State Auditor Crit Luallen says she found no evidence of wrongdoing in an audit of the Kentucky Retirement Systems. But Luallen says the audit does raise several areas of concern. The audit primarily focused on the use of placement agents, who act as middlemen to secure investments from entities like KRS. Placement agents have been at the center of "pay-to-play" scandals in other states, but Luallen says that does not appear to be the case in Kentucky.
However, Luallen says placement agent Glen Sergeon of New York had "an unusually close working relationship" with former KRS chief investment officer Adam Tosh, who no longer works for KRS.
"That placement agent received a high percentage of the investment contracts - more than all of the other placement agents combined," said Luallen.
Luallen says her findings have been referred to the Securities and Exchange Commission, which is conducting an informal inquiry into the use of placement agents at KRS. The audit makes 92 recommendations, which the KRS board has already started implementing.
KRS has nearly $13 billion in assets and serves 330,000 active and retired members.