Sink Must Release Secret Information About SBA Middleman Payments

The obvious question that comes to mind is if the middlemen in all of this have donated to Alex Sink's 527 she has set up for her campaign which has not been transparent like she promised. She wasn't truthful if she was going to set one up when she had already signed the papers so we expect little in the way of transparency from Alex Sink.

The very idea that Sink, as the Chief Financial Officer of Florida, is using a Middleman paying over $1M for each pension fund to get them in the door is outrageous. Kentucky goes straight to the pension fund instead of using a Middleman which speaks volumes. If Kentucky can do it, why can't Florida? It would mean Florida doesn't have to waste all the tax dollars on a Middleman. It would also stop the influence peddling by these Middleman.

Who are these Middlemen who are pocketing millions for opening a door to a pension fund? How much money has it cost the Florida taxpayer that should have been invested? Most importantly why is the State not required to divulge the names of the Middlemen when they are getting paid millions of Florida taxpayer dollars? This smells.

With all of this mismanagement lying in her wake, Sink wants to move from Chief Financial Officer to Governor of Florida where she controls the whole state? What a scary thought -- Sink being in charge of all the State resources with no one to oversee what she is doing. That would be one sure way to run the Florida economy straight into the ground. Does she have a plan to fix the economy or is her plan to hire more consultants and use more Middlemen to do business paying them millions?

This SBA comprised of the Governor, Chief Financial Officer, and Attorney General needs revamped if this is an example of what these people are doing with Florida tax dollars. Where is the oversight? Is this why McCollum would prefer Sink so she can keep a lid on all of this since he was a member of this group as Attorney General.  Might explain some of the Charlie Crist odd comments as well.  Personally think this fund needs investigated right along with the three people in charge.

Sink Must Release Secret Information About SBA Middleman Payments
October 7, 2010

FORT LAUDERDALE, FL – The St. Petersburg Times reported this morning on more troubling revelations about paying middlemen for deals between private funds and the SBA, a state agency Chief Financial Officer and former banker Alex Sink is charged with overseeing. The SBA has invested billions in private funds since December and many of those transactions were arranged through a “placement agent” between the funds and the SBA, making an average of $1.5 million according to the St. Petersburg Times. The SBA has not publicly disclosed which funds utilized middlemen and how much these “placement agents” were paid. Such arrangements were at the heart of kick back scandals involving the California and New York pension funds, according to the St. Petersburg Times.

Scott campaign spokesman Brian Burgess said, “Alex Sink and the SBA need to come clean on these secret, undisclosed payments made to middle men between the SBA and the funds in which they invest. Floridians have a right to know how much money is changing hands on the basis of SBA investments. Alex Sink and the SBA must release the secret information identifying these placement agents and how much they are being paid to play middleman for the SBA.”

To view the article, please visit: Tampa Bay.com

Background

“Florida's public pension has invested about $2 billion in two dozen private funds since December. Rather than approach the pension's staff directly, half the funds used middlemen to get in the door. They paid these well-connected placement agents millions of dollars for making introductions and setting up meetings. Average finder's fee: about $1.5 million.” (Hundley, Kris “Florida public pension funds keep quiet on millions paid to middlemen,” St. Petersburg Times, 10/7/10)

“Baloney, says Christopher Tobe, a veteran financial adviser and trustee of the Kentucky Retirement Fund. Tobe is among the growing number of experts who say funds that use third-parties, rather than going directly to a pension plan, are perpetuating an unnecessary and poorly regulated system that's proved vulnerable to abuse. ‘It's blatant corruption,’ he said. ‘There's really no reason for placement agents unless you want to get money to somebody through the back door.’” (Hundley, Kris “Florida public pension funds keep quiet on millions paid to middlemen,” St. Petersburg Times, 10/7/10)

“But after such intermediaries were found to be at the heart of kickback scandals at public pensions in New York and California, those states have taken tougher stands… And just last week, in the wake of problems at public pension funds, the Securities and Exchange Commission started requiring registration of placement agents.” (Hundley, Kris “Florida public pension funds keep quiet on millions paid to middlemen,” St. Petersburg Times, 10/7/10)

“There's just one catch: [SBA Executive Director Ashbel] Williams' definition of disclosure does not extend to Florida's pensioners or taxpayers. His agency gets to know what the middlemen are paid. But the public — told that pension investments are made on merit, not on who you know — cannot find out how much money changed hands before a deal went down.” (Hundley, Kris “Florida public pension funds keep quiet on millions paid to middlemen,” St. Petersburg Times, 10/7/10)
The reason? The SBA won't release the information if investment funds want to keep it secret. And they all do. For example, Florida recently invested $100 million of pension fund money with GSO Capital Partners. The company said disclosing what it paid a placement agent would ‘harm our business efforts.’” (Hundley, Kris “Florida public pension funds keep quiet on millions paid to middlemen,” St. Petersburg Times, 10/7/10)

