NAST resolution builds on Treasurer Magaziner's advocacy for stronger federal regulation of the industry
NASHVILLE, TN – Rhode Island General Treasurer Seth Magaziner applauded today's action by the National Association of State Treasurers (NAST) to pass a resolution he helped write that calls for more transparency of private equity investments.
"Private equity firms that do business with public funds are realizing that greater transparency is becoming the expectation," Treasurer Magaziner said. "Strong standards for private equity fee and expense disclosure are in the best interest of workers, retirees and taxpayers in Rhode Island and nationally. This is the public's money, and the public has a right know how their private equity funds are performing and the fees they are charging."
At NAST's annual meeting in Nashville, the organization unanimously recommended that public pension funds develop strategies to collect and report the actual cost of investing in private equity. Treasurer Magaziner collaborated with Missouri Treasurer Clint Zweifel to draft the resolution.
"We State Treasurers and retirement plan fiduciaries believe that transparency and accuracy of reporting is a core function of what we do each day," NAST said. "As public fiduciaries we have the obligation to set a higher standard for financial reporting that fully discloses any and all fees related to private equity investments. As public investment officers, our primary goals are to make responsible investments for, and remain accountable to the public we serve. Such a standard will allow us to accomplish those goals and set clear expectations for the cost of investing."
Millions of Americans have their retirement savings in pension systems with stakes in private equity investments. Without rules governing the disclosure of fees and expenses, pension systems lack the tools needed to ensure they are not being improperly overcharged by their private equity funds.
NAST's call for tougher measures to increase transparency of the industry builds on a groundswell of national support among public pension system administrators led by Treasurer Magaziner.
In July, Treasurer Magaziner announced the formation of a coalition of state and municipal public pension funds with approximately $1 trillion in assets calling on the federal Securities and Exchange Commission (SEC) to strengthen transparency of private equity fees and expenses. And on October 12, California's treasurer called for full transparency in the reporting of fees charged by private equity firms to the state's public pension systems.
In his first nine months in office, Magaziner has made Rhode Island's treasury the most transparent in the nation. As part of his Transparent Treasury initiative, Rhode Island enacted a first-of-its-kind policy to only invest in funds that agree to public disclosure of performance, fees, expenses and liquidity.