Regulator Has NY Pensions in its Sights

A close eye is being cast over New York's pension funds.

(July 31, 2013) — New York public pensions could face pages of new regulation as the state’s financial regulator has announced he wants better accountability and transparency.

Benjamin Lawsky, superintendent of the state Department of Financial Services (DFS) said at a Crain’s breakfast forum yesterday that his office had just begun examining the city’s funds and would soon publish initial findings of a year-long review into the state pension.

“What few people realize is actually DFS is the primary regulator of all state and local pension funds here in New York,” Crain’s reported Lawsky as saying. “In other words, it’s our responsibility to watch the watchers at the public funds to ensure that they are upholding the public’s trust.”

The state contains some of the largest pension funds in the US, and Lawsky said its citizens—including tax-payers and retirees—had a right to know what was going on inside them.

He added that he did not suspect there was any impropriety that would be uncovered, but said additional scrutiny was warranted.

In October last year, a New York State Supreme Court judge sentenced David Loglisci, the former CIO of the state’s multi-billion dollar employee pension system, to a conditional discharge for allowing a “culture of corruption” at the fund.

In November last year, oil company Chevron Corp accused New York State Comptroller Thomas DiNapoli—the State Comptroller overseeing New York’s pensions—of using his political position to urge donations in connection with a massive international lawsuit. DiNapoli denied the allegation, calling it an attempt of intimidation.  

Almost three years ago in October 2010, New York Attorney General Andrew Cuomo accused an indicted top aide to former State Comptroller Alan Hevesi of leading a $35 million fraud scheme at the New York State Common Retirement Fund.

“In 2007, Comptroller DiNapoli collaborated with former Insurance Superintendent Eric Dinallo to strengthen regulations governing the state and local retirement system to improve oversight and governance, codify high ethical standards and increase operational transparency,” said a spokesman for the comptroller, Crain’s reported. “DFS is statutorily required to examine public pension systems in New York state. We have been cooperating with the current examination, the first conducted under these new regulations.”

Related content: New York Legislature OKs Governor Cuomo’s Pension Reform; DiNapoli Expresses Skepticism