The RI Democratic Unity Hoax

      Democratic Hypocrisy in Rhode Island is oozing even beyond its normal level.Debbie Wasserman Schultz now joins  in this  cynical effort to display a real unified policy front  in the corrupt state of  Rhode Island with its seriously flawed individual leaders. For example ,on the issue of Social Security and pensions Democrats are massively confused and conflicted,   Senators Sheldon Whitehouse and Jack Reed as well as Congressman David Cicilline and Jim Langevin  have expressed forcefully  on repeated occasions that  efforts to privatize or even  partially privatize Social Security are "risky". At  at the same time. as residents and supporters of people like Angel Taveras and Joe Polisena they have hugely underfunded local pensions. Stocks are the huge favorite by Democratic mayors on how to fund these retirement plans. Are the mayor being to risky ? Why aren't the Senators or Congressmen  speaking out? Dont they care about local retirements or public workers? Are they critical of Angel Taveras huge investment in a single leveraged hedge Fund?Unquestionably Taveras et al  have put  taxpayers and beneficiaries at risk of enormous losses due to hedge fund and private Equity investments. David Cicilline and Angel Taveras who are  both stalwart democrats   have invested huge in the same hedge funds  on behalf of public employees and taxpayers even while they knew their  pension plans were already at enormous risk and taxpayers would have to bail them out. How does that square with the idea that stocks are too risky for social security? Obviously, it does not square. No wonder 10% of the public believes in Washington. So lets look at our elected officials  comments and what they have done or said re pensions and stock investments.
   The  typical comment  Democratic position  on equity investment by  Social Security  or individuals investing with SS money is as follows:

                Privatizing Social Security, which essentially is putting peoples' retirement money at the whim of the stock market, will weaken the federal retirement system through potentially risky investments.
Both Whitehouse  and Reed have made similar comments
           

Debbie Wasserman Schulttz  clearly aligns with the near universal democratic position on  whether stocks or corporate bonds should be held by Social Security.   here is a comment during the recent presidential campaign;

“ Paul Ryan still pushes through his budget that ends Medicare as we know it,  -- he  moves toward privatizing Social Security, he asks for cuts education and increases taxes on the middle class, so that we can -- so that we can cut taxes for the wealthiest, most fortunate Americans,” Wasserman Schultz said. “That's why Americans are concerned that we're not going to actually be able to maintain the prosperity that we've finally returned to.

 Sheldon Whitehouseon Investing in stocks with retirement dollars

Q: Will you support or oppose using Social Security taxes to fund private accounts?

A: Social Security has been the foundation of our country’s promise that no American will have to face an impoverished retirement. The Republican leadership in Washington is committed to undermining this promise through a risky scheme to put Social Security funds in the stock market as part of new private accounts. We should never again put seniors’ livelihoods at risk from a catastrophic stock market crash. I am opposed to President Bush’s proposal to cut Social Security benefits to middle-income workers through progressive indexing, and am disappointed that Senator Chafee has expressed support for this plan.
Source: AARP Senate candidate questionnaire , Sep 29, 2006   

 So Mr Whitehouse thinks stocks are a risky scheme for SS participants but for Rhode island  State and Municipal Workers who do not pay into social security instead into local  plans not only are stocks fine, but Rhode Island retirees should be exposed to hedge fund investments by Cicilline, taveras  and Raimondo.  Why are stocks risky for social security and not for municipal or state employees?

Jack Reed

 "As we celebrate the great success of Social Security, we must also recognize that it does face a long term financial challenge. I will work with my colleagues to strengthen Social Security, not to dismantle it through a risky privatization scheme. Deep benefit cuts and trillions in new debt is no way to honor the great legacy of President Roosevelt and Francis Perkins."

 Again  Mr Reed supports the  governmental   policies of  Gina Raimondo and  David Cicilline and Angel Taveras. Yet they all had significant investments in hedge funds, equities and alternative investments using retirement money. There are no concerns  expressed by leading democrats about the retirements of State and Municipal portfolios.Are they too dumb to know they are walking hypocrites?

