Tag: Kentucky

Kentucky Retirement Systems Lawsuit Targets New York Fixer Regina Calcaterra for Alleged Bid Fixing

Mary Pat Campbell

Link: https://www.nakedcapitalism.com/2022/09/kentucky-retirement-systems-lawsuit-targets-new-york-fixer-regina-calcaterra-for-alleged-bid-fixing.html

Excerpt:

Regina Calcaterra, partner in the law firm Calcaterra Pollack and a notorious New York State fixer is charged with bid rigging. The New York Times published an investigative series about the Moreland Commission, an anti-corruption probe. Calcaterra was its executive director. The commission was disbanded early. The Times reported that Calcaterra harassed investigators, interfered repeatedly in the report drafting process, improperly blocked subpoenas and communicated with Governor Cuomo, with the aim of squashing any findings that might embarrass Cuomo. The New York Board of Elections sued Calcaterra several times for violating campaign finance laws. She was barred from running for office for lying about her residency. To the extent she knows anything about public pension funds, she learned it from her one-time boss, state controller Alan Hevesi, who went to prison in a pay-to-play scandal (note Calcaterra worked for him his earlier role as New York City controller; in that capacity Hevesi was also responsible for the pension investments).

As you can see below, the tenacious legal team that originally represented the so-called Mayberry eight in Mayberry v. KKR has Calcaterra and an alleged co-conspirator at Kentucky Retirements Systems, its now general counsel Vicky Hale, in its cross-hairs for alleged violations of Kentucky procurement statutes, breach of trust and fiduciary duty, and conspiracy claims. A new group of so-called Tier 3 (defined contribution) plaintiffs are seeking to sue the KKR, Blackstone et al for selling overpriced, misrepresented customized hedge funds that underperformed stocks and even cash. The suit against Calcaterra, members of her firm, and Kentucky Retirement Systems’ Hale is a side but nevertheless revealing action.

The filing below perfects allegations previously made against Calcaterra and her apparent partners in misconduct. The first time the Tier 3 attorneys, led by Michelle Lerach, covered much of the same ground in an early 2021 filing and asked for the so-called Calcaterra Report to be released. Judge Philip Shepherd reacted harshly, as if the point of the filing was primarily to dirty up Calcaterra. He also discounted the New York Times investigation, saying more or less than anyone who has held an important job has been on the receiving end of bad stories.

Author(s): Yves Smith

Publication Date: 22 Sept 2022

Publication Site: naked capitalism

The Curious Case Against Hedge Funds in Kentucky

Mary Pat Campbell

Link: https://www.ai-cio.com/news/the-curious-case-against-hedge-funds-in-kentucky/

Excerpt:

The lawsuit notes the difficult position the retirement system was in, saying that “there was no prudent investment strategy that would allow KRS to invest its way to significantly improved funded status,” and that “the trustees were trapped in a demographic/financial vise.” However, while acknowledging there was no prudent investment strategy for KRS to get out of the hole it was in, the plaintiffs are simultaneously critical of Carlson and the other defendants for taking what they consider to be “longshot imprudent risks.”

The lawsuit also criticizes the hedge funds of funds for not providing high enough returns for the entire KRS portfolio to meet or exceed its 7.75% assumed rate of return. However, the same could be said for fixed income and many other assets in the KRS portfolio. Broad hedge fund portfolios are generally created to reduce risk, not beat equity markets.

“The Black Boxes did not provide the investment returns trustees needed for KRS to return to or exceed on the average its AARIR [assumed annual rate of investment return] of 7.75%,” says the lawsuit, which is targeting approximately 3% of KRS’ overall investments, while saying they should carry the entire portfolio to meet or outperform a rate of return the state acknowledged as “unrealistic and unachievable.”

The lawsuit also claims the investments “lost millions of dollars in 2015 to 2016,” which was more than two years after Carlson left, and which was a particularly bad time period for the entire hedge fund industry. The lawsuit criticized one of the investments, known as the Henry Clay Fund, for providing “exceptionally large fees for Blackstone”; however, the suit also states that “the amount of the fees could not be calculated and were not disclosed.”

Author(s): Michael Katz

Publication Date: 15 Oct 2021

Publication Site: AI-CIO

S&P: Kentucky’s pension funding ratios weak despite improvements

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202106031046SM______BNDBUYER_00000179-ce04-d125-a17f-ce353e9b0000_110.1

Excerpt:

Kentucky has taken action to shore up its pension system, but it?s going to take time to reverse the adverse effects of past funding shortfalls, according to S&P Global Ratings.

Kentucky has one of the poorest funded pension systems among all U.S. states, with an aggregate funded ratio of 44% as of fiscal 2019, S&P said. The state?s general obligations are rated A by S&P with a stable outlook.

