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Florida pension managers at the State Board of Administration have required four alternative investment firms to comply with the public records law and disclose fees paid to middlemen in response to this Watchdog City Press reporter’s public records requests.
Also, Florida pension managers turned over 16 years worth of cash flow information to this Watchdog City Press reporter, a cache of data pension managers held up for more than six months after this reporter’s initial public records request in October.
After more than four months of waiting for records the state said would be forthcoming for free, Florida pension managers sought to assess more than $1,000 in fees for 16 years worth of cash distribution data. Pension managers turned over the information for free after this Watchdog City Press reporter appealed for assistance to Gov. Rick Scott, Attorney General Pam Bondi, Chief Financial Officer Jeff Atwater, the Attorney General’s Office of Open Government and the non-profit advocacy group, the First Amendment Foundation. Scott, Bondi and Atwater serve as trustees over the Florida Retirement System’s traditional pension fund. Scott, who campaigned on more transparency at the Florida pension fund, said in April that he would discuss the public records dispute with SBA Executive Director Ash Williams.
SBA pension managers maintain that some requested information must remain off limits, even though, going forward, it is open to the public.
In response to this Watchdog City Press reporter’s public records request, 29 investment firms sought to black out and redact fees paid to middlemen and deemed them “confidential proprietary business information.” The documents filed by all but four of these firms are grandfathered, and the middlemen fees can be kept confidential, Florida pension managers assert.
Florida lawmakers amended a 2006 secrecy law and opened public records in 2011 that describe fees paid to those soliciting pension fund business.
Florida pension officials, in a May 8, 2013 letter, said the agency maintains that redacted documents filed before the 2011 amendment of the law are allowed to be kept confidential by firms seeking the redactions.
“Florida case law has held that an amendment to a statute eliminating the exempt status of certain records applies prospectively unless there is a specific retroactive application stated in the law,” SBA Director of Communications Dennis MacKee states in the letter.
Florida pension managers originally allowed any firm seeking to redact and black out middlemen fees to do so and turned those documents over to this reporter over a period of three months.
The fees and disclosure of these deals are the focus of federal investigations in other states where the use of middlemen has come under fire as part of pay-to-play public corruption scandals in which public officials have been accused of taking gifts and bribes from middlemen to steer pension business to certain funds. Florida began requiring firms to file disclosure forms on fees paid to middlemen in 2009 in response to scandals in California and New York. And these disclosure forms are part of what this Watchdog City Press reporter requested in October.
The Securities and Exchange Commission is more broadly looking at whether private equity and hedge funds are ripping off pension funds and other investors on fees, conflicts of interest and bogus accounting.
As reported in the on-going series “Secret Deals, Public Money,” scant information is open to the public about alternative investments, including private equity and hedge fund investments that don’t trade on a public stock exchange.
A 2006 secrecy law passed by Florida lawmakers makes vast amounts of information about alternative investments closed to the public. Public records that can be shielded from the public and deemed secret by law include prospectuses, audits and marketing material used to pitch pension fund investment managers on these alternative investments that are considered highly risky. A public records request made by this reporter on Oct. 23, 2012, sought only information that is specifically deemed public record under the 2006 law, Florida Statute 215.4401 (7).
This reporter is still seeking access to public records that disclose the identities of principals of the funds that received public money which is public record under F.S. 215.4401 (7)(a.)
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