    Calpers recently announced ,to the delight of many dems and unions, the shedding of Hedge fund investments. My question is why did they do that and whats appropriate? How can Dems believe its appropriate to back social security with investments in only US  30 year bonds at 3% and then not have any qualms at all about the very risky portfolios for retirement managed at the State and Municipal level?  Where are the progressives on this? Should we invest retirement funds in stocks and hedge funds based on  mayor Taveras "feel"?  What is an appropriate investment for cities and towns retirees and why is it  different from Social Security?. In both cases the taxpayer would pay for shortfalls. Why not risk free instruments for states and munis?Why does  David Cicilline put a big bet on hedge fund Renaissance Technologies for Providence retired Police and Fire and then say in Congress that  stocks are inappropriate for social security. What exactly are the dems saying?

Waiting for CFA ruling against Trillium and Magaziner

 I have filed an official complaint with the CFA institute re: Seth Magaziner, Trillium Asset Management and CEO Matthew Patsky. It is now under review and I don’t know when I will hear a response. Generally it takes 5 business days.

 As I outlined in detail previously http://rishrugs.blogspot.com/2014/07/ri-treasury-candidate-seth-magaziners.html , Rhode Island candidate for Treasurer Seth Magaziner  has openly violated several tenets and aspects of the CFA code of Asset Management. Shortly thereafter Trillium Asset Management ,where Magaziner currently works and  who had already violated CFA supervision rules, piled on with CEO Matthew Patsky publicly endorsing Magaziners  misrepresentations.

July 2014 Seth Magaziner

.."at the same time I have made strong investment returns for my clients. I look forward to doing the same for the State when I am treasurer"

"My record as an investment professional is unmatched in this race .I have taken on the responsibility of managing funds for church groups and non profits and retirees. And I have delivered . I look forward to doing the same thing for this state"

”The most important thing we can do to bring “colas” back to the workers and strengthen the pension system  is to make strong investment returns and My track record as an investor is  second  to none in this race.”

Here is a summary what  Magaziner and Trillium violated.

 Summary

1) Seth is a research analyst not a money manager or portfolio manager nor has ever managed money professionally.

2) Seth has zero Investment professional accreditation or licenses (series 65,66.7,CFP,CFA,ChFC etc)

3) Seth has no track record. His firm does and his team might but he does not.

4) Seth mislead about the performance of his firm in addition to making up his own performance.

5) Seth repeatedly makes investment claims to the public for which he has no evidence. Almost all money managers and portfolio managers have specific track records. Seth is a research analyst perhaps that’s why there is no record. That being the case these statement are known as lies  and that’s not a good sign for Treasurer but probably a great sign for a long political career in Rhode Island.

 

The following is just one part of the code Trillium and Seth Magaziner are governed by and it could not be more clear.

Asset Manager Code

E.1 performance presentation

   Managers have a duty to present performance information that is a fair representation of their record and includesall relevant factors.

 In particular, Managers should be certain not to misrepresent their track records by taking credit for performance that is not their own (i.e., when they were not managing a particular portfolio or product) or by selectively presenting certain time periods or investments (i.e., cherry picking).

For those who care about integrity and investment performance standards I have provide the following links:

 http://www.cfainstitute.org/ethics/codes/assetmanager/Pages/index.aspx

http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2009.n8.1

Ethics and Standards - Standard III-D: Performance Presentation

When communicating investment performance information, Members or Candidates must make reasonable efforts to ensure the information is fair, accurate and complete.

Reasoning behind Standard III-D
This Standard applies the guiding ethical principles of fair representation and full disclosure to the measurement and presentation of investment performance information. Much of the negative stigma associated with the money management business has to do with the marketing of performance returns in an effort to capture attention (e.g. "We returned 46% last year, and the market only did 11%! Sign up with us!"). Prospective clients and the investing public at large don't know what to think. Are these numbers a fair indication of what they can legitimately expect or a sleight-of-hand magic trick that may or may not be a total fabrication?

E. Performance and Valuation

1.   Managers must:  Present performance information that is fair, accurate, relevant, timely, and

complete. Managers must not misrepresent the performance of individual

portfolios or of their firm. Although past performance is not necessarily indicative of future performance, historical performance records are often used by prospective clients as part of the evaluation process when hiring asset managers. Managers have a duty to present performance information that is a fair representation of their record and includes

all relevant factors.

