Page 3 of 6 FirstFirst 123456 LastLast
Results 51 to 75 of 126
  1. #51
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    who picks up the tabs for the municipalities in CA, that have already declared bankruptcies ?
    The federal Pension Benefit Guaranty Corp may come into play, as it did for Delphi.



  2. #52
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    Wealthy capitalists sucking down working peoples' retirement savings: "2 and 20" (aka, we screw you)

    Study: Hedge Funds Taking Over Pension Fund Investments, Increasing Risk




    In a bid to boost investment returns, public pension plans in the past several decades have shifted funds away from fixed-income investments such as government and high-quality corporate bonds. During the 1980s and 1990s, plans significantly increased their reliance on stocks, also known as equities. And during the past decade, funds have increasingly turned to alternative investments such as private equity, hedge funds, real estate, and commodities to achieve their target investment returns….

    In short, increased investments in equities and alternatives could result in greater financial returns but also increased volatility and the possibility of losses on these assets. Even relatively small differences in returns resulting from investment performance or fees can have a major effect on the asset values of pension funds. A difference of just one percentage point in returns in a single year on $3 trillion equates to $30 billion.


    http://news.firedoglake.com/2014/06/...creasing-risk/



  3. #53
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    How the Private Equity Industry Is Looting the Middle Class

    A few weeks ago, a top official at the Securities and Exchange Commission reported on what he called a "remarkable" amount of potentially illegal behavior in the private equity industry -- aka the industry that buys up, changes and sells off smaller companies.

    In its evaluation of private equity firms, the SEC official declared that half of all the reviews discovered "violations of law or material weaknesses in controls." The announcement followed an earlier Bloomberg News report on how the agency now believes "a majority of private equity firms inflate fees and expenses charged to companies in which they hold stakes."


    At first glance, many probably dismiss this news as just an example of plutocrats bilking plutocrats. But that interpretation ignores how such malfeasance affects the wider economy.

    One way to understand that is through the simmering debate over pension obligations in states and cities across the country.

    Citing data from the National Association of State Retirement Administrators, Al-Jazeera America recently reported that the average amount of pension dollars devoted to private equity and other so-called "alternative investments" "has more than tripled over the last 12 years, growing from 7 percent to around 22 percent today."
    With public pensions now reporting $3 trillion in total assets, that's up to $660 billion of public money subject to the rapacious fees being exposed by the SEC. Those fees are paid through a combination of tax increases and pension benefit cuts.

    Private equity shenanigans can also hurt the middle class by encouraging looting. For instance, as Crain's New York recently reported,
    in the last decade, private equity firms have collected $2 billion in so-called "transaction fees," which the business publication says "are bonuses the firms take for conducting their business of buying, managing and selling companies." This scheme has been called the "crack cocaine of the private equity industry."

    As just one example of how it works, the New York Times recently examined a merger of two orthopedic implant manufacturers and how that merger resulted in a Wall Street jackpot. Indeed, according to the Times, the financial firms involved in the deal ended up extracted "a 20 percent share of gains from the sale, as well as management fees of 1.5 percent to 2 percent charged to investors" and "a share in an estimated $30 million in 'monitoring fees.'" The Times noted that "this deal will be a gift that keeps giving" to the private equity firms involved because "they will be paid millions more in fees for work that they are never going to do."


    In other words, millions of dollars are taken out of companies creating tangible economic value and jobs. The money instead is sent to the speculators.


    The good news, of course, is that we know how to curtail some of the worst effects of private equity's expansion. For one thing, the SEC can follow up its evaluation with fines and prosecutions.
    Additionally, states can pass laws mandating at least some modi of transparency in their pension funds' dealings with the private equity industry. And, as Eileen Appelbaum of the Center for Economic and Policy Research has written, the tax code can be changed to make sure that the fees claimed by private equity managers are no longer treated as capital gains and therefore taxed at a discounted rate.


    The trouble is that these straightforward solutions all require political will, and American politics remain dominated by Wall Street money.

