In the case of the supplemental fund, the auditors said the plan's managers could not provide substantive documentation to show that it had taken steps to address the performance of two lagging sub-managers. The auditors suggested the board allowed sub-managers to stray too far from the benchmarks for their industry sector - giving the example of one that was heavily invested in mortgage-backed securities and light on low-risk government bonds at a time when many mortgages were being exposed as "toxic assets."
In a vigorous 16-page response, the supplemental plan defended its oversight of its investment managers and called the auditors' criticism of their returns as "speculative with the benefit of hindsight."
But Kopp, while defending the board's oversight of its money managers, admitted the staff's documentation of such efforts needs to improve.
