Prisma was acquired by KKR in 2012 and merged with PAAMCO in 2017 to form PAAMCO Prisma Holdings. Mr. Reddy left the latter firm in 2018.
The report further said in its investigation of activities between 2011 and 2017 that it did not find "any violations of fiduciary duty or illegal activity by BAAM, then-PAAMCO, the consultants of investment staff or trustees."
In a statement accompanying the report, KPPA said the report "has been made public by KPPA in compliance with the Franklin Circuit Court ruling. KPPA does not comment on matters that could impact pending litigation, so we do not anticipate making any further statements at this time."
KPPA spokesman Chris Clair declined to comment.
Calcaterra Pollack in its executive summary said a separate report sets forth "a complete analysis of potential legal remedies available to KRS against Mr. Peden, Mr. Reddy and Prisma, including pros and cons of undertaking legal action, a cost/benefit analysis of such action, and any possible legal impediments to the legal action."
The report with the legal recommendations was not provided.
Additionally, the investigation concluded in early 2017 because a new board of trustees began to restructure the absolute-return investments and because Mr. Peden was terminated from KRS in mid-January 2017. At the time, KRS had no comment on the departure of Mr. Peden, who was replaced by Rich Robben, first on an interim and eventually on a permanent basis.
Mr. Cameron's July 2020 lawsuit against multiple defendants related to those hedge fund investments was filed 11 days after the Kentucky Supreme Court agreed with an earlier court of appeals' dismissal of a prior suit, Mayberry vs. KKR, which had been filed by eight participants of Kentucky Retirement Systems. The plaintiffs said in that lawsuit the defendants enticed KRS to invest in fund-of-funds investment vehicles, when KRS could have earned higher returns in the stock market. Chief Justice John D. Minton Jr. in his July 9, 2020, opinion said the plaintiffs did not have standing to bring their claims of funding losses sustained by the pension fund because they "do not have an injury in fact that is concrete or particularized."
In April 2019, the appeals court reversed an earlier decision by a state circuit court judge in November 2018 denying the hedge fund firms' motion to dismiss.
The appeals court's memorandums stated the plaintiffs had "no standing to assert such claims on behalf of KRS or the Commonwealth," citing among other items of support that the breach of fiduciary duty and aiding and abetting claims were governed by a five-year statute of limitations.
Other defendants in Mr. Cameron's lawsuit include Thomas Cavanaugh, Cavanaugh Macdonald's co-founder; Rebecca A. Gratsinger, CEO of RVK; Jim Voytko, RVK's president, director of research and senior consultant; Mr. Peden, currently a senior investment consultant at Pavilion, Mercer's non-profit consulting practice; T.J. Carlson, KRS CIO from 2010 to 2013 and current CIO of the $9.5 billion Missouri State Employees' Retirement System, Jefferson City; and William A. Thielen, KRS executive director until his retirement in 2015.