 In particular, Managers should be certain not to misrepresent their track records by taking credit for performance that is not their own (i.e., when they were not managing a particular portfolio or product) or by selectively presenting certain time periods or investments (i.e., cherry picking). Any hypothetical or backtested performance must be clearly identified as such. Managers should provide as much additional portfolio transparency as feasibly possible. Any forward-looking information provided to clients must also be fair, accurate, and complete.

Huge Hedge Fund bet by Cicilline and Taveras under U.S. scrutiny

                                      So many Questions but none from Taveras

 Renaissance Technologies and Wainwright Investment Council are joined at the hip. At $31 million dollars the Hedge Fund known as "Renaissance Institutional Equities Fund LLC (series B)" was and is  the largest single Investment of Chairperson  Angel Taveras. This one hedge fund investment alone accounted for 11.4% of the entire Providence portfolio as of June 24 th ,2014 and Hedge Funds in general were 15.6% of Providence portfolio.
        So we have been trying to find out more about Wainwright Investment Counsel LLC  and their relationship with Providence's Finance director Mancini and Angel Taveras. Since all the a fore mentioned have refused to disclose the nature of their relationship and the fees or costs bourne by beneficiaries as is required, we have had to review older Providence Investment Commission meetings and any suspicious investments going back several years.
       Wainwright Investment Counsel was hired in November 2005 by Vincent Cianci. Mr Mancini could only provide us with one RFP for the investment adviser position in the last 20 years. Mayor Taveras decided not to even put it out to bid despite his so called extensive review and category 5 commission. Also not discovered by Taveras and the Swat team was an accounting trick of $57 million dollars that the auditors ruled inappropriate in January this year. Because of this ruling it appears that this $57 million was fictitious and will be lost to the pension plan and its benefiticiaries.
      Wainwright Investment Counsel  LLC is theoretically responsible for advising Taveras commission on its investments which are then approved by Taveras. Our communications with and investigation of Wainwright have been suspicious to say the least.
       The offices in Boston are virtually empty and there is no waiting room or brochures of any kind.The firm doesnt answer phone calls.The Website doesn't show any personnel or management team and looks sketchy to say the least.

http://www.winvcounsel.com/

   Wainwright  settled  for $2.4 million dollars in 2009 claims that clients had complaining about having invested in Bernie Madoff feeder funds. None of this information is disclosed on Providence site.


    Renaissance Institutional Equities Fund LLC (series B) is an iteration of  hedge Fund giant Renaissance Technologies king of High frequency, algorithmic  type trading. recent hearings in late July in the United States Senate produced a report on Hedge Funds using tax dodging schemes the article is linked below and as you will read:
 "The subcommittee focused on options involving two of the largest basket option users, Renaissance Technology Corp. LLC (“RenTec”) and George Weiss Associates." there is a 93 page report exposing and investigating these complicated schemes. Providence 's largest investment is in this companies hedge fund  approve by Chair Taveras. In the past Wainwright has been affilliated with renaissance and in fact they have jointly issued product before. It is unclear what fee sharing or profit sharing arrangement wainwright has with Renaissance because neither Providence or Wainwright will disclose that or confirm what exactly Wainwright, Providence, Renaissance, Mancini, Cianci and Taveras have. Not only did Cianci hire Wainwright in 1995. In 2001 Mr Cianci openly pushed for investing in hedge funds, something that had not been done prior to that time.

                    Bertonazzi pushes hedge funds   

     In the 1st quarter of 2001 Wainwright selected 4 hedge-funds and Providence committed roughly $21 million dollars or 6% of the portfolio. In March and April of 2006 Investment Chair Mayor  David Cicilline approve investments in Point Judith Capital and a large investment in "Renaissance RIEF Fund" the recommendation was made by Eric Bertonazzi at Wainwright Investment Counsel LLC for $20 million on April 1 ,2006.
    Not only did Mr Cicilline and Providence invest in Renaissance in the July 2006 minutes Board member Allan Edwards told new member Craig Baker that they"all" invested in that one also(Renaissance).

