Pennsylvania’s state employee retirement fund has halted a proposed investment in a controversial private equity firm that just received hundreds of millions of dollars from the board managing teacher pensions.
At a meeting Tuesday, the State Employees’ Retirement System (SERS) board — which manages 239,000 current or retired workers’ pensions and nearly $30 billion in assets — did not vote on an agenda item to put tens of millions of dollars into a current round of fundraising by Platinum Equity.
A SERS spokesperson said that “there were no motions and no action taken” on Platinum.
The Los Angeles-based financial firm, founded in 1995, has ties to the prison industry and student debt collection.
Dave Fillman, board chair and executive director of the American Federation of State, County and Municipal Employees Council 13 — representing tens of thousands of public employees — cited the accumulated controversies while striking a skeptical note.
“I’ve been on this board for about 20 years, and I’ve never seen the amount of negative press on a firm that I’ve seen here today,” Fillman said in a recording heard by the Capital-Star.
Fillman voiced concerns that Platinum might invest in another “entity out there” that “is going to be messed up too, that we’re not going to know about.”
Fillman did not reply to requests for comment. Other individuals with knowledge of the remarks confirmed the recording’s accuracy.
Mark Barnhill, director of investor relations for Platinum, declined to comment.
SERS’s choice was preceded by a lobbying campaign from Worth Rises, a criminal justice group that works “to dismantle the prison industrial complex and end the exploitation of those it touches.”
Worth Rises praised it as “another win for David over Goliath” on Twitter.
It marks another victory for David over Goliath. And this win is a bellwether for what’s to come. It takes us past private prison divestment with the first major institutional decision to not invest in the broader PIC. Our message to all prison profiteers: We're coming for you.
— Worth Rises (@WorthRises) September 26, 2019
In 2017, Platinum Equity acquired Securus Technologies, a prison phone services company that has been criticized for the high cost of calls made by incarcerated people, and improperly recording legal conversations between inmates and their lawyers.
Platinum recognized issues within Securus in a letter sent to investors this May, saying a review of the company’s business policies was underway to make sure it “serves not only the best interests of the corrections-facility customers, but balances that where possible against the interest of the incarcerated-inmate consumers.”
The private equity firm also formerly own Transworld Systems, a student debt collection agency.
Transworld and National Collegiate Student Loan Trusts entered into a consent decree with the Consumer Financial Protection Bureau in September 2017 for filing lawsuits over debt they “couldn’t prove was owed or was too old to sue over.”
Transworld was ordered to pay a $2.5 million civil money penalty. Platinum sold off its majority stake in early 2018, but still owns part of the company.
At an August meeting of the Pennsylvania Public School Employees’ Retirement System (PSERS), the board chose to invest $300 million into Platinum’s current round of investment. There was limited opposition, mostly from state Treasurer Joe Torsella, who struck a similar note as Fillman.
A spokesperson for PSERS declined to comment for this story.
The school retirement board previously planned to vote on investing in Platinum in spring 2019, but delayed the vote until August to wait for additional information.