“Wholly Inadequate,” Says Lawyer of Response From Diossa on Request for Pension Fund Info
Friday, February 17, 2023
The response from Rhode Island General Treasurer James Diossa’s office related to an Access for Public Records Act (APRA) request for the state’s agreements with pension fund investment managers has been deemed “wholly inadequate,” according to the lawyer who filed the request.
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Terry Mutchler sent the APRA on January 20, seeking the prospectus and private placement memo, non-disclosure agreements and side letter and investment manager agreements pertaining to the Employees’ Retirement System of Rhode Island (ERSRI), among other requests.
The backdrop to this lack of transparency is that pension funds had a dismal performance. According to a Wall Street Report published on Thursday, "Public pension funds declined a median of 11.6% for calendar year 2022, according to Wilshire Trust Universe Comparison Services, after a fourth-quarter stock rally made year-end returns only slightly less terrible."
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"The funds, which control roughly $5 trillion in retirement savings of police, firefighters, teachers and other public workers, keep about half of their money in stocks and about 20% in bonds. For the quarter ended Dec. 31, they returned 5%," according to the WSJ report.
Diossa Rejected Request for Key Documents
On February 3, Diossa’s office rejected Mutchler's request for “prospectus, private placement memorandum, and offering document(s) provided to ERSRI with respect to each Alternative investment” — along with multiple others.
Mutchler, who is the Chair of the Transparency and Public Data Practice at Obermayer Rebmann Maxwell & Hippel LLP, notes that a key portion of her practice is devoted to helping journalists "obtaining public records in real time."
“In response to part 1 [sic] your request, the listed documents are not public record and have been withheld pursuant to R.I. Gen. Laws 38-2-2(4)(B) to protect proprietary /confidential trade secrets and/or commercial or financial information obtained from a person, firm or corporation that is of a privileged or confidential nature and or no portion of the documents or records contains reasonable segregable information that is releasable,” according to Diossa's Public Records Office in its response.
“This is one the most critical public records requests I’ve ever made,” Mutchler told GoLocal, calling the response from Diossa to his five-part request for transparency in pension management fees “wholly inadequate.”
Mutchler filed the request after SEC whistleblower Edward Siedle — who first took a look at the management of Rhode Island’s pension fund under then-Rhode Island General Treasurer and now U.S. Commerce Secretary Gina Raimondo in his report “License to Steal” — said he couldn’t find a Rhode Island-based attorney to file the APRA.
“We went through an exhaustive search for a RI lawyer for this records request. Six different lawyers rejected us,” said Siedle. “ I think that’s an indictment of the Rhode Island Bar — that [taxpayers] are being denied justice.”
“Raimondo ushered in this era of pension secrecy,” said Siedle. “And it continues and it’s gotten even broader.”
Requests Made -- and Denied
Mutchler also asked for “subscription agreements, non-disclosure agreements, limited partnership agreements, side letter agreements, investment managers agreements, or other written contracts between ERSRI and each investment’s manager or sponsor.”
The state provided the “subscription agreements” — with some redacted information to “protect proprietary trade secrets…that is of a privileged or confidential nature.”
“The remaining responsive documents and a limited number of subscription agreements have been withheld in their entirety as they contain proprietary and/or trade secret information pursuant to R.I. Gen. Laws § 38-2-2(4)(B) and no portion of the documents or records contains reasonably segregable information that is releasable,” wrote Diossa’s office. “Although side letters have been withheld, we have attached a copy of our master form side letter template, which provides general terms that are required by ERSRI when entering into an investment."
Siedle called the subscription agreements the "bare minimum"
"We don’t agree with their analysis and the same tired old Raimondo analysis and rationale for secrecy," said Siedle.
Mutchler says she plans to appeal the non-responsive nature of Diossa's answer to her APRA.
"It's standard MO of every record request — they say no initially," said Mutchler. "My responsibility and hope is we’ll be able to have a conversation about what is legitimate."
"A lot of times. I give them the benefit of the doubt," Mutchler continued. "You get folks who might not deal with open records laws — and they freak out when someone asks for records. I think that we can get to the right place."
Diossa's office did not respond to request for comment.
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- “Wholly Inadequate,” Says Lawyer of Response From Diossa on Request for Pension Fund Info
