Atlanta Pension Board Calls for Audit, Further Action

Sep 26, 2013

Atlanta Chief Financial Officer Jim Beard
Credit City of Atlanta

Alleged misconduct at one of Atlanta’s three pension boards has triggered a federal investigation. The city’s longtime pension advisor, Larry Gray, is said to have steered roughly $64 million in pension money to his own hedge fund without disclosing his affiliation.

At a special-called board meeting Thursday, even City of Atlanta Chief Financial Officer Jim Beard, who had expressed strong support for Larry Gray earlier this summer, said he was concerned.

“I’d like to move that we move for a forensic audit,” said Beard.

In addition to the audit, the board requested Larry Gray produce documents and regulatory filings related to his firm and the pension board.

This week, WABE learned the Securities and Exchange Commission is investigating Gray and the pension board. And earlier this month, the Atlanta Journal-Constitution reported Gray had failed to disclose to federal regulators personal debt involving tax liens on his house and a lawsuit settlement involving accusations of fraud.

After the meeting, Beard defended his support of Gray’s dual roles as financial advisor and fund recipient.

“In reviewing documents about the market I found in my review there are several instances in which consultants also have product. That being said, the mayor of the city of Atlanta has said we want to have a higher standard and that standard would be to separate those two functions,” said Beard.

Beard said he would make sure future bids don’t involve conflicts, perceived or otherwise.

Board member and City of Atlanta Human Resources Commissioner Yvonne Cowser Yancy also had publicly supported Gray’s dual roles. But after the meeting, Casey said the relationship needs to be re-evaluated, particularly after revelations of Gray's personal financial issues.

“This is not an issue of change of heart or host of things. When there are series of data points that are raised, it’s our responsibility to be accountable to those data points and that is specifically what we’re doing.”

It remains unclear whether the board will attempt to remove Gray as its financial advisor or null the $28 million contract his firm is handling for the pension fund.

In any event, board member Gregory Nash said he’s pleased city officials involved with the pension fund now seem more inclined to act than they had previously. He said he had raised concerns about Gray’s nondisclosure and conflicts of interest for close to a year.

“Only thing I can say is they’re showing concern now. Nobody was showing concern before. Nobody has said anything to me about the SEC, about Larry Gray and Co., or anything to that effect up until today.”

Meanwhile, Mayor Kasim Reed this week called on the pension board to reevaluate its financial practices and consider removing Larry Gray.

The board’s next regularly scheduled meeting is Wednesday.