Columbus, Ohio – Ohio Attorney General Dave Yost has taken legal action against two board members of the State Teachers Retirement System for allegedly breaching their fiduciary duty in protecting the pension fund. Yost’s lawsuit aims to remove Wade Steen, the governor’s appointee, and retired economist Rudy Fichtenbaum from their positions on the board.
The lawsuit was filed in Franklin County Common Pleas Court just before the board’s monthly meeting, where significant decisions were made regarding the leadership of the system. The legal action comes after an investigation was initiated by Yost last week to determine if certain board members had failed to act in the best financial interest of the pension system.
According to the lawsuit, Yost alleges that Steen and Fichtenbaum, along with two former board members, had advocated for a new investment firm, QED, and attempted to channel a substantial amount of funds amounting to $65 billion to the said firm. The lawsuit also states that both Steen and Fichtenbaum have undisclosed connections to QED, which raised concerns about their motives and actions.
In the midst of a power struggle within the board, a reform faction has been gaining momentum in electing members sympathetic to their grievances about transparency, leadership, investment practices, and benefit suspensions for retirees. The recent election of Michelle Flanigan as a reform-minded board member indicates a shift towards a majority of seats held by individuals looking to enact change within the system.
The ongoing strife within the board has led to prolonged debates and disagreements over critical decisions, as highlighted by the recent removal of teacher Dale Price as chairman and contentious discussions about the suspension of cost-of-living allowances for retirees. This internal conflict underscores the challenges faced by the State Teachers Retirement System in maintaining financial stability and safeguarding the interests of its beneficiaries.
In response to the lawsuit, various stakeholders have expressed differing opinions, with the Ohio Retirement for Teachers Association questioning the attorney general’s actions and advocating for a different approach to addressing the issues at hand. The accusations and legal proceedings initiated by Yost have put a spotlight on the complexities and challenges faced by public pension systems in balancing financial sustainability with fiduciary responsibilities.