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*** UPDATED x2 Siedle responds - Rauner response *** Today’s must-read

Thursday, Oct 30, 2014

* Ted Siedle at Forbes

In short, I learned from my experience with Rauner that you don’t have to be brilliant to be successful in the silly business of buying and melding together established businesses—businesses you really know very little about—using state workers’ retirement savings. Access to public pension assets is the key prerequisite.

Trust me, any money manager with workers’ monies committed to funding his professional development for a protracted period of time, eventually—assuming he’s reasonably intelligent and capable of learning from his mistakes—will stumble upon a winner. Worse case, he’ll lose much of the workers savings over the course of the standard ten-year lock-up commitment period and pocket millions in asset-based management fees along the way.

Just being around all that pension cha-ching, tweaking purchase and sale agreements and engaging in thinly-disclosed rampant self-dealing virtually guarantees the manager blessed with Other People’s Money under his care will end up wealthy himself. Call it a “wealth transfer.”

Better still, thanks to private equity secrecy agreements, your clients may never know just how much you profited potentially at their expense.

Read the whole thing.

*** UPDATE 1 *** The Rauner campaign responds by attacking the author…


Siedle Wrote Articles Attacking Rhode Island Treasurer Gina Raimondo For Investing In Private Equity Funds. “In an online column for Forbes on April 4, Siedle blasted Raimondo for dramatically increasing both risk and fees by steering a sizable chunk of Rhode Island’s $7-billion state pension fund into ‘alternative investments,’ including hedge funds. He accused her of enabling a ‘Wall Street feeding frenzy.’” (Mike Stanton, “Former SEC Watchdog Edward Siedle Criticizes Rhode Island Treasurer’s Pension Strategies,” Providence Journal, 6/30/13)

Shortly After Attacking Raimondo, Siedle Was Paid $20,000 By A Union Hostile To The Treasurer. “A month later, he was having lunch in Providence at Capriccio with Rhode Island union officials and retirees who had read his columns, including two top officials of the state’s largest public employees union, Council 94 of the American Federation of State, County and Municipal Employees. Shortly thereafter, Council 94 hired Siedle for $20,000 to investigate Rhode Island’s pension funds. Siedle declined to reveal his fee, but Council 94 president J. Michael Downey confirmed it after questions from The Providence Journal.” (Mike Stanton, “Former SEC Watchdog Edward Siedle Criticizes Rhode Island Treasurer’s Pension Strategies,” Providence Journal, 6/30/13)

Forbes Forced Sielde To Stop Writing About Rhode Island. “Raimondo immediately attacked Siedle’s credibility and motives. ‘This was a bait and switch,’ said Raimondo spokeswoman Joy Fox. ‘He sold himself as a journalist while pitching a local union for business.’ Raimondo complained to Forbes, which says it has asked Siedle, an unpaid contributor since 2006, to ‘cease writing about Rhode Island.’” (Mike Stanton, “Former SEC Watchdog Edward Siedle Criticizes Rhode Island Treasurer’s Pension Strategies,” Providence Journal, 6/30/13)

*** UPDATE 2 *** The author has responded to the Rauner camp’s claims…

While Gina Raimondo, Democratic Treasurer of Rhode Island (and candidate for Governor) did indeed complain to Forbes about my writings exposing her Wall Street agenda, Forbes never asked me to stop writing about her. I have written a dozen articles on Forbes about her since her complaint which have been read by hundreds of thousands.

Check the record Bruce before you embarrass yourself with bogus allegations.

What about the red flags I’ve identified at GTCR, conflicts and secret dealings? Will you make public the potentially damning evidence?

- Posted by Rich Miller        

  1. - vise77 - Thursday, Oct 30, 14 @ 9:53 am:

    Nice article, thanks. I am shocked–shocked–that these money makers and paper chasers aren’t the wisest of the wise, the smartest of the smart as a good two or three decades of their propaganda would have it.

  2. - Anonymous - Thursday, Oct 30, 14 @ 10:00 am:

    Don’t forget the 20 to 25% return on the pension funds that the state received as a result of the investment and how the current administration can’t account for it like it never happened. The truth, the whole truth, and nothing but the truth.

  3. - Lord Stanley's Cup - Thursday, Oct 30, 14 @ 10:10 am:

    Not sure how much hay can be made on Oct 30 but Team Quinn should be doing all it can to push this story downstate.

