Longboat Key (Fla.) Firefighters’ Retirement System plans to schedule a review of the findings of a new report that alleges conflicts of interest in investment consulting work and custodial services by Morgan Stanley Smith Barney, and questions whether the firm and the $12 million pension fund are complying with state fiduciary statutes and contracts.
Non-compliance could jeopardize the use of state tax revenue to fund contributions to the system, according to the report prepared by Benchmark Financial Services and commissioned by the fund.
The report said Morgan Stanley’s disclosed conflicts of interest and payment from the fund’s money managers raise a question whether the firm is independent as defined by Florida statute, not associated with any of the fund’s managers, and whether the fund is also in compliance with state law.
The report recommends the board determine whether information provided by Morgan Stanley Smith Barney on the payments to the firm from the fund’s investment managers “is adequate to demonstrate compliance by the firm and the fund with applicable fiduciary standards and law.”
It also asks whether Morgan Stanley Smith Barney’s custodial arrangement with the fund “complies with the third-party custodian requirement in Florida statutes.”
Keith Tanner, chairman of the fund’s board, who received the report Tuesday, said he is in the process of reading it and cannot comment on its findings. He said he plans to distribute it to the other board members and Morgan Stanley Smith Barney officials on Wednesday and schedule a special meeting by May 14 to review its findings and discuss what action, if any, the system should take.
In a statement, the firm said, “Morgan Stanley disagrees with the conclusions in (the)report (by Edward Siedle, president of Benchmark Financial) and looks forward to the opportunity to fully rebut Mr. Siedle’s so-called ‘findings.’ Morgan Stanley recently proved in an arbitration that similar allegations drummed up by Mr. Siedle’s against other Morgan Stanley financial advisers were false and clearly erroneous.” Morgan Stanley Smith Barney officials declined to provide further information, said spokeswoman Christine Pollak.