News & Record's Inside Scoop: "Politics, and as much food as you can eat"

"Former mayoral candidate George Hartzman will host an election eve "dinner and debate" Monday night.

In case you aren't tired of local politics, here's a chance to debate any topic you like.

Hartzman will give participants 60 seconds to discuss the topic of their choice (he suggests the planned performing arts center or the funding for the civil rights museum would be likely topics.) Then anyone in the audience has a chance to rebut the statement for 30 seconds.

Participation, Hartzman notes in the invitation, is not mandatory.

The debate is free, although you've got to buy dinner at the host site, the Golden Corral, 2419 Lawndale Dr., Greensboro.

Debate begins at 6:30."

Amanda Lehmert
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Dinner & Debate

Monday, November 4, 2013.

6:30pm until 8:30pm

Topic: Tuesday's Election

Likely issues; Greensboro Performing Arts Center, Civil Rights Museum, Coliseum and Police Issues, Local and National Political Ethics, the Affordable Care Act (Obamacare) and Entitlements, 2012’s Guilford County Real Estate Revaluation, Legal Ethics, Economics, Fun and Whatever Comes Up

From beginning to end, attendees will have the opportunity for 60 seconds to present any point of view on any subject.

Others can have 30 seconds to respond, before another topic begins, if not by a member of the audience, then by the moderator.

Audience participation is not mandatory

The format is designed after a class I have moderated at the Shepherd's Center of Greensboro.
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Moderated by George Hartzman, Chief Economist and Lecturer
Think Professional Education

No cost with the purchase of a Golden Corral meal.

Meeting room doors open at 6pm, with the event beginning at 6:30

Golden Corral
2419 Lawndale Dr, Greensboro, NC

The City of Greensboro's 457 Retirement Plan, Its Stable Value Fund, and How to give City Employees a Raise

As of December 31, 2012, there was $79,494,486.39 invested by the City of Greensboro's employees in their 457 retirement plan;

457 plans are similar to 401(k) and 403(b) retirement savings plans.

A 457 plan is a non-qualified tax advantaged deferred-compensation retirement plan for the City of Greensboro's employees. 

Greensboro's government provides the plan and employees defer compensation into it on a pre-tax basis.

At first glance, Greensboro's 457 looks like it's paying an annual fee of $143,291.72;

But 49% of the plan is invested in the VantageTrust Plus Fund, otherwise known as a Stable Value Fund;

The VantageTrust Plus Fund's Objective;

The expense ratio for the VantageTrust Plus Fund is in addition to the $89,168.05 above.

I met with City of Greensboro staff Friday to go through this information. It is not their fault that they did not know this.  It is my industry's fault for not telling the people in charge of doing right by their employees fault for not telling them about what they should have known but didn't.

As can be seen below, and semi-confirmed by city staff, the VantageTrust Plus Fund charges .81% on top of $89,168.05 charged above.

38,800,959.85 x .0081 =  $314,287.77

All the other funds in the plan also have underlying expenses, like the VantageTrust Plus Fund, some of which get kicked back to the retirement plan provider.

The returns about "assumes a 0.55% management fee, which "an Employer may negotiate"

The City of Greensboro's Plan sounds like they're paying 0.81%, plus $89,168.05.

$89,168.05 + $314,287.77 = $403,455.82 for 49% of the plan, meaning ICMA actually looks like it's making about 1.04% on just their Stable Value Fund, not counting any of the other funds in the plan.

The following is from the agreement between ICMA and the city;



This is what legal kickbacks sounds like that are not included on fund fee disclosure disclaimers;

In a nutshell, the above wording means ICMA makes money on the back end through City of Greensboro employee funds that were very poorly disclosed to the city's employees by ICMA.

What big print can give, fine print can take away.

If the fees are negotiable, and city staff negotiates the VantageTrust Plus Stable Value Fund down to 0.25% instead of 0.81%;

0.56% x  38,800,959.85 = a $217,285.38 raise per year for City of Greensboro employees invested in the city's ICMA 457 Retirement Plan's VantageTrust Plus Fund.

Again, the likelihood for Greensboro city staff to have known about this issue is relatively small, because my industry has been misleading retirement plan sponsors for decades on how fees are accumulated by brokers and providers.

