SC

Curtis Loftis Finds $106M In Undisclosed Fees

South Carolina Treasurer Curtis Loftis is asking the S.C. Retirement System Investment Commission (SCRSIC) to disclose $106 million in previously unreported fees paid out to consultants of the state’s underperforming $26 billion pension fund. The fees would bring the fund’s 2012 expense total to more than $400 million – one…

South Carolina Treasurer Curtis Loftis is asking the S.C. Retirement System Investment Commission (SCRSIC) to disclose $106 million in previously unreported fees paid out to consultants of the state’s underperforming $26 billion pension fund.

The fees would bring the fund’s 2012 expense total to more than $400 million – one of the highest expense percentages in the nation.

“These fees are a hidden drag on public pension plans in South Carolina and around the country,” Loftis said in a statement. “Transparency is the only way to ensure that the money contributed by taxpayers and public service employees is effectively managed.”

Indeed … also reducing these exorbitant fees would go a long way toward improving the performance of South Carolina’s fund, which consistently ranks among the bottom third of public pension funds nationwide. It would also help scale back the rampant corruption of the fund’s managers, chiefly its leader Reynolds Williams.

While you’d think higher returns, lower fees and less corruption would be things everybody could get on board with, you’d be forgetting that this is South Carolina. In fact just last week, S.C. Gov. Nikki Haley’s appointee to the pension fund investment panel introduced a censure measure against Loftis.

Loftis’ “crime?” Having the audacity to hold his fellow fund managers accountable for their performance …

Haley has spoken out against the censure resolution, but she has yet to remove her appointee from the commission. The one-time transparency advocate has also failed to lift a finger to help Loftis in his efforts to pull back the curtain on the SCRSIC’s corruption.

In fact this time a year ago she was busy helping its leaders in their bid to stick a knife in Loftis’ back …

***

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42 comments

Thomas March 4, 2013 at 6:18 pm

The SC Retirement System has no right to gamble with our money in derivatives! Better look around, central banks are purchasing gold, building up to 15% reserves across the globe! Gold is going to shoot to the moon in 4 weeks then settle down as a Tier 1 asset. These people are going to lose everything playing in derivatives. Get gold, when the market corrects, get back into equities. Do not look for more tax increases to bail out the retirement system after losing everything in alternative investments aka derivatives!

Keep on keeping on Loftis of America!

Reply
Thomas March 4, 2013 at 6:18 pm

The SC Retirement System has no right to gamble with our money in derivatives! Better look around, central banks are purchasing gold, building up to 15% reserves across the globe! Gold is going to shoot to the moon in 4 weeks then settle down as a Tier 1 asset. These people are going to lose everything playing in derivatives. Get gold, when the market corrects, get back into equities. Do not look for more tax increases to bail out the retirement system after losing everything in alternative investments aka derivatives!

Keep on keeping on Loftis of America!

Reply
Teddy March 4, 2013 at 6:45 pm

Need to make sure all the hedge fund mgrs have enough money to fuel their helicopters they ride to work. God orbid they have to get driven to work in a limo!

Reply
Teddy March 4, 2013 at 6:45 pm

Need to make sure all the hedge fund mgrs have enough money to fuel their helicopters they ride to work. God orbid they have to get driven to work in a limo!

Reply
James March 4, 2013 at 7:00 pm

I worked in the hedge fund world for 10 years. Loftis is understanting the amount of the fees. he should add another 25 million!

Reply
James March 4, 2013 at 7:00 pm

I worked in the hedge fund world for 10 years. Loftis is understanting the amount of the fees. he should add another 25 million!

Reply
Ron March 4, 2013 at 7:05 pm

These fools actually think Loftis will give up? The man is on a mission. Just because gasoline is a liquid don’t mean it puts out fires. Thank you, Reynolds!

Reply
Ron March 4, 2013 at 7:05 pm

These fools actually think Loftis will give up? The man is on a mission. Just because gasoline is a liquid don’t mean it puts out fires. Thank you, Reynolds!

Reply
Cash2 March 4, 2013 at 7:07 pm

Count all the fees. Every penny. I know exactly what I spend in my business and without that I would be lost.

Reply
Barry March 4, 2013 at 7:07 pm

I wonder….with all these conservative politicians touting the need for “pension reform” why is it that Loftis is the only one acting? Much like medicaid and unemployment insurance….lets fix the fraud first. Shocking idea, I know.

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GOP'er March 4, 2013 at 7:36 pm

Agreed.