    The question, then, is simple: How much more looting has to happen before that cash can no longer buy inaction?


    http://www.alternet.org/economy/how-...age=1#bookmark



  4. #54
    Mr. John Wayne CosmicCowboy's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Mar 2003
    Post Count
    43,734
    Defined benefit pension plans are abused by politicians to buy public sector votes and kick real costs down the road until they are someone else's problem. I totally support 401K matching as an alternative to public sector defined benefit plans. They are much more transparent and expense the cost in the year they occur. Real employment/contract costs for 2014 should be paid in 2014.

  5. #55
    Mr. John Wayne CosmicCowboy's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Mar 2003
    Post Count
    43,734
    I know a TEXDOT engineer whose salary all his career has been dollar for dollar compe itive with private firms but he gets to retire next year at 55 at essentially full salary for the rest of his life.

  6. #56
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    North Carolina is still suing Facebook, wants to pass law banning public from knowing what else it’s doing

    In the last few months, there has been increasing pressure on public officials to stop hiding the basic terms of the investment agreements being cemented between governments and Wall Street’s “alternative investment” industry.

    That pressure has been intensified, in part, by two sets of recent leaks showing how these alternative investment companies (private equity, hedge funds, venture capital, etc.) are using the secret deals to make hundreds of millions of dollars off taxpayers. It is also in response to the Securities and Exchange Commission recently declaring that many of the stealth schemes may be illegal.

    And yet, as the demands for transparency grow louder, a potentially precedent-setting push for even more secrecy is emerging. Pando has learned that legislators in North Carolina — whose $86 billion public pension fund is the 7th largest in America – are proposing to statutorily bar the public from seeing details of the state’s Wall Street transactions for at least a decade. That time frame is significant: according to experts, it would conceal the terms of the investment agreements for longer than the statute of limitations of various securities laws.


    In other words, the legislation – which could serve as a model in state legislatures everywhere – would bar the disclosure of the state’s financial transactions until many existing securities laws against financial fraud become unenforceable.


    A growing scandal in North Carolina


    If the North Carolina Retirement System and
    its sole trustee, Treasurer Janet Cowell (D), seem familiar to tech readers, that is because the NC system is one of the lead plaintiffs in the class action suit surrounding Facebook’s initial public offering. Additionally, as part of her career in the financial sector, Cowell was the marketing director for the tech-focused VC firm, SJF Ventures.

    Like other states, North Carolina has been redacting and/or refusing to release the contractual terms of its pension fund’s massive Wall Street investments, even though the contracts involve public money and a public agency. In recent months, that practice exploded into a full-fledged political scandal when the State Employees Association of North Carolina released a 147-page report from former SEC investigator Ted Siedle.

    The report asserted that under Cowell, up to $30 billion of state money is now being managed by high-risk, high-fee Wall Street firms, and that the state could soon be paying $1 billion a year in fees to those firms. The report also noted that the investment strategy “has underperformed the average public plan by $6.8 billion” and it alleged that Cowell has misled the public about how where exactly she is investing taxpayer dollars. The union has called for a federal investigation, while Cowell has publicly denied the allegations.

    Following the report, (SEANC) is now pushing the legislature to adopt a simple two-page bill that would force the Treasurer to open up the state’s books so that taxpayers and public employees can at least see how their money is being invested. In response,
    Cowell sprung into action against the transparency initiative and on behalf of the financial and securities industries that have given her election campaign committee morethan$250,000 since 2008.

    First, in an email obtained by Pando (embedded in full below), Cowell’s office told legislators that the transparency bill would violate previously undisclosed contractual provisions that Cowell agreed to. Those officials claim that “losses as a result of the breaking of these contracts is $1.8 billion.” Put another way: Cowell asserted that, unbeknownst to lawmakers and the public, she had already signed North Carolina taxpayers into secret deals with Wall Street firms – deals that allegedly aim to financially punish taxpayers if the public is ever permitted to see the details of the agreements.


