Did New Jersey Use Pensions to Support Failing Hedge Funds?

Business Attorneys Examine the Allegations

Government employees must avoid conflicts of interest when managing public dollars. New Jersey has very clear rules about how elected officials can invest pension funds, and as a recent complaint alleges, the state government may have violated its own rules by supporting politically charged Wall Street entities.

Did New Jersey Officials Violate Investment Policies?

According to a complaint from the AFL-CIO, the biggest labor union in New Jersey, the state government violated the law by using pension funds to invest in hedge funds and other “alternative” Wall Street firms. These investments have fallen short of projected goals, and most of the parties that received these funds also charged high fees (up to $400 million).

An analysis shows that state funds missed out on billions in lost funds, and that many of the underperforming hedge funds and other “alternative investments” had donated money to prominent organizations that supported Gov. Chris Christie’s election and re-election efforts.

Specifically, the union’s complaint targets Robert Grady, chair of the State Investment Council, for making the allegedly political investment decisions. It points to government records that show a close working relationship between Grady and Christie while Grady was managing the pension investments. Grady also used to work for the Carlyle Group, which received these pension investments, along with firms like Blackstone, Third Point and Elliott Association.

State Denies Wrongdoing

“It should not be seen as mere coincidence that the reports show Robert Grady was listed as a required attendee on a series of regular weekly phone conference calls held by high-level staff on the Governor’s re-election committee in or around September 2013,” the union’s complaint points out.

Grady said that he was doing nothing unusual by employing a “policy of diversifying [our] investments in order to maximize returns while managing risk.” Gov. Christie’s spokesperson Kevin Roberts called the accusation a “cheap political stunt.”

Attorneys For Business Disputes and Corporate Litigation

Disputes between Wall Street hedge funds, public agencies and political groups involve complex laws, rules and regulations. A business litigation attorney can sift through the red tape and discover where violations occurred, if anywhere.

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