Reply
Cash2 March 4, 2013 at 7:07 pm

Count all the fees. Every penny. I know exactly what I spend in my business and without that I would be lost.

Reply
Barry March 4, 2013 at 7:07 pm

I wonder….with all these conservative politicians touting the need for “pension reform” why is it that Loftis is the only one acting? Much like medicaid and unemployment insurance….lets fix the fraud first. Shocking idea, I know.

Reply
GOP'er March 4, 2013 at 7:36 pm

Agreed.

Reply
Cash2 March 4, 2013 at 7:12 pm

Smart investors understand the best way to create alpha is to lessen fees. SC Investment Commission ought to take a page from Sorros and Buffett and lose the fees and increase earnings.

Reply
Phil March 4, 2013 at 8:57 pm

That is a hell of a lot of fees. I just read an article about this and some fund of funds have embedded fees of up to 7%. I suspect larger investors get a better deal than retail.

Do state employees have to be in the retirement system?

Reply
Cash2 March 4, 2013 at 7:12 pm

Smart investors understand the best way to create alpha is to lessen fees. SC Investment Commission ought to take a page from Sorros and Buffett and lose the fees and increase earnings.

Reply
Phil March 4, 2013 at 8:57 pm

That is a hell of a lot of fees. I just read an article about this and some fund of funds have embedded fees of up to 7%. I suspect larger investors get a better deal than retail.

Do state employees have to be in the retirement system?

Reply
Gerry March 4, 2013 at 7:19 pm

What would you get if you crossed a boat full of drunken sailors with some old white geezers investing others people’s money?

The Investment Commission. But no parrots, the hedge fund managers took them.

Reply
Gerry March 4, 2013 at 7:19 pm

What would you get if you crossed a boat full of drunken sailors with some old white geezers investing others people’s money?

The Investment Commission. But no parrots, the hedge fund managers took them.

Reply
Charles March 4, 2013 at 7:34 pm

Mr. LOFTIS is a tenacious guy. I like that. I wish him well.

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Charles March 4, 2013 at 7:34 pm

Mr. LOFTIS is a tenacious guy. I like that. I wish him well.

Reply
CorruptionInColumbia March 4, 2013 at 8:28 pm

Mr Loftis, please just keep doing what you are doing! Expose these crooks at every possible opportunity!!!! If the loot they are stealing from state retirees could be returned to the fund or at least cut back, maybe the retirees could get a much-needed increase in benefits.

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CorruptionInColumbia March 4, 2013 at 8:28 pm

Mr Loftis, please just keep doing what you are doing! Expose these crooks at every possible opportunity!!!! If the loot they are stealing from state retirees could be returned to the fund or at least cut back, maybe the retirees could get a much-needed increase in benefits.

Reply
William March 4, 2013 at 8:39 pm

These fees are known throughout the industry. But never spoken about above a whisper. I have never seen a public official call for their disclosure. Hope Loftis has adequate protection as he is calling for disclosure of hundreds of billions in fees. Wall Street ain’t going to be happy

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William March 4, 2013 at 8:39 pm

These fees are known throughout the industry. But never spoken about above a whisper. I have never seen a public official call for their disclosure. Hope Loftis has adequate protection as he is calling for disclosure of hundreds of billions in fees. Wall Street ain’t going to be happy

Reply
James Fleming Jr March 4, 2013 at 8:52 pm

These appointees are like those that appoint them. They fill their own pockets first and foremost. Our state government is no different than the Mafia or a Union!

Reply
James Fleming Jr March 4, 2013 at 8:52 pm

These appointees are like those that appoint them. They fill their own pockets first and foremost. Our state government is no different than the Mafia or a Union!

Reply
FedUp March 4, 2013 at 11:51 pm

And the legislature decided to increase their salaries by $20,000 last year?! How bad to I have to screw up to get that kind of raise? Curtis needs to clean house.

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FedUp March 4, 2013 at 11:51 pm

And the legislature decided to increase their salaries by $20,000 last year?! How bad to I have to screw up to get that kind of raise? Curtis needs to clean house.

Reply
dm10ae March 5, 2013 at 5:03 am

Thanks Mr Loftis. $400 million in fees is way off IMO for losing billions. If it had earned what it had lost, $400 million would be ok.

Reply
Scooter March 5, 2013 at 10:25 pm

Diogenes could walk the streets of Columbia for the next ten years and never find an honest

politician. These bastards should have their hands cut off–to start with.