At an average return of 3% per year, $217,285.38 turns into about $10,647,565.55 after 30 years, meaning lowering the actual fees charged for about half of the City of Greensboro's 457 plan and compounding could put about $10,647,565.55 more into the pockets of taxpayer funded employees, which is essentially giving them a raise.

The US Federal Government's Thrift Savings Program Fund Comparison Matrix; Average Fund Expense Ratio = 0.03%

http://hartzman.blogspot.com/2014/06/the-us-federal-governments-thrift.html

Some ICMA-RC 457 Plan Fee Disclosure from some different local Municipalities

http://hartzman.blogspot.com/2014/07/some-icma-rc-457-plan-fee-disclosure.html

The City of Greensboro's 457 Retirement Plan, Its Stable Value Fund, and How to give City Employees a Raise

http://hartzman.blogspot.com/2013/05/the-city-of-greensboros-457-retirement.html

National Association of Counties Nationwide Insurance provided 457 Plan Fee Disclosure for a North Carolina Municipality

http://hartzman.blogspot.com/2014/07/national-association-of-counties.html

On fees for ICMA-RC's VantageTrust PLUS Fund charged to the City of Greensboro

http://hartzman.blogspot.com/2014/07/on-fees-for-icma-rcs-vantagetrust-plus.html

A Few Observations on Share Classes and Wells Fargo Stable Return Fund

http://hartzman.blogspot.com/2014/06/a-couple-of-observations-on-share.html

On the State of North Carolina's 401k plan Stable Value Fund; Could be a $4,844,452.19 annual increase for North Carolina's employees

http://hartzman.blogspot.com/2014/06/on-state-of-north-carolinas-401k-plan.html

City of Greensboro 457 Plan Proposal;

http://hartzman.blogspot.com/2013/06/city-of-greensboro-457-plan-proposal.html

Stable Value Fund Expenses; ICMA-RC VT PLUS Fund - 1.38%


http://hartzman.blogspot.com/2014/07/stable-value-fund-expenses-icma-rc-vt.html

"Complaint to a Member of Congress"; ABA..., and Facebook conversations with then US Congressman Brad Miller

"Mr. Hartzman does not identify any specific reporting practice by Wells Fargo with respect tho these "secret" loans

Sent: Wednesday, February 22, 2012 10:37 AM

from: george.hartzman@wellsfargoadvisors.com to: aaron.l.landry@wellsfargoadvisors.com, danny.ludeman@wellsfargoadvisors.com, john.g.stumpf@wellsfargo.com, d.carroll@wellsfargo.com, stacey.mitchell@wellsfargoadvisors.com, don.geczi@wellsfargoadvisors.com, baconmij@wellsfargo.com, bill.rogers@wellsfargoadvisors.com, doug.lowe@wellsfargoadvisors.com, BoardCommunications@wellsfargo.com, karl.f.riem@wellsfargo.com, Grant.Carlson@wellsfargo.com, Bruce.J.Berrol@wellsfargo.com

Attachments; 10k.doc
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“LIQUIDITY AND FUNDING

Asset liquidity is further enhanced by our ability to sell or securitize loans in secondary markets and to pledge loans to access secured borrowing facilities through the Federal Home Loan Banks, the Federal Reserve Board, or the U.S. Treasury.

[Ability doesn't mean borrowed]

Short-term borrowings averaged $65.8 billion in 2008 and $25.9 billion in 2007, an increase of $39.9 billion due to business funding needs.”

Wells Fargo 2008 10k

[no mention of FED TAF loans or Discount Window borrowing]
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Falsification of any company…information that you provide is prohibited.

Falsification refers to knowingly misstating, altering, adding information to, or omitting or deleting information …which results in something that is untrue, fraudulent, or misleading.

Wells Fargo’s Code of Ethics and Business Conduct
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“Asset liquidity is further enhanced by our ability to sell or securitize loans in secondary markets and to pledge loans to access secured borrowing facilities through the Federal Home Loan Banks, the FRB, or the U.S. Treasury.

Short-term borrowings averaged $52.0 billion in 2009 and $65.8 billion in 2008.

