SEC Whistleblower Complaint Filed Against Ohio Teachers State Pension

Federal and state securities regulators, as well as the State Auditor of Ohio, have all been advised of potential violations of law involving $90 billion in teacher retirement assets.

SEC has been reluctant to pursue potential violations of the federal securities laws involving state and local government pensions due to “politicization” of the investment process.

In June, 2021, I completed a forensic investigation of the $90 billion State Teachers Retirement System of Ohio, commissioned by Ohio Retirement for Teachers Association. Among the key findings were:

STRS has long abandoned transparency; legislative oversight of the pension has utterly failed; Wall Street has been permitted to pocket lavish fees without scrutiny; investment costs and performance may have been misrepresented; and failure to monitor conflicts may have undermined the integrity of the investment process, as billions that could have been used to pay retirement benefits promised to teachers have been squandered.

A copy of my damning report entitled, The High Cost of Secrecy was provided to the State Auditor of Ohio, as well as the Ohio Securities Division.

Months later, in October 2021, Ohio State Auditor Keith Faber informed STRS that his office was launching a Special Audit of the pension after receiving numerous complaints, following the release of the findings of the forensic investigation commissioned by Ohio Retired Teachers Association. For reasons that could only be political, the investigation by Faber’s staff took over a year to complete. The findings the State Auditor finally released were superficial—which was no suprise since his office admittedly had no expertise in pension matters. Most helpful, Faber agreed the pension should comply with state public records laws and embrace transparency after decades of growing secrecy. Hostility in the face of mounting public scrutiny had become STRS’ modus operandi. Faber also calculated that the pension would be twice as big ($180 billion vs. $90 billion) had it been prudently managed over the years.

I also filed a whistleblower complaint which included, but was not limited to, my forensic findings with the U.S. Securities and Exchange Commission’s Office of the Whistleblower. In my complaint, I provided additional details which would be helpful to the Commission’s staff in investigating potential violations of law I had identified.

The SEC has been reluctant to pursue potential violations of the federal securites laws involving state and local government penisons due to, what I refer to in my book Who Stole My Pension?, as “politicization of the investment process.”

In other words, since investments at public pensions are largely determined by state and local politicians—as opposed to based upon the merits of the particular options—any investigation of public pensions will almost certainly involve political influence-peddling or pay-to-play by Wall Street.

The SEC does not want to get mired in state and local politics.

Nevertheless, given the longstanding potential violations I have identified which impact trillions in public pensions nationally, I am hopeful the SEC will do its job and investigate the concerns of tens of thousands of retired and active teachers participating in STRS Ohio and beyond.