Kentucky Republicans love talking about fiscal conservatism. They love local control.
They love complaining about government picking winners and losers. They love attacking ESG and Wall Street influence.
Then a multibillion-dollar data-center developer shows up. Suddenly the free market apparently needs a tax exemption.
Local control becomes an inconvenience. Corporate secrecy becomes economic development.
And Wall Street private equity becomes our new best friend.
Kentucky’s exploding data-center controversy is becoming a remarkably clean test of whether the state’s political establishment actually believes what it has been selling voters for years.
And the 2026 election gives Kentuckians an opportunity to demand an answer.
The Data-Center Gold Rush Wasn’t Free
I wrote in May about Kentucky’s emerging data-center gold rush.
The sales pitch sounds wonderful: artificial intelligence, billions of dollars of investment, construction jobs and the magic phrase every politician loves—”economic development.”
Look underneath the hood.
Kentucky created extraordinary sales-tax advantages for qualifying data centers. Some of these benefits can extend for decades.
Meanwhile, the infrastructure required by hyperscale data centers can be enormous. These facilities can consume staggering amounts of electricity. Communities have raised questions about water, transmission infrastructure, noise, land use and who ultimately pays for grid expansion.
Kentucky legislators themselves have effectively acknowledged the ratepayer problem.
House Bill 544, appropriately called the Kentucky Ratepayer Protection Act, was introduced in 2026 to require that data centers above 100 megawatts bear the capital and operating costs of infrastructure constructed to serve them rather than shifting those costs onto everybody else.
Think about what that tells us. Kentucky first raced to attract data centers.
Now Kentucky needs legislation to make sure ordinary electric customers aren’t stuck paying for them. That isn’t anti-technology. That’s basic accounting.
The Most Conservative Data-Center Policy Is Simple: Pay Your Own Bills
If Meta, Google, Blackstone, KKR, Apollo or another multibillion-dollar corporation wants to build a data center in Kentucky, fine.
Build it. But buy your own land. Pay your own taxes. Pay for the electric infrastructure you require.
Pay the real cost of the power you consume. Pay for the water infrastructure you need.
Disclose what you’re asking government to provide. And let the people who actually live in the affected community know what is happening before the deal is effectively done.
Why is that controversial?
Apparently corporate welfare becomes “economic development” when the corporation is large enough.
Kentucky’s Local-Control Problem Is Getting Bigger
The backlash isn’t theoretical anymore.
Oldham County has already experienced a major fight over a hyperscale project. Mason County has become another battleground. Across Kentucky, counties are discovering that they may have to create zoning, noise, water, infrastructure and siting policies for an industry moving much faster than local government.
In Mason County, the fight became so intense that two women made national news after refusing a reported $26 million offer connected to a proposed hyperscale data-center development.
Whatever one thinks about their decision, it destroys the idea that opposition to these projects consists simply of environmental activists trying to stop technology.
This is rural Kentucky.
These are property-rights questions.
These are local-control questions.
These are electricity-rate questions.
Those used to be conservative issues.
And Then There Is the Secrecy
Kentucky Senate Bill 330 tells another revealing story.
The bill would restrict government agencies from using nondisclosure agreements to hide information about data-center projects beyond what Kentucky law already protects. It specifically addresses public records, public meetings and information concerning potential impacts on utilities and communities.
Again, ask the obvious question:
Why did Kentucky need such a bill in the first place?
When taxpayers provide incentives, utilities build infrastructure and local communities absorb the consequences, “confidential economic development” cannot become a magic phrase that makes public accountability disappear.
A corporation is entitled to protect legitimate trade secrets.
It is not entitled to privatize government.
Follow the Pension Money Too
There is another part of this story almost nobody in Kentucky politics wants to discuss.
Data centers aren’t simply a technology story.
They have become a gigantic Wall Street infrastructure asset class.
Blackstone, KKR, Apollo, Brookfield and other alternative-asset managers are pouring capital into digital infrastructure, electricity generation, transmission and data centers.
Where does Wall Street get enormous amounts of long-duration capital?
Pension funds.
Including public pension funds.
So Kentucky can potentially subsidize the data-center ecosystem with one pocket while public retirement systems finance the Wall Street funds participating in it with another.
The taxpayer can appear on both sides of the transaction.
That’s why “follow the money” matters more than the ribbon-cutting press release.
Allison Ball Demonstrates the Contradiction
Kentucky Auditor Allison Ball provides an especially interesting example of the political contradiction.
Ball built a national profile attacking ESG and warning about conflicts between Wall Street political agendas and public pension fiduciary responsibilities.
Yet while Ball served as state treasurer and sat on the Kentucky Teachers’ Retirement System board, KTRS approved substantial commitments to KKR funds.
I previously identified as much as $95.5 million in new KKR commitments during Ball’s tenure.
KKR has also participated in the State Financial Officers Foundation sponsorship ecosystem. Ball has longstanding connections to SFOF, and her former Treasury official O.J. Oleka eventually became SFOF’s CEO.
And KKR is a major participant in the data-center and digital-infrastructure boom.
That doesn’t prove wrongdoing.
It does demonstrate why Kentucky voters should stop accepting political branding as a substitute for following actual money.
If ESG conflicts matter, conflicts matter.
If Wall Street influence matters, Wall Street influence matters.
The principle shouldn’t disappear depending upon which asset manager is writing the check or which investment happens to fit today’s political agenda.
Andy Barr Is an Especially Useful Test Case
That brings us to Republican U.S. Senate nominee Andy Barr.
Barr has spent years at the intersection of Kentucky politics and the financial-services industry.
His campaign fundraising makes the relationship impossible to ignore.
According to federal campaign-finance records, Barr’s authorized committees raised roughly $10 million from January 2025 through June 2026.
In earlier research, I documented contributions associated with major financial firms including Apollo, JPMorgan and Blackstone.
That matters because these aren’t random industries sitting on the sidelines of the data-center boom.
Alternative-asset managers, private-credit firms, banks, utilities and technology companies are financing an unprecedented buildout of AI infrastructure.
The question isn’t whether accepting a legal campaign contribution proves corruption. It doesn’t.
The question is much simpler:
When the interests of enormous financial contributors collide with Kentucky taxpayers, electricity customers, pension beneficiaries and local communities, whose interests come first?
That is a perfectly legitimate question for Barr—and every other candidate—to answer.
Robert Stivers Should Answer It Too
Kentucky Senate President Robert Stivers has publicly defended data-center development.
Good.
Then let’s have the debate.
But don’t give Kentuckians another economic-development argument consisting primarily of enormous investment numbers.
Tell us the denominator.
How much public subsidy?
How much electricity?
How much new generation?
How much transmission?
How much water?
How many permanent jobs?
How much tax revenue would have been collected without the exemptions?
Who pays if projected electricity demand doesn’t materialize?
Who pays for stranded infrastructure?
And what protections prevent residential and small-business ratepayers from subsidizing hyperscale customers?
Those aren’t anti-business questions.
They’re the questions any competent investment analyst would ask before putting money into a deal.
Kentucky taxpayers deserve at least the due diligence Wall Street demands for itself.
This Is Bigger Than Data Centers
The real issue in 2026 isn’t whether Kentucky should have data centers.
Of course Kentucky will have data centers.
AI is real. The infrastructure supporting it will require extraordinary investment.
The issue is who bears the risk and who collects the return.
That’s the question politicians don’t put on the economic-development billboard.
If a project succeeds, private investors can make billions.
If government grants decades of tax advantages, somebody else pays taxes.
If a utility builds billions of dollars of infrastructure, somebody ultimately pays the utility bill.
If public pension money flows through expensive private funds into infrastructure projects, retirees bear investment risk while Wall Street collects management fees and carried interest.
And if local citizens discover the details only after confidentiality agreements have been signed and political decisions have effectively been made, democracy becomes another externality.
Kentucky Needs a Data-Center Bill of Rights
Every candidate running statewide in Kentucky should be asked to support a few simple principles:
No ratepayer subsidies. No secret government deals. Full disclosure of tax incentives. Genuine local control over siting. Public disclosure of projected electricity and water consumption. Developers responsible for project-specific infrastructure costs. Transparent pension-fund exposure to data-center investments. And public disclosure of political contributions from companies and investment managers financially benefiting from the boom.
Republican, Democrat or independent—that should not matter.
These are taxpayer protections.
Follow the Power
Kentucky’s data-center story ultimately comes down to two kinds of power.
There is electrical power—the gigawatts these facilities require.
And there is political power—the ability of enormous corporations, Wall Street firms, utilities and their lobbyists to convince government that their private investment deserves public assistance.
Kentuckians should follow both.
Andy Barr should be asked about it.
Robert Stivers should be asked about it.
Allison Ball should be asked about it.
Every legislator who votes on another data-center subsidy should be asked about it.
And every candidate asking Kentuckians for a vote in November should have to explain exactly where they stand.
Because Kentucky doesn’t have to choose between technological development and protecting its citizens.
It can welcome AI investment while demanding that billion-dollar corporations pay their own bills, disclose their deals and stop treating Kentucky taxpayers as silent limited partners.
That’s not anti-business.
That’s common sense.
Send Kentucky Republicans a message on Date Centers by defeating Andy Barr
When Pension Fight Club premiered in Sacramento in May, just steps from CalPERS, it looked like the culmination of years of battles over public pension secrecy.
It may turn out to have been the beginning.
Award-winning filmmaker Doug Orchard’s 87-minute documentary Pension Fight Club is now available to stream online, bringing together one of the most unusual collections of pension critics ever assembled in one film: Republican and Democratic elected officials, union leaders, current and former pension trustees, professors, journalists, whistleblowers, retiree advocates—and ordinary teachers who simply started asking what was happening to their retirement money.
The film’s premise is provocative but remarkably simple: Public pension money is public money. Why has so much information about how that money is invested—particularly in private equity, private credit, hedge funds and other alternative investments—become secret?
The documentary argues that pension fiduciaries themselves can face obstacles obtaining the contracts governing some of their largest and riskiest investments. It examines hidden or difficult-to-measure fees, opaque valuations and benchmarks, consultant and manager conflicts, and the political and institutional resistance encountered by trustees and beneficiaries who demand answers.
What makes Pension Fight Club particularly powerful is that there is no convenient political stereotype for its cast. These people come from California, Pennsylvania, South Carolina, Ohio, Kentucky, Illinois, New York, Rhode Island, Minnesota and North Carolina. They include Republicans, Democrats, union officials and people with no obvious partisan agenda at all.
Wall Street secrecy turns out to be bipartisan. So does opposition to it.
Meet the Pension Fight Club
Margaret Brown — Former CalPERS Board Member
Brown has moved from being a dissident voice inside CalPERS to one of its most persistent outside critics. Now president of the Retired Public Employees’ Association of California, Brown argues that trustees, retirees and taxpayers cannot meaningfully evaluate private equity without credible information about fees, risks, valuations, benchmarks and performance. She has criticized CalPERS communications that portray private equity positively without giving members an equally clear picture of its risks. Her message is fundamentally about governance: you cannot have accountability without information.
J.J. Jelincic — Former CalPERS Board Member
Few people know CalPERS from the inside as well as J.J. Jelincic, who spent decades at the system as an investment officer before serving on its board. Long before pension transparency became fashionable, Jelincic was asking uncomfortable questions about private-equity fees, fee offsets, carried interest and what exactly CalPERS was paying its managers. His criticism goes to the heart of fiduciary oversight: if a trustee doesn’t know all the fees being charged, how can the trustee determine whether the pension is receiving value for them?
Katie Muth — Pennsylvania State Senator
Muth turned the transparency issue into an actual legislative program. She has proposed making public-pension investment contracts subject to Pennsylvania’s Right-to-Know Law, disclosing managers and contracts to beneficiaries, and limiting pension exposure to non-public markets. She has also fought PSERS over access to records as a board member herself. Her experience illustrates one of the documentary’s most disturbing questions: What does it say about pension governance when an elected pension trustee has to fight her own pension system for information?
Curtis Loftis — South Carolina State Treasurer
Loftis may be one of the original pension fight-club members. For more than a decade he has attacked excessive investment costs, opaque alternative investments and contracts that restrict meaningful oversight. He has repeatedly argued that private equity can have a legitimate place in a portfolio—but only if fiduciaries actually know what they are paying and can compare those costs with performance. Years ago, he complained that South Carolina was paying hundreds of millions to Wall Street while struggling even to identify all the underlying expenses. His issue isn’t simply high fees. It is fees nobody can reliably measure.
