The South Florida Sun-Sentinel reports that the pension board agreed to give Smith Barney a chance to negotiate a settlement on the undisclosed fees. Edward Siedle, an independent investigator who initiated the review of Delray Beach’s account, estimated the amount due to the fund was close to $2 million, the news report said.
Smith Barney and other financial firms with pension consulting divisions have been under scrutiny recently for simultaneously providing consulting and broker services for pension boards. The firms are advising the pension boards on which money managers to use while collecting commissions from trades made by many of those managers – a relationship the U.S. Securities and Exchange Commission (SEC) declared a conflict of interest in a 2005 staff report.
According to the Sun-Sentinel, in 2006 Smith Barney acknowledged that for eight years it inaccurately reported the Delray Beach fund’s performance to the board by excluding trading fees in performance reviews. Officials from both the Delray Beach and West Palm Beach police pension plans said last year the SEC subpoenaed documents regarding their relationship with Smith Barney.
The West Palm Beach police pension board ended its relationship with Smith Barney about two months ago, the news report said.