    At the same time, Cowell’s allies in the legislature filed a bill to serve as a replacement for the transparency legislation. Upon that replacement bill being introduced, Cowell issued a press releaseendorsing it. Proposed only days before the SEC sounded the alarm about a lack of transparency in the private equity industry, Cowell’s legislation claims to be about transparency, but weaves in provisions that seem designed to enshrine the exact opposite.


    Specifically, section 3(b) of the proposal says that if Wall Street firms demand secrecy, the law will automatically bar the public from viewing key information about public pension investments for 10 years after the investment is terminated. That includes, according to the bill draft, “information regarding the portfolio positions” of public pension fund investments; “capital call and distribution notices” sent to state pension officials by investment firms; investment firms’ “private placement memorandum and other offering and marketing material”; and, perhaps most important of all, “the investment’s contractual do ents.”


    According to the North Carolina House’s website, two of the lawmakers sponsoring the bill currently work in the financial industry one is described as a “financial consultant,” the other is described on the website as “Vice President & Investment Officer – Wells Fargo Advisors.” The State Treasurer’s2013 report notes that Wells Fargo does brokerage business with North Carolina’s pension system. Additionally, do ents from the North Carolina Secretary of State’s office (embedded below) show at least 22 financial firms and securities industry trade associations have registered lobbyists in the state capitol.


    A license for Wall Street malfeasance


    Critics argue that the bill is a license for Wall Street malfeasance because its 10-year secrecy mandate appears to exceed the statute of limitations of many state and federal securities laws.


    For instance, the North Carolina Securities Act includes language outlining a three to five year statute of limitations. Similarly, a law firm specializing in securities work and a North Carolina insurance firm both point out that the statute of limitations in securities fraud is well shorter than the 10 year gag order being proposed by North Carolina legislators.


    Meanwhile, the Securities Fraud and Investor Protection Resource Center reports that the federal law’s statute of limitations is “not more than five years after the fraud occurred.”


    All of this means that if the secrecy bill passes, and if violations of existing securities laws are then uncovered only after the 10-years secrecy period, there may be no way for taxpayers and retirees to seek legal recourse. In short, Wall Street firms would potentially be able to bilk the pension fund knowing that the public would be statutorily barred from seeing what’s happening until it was too late to seek redress under state and federal law.


    A possible precedent-setting move for secrecy


    In recent years, states and cities have been moving more money into high-fee alternative investments – up to $660 billion by one estimate. With that kind of cash on the line – and with leaked do ents and the SEC raising questions about the propriety of such investments – unions and watchdog groups like the American Civil Liberties Union and Common Cause have become more aggressive in demanding basic transparency.


    The bill in North Carolina, however, may represent a precedent setting escalation in the fight against such transparency. Indeed, whereas most states up until now have relied on discretionary executive branch decisions and Attorney General opinions as a justification for secrecy, North Carolina is attempting to statutorily mandate secrecy through bill language that could easily be replicated in states across the country.


    As one example of how that could happen, consider the Wall Street-aligned
    American Legislative Exchange Council. That conservative group works in legislatures all over America and, according to the Center for Media and Democracy, the organization’s economic task force works closely with the trade group representing the banking industry.

    Additionally, North Carolina’s House Speaker Thom Tillis (R) – whose fellow Republicans are backing the secrecy bill – has been both a board member of ALEC and has received large campaign contributions from the financial sector.

    Indeed, data from the Ins ute on Money In State Politics show that 20 percent of his entire campaign fund in 2012 (or more than $345,000) came from the
    Finance, Insurance & Real Estate industries. That is on top of the more than $47,000 he has received from the securities industry in his current run for U.S. Senate.


    ... more

    http://pando.com/2014/06/13/north-ca...lse-its-doing/


    Last edited by boutons_deux; 06-13-2014 at 02:43 PM.