Wade Steen — Former STRS Ohio Board Member
Steen became one of the central figures in the extraordinary political war over Ohio STRS. As a reform-oriented board member, he questioned investment practices and management and aligned himself with members seeking significant changes at the pension. His disputes eventually escalated far beyond ordinary boardroom disagreements, including litigation and controversy surrounding the QED proposal. Whatever one’s view of that separate controversy, Steen’s story illustrates the intensity of the institutional resistance that can develop when pension trustees challenge entrenched investment practices.
Rudy Fichtenbaum, Ph.D. — STRS Ohio Board Member
Economist Rudy Fichtenbaum has made perhaps the clearest quantitative case among the Ohio reformers. He advocates greater use of low-cost passive investing, lower investment expenses, better benchmarks and greater transparency around alternative investments. He has argued that STRS increased risk and reduced transparency through heavy exposure to alternatives and has repeatedly challenged the benchmarks used to judge their performance. Fichtenbaum’s question is devastatingly straightforward: if expensive active and alternative management is worth the money, demonstrate it against a credible benchmark after all costs.
Chris Tobe — Former Kentucky Retirement Systems Trustee
Tobe brings the perspective of a former Kentucky pension trustee, investment consultant, author and longtime critic of public-pension alternative investments. His work has focused on hidden investment fees, misleading benchmarks, conflicts involving consultants and money managers, and the difficulty trustees face when investment contracts and underlying economics are obscured. His broader argument fits squarely into Pension Fight Club: a fiduciary cannot prudently oversee an investment he cannot independently value, benchmark, cost and fully understand.
Maria J. Rodriguez — Chicago Teacher Pension Trustee
Rodriguez represents another important constituency in the movie: pension trustees willing to dissent rather than simply ratify staff and consultant recommendations. Her presence broadens the story beyond the better-known CalPERS and STRS fights. Chicago’s pension systems operate in an environment of chronic funding pressure, making independent trustee scrutiny of investment costs, governance and risk particularly important. Pension Fight Club makes the larger point that board dissent should be treated as part of fiduciary governance—not as an institutional nuisance.
Drew Warshaw — New York Comptroller Candidate
Warshaw has taken the fight directly into electoral politics. His campaign against New York’s longtime comptroller attacked the state’s reliance on hundreds of outside Wall Street managers and argued that much of the portfolio could be managed more cheaply through diversified passive strategies. Warshaw says New York has paid billions to outside managers without receiving adequate value for those fees. His challenge is essentially the index-fund question writ large: why should taxpayers pay Wall Street billions to try to beat markets if the expensive strategy fails to beat appropriate benchmarks after costs?
Lawrence Kotlikoff, Ph.D. — Boston University Professor
Economist Lawrence Kotlikoff supplies an academic perspective on the much larger problem: pension promises, funding assumptions and the intergenerational transfer of costs when governments fail to account honestly for retirement obligations. His presence helps move the film beyond individual managers or individual pension systems. Ultimately pension opacity is not merely an investment-management problem. If risks and liabilities are misstated today, workers and taxpayers bear the consequences tomorrow.
Robin Rayfield, Ed.D. — Ohio Retirement for Teachers Association
Rayfield and ORTA helped transform Ohio teachers from pension beneficiaries into pension investigators. ORTA helped finance Edward Siedle’s forensic investigation of STRS and has repeatedly demanded disclosure of investment fees, expenses and alternative-investment information. Rayfield has asked why STRS refused to provide records needed for that investigation and has argued that accountability cannot exist when information remains hidden from the people whose retirement money is being managed.
Dean Dennis — Ohio Retirement for Teachers Association
Dennis has focused relentlessly on the connection between investment policy and lost teacher benefits. His criticism is that teachers have worked longer, contributed more and lost inflation protection while STRS continued expensive active management and opaque private-market investing. Dennis contrasts that approach with simpler index investing and argues that hidden fees and nondisclosure agreements make meaningful accountability more difficult.
Edward Siedle — The Pension Warrior
Ted Siedle is effectively the connective tissue of the movie. A former SEC lawyer turned forensic pension investigator, Siedle has spent years investigating public pensions and arguing that the combination of secrecy, complex alternatives, hidden fees, conflicted advisers and weak trustee oversight creates an enormous opportunity for Wall Street to extract wealth from retirement systems. His investigations in Rhode Island, Ohio, Kentucky, Minnesota and most recently CalPERS have also demonstrated something important: retirees themselves can finance independent forensic scrutiny when pension institutions won’t provide it. The CalPERS investigation that helped inspire the documentary was itself crowdfunded by pensioners.
Pulitzer Prize-winning financial journalist Gretchen Morgenson brings something different to the film: decades of experience following money that powerful institutions would prefer not be followed. Her reporting has examined pension investment costs, private markets and the CalPERS forensic investigation. Morgenson helps connect what might otherwise look like isolated fights in individual states into a national financial story: hundreds of billions of dollars of workers’ retirement savings have migrated into increasingly complicated and opaque investments.
Michael McDonald — President, Rhode Island Council 94, AFSCME
Rhode Island is an important chapter in the modern pension story. Public workers experienced benefit reductions while the state moved substantial assets toward expensive alternative investments. McDonald represents the union and beneficiary perspective: workers are routinely told sacrifices are necessary to protect pension solvency, yet far less attention may be paid to the fees, costs and investment decisions on the asset side of the pension equation. Pension Fight Club asks why workers’ benefits are so easy to scrutinize while Wall Street contracts can remain so difficult to see.
John Damschroder — The Blade
Damschroder brings the Ohio fight into the realm of public accountability and journalism. While much of the Ohio media was controlled by Private Equity interests, Damschroder and the Toledo Blade brought real independent journalism to Ohio. The STRS controversy demonstrates why local and regional financial reporting matters: pension disputes that sound technical—benchmarks, alternative-investment expenses, staff incentives and governance—ultimately determine the retirement security of hundreds of thousands of people. The movie turns those seemingly obscure financial questions into something understandable: Whose money is it, who controls it, and who is watching the people controlling it?
This group represents the people at the bottom of the pension organizational chart but at the center of its purpose: teachers. They have testified publicly about disparities affecting Minnesota teachers’ retirement benefits. Their presence reminds viewers that pension policy isn’t an academic argument over basis points. Changes in retirement ages, contribution requirements and benefits determine how long a teacher must remain in the classroom and what kind of retirement that teacher can afford.
After decades in education, they have argued that retirement rules can leave veteran teachers feeling that they have little financial choice but to continue working. Her story puts a human face on the numbers: when a pension system underperforms expectations, teachers don’t experience a spreadsheet variance—they experience additional years of work and a less secure retirement.
Minnesota educators helped raise money for an independent forensic examination of their pension investments rather than relying solely on assurances from the institutions managing them. Their involvement is one of the documentary’s strongest themes: beneficiaries increasingly want independent verification, not simply another consultant telling them everything is fine.
Trina Prufer — Ohio Teacher
Prufer gives the Ohio battle its most important perspective—the teacher living with the consequences. Ohio educators have watched contribution rates rise, retirement requirements change and COLAs disappear or become uncertain while investment professionals and outside managers continued to be paid. Her presence keeps the STRS debate focused where it belongs: the pension exists to provide retirement benefits to teachers, not to provide an asset pool for the investment industry.
Ardis Watkins — Executive Director, State Employees Association of North Carolina
Watkins brings organized labor into the transparency coalition. SEANC has fought for pension transparency and accountability in North Carolina for more than 15 years. Her presence also destroys the convenient argument that questioning Wall Street pension management is somehow anti-worker or anti-pension. Watkins’ position is essentially the opposite: protecting public employees’ pensions requires demanding accountability from the people investing their money. SEANC itself has urged members to watch the documentary.
This Isn’t a Movie About Red States or Blue States
That may be Pension Fight Club’s most important accomplishment.
Look at the map.
California. South Carolina. Pennsylvania. Ohio. Kentucky. Illinois. Rhode Island. Minnesota. North Carolina. New York.
Look at the participants.
Republicans. Democrats. Union officials. Retirees. Professors. Teachers. Journalists. Pension trustees.
Yet they repeatedly arrive at versions of the same questions:
What are we paying?
What are we getting?
What risks are we taking?
Who picked these managers?
Who is checking the consultants?
Why can’t trustees see everything?
Why are public investment contracts secret?
Why are private-market valuations accepted without the same market discipline applied to publicly traded securities?
And perhaps most importantly:
Why does asking these questions so often produce hostility rather than answers?
That is why Pension Fight Club matters beyond pensions.
America’s public retirement systems control trillions of dollars. Those trillions have helped make public pensions some of the most important customers of private equity, private credit, hedge funds, real estate funds and Wall Street investment managers.
The people whose money supplies that enormous financial machine are teachers, firefighters, police officers, nurses and other public workers—and ultimately taxpayers.
They should not need a forensic investigator to find out what they own.
A trustee should not have to fight staff to see an investment contract.
A retiree should not need a finance degree to determine whether a manager beat a legitimate benchmark.
And taxpayers should not be told to write bigger checks without being able to determine how much money disappeared into fees, expenses and underperformance first.
The First Rule of Pension Fight Club Should Be: Talk About Pension Fight Club
The movie had its world premiere May 19 at Sacramento’s historic Crest Theatre, near both the California Capitol and CalPERS, as California debated legislation intended to increase private-equity transparency.
Now the fight has moved online.
This is a documentary that should be watched by every public pension trustee, every state legislator who oversees a retirement system, every union representing public workers, every financial reporter covering state government—and especially every teacher and public employee who has ever been told:
“Don’t worry. The experts have this under control.”
Maybe they do.
But after watching Pension Fight Club, you may decide you’d still like to see the contracts.
My Latest Broadcast Retirement Network Interview—and Why Artificial Intelligence May Be the Biggest Transparency Tool Retirement Investors Have Ever Had
By Christopher B. Tobe, CFA, CAIA
In my latest interview with Jeffrey Snyder on the Broadcast Retirement Network, we talked about 401(k) litigation, target-date funds, annuities, collective investment trusts and private markets. https://www.youtube.com/@BroadcastRetirementNetwork
Bloomberg used artificial intelligence and extensive data analysis to examine a market that historically has been extraordinarily difficult to map.
That matters because CITs have grown into a roughly $6–$7 trillion market rivaling mutual funds, while disclosure remains fragmented among federal and state regulators and no regulator appears to possess a complete picture of the marketplace.
That is remarkable.
We have trillions of dollars of American retirement savings sitting in investment vehicles for which the public lacks anything resembling the SEC’s centralized mutual-fund disclosure system.
Bloomberg used technology to begin putting that puzzle together.
I have been trying to do something similar on a much smaller scale.
AI Gives every Participant the power
A smart participant say someone who is an engineer or almost any business background, by putting their statement and 5500 in AI and could know more than historically plan sponsors and even their advisors. On issues like fees which many plans and most advisors have tried to ignore now become transparent.
In the hands of an expert AI can tear apart almost any 401k plan and sort out the ones that should be litigated.
A smart plan sponsor would put their plan in AI and ask what is wrong? But their advisors will discourage doing this to protect their jobs.
AI makes expertise scalable.
I can ask questions today that would have been economically unrealistic for an independent researcher to ask five years ago.
Follow the Money—At Machine Speed
This is where things become uncomfortable for Wall Street.
AI is increasingly good at connecting information that institutions have historically disclosed separately.
Each document by itself may tell you relatively little.
Connect 50 of them and you may have a story.
That is exactly the kind of work AI makes dramatically easier.
The Most Important AI Skill Is Still Knowing What Doesn’t Smell Right
AI is not magic. It makes mistakes.
Every important finding still needs to be verified against original documents.
But that misses the real significance of the technology.
An experienced investigator often knows that something doesn’t make sense long before he can prove why.
Those questions come from experience.
AI allows the investigator to pursue dozens of them simultaneously.
Human skepticism + investment experience + AI research capacity is an extraordinarily powerful combination.
The 401(k) Industry Was Built for an Information-Scarce World
A surprising amount of retirement regulation assumes that information is expensive.
Participants cannot investigate everything, so give them standardized disclosures.
Plan committees cannot analyze everything, so hire consultants.
Regulators cannot inspect everything, so require periodic filings.
Courts cannot reconstruct every investment decision, so rely upon benchmarks and fiduciary process.
Wall Street learned to operate inside those limitations and lack of transparency.
Complexity became protection.
Fragmentation became protection.
Scale became protection.
Put something inside another fund and it becomes harder to see.
