SEC Ends Two-Year Inquiry Into Florida Pension Agency

The federal probe clears Florida’s money managers of wrongdoing, without enforcement action recommended.

(March 8, 2010) – The Securities and Exchange Commission’s investigation of the Florida State Board of Administration (FSBA), which manages $138.5 billion, has come to a close with no action taken.


The SEC concluded the investigation in a two-sentence letter faxed to the FSBA: “This investigation has been completed as to the Florida State Board of Administration, against whom we do not intend to recommend any enforcement action by the commission,” wrote Eric R. Busto, SEC assistant regional director for the Miami office. He additionally attached a copy of a 1972 securities act, indicating that the SEC could restart the investigation if it deemed necessary. The brief SEC letter was a welcome relief for SBA managers and the board, which consists of Gov. Charlie Crist, Attorney General Bill McCollum and Chief Financial Officer Alex Sink.


The two-year federal probe involved allegations of possible securities violations at FSBA, which manages employee pension funds for state and local governments and dozens of other pools of money.


The probe began in March 2008, when the SEC starting looking into potential securities violations by the FSBA and three Wall Street firms: Lehman Brothers Inc., J.P. Morgan Securities and Credit Suisse Securities. The probe centered around whether FSBA made false or misleading statements to the public over the risk and liquidity of securities it purchased from the firms.


“It’s a welcome development,” said Ash Williams, SBA executive director, to Bloomberg “We’re delighted to have the letter from the SEC. We never sensed that we had issues there, but you don’t know until you know.”


Investments at FSBA increased 16.3% since June, representing the first improvement in the pension plan since it lost 19% for the fiscal year ended June 30, 2009, the St. Petersburg Times reported.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href=''></a>; 646-308-2742