  7. #57
    I am that guy RandomGuy's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Jun 2005
    Post Count
    50,672
    Defined benefit pension plans are abused by politicians to buy public sector votes and kick real costs down the road until they are someone else's problem. I totally support 401K matching as an alternative to public sector defined benefit plans. They are much more transparent and expense the cost in the year they occur. Real employment/contract costs for 2014 should be paid in 2014.
    NOt many defined benefit plans left anywhere.

    Now it is mostly defined contribution plans.

  8. #58
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    401Ks are "transparent"? you can see all fees?

  9. #59
    Veteran Wild Cobra's Avatar
    My Team
    Portland Trailblazers
    Join Date
    May 2007
    Post Count
    43,117
    401Ks are "transparent"? you can see all fees?
    Yes, at least every one I've seen.

  10. #60
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    and when the state pensions try to hold private equity funds accountable, they threaten to cut the states out of the action:

    A new story on private equity secrecy by Mark Maremont at the Wall Street Journal started out with a bombs , that of private equity industry kingpin KKR muscling a public pension fund to deny information requests about KKR’s practices:

    KKR & Co. warned Iowa’s public pension fund against complying with a public-records request for information about fees it paid the buyout firm, saying that doing so risked it being barred from future private-equity investments.
    In an Oct. 28 letter to the Iowa Public Employees’ Retirement System, KKR General Counsel David Sorkin said the data was confidential and exempt from disclosure under Iowa’s open-records law. Releasing it could cause “compe ive harm” to KKR, the letter said, and could prompt private-equity fund managers to bar entree to future deals and “jeopardize [the pension fund’s] access to attractive investment opportunities.”
    http://www.nakedcapitalism.com/2014/...a-request.html

  11. #61
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    So why has industry leader KKR stooped to issue an explicit, thuggish threat? Why are they so threatened as to cudgel an Iowa pension fund into cooperating with KKR and heavily redacting the response? Just as with the Sequoia and Kleiner Perkins case, it’s naked, and not at all defensible self interest.


    Law firm Ropes & Gray, which counts Bain Capital among its clients, issued what amounted to an alarm to its private equity and “alternative investment” clients over an increase in inquiries to public pension funds about the very subject that the SEC had warned about in May, about fee and expense abuses, as well as other serious compliance failures. It’s a not-well-kept-secret that many investors were correctly upset about the SEC’s warnings, and some lodged written inquires with general partners as to what specifically was going on. We’ve embedded an unredacted example of one such letter at end of this post. It was the same one that CalPERS board member JJ Jelincic used to question investment consultants last month because the letter ‘fessed up to an abusive practice called evergreen fees.


    Journalists like Maremont and interested members of the public have written public pension funds to obtain the general partners’ responses to these questionnaires. And this is a matter of public interest, since shortfalls in private equity funds, even minor grifting, is ultimately stealing from beneficiaries, and if the pension fund is underfunded, from taxpayers. Yet notice how Ropes & Gray depicts questions about what are ultimately taxpayer exposures as pesky and unwarranted intrusions...
    same

  12. #62
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    The fact is that the various FOIAs focused on getting at SEC abuses aren’t about protecting valuable industry intelligence, to the extent there really is any in any of their do ents; it’s simply to hide their dirty laundry. The Wall Street Journal story reports how in Washington, Florida, and North Carolina, public pension fund officials have been acceding to private equity fund “concerns” and using strategies ranging from foot-dragging to woefully incomplete disclosure to outright denial to stymie inquiries.

    The interesting thing about KKR’s exposure is that its defensiveness is likely due to how much scrutiny it is getting from the SEC. Maremont earlier exposed how KKR’s captive consulting firm KKR Capstone appeared to be charging undisclosed, hence impermissible fees to KKR funds. KKR has attempted to defend the practice by arguing that KKR Capstone isn’t an affiliate. We debunked that argument here.


