RALEIGH, N.C. -- The State Employees Association of North Carolina has enlisted an independent, nationally known expert in retirement system forensics, Edward Siedle, to conduct a comprehensive review of the $83 billion Teachers’ and State Employees’ Retirement System for conflicts of interest related to TSERS investments and potential violations of the federal securities laws.

SEANC’s action comes on the heels of a $1 million “placement agent” report requested and issued by the state Treasurer Janet Cowell which focused on secret payments to intermediaries who helped secure retirement fund business — referred to as “pay to play” by the Securities and Exchange Commission — during former Treasurer Richard Moore’s administration. Given the improprieties found in the treasurer’s report, SEANC wants to learn more and broaden its review of TSERS through the present.

The retirement systems’ investment practices have been a concern of SEANC’s for years. SEANC Executive Director Dana Cope explains, “We believe the wolves of Wall Street are at our door and knocking. Given the treasurer’s expanded alternative investments authority that bleeds money in fees, we’re not going to wait until our retirement system is in near collapse like a Rhode Island or South Carolina to find out answers to pressing concerns about the state’s retirement system. SEANC will be proactive in our commitment to retirement security for the state’s public servants and the people of North Carolina.”

The investigation, conducted by Siedle’s firm Benchmark Financial Services Inc., will focus on TSERS:

• Conflicts of interest related to investments
• Total fees paid to investment managers and related expenses
• Disclosure practices related to investments, including disclosure of investment fees, expenses and risks
• Heightened risks related to non-traditional investments, including valuation and liquidity concerns
• Use of disclosed and undisclosed registered and unregistered placement agents in connection with investments
• Potential violations of federal securities laws

Siedle is a former attorney with the Securities and Exchange Commission and has pioneered forensic investigations in the money management industry, involving over $2 trillion in assets. He has testified before Congress and served as an expert on mutual fund scandals like the Bernie Madoff trial and others. He also writes a Financial Watchdog column for Forbes and contributes to other national media outlets regarding his investigations.

His recent investigation of the $8 billion Rhode Island retirement system uncovered what amounts to a “license to steal” for Wall Street hedge fund managers, who take exorbitant fees and make mystery investments at the expense of workers who are counting on the fund to finance their retirement as well as taxpayers who are stuck footing the bill when it is mismanaged.

Last year, despite SEANC’s strong opposition, the General Assembly granted the state treasurer the ability to gamble with even more of the fund in so-called “alternative investments,” risky ventures such as hedge funds and real estate that often come with very high fees from Wall Street managers. Since 2000, the General Assembly has allowed investments in alternatives to grow from 5 to 34 percent of the retirement system and has no positive growth to show for it, while wasting millions of dollars on fees.

SEANC has long advocated for a move away from a sole fiduciary system, wherein North Carolina’s State Treasurer has the lone authority to invest the more than $83 billion in state employees’ retirement system. North Carolina is one of only four states in the country that have such a system.

“That is more money than the General Assembly or even the governor controls,” Cope said. “It’s far too much money to be trusted in the hands of one person, no matter who that person is.”

SEANC hopes to move investment decisions out of the hands of one person and into a board system similar to that of the State Health Plan Board of Trustees, a group of stakeholders who decide the direction for the plan.