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Pennsylvania PSERS Hires Law Firm Amid Federal Probe

The retirement system did not reveal what the investigation is related to.

The Pennsylvania Public School Employees’ Retirement System is facing a federal investigation, recent board meeting resolutions reveal.  

At a special board meeting held Tuesday, the retirement system decided to hire law firm Pillsbury Winthrop Shaw Pittman to “represent and provide guidance to the board in matters relating to a federal investigation and any collateral issues related thereto.” 

The board’s website does not specify what is involved in the federal probe, and spokespeople from PSERS did not return an email seeking comment Thursday. Bloomberg initially reported the news on Wednesday evening. 

Prior to revealing the probe, PSERS held two special meetings — one on April 2, and the second on Tuesday. According to an agenda from Tuesday’s board meeting, the board met to discuss a “consultation with counsel in connection with potential or current litigation.”  

The board and its audit compliance committee are set to meet again on Friday afternoon, the PSERS website shows.  

[II Deep Dive: Pennsylvania Pension Fund Turns to SimCorp for Investment Operations Help]

It’s unclear whether the federal probe is related to an investigation that PSERS itself launched in March. The board said it was looking into the circumstances surrounding a possible error in the reporting of investment performance results used by the board in December.  

PSERS first revealed this error on March 12. Later that month, the retirement system shared that the error was caused by one of its outside consultants and that it was related to the employee contribution rates reported for fiscal year 2021-22.  

“We do not have any information at this time that anything criminal occurred,” PSERS board chair Chris SantaMaria said in a statement published on March 16. “Our present concern resulted from the admission of an error by one of our outside consultants.” 

According to a September 2020 roster of PSERS’ outside managers, the retirement system’s consultants include Aksia, Aon Investments, and Hamilton Lane Advisors. PSERS has not revealed the name of the consultant involved in the error, and spokespeople for all three firms did not immediately respond to emails seeking comment Thursday. 

A person familiar with the matter said “Hamilton Lane is under no impression from PSERS or anyone else that it is involved in this matter.”

According to the March 26 statement from PSERS, “the board is investigating the circumstances regarding the consultant’s calculation as well as the actions taken by PSERS’ staff and the consultant after the consultant’s disclosure. At this time, the Board has taken no personnel action.” 

The retirement system revealed in March that it had hired law firm Womble Bond Dickinson to look into the misstatement of PSERS’ nine-year investment performance.

It also reported that the audit and compliance committee had authorized the hiring of law firm Morgan Lewis to assist with an independent opinion letter related to federal tax qualification issues involved with the pension fund’s shared risk calculation. PSERS is also asking for the firm to provide guidance on the recertification process for the shared risk contribution rate. 

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