Less than two weeks before a book is to be released that alleges a culture of corruption at the Kentucky Retirement Systems, the SEC announced July 11 it will not pursue any enforcement action against the $15 billion pension fund's use of placement agents between 2004 and 2009.
Chris Tobe, former board trustee and self-proclaimed SEC whistle-blower, is releasing “Kentucky Fried Pensions” on July 23. The book explores the links between alleged corruption in investments via placement agents and problems with underfunding that affects states such as Kentucky.
William Thielen, executive director of the Frankfort-based pension fund, said the system provided an “awful lot of material” to the Securities and Exchange Commission and the case is now closed.
“I fully expect (Mr. Tobe) will continue allegations of corruption and fraud,” said Mr. Thielen, who was the chief operating officer during the time of the placement agent controversy. “He has never produced a shred of evidence to back anything up.”
The SEC started an informal inquiry in September 2010 on the use of placement agents between 2004 and 2009 after Mr. Tobe filed a complaint with the agency. During that time period, 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. An internal audit and state audit found no evidence of wrongdoing.