Put it inside a CIT and disclosure may decline further.
Put a private fund inside the CIT and another layer appears.
Put an insurance contract underneath it and another appears.
Twenty years ago, following that chain might have required a team of lawyers, accountants and investment professionals.
Today an experienced investigator with AI can start pulling those layers apart from a laptop.
AI Could Be Particularly Dangerous to Hidden Fees
Wall Street can defend a disclosed 40-basis-point fee.
It is much harder to defend economics nobody disclosed.
This is why I think insurance products deserve particular attention.
If participants receive 2% while an insurer earns substantially more on the underlying portfolio, the economic difference can dwarf the tiny mutual-fund expense-ratio disputes that have dominated ERISA litigation.
Historically, determining those economics was difficult.
AI makes it increasingly possible to combine crediting rates, insurer portfolio yields, statutory filings, product documents, competitor rates and plan disclosures.
The same principle applies to private equity.
Private credit.
Real estate.
CITs.
Target-date funds.
Consulting relationships.
Revenue sharing.
And conflicts of interest.
Opacity becomes less valuable when computers can connect the disclosures you scattered across 20 different places.
Bloomberg Has Resources. Now Individuals Have Leverage Too.
Bloomberg’s investigation demonstrates what sophisticated technology and financial data can accomplish at institutional scale.
But the more revolutionary development may be happening below Bloomberg’s level.
Independent investment professionals. Even individual retirement-plan participants.
They increasingly have access to analytical capabilities that once belonged almost exclusively to large financial institutions.
The information advantage is narrowing.
That could ultimately matter more to retirement investors than another thousand pages of regulation.
This Is Why Wall Street’s Move Toward Complexity May Backfire
Private markets are arriving in 401(k)s at exactly the wrong historical moment for secrecy.
Wall Street is moving toward investments with: More complicated contracts. More subjective valuations. More layers. More affiliated entities. More private credit. More insurance structures. More state-regulated CITs.
Less standardized disclosure. That strategy assumes complexity will continue protecting the industry from scrutiny.
AI is making the opposite bet.
The more complicated the structure becomes, the more relationships there are for machines to discover.
The more documents scattered among regulators, the more documents there are to connect.
The more affiliated entities involved, the more potential conflicts can be mapped.
The more complicated the money trail, the more valuable automated analysis becomes.
Wall Street is building increasingly complicated haystacks at precisely the moment AI is getting extraordinarily good at finding needles.
I don’t believe AI replaces investment professionals, lawyers, journalists or regulators.
It does something potentially more important.
It dramatically increases their reach.
An experienced investment professional can investigate thousands of plans instead of dozens.
A journalist can connect records scattered among regulators.
A plaintiff attorney can identify potential fiduciary problems before discovery.
A pension trustee can independently test what consultants are telling the board.
And participants may eventually be able to ask questions about their retirement investments that previously required institutional research departments to answer.
For decades, complexity gave Wall Street an enormous advantage.
CFA Institute’s new continuation-fund report exposes a bigger pension problem: GP-controlled transactions can potentially manufacture valuations, move performance between funds, crystallize carry and turn smoothed private-market marks into something that looks like independent price discovery.
Now it may have found a way to make that valuation problem look like a market transaction.
In my recent CommonSense piece, “Private Equity’s New 401(k) Sales Pitch: Fake Diversification From Smoothed Numbers,” I explained the basic problem:
Smoothed NAV → artificially low measured volatility → artificially low correlation → artificially attractive Sharpe ratio → apparent diversification benefit.
Private equity doesn’t necessarily become less risky because its reported price moves less often.
The ruler changed.
Now a new CFA Institute report on continuation funds raises an even more troubling question:
What happens when the private-equity manager can effectively sell an asset from one fund it manages to another fund it manages—and then point to that transaction as evidence of value?
That matters to public pensions today.
It matters to insurance-company portfolios stuffed with private assets.
And as Wall Street pushes private equity and private credit into 401(k) target-date funds, it could become an enormous ERISA fiduciary problem.
What Is a Continuation Fund?
The basic transaction isn’t complicated.
A private-equity GP owns a company through an existing fund.
Normally we would expect the eventual exit to be something like:
PE Fund → Independent Buyer → Cash
The independent buyer establishes something approaching a real market price.
A continuation transaction can look very different:
Old PE Fund ↓ Portfolio Company ↓ Continuation Fund controlled by the same GP ↓ Same Portfolio Company
Existing investors may cash out or roll their interests into the continuation vehicle. New investors may come in.
But the GP can remain in control of the asset before and after the transaction.
That means something extraordinary has happened:
The GP is effectively involved on both sides of the transaction.
CFA Institute’s new report doesn’t dismiss this conflict. It puts it front and center.
The GP may organize the sale process, negotiate the price, manage the legacy fund selling the asset and then manage the continuation vehicle buying it.
That’s not necessarily wrongdoing.
But don’t call it the equivalent of selling Ford stock on the New York Stock Exchange.
The Manager Can Have an Incentive for a High Price—or a Low Price
This is one of the most fascinating parts of the CFA report.
You might assume a PE manager always wants the highest possible valuation.
Not necessarily.
A higher continuation-fund price can benefit the legacy fund.
It may:
improve reported returns;
increase DPI;
increase IRR;
crystallize carried interest;
strengthen the GP’s historical track record; and
make the manager look better when raising its next fund.
But the GP can also have reasons to favor a lower transaction price.
A lower purchase price gives the continuation fund a lower starting basis.
That potentially creates more upside in the new vehicle—and another opportunity for future carried interest.
Think about what that means.
The manager doesn’t necessarily have a simple incentive to inflate the asset.
It can potentially have discretion over where it wants the performance to appear.
Legacy Fund A needs better performance?
A higher transaction value can help.
Continuation Fund B needs an attractive future return?
A lower starting value can help.
And the same GP can be involved with both funds.
That isn’t conventional price discovery.
It is a conflict that every pension trustee and ERISA fiduciary should understand.
From “Volatility Laundering” to “Transaction Laundering”
My August 15 article examined how stale and discretionary private-market valuations can produce an illusion of lower risk.
Public stocks are priced every trading day.
Private assets frequently aren’t.
If the S&P 500 drops 20%, we know it immediately.
A private-equity portfolio company may not receive a comparable markdown for weeks or months.
That produces the familiar chain:
Stale marks → lower reported volatility → lower measured correlation → better Sharpe ratio → apparent diversification.
An optimizer doesn’t know that one return series represents continuously traded securities while the other represents periodically estimated values.
It just sees numbers.
Garbage risk statistics in → fiduciary-looking efficient frontier out.
Continuation funds potentially add another layer.
Instead of:
GP estimate → NAV
we can get:
GP estimate → GP-organized transaction → GP-controlled continuation vehicle → “transaction price” → NAV
Suddenly an internally influenced valuation can acquire the appearance of external validation.
That is much more powerful.
The manager can say:
“This isn’t merely our mark. A transaction occurred at this price.”
Fine.
Then the fiduciary should ask:
Who was really on the other side of the transaction?
A $100 Million Example
Suppose a PE manager carries a company at:
$100 million.
Imagine a genuinely independent secondary buyer would pay only:
$85 million.
That’s important information.
The real market might be telling the pension fund that its $100 million asset is worth closer to $85 million.
But instead of accepting that independent-market discount, the GP organizes a continuation vehicle transaction at $100 million.
The legacy fund can now report something resembling a $100 million realization.
DPI may improve.
IRR may improve.
Carry may be crystallized.
The GP continues managing the company.
The continuation fund starts with a $100 million investment.
Five years later, suppose the company is finally sold to a truly independent buyer for $150 million.
Now the GP’s performance presentation can potentially tell two attractive stories:
Legacy fund: Successful $100 million realization.
Continuation fund: $100 million investment became $150 million.
But economically, the GP never really exited the investment at $100 million.
It moved the asset from one vehicle it managed to another vehicle it managed.
There may have been only one genuinely independent market price:
$150 million.
Public Pensions Should Be Particularly Concerned
This fits almost perfectly with CFA Institute research by Richard Ennis on what he calls “volatility laundering.”
Ennis looked at secondary-market discounts to reported private-market NAV.
The discounts he cited were striking:
Asset
Approximate Secondary-Market Discount to NAV
Buyout
6%
Private Credit
15%
Real Estate
26%
Venture Capital
30%
All Private Assets
12%
That is a huge issue for public pensions.
If a pension reports a private asset at $100 million while independent secondary buyers would pay only $85 million, which number should taxpayers and trustees care about?
Probably both.
Yet the pension’s annual report may prominently display the $100 million NAV.
This can potentially flow through the entire pension reporting system:
GP valuation ↓ Continuation transaction ↓ Pension NAV ↓ Private-equity return ↓ Total-fund return ↓ Benchmark comparison ↓ Reported “alpha” ↓ CIO/manager compensation ↓ Trustee and taxpayer perception
This isn’t merely an accounting technicality.
Performance numbers determine reputations, bonuses, asset allocations and hundreds of billions of dollars of future commitments.
Did the Pension Really Realize Anything?
Here’s another question pension trustees should start asking.
Suppose a pension owns the legacy fund.
The portfolio company moves into a continuation vehicle.
The pension elects to roll its investment.
Did the pension really experience an economic realization?
Or did an accounting event occur while substantially the same economic exposure continued?
Those aren’t necessarily the same thing.
A pension report showing improved DPI or a realization could leave trustees with a very different impression than:
We still own exposure to substantially the same company through another vehicle managed by substantially the same manager.
That distinction belongs in pension investment-committee minutes.
Insurance Companies May Be an Even Bigger Problem
Now apply this to insurance companies.
Insurance-company portfolios increasingly contain private credit, private equity, structured investments and other assets without transparent daily market prices.
In some cases the insurer, asset manager, private fund, financing entities and related investment vehicles can exist within interconnected corporate ecosystems.
That makes the valuation question extremely important.
A regulator, policyholder, pension fiduciary or annuity purchaser shouldn’t merely ask:
“Was there a transaction?”
They should ask:
“Was there a genuinely independent transaction capable of establishing fair market value?”
Those are very different questions.
If an affiliated or closely connected asset manager controls the investment before the transaction and continues controlling it afterward, calling the resulting number “market value” deserves scrutiny.
For an insurance company, asset values can ultimately affect perceptions of:
investment performance;
asset quality;
capital strength;
surplus;
creditworthiness;
liquidity; and
the safety of liabilities backing annuities and retirement benefits.
This deserves considerably more attention from state insurance regulators.
Now Put This Inside a 401(k) Target-Date Fund
This is where continuation funds become an ERISA issue.
Wall Street wants the next generation of target-date funds to contain things like:
Public Stocks + Bonds + Private Equity + Private Credit + Real Estate + Annuities
The sales pitch is diversification.
But as I discussed in my August 15 CommonSense article, mixing daily-priced public securities with manager-valued private assets can produce misleading volatility and correlation statistics.
Now imagine some of those private investments also move through continuation vehicles.
The participant sees:
“2055 Target Retirement Fund.”
The investment committee sees:
“Improved diversification.”
Underneath that simple name could potentially sit:
401(k) ↓ Target-Date CIT ↓ Private-Market Fund ↓ PE Partnership ↓ Continuation Vehicle ↓ Portfolio Company
And somewhere down that chain somebody has to decide what that company is worth.
That valuation eventually works its way back into the participant’s retirement account.
ERISA Fiduciaries Cannot Outsource Common Sense
ERISA doesn’t require an investment committee to become an expert private-equity appraiser.
It does require a prudent process.
A fiduciary considering a target-date fund containing private assets should therefore understand how those assets are being valued.
Continuation funds make that obligation more important—not less.
A consultant shouldn’t be allowed to walk into an investment committee meeting and say:
“The asset was independently validated by a market transaction.”
without somebody asking:
Who controlled the seller?
Who controlled the buyer?
Who selected the bidders?
Who established the valuation?
Who received carried interest?
Who continued earning management fees afterward?
Those aren’t obscure technical questions.
They’re basic fiduciary questions.
The Plaintiff’s Discovery Request Almost Writes Itself
Suppose a 401(k) plan eventually gets sued over a target-date fund containing PE interests that participated in continuation transactions.
Plaintiff counsel should request:
Legacy-fund NAV immediately before each continuation transaction.
Continuation-fund transaction price.
Every independent bid received.
Bid-price ranges.
Secondary-market indications of value.
Fairness opinions and independent valuations.
Valuation methodologies and assumptions.
Changes in valuation methodology before the transaction.
