Wednesday, February 10, 2016

PSERS removes state 'alternative investment' contracts from public scrutiny

After unwanted publicity

PSERS removes state 'alternative investment' contracts from public scrutiny


The Pennsylvania Public School Employees' Retirement System "has made the decision to remove alternative investment contracts posted prior to 2012 from the Treasury Department Website," spokeswoman Evelyn Tatkovski tells me. That's after I asked PSERS about statements by Susan Webber, the financial consultant who runs the Web site under the pen name Yves Smith, that the documents posted by PSERS on the Pennsylvania State Treasury Web site provide a "treasure trove" of seldom-seen fee and operations information on funds managed by Cerberus, KKR, TPG and other large hedge funds that run money for chronically underfunded PSERS. Check the documents (posted in the U.S. and Hong Kong) here. Pa. Treasury website here.

Webber noted that the KKR documents enable readers to check claims by the Wall St Journal in this recent story raising questions about fees assessed clients (including, apparently, Pennsyvlania) by Capstone, a KKR-allied firm. She called Pennsylvania's disclosure of the hedge fund documents "private equity's Snowden moment," comparing it to rogue military contractor Edward Snowden's decision to make public classified U.S. spy records before fleeing to Russia.

"PSERS posted the alternative investment contracts in question, along with hundreds of other PSERS investment and non-investment-related contracts, on the Treasury Department website pursuant ot the Commonwealth's Right-to-Know Law," PSERS spokesman Tatkovski told me in an email. But "in 2012, after a number of alternative investment managers asserted their contracts should be kept confidential, PSERS ceased posting alternative investment contracts that reveal the terms by which the managers operate their businss enterprises," and started posting only "companion contracts" or "subscription agreements" under which PSERS commits public money to be invested.

"PSERS did not, however, remove all of the alternative investment contracts that had been previously posted," Tatkovski added, until an unnamed "recent blog posting" (presumably Webber's at NakedCapitalism). But PSERS has now "made the decision to remove alternative investment contracts posted prior to 2012," she added.

PSERS had no immediate comment when I asked if there was a legal basis for the agency's about-face and suppression of public documents, or whether money managers had threatened to drop the state as a client unless it surrendered.

Gary Tuma, spokesman for elected Pennsylvania state treasurer Rob McCord, who used to run a money management firm that ran state pension money, and a member of the board of PSERS' sister agency, the State Employees' Retirement System (SERS), said the treasurer won't stop PSERS from suppressing the postings because his agency only "has a passive role; we maintain the website," with no public-records "enforcement authority," Tuma told me. 

I'll have more in my column in tomorrow's Philadelphia Inquirer.

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About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at, 215.854.5194, @PhillyJoeD. Read his blog posts at and his Inquirer columns at Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph N. at or 215 854 5194.

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