Highlights
Ohio Teachers’ Pension Chair Still Considering Deal With Controversial Firm at Center of Scandal
Source:https://ohiocapitaljournal.com/
Rudy Fichtenbaum, the chair of the State Teachers Retirement System (STRS) pension board, is defending himself against bribery and corruption accusations made by Ohio Attorney General Dave Yost. Fichtenbaum is considering a settlement with the investment firm at the center of the controversy. The STRS is currently in turmoil, with board conflicts, resignations, and allegations of corruption and fund mismanagement. Yost’s lawsuit seeks to remove board members Wade Steen and Fichtenbaum, accusing them of participating in a scheme to steer contracts to the investment firm QED, which could benefit them personally.
Key Highlight:
- QED, founded by former Deputy Treasurer Seth Metcalf and consultant Jonathan Tremmel in 2020, sought to partner with the State Teachers Retirement System (STRS) despite lacking clients, experience, and registration as a broker-dealer or investment adviser. The firm struggled to impress STRS board members and did not have the necessary technology. Ohio Attorney General Dave Yost’s case against board members Wade Steen and Rudy Fichtenbaum alleges that they breached their fiduciary duties by promoting QED and colluding with the firm, warranting their removal from the board.
- The conflict at the State Teachers Retirement System (STRS) stems from a debate over investment strategies: whether to use actively managed funds, which aim to outperform the market but cost more, or switch to index funds, which are less expensive and align with market performance.
- Reformers, who now hold a majority on the board, advocate for index funds and the reinstatement of cost-of-living adjustments (COLAs) for retirees. COLAs were suspended for five years starting in 2017, and while they have been partially reinstated, increases remain suspended, impacting retirees amid inflation. The reformers view the current investigation as an attempt to undermine their decisions and prevent democratic control over pension investments.
- Steen and Fichtenbaum have criticized the rapid pace at which Ohio Attorney General Dave Yost moved from receiving a memo to filing a civil suit. The documents were received by officials in early May, Yost began investigating on May 9, and a lawsuit was filed by May 14. In late August, Yost issued subpoenas against QED and others involved. QED has only recently publicly responded to the situation.
Image Source:https://ohiocapitaljournal.com/