                   Providence buys into extraordinary claims of Renaissance 
Love affair reminiscent of Schilling

    The minutes of February 2006 show board members and the Mayor gushing over Mr. Dwyer from Renaissance presentation. There goal was very" Madoff like"  as Mr Dwyer stated:

" We are – we’re shooting to outperform the S & P 500 at a minimum of about 600 basis points. Based on the long terms of the S & P 500 performance, that means we’re looking for a return somewhere in the mid teens, about a year in, year out basis.And then as far as volatility, we’re looking to do about two thirds volatility in the market, and that would mean somewhere, you know, high single digits, low double digit volatility. In other words, let’s say we get – for us a normal year would be return of about 15%, volatility of about 9%, and that would be something that we would be – we would be quite satisfied with. "

"MAYOR CICILLINE: Is there any discussion we need to have? Any further – do you have further comment?
MR. BERTONAZZI: Any other questions?
MR. EDWARDS: I have no further questions. I’m very happy that we’re able to find this. Eric has taken a due diligence on that, and, you know, let success beget success. I sort of – what’s been very interesting to me is your organization. And I would – it would be intriguing to come visit you in Stony Brook. We’re putting up a technology up at the school there.
MR. DWYER: You are?

" MR. EDWARDS: You know we’re coming to the City by the way.
MAYOR CICILLINE: Yeah, of course, we can do this citywide. We’ll charter the City plane.
MR. EDWARDS: Right.
MAYOR CICILLINE: That is assuming the City yacht is not available."

Like lambs to a slaughter 

  

"MR. DWYER: Good bye.
MS. YORK: Can I bother you for a card?
VICE-CHAIRMAN PRIGNANO: She is going to invest. She’s getting a card.
MR. EDWARDS: Yeah, I’d say, Myrth –
MS. YORK: I’m going to put it with your preference.
MR. DWYER: Bye-bye everyone.
MR. NAPOLITANO: Take care.
MAYOR CICILLINE: All right, so we need to do an actual motion, I presume.
MS. YORK: Do we?
MAYOR CICILLINE: Or do we?  "

 So just what were the returns for Renaissance and Providence ? 

according to Wainwright and the City of Providence Renaissance has returned 7.4% annually compared with  6.56% annualized S&P 500 total annualized return over the exact same period.

Wainwright and Renaissance above promised 600 basis points above the S&P 500 per year...at 2/3 the risk. This did not happen despite 71 phd's.

So what Riley so they didnt do what they said ..they still did ok?

From Providence Standpoint they didnt get killed..they got snookered but not killed . So why is it 11% of the fund? Did Bertonazzi get money from Renaissance like they did from Madoff?
Is Renaissance another Madoff? or just another hft long short fund?


Some more troubling news, The Permanent Subcommittee on Investigations is looking into tax evasion and abuse of structured financial products. In July 2014 , a few weeks ago, the subjects of the investigation were announced. You guessed it, it centers on Renaissance Technologies. For those so inclined, you can read the link below and from there download a 90+ page report. from the U.S. Senate

http://www.hedgefundlounge.com/2014/07/senate-hedge-funds-used-%E2%80%9Cbasket-options%E2%80%9D-to-dodge-taxes/

 United States Senate
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
Committee on Homeland Security and Governmental Affairs
Carl Levin, Chairman
John McCain, Ranking Minority Member
ABUSE OF STRUCTURED
FINANCIAL PRODUCTS:
Misusing Basket Options to
Avoid Taxes and Leverage Limits



BASKET OPTION CASE STUDIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
A. Basket Option Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(1) Deutsche Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(2) Barclays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(3) Renaissance Technologies LLC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(4) George Weiss Associates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33


There's more probably much much more. Eric Bertonazzi talks a very godd game and seems quite professional. But is everything as it seems. What is Wainwright Investment Counsel LLC why did they have a Madoff feeder fund and pay 2.4 million to settle lawsuits? Was this disclosed to Taveras or Cicilline? And now with Renaissance long rumored to be suspicious, what s up with last years co -filing of a new fund managed by Renaissance and Wainwright? Does Wainwright collect fees? Do they or Bertonazzi get paid by Renaissance to manage Providence money? How much and was that ever disclosed?
   Notice the address   on that fund  below . For my regular readers . It is the same one I called they refused to answer any questions and no one else was there and its also  the same address my friends investigated and found "eerie" with no waiting room or brochures or activity of any kind. If you think these are the kind of unexplained ,undisclosed relationships that are appropriate and not due diligence on . Or Taveras is right to make this hedge fund  Providence's largest investment than you are willing to tolerate all kinds of risk.
   For me I dont trust renaissance, wainwright, Madoff, Cicilline or Taveras.

