A final transparency (or lack of transparency) note for the day. John Cheves reports in the Lexington Herald-Leader that Riverstone Holdings stands in line ahead of unpaid Blackjewel coal miners — as a "super-priority secured debtor-in-possession" — in Blackjewel's federal bankruptcy proceedings.

The transparency issue is, again, tangential to Cheves's article but directly relevant to a critical issue we have commented on in the past.

https://www.facebook.com/419650175248377/posts/489370308276363?sfns=mo

That issue is the failure of the retirement systems, and lawmakers, to hold investment firms accountable under state law — specifically, 2017's SB 2 — mandating that they post their contracts and fees on the retirement systems' websites.

Cheves observes:

"Among Riverstone's many clients is the $21.3 billion Teachers Retirement System of Kentucky, for which it manages $82.6 million in pension and health insurance fund investments. In fiscal year 2018, Riverstone collected more than $1 million in investment fees from TRS."

A partial accounting, at best, of its management fees in a single year, but whose contracts are entirely omitted from the TRS website *with TRS's blessing*?

Riverstone Energy and Power Fund V, Riverstone Energy and Power Fund Vl, and Riverstone/Carlyle Energy and Power Fund lV.

TRS explains that these and many other contracts:

"have been marked confidential and proprietary by the funds being invested in, and the managers of those funds have submitted letters to TRS reasserting that position."

TRS goes on to explain that statutorily mandated posting "would be detrimental to the fiduciary duty to seek to maximizing [sic] returns on the investments of its members and, in some cases, negotiate fees more favorable than what other pension systems pay, also disadvantaging the members."

Rather than risk offending fund managers or breaching fiduciary duties based on purely speculative and wholly unsubstantiated concerns, TRS — like KRS — blithely elects to ignore a statutory duty.

And lawmakers quietly look away.

Perhaps by coincidence, on August 26 Auditor of Public Accounts Mike Harmon announced that he would hold a press conference at 10:00 am on August 27 to release a long awaited and highly anticipated special examination of policies, procedures, and transparency compliance activities required by Senate Bill 2 of retirement systems in Kentucky.

https://m.facebook.com/notes/auditor-mike-harmon/auditor-harmon-to-rele…

Perhaps Kentucky's retirement systems will be forced to acknowledge their "higher legal and moral duty to Kentucky's public employees, not to mention its taxpayers, than any purported obligation to their investment managers, their self-serving interpretation of Kentucky law, and their baseless confidentiality agreements."

Perhaps, at long last, the retirement systems will be forced to acknowledge that they "are the servants of the people and not of their investment managers."

Or perhaps not.