"But Susan Lerner, the head of Common Cause New York, said taxpayers end up footing the bill. ‘The funds that use these intermediaries negotiate a somewhat higher management fee so that nothing comes out of their profit margin,’ she said. ‘Those fees just get passed through. The public is paying for it.’” (Hundley, Kris “Florida public pension funds keep quiet on millions paid to middlemen,” St. Petersburg Times, 10/7/10)

St. Petersburg Times Editorial: Full Accounting Needed At State Board Of Administration (SBA)

The last paragraph of this editorial says it all:

National embarrassment may succeed where old-fashioned accountability hasn't. Just this week, Congress' Financial Crisis Inquiry Commission sought documents aimed at understanding the forces at play when the SBA bought the tainted securities. That should force Crist, McCollum and Sink to provide a full public explanation of what happened inside the SBA in 2007 rather than place all of the blame on Wall Street. Such accounting is long overdue to the people of Florida.

Every resident of the state of Florida needs to read this editorial before voting. To sum it up, the voters dodged a bullet by Republicans electing Rick Scott instead of Bill McCollum as their candidate for Governor, and choosing Marco Rubio early over Charlie Crist which made Crist run as the 'NO PARTY' candidate. That leaves voters with the choice of Alex Sink as the Democrat nominee for Governor which is easily rectified by voting for Rick Scott for Florida Governor and turning out the three -- Crist, McCollum, and Sink who with their risky investments basically have tanked the State of Florida while blaming Wall Street.

The latest revelations cast a far different light on the official version of events offered by the SBA after the securities were given junk status in late 2007, prompting local governments to make a run on the SBA's Local Government Investment Pool. It suggests that SBA trustees — Gov. Charlie Crist, Attorney General Bill McCollum and Chief Financial Officer Alex Sink — either are clueless regarding the facts or are shamefully willing to misrepresent them. Once again the agency, which invests about $140 billion in government assets, has broken faith with Floridians.

Seems every ad that Alex Sink runs sinks herself when she touts her experience as the best answer for Florida especially this time when she uses her role at the SBA as a reason to vote for her. Her role at the SBA is one of the best reasons to vote against her.

Does she have a plan like Rick Scott? Not that we have seen -- her plan seems to be I am honest so you can trust me. With the way she has handled the investments for the State of Florida, would say that trusting Alex Sink to be Governor is like inviting the wolf into the hen house.

St. Petersburg Times Editorial: Full Accounting Needed At State Board Of Administration

FORT LAUDERDALE, FL – The morning after Chief Financial Officer Alex Sink released a campaign advertisement touting her role at the SBA, the St. Petersburg Times published a scathing editorial that raises serious questions about her competence and accountability.

Full Accounting Needed At State Board Of Administration
St. Petersburg Times Editorial

9/25/10

It's possible the Florida State Board of Administration wasn't fully informed by Wall Street brokers three years ago when it cavalierly bought exotic mortgage-related securities just weeks before the credit markets crashed. But newly disclosed e-mails and internal documents show SBA staff members were just as eager to buy the securities as Wall Street was to sell. It was a reckless pursuit of higher returns that disregarded federal regulations, and those SBA staffers involved should have been fired.

(snip)

St. Petersburg Times' Sydney Freedberg reported this week that SBA money managers sought for years to circumvent decades-old federal regulation specifically aimed at protecting less-sophisticated investors, such as local municipalities or school boards, from dabbling in risky, unregistered securities. In 2007, the principal manager of the LGIP, Mike Lombardi, raised the issue again. He repeatedly sought to have the LGIP declared a "qualified institutional buyer" so he could invest its money in mortgage-related securities as he did for the state's pension account.

SBA managers never succeeded in changing the LGIP's classification. Yet Lombardi still invested hundreds of millions of dollars of the LGIP's assets, then $31 billion, in unregistered securities. By November 2007, many of the investments tied to the mortgage industry had been downgraded to junk status, prompting local governments to withdraw $13 billion before the trustees froze the fund.

When an outside consultant months later noted that such buys had violated federal rules as well as the agency's guidelines, the SBA claimed that they were legal under another federal code that would allow the LGIP to purchase the securities as long as they were buying from a "primary issuer." At best, that is exploiting a loophole — and some purchases didn't even qualify under that scenario.

There have been changes at the SBA since this debacle. Executive director Coleman Stipanovich quit under fire. New executive director Ash Williams insists internal controls have been tightened. The Local Government Investment Pool, now called Florida Prime, has moved to an outside money manger, tightened investment guidelines and secured a top rating from Standard & Poor's.

Trustees Crist, McCollum and Sink now meet four times a year solely to discuss the SBA and its operations in public. But that is inadequate for an agency that manages investments totaling nearly twice the state's annual budget. Crist and McCollum have summarily rejected Sink's prudent proposal to expand the SBA board of trustees to include individuals with financial backgrounds who would have more time than busy, statewide elected officials to run herd on the agency.

Besides Stipanovich, no one at SBA has been held to account. Lombardi and his two superiors forfeited annual bonuses but remain in their well-paying posts in Tallahassee. They should have been fired.

Excerpt: Read the editorial online at TampaBay.com