Here is a hero. Dr. Randy Weick, a high school history teacher in Kentucky with a degree from the London School of Economics, has filed a class action suit against some of the nation’s largest investment firms for the danger they have inflicted on the pensions of Kentucky teachers.
A columnist in Forbes writes that Wieck has taken on “the titans of private equity”:
Wieck has filed a class action lawsuit in the United States District Court of the Western District of Kentucky claiming that mismanagement of the investments of the Kentucky Teachers Retirement Systems (KTRS) has resulted in the worst-funded state teacher plan in the U.S—forcing teachers to contribute more of their salaries (up from 9% to 13%).
Wieck has no lawyer—he’s representing himself—in a Herculean effort to save his own and other Kentucky teachers’ retirement.
You might expect that powerful, well-funded national and local public unions would rally behind Wieck to hold Wall Street accountable for undermining teachers’ retirement security. To date, in Kentucky and nationally, public sector labor organizations have been mighty reluctant—even when pressed—to recognize that how the money in a pension is managed is at least as important as how much goes into it and is paid out in benefits.
Labor should be embracing a new role—providing meaningful independent oversight of pension investments. Every public pension needs an outside Inspector General, in my opinion. Organized labor could and should make it happen.
Private Equity firms mentioned in the Wieck complaint include Blackstone, Carlyle and KKR. Excerpts from the case referring to Private Equity investments include:
“As late as 2007 KTRS had no alternative investment managers listed in their Comprehensive Annual Financial Report; by 2013 there were 31 alternative managers listed and KTRS continued to add alternative investments in 2014 and 2015—despite the filing of a lawsuit against another Kentucky State Pension plan challenging the legality of purchasing alternatives.”
“KTRS has failed in their fiduciary duty by selecting investments and investment managers not permitted by statute of the Commonwealth of Kentucky. KTRS has invested in high-risk alternative investments not appropriate for fiduciaries under the common law. Many of these alternative investment entities have not documented in their contracts that they adhere to investment ethics and disclosure rules as required by statute. KTRS Trustees have allowed numerous alternative investment managers to violate Kentucky state law on ethics and disclosure – which also constitutes violations of the Investment Advisers Act of 1940. KTRS (in Fiscal Year 2014) admitted to paying $9.2 million to alternative investment managers in secret no-bid contracts. KTRS managers who have hired lobbyists in Frankfort include KKR, JP Morgan (Highbridge) and Blackstone – which has 16 listings on the executive branch lobbyist list (all affiliates and placement agents combined).”
Dr. Randy Weick joins this blog’s honor roll, fighting for all teachers in Kentucky.
Diane Ravitch's blog 
Wow. One person really CAN make a difference. And, what a good post for the Labor Day weekend.
What a bunch of great posts goIng into Labor Day weekend!
Far be it for the teachers involved to accept responsibility for their OWN decisions, ‘eh? After all, they’re just ignorant babes in the woods who shouldn’t be obligated to track their investments on their own, should they? Like always, society OWES THEM!
This is bigger than what you imply. And you’re not demanding tracking, you’re demanding that people file lawsuits against their own pension managers.
“It is often said that Americans are litigation-happy. Ironically, the swift movement of a quarter of the trillions in our nation’s public pensions into the highest cost, highest-risk, most-secretive investment schemes ever devised by Wall Street—investments that have and will continue to dramatically underperform—has even the plaintiff’s bar and big labor wondering who has legal standing and what to do about the fleecing.
Until they, or others, come up with answers, it’s up to the little guys—like Wieck—to keep public attention on this slow-moving, damages-mounting train wreck.”
I hope you’re being snarky since obtaining the expertise to do as you say requires time and effort that few teachers, that few working people at all have which is why we hope to be able to trust fund mangers and especially those who regulate and hold them accountable. What’s next, owning my own fire truck and sewer system?
Ken, in Nevada i am in the state PERS system whether I want to be or not (I am happy with it by the way.) Since my pension is there I have no control over it. I am depending on others to make wise decisions. This teacher is tracking the abuse of his pension, in effect, tracking fraud and abuse. What exactly was your point? Are you one of the disingenuous people that simply believes the libertarian philosophy of you are on your own? And how did your 401 k fare in the great wallstreet ripoffs of the last few decades? That is why teachers prefer state funded defined benefit pensions. We wont get rich,but we also will not (hopefully) have everything we need stolen from us.
