North Providence, R.I. – AFSCME Council 94 is calling for an investigation by federal regulators into the state treasurer’s pension practices after releasing a report showing that taxpayers could be at risk from her risky state pension investments.
The report, “Rhode Island Public Pension Reform: Wall Street’s License to Steal,” raises troubling questions about recent investment decisions and strategies made by Gina Raimondo.
In 2011, Raimondo pushed through legislation that considerably slashed members’ retirement security, cutting annual cost-of-living increases for current and future retirees, and imposing a riskier hybrid pension plan on future hires. Raimondo gained national notoriety in recent years for gambling state pensions in high-fee, Wall Street hedge funds.
“Instead of promoting retirement security for all Rhode Islanders, the changes apparently enriched wealthy hedge fund managers – many from out of state – promoted conflicts of interest, and considerably weakened and raised the risk of the Employees Retirement System in Rhode Island,” said J. Michael Downey, president of Council 94.
Ted Siedle, a financial expert and former Securities Exchange Commission attorney, who conducted the investigation that informs the report, called the lack of transparency “alarming.”
The investigation revealed that “further investigation by the SEC was warranted,” Siedle said, adding “there appears to be considerable conflicts of interest, and fees continued to rise.” In some cases, fees associated with Raimondo’s investments topped 700 percent of projected fees.
Council 94 will submit the report to the SEC with a request for further investigation.