GP carried interest crystallized in the legacy fund.
Carry terms in the continuation vehicle.
Management fees before and after the transaction.
Percentage of existing LPs that rolled.
GP investment in the continuation vehicle.
IRR and DPI immediately before and after the transaction.
Performance presentations used in subsequent fundraising.
Investment-consultant analysis presented to the ERISA committee.
Any analysis comparing the transaction price with a genuine third-party sale.
Then ask one very simple deposition question:
“You called this a market transaction. Who was the independent buyer?”
The answer could become interesting.
Six Numbers Every Fiduciary Should Demand
My earlier CommonSense article suggested that before accepting the claim that private equity reduces target-date-fund risk, fiduciaries should demand six numbers:
Reported PE volatility. Unsmoothed PE volatility. Reported stock/PE correlation. Unsmoothed stock/PE correlation. Stress-period correlation. Secondary-market discount to NAV.
Continuation funds justify adding several more:
Pre-transaction NAV. Continuation transaction price. Highest independent bid. Lowest independent bid. Carry crystallized at the transaction. Legacy-fund IRR before and after the transaction.
Put those numbers side by side.
You may learn considerably more than you will from a 70-page consultant presentation.
Bottom Line
Private equity already has an enormous advantage over public markets:
It largely controls when changes in value appear in reported returns.
That can suppress measured volatility and correlation.
Continuation funds potentially add another advantage:
The manager can participate in creating a transaction around its own valuation.
That doesn’t mean every continuation fund is improper.
It doesn’t mean every continuation-fund price is manipulated.
And it certainly doesn’t mean every transaction violates ERISA.
But CFA Institute’s own analysis demonstrates why fiduciaries shouldn’t automatically treat these transactions as independent price discovery.
When the same manager can influence the seller, buyer, transaction process, valuation, carried interest and subsequent management of the asset, a transaction price deserves considerably more scrutiny than an ordinary arm’s-length sale.
For public pensions, the danger is that valuation smoothing can become performance smoothing.
For insurers, questionable private-market marks can potentially obscure the economic risk sitting behind retirement guarantees.
And for ERISA plans, the problem may eventually be even simpler:
A fiduciary can’t claim private equity reduces risk because its reported prices don’t move—and then accept a GP-controlled continuation transaction as proof that those same reported prices were market values.
Private equity doesn’t become less volatile because nobody marks it down.
And an estimated price doesn’t necessarily become a market price merely because the manager sells the asset to another fund it manages.
Public pension pay-to-play does not have to look like an envelope of cash handed to a trustee.
There is a much more respectable-looking system.
Investment managers, private-equity firms, consultants, insurers, custodians and other Wall Street vendors provide money to the national organizations that educate, convene and influence the public officials responsible for trillions of dollars of retirement assets.
The organizations call it membership, sponsorship, education, partnership and networking.
Wall Street might call it something simpler:
Business development.
And public pension participants should start asking a basic question:
Who is paying the organizations that are educating and influencing the people investing our retirement money?
The issue is not that accepting corporate sponsorship automatically creates corruption. Trade associations routinely have commercial members and sponsors. The more serious problem arises when an organization financially dependent on an industry also becomes an influential voice on issues where that industry’s interests may diverge from pension participants, taxpayers, investigators or regulators.
That is the structural conflict.
NCPERS Says the Quiet Part Out Loud: Sponsors Get Access
The National Conference on Public Employee Retirement Systems may provide the clearest illustration.
NCPERS doesn’t merely say sponsors support pension education.
Its current marketing materials tell prospective sponsors that partnering with NCPERS provides “direct access to leaders and decision makers within the public pension community.”
Benefits include access to trustees, administrators and pension staff, opportunities to develop relationships, conference visibility, exhibits and—in appropriate cases—speaking and panel participation. NCPERS even acknowledges that sponsorship is one of the factors considered when evaluating speaking proposals.
That is remarkably important.
The attached analysis puts the economics in perspective. A manager paying $10,000 or $25,000 for access may be competing for a $500 million mandate. At only 50 basis points, that mandate generates $2.5 million in management fees every year.
The conference sponsorship is rounding error.
The pension mandate is the prize.
This Is a National Ecosystem
NCPERS isn’t alone.
A surprisingly small collection of national organizations sits between Wall Street and many of the trustees, administrators, treasurers and other officials controlling America’s public retirement money.
Organization
Who Wall Street can reach
Financial-industry connection worth examining
NCPERS
Public pension trustees, administrators and staff
Corporate membership, sponsorship, exhibits, networking and potential speaking opportunities
NCTR
Teacher retirement systems
Commercial members include investment managers, consultants and private-market firms
NASRA
State retirement-system administrators and CEOs
Associate and Premium Associate memberships for private-sector firms
NAST
State treasurers
Corporate affiliates receive networking, conference and other access
NASACT
State auditors, comptrollers and treasurers
Corporate Associates Program explicitly facilitates private-sector interaction
SFOF
Primarily conservative state financial officers
Historical financial-industry sponsorship and extensive political-financial networking
NASP
Minority managers, institutional investors and financial professionals
Major managers and pension consultants appear among sponsors
CII
Large institutional investors, including major public pensions
Money-manager associate membership and conference sponsorship
The relationships differ. Membership should not automatically be described as sponsorship, and neither proves that an investment mandate resulted from the relationship.
But taken together, they reveal a national infrastructure through which financial companies can repeatedly interact with the officials controlling public money.
NCTR: Wall Street Inside the Teacher-Retirement Network
The National Council on Teacher Retirement is especially interesting because its pension members include many of America’s largest teacher retirement systems.
Its current commercial-member roster includes BlackRock, Blue Owl, Clearlake Capital, HarbourVest, Adams Street, Bridgewater, Fidelity, Callan, Meketa, Guggenheim, Franklin Templeton and many others.
Commercial membership costs $4,530 in 2026.
Again, $4,530 is virtually meaningless to a large asset manager.
Access to executives and trustees controlling tens or hundreds of billions of dollars isn’t.
This becomes particularly sensitive because public-pension organizations don’t merely organize cocktail receptions. They conduct trustee education, legislative programs, workshops and conferences and help establish what the public-pension community regards as accepted professional practice.
Whose consensus is it?
An industry-supported organization can produce reports, conferences, surveys and policy positions that eventually become accepted as “the position of the public-pension community.” But pension administrators and Wall Street vendors do not necessarily have interests identical to retirees and taxpayers.
NASRA: The People Who Actually Run the Systems
NASRA may be even more strategically valuable.
Its members include retirement-system executives. Its private-sector Associate Members participate through an Associate Advisory Committee that provides insight and guidance on association activities.
Current Premium Associates include BlackRock, Nuveen, PGIM, Principal Asset Management, Lazard, T. Rowe Price and others.
Think about that structure.
The organization represents public retirement administrators.
Private firms seeking business from public retirement systems financially participate in the organization.
Those firms can participate in an advisory committee providing input concerning association activities.
And Premium Associates obtain enhanced access and networking.
None of this demonstrates an improper investment decision.
But it certainly warrants disclosure.
NAST: Treasurers, RFPs and Wall Street
The National Association of State Treasurers provides another unusually clear example.
Its current Corporate Affiliates include KKR, TPG, State Street, Vanguard, Prudential, TIAA, Wells Fargo, UBS and numerous other financial firms.
And NAST explains what Corporate Affiliate membership provides.
Affiliates can submit conference topics and speaker suggestions, serve as speakers or panelists, participate in members-only networking, access member information and even access selected RFPs.
That doesn’t mean NAST is selling investment mandates.
It does mean Wall Street considers proximity to state treasurers sufficiently valuable to pay for participation in the ecosystem surrounding them.
SFOF Shows How the Network Can Become Political
SFOF takes the issue one step further.
The State Financial Officers Foundation brings together conservative state treasurers, auditors and other financial officials. SFOF itself describes its national gatherings as opportunities for discussions between financial officers, the financial industry and political leaders.
Historical sponsor records identify Fidelity and Invesco as Silver sponsors, Wells Fargo as Bronze, JPMorgan as a Friend of SFOF and KKR as a former Friend of SFOF.
That makes SFOF’s anti-ESG campaign particularly interesting.
As discussed in the attached SFOF analysis, SFOF challenged BlackRock over ESG affiliations including UN Principles for Responsible Investment. Yet KKR—the private-equity giant historically connected to SFOF—has itself participated extensively in ESG and sustainability initiatives, including becoming a PRI signatory in 2009.
That creates an obvious fiduciary question.
If ESG affiliation makes a cheap, liquid BlackRock index mandate objectionable, why doesn’t the same standard apply to an expensive, illiquid private-market manager with similar ESG commitments?
The attached analysis identifies the economic distinction: replacing a low-cost, liquid and transparent index mandate with private equity, private credit, infrastructure or real estate can introduce management fees, carried interest, partnership expenses, leverage, illiquidity and manager-controlled valuations.
Follow the money, not the political label.
Ohio STRS Shows Why Access Matters
The Ohio STRS controversy provides a remarkable case study.
Ohio’s attention centered on QED and reform trustees Rudy Fichtenbaum and Wade Steen.
But QED received $0 from STRS.
Meanwhile, STRS had billions invested in private markets.
And one of the central QED figures, Seth Metcalf, had previously been an Ohio deputy treasurer, OPERS trustee and Ohio Deferred Compensation trustee before becoming president of SFOF’s board. Historical records identify KKR among SFOF’s former financial supporters.
Even more interesting, Alaska Permanent Fund travel records discussed in the Ohio analysis show its executive director attending SFOF’s 2017 annual meeting and meeting with KKR during the same trip.
And the SFOF network subsequently supplied another revealing example. The Ohio article describes SFOF connections between state officials and Vivek Ramaswamy, whose Strive later obtained public-pension advisory business.
The pathway matters:
Financial firm → national organization → public financial official → pension access → potential business.
That pathway deserves the same scrutiny we give campaign contributions.
The Real Conflict May Be Over Transparency
The biggest danger isn’t necessarily that a manager buys a mandate.
It may be that industry-funded organizations gradually influence what public pensions consider normal.
Private-market firms generally benefit from broad investment discretion, long-duration partnerships, complex fee structures and confidentiality.
Participants and taxpayers may instead prefer lower costs, maximum transparency, independent valuation and competitive procurement.
Those interests can collide over:
private-equity fees and carried interest;
LP agreements and side letters;
manager selection;
consultant conflicts;
private-asset valuations;
benchmarks;
placement agents;
investigations and forensic audits.
The State Organizations Are the Next Layer Down
There is also a smaller but important state-level network.
Among the organizations worth tracking are MAPERS in Michigan, Missouri MAPERS, MACRS in Massachusetts, SACRS in California, FPPTA in Florida, TEXPERS in Texas and GAPPT in Georgia.
They should be viewed as the second layer of the same ecosystem.
But the national organizations deserve priority because they can connect a Wall Street firm with pension decision-makers across many states through a single relationship.
Don’t Call It Corruption. Call for Disclosure.
Ordinary trade-association sponsorship should not automatically be labeled pay-to-play.
There may be no quid pro quo at all.
But the public-policy concern is remarkably similar to the problem underlying investment-adviser pay-to-play rules:
Can financial firms obtain privileged relationships or access to officials controlling public assets outside the ordinary competitive procurement process?
This is a structural-conflict question rather than an accusation requiring proof of a bribe.
The solution is straightforward.
Every national public-pension organization should annually disclose:
Who paid it. How much they paid. What sponsorship or membership tier they purchased. What conferences they attended. What speaking opportunities they received. What advisory committees they served on. And which public pension systems and officials participated in those events.
Then pension systems should disclose whether those firms subsequently competed for or received investment mandates.
The new 401(k) lawsuit against Ford Motor Company contains a remarkably simple lesson:
A low recordkeeping fee does not necessarily mean low recordkeeper compensation.
According to the complaint in Fuller v. Ford Motor Co., Ford negotiated recordkeeping with Alight for approximately $20 per participant.
That looks excellent.
But plaintiffs allege Alight received millions of dollars of additional compensation through other relationships associated with the plans, including payments connected with Financial Engines’ managed-account services and rollover activity.
Published accounts of the complaint put Alight’s alleged total compensation as high as approximately $57 per participant.
So the apparent $20 recordkeeping fee may have been closer to a $57 economic relationship.
Ford is important.
But Ford is also a mega-plan.
The potentially much bigger story is what happens farther down the 401(k) food chain.
