An independent investigator looking into whether Smith Barney and Wachovia improperly collected fees from the $104-million Delray Beach fund, this week accused both firms of deliberately stonewalling his inquiry, the South Florida Sun-Sentinel reported.
The police and firefighter pension plan’s board, upset over the fact that the investigation has lasted more than a year, threatened to drop Smith Barney, if it doesn’t turn over financial records before the board’s June meeting.
Edward Siedle, a former US Securities and Exchange attorney, said he has yet to receive payment records, monthly statements and performance calculations from either company. Smith Barney financial advisor Ernie Mahler countered that last summer, Smith Barney sent Siedle “five to 10 pounds” worth of documents, according to the Sun-Sentinel.
Siedle argued that he and the forensic auditing firm involved in the investigation, Buchbinder Tunick & Company, have not received documents from Smith Barney from March 1996 to July 2002. From what Siedle’s examined so far, “It now appears that Smith Barney may have earned undisclosed compensation” from charging fees without telling the client, he said in the news report.
In addition, Siedle said he is waiting to hear back from Wachovia on whether the bank got an undisclosed amount of money from the fund by investing its cash in a high-cost money market account the bank owned.
“I think the board’s view is the residents should be happy that the board is taking the interest and doing the research to see how the vendors we hire and the companies we use are acting in the best interest of the fund as a whole,” said William Adams, chairman of the board, according to the news report.
Asked to comment on the investigation, Smith Barney spokeswoman Katrina Clay told the newspaper, “We still have a valued relationship with the board.”