Colorado Treasurer Aims to Sue State Scheme, Claiming Lack of Transparency

State Treasurer Walker Stapleton aims to file a lawsuit against the $39 billion Colorado Public Employees' Retirement Association for state workers, claiming that the fund has denied his repeated requests for financial data.

(September 19, 2011) — Colorado Treasurer Walker Stapleton plans to sue the state’s pension fund, alleging that the scheme has denied his repeated requests for financial data.

Stapleton requested data in June for details on how much money Colorado’s $39 billion pension fund for state workers paid the top 20% of beneficiaries and how they earned those benefits. Stapleton asserted that his motivation in suing the Colorado Public Employees’ Retirement Association (PERA) was his concern for the solvency of the scheme.

With a 66.1% funding status, the Colorado scheme is one of several public pension funds in the United States in an unstable condition, as noted in a report last year issued by the Pew Center on the States. In response to the fund’s deteriorating funding status, the treasurer has requested the “financial DNA” of the scheme’s beneficiaries, which includes information about annual benefits, age of retirement, last five years of salary, former job, and ZIP code of residency.

“As a PERA trustee and fiduciary, I must act in accordance with the care, skill, prudence, and diligence in light of prevailing circumstances that a prudent person acting in a like capacity and familiar with PERA matters would use. In order to carry out my role as a fiduciary, I am entitled to complete access to all PERA records,” Stapleton stated in the latter dated June 3 to Meredith Williams, Colorado PERA’s CEO.

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“If responsible board members had asked these questions at an Enron or a Countrywide or a Lehman Brothers, we would have gone a lot further in addressing the problems that occurred,” Stapleton said, according to the Denver Post. “Our objective in this is to make sure PERA as a plan is kept solvent for current and future employees of Colorado.”

Attorney General John Suthers, a fellow Republican, represents Stapleton in the case.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

Following Arrest of UBS Trader, S&P, Moody’s, Fitch Issue Review for Downgrade

UBS, which reportedly suffered a $2 billion loss from unauthorized trading at its investment bank, had its credit ratings put under review for potential downgrade by Standard & Poor’s, Moody’s Investors Service, and Fitch.

(September 16, 2011) — Ratings agency Moody’s, Standard & Poor’s (S&P), and Fitch Ratings have placed UBS on review for downgrade after its $2 billion unauthorized trading loss.

According to Moody’s, the review reveled the “ongoing weaknesses in the group’s risk management and controls that have become evident again.” S&P said in a statement that it will make a decision on the ratings “once further details emerge on the scale of the loss and the risk management lapses that enabled it to occur.”

UBS shares dropped 11% yesterday after news surfaced that the firm’s trader, Kweku Adoboli, had been arrested following suspicion of fraud and abuse of his position. The controversy over the London-based trader added to already difficult times for the Swiss bank, as Europe’s sovereign debt crisis continues to pummel financial institutions across the continent.

Moody’s continued to assert that UBS’ losses call into question the group’s ability to successfully complete the rebuilding of its investment banking operations. “We have continued to express concerns with regards to the ability of management to develop a robust risk culture and effective control framework while at the same time trying to re-establish its position in certain market segments,” the ratings firm said.

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In addition to Moody’s and S&P, Fitch Ratings has also asserted that it is placing UBS’s “viability rating” on review for a possible downgrade. “Fitch acknowledges that no control framework can fully protect a bank from a ‘rogue’ trader,” the rating company said. “However, the magnitude of the loss is large in the context of UBS’s reduced investment bank activities and compared to other ‘rogue trader’ incidents at other institutions. This incident strengthens the arguments for UBS to down-scale its investment bank.”



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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