The $100 Million to $1 Billion Plans
There are hundreds—potentially thousands—of mid-sized 401(k) and 403(b) plans where the Form 5500 appears to show remarkably inexpensive recordkeeping.
I have reviewed many plans in the $100 million to $1 billion range where an insurance-company recordkeeper reports compensation that appears to be:
$20 per participant.
$25 per participant.
Under $30 per participant.
Look only at the Form 5500 and the plan can appear extraordinarily well managed.
But that number can be dangerously incomplete.
Insurance-company recordkeepers can occupy several economic positions simultaneously.
The visible recordkeeping fee can therefore be one of the least interesting numbers in the relationship.
Ford Shows the Problem. Insurance Companies Can Supercharge It.
Ford’s alleged economics are relatively easy to understand.
The recordkeeping contract says approximately $20.
Then plaintiffs identify additional payments connected with other services.
Add them together and plaintiffs contend the economic compensation was substantially higher.
With an insurance-company recordkeeper, the economics can be considerably harder to reconstruct.
Consider a hypothetical $500 million plan.
Its Form 5500 shows:
10,000 participants
$250,000 recordkeeping compensation
or:
$25 per participant.
A conventional fee-benchmarking exercise may give that plan an A.
But suppose the same insurance company also has $75 million of participant assets in its general-account fixed annuity or stable-value product.
The insurance company doesn’t necessarily receive an explicit 50-basis-point management fee.
Instead, it invests the $75 million.
Suppose the underlying portfolio earns 5.5%.
Participants receive 3.0%.
The difference is:
250 basis points.
On $75 million:
$1.875 million annually.
That dwarfs the $250,000 visible recordkeeping fee.
The economics potentially become:
Compensation source
Illustrative amount
Reported recordkeeping
$250,000
Insurance spread economics
$1,875,000
Other revenue sharing
Unknown
Managed accounts
Unknown
Proprietary investments
Unknown
Rollover economics
Unknown
Potential economic relationship
$2,125,000+
The Form 5500 says:
$25 per participant.
The broader economics in this simplified illustration are:
$212.50 per participant.
That is an entirely different fiduciary picture.
The Spread Is the Revenue Sharing Nobody Calls Revenue Sharing
Traditional revenue sharing is relatively easy to understand.
A mutual fund charges 75 basis points.
Some portion goes back to the recordkeeper for shareholder servicing or recordkeeping.
Eventually the industry recognized the conflicts created by those arrangements.
Plans migrated toward institutional shares, zero-revenue-sharing funds and CITs.
But insurance-company plans present another potential form of indirect economics.
Spread products.
With a general-account product, the insurer takes participant assets, invests them and promises participants a crediting rate.
The difference between what the insurer earns and what it credits—after considering expenses, reserves, capital costs and other contractual economics—contributes to the insurer’s economics.
That spread is not necessarily reported on the Form 5500 as:
Recordkeeping compensation: $1,875,000.
Yet the insurer may have access to those assets precisely because it has a broader relationship with the retirement plan.
That deserves fiduciary scrutiny.
This Can Make Ford Look Simple
Ford allegedly involves a $20 headline fee plus identifiable additional payments.
The insurance-company model can be more difficult.
Imagine seeing this on the Form 5500:
Recordkeeper compensation: $27 per participant.
Then discovering that the same insurance company has hundreds of millions of dollars in:
general-account fixed annuities;
guaranteed-interest accounts;
separate-account products;
stable-value products;
proprietary funds;
target-date products;
managed accounts; or
affiliated investment vehicles.
The right question isn’t:
Is $27 competitive?
Of course $27 may be competitive.
The right question is:
What is the insurance company making from the entire plan relationship?
The Wrong Benchmark Can Produce the Wrong Answer
This exposes a fundamental weakness in conventional recordkeeping benchmarking.
Suppose a consultant reports:
Plan
Reported RK cost
Comparable Plan A
$45
Comparable Plan B
$39
Comparable Plan C
$34
Your Plan
$27
The committee minutes then say:
“Recordkeeping fees were reviewed and determined to be reasonable.”
That conclusion may be meaningless if nobody examined the recordkeeper’s other economics.
The consultant has benchmarked the visible invoice.
The fiduciary needs to understand the economic relationship.
Those aren’t necessarily the same thing.
Ford Gives Plaintiff Lawyers a Roadmap
The Ford complaint is important because plaintiffs aren’t simply alleging that $20 was excessive.
That would be a difficult argument.
Instead, they are effectively saying:
$20 wasn’t the real number.
That is the concept plaintiff lawyers should apply to mid-sized plans.
A plan showing $25 or $30 per participant shouldn’t automatically be eliminated from an excessive-fee investigation.
It may deserve more investigation, particularly when the recordkeeper is also an insurance company providing investment or spread products.
The first question should be:
Where else does the recordkeeper make money?
Cunningham v. Cornell Changes the Stakes
This becomes particularly important after the Supreme Court’s unanimous decision in Cunningham v. Cornell University.
ERISA §406 prohibits specified transactions involving plans and parties in interest.
Plan service providers can fall within the party-in-interest framework.
Section 408 contains exemptions permitting necessary plan services subject to statutory requirements, including reasonable compensation.
The Supreme Court held that plaintiffs bringing a §406(a) claim do not have to plead facts negating those exemptions.
The exemptions are affirmative defenses.
That doesn’t make ordinary recordkeeping contracts unlawful.
It does make the complete compensation arrangement more important.
If an insurance-company recordkeeper is receiving money or economic benefits through several channels, fiduciaries should understand those channels rather than assuming that a $25 Form 5500 number establishes reasonable compensation.
Don’t Confuse Spread With a Disclosed Fee
There is an important distinction.
An insurance spread isn’t necessarily a conventional fee.
Part of the spread may compensate the insurer for:
credit risk, capital requirements, guarantees, liquidity, administration and other contractual obligations.
That doesn’t make the spread irrelevant.
It means fiduciaries need to understand it.
The proper analysis isn’t necessarily:
“Every basis point of spread is an excessive recordkeeping fee.”
That would be too simplistic.
The better questions are:
How large is the spread?
What risks and services legitimately justify it?
What does a competitive product provide?
Does the recordkeeping relationship influence the selection or retention of the spread product?
Was the insurer selected as an investment provider independently from its role as recordkeeper?
And, particularly after Cunningham:
What transactions are occurring with a party in interest and what exemption permits them?
Those are much harder questions than simply comparing Form 5500 recordkeeping numbers.
A $25 Recordkeeping Fee Should Sometimes Be a Red Flag
For a large insurance-company-recordkept plan, an extraordinarily low disclosed recordkeeping fee should not automatically end the investigation.
Sometimes it should start one.
If competitors need $40 per participant to provide the service and an insurance company apparently does it for $20, the fiduciary should understand why.
Maybe the insurer is simply more efficient.
But maybe the recordkeeping business provides access to profitable investment products.
Maybe there is traditional revenue sharing.
Maybe there are proprietary funds.
Maybe there are managed-account payments.
Maybe there are spread products.
Maybe there are rollover opportunities.
Or maybe there is some combination of all of them.
There is nothing inherently wrong with a provider earning money.
The fiduciary problem begins when the committee doesn’t know how much the provider is earning or where it is coming from.
Plaintiff Lawyers: Don’t Screen These Cases Out
This may have significant implications for how plaintiff firms screen 401(k) cases.
A common screening methodology starts with Form 5500 data.
Plans with high administrative costs receive attention.
Plans showing $20–$30 per participant may get discarded.
That could be exactly backwards for some insurance-company plans.
A $500 million plan reporting $25 per participant while holding $100 million in the recordkeeper’s own insurance products could potentially be far more interesting than a plan transparently paying an independent recordkeeper $50.
The $50 may actually be $50.
The $25 may not really be $25.
Ford May Be the Tip of the Iceberg
Ford deserves attention precisely because it is enormous and sophisticated.
If plaintiffs can allege that even Ford’s $20 recordkeeping price didn’t capture the complete economics, consider what may be happening in the much larger universe of mid-sized plans.
A $200 million or $500 million plan may not have Ford’s purchasing leverage.
It may rely much more heavily on an insurance-company recordkeeper.
The insurer may simultaneously provide recordkeeping, investments, stable value, annuities, managed accounts and rollover services.
And the Form 5500 may still appear to show:
$25 per participant.
That is why the next generation of excessive-recordkeeping litigation shouldn’t begin by sorting Form 5500s from highest fee to lowest fee.
It should begin by asking:
Who is the recordkeeper?
What other products does it provide?
How much plan money is invested with it or its affiliates?
Where does it make its money?
And after Cunningham v. Cornell:
Is the recipient a party in interest, what transactions occurred, and can the defendants establish the applicable exemption?
Ford gives us the headline.
But the potentially much larger litigation opportunity may be buried among hundreds of ordinary $100 million to $1 billion retirement plans whose Form 5500s appear to show some of the lowest recordkeeping fees in America.
The $25 recordkeeping fee may be the number that should make you look harder—not stop looking.
For years, ERISA litigation has increasingly revolved around two magic words:
“Meaningful benchmark.” The phrase sounds like investment science.
Too often, it isn’t. It has become a litigation construct that can distract courts from the investment question that actually matters:
Did the fiduciary prudently evaluate the investment, its risks, its costs, its contracts, its asset allocation and the reasonable alternatives available at the time?
Investment professionals don’t start with a lawyer’s search for a single magical benchmark.
They start by understanding what they actually own.
And that distinction becomes enormously important with target-date funds, annuities, private equity, private credit and increasingly complicated collective investment trusts.
The BlackRock Target-Date Cases Show What Went Wrong
Beginning in 2022, essentially parallel lawsuits challenged employers’ use of BlackRock LifePath Index target-date funds. These were low cost funds. The theory was straightforward: BlackRock’s funds underperformed several competing target-date families.
The problem was that target-date funds aren’t interchangeable. One 2040 fund might have roughly 70% in equities while another has 60%.
One may use active management. Another passive management. One may have substantially greater international exposure. Another may hold more bonds. Their glide paths can be materially different.
Those differences matter enormously because asset allocation can dominate investment results.
Comparing the raw return of Fund A against Fund B therefore doesn’t necessarily tell you whether either investment manager did a good job.
It may primarily tell you that one fund owned more stocks during a bull market. I believe that BlackRock on a fair basis outperformed in general because of lower fees.
Yet that superficial comparison became the centerpiece of numerous BlackRock lawsuits.
And courts repeatedly threw them out. Three early BlackRock cases were dismissed with prejudice, with courts rejecting comparisons based on other TDF suites, the S&P Target Date Index and even Sharpe ratios.
By 2024, a litigation survey counted eight of the original eleven BlackRock cases dismissed, with only one motion to dismiss denied and two then pending. Cisco became an especially revealing example.
Plaintiffs amended their complaint repeatedly attempting to solve the comparator problem. In March 2025, the court dismissed the third amended complaint, ending the case at the district-court level.
That’s an expensive lesson.
A bad benchmark can destroy an otherwise interesting fiduciary investigation.
A Target-Date Fund Isn’t Really One Investment
A target-date fund is better understood as an asset-allocation portfolio wrapped inside a single investment vehicle.
Suppose:
2040 Fund A
70% stocks 30% bonds
and
2040 Fund B
60% stocks 40% bonds
If stocks dramatically outperform bonds, Fund A should outperform Fund B even if Fund B’s underlying managers actually produced superior risk-adjusted investment results.
Calling Fund A’s higher return proof of superior fiduciary prudence is therefore potentially nonsense.
The correct analysis starts by decomposing the portfolio.
What percentage was allocated to equities?
What percentage to fixed income?
What percentage internationally?
What were the underlying exposures?
How did those allocations change?
What risks were being taken?
What did the underlying managers contribute after controlling for those exposures?
Only then can you intelligently discuss performance.
The DOL Has Now Effectively Acknowledged the Problem
This isn’t merely theoretical anymore.
The Department of Labor’s March 2026 proposed investment-fiduciary regulation defines a meaningful benchmark as an investment, strategy, index or comparator having similar:
mandates, strategies, objectives and risks.
Even more importantly, DOL specifically addresses target-date funds.
Its proposal explains that a fiduciary may use a custom composite benchmark blending broad market indexes according to the TDF’s actual asset allocation.
That is much closer to how an investment professional should approach the problem.
In other words:
The benchmark should follow the investment. The investment shouldn’t be squeezed into whatever benchmark makes a lawyer’s complaint work.
Market Timing Disguised as Benchmarking
There is another danger.
Select a comparator after observing which TDF performed best and you may simply be engaging in hindsight market timing.
