Firefighter pension issues debated

The Longboat Key Firefighters Pension Board must decide whether to take action against investment consultant Morgan Stanley Smith Barney, which pension investigator Edward Siedle targeted in his forensic investigation.

But at a special pension board meeting Friday, May 13, Morgan Stanley representatives refuted statements from Siedle, the president of Benchmark Financial Services, and the claims made in his report that state the company may have breached its contract with the pension board.

The main discovery of Siedle’s report, which was outlined in a preliminary report last month, refers to a $209,000 payment made to Morgan Stanley that Siedle doesn’t believe was properly disclosed and investigated in 2004, even though the pension board’s attorney, Robert Sugarman, brought the matter up at that time.

Siedle made several recommendations regarding Morgan Stanley and said the board needs to determine whether Morgan Stanley is in compliance with its transaction agreements. He also said the board needs to amend its investment policy and appoint a compliance officer to regularly monitor the plan.

“A preliminary review revealed longstanding conflicts of interest involving the investment manager,” said Siedle, who said that his firm uncovered significant compliance issues related to services provided by the fund. “To determine losses to the fund, one would have to look at each and every trade (made by Morgan Stanley). You may have been in non-compliance for over a decade.”

Siedle noted that if Morgan Stanley violated its contract by making improper trades, then the pension board would be entitled to recoup the fees paid to Morgan Stanley.

Siedle said the pension board has paid approximately $560,000 to Morgan Stanley over the years for its services.

Siedle, however, did point out that his investigation found no fiduciary breaches made over the years by the actuaries, town officials or past and present pension board members.

Pension board member Gerald Feder, however, questioned whether there was anything to recoup.
“We can insist on documents and go through each and every transaction, but from what you have seen here, what’s the likelihood of there being large recoveries on the performance side?” Feder asked Siedle.
Siedle said he didn’t know.

“The issues are performance and compliance, with the compliance issue to me being the most disturbing,” Siedle said.

Morgan Stanley attorney Allison Patton, however, refuted Siedle’s report and his comments to the board.
“Frankly, we are troubled by Mr. Siedle’s actions,” said Patten, who said that there was no improper trading or improper commissions made by Morgan Stanley. Patten presented documents to the board to backup her claims.

At its quarterly pension meeting Wednesday, May 25, the board will discuss the report further and also hear from Sugarman, who was cited in Siedle’s report for possibly being a conflict of interest because his firm is already involved with a class action lawsuit involving Florida public funds.

Contact Kurt Schultheis at [email protected].