Kentucky Retirement Systems ignored adviser's warning to avoid risky hedge funds, suit says

Frankfort -- Kentucky Retirement Systems lost public money on more than $1.5 billion in hedge fund investments in recent years, although its own advisers privately urged the agency to stay away from such “unacceptable risks,” according to new claims in a lawsuit brought by eight public employees.

“KRS is in crisis,” Louisville attorney Ann Oldfather wrote in a memo filed Friday in Franklin Circuit Court. “In the limited discovery plaintiffs have obtained thus far, it is becoming clear why. It is apparent now the current crisis could have been avoided had this information been made public earlier.”

Oldfather’s clients are suing several major investment firms — KKR & Co., Prisma Capital Partners, The Blackstone Group and Pacific Alternative Asset Management — to recover what KRS lost on hedge fund investments and management fees to those firms, plus damages. Also named as defendants are a number of past and present KRS trustees and executives.

The KRS Board of Trustees is debating whether to join the suit as a co-plaintiff. The firms are asking Judge Phillip Shepherd for a protective order keeping much of the information in the case confidential, something the public employees are opposing by arguing that Kentucky taxpayers have a right to know what happened at the publicly funded KRS.

Read more here: http://www.kentucky.com/news/politics-government/article209128059.html