Imagine stocks outperform bonds for five years.
A lawyer searches the TDF universe and identifies another fund with superior returns.
But suppose that “superior” fund simply maintained a substantially larger equity allocation.
The complaint effectively argues:
The fiduciary should have known five years earlier that stocks were going to outperform bonds and selected the TDF positioned to benefit from that outcome.
That’s not necessarily evidence of imprudence.
It’s hindsight.
The CMFG court identified essentially this problem, rejecting comparisons between BlackRock LifePath and TDF families having materially different investment strategies and management approaches.
Now Add Private Equity
This problem becomes far worse when Wall Street puts private assets inside target-date funds.
A hypothetical 2040 fund might contain:
55% public equities 25% bonds 10% private equity 5% private credit 5% real estate
Now find me the magical index.
There isn’t one.
Private equity doesn’t even produce a continuously observable market price comparable to publicly traded stocks.
Its reported volatility and correlations can be affected by appraisal-based valuations and infrequent marks.
So simply comparing this fund against Vanguard’s or BlackRock’s conventional 2040 fund can become economically misleading.
The DOL’s own 2026 proposal implicitly recognizes this difficulty. For an asset-allocation investment containing private equity, DOL discusses combining public-market indexes with methodologies commonly used for the private-equity component, including IRR and public-market-equivalent analysis.
That is a vastly more sophisticated exercise than:
Fund A returned 8.2%.
Fund B returned 7.6%.
Therefore Fund B was imprudent.
Annuities Expose the Absurdity Even More Clearly
The benchmark obsession becomes especially problematic with fixed annuities.
A general-account fixed annuity isn’t a bond fund. It isn’t a synthetic stable-value fund.
It isn’t a Treasury bill. It is fundamentally an insurance-company contractual promise.
The participant exchanges assets for an obligation of an insurer subject to contractual provisions governing such things as: crediting rates, withdrawals, surrender provisions, market-value adjustments, liquidity, transfer restrictions, investment guidelines, termination rights, and ultimately the insurer’s creditworthiness.
Trying to find a Bloomberg index that magically captures those contractual characteristics misses the investment. As I have argued previously:
Fixed annuities have comparables. They don’t necessarily have benchmarks.
The obvious question isn’t: What index perfectly tracks this contract?
It is: What were comparable insurers willing to pay for reasonably comparable contracts at the same time?
If Insurer A offered 2.25% and equally or more creditworthy Insurer B offered 4.25% on reasonably comparable terms, that’s economically important evidence.
You don’t need to invent an index to recognize it.
Prohibited Transactions Make the Benchmark Distraction Particularly Dangerous
This becomes even more important after Cunningham v. Cornell.
Suppose an affiliated insurer, asset manager, recordkeeper or other party in interest is involved in an investment arrangement.
The first question shouldn’t necessarily be:
Did this product underperform its benchmark?
The questions may instead include:
Who received compensation?
Was the provider a party in interest?
What transaction occurred?
What exemption supposedly permitted it?
Were the exemption’s conditions satisfied?
What did the contract actually say?
What alternatives were available?
What fees were embedded inside the structure?
Those are transaction and fiduciary-process questions.
Performance can matter enormously for damages and prudence.
But a prohibited transaction doesn’t magically become permissible because somebody finds an index that the product happened to outperform.
And Guess Which Products Are Hardest to Benchmark?
There is an uncomfortable pattern.
The products increasingly being pushed into retirement plans are precisely the products that are hardest to evaluate using conventional public-market benchmarks:
Private equity.
Private credit.
Insurance-company general accounts.
Separate-account annuities.
Lifetime-income products.
Private real estate.
Multi-asset CITs containing combinations of them.
That’s not a reason fiduciaries should receive less scrutiny.
It’s a reason they require more sophisticated scrutiny.
The Contract May Be More Important Than Morningstar
An attorney can download performance data in minutes.
Reading a 70-page insurance contract is harder.
Obtaining an LPA is harder.
Understanding a CIT declaration is harder.
Reconstructing embedded fees is harder.
Analyzing surrender provisions is harder.
Evaluating insurer credit risk is harder.
Determining whether investment guidelines actually constrain an insurer is harder.
Calculating asset-allocation-adjusted performance is harder.
And hiring somebody who understands these things costs money.
But ERISA isn’t supposed to become:
Whatever can be downloaded cheaply from Morningstar is actionable; everything requiring investment expertise gets ignored.
That turns litigation economics into fiduciary law.
The Better Plaintiff Playbook
Instead of beginning an ERISA investment case by asking “What benchmark underperformed?”, begin with the investment itself.
Examine underlying holdings and governing documents
Affiliated product
Compare performance
Start with transaction, compensation and exemption
Lifetime income
Compare payout
Examine guarantee, portability, liquidity and downgrade provisions
Fiduciary process
Look at outcome
Examine what fiduciaries actually knew and considered
That is due diligence.
The Irony
Wall Street spent years arguing that retirement investments were too complicated to judge using simplistic comparisons.
On that point, Wall Street was often correct. But that shouldn’t produce the conclusion:
Therefore complicated products cannot be challenged. It should produce exactly the opposite conclusion:
Complicated products require complicated due diligence.
And DOL’s proposed rule makes another important point: when an investment is sufficiently complex, the fiduciary must determine whether it actually possesses the knowledge and experience necessary to evaluate it—or whether qualified investment assistance is required.
That principle should apply to litigation too.
Stop Litigating Investments Like Lawyers. Analyze Them Like Investors.
The lesson of the BlackRock target-date litigation shouldn’t be that ERISA investment cases are dead. The lesson should be that superficial performance lawsuits are bad investment analysis.
A target-date fund isn’t merely its return. An annuity isn’t merely its crediting rate.
Private equity isn’t merely its reported IRR. A CIT isn’t merely its NAV.
And an affiliated financial product isn’t cleansed of a potential prohibited transaction because somebody can produce a favorable performance chart.
The next generation of ERISA cases should move beyond the Wall Street-lawyer obsession with finding one magical “meaningful benchmark.” “the wave of BlackRock LifePath cases overwhelmingly failed, largely demonstrating the danger of comparator-driven pleading.”
Start with: the assets, the allocation, the contract, the fees, the liquidity, the credit risk, the conflicts, the parties in interest, the available alternatives, and the fiduciary’s actual decision-making process.
Then analyze performance. Because sometimes the most misleading benchmark of all is the one that makes a complicated investment look simple.
Appendix: Intel, the Eleventh Circuit and Wall Street’s “Meaningful Benchmark” Catch-22
The misleading-benchmark problem is now squarely before the Supreme Court—and a brand-new Eleventh Circuit decision shows why the Court should be very careful about turning the phrase “meaningful benchmark” into a universal pleading requirement.
In Anderson v. Intel Corporation Investment Policy Committee, the Supreme Court will decide whether an ERISA plaintiff alleging imprudent investment based on underperformance must plead a “meaningful benchmark.”
Intel participants challenged portfolios containing substantial allocations to hedge funds and private equity, alleging high fees, unusual risks and poor performance. The Ninth Circuit nevertheless affirmed dismissal because plaintiffs had not supplied sufficiently comparable benchmarks. The Supreme Court granted review in January 2026.
The Problem: Sometimes the Differences ARE the Case
On August 18, the Eleventh Circuit provided an important counterweight.
In Johnson v. Russell Investments Trust Co., involving Royal Caribbean’s replacement of Vanguard target-date funds with Russell target-date funds, the district court had demanded essentially an apples-to-apples comparator—another TDF with sufficiently similar strategy and risk characteristics.
The Eleventh Circuit rejected making that requirement dispositive.
Its key observation:
“An ERISA plaintiff need not identify an apples-to-apples comparison to establish objective imprudence in every case.”
Why?
Because the plaintiff argued that the very characteristics distinguishing the Russell funds from other TDFs were themselves what made Russell imprudent.
Requiring another investment possessing those same allegedly imprudent characteristics creates a logical trap.
That Is Exactly the Problem With Intel
Consider the Intel allegations. Suppose Intel’s portfolios really were unusual because they contained substantially more:
private equity, hedge funds, illiquid investments, high fees, and other alternative strategies.
Then requiring plaintiffs to locate another retirement portfolio with essentially the same unusual combination of risks and strategies before they can challenge Intel produces an absurd result:
The more unusual the fiduciary’s investment strategy becomes, the harder it becomes to sue the fiduciary because fewer comparable investments exist.
That turns ERISA prudence upside down.
Wall Street’s Benchmark Catch-22
The argument can become:
Step 1: Create an unusual investment.
Step 2: Add private equity, private credit, hedge funds, annuities or other difficult-to-value assets.
Step 3: Give it a bespoke asset allocation.
Step 4: Make conventional comparisons increasingly difficult.
Step 5: When participants sue, demand an investment with essentially identical characteristics.
Step 6: Argue that no “meaningful benchmark” exists.
Step 7: Dismiss the case.
That is not investment analysis.
It is potentially a complexity safe harbor.
But This Doesn’t Mean Any Benchmark Will Do
There is an important distinction.
The Eleventh Circuit isn’t saying that lawyers should be free to compare any target-date fund against any other target-date fund.
That would create the opposite problem.
As the Eleventh Circuit itself previously observed in Pizarro, “target date funds are not all created equal.” A more equity-heavy TDF will tend to outperform a conservative TDF during a strong equity market, while the relative results can reverse during a downturn.
That supports the investment-professional criticism of many TDF lawsuits.
If:
Fund A = 70% equities / 30% bonds
and
Fund B = 60% equities / 40% bonds,
and equities boom, Fund A’s higher return doesn’t prove Fund B was imprudent.
The plaintiff may simply be using hindsight to say:
The fiduciary should have known stocks were going to outperform bonds.
That’s market timing disguised as benchmarking.
Two Very Different Cases
This distinction is crucial:
Case theory
Proper benchmark treatment
“Fund A was imprudent because Fund B returned more.”
Demand a genuinely meaningful comparison
Different TDF asset allocations
Normalize for asset allocation/glide path
Active vs. passive management
Separate allocation effect from manager effect
Private equity underperformed
PME and appropriate economic analysis
Fixed annuity paid too little
Contemporaneous comparable contracts may matter more than an index
Excessive fees
Compare services, economics and market alternatives
Excessive illiquidity
Analyze liquidity itself
Excessive private-assets allocation
Analyze the allocation and risks
Contract contains dangerous restrictions
Read the contract
Conflicted/affiliated transaction
Analyze parties, compensation and applicable exemptions
Strategy is itself allegedly imprudent
An identical comparator may defeat the point
The mistake is turning “meaningful benchmark” from an analytical tool into a legal password.
Sometimes “There Is No Comparable Fund” Is Evidence Worth Investigating
Suppose a fiduciary created a 2040 TDF containing:
50% public equities 20% bonds 10% private equity 10% private credit 5% real estate 5% annuity contracts.
A court could ask:
Where is the identical 2040 fund that proves this was imprudent?
But perhaps there isn’t one.
And that might be precisely why the investment deserves greater scrutiny.
The real questions become:
Why did the fiduciary depart from conventional allocations?
What additional return was expected for the additional risk?
What liquidity was sacrificed?
What fees were added?
How were private assets valued?
What leverage existed underneath the investments?
What did the contracts say?
Were affiliates involved?
What alternatives were considered?
What happened to diversification after looking through the underlying holdings?
Those are investment questions, not simply benchmark questions.
Intel Could Determine Whether Complexity Becomes Its Own Defense
The stakes in Intel therefore extend well beyond one company’s retirement plans.
The Supreme Court essentially has three choices.
It could allow superficial comparisons, encouraging more lawsuits claiming that one TDF was imprudent merely because another TDF with a completely different asset allocation performed better.
That would be bad investment analysis.
At the other extreme, it could impose a rigid apples-to-apples benchmark requirement that makes unusual private-market and alternative-investment strategies increasingly difficult to challenge precisely because nothing sufficiently identical exists.
That could be even worse.
Or the Court could recognize the economically sensible middle ground now highlighted by the Eleventh Circuit:
A meaningful comparator may be necessary when the inference of imprudence depends upon comparative performance. But an identical comparator should not be required when the allegedly imprudent characteristics of the investment themselves are the reason no identical prudent comparator exists.
That distinction matters enormously as Wall Street pushes private equity, private credit, annuities, real estate and other opaque products deeper into 401(k) target-date funds.
Show Me What the Plan Actually Owned
The debate ultimately comes down to two approaches.
