October 6, 2009
As the Secretary to and a Member of the Erie County Employees' and the Pleasant Ridge Manor Employees' Pension Fund Boards, I strongly support the rule amendments which would end "pay to play" practices by investment advisors.
Over the last five years I have seen what I consider to be numerous abuses of influence which have cost the both of these funds money due to the fact that Board members solicit and receive political contributions for themselves and others from money managers involved with the two pension funds. I have served as a Board member and Secretary to these two funds while at the same time serving as the elected County Controller. I have never solicited or accepted contributions from money managers dealing with our fund during my term of elected office. I feel that is wrong.
I have seen money managers awarded contracts with our fund which involved payments to individuals who served as middlemen, creating needless expense for the fund. These middlemen were political contributors to the campaigns of board members who voted to contract for money management services with the companies who paid them as middlemen.
It has gotten so corrupt that certain Retirement Board officials have even maced the money managers for political contributions not only for themselves, but for people who don't sit on the Retirement Board. One Board member who was running for Congress even maced our money managers for contributions to his Congressional campaign, which he lost. Had he won, the money managers he was macing would not even have received any business from him in that position. But they knew that if he won, he would still be on the County's retirement Board for a few months until he took office and could make decisions benefiting them. They also knew that if he lost, he would remain a County Retirement Board member and could make decisions benefiting them.
There is a cost to all this, because the money managers are expending funds and these must be recouped. In the end, everyone pays higher fees due to the "pay to play" practice.
I have attempted to get our Retirement Board members to voluntarily pass such a rule, but met with concrete resistance. Every one of them is an elected official, with the exception of one, who is the designee of an elected official and votes as that elected official wishes, because he is an at-will employee of the official.
Quite honestly, I think the financial advisors themselves would be elated if this rule change became a reality. They must be tired of being maced.
If you have a public hearing on this rule amendment, I would like to participate.