Kentucky Retirement Systems, Frankfort, forwarded to the SEC a document from the attorney for board trustee Christopher Tobe that criticized placement agent audits performed internally by KRS and by the state's auditor of public accounts, according a news release issued by the $13.3 billion retirement system.
The SEC is conducting an informal inquiry into use of placement agents by the retirement system from 2004 to 2009. During that time, roughly $15 million was paid to placement agents, about $6 million of which went to a former colleague of then-Chief Investment Officer Adam Tosh.
The audits cleared Mr. Tosh and the retirement system of any wrongdoing.
The KRS news release said the retirement fund has been “proactive in relation to placement agent issues” and “invested considerable time and resources on audits of these issues.”
Edward Siedle, independent attorney for Mr. Tobe, disputed the results of the two audits in a report sent to the retirement system this week, which the system forwarded to the SEC.
“In my opinion, it is unfathomable that the (auditor of public accounts) could have recited the facts related to a classic ‘pay-to-play' scenario in its report and yet concluded none existed,” Mr. Siedle's report states. “I can only assume that the APA lacked expertise in investigating pension abuses and did not retain a qualified expert to assist in its examination.”
William Thielen, KRS interim executive director, referred to the news release for the retirement fund's position on the inquiry. The release said Mr. Tobe is not a source of original information that would classify him as a whistle-blower. It also states, “the document is strikingly absent of any facts or analysis that were not already known to the auditors and therefore KRS and the public.”
“We've cooperated fully with (the SEC) and provided thousands of pages of documents,” Mr. Thielen said in a telephone interview. He added the retirement fund has not made investments using placement agents in about two years. “We're doing anything the SEC wishes and waiting for the results of the inquiry.”
Mr. Tobe is still on the KRS board. His term expires March 31.