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Murphy removes Respected Wall Streeter and Pension Reformer Tom Byrne from State Investment Council


April 18,2018

the staff of the Ridgewood blog

Trenton NJ, Gov. Phil Murphy has removed Tom Byrne from his position on the State Investment Council, which he had held since 2010.Former Gov. Chris Christie appointed Byrne, who is managing director of Byrne Asset Management.

Byrne founded Byrne Asset Management in 1998. He serves as the Managing Director and Head of Equity Portfolio Management and brings over 35 years experience in the securities industry to his clients.

In early 1987, Byrne published a book on the relationship between stock index futures and the stock market, warning readers that “the stock market may well eventually crash” and that stock index futures “might accelerate it”. In 1988, he served as a member of the Brady Commission staff that reported to President Reagan on the causes of the 1987 stock market crash.

Byrne has been a critic of the current New Jersey pension system and come under fire from unions. Republicans expressed concern over the ouster of Byrne, who’s the son of the late Gov. Brendan Byrne and a onetime chair of the state’s Democratic Committee. The state pension commission warned pension and health benefits will eat up roughly a quarter of the state operating budget by 2023 if state officials don’t undertake difficult reforms.

With Byrnes help the state pension-system investments are up 8.6 percent during the 2017 fiscal year, according to the New Jersey State Investment Council. The returns are even more impressive over the past 12 months, topping 15 percent.

Byrne also won praise from union officials who serve on the investment council for helping to broker a compromise that cut down on the fees paid to outside money managers. However Byrne’s work on Gov. Christie’s bipartisan pension panel eventually cost him backing from public employee unions and his moderate views convinced New Jersey Democrats he’s not ‘Blue’ enough.

“Tom Byrne is one of the smartest people in government finance on either side of the aisle in New Jersey,” said state Senator Declan O’Scanlon, R-13th District, in a statement. “Tom has integrity. He is one of the few people in Trenton who isn’t afraid to say ‘no’ to the unions. He is a fierce and fair advocate for pensioners and taxpayers alike.

“This is not the kind of public servant we should be losing,” O’Scanlon said. “I am very concerned that the Murphy administration seems to be purging qualified, intelligent public servants – with no regard to the high caliber of work they have done for the people of New Jersey, and the continued value they are throwing away.”

Byrne, said publicly since November that he intended to resign by June 30 and that the governor was more than welcome to replace him sooner.

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Pennacchio & Corrado Bill to Combat Conflicts of Interest State Investment Council


March 26, 2018

the staff of the Ridgewood blog

Bill Aims to Stop Corruption on NJ State Investment Council In Wake of Pension Scandals
Legislation sponsored by Senate Republicans Joe Pennacchio and Kristin Corrado to combat corruption on the State Investment Council, by forbidding members from voting on investments that present a financial or familial conflict of interest, has passed the New Jersey Senate.

Ridgewood NJ, Sens. Joe Pennacchio and Kristin Corrado’s bill would combat corruption on the State Investment Council, by forbidding members from voting on investments that present a financial or familial conflict of interest. The bill was introduced in response to scandals involving the council and the state pension system. (Pixabay)
“State Investment Council members should serve the people of New Jersey, not themselves,” Senator Pennacchio (R-26) said. “We cannot turn a blind eye to the despicable violations of public trust that have occurred in recent years. People who handle taxpayer dollars must be held accountable.”

The Senators’ bill, S-396, was introduced in light of reports that in 2008, the State Investment Council invested in Lehman Brothers right before the firm went bankrupt. The Lehman Brothers managers who sat on the council did not recuse themselves prior to voting to approve the investment in their firm. The misguided vote cost the pension system nearly $116 million.
Additionally, in 2014, concerns arose that Robert Grady, the former chairman of the council, had invested public money into a fund which his own private firm also invested in. Such potential conflicts of interest would not be tolerated under the Pennacchio/Corrado legislation.

The State Investment Council was created by the New Jersey Legislature in 1950 to develop policies governing the investment of funds by the Director of the Division of Investment.
S-396, would require members of the State Investment Council to recuse themselves from a vote if the matter before the council involves one of the following conflicts of interest:
The member or their spouse is or was employed by the entity in which the investment is being made.

The member or their spouse has a direct investment exceeding $5,000 in the entity in which the investment is being made.

Under S-396, a member who breaks this law would be removed from the council, and must be immediately reported to the Governor and the Legislature.
“Any member who casts a vote despite an obvious conflict of interest does not deserve to sit on the State Investment Council,” Senator Corrado (R-40) said. “The hardworking families we represent must be able to trust that the state is investing and spending these funds wisely. This legislation will ensure council members who use public money for personal or political gain are punished accordingly.”

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N.J. public pension investments get some better news


By Samantha Marcus | NJ Advance Media for
on March 29, 2017 at 4:49 PM, updated March 29, 2017 at 4:59 PM

TRENTON — After a year that saw New Jersey’s public worker pensionslose nearly a percent on their investments, state officials reported the fund posted a 8.62 percent gain since the fiscal year began in July.

The $71.6 billion pension fund, which is in the process of slashing its stake in hedge funds, in fiscal 2016 beat the long-term rate of return needed for the system to avoid piling on additional unfunded liabilities.

“It is nice to be able to report on a period that offers good news,” Tom Byrne, chairman of the State Investment Council said Wednesday, noting that the pension fund “remains prudently diversified.

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Commentary: Jersey plan would exacerbate pension problems

Village Council Meeting

file photo by Boyd Loving

Updated: MARCH 28, 2017 — 11:19 AM EDT

by Steve Malanga

State legislators worried about New Jersey’s deep pension debt are contemplating turning over administration of one of the largest retirement funds to workers and retirees. The idea behind the move sounds simple: Workers and retirees, who are beneficiaries of the system, can be relied on to run it well.

The only problem is that this has already been tried around the country and has helped create some of the nation’s biggest pension fiascos, as workers and unions have managed pensions for their benefit, leaving taxpayers on the hook for huge losses. This is not the kind of reform that Jersey residents facing tens of billions of dollars in pension debt need.

The Legislature has already passed a bill, now awaiting Gov. Christie’s signature, that turns over management of the Police and Firemen’s Retirement System (PFRS), run by the Treasury Department, to a 12-member board of trustees dominated by beneficiaries. One justification for the bill is anger that the State Investment Council, which directs pension fund investing, has been paying Wall Street firms big fees, but returns haven’t lived up to expectations.