Questionable Investment “Partnership” Pitched to STRS Board

During the STRS Board’s November meeting, two current Board members presented a “new business opportunity” for STRS.  Wade Steen (Governor DeWine’s appointee to the STRS Board) and Rudy Fichtenbaum (a retiree representative) advocated for the creation of a public/private partnership with a firm called QED.  Under the proposal the company would facilitate access to STRS assets by a counter party who would execute asset swaps resulting in profits from arbitrage for the counter party.  During a lengthy discussion, it was revealed that QED currently has no assets under management and no track record of performance.  Further, STRS would provide 100% of the assets in the “partnership” and receive 25% of the profits.  Mr. Steen had previously indicated that he had an investment plan that would return $4 billion in revenue while reducing risk to the portfolio.  Based on the discussion, in order to achieve that level of return it would be necessary to devote $65 billion in assets (two-thirds of all STRS assets) to this new enterprise.  A proposed motion to hire outside council to negotiate an agreement with QED was never offered.