Globe, MBTA pension fund settle suit over release of investment records
The Boston Globe has agreed to settle a 2014 lawsuit it brought to obtain records from the MBTA Retirement Fund relating to a $25 million loss on a hedge fund investment, after the pension board produced 62 pages of documents under a new policy adopted in response to a state public disclosure law that takes effect Jan. 1.
As part of the settlement, the $1.5 billion pension fund for transit workers said it will “voluntarily” respond to public record requests. But it reserved the right to challenge the new law, a sweeping update of legislation that, among other things, specifically says the rules apply to the MBTA pension board.
The Globe reserved the right to pursue public records from the board in the future, including by going back to court.
The settlement comes three years after the Globe first requested records concerning the MBTA pension fund’s loss with Fletcher Asset Management of New York. At the time the board decided to invest the money, April 2007, the pension system’s former executive director was working for Fletcher — and pitching the hedge fund to his former colleagues.
The pension fund in 2013 refused a request from the Globe for meeting minutes related to the board’s 2007 decision to approve the investment. It also denied the Globe’s request for minutes from 2011, when the board tried unsuccessfully to redeem $10 million from Fletcher; from 2012, when Fletcher filed for bankruptcy protection; and from 2013, after the bankruptcy trustee alleged that the Fletcher hedge fund had been a fraud.
The MBTA fund, which was organized as a private trust, has argued that it is not subject to state public records or ethics laws. In a 1993 case, the state’s Supreme Judicial Court agreed. The board has since used that decision to justify keeping its meetings closed to the public. It does not make meeting minutes public, either, and is not required to follow standard ethics rules that apply to other pension funds for public employees — despite having received nearly $500 million in taxpayer funding from 2006 through 2015.
In summer 2013, the Legislature passed a measure, signed by then-Governor Deval Patrick, requiring the MBTA pension fund to comply with the public records law. The pension fund board voted 4 to 3 that the legislation did not apply to it.
In early 2014, the Globe twice appealed the T pension board’s decision to the state’s supervisor of records, Shawn Williams, who denied both requests. Williams said the 2013 measure was not specific enough.
The Globe filed a lawsuit against the pension board in May 2014 in Suffolk Superior Court. This past March, Judge Kenneth W. Salinger ruled that the board “does indeed receive public funds from the MBTA, and thus that the board’s records are now subject to mandatory disclosure under the public records law.”
But the judge allowed the pension fund to continue to fight the case, and to present “constitutional” reasons why it should be allowed to maintain its privacy. Last month, the board instead approached the Globe about settling the matter.
The Globe agreed, to secure the Fletcher records without further delay.
The pension board, however, reserved the right to deny record requests in the future. The board said it would take the same position as the governor’s office regarding the law — meaning it plans to disclose records on a voluntary basis.
“The Legislature made it abundantly clear” that the law applies to the pension board, said Pam Wilmot, executive director of Common Cause Massachusetts, a nonprofit that supported the legislation. “If they don’t comply, then I’m sure they’ll be sued again.”