Monday, May 25, 2009

UFOs in Horn Lake, Mississippi

Posted By on Mon, May 25, 2009 at 9:32 PM

It's not too often you get reports of UFOs in the Memphis area, much less ones that are captured on video and disseminated through YouTube. Greg Akers totally digs it -- and has the video.

Baseball, Bruises, and 'Birds

Posted By on Mon, May 25, 2009 at 1:11 PM

Funny how a hamstring is pulled in St. Louis and a groan of agony is heard in Memphis ... Frank Murtaugh takes a look at the ebb and flow of players between Memphis and St. Louis.

No Cars on Main Street in Downtown Memphis

Posted By on Mon, May 25, 2009 at 8:26 AM

The City Council recently decided not to allow the return of vehicle traffic to Main Street downtown. Mary Cashiola is a little disappointed.

Sunday, May 24, 2009

New Questions Arise About CSG's Role in Managing Shelby County Assets

Posted By on Sun, May 24, 2009 at 2:51 PM

Since the mid-'90s, Shelby County government has disposed its pension fund assets in accordance with contractual advice from a home-grown management company, Consulting Services Group, which, as the Flyer first noted last month, has been implicated in a New York State bribery scandal.

The Memphis-based firm was founded in 1990 and, like many another financial-services company, experienced hothouse growth through the last two decades. CSG has also been fined by the Department of Labor for reneging on contractual arrangements and has been identified as channeling clients' money into Ponzi schemes (including the notorious one run by Bernie Madoff).

Even if all these problems, though matters of public record, were imperfectly grasped by Shelby County officials, another matter should have been front and center on the county agenda. As noted in the current issue of Forbes Magazine -- which, along with The Wall Street Journal, has devoted significant attention to CSG of late -- the county's pension board in 2006 commissioned its own review of CSG's practices. This was at a time, according to Forbes, when Memphis Light Gas & Water, another client, had backed away from its relationship with the CSG.

"Conflicts of Interest"

The company that performed the review, Benchmark Financial Services, presented the county with a report that attributed a "myriad of conflicts of interest" to CSG and found that the company, by routing the county's pension fund through successive layers of investment firms -- culminating with a final distribution into some 120 hedge funds -- "has derived exponentially greater compensation from the fund as a result of this elaborate hedge fund of funds arrangement."

The report found that this chain-letter mode of investments saddled Shelby County with "three layers of fees that together siphoned off between 2.5 percent and 3.25 percnet annually, plus 20 percent of any profits." As Forbes notes, the profits CSG was then making off the setup, and the risks Shelby County was facing as a result, could not be precisely quantified, because, as that 2006 Benchmark report said, "identities, securities holdings, trading costs and custodians" for "some or all" of those 120 hedge funds were unknown.

Even so, with all this damning self-solicited information at its disposal, Shelby County renewed its contract with CSG in April 2007 after conducting what county retirement-systems manager David Pontius said had been "a national search," when recently queried about the CSG matter by Shelby County Commissioner Mike Ritz.

Ritz Investigates

Shortly after learning in mid-April about CSG's involvement in the New York bribery scandal from a source in New York State government, the Flyer had shared its information with Ritz, a veteran of the investment business, who was known to have made repeated inquiries of Shelby County officials -- at that point unanswered -- concerning the county’s mode of handling pension fund assets.

What the Flyer had learned at that point was that Consulting Services Group had been cited in a complaint by the Securities and Exchange Commission, which asserted CSG had acquired management control over New York State Retirement Fund assets by paying a kickback of $1,150,000 in 2005 to a top political aide to the state's then comptroller, Alan Hevesi.

Though CSG was no stranger to the comptroller's department, having long consulted with New York State on its hedge fund investments, it was compelled, as the cost of landing the management contract, to pay that amount, disguised as a "finder's fee" equivalent to 30 percent of the management fees that CSG could expect to receive for handling New York’s pension assets.

The several comptroller's employees involved in the transaction were indicted for extortion by New York State Attorney General Andrew Cuomo. CSG itself was not itself charged but may be providing evidence in that case, as well as in the SEC investigation into the state comptroller's department.

Ritz provided the Flyer with contextual and background material and intensified his own ongoing investigation into the county's pension matters. Armed with copies of a Wall Street Journal article concerning the New York state matter, Ritz distributed them via email to a list of Shelby County luminaries, including county mayor A C Wharton; county financial officer Jim Huntzicker; county attorney Brian Kuhn; Mike Carpenter, Deidre Malone, and J.W. Gibson (the three members of the County Commission's committee dealing with pension funds); and District Attorney General Bill Gibbons.

That email, and an avalanche of subsequent ones from Ritz, including a request that the county initiate "a thorough review of every money management relationship, the circumstances of each firm's original selection to advise the Pension Fund, any charges by any party against any advisor, and any other matter the Retirement Board or Investment Committee deems appropriate," generated at least partial results.

