The Coastal Star

Ocean Ridge: Protect yourself, ‘pension detective’ warns

Edward Siedle has made a career investigating flawed and mismanaged retirement assets. Tim Stepien/The Coastal Star

By Mary Hladky

    He’s been called the “Sam Spade of money management” and “pension detective.”
    Ocean Ridge resident Edward Siedle, the president of Benchmark Financial Services Inc., has forged a career investigating more than $1 trillion in retirement plan assets, uncovering flawed investment strategies, excessive fees paid to Wall Street firms hired to manage the funds and plan mismanagement.
    His expertise is sought out because public employee pension funds and corporate retirement plans are in big trouble.
    Unfunded pension liabilities — the amount that pension fund assets fall short of commitments to workers — have reached $3.85 trillion, according to a 2017 report by Hoover Institution senior fellow Joshua Rauh.
    Most city and state public pension funds are underwater. Pension obligations have contributed to the bankruptcies of Puerto Rico and several cities, including Detroit.
    The consequences are devastating to many retirees, who have seen pensions they were promised and depended on slashed, cost-of-living adjustments eliminated and the substitution of 401(k) retirement plans for traditional corporate pensions.
    Siedle’s work often involves finding out what went wrong and what can be done to shore up the plans. His findings and recommendations have met with resistance by those whose decisions he has criticized, and some have questioned his competence.
    But now, Siedle has won a measure of vindication.
    The U.S. Securities and Exchange Commission has awarded him about $50 million — the largest whistleblower award the SEC has made to date — for helping it make the case that JPMorgan Chase failed to disclose to wealthy clients that it was steering them into investments that would be most profitable for the bank, the online Rhode Island news outlet GoLocal reported in July.
    JPMorgan Chase agreed in 2015 to pay $307 million to settle accusations that it improperly guided clients into its in-house mutual funds and hedge funds.
    Siedle did not confirm or deny the award in an interview with The Coastal Star, and the SEC does not identify whistleblowers.
    But Siedle did say he is expecting a record award from another federal agency very soon.
    “The question was, ‘Is this guy right? Does he have any credibility?’” Siedle said. “The question is answered. Getting the award closes the door on that, who was right and who was wrong.”

Father’s death inspired career path
    A personal tragedy when he was 17 influenced Siedle’s decision to become a lawyer. His father, Robert Siedle, a sociologist and lecturer at Makerere University in Kampala, Uganda, disappeared in that country in 1971 as he and a freelance reporter investigated reports that 150 soldiers had been massacred by fellow troops during the brutal dictatorship of Idi Amin. A witness later said that soldiers had killed both men.
    The Ugandan government paid a settlement to both of their families without acknowledging any wrongdoing.
    The settlement allowed Siedle to attend Franklin Pierce College and the Boston College Law School, where he earned a law degree in 1983.
    While he previously had no interest in pursuing a legal career, his father’s death and the legal matters that arose from it “led me to conclude a young man needed to know how to handle these things,” he said.
    He was hired as an SEC attorney, working for three years in a division that regulates money managers and mutual funds.
    Siedle then moved to the private sector, becoming in-house counsel for a mutual fund. When he uncovered illegal activity, and his employer did nothing about it, Siedle became a whistleblower.
    He has since filed about 120 whistleblower claims with financial regulators, most with the SEC, he said.
    Whistleblowing is fraught with risk. Those who report wrongdoing and illegal activity are often fired from their jobs and blackballed from new ones.
    But for Siedle, his willingness to investigate and file claims has brought him clients seeking someone who will do just that.
    “It becomes your brand and identity,” he said. “People come to you with violations of the law. The negative becomes a positive.”
    Or, as he states on the back of his business card: “Because someone has to take out the trash.”
    Siedle, 63, was born in Trinidad and has always loved the tropics. So after many years in New England and Manhattan, he wanted out of the cold and snow.
    He scouted homes throughout South Florida before moving to Lighthouse Point in 1995. Two years later, he bought a waterfront home in Ocean Ridge, where he lives with his wife, Tamara, and two children ages 12 and 15. He founded Benchmark in 1999.
    “I wanted to return to my tropical roots,” he said. “I love it here.”

Take note and take care
    Siedle soon learned he had landed in what he termed a “challenging social environment” rife with Medicare, Medicaid, brokerage and other fraud.
    South Florida “is the scam capital of America. Even among the very wealthiest here, there is a lot of skullduggery. Many of the most prominent social figures have very questionable pasts,” Siedle said.
    He urges South Florida residents to take note and take care. “This is a high risk area for financial crime. People should understand that. … The lawyer that wants to manage your estate. The guy at the country club who says I can manage your money. People are not who they appear to be.”
    Despite the intense media coverage of Bernard Madoff’s Ponzi scheme, Siedle said people still are not carefully scrutinizing their investments.
    “To this day, people are making the same mistakes … even the wealthiest, most sophisticated people get ripped off,” he said.
    Even though he is tucked away on a quiet island, clients have found Siedle.
    He has investigated public employee pension funds in Rhode Island, Alabama, North Carolina, Jacksonville and elsewhere, and corporate retirement plans for Walmart and Boeing.
    His clients bring him on board primarily to look for undisclosed conflicts of interest, hidden and excessive fees and violations of law, he said.
    He also files suit to recover money for retirees. “We focus on Wall Street ripping off Main Street [pension funds] or causing regulators to take actions that result in recoveries to investors or retirement plan participants,” he said.
    Three of his forensic investigations were crowdfunded, which gives cash-strapped retirement plan participants money to hire him. Siedle plays no role in setting up the crowdfunding.
    Crowdfunding financed two of three investigations Siedle conducted in Rhode Island.

