"With all the big and small grifting that goes on in private equity, we haven’t bothered calling out a practice that is pervasive and well known in the private equity community and authorized by the agreements that the limited partners sign with the general partners. Yet it will likely stick in the craw of most public pension fund beneficiaries, the taxpayers who support the payments to those plans, as well as donor to foundations and endowments that also invest in private equity even more than the widespread use of private jets, which is authorized not just for firm employees but at some general partners, even their family members.
Another routine form of private equity rent extraction is how they get the fund investors, who are fiduciaries, to pay for lavish annual conferences which for the biggest funds includes big ticket entertainment like Elton John."
General partner conferences are either by accident or design busywork to keep limited partners like TMRS from digging into documents and data.
"Indeed, a former private equity fund executive pointed out that keeping private equity staff at pension funds and foundations busy with the nominally important work of running around to general partner meet and greets seriously eroded the time they could spend doing what ought to be their real work, of reading the financial information and other reports provided by the general partners as well as their SEC Form ADVs, which it appears virtually no one in the industry bothers scrutinizing."
Texas Municipal Retirement System, TMRS, continues to invest through private equity firms as they chase higher investment returns. Guess what, passive investing is equaling or beating the returns generated by private equity with substantially less investment risk.
Its time for Georgetown to take a hard look at TMRS to assure they are prudently managing and investing taxpayers and city employees money
No comments:
Post a Comment