You would think this noble teacher’ who has been paying a lifetime into a union would get legal support both at his district level and the larger affiliation – AFT! Why are our union presidents and the AFT head complicit in ignoring such a monumental issue? This sure supports the notion that union leadership is in it for themselves and not for those they serve! Maybe the leadership of our unions should be earning teacher salaries and then we might draw in leadership that enters the position – not for salary and “power”.
I agree completely. Why are we paying so much. We certainly don’t seem to be attracting top talent.
I would venture to guess that Goldman Sachs would also be included in this suit.
Good for him. Financial services are known for hiding the fees they charge to administer our accounts. Wall St. is attempting to insert itself into teacher pension funds as well as 403B accounts. Their fees are deducted from your account, and they often don’t even have to disclose what they charge. Some corrupt governors are allowing financial services to drain pensions by charging outrageous fees that may destabilize the fund. This is a disturbing financial manipulation that can put pensions at risk. There should be limits on what they charge, and the amount should have to be disclosed.
There is an effort underway to do some “reputation” damage control on the handling of investments in pensions. This illustrates that the problem this one teacher in Kentucky is taking on.
https://www.google.com/search?q=wall+street+journal&ie=UTF-8&oe=UTF-8&hl=en&client=safari#hl=en&tbs=qdr:d&q=wall+street+journal+pensions
“The price of liberty is vigilance.” In the absence of government oversight due to it being almost entirely co-opted by the corrupting influences it previously sought to monitor and regulate, I guess we’ll have to DIY as described above until such time that we can restore our gov’t to a condition where it can fulfill that role once again. The danger here is that the forces of privatization and those who oppose any definition of gov’t defending its citizens from crime outside of police and military power would view the development of citizen oversight as a feature even as they oppose its actions as a threat to their own freedom to be criminal. The ideal would be a gov’t that takes citizen watchdogs as partners and willingly takes the batons they pass off to it. We are where we are now due to the citizenry being almost entirely asleep at the switch with only a scant number remaining vigilant and fighting against the cabal of gov’t and business being a conjoined monster.
Let us salute Dr. Wieck and let us note, yet again, as you, Ms. Ravitch just did, the failure of the labor unions to challenge the mismanagement of pension funds. This is, sadly, part of a long history compliant behavior that has helped undermine whatever the unions and their members had struggled long and hard to achieve.
Contrary to the public perception, constantly reinforced by the media, most rabidly by the right-wing media, the leadership and organization of the teachers’ unions (and probably the other unions as well) rarely come to the aid of their members when they are most needed.
They prefer to work with politicians behind the scenes to cut some deals that increasingly do not benefit most of their members and which are increasingly difficult to make in the current anti-union atmosphere.
Meanwhile, even the hard-earned and meager pensions of most teachers and other workers is being allowed to go up in smoke, as the same greedy, irresponsible and indeed reckless behaviors that brought much of Wall Street to the brink of catastrophe, only to be saved by a giant, bailout at great eventual expense to taxpaying workers, are still being allowed to do their damage.
One small filing for man, one giant leap for public service.
He has an uphill battle without an attorney, unfortunately.
I am grateful to my KY colleague for speaking up about our retirement situation. To add insult to injury, the Windfall Elimination Provision also limits those of us who changed careers after paying Social Security from collecting all we might qualify for had we continued to pay into the national system. I would appreciate constructive comments as to how to get that changed as well.
Way to go Dr. Wieck!!
The book, Kentucky Fried Pensions describes the situation in Kentucky.
Part of the problem is the influence that politicians have on state pensions, some by legislative design and other times, by fear of their clout. For example, the Kasich influence in Ohio, resulted in huge investments in Lehman Bros., where he was employed at the time. The pensions lost significantly when Lehman folded.
The SEC could act to protect all retirement investments, in a number of ways. They don’t, because of plutocratic spending on politicians and because of revolving door
opportunities.