The board of Pennsylvania's largest public pension fund for school teachers on Thursday reportedly agreed to accept the resignation of two top executives following two separate federal investigations.
The two senior officials are under federal investigation for allegedly concocting exaggerated returns.
As reported by The Wall Street Journal, board members of Pennsylvania’s $64 billion Public School Employees’ Retirement System accepted the resignations of Executive Director Glen Grell and Chief Investment Officer Jim Grossman.
Grell and Grossman have been accused of misreporting actuarial returns of the fund over a nine-year period, the Journal reported.
In March, a federal grand jury subpoenaed the fund requesting documents for its probe.
The Securities and Exchange Commission has also started an investigation into the fund in September over improper “compensation and gifts” possibly offered to its staff, a local Pennsylvania news outlet reported.
"If the pension plan’s investment results had matched its best-performing peers over the past decade, it would have had about $80.97 billion at the end of December, instead of $62.4 billion, the letter states," the Journal's report added.
The pension fund has served about 240,000 retirees and had roughly 256,000 active members as of the end of June 2020.
The average working member earns about $54,500 a year and the average retiree receives about $25,750, according to its budget report cited by the Journal.
Board members have reportedly cleared plans for Grell and Grossman to stay on in temporary advisory positions. They have also authorized the Chairman Christopher SantaMaria to begin a search for their replacements, the Journal reported.
Grell will reportedly exit the fund on Jan. 1 and Grossman will leave his position on Dec. 9. The two will serve as advisors till Feb. 28 and May 1 respectively.
In June, six trustees had demanded long time staffers Grell and Grossman be dismissed.
Those recommending the departures included former Treasurer Joseph Torsella, acting state Education Secretary Noe Ortega, state Banking and Securities Secretary Richard Vague, state Sen. Katie Muth and Pennsylvania School Board Association Chief Executive Nathan Mains.
The trustees in the letter faulted the two employees for "years of poor investment performance, citing costly investments in alternative assets, including the recent results that led to higher worker contributions," the Journal reported in June.
Grell was appointed as executive director in 2015. Grossman has worked for the fund since 1997 and was named chief investment officer in 2013.
Grossman's attorney, Matt Haverstick of Kleinbard, told the Journal that “he has always faithfully executed the investment designs of the board.”