Way back in June, we questioned whether Louisville Metro Government could continue funding the mess at Kentucky Retirement Systems and people freaked out.
We brought it up in March, as well.
None of that should come as a surprise.
Also not a secret that the Commodity Futures Trading Commission has indicated in the press a few times that it is interested in regulating currency derivatives.
Probably will come as a surprise, though, that sources close to KRS and former KRS officials tell us that they were interviewed by two CFTC officials in late October. And that it’s the beginning of a formal investigation of Record Currencies in both Kentucky and Maryland. An investigation that’s completely separate from the Securities and Exchange Commission investigation of placement agents. Not exactly great news for the Commonwealth and those state government officials working hard to sweep this worst-in-the-nation nightmare under the Frankfort rug.
There are been near constant rumblings that Kentucky Counties and Cities want to move CERS out of KRS since it owns 70% of assets and only 40% of the liabilities. Having but a single board member out of eight doesn’t exactly make people happy. Since the legislature loves to use CERS funds to cover up KERS mistakes, it’s doubtful that CERS will ever be allowed to move. They’ll have to go to court for that fight. The $5 million shift in currency losses from KERS to CERS we linked in the first graph could be a strong legal argument for moving CERS away from KERS.