Reply
dm10ae March 5, 2013 at 5:03 am

Thanks Mr Loftis. $400 million in fees is way off IMO for losing billions. If it had earned what it had lost, $400 million would be ok.

Reply
Scooter March 5, 2013 at 10:25 pm

Diogenes could walk the streets of Columbia for the next ten years and never find an honest

politician. These bastards should have their hands cut off–to start with.

Reply
Philip Branton March 5, 2013 at 10:42 am

Classic move….just classic…..we may call it the “Curtis Loftis counter stunt”….!!

Reply
Philip Branton March 5, 2013 at 10:42 am

Classic move….just classic…..we may call it the “Curtis Loftis counter stunt”….!!

Reply
saltydoggerel March 5, 2013 at 4:12 pm

Not since M. Luther nailed theses
Have big shots stepped into more feces.
For the Curt Loftis censure
Has become an adventure
In pulling accounting to pieces.

CFAs, CIOs on a ledge,
Joined by mystical funders of hedge,
Will be tempted to jump,
With a nudge to the rump,
If they do not take Loftis’s pledge.

Those who finesse with such ease
SC taxpayers and retirees
Are doomed to disgrace,
And a slap on the face,
For dunning the public with fees.

Reply
saltydoggerel March 5, 2013 at 4:12 pm

Not since M. Luther nailed theses
Have big shots stepped into more feces.
For the Curt Loftis censure
Has become an adventure
In pulling accounting to pieces.

CFAs, CIOs on a ledge,
Joined by mystical funders of hedge,
Will be tempted to jump,
With a nudge to the rump,
If they do not take Loftis’s pledge.

Those who finesse with such ease
SC taxpayers and retirees
Are doomed to disgrace,
And a slap on the face,
For dunning the public with fees.

Reply
Pensionguy March 6, 2013 at 12:31 pm

I work for a peer state pension fund. We are very well run and very well funded. The problem you guys have in SC is you don’t want to hire a staff to do the work of investing the pension so you hire consultants to tell you what to do. This is how conservative governments prevent “government waste”. Managing money is exensive because it is hard. South carolina paid hundreds of millions of dollars in fees to these managers to earn them a return. What if south carolina brought all that managment in house? THey would have to pay someone millions of dollars to run it but you would save hundreds of millions of dollars. But you people on this chain would not like that either because you would be pissed that a government employee is making millions of dollars. Guess what people you can’t pay someone 100k to look after $25B and expect to get a return. Look at the canadian pensions. THey pay market rates and do everything in house. You guys have no option in South Carolina except to pay fees. And for the idiot down below who thinks alternatives is “risky derivatives” I’m curious on his financial training. If he knows what a derivative is or alternative investment. If he is aware that alternatives outperformed the equity market in 2008. I am guessing he knows none of the above.

Reply
CFO March 8, 2013 at 8:28 am

To manage money in house one must insure that there is an appropriate back and middle office, a well trained audit team and a very good compliance team. The SCRS, according to several outside audit firms and their own writings, do not have that. SCRS cannot make that “shift” until they have earned that privilege.

Reply
Pensionguy March 6, 2013 at 12:31 pm

I work for a peer state pension fund. We are very well run and very well funded. The problem you guys have in SC is you don’t want to hire a staff to do the work of investing the pension so you hire consultants to tell you what to do. This is how conservative governments prevent “government waste”. Managing money is exensive because it is hard. South carolina paid hundreds of millions of dollars in fees to these managers to earn them a return. What if south carolina brought all that managment in house? THey would have to pay someone millions of dollars to run it but you would save hundreds of millions of dollars. But you people on this chain would not like that either because you would be pissed that a government employee is making millions of dollars. Guess what people you can’t pay someone 100k to look after $25B and expect to get a return. Look at the canadian pensions. THey pay market rates and do everything in house. You guys have no option in South Carolina except to pay fees. And for the idiot down below who thinks alternatives is “risky derivatives” I’m curious on his financial training. If he knows what a derivative is or alternative investment. If he is aware that alternatives outperformed the equity market in 2008. I am guessing he knows none of the above.

Reply
CFO March 8, 2013 at 8:28 am

To manage money in house one must insure that there is an appropriate back and middle office, a well trained audit team and a very good compliance team. The SCRS, according to several outside audit firms and their own writings, do not have that. SCRS cannot make that “shift” until they have earned that privilege.

Reply

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