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Forbes Blog Raises S.C. Investment Commission Hackles

By Porter Barron Jr.
Tuesday, December 24, 2013 |
Curtis Loftis’ frequent criticism of the state’s retirement system got some support from Forbes last week. Photo by Sean Rayford
Writing last week for Forbes’ Financial Watchdog blog, a forensic investigator of the money management industry called out the South Carolina Retirement System Investment Commission for “doubling down” on risky investment strategies and other controversial practices, thereby inducing the latest spasm of Palmetto State pension tension, replete with the name-calling and personal attacks we have come to expect from the men in charge of the $27 billion state employees’ retirement fund.

Forbes is hardly the first national outlet to run an article critical of South Carolina’s pension investment commission. Stories in The New York Times and Bloomberg have also called into question the commission’s reliance on alternative investments — commodities, private equity, hedge funds, etc. — that lack transparency and require expensive management fees. After all, South Carolina’s pensioners paid out $420 million in fees to Wall Street money managers in 2013, more than any other retirement fund has reported, while still performing in the bottom 20 percent.

But Edward Siedle, who authored the Forbes piece, isn’t just a financial reporter. In the wake of his firm, Benchmark Financial Services Inc., exposing numerous problems with money managers preying on the Rhode Island pension fund, S.C. Inspector General Patrick Maley invited him to bid for the contract to audit South Carolina’s retirement commission. Siedle’s bid was rejected, but he did not disappear quietly.

“If ever there was a state pension system in need of an in-depth forensic investigation, it’s got to be South Carolina’s,” Siedle wrote of his visit to South Carolina. “Yet, that’s precisely the level of scrutiny we were told in a tense meeting with the State Inspector General and Retirement System Investment Commission last month nobody in the room wanted.”

Later he added, “We opened by telling the Inspector General and others involved with the Investment Commission in the room that ‘we are not in the business of providing superficial fiduciary reviews and would not be here if we thought that’s what you’re looking for.’ I also stated that I would not lend my name to any report that did not meet an integrity ‘gold standard.’”

RSIC Chairman Reynolds Williams did not take long to respond to Siedle in the blog’s comments. “His firm was rejected before even getting to make a presentation to the Commission,” Williams wrote. “This man’s stupidity, lack of professionalism, & bile is so odious that I am proud to be of the opposite opinion.”

Williams also penned a letter to Forbes on Siedle’s “malicious column,” which was notable mostly for its contemptuous tone and Williams’ defense of a former RSIC chief investment officer’s yellow Lamborghini as a “ten-year old used car.” Williams also issued this cut-down aimed at Siedle: “This self-proclaimed ‘Sam Spade of Money Management’ turns out to be a Maxwell Smart.”

Google those references, kids.

As for Siedle, he told Free Times on Friday that he had referred Williams’ personal attacks to the inspector general. He did not sound too distraught over having his firm’s bid rejected in South Carolina, either.

“When you say to people, ‘I will only put my name on a gold standard for integrity,’ you’re not saying, ‘Please hire me.’ You’re saying, ‘If you’re right for me and I’m right for you, maybe we can work together,’” Siedle said.

Meanwhile, the office for Treasurer Curtis Loftis, which has sparred repeatedly with Williams over the pension fund’s management, has relished Williams’ response to Siedle, in addition to having the latter echo its criticisms of the investment commission.

“It was just another rambling and crazy letter from Reynolds Williams,” said Alex Stroman, Loftis’ spokesman. “As my granddad has said, a bit dog hollers. For this kind of response to an article in Forbes, for [Williams] to comment on the blog continually, for him to send out this letter ridden with falsehoods and character attacks, not only on the treasurer but also the author, it just shows we have somebody asleep at the wheel.”

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