(June 4, 2012) — Whistleblowers in public pension plans face unjust hostility and retaliation, according to Chris Tobe of Stable Value Consultants and a former trustee of the Kentucky Retirement Systems.
Tobe’s comments follow a lawsuit filed by Jeffrey Baker, a former investment officer at the $8.6 billion San Diego County Employees’ Retirement Association (SDCERA), who has sued over his termination from the pension fund. Baker, a self-proclaimed “whistleblower” fired in October 2011 from SDCERA, filed the federal lawsuit against SDCERA, the scheme’s Portfolio Strategist Lee Partridge, Partridge’s former firm, Integrity Capital Services, and Brian White, SDCERA’s CEO. The brunt of the suit, according to Baker: unlawful termination for reporting investment policy violations.
SDCERA, however, has denied the allegations. “In fact, Mr. Baker was not terminated by SDCERA for being a “whistleblower.” Mr. Baker was terminated for repeatedly violating SDCERA’s Data and Information policy,” SDCERA spokesperson Johanna Shick tells aiCIO. “This has been reaffirmed by three findings at independent hearings of the Office of Internal Affairs and the San Diego Civil Service Commission (and Mr. Baker’s subsequent appeal with the Commission). All three findings found that SDCERA’s termination of Mr. Baker was proper.”
Commissioner Francesca Krauel, who presided over five days of testimony in December and January, wrote: “In releasing the information…[the] [e]mployee did not qualify as a whistleblower. The information..had previously been publicly disclosed on several occasions by SDCERA during its meetings. [The] [e]mployee was not releasing information that SDCERA was trying to conceal from the public.”
Meanwhile, Baker’s complaint, obtained by aiCIO, states: “Mr. Baker’s superiors, defendants Brian White and Lee Partridge, carried out a malicious, oppressive, and fraudulent campaign of silencing and retaliating against Mr. Baker. They reduced the scope of his duties, removed him from monitoring their risk budget violations, eliminated his job, terminated his employment, contrived false stories about him, sabotaged his rights to a fair administrative hearing, and violated his civil and constitutionally guaranteed rights.”
Despite SDCERA’s objections, Tobe defends Baker, asserting that the former investment officer aimed to reveal investment problems at the fund. “Whistleblowers are silenced because public pensions face risk of having problems revealed, and they are wary of damage to their reputation.” He added that the CFA Institute — a global association of investment professionals — has said it wants to make whistleblowing perceived more positively. Last month, John D. Rogers, CFA, president and CEO of CFA Institute, urged the global investment community at the organization’s 65th Annual Conference in Chicago to take personal responsibility to restore investor trust and reconnect with the public interest. Additionally, in a list of ’50 ways to restore trust in the investment industry’, the institute noted to 1) never overlook unethical behavior because you’re better served by ignorance, and 2) bring to justice those who take part in irresponsible and illegal activities.
In September, White, SDCERA’s CEO, interviewed for the Kentucky Retirement System (KRS) and withdrew his name the same month. According to Tobe, the reason the Kentucky pension wanted him hired in the first place was because of his success in silencing negative remarks about the fund and preventing transparency. “I believe the reason KRS staff and some board members wanted to hire Brian White as Executive Director was because of his success in retaliation and getting rid of a CFA charterholder who was trying to disclose investment problems,” says Tobe, noting that he had tried to thwart the hiring of White by expressing reservations.
Tobe along with the CFA Institute are not the only ones to urge for the protection of so-called whistleblowers. In May of last year, the US Securities and Exchange Commission (SEC) adopted rules to create a whistleblower program that rewards individuals who provide the agency with high-quality tips that lead to successful enforcement actions. “For an agency with limited resources like the SEC, it is critical to be able to leverage the resources of people who may have first-hand information about violations of the securities laws,” said SEC Chairman Mary L. Schapiro in a statement. “While the SEC has a history of receiving a high volume of tips and complaints, the quality of the tips we have received has been better since Dodd-Frank became law. We expect this trend to continue, and these final rules map out simplified and transparent procedures for whistleblowers to provide us critical information.”
Editor’s note: A previous version of this article described a former SDCERA employee as a whistleblower despite rulings that determined otherwise. Chris Tobe, however, continues to assert that Baker was a whistleblower on SDCERA under SEC rules, adding the he believes that Baker should be classified a whistleblower under state law.