The Baltimore City Council president plans to request hearings on the police and fire departments' pension fund's loss of $3.5 million in investments tied to disgraced money manager Bernard L. Madoff.
At today's meeting, council President Stephanie C. Rawlings-Blake will propose a resolution seeking an inquiry into investment policy guidelines.
The U.S. Securities and Exchange Commission is working to untangle the web of investors affected by Madoff's alleged $50 billion Ponzi scheme. The Baltimore police and fire fund is the largest Madoff-related loss discovered so far in the Baltimore area, though the investment was just a sliver of the group's overall pension.
"Even though it is a relatively small amount of money, it's still appropriate to look at the guidelines," said Ryan O'Doherty, a spokesman for Rawlings-Blake. "The council president understands that pensions lose money from time to time because of a bad market. But it is unacceptable to lose money as a result of theft, and that's what has happened here."
The resolution also calls for an examination of the practices of the pension fund for general city employees, even though it has not reported any Madoff-related losses.
About $73 million of the $1.5 billion pension fund is managed by New York-based UBP Asset Management, which, in turn, invested about 5 percent of that money with Madoff, according to Stephan G. Fugate, chairman of the fire and police pension board.
Fugate said the council was welcome to review his pension board's investment policies and would find them "squeaky clean."
"Everything is well-written, well-documented," he said. "This issue that happened - it was something that was totally unavoidable. Anyone can commit fraud. It has absolutely nothing to do with our guidelines."
Fugate said any City Council hearings would duplicate reviews the pension board already has in place. He said the board "immediately" acted to cut ties with UBP when it learned of the Madoff connection. He said the board is seeking a full return of its funds from UBP and should have the investment back - less the Madoff loss - within a few months.
The two other pension boards for city employees appear to be unaffected by the Madoff scandal.
Rawlings-Blake's resolution also calls for an examination of the efforts made by both pension funds to seek local firms and those owned by women and minorities to manage their money.