Special Audit Raises Questions about Placement Agents
Bowling Green, KY – State Auditor Crit Luallen says the new audit found no evidence of conflicts of interest that benefitted Kentucky Retirement System officials, but several "troubling aspects" were found regarding the use of placement agents. The State Auditor is referring several audit points to the U-S Securities and Exchange Commission, which has the authority to determine whether further investigation is needed.
The new audit found that one placement agent, in particular, had an unusually close working relationship with the former Chief Investment Officer at KRS and received a high percentage of the investment contracts. The audit estimates that individual could earn a minimum of 1.3 million dollars in fees from KRS investments he handled.
The State Auditor is also emphasizing the importance of providing adequate state funding to the retirement system. She says future legislators and governors in Kentucky will need to continue to increase employer contributions over the next fifteen years to fully fund the retirement system's obligations.