The state?s Public Pensions Authority is responsible for the Kentucky Employees Retirement System (KERS) and State Police Retirement System (SPRS) while counties and cities are responsible for the County Employees Retirement System (CERS). The Teachers Retirement System is a seperate system with its own board.

The funded ratios for the systems are 14.01% for the KERS non-hazardous and 55.18% for the KERS hazardous, 58.27% for the TRS, 28.02% for the SPRS and 47.81% for CERS non-hazardous and 44.11% for the CERS hazardous.

Author(s): Chip Barnett

Publication Date: 3 June 2021

Publication Site: Fidelity Fixed Income

Decisions Finally Coming in Long-Running Battle with Hedge Fund Titans in Kentucky Pension Case, Mayberry v. KKR

Mary Pat Campbell
Decisions Finally Coming in Long-Running Battle with Hedge Fund Titans in Kentucky Pension Case, Mayberry v. KKR

Graphic:

Excerpt:

You can find all the major filings at Kentucky Pension Case. The two below are over the most heated current issue: whether the Tier 3 Plaintiffs can move forward. Judge Shepherd said effectively that he needed to see what the attorney general planned to do before he decided that.

Given that the justification for the attorney general repeated extension requests was to wrap his mind around the case, and the Calcaterra report looked like Kentucky Retirement Systems hiring an outside firm to brief the attorney general, the new filing is entirely old hat. It has not only has no new arguments, it is even more openly cribbed from older plaintiff filings that the original attorney general intervention, where his office at least re-wrote a fair bit of the material into white shoe tall building lawyer style. Here, nearly all of the filing is a cut and paste, including the charts.

Author(s): Yves Smith

Publication Date: 4 June 2021

Publication Site: naked capitalism

Alternative Investment Looting Is Destroying Pension Funds

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2021/05/21/alternative-investment-looting-is-destroying-pension-funds/?sh=1e71137979c1

Excerpt:

Forensic investigations in Rhode Island, North Carolina, Kentucky and Ohio reveal that gambling 30 percent or more on high-cost, high-risk, secretive alternative investments has exposed pensions to massively greater risks and reduced net returns. The time is ripe for legislators, regulators, and law enforcement to act to stop the looting.

A recent New York Times NYT -3% article revealed that putting more than half of the $62 billion Pennsylvania state teachers’ retirement fund’s assets into risky alternative investments hadn’t worked out well for the pension and had spurred an investigation by the FBI. The FBI is investigating reporting fraud—returns allegedly falsified to avoid increased worker contributions to the pension.

Law enforcement investigations into public pension funds that lie about their returns are long, long overdue.

Author(s): Edward Siedle

Publication Date: 21 May 2021

Publication Site: Forbes

The New Kentucky Investment Chief Just Got a 41% Pay Boost

Mary Pat Campbell

Link: https://www.ai-cio.com/news/new-kentucky-investment-chief-just-got-41-pay-boost/

Excerpt:

The new investment chief at the Kentucky Public Pensions Authority (KPPA) has received a 41% boost to his base salary. The hike comes after the plan’s board members this week approved a motion to lift the pay ceiling for top investment officials at the retirement system. 

Board members are hoping the compensation changes will help the underfunded pension plan hold on to KPPA CIO Steven Herbert. He started in January at the $20 billion retirement system, just as it is undergoing a complete rebranding and overhaul of its operations. KPPA was formerly known as the Kentucky Retirement Systems. 

Starting this month, Herbert can earn $235,000 annually, not including incentive pay, up from $167,000 per year. Steve M. Willer, the deputy executive director of investments, who is effectively the DCIO, can earn $190,000 per year, up from $165,000 annually. 

Author(s): Sarah Min

Publication Date: 9 April 2021

Publication Site: ai-CIO

Kentucky legislature overrides teacher pension veto, putting new hires on ‘hybrid’ plan

Mary Pat Campbell

Link: https://www.courier-journal.com/story/news/politics/ky-general-assembly/2021/03/29/kentucky-general-assembly-overrides-teachers-pension-reform-veto/6997915002/

Excerpt:

Kentucky lawmakers have overridden Gov. Andy Beshear’s veto of a bill that would change pension benefits for future teachers.

In what some Republican legislators hope will be the beginning of larger pension reform, the House and Senate voted to override the veto of House Bill 258 Monday. 

The House voted 63-31, followed by a 25-13 vote in the Senate.

Beginning in 2022, new Kentucky teachers will be placed on a “hybrid” pension plan that combines elements of defined contribution and defined benefit plans.

Author(s): Olivia Krauth

Publication Date: 29 March 2021

Publication Site: Courier-Journal

Kentucky Lawmakers Override Pension Bill Veto

Mary Pat Campbell

Link: https://www.ai-cio.com/news/kentucky-lawmakers-override-pension-bill-veto/

Excerpt:

The GOP-run Kentucky state legislature has overridden Democratic Gov. Andy Beshear’s veto of a pension reform bill that will place new teachers in a hybrid pension plan that incorporates aspects of a defined contribution (DC) and a defined benefit (DB) plan.

