A recent episode of “Weeds,” a Showtime television series that features a marijuana-selling single mom, raises the question of what would happen if a crooked financial professional managed a federal investigator's retirement money.
In the show, a hedge fund accountant played by Kevin Nealon gets himself, the hedge fund and the pot-dealing mother off the hook with federal regulators by not-so-delicately reminding Securities and Exchange Commission investigators that their retirement funds are invested in his company's fund.
“You guys have those federal pension funds tied in with our Mainstay Fund,” the character says. “Five years ago, Uncle Sam bet your retirement plans on our good judgment ... if we go down, you go down. ... Not only are you going to let the two of us off the hook right here, but you're going to give your bosses in D.C. a ring to make sure that our firm's road to success is paved with the fed's good graces, plenty of deregulation and a laissez-faire sense of letting us do our [damn] jobs.”
The scene casts the SEC investigators as vulnerable twits who decide to ensure that their pensions remain whole by dropping their inquiry.
In reality, the government has structured its defined-contribution plan to make sure that such a scenario remains the stuff of TV scripts.
In fact, government officials hired an outside law firm in the midst of the 2008 financial crisis to review potential risks to assets in the government's version of a 401(k) plan, its Thrift Savings Plan. The firm concluded that even if there were a failure of Barclays Bank PLC, which then managed most of the investments in the plan, the assets are secured in trusts that can't be pilfered, said Tom Trabucco, a spokesman for the Federal Retirement Thrift Investment Board, which operates the plan.
That assurance now applies to
BlackRock Inc., which became the investment manager after buying Barclays Global Investors from the British investment bank for $13.5 billion in 2009.
Even if
BlackRock itself were to go out of business, the plan's assets are in a “true trust arrangement,” so no creditor of the firm could claim the assets, and the funds could be transferred to another independent fiduciary, Mr. Trabucco said.
Email Liz Skinner at [email protected]