Wall Street litigation approach:
Show me your benchmark.
Investment-professional approach:
Show me what the plan actually owned.
Then examine:
asset allocation, fees, contracts, leverage, liquidity, valuation methodology, conflicts, parties in interest, alternatives and fiduciary process.
After understanding those things, determine the appropriate method for evaluating performance.
The Eleventh Circuit’s new decision gets an important part of this right:
Sometimes the characteristics making two investments different are precisely the characteristics the lawsuit should be examining.
That is the issue the Supreme Court should keep front and center in Intel.
Otherwise “meaningful benchmark” risks becoming the ultimate Wall Street Catch-22:
The stranger, more complicated and less transparent the investment, the harder it becomes to find an identical comparator—and therefore the harder it becomes to challenge.
A benchmark should help courts understand an investment.
It should not protect an investment from being understood.
Appendix: The Eleventh Circuit Just Poked a Hole in the “Meaningful Benchmark” Wall
August 20, 2026
Two days after this article was published, the Eleventh Circuit provided an important real-world example of why the judicially created “meaningful benchmark” doctrine has become too rigid.
In Johnson v. Royal Caribbean Cruises Ltd., the Eleventh Circuit reversed summary judgment for Royal Caribbean in litigation challenging its replacement of Vanguard target-date funds with Russell target-date funds. The district court had effectively demanded an “apples-to-apples” comparator sharing the Russell funds’ strategy and risk profile.
The Eleventh Circuit rejected making that an absolute requirement:
“The important point is that the law imposes no mandate that a plaintiff prove objective imprudence through apples-to-apples comparator evidence.”
That is an important sentence. The court held that comparisons can be useful evidence—but they are not the exclusive method of proving imprudence. Depending upon the circumstances, qualitative evidence, quantitative evidence, or a combination of both may establish that an investment fell outside the range of reasonable choices available to a prudent fiduciary.
Royal Caribbean Shows Why Investment Analysis Cannot Be Reduced to One Comparator
The facts illustrate the problem.
According to the Eleventh Circuit’s analysis, the Russell target-date funds had a very small client base, had lost their two largest clients to Vanguard, carried relatively high pricing, and were associated with an arrangement requiring that at least 75% of the plan’s investment offerings be Russell funds. Evidence also indicated inferior risk, return and risk-adjusted-return characteristics. The Russell funds ultimately underperformed the Vanguard funds they replaced, the American Funds that later replaced Russell, and their own composite benchmark.
An investment professional would look at all of that evidence.
Yet the increasingly lawyer-driven “meaningful benchmark” doctrine threatens to turn ERISA prudence into a search for a nearly identical investment product. That is particularly problematic with customized target-date funds, hedge funds, private equity, private credit and other alternative investments—where differences in asset allocation and strategy can always be invoked to argue that the plaintiff’s comparator isn’t sufficiently “meaningful.”
Royal Caribbean pushes back against that trap.
The Timing Could Matter for Anderson v. Intel
The decision arrives just before the Supreme Court considers Anderson v. Intel Corp. Investment Policy Committee, where the Court will address whether an ERISA plaintiff alleging imprudence based on investment performance must plead a “meaningful benchmark.” The Ninth Circuit required such a comparator even though ERISA itself contains no express “meaningful benchmark” pleading requirement.
Royal Caribbean does not decide Anderson. There is also an important procedural distinction: Royal Caribbean reached the Eleventh Circuit after summary judgment, whereas Anderson concerns what a participant must plead before obtaining discovery.
But that distinction may actually highlight the transparency problem.
If courts require participants to identify a nearly identical comparator before discovery, defendants controlling customized funds and opaque alternative investments can potentially use the uniqueness and complexity of those investments as a litigation shield:
The harder an investment is to understand and benchmark, the harder it becomes for participants to obtain the discovery necessary to determine whether it was prudent in the first place.
That would turn opacity into legal protection.
The Eleventh Circuit instead returned to a much more sensible principle: ERISA prudence is a facts-and-circumstances inquiry, not a mechanical benchmark contest.
A Possible Preview of the Supreme Court?
Royal Caribbean therefore strengthens the argument for the Supreme Court to reject a categorical meaningful-benchmark pleading rule in Anderson.
The better rule is not that benchmarks are irrelevant. They are extremely important investment tools. The problem arises when courts transform one comparator into a judicial gatekeeper to discovery.
Participants should be able to point to fees, risk, performance, asset allocation, liquidity, valuation practices, conflicts, industry analysis, fiduciary process and other relevant evidence—and then obtain discovery into what the fiduciaries actually knew and did.
That is especially important as Wall Street pushes increasingly opaque private-market investments into 401(k) plans.
A benchmark should be evidence. It should not be a secrecy shield.
And the Eleventh Circuit has now given the Supreme Court one more reason to say so.
Private equity doesn’t need to censor professors. It has something better: billions in endowment money, billionaire donors, university trustees, business-school influence, proprietary research data—and jobs everyone wants.
You don’t have to control what professors say if you can help control the economic ecosystem in which they say it.
America’s universities have spent decades pouring endowment and pension money into private equity. Then the relationship metastasized.
Private-equity billionaires became: Trustees. Mega-donors. Investment-committee members. Business-school advisers. Sponsors of research centers. Gatekeepers to proprietary data. Employers of the students universities desperately want placed in lucrative jobs.
Nobody has to tell the professor:
Don’t criticize private equity.
The university’s financial structure delivers the message.
Marc Rowan: When the Donor Starts Acting Like the Boss
Apollo CEO Marc Rowan provides an extraordinary case study.
Rowan isn’t merely a Penn alumnus. He gave $50 million to Wharton and chairs Wharton’s Board of Advisors.
Then came the Gaza controversy.
Rowan urged Penn alumni to “close their checkbooks” and became a major force pushing for changes at Penn. Faculty and the AAUP warned that donor pressure was crossing the line into academic freedom and shared governance.
Whatever one’s views about Gaza, Israel, antisemitism or the campus protests, consider the power relationship.
A billionaire threatens the money.
The university listens. That’s not how academic freedom is supposed to work.
And Rowan isn’t simply any billionaire. He runs Apollo, one of the world’s most powerful alternative-investment companies.
Then Professors Took On Apollo
The story became even more extraordinary in 2026.
The AFT and AAUP demanded an SEC investigation of Apollo concerning disclosures about contacts between Jeffrey Epstein and Apollo executives including Rowan and Leon Black.
Rowan wasn’t merely demanding that Penn fight antisemitism. After helping lead the donor revolt that toppled Penn’s president, the Apollo CEO circulated questions asking whether trustees should close academic departments, change faculty qualifications, alter instruction and discipline faculty over viewpoints. Penn’s AAUP chapter called it what private-equity professionals themselves would recognize immediately: a “hostile takeover” of the university’s core operations.
And the takeover attempt came amid an escalating battle over Israel and Gaza. Penn faculty said colleagues criticizing Israeli government policy were subjected to systematic harassment, while administrators restricted Palestine-related teach-ins, protests and educational events. National AAUP specifically warned that criticism of Israel was being conflated with antisemitism.
That’s where Rowan’s private-equity background becomes relevant. Apollo’s CEO wasn’t behaving like an ordinary alumnus writing an angry letter. He was behaving like an activist owner: change management, change governance, examine the workforce, reconsider underperforming departments and impose new operating rules. The problem is that a university isn’t an Apollo portfolio company—and professors aren’t employees of Marc Rowan.
There’s an even stronger national example that would broaden this beyond Rowan. Just this month, the Guardian reported that the University of Minnesota paid historian Raz Segal $250,000 after withdrawing its offer for him to lead its Center for Holocaust and Genocide Studies. Segal had called Israel’s Gaza campaign a “textbook case of genocide.” Public-record emails showed donor pressure, including warnings that pledges and fundraising could disappear if his appointment went ahead. The university settlement did not admit wrongdoing.
Director of the Center for Holocaust and Genocide Studies Center for Jewish Studies, warned a university official that the Jewish Community Relations Council (JCRC) of Minnesota and the Dakotas, a group that claims to represent “the public affairs voice of the Jewish community”, was planning to coordinate a “volley” of donor objections, Marion Rarick, a Republican
The irony is difficult to miss. American academics increasingly find their freedom dependent upon institutions whose donors, trustees and pension systems are deeply intertwined with private capital. At Minnesota, organized donor pressure helped derail the appointment of a Jewish Israeli genocide scholar who criticized Israel’s conduct in Gaza. At the same time, Minnesota teachers themselves supply billions of dollars to the private-market industry through a pension portfolio allocating more than one-fifth of its assets to private markets. The professors supply the capital. Wall Street collects the fees. Donors gain influence. And the professor who says the wrong thing can discover just how fragile academic independence really is.
AAUP says its members’ retirement systems have at least $27.5 billion committed to Apollo.
Read that twice. Professors’ retirement money helps capitalize Apollo.
Apollo collects fees and profits. Those profits help create enormous personal fortunes.
Those fortunes create mega-donors.
Those mega-donors gain extraordinary access to universities.
And then the professors’ own union finds itself asking federal regulators to investigate the company.
Academia isn’t merely under private equity’s thumb.
In many cases, academia is helping finance the thumb.
Look Who Is Sitting in the Boardroom
Rowan isn’t some bizarre exception.
Private-equity and private-capital executives are scattered throughout the governance structure of America’s elite universities.
University
PE/private-capital figure
University role
Financial connection
Penn/Wharton
Marc Rowan
Chair, Wharton Board of Advisors
Apollo
Stanford
José Feliciano
Trustee
Clearlake Capital
Stanford
James Coulter
Trustee
TPG
Columbia
Alisa Amarosa Wood
Trustee
KKR
Columbia
Jonathan Lavine
Former trustee/chair
Bain Capital
NYU
Joseph Landy
Trustee
Warburg Pincus
NYU
Gregorio Napoleone
Trustee
Stirling Square
NYU
Luiz Fraga
Trustee
Gávea
Northwestern
Du Chai
Trustee
Horsley Bridge
Northwestern
J. Landis Martin
Former board chair
Platte River Equity
Harvard
David Rubenstein
Former Corporation member
Carlyle
MIT
Joseph Broshy
Corporation member
Healthcare PE
These aren’t struggling community colleges looking for somebody to write a $50,000 check.
These are institutions that help determine who becomes America’s economists, financiers, regulators, journalists and political leaders.
And this is only a preliminary list.
Private equity didn’t just get a seat at the table.
It increasingly helps populate the table.
The Business Schools Can Look Like PE Farm Teams
University boards are only the beginning.
Northwestern Kellogg has maintained a Private Equity Advisory Council populated by executives associated with Blackstone, Warburg Pincus, Thoma Bravo, Ares, Partners Group, HIG, Riverside and other private-market firms.
Other elite business schools have built similarly intimate relationships with private capital.
There’s an obvious justification.
Students want private-equity jobs.
Schools want their students to get those jobs.
PE firms want access to elite graduates.
Successful graduates become wealthy alumni.
Wealthy alumni become donors.
Donors become trustees.
Trustees help govern universities.
It’s a beautiful circle.
For private equity.
The obvious question is where the counterweight is.
Where is the Private Equity Skeptics Advisory Council?
Where are the institutional seats for people examining whether PE’s fees, leverage, valuations and claimed diversification benefits actually hold up?
Apparently those aren’t quite as useful for MBA placement statistics.
Even the Academic Data Can Come Through the Industry
This problem gets deeper.
Researchers studying Microsoft don’t need Bill Gates to give them Microsoft’s stock price.
Private equity is different.
Its funds are private.
Its underlying companies are private.
Its contracts are private.
Its valuations are largely private.
Its fees can be extraordinarily difficult for outsiders to reconstruct.
Academic researchers therefore often depend upon proprietary databases and cooperation from institutional investors and industry participants.
UNC’s Private Equity Research Consortium, for example, has described itself as a collaboration between academics and industry professionals and historically facilitated researcher access to Burgiss private-equity data.
Important academic PE research has been produced from institutional datasets like these.
That doesn’t make the research wrong.
But academia ought to recognize the obvious problem:
If the industry controls much of the information, the industry possesses enormous power over the research agenda.
Researchers can investigate the data they can obtain.
The secrets stay secret.
Where Were America’s PE Critics?
For years, Jeffrey Hooke at Johns Hopkins seemed remarkably lonely.
Hooke repeatedly challenged private-equity performance claims, enormous fees and institutional investors’ fascination with alternatives.
Oxford’s Ludovic Phalippou became another major critic.
Notice something?
Oxford.