Under House Bill 258, new teachers are required to contribute more to their retirement plans than current teachers do, and they will have to work for 30 years instead of 27 to earn their maximum benefits. The new rules will become effective at the beginning of 2022.

The bill had been passed by large majority of both chambers of the legislature earlier this year, with the House passing it by a vote of 68 to 28 and the Senate passing it by a count of 63 to 34. Because the state’s Republicans have a supermajority in both the House and Senate, they didn’t have much difficulty in overriding the veto, which was one of 24 vetoes passed down by Beshear, a Democrat, that were overridden in one day.

Author(s): Michael Katz

Publication Date: 1 April 2021

Publication Site: ai-CIO

Legislators override veto of bill reforming pensions for future Kentucky teachers

Mary Pat Campbell

Link: https://www.wdrb.com/news/education/legislators-override-veto-of-bill-reforming-pensions-for-future-kentucky-teachers/article_7cce8d94-90e7-11eb-99ba-d74ac0b11b3d.html

Excerpt:

Kentucky lawmakers voted Monday to override Gov. Andy Beshear’s veto of a bill that would change future teachers’ pension benefits. 

The House and Senate, both with GOP supermajorities, voted to override Beshear’s veto of House Bill 258, which would create a “hybrid” pension tier blending defined benefit and contribution components for new Kentucky teachers hired starting in 2022. 

That means teachers hired starting next January would be required to pay more toward their retirement and work longer before they can earn full benefits.

Author(s): Associated Press

Publication Date: 29 March 2021

Publication Site: WDRB

KRS APPROVES NEW INVESTMENTS

Mary Pat Campbell
KRS Approves New Investments

Excerpt:

The Kentucky Retirement Systems (KRS) Board of Trustees held a special meeting Thursday morning to approve more than $170 million in investments. The move comes just one week before a new County Employees Retirement System (CERS) Board of Trustees takes control of the local pension system and its investments; the timing was not lost on several board members who questioned why they needed to act before the April 1 separation. CERS elected representative Betty Pendergrass pointed out that a majority of the money being allocated was CERS funds, which account for 76% of KRS pension assets.

Publication Date: 25 March 2021

Publication Site: KLC City Limit

Bottom Line: Changes could be coming to the pension system for Kentucky’s teachers

Mary Pat Campbell
Bottom Line: Changes could be coming to the pension system for Kentucky’s teachers

Excerpt:

Legislation to change the pension plan for future teachers in Kentucky moves to the full Senate in the final days of the 2021 session.

House Bill 258, sponsored by Rep. Ed Massey, would create a new tier in the Kentucky Teachers’ Retirement System (KTRS) for any newly hired teachers in the state that would be partially defined benefit plan like the existing pension plan and part defined contribution plan, more like a 401(k).

The bill serves as a retirement plan as well as social security replacement plan, as teachers in Kentucky do not pay into social security and do not receive the benefit in retirement. The new system would provide a supplemental plan with two percent paid in by both the employee and the state, which is portable to allow an employee to take those benefits with them should they leave the teaching profession, unlike the existing KTRS pension plan.

Author(s): Jacqueline Pitts

Publication Date: 15 March 2021

Publication Site: Lane Report

Mayberry v. KKR: Pitched Battle as Attorney General and Defendants Try to Block “Tier 3 Plaintiffs” Pursuing Claims Aggressively

Mary Pat Campbell
Mayberry v. KKR: Pitched Battle as Attorney General and Defendants Try to Block “Tier 3 Plaintiffs” Pursuing Claims Aggressively

Excerpt:

One noteworthy feature of these filings is that they are regularly shrill, ranging from pissy to screechy (the Attorney General’s filing is a bit different in instead adopting the tone of royalty having to stoop to dismiss an annoying subject).

And the reason for the all too evident frustration among the various opponents is that the legal team targeting the hedge fund abuses was supposed to have gone away by now.

As the Background describes in more detail, they were supposed to be over after their initial case was dismissed by the Kentucky Supreme Court on standing grounds. Recall that the defeat came as a result of rulings in Kentucky and by the US Supreme Court that found that Federal Article 3 standing rules (which Kentucky has adopted but not other states such as California) means that defined benefit plan participants have to have suffered an actual (“particularlized”) loss, as in not be getting benefits or only be receiving reduced benefits, to be able to lodge a claim. Since the Kentucky Retirement System, even at its stunningly depleted 13% funding level, is still anticipated to pay out until 2027 (and we are supposed to believe the State of Kentucky will step up and make good on the pensions until it turns out otherwise), the defined benefit pensioners can take no action until then.

Author(s): Yves Smith

Publication Date: 12 March 2021

Publication Site: naked capitalism