    Even though we have criticized the SEC for its apparent inaction on the private equity front, in terms of following through with Wells notices after describing widespread private equity industry malfeasance, we have been told that the agency is in the process of building some major cases against private equity firms. Given how many times KKR’s name has come up in Wall Street Journal, New York Times, and Financial Times stories on dubious private equity industry practices, one has to imagine that KKR would be a likely target for any action that the SEC would consider to be “major”.
    same

  13. #63
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    logical assumption: financial sector STEALING Human-Americans' pensions. guilty until proven innocent.

    and you right-wingers want to kill SS and give those $Ts to Wall St?

  14. #64
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    Thanks to new pension accounting rules put forth by the Governmental Accounting Standards Board (GASB), Kentucky, along with a handful of other plans, has been forced to lower its discount rate -- that is, the rate of return on its investments that it uses to determine the value of its total pension liabilities. The higher the expected rate of return, the lower the amount of funding a government needs to pay into its pension plan. The opposite is true when the rate of return is lowered. For Kentucky, which had to bring its rate down by more than two points to 5.23 percent, the effect was to increase the total liability. With the lower rate for investment performance, the plan will need more money to pay its pension obligations.

    In a Governing analysis of 80 pension plans that had comparable data available, about one-third adjusted their discount rate downward but just nine plans in four states lowered it by more than a half-percentage point. The results for most of those plans were dramatic changes in their total pension liabilities while their assets on hand either improved somewhat or stayed the same.


    Overall, the total liability of the plans reviewed increased an average of only 9 percent, a hike generally attributed to retirees living longer. But some plans saw more dramatic changes. In New Jersey, pension liabilities for the state employee retirement plan increased 55 percent. While the aggregate average plan saw a boost in its funded ratio of 4 percentage points, New Jersey’s funded status fell by nearly one-fifth to 28 percent.
    The discount rate rule, known as GASB 67, is just part of the story. Another piece of the new rule, GASB 68, will hit financial statements starting later this year. Under that new rule, governments that are members of a pension plan -- say, localities that pool their money with a state plan -- are required to report their share of that plan’s unfunded liability on their governmentwide balance sheet for the 2015 fiscal year, something most of those governments have never before had to do. Now most will be adding millions of dollars in liabilities, forcing lawmakers to acknowledge the role pension payments play in their government’s overall financial picture.
    http://www.governing.com/topics/mgmt...orse-soon.html

  15. #65
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    Here's how the plutocrats vote themselves taxpayers' funds for their PENSIONS

    Aaron Schock still gets taxpayer-funded pension

    Rep. Aaron Schock, who announced his resignation today under su ion of misusing public money, will be eligible for more of it in retirement.

    Schock, a Republican from Illinois, could eventually collect hundreds of thousands of dollars in taxpayer-funded retirement benefits, depending on how long he lives.


    Starting at age 62, he will be eligible for just under $18,500 annually, according to estimates by the National Taxpayers Union, a conservative nonprofit organization.


    Douglas Kellogg, a spokesman for the National Taxpayers Union, added that members of Congress are also eligible for a 401(k)-style plan, but it’s unknown whether Schock has chosen to participate in it.


    According to a June report from the Congressional Research Service, members of Congress who have completed at least five years of service are eligible for taxpayer-funded pensions beginning at age 62.


    The amount of a former congressional member’s pension varies, but the payout is based on the number of years of service and an average of the member’s three highest years of salary.

    http://www.publicintegrity.org/2015/...est+Stories%29

    My guess is that nearly every politician run for office as strategy to become (more) wealthy, not to serve America.



  16. #66
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    Elizabeth Warren Exposes How Financial Advisers Exploit Retirees

    Retirees across America look to financial advisers for help in navigating options for smart retirement saving. But there's a scary fact many folks don't know when they entrust their life savings to a broker. According to a report released by Sen. Elizabeth Warren (D-Mass.) last week, many financial advisers promoteinferior financial products to collect kickbacks—from pricey Caribbean vacations to gift cards and golf outings—offered by the companies that sell certain annuities. And what's worse, that practice is totally legal.

