A forensic audit of alternative money manager contracts with the $86.1 billion North Carolina Retirement Systems, Raleigh, contained “inaccuracies and unsupported allegations,” Chief Investment Officer Kevin SigRist said in a letter sent to investment advisory committee members.
The audit, conducted by Benchmark Financial Services for the State Employees Association of North Carolina, criticized North Carolina Treasurer Janet Cowell, the sole trustee of the pension fund, for improper disclosure of fees and expenses, and high fees for alternative investments.
Mr. SigRist said that the report's “most troubling allegations … have the potential to create unfounded concerns regarding the stability of the NCRS and its investments.” He noted that Ms. Cowell has proactively expanded investment reporting and conducted an independent review of the investment program, including the recently concluded Investment Fiduciary Governance Commission, which recommended further governance changes now being considered in the Legislature.
“Today, the department makes more information public about its investment practices than the majority of public pension plans,” Mr. SigRist wrote in the letter on Monday. North Carolina also has a lower cost than its peers, he said, citing several reviews that show the pension fund's fees and expenses as a ratio of assets to be 0.11% lower than for other public pension funds with $20 billion or more in assets.
In a statement, SEANC said the response from the treasurer's office contained “inaccuracies” as well, and questioned “largely unreadable” redacted documents supplied to Benchmark for its audit.