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From the staff of the Tampa Bay Times

Florida pension funds take $30 million hit as big banks profit

22

September

Florida's giant pension fund took a $30 million hit from 2001-2010 because of lax oversight by a state agency and questionable trading practices by two large banks hired to safeguard the fund, records show.

A Florida lawsuit accusing one of the banks of shortchanging the state's pension fund was filed last month, and similar cases have been filed in California and Virginia.

"What we are seeing across the country is evidence that these big banks took pension funds for a ride, hiding exorbitant mark-ups from them and pocketing billions of dollars in unearned profits in the process," said financial fraud investigator Harry Markopolos, who is helping to build the case against the banks.

Hundreds of pages of documents, obtained by the St. Petersburg Times through a public records request, raise questions about the high price of some foreign trading activities. But they also point to inadequate monitoring by the State Board of Administration, which oversees $145 billion in Florida pensions and public funds.

Bank of New York Mellon Corp. and Boston-based State Street Corp. deny wrongdoing and say the new reports are flawed.

But Markopolos, who helped expose Bernard Madoff's financial scheme, sees banks handling billions of dollars in retirement money as the next big scam.

"At a time when pension funds are losing billions of dollars in value for their retirees because of the staggering economy ... the banks they put their trust in cost them billions more through their deceptive acts,'' Markopolos said in an e-mail to the Times.

Story here.

[Last modified: Thursday, September 22, 2011 5:40pm]

    

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