    The study, called "Villas, Castles, and Vacations: How Perks and Giveaways Create Conflicts of Interest in the Annuity Industry," points out that loopholes in various rules from the Securities and Exchange Commission, the Financial Industry Regulatory Authority, state insurance departments, and other agencies allow this practice to continue.
    The tainted financial advice costs Americans about $17 billionevery year.

    To get a sense of the prevalence of these perk-induced conflicts of interest, Warren's Senate office wrote to 15 leading annuity providers, asking whether they offered non-cash incentives, including vacation trips, cruises, and dinners, to annuity sales agents for promoting their financial products. Often, agents have to hit multi-million-dollar sales goals to trigger giveaways, so the letter also asked these companies about their protocols for disclosing sales incentives to annuity purchasers. Warren began the investigation in April, a few weeks after the Department of Labor proposed a rule to help curb conflicts of interest in annuity sales.


    None of the companies, says the report, provided complete answers to Warren's questions, but "the responses nonetheless reveal a widespread practice of offering agents kickbacks in exchange for promoting certain annuities…and that such kickbacks are effectively concealed from customers."

    Thirteen of the 15 companies contacted by Warren's office admitted to offering perks either directly to sales agents or indirectly through third-party providers.Some of the top perks included a 30-day trip around the world for two, a week in Bora Bora, a trip to Monte Carlo, and a week in Rome. Beyond vacations, Warren's office heard from companies that they offered items such as iPads, golf outings, jewelry, dinners at expensive restaurants, and sports tickets.


    Here are more examples of the types of perks that companies revealed to Warren's office:


    • In 2015, American Equity offered the top sellers of its products a trip to San Francisco for agents "and their guests." In 2014, the company offered top-selling agents a trip to Disney World. Children of sales agents who had sold an extra $600,000 worth of American Equity products traveled for free.
    • For its agents who sell more than $3.5 million worth of Athene products, the company is offering a 2016 trip to a conference in Aruba, with accommodations at the RitzCarlton.
    • Fidelity Guarantee and Life offered top agents a trip to the company's Power Producer Conference at the Four Seasons Resort in Punta Mita, Mexico.
    • American National offered its top-performing agents and their guests a five-day, four-night stay at the Cove Atlantis on Paradise Island in the Bahamas.


    Existing rules limit non-cash compensation for annuity sales, but these regulations still make it fairly easy to provide kickbacks while staying within the confines of the law, the report found. For instance, companies are allowed to offer expensive vacations when they're tied to sales meetings or conferences. They are also allowed to provide perks via third-party marketing organizations as a way to get around limits on non-cash compensation provided directly to sales agents.

    http://www.motherjones.com/politics/...acks-vacations



  17. #67
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    ongoing kerfuffle at CALPERS over undisclosed fees to managers. $3.4 billion since 1990.

    http://www.wsj.com/articles/calpers-...ers-1448386229

  18. #68
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421

  19. #69
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    Experts on the tax beat have recently been saying, as incredible as it may seem, that the days of the billionaire-creating carried interest loophole are numbered. The release by CalPERS of carry fee information across its portfolio yesterday may well move its sell-by date forward.
    same

  20. #70
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    Mar 2009
    Post Count
    97,514
    calpers 19% gain was reduced to 12% as the fund mangers took 7%, over 33% of the gains.

    then there are the often secret, unquestionable fees.

  21. #71
    Veteran
    My Team
    San Antonio Spurs
    Join Date
    May 2006
    Post Count
    6,202
    Getting back to the original topic: my friend has 28 years in the Florida retirement system. She transferred to the City of Miramar - different retirement system - plans to work for 10 years there - collect 40% of her current salary and then add 2 more years at some low end job (she already has her 5 highest years that the pension is calculated for) to finish up the 30 years in FRS. Will be collecting 2 pensions (1 full) at age 62 till what's the average age for a woman - 88? Some also save up overtime, vacation time, etc and claim at the end (to blow up the salary) when pension is calculated.

