EDITORIAL: Raimondo’s Hedge Fund Problem

Now-Governor Gina Raimondo claimed her political bones and gained national press attention through her role in “pension reform" in Rhode Island.

But now, a growing chorus of pension experts and leading Democrats are saying her role is overstated and her post-reform strategy of heavy investments in hedge funds cost more than the actual pension reform saved.

This is a real issue for taxpayers and retirees.

In the Critics' Glare

In the past she ridiculed her critics, but now the diversity and the track record of their predictions are creating a significant problem and undermines Raimondo’s credibility.

Here are some of the Raimondo detractors — it is a growing and diverse list.

1) Ted Siedle - when he first burst on the scene in 2013, the Raimondo team called Siedle a blogger when he began to raise issues about Raimondo’s investment strategy in hedge funds.

Siedle, a Forbes columnist and former U.S. Securities and Exchange Commission (SEC) investigator is soon to be the recipient of the biggest whistle-blower ever awarded by the SEC. As GoLocal first reported on Friday, Siedle will receive approximately $48 million as part in his role in the enforcement of JPMorgan which led to $300 million in penalties in 2016.

2) Lincoln Chafee — the former Republican U.S. Senator and independent and Democratic Governor has been peppering Raimondo on her ties to Wall Street. Chafee like Siedle claims that Raimondo not only hurt state retirees, but more importantly, choose a strategy that would benefit the Wall Street hedge fund industry - and allow herself to fundraise millions.

3) Seth Magaziner — initially when he entered office he defended the Raimondo hedge fund strategy, but once the performance numbers came in and the criticism grew, he abandoned the Raimondo playbook. In May Magaziner announced, "We are moving away from the high-cost hedge funds that have failed to meet expectations while charging unacceptably high fees. Our new Back to Basics strategy will improve performance and reduce risk, providing a more secure future for Rhode Island public employees and all taxpayers.”

While Chafee’s motivation can be questioned as he is considering running for Governor, Siedle and Magaziner come from two entirely different worlds and both come to the same conclusion.

Matt Taibbi of Rolling Stone magazine wrote, “…Led by its newly elected treasurer, Gina Raimondo – an ostentatiously ambitious 42-year-old Rhodes scholar and former venture capitalist – the state declared war on public pensions, ramming through an ingenious new law slashing benefits of state employees with a speed and ferocity seldom before seen by any local government.”

Raimondo may have a hard time explaining. Moreover, whenever anyone sees one of her re-election TV commercials, will they think of the message - or focus on that those commercials are paid for Wall Street interests.

Raimondo has a hedge fund problem.

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