For Immediate Release
April 28, 2016
Philadelphia, PA – Democratic Nominee for State Treasurer Joe Torsella released the following statement after the Philadelphia Inquirer reported that the Pennsylvania Treasury Department was involved in an FBI, IRS and SEC investigation of third-party marketers, Valley Forge Investment Corporation and Dick Ireland:
“We need an immediate ban on third-party marketers. Pennsylvanians need to be able to trust that their money will be managed with fairness and integrity, uncompromised by conflicts of interest, political affiliation, favoritism, or other unfair considerations. Under my administration, the days of needing to know someone to do business with Treasury will be over.”
Joe Torsella will implement a ban on the use of third-party marketers where the Treasurer can act unilaterally. He will also work with the legislature and the pension boards to universally ban third-party marketers involving SERS, PSERS, and other investment funds controlled by the Commonwealth.
Third-party marketers, which are often referred to as “finders,” “solicitors,” and “placement agents” act as middlemen to connect investment managers to investment funds. At times, an investment manager hires a third-party marketer solely to capitalize on the marketer’s relationship with a public fund. Third-party marketers can be paid commissions totaling millions of dollars and the costs are sometimes not clearly and universally disclosed to Pennsylvania taxpayers. Third-party marketers have been involved in pay-to-play scandals across the United States, including, now, Pennsylvania.
When third-party marketing is used by the Commonwealth, Taxpayers lose by paying fees and causing the public fund to possibly make investments based on political relationships rather than the appropriateness of the strategy for an investment fund. New York City, CALPERS, and several other major funds and political entities have already moved to ban or severally restrict third-party marketers. In 2010, the SEC proposed a rule to ban third-party marketers from soliciting business from public pension funds.
Joe Torsella has spent his life in public service making public institutions more efficient, more transparent, and more innovative. As Ambassador to the United Nations for UN Management and Reform from 2011 to 2014, Torsella was the architect and chief public spokesperson for the U.S.-led reform of the UN’s $36 billion system. As Deputy Mayor of Philadelphia, Torsella helped Ed Rendell close a $1.25 billion deficit. Torsella was the founding CEO of the National Constitution Center, helping it go from virtual bankruptcy to national treasure.