WAINWRIGHT RENAISSANCE FUND 1, L.P.

• Summary
• 13D/G
• Insider (Form 4)
• Form D 2

• Contact Information

  wainwright renaissance fund 1, l.p.
  ONE BOSTON PLACE
  BOSTON MA    02108
  Business Phone: 617-531-3100

• Recent SEC Filings

  Recent filings

  Form D/A	2013-12-16
  Form D	2012-06-15

RI treasury Candidate Seth Magaziners misrepresentations exposed

                                                        Seth Magaziner Revealed

    It really shouldn’t be this hard to verify the claims of a Candidate for any State Office. It’s especially important that claimed performance and track record be verified for the office of Treasurer. We want a candidate who has a track record and experience and most importantly tells us the truth about their experience and record. 

   Unfortunately one candidate for Rhode Island treasurer , Seth Magaziner, has made a series of claims ,exaggerations and misrepresentations neither he nor Trillium Asset Management his employer  can explain. So we have had to put our detective hat on and get to the bottom of this.

   So because Magaziner refused to identify any particular money management function we’ve had to deduce that he was an “ANALYST” for one of several Funds Trillium runs. So we can follow this all together, at this point you should download the small/ mid cap core Fact Sheet

 

http://www.trilliuminvest.com/trillium-investment-strategies/

download small/mid cap Core fact sheet  (second one down)

 INVESTMENT PROCESS

The investment process begins with sector allocation based on economic outlook, benchmark allocation, and risk/return expectations for each sector. Within these sector guidelines, the strategy seeks stocks with superior earnings growth prospects and environmental, social, and governance (ESG) records, but which are available at a reasonable price. A team of fundamental, sector focused analysts conduct bottom-up financial analysis including a rigorous integrated review of financial and ESG factors. The Investment Management Committee, comprised of portfolio managers and analysts, meets periodically to review and approve recommendations to the buy-list recommended by the analysts. A strategy team, headed by the lead Portfolio Manager, rebalances the portfolio on at least a quarterly basis to identify the best sub-set of names from the buy-list at that particular point of time. The team leverages an optimization process that helps monitor and control portfolio characteristic exposures while overweighting companies based on a proprietary alpha score that includes an analyst rating, an ESG rating, and technical, valuation, and momentum inputs. In this sense, the strategy is fundamentally driven, but quantitatively assisted.

Investment Performance % (as of 3/31/2014)

                                             QTR      1-YR        3-YR        5-YR      GIPS Inception

Gross of Fees	4.8%	28.5%	13.7%	25.8%	10.3%
Net of Fees	4.6%	27.8%	13.0%	25.1%	9.7%
S&P 1000	2.4%	23.2%	14.2%	25.3%	9.1%

You can now recognize this above section of the fact sheet so readers who haven’t downloaded the fact sheet can follow along.

Each of the claims below are direct quotes from  Seth Magaziner on WPRI Treasury Debate  https://www.youtube.com/watch?v=IMYSvfzG4fI   or http://blogs.wpri.com/2014/07/13/watch-newsmakers-almonte-caprio-and-magaziner-debate/

There are also multiple reports of outlandish claims at a Laurel mead debate.I don’t have a tape or transcript.