    Be careful where you live - e.g. Illinois at 43% liabilities funded is in BIG trouble. Taxpayers will have to cough up.

  22. #72
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    Here’s what U.S. state and city pension funds are getting this year for the hundreds of millions of dollars in fees they’re forking over to hedge funds: almost nothing.


    The investment pools gained 0.4 percent through November, putting them on pace for the worst year since 2011, according to data compiled by Bloomberg. The industry’s struggle was underscored over the past two months as BlackRock Inc., Fortress Investment Group and Bain Capital closed hedge funds after running up losses.


    The low returns are dealing a setback to governments that boosted exposure to hedge funds, seeking windfalls to help close a $1.4 trillion shortfall that’s facing public-employee retirement systems nationwide. The investment funds have underperformed stocks since 2008 as share prices rallied and volatility whipsawed global financial markets.


    “The bull market of the last six years allowed public pension plans to become poor consumers,” said South Carolina Treasurer Curtis Loftis, who has criticized the fees his state has paid firms including hedge funds. “The plans viewed hedge funds as an ‘elite investment’ and therefore neglected to perform strenuous and ongoing due diligence.”
    http://www.bloomberg.com/news/articl...w-for-the-fees

  23. #73
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    thematically related: study shows private equity firms take over 6% of invested equity in hidden fees

    A study just released by Oxford Professor Ludovic Phalippou seeks to identify how much limited partner are paying in fees they don’t see and can’t control, as in the charges private equity firms make to the companies they buy on behalf of investors, the so-called “portfolio companies”. The headlines at the Wall Street Journal and the Financial Times report his study as finding $20 billion in hidden fees, but they fail to emphasize that this study was based on an in-depth examination of 592 companies and 1044 transactions, meaning a subset.


    Remarkably, neither article includes a conclusion in the study’s’ opening paragraph, which is far more arresting (emphasis ours):


    We describe these contracts and find that related fee payments sum up to $20 billion evenly distributed over twenty years, representing over 6% of the equity invested by GPs on behalf of their investors.
    http://www.nakedcapitalism.com/2015/...-invested.html

  24. #74
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    The reason these fees have been opaque to investors is that they are not paid by the private equity fund, but skip the fund’s books entirely by going straight from the investee companies to the general partner. And the arrangements are not set forth in the limited partnership agreements that govern these deals either. Yes, the limited partnership agreements give the general partners the right to make enter into these types of contracts with the portfolio companies, peculiarly without setting any parameters on them. One type of common agreement, so so-called monitoring agreement, routinely calls for companies to pay fees whether any services have been rendered or not. As Phalippou has “translated” these agreements for the benefit of his students:


    I may do some work from time to time

    I do some work, only if I feel like it. Subjective translation: I won’t do anything.

    I’ll get [in this case] at least $30 million a year irrespective of how much I decide to work. Subjective translation: I won’t do anything and get $30 million a year for it.
    If I do decide to do something, I’ll charge you extra.

    I can stop charging when I get out (or not), but if I do I get all the money I was supposed to receive from that point up until 2018.

    This study does represent a meaningful sample. The 592 companies represent a total of $1.1 trillion in value. The fees charged over twenty years was $16 billion; adjusted for inflation, the total comes to $20 billion. And these companies generally were larger than average by virtue of having been reported in SEC filings.
    same

  25. #75
    dangerous floater Winehole23's Avatar
    My Team
    San Antonio Spurs
    Join Date
    Nov 2008
    Post Count
    89,421
    Both the Journal and the Financial Times mentioned a “back of the envelope” calculation using CalPERS data to give a sense of the magnitude of these only partial “hidden fees” compared to carry fees. From the Financial Times:


    Mr Phalippou’s analysis indicated that Calpers paid around $2.6bn in hidden fees on private equity investments made between 1991 and 2014 on top of its $3.4bn bill for carried interest. Around $1.3bn was repaid to Calpers as rebates against annual management fees.

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •