Issue Position: Retirement System Investment Commission

Issue Position

Reveled that:

That Chairman Reynolds Williams was warned by the SC Ethics Commission that the "appearance of impropriety does exist" in relation to his behavior in the American Timberlands Investment.

$773 million of investment fees and expenses were unreported in audited statements for FY2010, 11, 12;

$427.5 million a FY2013 paid in investment fees and expenses to Wall Street;

RSIC pays the highest investment fees and expenses in the nation (on % basis);

Routinely rank in the bottom 20% in investment performance;

$1.3 billion in unachieved returns due to below average investment returns over three years;

Staff compensation ranks in the 10% nationally despite bottom 20% investment performance;

$1.4 million in bonuses awarded to 14 staff;

Former CEO/CIO travel to Bermuda on private jets provided by money manager who does business with RSIC.

Because of those facts revealed to the public, these changes have been made:

Financial Statements now in compliance with GAAP (concerning fees).

Began dissolving expensive and unneeded investment structures..

Implemented a formal investment approval process.

Emphasis placed on ethics, conflicts of interest and sourcing of investments.

Implemented insider trading and gifts policy

Two reviews of internal controls and risk have been performed.

Development of the operational due diligence program.

Implemented initial due diligence guidelines.

Implemented formal ongoing due diligence guidelines.

Implemented an internal audit function.

Hired internal auditor.

Now has functioning internal audit committee.

Hired compliance officer.

Implemented Whistle Blower policy.

Created Valuation Policies and Procedures committee jointly with PEBA.

Percentage of assets in BNY custody have increased from 30% to 39%

Nondisclosure agreement signed that allows STO staff and others to review confidential documents.

Reduction in allocation to alternative investments.

Moving to more passive, less active management.

Renegotiating agreements with investment managers

Moving from expensive fund of funds to direct investments

Increased emphasis on management, control and reporting.

Hired new CIO.

Hired new general consultant.

Established a 30-day review period for Commissioner's to review an investment contract prior to execution.

B&CB, Attorney General, outside counsel, Inspector General and the Supreme Court all affirmed the Treasurer's right to full and unfettered access to investment documents.

Prevented a $71,000 bonus to former CEO/CIO for one day of work.

Retained seat as Commissioner by a 36-8 vote in the Senate.

Source