  4. - Louis Howe - Thursday, Oct 30, 14 @ 10:12 am:

    Hedge funds have been lousy investments for pension funds for years. They earned on average 7.3 % in 2013 and have underperformed the S&P 500 for five straight years.
    But hedge fund managers make out like real bandits. First, taking 2% off the top and 20% of any gains, then paying a top tax rate of 20%. Thanks union members for sharing the wealth.

  5. - the Patriot - Thursday, Oct 30, 14 @ 10:12 am:

    It is ironic that Rauner is the best reason union workers should vote against Quinn so they can shift their money into a 401k they control.

    Yea, this is a Rauner problem. Tens of thousands of union workers, company employees, and public employees have been whacked by the mismanagement of defined benefit pensions. The only solution is to phase out of them into a 401k style program. Better for the taxpayer, and puts control of the workers money where it belongs….with the worker.

    Ironically, Rauner will be the guy to make this change not Quinn. The state still has refused to comply with the orders from the last pension lawsuit.

    Quinn tried to steal your pension, you beat him in court, yet he refuses to comply with the court order. If you vote for him again, you get what you deserve as an public sector union member. Don’t cry when you are 65 and broke.

  6. - Grandson of Man - Thursday, Oct 30, 14 @ 10:14 am:

    “Don’t forget the 20 to 25% return on the pension funds that the state received as a result of the investment”

    Let us not also forget the way Rauner described unions and their government worker salaries and pensions. That’s one of the early and powerful reasons why I oppose him today. I’ve gone on and on about his apparent disdain for unions and pensions, while profiting immensely from them.

    Rauner’s pension record is a contradiction of his campaign stance of needing a new governor to fix the state’s pension mess.

  7. - PublicServant - Thursday, Oct 30, 14 @ 10:16 am:

    Seems like Rauner got rich with a little redistribution of public employee pension fund fees. Redistribution from the little guy to the scam artists like Rauner is apparently common. What a taker that guy is, huh?

  8. - JS Mill - Thursday, Oct 30, 14 @ 10:17 am:

    Rauner absolutely loves to call people corrupt, often for actions allowed under the law. The hypocrisy of it all is that he is involved in or linked through his “businesses” to a mountain of corruption in the financial sector. Their behavior makes even the most corrupt Illinois politician look like an amateur.

  9. - 47th Ward - Thursday, Oct 30, 14 @ 10:25 am:

    Nice article. Not that I needed further proof that Rauner lacks the character and experience necessary to be Governor, it’s still a nice re-affirmation of the many reasons I don’t like the man. So thanks for that.

  10. - Norseman - Thursday, Oct 30, 14 @ 10:26 am:

    So if Raunervich gets elected, we can add another 12 years to his 100 years of corruption rant.

  11. - walker - Thursday, Oct 30, 14 @ 10:34 am:

    Absolute must read.

    In our economy you just don’t make such high personal returns, (unless you truly invented something), without misleading people, operating in narrow corners of the market, and skirting regulations, national boundaries, and what most would assume are the ethical and legal standards that allow our free economy to work.

    His company’s style of private equity investment and management, are not what standard corporations, other industries, or even other venture capitalists do. This is not like hiring a standard corporate or business leader for the job.

    Let’s ask ourselves again: Just what values skills would Rauner bring to the Governor’s job, that have been demonstrated in his business experience?

    Those who know this industry, know that it is very shaky ground from which to grow. It is one of the arenas in our private enterprise world that has more ethical problems than even bad politicians.

    Is Rauner the exception? How would we know?

  12. - VanillaMan - Thursday, Oct 30, 14 @ 10:42 am:

    A good read.
    It appears that Rauner has a great deal of experience shuffling money from one source to another, taking some for himself, and finding new angles to profit with the funds he availed himself of that day.

    If anyone can shake up Springfield and Illinois government, it is a governor with experience doing those kinds of things.

    The author doesn’t trust Rauner, however, he seems to make it clear that he doesn’t trust himself either.

    Want change, Rauner will do it.
    Like how things are going today, keep Quinn.

  13. - Carhart Representative - Thursday, Oct 30, 14 @ 11:34 am:

    I’m so happy that Bruce is coming to shake up Springfield and stop these people from enriching themselves off the public dime like this Rauner fellow.

  14. - Demoralized - Thursday, Oct 30, 14 @ 11:39 am:

    Not all change is good VMan. Change for the sake of change isn’t an answer.

  15. - WhoKnew - Thursday, Oct 30, 14 @ 11:45 am:

    Good read!
    “He who comes bearing gifts—as opposed to merely seeking a hand-out—will be richly rewarded and at breakneck speed.”
    All facilitated with the use of Other Peoples Money!

