Atlanta Mayor Troubled By Ongoing Pension Controversy

Counter to statements by his chief financial officer, Reed said there’s cause for concern.

“Conflicts are a real problem for me and I have a personal issue with the lack of disclosure so I've gone and we're pulling all the records from those meetings,” said Reed.

For more than 15 years, Larry Gray of Gray & Co. has served as a city pension advisor, helping manage $2.5 billion in funds.

Pension board member Angela Green alleges late last year Gray steered more than $60 million of pension money to his own investment fund without disclosing his affiliation to pension board members.

“He didn’t give us the name of the company. He didn’t tell it was his company. He said these people don’t want to come before us and meet and if you look at the agenda – look at the minutes – you can verify what I’m saying. It was nondisclosure.”

Green filed a complaint in January with the Securities and Exchange Commission. The SEC declined comment on its status.

In addition to alleged lack of disclosure, critics say there’s a problem investing in a fund owned by one’s advisor.  Georgia State University business professor Robert Klein said it calls into question the advisor’s impartiality.

“It comes down to, at the very least, appearances are not good and do you want to set a precedent like this and start undermining public trust and the management of the city’s pension funds,” said Klein.

Atlanta CFO Jim Beard, who sits on the city’s three pension boards, was quoted last month in the Atlanta Journal Constitution saying he felt Gray’s ownership stake would be an advantage, arguing he had “skin in the game.”

Mayor Reed, however, appears to disagree.

“Candidly in the past it was not uncommon for advisors to have a fund of their own but that’s not the standard for me. The standard after everything we’ve been through regarding our pension really is best-in-class and the highest level of transparency,” said Reed.

Reed is still reviewing the case and said he’ll make a decision on whether Gray’s actions were appropriate at the end of the month.