These are tense days at the Pennsylvania State Employees Retirement System, where the fund’s chief investment officer has left following allegations of wrongdoing, and state Treasurer Rob McCord has called for the removal of the board’s chairman, Nick Maiale.I’ve known Maiale as a former legislator and Philadelphia Democratic ward leader for years, but didn’t realize until I read about the current controversy that he chairs SERS, which manages $25 billion in pension funds. Maiale is one of those guys who flies under the media radar, but, it turns out, wields some serious clout.
In fact, he’s chaired the SERS board for 22 years. First appointed by Gov. Bob Casey, he was left in place by Govs. Tom Ridge, Ed Rendell and now Tom Corbett. Maiale gave up the leadership of the 48th Ward in South Philadelphia in 2010, but is a lawyer and maintains an lobbying practice, showing up in City Council when a client needs somebody who knows somebody.
When I say Maiale flies under the media radar, I don’t mean that he hides from reporters. He returned my call quickly about the state pension fund flap, and was happy to talk on the record.
Maiale said he thought the former investment officer, Anthony Clark, “did a fine job.” He said McCord’s complaints are rooted in the fact that Clark “didn’t take direction” from the treasurer, who sits on the SERS board, and in McCord’s need to “grab headlines” in his campaign for governor.
More to come
I can’t claim to have sorted all this out, but the Inquirer has reported that an unnamed employee at SERS has charged that Clark engaged in private day trading while on the job and withheld information from the board about a pension fund investment that went bad.
In a letter McCord wrote to Corbett, he said the allegations of the SERS employee about its investment practices were “both troubling and broad. These charges not only implicate SERS’ Chief Investment Officer, but also explicitly include the Chairman of the Board and the process by which investment opportunities are identified and vetted, and also the veracity with which they are presented to the Board for approval.”
As for Maiale’s charge that McCord is just a gubernatorial candidate trying to get attention, McCord says he’s been raising issues about SERS practices for quite a while. In this release from January, McCord complains of investment strategies that are “fee-heavy and lacking in transparency.”
Maiale told me the fund’s returns through October was “13.3 (percent), net of fees,” despite the controversial investment in the Tiger hedge fund that actually lost money. It’s a big market, Maiale says, and not everything works.
I saw Gov. Corbett over the weekend and asked him about McCord’s suggestion that he replace Maiale.
“I don’t know the facts,” he told me. “You have to find out what the facts are first.” He said that’s “being done.” That’s being done by, among others, the law firm of Stradley Ronon, which the Corbett administration engaged, and State Attorney General Kathleen Kane.