Local

Lack of Disclosure from Atlanta Pension Advisor Raises Questions

July 29th, 2013

A private financial advisor who manages pensions for Atlanta city employees has come under fire. Critics allege he steered millions in public pension dollars to his own firm without disclosing his affiliation.

For more than 15 years, Larry Gray of Gray & Co. has advised the city's three pension boards. Those boards manage $2.5 billion in retirement benefits for nearly 12,000 general employees, police officers, and firefighters.

Late last year, those boards approved Gray's recommendation to steer roughly $65 million to a new investment fund he owns.

Business observers say Gray's ownership stake may call into question his objectivity if the fund ever underperforms and needs to be dumped.

But Georgia State University business professor Conrad Ciccotello says on its face, investing in a fund owned by a longtime advisor isn’t necessarily an unwise move.

“That makes him work harder, that makes him own it, that gives him firsthand knowledge about what’s going on inside that fund where we really don’t have it in funds that other people manage – they may be hiding things from us.”

Ciccotello does however have trouble understanding why the public record shows no apparent evidence Gray disclosed his financial stake to board members before the approval process.

“You now have this appearance of a conflict and folks going back and saying ‘well, why didn’t he?’ I mean, why isn’t it clear these things are affiliated with him?”

Gray could not be reached for this story, but in the Atlanta Journal Constitution, Gray argues he did disclose his ownership stake and public records are inaccurate.

Still, one of the city’s pension board members has filed a complaint with the Securities and Exchange Commission. The SEC declined comment on the complaint’s status.