SEC charges Atlanta investment firm, two executives accused of defrauding city's police, firefighter pension funds

These are not the only public employee pension funds that have suffered from such behaiour by private consultants.

http://www.bizjournals.com/atlanta/news/2015/05/21/sec-charges-atlanta-investment-firm-two-executives.html

Phil W. Hudson
May 21, 2015

The Securities and Exchange Commission charged an Atlanta-based investment advisory firm and two executives with fraud.

According to the SEC, Gray Financial Group, its founder and president Laurence O. Gray, and its co-CEO Robert C. Hubbard IV are accused of selling unsuitable investments to pension funds for the city’s police and firefighters, transit workers and other employees.

The SEC’s Enforcement Division alleges the company and its two executives breached their fiduciary duty by steering these public pension fund clients to invest in an alternative investment fund offered by the firm despite knowing the investments did not comply with state law. Georgia law allows most public pension funds in the state to purchase alternative investment funds, but the investments are subject to certain restrictions that Gray Financial Group’s fund allegedly failed to meet.

The SEC’s Enforcement Division alleges that Gray Financial Group has collected more than $1.7 million in fees from the pension fund clients as a result of the improper investments.

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