Pension ‘reform’ increased risk
    When Gina Raimondo assumed office as Rhode Island general treasurer in 2011, she pushed for a controversial overhaul of the state’s $8 billion pension fund that shifted a quarter of the retirees’ assets into hedge funds, private equity firms and other “alternative investments” to obtain better investment returns. In another effort to shore up the pension fund, retired employees’ annual cost-of-living adjustment increases were eliminated and current employees were moved into a hybrid pension system that has features of 401(k)s.
    As government workers protested the cuts, Council 94 of the American Federation of State, County and Municipal Employees hired Siedle to evaluate whether the move into high-fee and higher-risk hedge funds was draining the pension fund.
    In a scathing 2013 forensic report titled “Rhode Island Public Pension Reform: Wall Street’s License to Steal,” Siedle sharply criticized Raimondo’s investment strategy, saying the state’s hedge fund portfolio delivered returns that significantly trailed low-fee stock index funds and cost the pension fund $2 billion in preventable losses.
    “The treasurer has emerged as the leading national advocate of a disingenuous form of public pension ‘reform’ which involves slashing workers’ benefits and thwarting public access to information regarding the riskiest of pension investments while, in secret, dramatically increasing the risks to retirement plans and the fees they pay to Wall Street,” his report said.
    Raimondo, now the state’s governor, and other state officials have strongly disputed Siedle’s findings, but the state is divesting its hedge fund portfolio.
    Members of the Rhode Island Retired Teachers Association, which hired Siedle in 2015, are now pinning their hopes on requests he made to the SEC and FBI for an investigation into possible criminal mismanagement of the pension fund.
    Diane Bucci, the association’s legislative chair, praises Siedle’s efforts on the teachers’ behalf.
    “He has really stayed with us,” she said. “He felt the same injustice for us as we did. He gave us courage.”
    Siedle has been approached about running for Rhode Island attorney general in 2018. He said he is flattered to have been asked, and is considering it.
    Bucci thinks he would win significant support.
    “I think he has got a very good chance. He is well-spoken. He is well-versed on Rhode Island,” she said. “He has the vote of 60,000 state workers and their families and friends.”
    When problems with Jacksonville’s Police and Fire Pension Fund became too big to sweep under the carpet any longer, Councilman Bill Gulliford was instrumental in hiring Siedle to delve into the fund’s performance and management.
    Siedle’s 2015 forensic investigation was hampered by the pension board’s refusal to turn over financial and other public records. Yet he determined that the problems of the pension fund, which was $1.6 billion in the hole in 2014, were due to poor investment choices, mismanagement and board inattention to how much it paid to advisers.
    Poor investment decisions resulted in $370 million in underperformance losses, inadequate oversight resulted in paying excess investment management fees of $36 million over six years, and the fund lost about 30 percent of its value because the board did not heed credible warnings about its then-investment adviser, his report stated.
    The pension fund set up an investment advisory committee and hired a new executive director. The city has since found painful ways to shore up the fund, but new police and firefighters are hired with a significantly reduced package of pension benefits.
    “As you might expect, the people [Siedle] called out pushed back hard,” Gulliford said. “I think he had them dead to rights. A lot of those people are gone, and we are better off without them.”
    Gulliford is well satisfied with the decision to hire Siedle. “I still hold him in high regard,” he said. “He was excellent. He was a lot responsible for us finding some solutions.”
    Siedle’s reputation as an expert on forensic investigations of retirement plans has been noted in media reports, including an Oct. 22 New York Times article about allegations of improprieties by the Teachers Insurance and Annuity Association, known as TIAA.
    He also has drawn attention as a financial columnist for He drew on that work to write a book, titled How to Steal a Lot of Money, that he expects to self-publish later this year.
    Siedle’s whistleblowing will continue. Now it can be financially rewarding.
    The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act directed the SEC and the Commodity Futures Trading Commission to reward whistleblowers who provide information that leads to successful enforcement actions resulting in sanctions over $1 million. It set aside about $450 million for the awards, which can range from 10 percent to 30 percent of recoveries.
    The Internal Revenue Service and Department of Justice also have whistleblower programs.
    “The nation benefits when it becomes possible to do well — even better than the crooks — by doing good,” Siedle wrote in a column.
    While some might wonder if whistleblower programs could be imperiled by President Donald Trump’s administration, Siedle doesn’t think so.
    “I think there is broad consensus among fiscal conservatives and social progressives that whistleblower programs pay substantial dividends to society and that these programs should be supported,” he said. “While the Trump administration has gripes about many Dodd-Frank provisions, it is my understanding whistleblower programs are secure.”

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