In recent years, there has been growing concern over the amount of fees paid by public pension funds to private fund managers and whether the returns on private fund investments justify those fees. In the evolving drama over the Kentucky State Retirement System (KRS) – reportedly one of the shakiest in the nation – the Kentucky Attorney General (AG) has joined the fray. In 2017, several state employees brought a lawsuit against certain KRS trustees, officers and advisers, as well as KKR; Prisma Capital; Blackstone; Pacific Alternative Asset Management Company; and their respective founders and principals, that allegedly sold KRS extraordinarily risky and opaque fund of hedge fund products. After the Kentucky and U.S. Supreme Courts ruled that individual pension beneficiaries lacked standing to sue, the AG intervened in the lawsuit and now seeks damages on behalf of the state. This article summarizes the allegations in the 140+ page intervening complaint. For discussion of other actions involving alleged mismanagement of pensions, see “Class Action Lawsuit May Affect Retirement Plan Allocations to Hedge Funds
” (Nov. 12, 2015); and “U.S. District Court Allows ERISA Claims For Breach of Fiduciary Duties to Proceed Against a Pension Fund’s Investment Advisers
” (Oct. 8, 2010).