LPs

State treasurers to call on SEC to push for more PE transparency

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  • New York State, NYC, California Treasurer among signatories
  • “Too often public pension funds pay outrageous fees,” says SC treasurer
  • Timing of release “serendipitous” with issues at CalSTRS, CalPERS

The letter will address public pensions’ ability to track asset valuations, the reporting of profits, waterfall distributions, and other issues, said Wyoming Treasurer Mark Gordon. The letter is expected to be made public on Tuesday night or on Wednesday, July 22.

Update: Read the letter here.

Besides Gordon, signatories include: California State Treasurer John Chiang, Rhode Island General Treasurer Seth Magaziner, Nebraska Treasurer Don Stenberg, District of Columbia Treasurer Jeffrey Barnette, New York State Comptroller Thomas DiNapoli, Virginia Treasurer Manju Ganeriwala, Vermont Treasurer Beth Pearce, New York City Comptroller Scott Stringer, Oregon Treasurer Ted Wheeler, Missouri Treasurer Clint Zweifel, and South Carolina Treasurer Curtis Loftis.

South Carolina’s Loftis said in a statement emailed to Buyouts: “Working people have the right to know what their pension funds are paying Wall Street for investment services. Too often public pension funds pay outrageous fees and expenses that rob the funds of the ability to pay retirement benefits. Standardization of fees and an increase in pension fund transparency is long overdue.”

Other signatories were unavailable for comment. The SEC was not available for comment at press time.

The SEC has zeroed in on private equity managers’ use of fees and expenses over the last year and a half, and recently fined Kohlberg Kravis Roberts & Co more than $30 million for misallocating co-investors’ broken deal expenses to its flagship fund.

The letter comes as the California Public Employees’ Retirement System and the California State Teachers’ Retirement System recently came under fire for failing to track the amount of carried interest accrued by their private equity fund managers.

However, Wyoming’s Gordon noted that CalPERS and CalSTRS did not prompt the letter. The letter was “independently generated” and was the result of a coalition of Treasurers discussing transparency issues for more than a year, he said.