When MBTA Retirement Fund board members met in March 2007 to consider sinking $25 million into a hedge fund, several of them weren’t convinced it was a smart move. They wondered whether the fund was too risky, too expensive, or even a good match for that slice of pension money, records recently obtained by the Globe show.
But a month later, the board’s executive director at the time, Michael Mulhern, recommended that they commit to the investment. He cited the “level of trust’’ they all had in the man pitching the deal, Karl White — who also happened to be Mulhern’s predecessor as chief of the $1.5 billion MBTA pension fund.
It turned out to be trust that was badly misguided.
The hedge fund, run by Fletcher Asset Management, where White had gone to work just 10 months earlier, eventually collapsed. The trustee overseeing New York-based Fletcher’s bankruptcy called the operation a fraud, and the pension fund lost every dollar it invested on behalf of the MBTA’s more than 12,000 employees and retirees.
Retirement board documents newly released to the Globe cast light on how the MBTA Retirement Fund trustees came to make such a disastrous move, and how they failed to promptly report the investment’s unraveling to transit workers and taxpayers.
Read more here.
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