   Magaziner Quote and claim                                     Fact Finding

..."at the same time I have made strong investment returns for my clients. I look forward to doing the same for the State when I am treasurer"	There is no evidence of returns produced individually by Seth for any client at any time… He was an research analysts on a team lead by Portfolio manager Laura McGonagle
"the biggest factor in Rhode Island under funding problem, I think, is poor investment returns. Now at Trillium, the firm that I work at in the private sector, we have outperformed the market. We have beaten the market 5 out of the last 7 years. We made north of 30% last year."	The above table from Trillium shows underperformance against the benchmark s&p 1000 for both the 3 yr and 5 yr time frame… Last 12 month return was 27.8% for small cap not 30% and Seth  didn’t manage it The SEC and Finra and the CFA are kind of picky Dear Seth, you don’t claim you are the manager ,when you are one of several analysts on a team that also has portfolio managers,(which you were not and you don’t approximate or exaggerate returns
“We need to elect a treasurer who has a track record of producing strong investment returns. That's why I am running for treasurer. That's what i want to deliver to the people of Rhode Island.”	Again Seth has no track record And that’s what he would bring to the people of Rhode Island
”The most important thing we can do to bring “colas” back to the workers and strengthen the pension system  is to make strong investment returns and My track record as an investor is second to none in this race.”	Not only does he brag about a record he doesn’t have.. he then compares it to the other candidates records which he hasn’t investigated. I have no comparable periods which to compare any of them
" I have delivered strong returns in the private sector. I will do the same in the public sector for our State."	Again he has not and there is no record of him ever managing any money or fund..he was a RESEARCH ANALYST
"I really cannot stress enough the importance of strong investment returns. The rest is really academic if you dont make good returns."	While we agree…we see no record of him managing money and producing returns of any type ..good , bad   or neutral
" The most important thing when looking at someone’s track record is how they have done relative to their peers. Now, relative to our peers at Trillium, relative to other equity funds, we have outperformed. We have outperformed while I have been there. We've outperformed in two areas that I "oversaw" . I was in charge of all of  "our" investments in financial Services and energy Companies, about $100 million in investment positions." We" outperformed in those sectors and outperformed relative to our peers	This is clearly wrong for the fund he was a part of a team of research analysts the above table shows the underperforming the benchmark over the last 3 years producing 13% vs the benchmark 14.2%. Seth claims hes been there managing money for 3 years. Outr take is that he may have been there , but he didn’t manage money and they underperformed. The end of this comment shows some new claims…he oversaw all investment in Financial Service companies and energy companies for the entire 1.5 billion dollar fund. He specifically managed 100 million in investment positions/ This role is a new revelation that again we have been unable to confirm. We don’t have any record of job title or performance.
"My record as an investment professional is unmatched in this race .I have taken on the responsibility of managing funds for church groups and non profits and retirees. And I have delivered . I look forward to doing the same thing for this state"	Its not clear what he is referring to here. Is he referring to clients of trillium that he specifically manages portfolios or money for in separate accounts? He just needs to tell us which portfolios and how they performed on their own under his management and how he performed compared to peers. It also brings up how is small cap growth analyst style fits with retirees and non profits. Is trillium or Seth placing retirees in  unsuitable investments?

 

So those are the claims and the problems with those claims listed in a table . Those statements were made in just one debate. Seth has had similar claims in ads and in print and apparently also  spoken in public at a Laurel Mead Debate. This behavior  is a real issue for Trillium as they cannot allow an employee of whatever status to purposely mislead the public and  investors about their returns and his role in those returns. Most of the Trillium  Investment professionals on the website are CFA designated and the firm compliance director is as well. I know from my CFA ethics classes that Seth has violated several areas of the code. Trillium and Seth need to apologize and fess up and not pretend that Seth Magaziner has either the experience or record he portrays.

Summary

1) Seth is a research analyst not a money manager or portfolio manager nor has ever managed money professionally.

2) Seth has zero Investment professional accreditation or licenses (series 65,66.7,CFP,CFA,ChFC etc)

3) Seth has no track record. His firm does and his team might but he does not.

4) Seth mislead about the performance of his firm in addition to making up his own performance.

5) Seth repeatedly makes investment claims to the public for which he has no evidence. Almost all money managers and portfolio managers have specific track records. Seth is a research analyst perhaps that’s why there is no record. That being the case these statement are known as lies  and that’s not a good sign for Treasurer but probably a great sign for a long political career in Rhode Island.