What was that, again, about it being a waste of time to cover Kentucky Retirement Systems corruption every day for years and years?
Looks like it’s paying off quite a bit recently:
The City of Ft. Wright has filed a class-action lawsuit in the Kenton County, Kentucky, Circuit Court against the Board of Trustees of the Kentucky Retirement System on behalf of all participants in the County Employees Retirement System—known as the CERS.
Over 500 entities state-wide contribute funds to the CERS, including cities, counties, non-profits, and other governmental entities. Within the past decade, the Board has invested CERS assets in a relatively large proportion of high-risk, alternative investments such as venture capital, hedge, private equity, and leveraged buyout funds. These investments are not publicly traded and are not registered pursuant to the Investment Company Act of 1940. Many are start-up funds with no track record.
These alternative asset investments are notorious for charging excessive management fees. Over the past several years, the Kentucky Retirement System Board paid more than $50 million in such management fees to invest CERS assets, in addition to fees it regularly pays to money managers to invest in traditional low-risk investments that are authorized by statute.
The City alleges the Board has improperly commingled the investment of CERS assets with KERS assets, failing to recognize the different and more restrictive investment standards applied to CERS assets.
The Board has never acknowledged different statutory obligations govern its investment of CERS funds, that it is prohibited from investing CERS assets in non-registered funds, nor that it owes a statutory fiduciary duty to the public entities and their retirees who pay into CERS.
The City of Fort Wright asks the court to rule that CERS assets must be invested in accordance with fiduciary standards set forth in the Kentucky Statutes and to prohibit the Board from continuing to commingle CERS funds and KERS funds for investment purposes. The City also asks the Court to require the Kentucky Retirement System to account for the funds that have been placed into these high risk investments within the preceding five (5) years and to account for and repay all of the substantial management fees that were paid to managers of hedge funds, private equity funds and other such high risk investments.
City of Ft. Wright Mayor Joe Nienaber said, “It’s simple. The more fees you pay, the less money for your retirees. The more risky your investments, the greater risk to your pensions. CERS and KERS need to be separated. We’re bringing this lawsuit to do that so CERS can recoup some of these outrageous fees and be properly managed.”
This isn’t so much a pat on the back as it is a reminder that you should stick with your convictions, your gut, with what you know is right. Even if people defame you, attack you or criticize you for holding both sides accountable.
People are paying attention as a result. Our efforts weren’t for nothing.
All those times Steve Beshear’s people told us to back off, that we were out-of-line. All those times Crit Luallen’s crew told us there was ‘nothing there’ to dig in to. All those times Courier-Journal reporters told us KRS was no big deal, nothing to see here, move along. All those times KRS lobbyists and board members went after our advertisers and choked off our advertising revenue. All of that was a giant, backroom, good old boy circle jerk.
Turns out that grit and determination can make a difference.
Interesting how that works.