According to the Palm Beach Post, attorney-turned-scam-detector Edward Siedle claims he was hired by the pension board of the Delray Beach police and firefighters to investigate suspicions that it was being duped by Salomon Smith Barney, which oversaw its $120 million investment portfolio from 1995 to 2006 (see Smith Barney Fails to Get Pension Case Moved out of Court).
The lawsuit, filed last week in Palm Beach County Circuit Court, claims that the pension board didn’t pay Siedle for work that helped it launch a $9 million lawsuit against its investment consultant.
Siedle, president of Benchmark Financial Services, claims that information he uncovered during his four-year investigation was used by the pension board to sue Smith Barney in November 2008 (see City Pension Board Seeking Settlement from Broker on Trading Fees).
In the lawsuit now pending in U.S. District Court, the board claims Smith Barney “intentionally, recklessly or negligently” mismanaged the fund and misrepresented how much the board was making on its investments. “[It] painted a rosier picture of the fund’s performance than was actually true,” according to the federal lawsuit.
It also accuses Smith Barney of self-dealing, claiming that the firm used its position as the pension board’s money manager to become a broker so it could collect commissions on the pension board’s investments (see Eyes Wide Shut, PLANSPONSOR). The board is seeking the return of the more than $9 million it would have made had Smith Barney managed the portfolio properly. It is also asking the firm to return fees it paid for services that weren’t performed.
However, in his lawsuit, Siedle said much of the information was uncovered during his investigation – and that he is owed $945,750. For its part, Smith Barney has repeatedly denied the claims in the pension board’s lawsuit.