County Officials Respond

Professing to "share the same concerns" as Ritz, Wharton pledged to see that he got his answers. Huntzicker, too, responded, promising to "see that our board exercise its 'due diligence' on this matter and all other contractual relationships." Huntzicker's return email to Ritz noted that CSG received an annual "base consulting fee" of $110,000 from the county "for investment advice and certain reporting functions, as well as additional fees for special manager searches and hedge fund monitoring."

At the end of 2008, according to Forbes, quoting Pontius, 18 percent of the county's pension assets were in a CSG "fund-of-funds" program, for which the county was paying out 55% of its annual management fees. Notes the magazine: "Last year, the pension lost 25 percent of the assets it had invested in CSG's hedge fund program, net of fees."

But, said Forbes authors Asher Hawkins and David K. Randall, it could have been "far worse." As Hawkins and Randall noted, assets of the Fort Worth Employees' Retirement Fund and San Antonio Fire & Police Pension Fund had been channeled, on CSG's advice, into Madoff's now notorious Ponzi scheme. Other clients had their assets steered into something called the Bayou Group, which was also determined, says the Forbes article, to have practiced a Ponzi scheme. As part of the fallout, say the authors, "one former client, a pension plan for University of Tennessee doctors, has ... sued CSG for breach of fiduciary duty."

"Going Strong"

Another issue with CSG concerns its operation of Trading Services Group, an associated brokerage which handles client trades, thereby generating additional income for the parent company. Earlier this year, CSG was fined $28,000 by the Department of Labor, settling a case in which the department found CSG to have withheld $278,000 from clients in "promised commission rebates" relating to its in-house brokerage. CSG was also compelled to repay the unnamed clients for the $278,000, which had been withheld, CSG president Brian Jones told Forbes, because of a "miscoding in our billing system."

Whatever the ultimate result of the promised county review of its pension arrangements, CSG is "going strong," says Forbes, which credits the company with advising 42 public and private pension funds on how to allocate $16 billion and which money managers to hire -- even while "taking money from some of those same managers for steering business their way."

John Daly: Pink Pants for Amy Mickelson

Posted By on Sun, May 24, 2009 at 1:53 PM

Daly wore pink pants in his final round of the BMW PGA Championship. Fashion faux pas? Nope. He actually donned the pink trousers in support of Amy Mickelson — the wife of golf superstar Phil Mickelson — who has been recently diagnosed with breast cancer. Greg Akers has the story.

Saturday, May 23, 2009

Becky Quick Inspires Memphis Rockers

Posted By on Sat, May 23, 2009 at 9:15 AM

CNBC anchor Becky Quick is getting some love from the local music group 40 Watt Moon. Greg Akers has the story in Sing All Kinds, the Flyer's pop culture blog.

Friday, May 22, 2009

Whip That Egg, Pinch That Salt

Posted By on Fri, May 22, 2009 at 2:28 PM

MIFA and the Music Commission put out call for recipes.

"Terminator Salvation": Was This Really Necessary?

Posted By on Fri, May 22, 2009 at 7:45 AM

Chris Herrington takes a look at the latest from the Terminator franchise.

Thursday, May 21, 2009

Memphis' Freshest Food News

Posted By on Thu, May 21, 2009 at 3:58 PM

From fresh strawberries to local roadside stands, food writer Pam Denney's got the latest scoop on the edible side of Memphis.

Cody Dickinson's New Band

Posted By on Thu, May 21, 2009 at 11:31 AM

The North Mississippi Allstars drummer has got a new band. Chris Herrington's got the story.

What Do Ginnifer Goodwin and Hailey Barbour Have in Common?

Posted By on Thu, May 21, 2009 at 9:26 AM

They got blogged by BruceV.

The Prosecution Rests ...

Posted By on Thu, May 21, 2009 at 7:23 AM

John Branston wonders why there has been such a delay in appointing a new U.S. Attorney.

Wednesday, May 20, 2009

More on the Sexual Assault Crisis Center Fiasco

Posted By on Wed, May 20, 2009 at 11:09 AM

"Last year, around this time, we were talking about the animal shelter and mistreating animals. Now we've upgraded to mistreating victims of crime. This is not a national model. It's a disgrace."

So said Councilman Shea Flinn during the City Council's executive committee meeting on the Memphis Sexual Assault Resource Center today ...

Mary Cashiola has more on MSARC at her In the Bluff blog. (Second item)

Grizzlies to Pick Second: Is It Rubio?

Posted By on Wed, May 20, 2009 at 6:48 AM

Chris Herrington has some thoughts about the Grizzlies' draft options at Beyond the Arc.

Tuesday, May 19, 2009

Grizzlies to Draft Smallest Person in the World

Posted By on Tue, May 19, 2009 at 4:28 PM

Nah, just kidding. But thanks to a helpful reader, Vance Lauderdale has learned the truth about this diminutive former Memphian.
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