We reduced short-term borrowings due to the continued liquidation of previously identified non-strategic and liquidating loan portfolios, soft loan demand and strong deposit growth.”

2009 10k

[no mention of FED TAF loans or Discount Window borrowing]
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Short-Term Borrowings

2007: 53,255.0

2008: 108,074.0

2009: 38,966.0

2010: 55,401.0

[no mention of FED TAF loans or Discount Window borrowing]
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Sarbanes–Oxley Act

...mandates that senior executives take individual responsibility for the accuracy and completeness of corporate financial reports.

...Section 302 requires that the company's "principal officers" (typically the Chief Executive Officer and Chief Financial Officer) certify and approve the integrity of their company financial reports quarterly.

Title IV ...requires timely reporting of material changes in financial condition...

Sarbanes-Oxley required the disclosure of all material off-balance sheet items.

It ...specifies the responsibility of corporate officers for the accuracy and validity of corporate financial reports.

...The CEO and CFO are now required to unequivocally take ownership for their financial statements under Section 302…

Title IV ...requires timely reporting of material changes in financial condition...

Sarbanes-Oxley required the disclosure of all material off-balance sheet items.

Wikipedia

"SEC Charges City of Harrisburg for Fraudulent Public Statements" and Hartzman v Wells Fargo with a Mash Up

"Washington, D.C., May 6, 2013 — The Securities and Exchange Commission today charged the City of Harrisburg, Pa., with securities fraud for its misleading public statements when its financial condition was deteriorating and financial information available to ...investors was incomplete...

Wells Fargo's "Envision is [not] an advisory tool..., but is instead an "information gathering" and discussion generating tool"

"Clients have no expectations that the Envision program provides a guaranteed outcome."

Gregory C. Keaton, attorney for Wells Fargo against George Hartzman
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Section 206 of the Investment Advisors Act of 1940 states "It shall be unlawful for any investment adviser, …to employ any device, scheme, or artifice to defraud any client or prospective client; to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client; or... to engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative."
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A Wells Fargo "Internal Use Only" document "Presenting Envision results that matter" (0211-5064) states "Although it may be unintended and clearly disclosed away, this report will serve as a guarantee (in the eyes of the client) of how reality should unfold. It illustrates what they should have in taxable assets in 2013, their tax bill in 2015 and their net portfolio withdrawal in 2020. No matter how many disclosures that are made, how else would you perceive this report if you were a client?" and "With the Envision process, the job is to focus on what matters: the client’s confidence and comfort in achieving the goals they value most. Presenting results that matter is what creates the confidence and comfort the client desires."

Wells Fargo Advisor's "Presenting Envision results that matter" states "If the client has any doubts about the underlying assumptions, Advisors should be prepared to provide clarity and rationale. Observe that this is based on “IF” the client has doubts about assumptions, which means advisors do not need to burden clients with a detailed explanation of the assumptions if they are not in doubt of your ability to understand their goals and priorities." and "If the client asks you how their confidence is measured, this will require a careful explanation but it should not be focused on mathematics. Instead, the focus should be on the results of the math." And "If you fall into the red, above target zone, you are making needless sacrifices to your lifestyle...," meaning some clients may be spending more than they "should", if investment fees are not included in Envision plan target zone calculations.

Section 36 of the Investment Advisors Act of 1940 states "The Commission is authorized to bring an action...alleging that a person ...is about to engage in any act or practice constituting a breach of fiduciary duty involving personal misconduct in respect of any registered investment company for which such person so serves or acts, or at the time of the alleged misconduct, so served or acted — as ...investment adviser...”

“...the investment adviser … shall be deemed to have a fiduciary duty with respect to the receipt of compensation for services, or of payments of a material nature, paid by such registered investment company… to such investment adviser… An action may be brought … by the Commission...against such investment adviser... who has a fiduciary duty concerning such compensation or payments, for breach of fiduciary duty in respect of such compensation or payments paid by such registered investment company...to such investment adviser or person. …It shall not be necessary to allege or prove that any defendant engaged in personal misconduct, and the plaintiff shall have the burden of proving a breach of fiduciary duty."

Littler Mendelson's Gregory C. Keating's "Adverse Employment Actions Under SOX"