Wells Fargo? When it comes to public employee pension theft, they are small potatoes.


Leon Black heads Apollo Global Management. TRS has hundreds of millions invested in his managed portfolio.

Even with all the attention that Trump and Clinton have been getting these past few weeks, you may have read about the hand-slapping Wells Fargo received for charging customers phony fees to the tune of $2.6 million.

Illinois’ Democratic Treasurer Michael Frerichs was so outraged that he suspended all Illinois business dealings with Wells Fargo.

But $2.6 million is small potatoes compared to Apollo Global Management. In a case quietly settled with the Securities and Exchange Commission, Apollo agreed to return over $40 million in hidden fees charged to customers.

Which customers? Public pension funds, including my Teacher Retirement System pension fund.

$2.6 million compared to $40 million. And barely a peep.

The NY Times Gretchen Morgenson reports on all this today.

Morgenson wonders why Wells Fargo deservedly got so much attention, but nothing about Apollo and other pension portfolio managers.

I asked this of the 13 public pension funds that, like Calpers, had invested at least $100 million in the Apollo VII portfolio. That list included funds benefiting teachers in California, Illinois, Ohio and Texas; public employee retirement systems in Colorado, Florida, Maryland, New York state, Oregon and Wisconsin, and funds benefiting firefighters and police officers in New York City.

Some funds didn’t respond; one declined to comment. And some said they had responded to the S.E.C. case by increasing their demands for fee transparency from Apollo and other investment managers. That’s not enough to move the accountability needle.

Others like Calpers and the California State Teachers’ Retirement System told me they were monitoring the Apollo situation. Fine, but isn’t that their job?

I’ve confirmed that TRS has hundreds of millions of our retirement dolars invested with Apollo.

Investment management firms like Apollo can report good returns on investments while still stealing money with hidden fees.

Writes Morgenson, “In response to my questions, other pension officials said that some ethical flaws were to be expected or that Apollo had been transparent about its fees. ‘Given the size and breadth of our portfolio and our investment manager network, it is likely that there will be occasional lapses,’ Dennis D. MacKee, spokesman for the Florida Board of Administration, said in a statement.”

But the “some ethical flaws” involves retirees’ retirement income source.

5 Replies to “Wells Fargo? When it comes to public employee pension theft, they are small potatoes.”

  1. That was Rauners business as well. Perhaps the GA might invesigate to see if he committed these offences as well. Naked Capitalism has had a great series on these Leveraged Buyouts oufits and their few abuses. I have real concern that it may be worse than that. I am concerned these black boxes may be full of ponzi.

  2. Overall, it can be complicated to compare teacher salaries because of cost-of-living differences; the size, type and affluence of districts; how much experience teachers have; and whether they have post-graduate credits and degrees. For example, educators get significant bumps in pay when they earn master’s degrees.

    In the affluent and top-performing New Trier Township High School District, 96 percent of teachers have master’s degrees. In contrast, 57 percent of CPS teachers have master’s degrees.
    Fred, everyone in my district had their Masters degrees by the time they retired!!! My god if you did not you were leaving a lot of MONEY on the table!!!!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s