Politics & Government

State pension agency hires new investment chief

The Kentucky Retirement Systems is getting a new chief investment officer Tuesday.

Timothy "T.J." Carlson will oversee investments at the agency that handles $13 billion in assets to provide benefits for state and county retirees. Carlson replaces Adam Tosh, who resigned in July for a private sector job.

"I am excited about the wonderful opportunity to come to Kentucky, and I look forward to working with the seasoned KRS team to help navigate these interesting and challenging times for our pension and insurance programs," Carlson said in a prepared statement.

Last year, Carlson was named a principal at investment consultant Ennis, Knupp & Associates in Chicago. Before that, he was chief investment officer and treasury director for Marshfield Clinic in Marshfield, Wis. He also worked for the West Virginia Investment Management Board and the Iowa Public Employees Retirement System.

In May, acting on behalf of Ennis, Knupp & Associates, Carlson defended higher management fees that were paid by the North Carolina Teachers and State Employees Retirement System to a firm, Relational Investors, that hired the state treasurer. Previously, the state treasurer had invested state funds with Relational Investors, according to Carolina Journal.

Ennis, Knupp & Associates advised the state of North Carolina this year on its investments.

After Carolina Journal questioned the fees, and critics complained about a conflict of interest given the former state treasurer's new job, Carlson wrote a memo defending Relational Investors' fee schedule as "meaningfully and justifiably above those charged by the plan's other traditional equity managers."

Carlson joins Kentucky Retirement Systems as its practices are being examined by the U.S. Securities and Exchange Commission and state Auditor Crit Luallen.

In October, Luallen said her office would review the KRS board of trustees, employees, business conduct, purchases, ethics policies and the adequacy of its audits and financial reports. The SEC also has opened an "informal inquiry" into KRS, although that appears to be limited to the use of "placement agents," middlemen paid to connect the pension fund with investment companies selling financial products.

KRS executive director Mike Burnside said Monday that the agency is cooperating with the SEC and the auditor's office and is providing documents as requested. The SEC has issued a subpoena to formalize the process, Burnside said.

KRS released an internal audit in August that for the first time revealed the fees paid to placement agents. It also disclosed a previously existing relationship between New York placement agent Glen Sergeon, who made nearly $6 million from Kentucky pension deals, and Tosh, who had resigned weeks earlier.

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