  16. - Sir Reel - Thursday, Oct 30, 14 @ 12:08 pm:

    Like most masters of the universe, Rauner believes his success is due to his business acumen. I’d like to see him come up with a good idea on his own, then using his own money turn it into a successful business. There’s a difference.

  17. - Oswego Willy - Thursday, Oct 30, 14 @ 12:31 pm:

    To the Rauner response;

    Unions, smear, credibility, personal…

    No denial of the article.

    Imagine “Governor Tom Hagen”, but the Sun-Times is already Sen. Geary, so if Rauner can sit on the Press that’s left, it won’t matter much what they say about Rauner, true or not.

    If you don’t like Rauner, he will destroy you, if he can.

    It’s a pattern. Look around. Read. Read above.

    There’s no denial. There’s only scorched earth.

  18. - Meanderthal - Thursday, Oct 30, 14 @ 12:40 pm:

    If it were that easy, everybody would be doing it.

  19. - Meanderthal - Thursday, Oct 30, 14 @ 12:45 pm:

    Another thought, the best way to get state worker’s retirement funds out of private equity is to give all state workers 401ks and let each one of them decide for themselves which asset class they want to invest in for their retirement.

  20. - Precinct Captain - Thursday, Oct 30, 14 @ 1:08 pm:

    Can’t respond to legitimate criticism? Resort to personal attacks, bullying, and intimidation. Bullying is about the only thing Bruce can legitimately claim as an accomplishment in his life.

  21. - PMcP - Thursday, Oct 30, 14 @ 1:15 pm:

    This shouldn’t be surprising, the number one rule of finance has always been, and will always be, “Other People’s Money.”

  22. - Soccermom - Thursday, Oct 30, 14 @ 1:27 pm:

    Dear Bruce,

    Thanks for the reminder! I was planning to read the article, but it had slipped my mind.

  23. - truthteller - Thursday, Oct 30, 14 @ 1:37 pm:

    Well, is Rauner going to respond to Siedle, or does he have something to hide?
    Can’t say I’m shocked to learn that the Rauner campaign misrepresented the facts in its initial response.

  24. - liandro - Thursday, Oct 30, 14 @ 1:52 pm:

    “There’s no denial. There’s only scorched earth.”

    OW, I have to ask: did you at first comment “if you’re explaining, you’re losing” before realizing you’d have to attack him from some other angle on this one? Because that’s exactly what you would have posted if he had done what you suggested, heh.

  25. - Demoralized - Thursday, Oct 30, 14 @ 2:05 pm:

    So is this going to be Rauner’s standard M.O. when somebody writes something negative about him? Smear the writer? Question their integrity?

    Again, character is important. He seems to be lacking it.

  26. - Soccermom - Thursday, Oct 30, 14 @ 2:39 pm:

    Good article on Siedle — gives some background

  27. - Soccermom - Thursday, Oct 30, 14 @ 2:54 pm:

    This was an easy fact check, by the way — Siedle has published a number of stories on Rhode Island since he did the work for AFSCME. Here’s a recent one:

    (Dear Bruce — I know you don’t want to waste money, but you should probably get your staff access to the Google.)

  28. - Wordslinger - Thursday, Oct 30, 14 @ 8:33 pm:

    VMan, using your brilliant logic, you should vote for Willie — Willie Sutton.

    He knew where the money was.

  29. - RNUG - Thursday, Oct 30, 14 @ 9:03 pm:

    - the Patriot - Thursday, Oct 30, 14 @ 10:12 am:

    I think you are a bit confused on the status of the SB-1 pension case. It’s still in Circuit Court with Judge Belz and no rulings have been made. The next hearing is later in November.

    The only retiree case that has been decided was Kanerva (formerly Maag aka SB-1313) and it was about the premium free health insurance. Yes, the ISC pretty much telegraphed the likely outcome of the SB-1 case with their Kanerva decision but from a procedural and legal standpoint, there has been no decision in SB-1.

    And as far as the State following the orders that Judge Nardulli issued re Kanerva, the State has been complying. The deductions have been stopped and the court is trying to sort out exactly how to issue the refunds and get the attorney’s fees paid. There are a number of refund issues that have to be sorted out; one example is who receives the refund for a deceased retiree, the estate (if it is still in existence), a survivor who might be receiving a spousal pension, or the beneficiary(s) as listed on the retiree’s pension?

Sorry, comments for this post are now closed.

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