Not Harvard.
Not Wharton.
Not Stanford.
Not Columbia.
Not Chicago.
That doesn’t prove American professors were silenced.
It raises a better question:
Why did an industry controlling trillions of dollars generate so little sustained criticism from the American academic institutions sitting closest to Wall Street?
Only recently has the academic opposition begun getting louder.
Scholars including Jill Fisch Clayton and Elisabeth de Fontenay have challenged the rush to put private equity into ordinary workers’ 401(k)s.
Others are questioning private credit, valuations, fees and the supposed diversification miracle of private assets.
Good.
But where was this skepticism when institutional investors were shoveling trillions into the industry?
Nobody Needs to Bribe the Professor
This is where defenders of the system will deliberately misunderstand the argument.
They’ll say:
“Show me the professor Marc Rowan paid to change a research paper.”
That’s not how sophisticated institutional capture works.
Imagine you’re a 35-year-old finance professor.
Your university endowment has billions in alternatives.
PE billionaires sit on the university board.
PE executives donate enormous sums.
Your business school wants relationships with Apollo, KKR, Blackstone and Carlyle.
Your students desperately want jobs at those firms.
Your research may depend on private-market data.
Your dean wants successful alumni.
And those successful PE alumni may someday write eight-figure checks to the university.
“Private Equity Returns Are Inflated by Leverage, Valuation Smoothing, Bad Benchmarks and Hidden Fees.”
Nobody needs to threaten you.
Nobody needs to buy you.
Nobody needs to censor you.
You can read the room.
Universities Police $25,000 Conflicts While Ignoring $50 Million Ones
This may be academia’s greatest hypocrisy.
Universities obsess over professors’ conflicts.
Take a modest corporate research grant and disclosure rules appear.
Consult for an outside company and forms must be completed.
Own shares in a company you’re researching and everybody properly worries about independence.
But what happens when the conflict moves upstairs?
A billionaire gives $50 million.
His industry manages university assets.
Executives from the industry sit on boards and advisory councils.
The business school cultivates their companies.
The industry’s databases support academic research.
Apparently that isn’t a conflict.
That’s philanthropy.
Private Equity Doesn’t Need to Own the University
It has developed something more efficient.
Private equity can simultaneously be:
The university’s investment manager.
The university’s investment.
The university’s donor.
The university’s trustee.
The business school’s adviser.
The student’s dream employer.
The researcher’s data source.
And increasingly:
A political force demanding changes in university governance.
Every individual relationship can be defended.
Put them together and you get something that starts looking remarkably like institutional capture.
The AAUP-Apollo Fight Exposes the Whole System
That is what makes the AAUP confrontation with Apollo so important.
The organization devoted to defending professors’ academic freedom is challenging a company whose CEO is simultaneously one of America’s most powerful university donors.
Meanwhile, the professors’ own retirement savings help provide billions of dollars of capital to Apollo.
You could hardly design a better illustration of the problem.
Academia didn’t wake up one morning and discover private equity had taken over.
Academia sold it the keys.
First came the endowment investments.
Then the private-equity managers.
Then the billionaire donations.
Then the trustees.
Then the advisory councils.
Then the research relationships.
Then the political influence.
Now universities are discovering something they should have learned long ago:
When somebody supplies enough of the money, eventually they expect a say.
Private equity loves to preach accountability when it buys a company.
Perhaps America’s universities should try some on their own campuses.
Disclose the PE trustees.
Disclose the PE donations.
Disclose the PE managers.
Disclose the research relationships.
Disclose the proprietary-data arrangements.
And most importantly:
Stop pretending a $50 million donor presents less of an academic conflict than a professor with a $25,000 consulting contract.
Private equity didn’t have to buy the Ivory Tower.
Private Equity, NIL and Public Pensions Are Turning College Sports Into the Billionaires’ Fantasy League
For more than a century, college sports had a fairly simple hierarchy.
Alabama was Alabama. Ohio State was Ohio State. Michigan was Michigan.
And Indiana football was Indiana football.
Then college sports discovered something more powerful than tradition:
Money that can buy a roster.
Indiana may be the perfect case study.
Mark Cuban had never been a major Indiana athletics donor. Then Curt Cignetti arrived, started winning, and convinced Cuban that additional money could make a difference.
When Indiana needed more money to land quarterback Fernando Mendoza from Cal, Cuban says athletic director Scott Dolson told him what was needed.
Cuban essentially said:
I’ll put up the money.
Mendoza reportedly went from about $1.6 million at Cal to $2.6 million at Indiana. He won the Heisman Trophy. Indiana went undefeated and won the national championship. Mendoza then became the first pick in the NFL draft.
Cuban subsequently put in more money.
That’s not old-fashioned alumni philanthropy.
That’s something much closer to renting a football team.
You Don’t Have to Own the University
Suppose you’re worth $10 billion.
You can’t buy Indiana University.
You can’t buy Michigan.
You can’t buy Oregon.
But you don’t need to.
If the university and television contracts already pay for the stadium, athletic department, coaches and infrastructure, you only need to provide the marginal dollars that separate an average roster from a championship roster.
That number suddenly looks surprisingly affordable.
A recent survey found the average Power-conference football roster now costs more than $20 million. Miami was reportedly above $40 million, while many schools supplement their revenue-sharing money with another $3 million to $5 million from booster-funded NIL collectives.
For a billionaire, that’s pocket change.
Spend $20 million a year for three years and you’ve spent $60 million.
For someone worth $10 billion, that’s 0.6% of his fortune.
An NFL franchise might cost $8 billion.
A college football fantasy team might cost $20 million a year.
Which sounds like more fun?
Indiana Is Not an Outlier
Look around college sports.
Phil Knight and Oregon.
Larry Ellison and Stephen Ross at Michigan.
Cody Campbell at Texas Tech.
Ryan Smith and the BYU basketball ecosystem.
Tilman Fertitta at Houston.
The Tyson and Jones families at Arkansas.
David Booth at Kansas.
Mat and Justin Ishbia at Michigan State.
Paul Tudor Jones at Virginia.
Anthony Pritzker at UCLA.
David Rubenstein and the private-money ecosystem surrounding Duke.
These aren’t boosters buying everyone a steak dinner after the game.
Some are billionaires whose financial resources rival the annual budgets of the universities themselves.
And the new rules allow that wealth to get much closer to the playing field.
Mark Cuban Accidentally Explained the Whole Thing
Cuban has compared the new college-football environment to an NBA salary cap.
He’s right.
But there’s one enormous difference.
The Dallas Mavericks have an owner.
Indiana University doesn’t.
Theoretically.
Yet if one billionaire supplies enough incremental capital to determine which quarterback Indiana can afford, how many transfer-portal players the coach can recruit and how competitive the roster becomes, we should at least ask:
What does ownership really mean?
Cuban doesn’t hire the coach.
He doesn’t own Indiana Athletics.
He doesn’t tell the quarterback which play to run.
That’s important.
But economic control doesn’t always require legal ownership.
If your money makes possible a roster that otherwise couldn’t be purchased, you’ve acquired something extremely valuable:
influence over competitive outcomes.
College Basketball Is Even Easier to Rent
Football requires dozens of expensive players.
Basketball requires five starters.
Kentucky reportedly spent around $22 million constructing its 2025-26 roster, and reports suggested another $20-million-plus roster could follow.
Think about that.
A billionaire doesn’t need to donate $500 million to build a medical school.
He can spend $20 million on basketball players.
For two years.
Maybe win a championship.
Sit courtside.
Become the most popular alumnus on campus.
And move on.
That looks remarkably like renting a professional franchise—without paying the franchise acquisition price.
Now Private Equity Has Discovered the Other Half of the Business
The billionaires can finance the players.
Private capital can monetize everything surrounding them.
The University of Utah has already crossed the line.
Utah created a for-profit company with Otro Capital that manages revenue-producing activities including events, branding, licensing, sponsorships, ticketing and digital media.
Otro gets a percentage of the resulting revenue.
Utah still owns the facilities and controls coaches, recruiting and athletes.
That’s precisely why the structure is so fascinating.
Otro doesn’t have to own the Utah Utes.
It gets access to the economics surrounding the Utes.
The original transaction contemplated potentially hundreds of millions of dollars of outside capital, with reports putting the broader potential commitment as high as $500 million.
This is the private-equity version of renting the team.
Then the Big 12 Called Wall Street
The Big 12 subsequently approved a five-year partnership with RedBird Capital Partners and Weatherford Capital.
The conference gets a $12.5 million capital infusion and commercial-development assistance.
Individual schools can obtain up to $30 million apiece through an optional credit facility.
Importantly, RedBird doesn’t own the conference, its revenues or its governance.
Again:
Why own the team when contracts can give you access to its economics?
As of May, no Big 12 school had publicly confirmed taking the $30 million credit offer.
That restraint may not last forever.
And Guess Who Else Has Discovered College Sports?
Public money.
Elevate launched a $500 million Collegiate Investment Initiative backed initially by Velocity Capital Management and the Texas Permanent School Fund Corporation.
Its purpose is to provide capital for revenue-generating college athletic projects.
Read that again.
A public institutional investment fund is helping capitalize a platform designed to monetize college athletics.
Meanwhile, the Big Ten considered something even larger.
UC Investments—connected to the University of California retirement and investment system—proposed putting $2.4 billion into a new Big Ten commercial entity in exchange for a 10% interest in Big Ten Enterprises, which would house media-rights and sponsorship economics.
Michigan and USC opposed the transaction and the proposal was paused.
But the significance isn’t whether that particular deal ultimately closes.
The wall has already been breached.
Follow the Circular Money Trail
Here’s where college sports starts looking a lot like the rest of modern finance.
Public/institutional money
↓
Private-equity and investment managers
↓
Billionaire fortunes
↓
College boosters and private-capital vehicles
↓
Players, coaches and athletic departments
↓
Winning
↓
Tickets, television, sponsorships and gambling
↓
More valuable college-sports cash flows
↓
Private investment returns
↓
Back to institutional investors
This isn’t the college-sports business most alumni think they’re watching on Saturday afternoon.
Then Add Gambling
This is where regulators should start paying attention.
College games are no longer merely contests between students representing universities.
They are events surrounded by enormous amounts of legal gambling.
And roster information moves betting markets.
A quarterback transfer matters.
An injury matters.
A player’s compensation dispute matters.
A billionaire deciding whether to finance another transfer matters.
If private investors, billionaire boosters, commercial partners, data companies and sportsbooks increasingly surround the same teams, the question isn’t whether any particular participant is doing something improper.
The question is:
Who is watching the conflicts?
The Public-University Problem
The issue gets stranger when the team belongs to a public university.
The taxpayers effectively own the institution.
Students pay tuition.
Fans buy tickets.
Donors finance facilities.
Television networks finance conferences.
Billionaires finance players.
Private capital can finance commercial operations.
And public investment pools can potentially provide capital to the investors.
Who exactly is the principal?
And who is the agent?
That is a governance structure begging for conflicts.
The Billionaire Fantasy League
Maybe we need to stop pretending this is still traditional amateur college athletics.
College football and basketball are evolving toward something genuinely new:
The Billionaire Fantasy League.
Pick your alma mater.
Hire a great coach.
Put $20 million into the roster.
Buy a quarterback.
Bring in transfers.
See if you can win the championship.
If it works, put in another $20 million next year.
Cuban’s experience is almost a perfect demonstration.
Indiana needed a quarterback.
The athletic director had one in mind.
There was a funding gap.
A billionaire wrote the check.
The quarterback won the Heisman.
Indiana won the national championship.
Cuban put in more money.
That may be the greatest booster return on investment in college-football history.
The Next Great College Rivalry May Be Billionaire vs. Billionaire
Michigan–Ohio State used to be about recruiting, coaching and tradition.
Increasingly it is also about:
Whose alumni have more money? Larry Ellison or Les Wexner?
Whose collective can raise more?
Whose billionaire wants to play?
Whose private-capital partners can generate more revenue?
And whose university is willing to mortgage more of tomorrow’s sports economics to win today?
That last question should concern university trustees.
“We have to do it because everyone else is doing it.”
That’s how arms races work.
Indiana proves that money can rapidly change the competitive hierarchy.
Utah proves private capital can get directly inside the commercial structure of a public university’s athletics operation.
The Big 12 proves conferences will turn to private capital when they can’t keep up with richer competitors.
And the Texas Permanent School Fund and proposed UC/Big Ten transaction show institutional public money can wind up on the investor side of the equation.
College sports isn’t simply being professionalized.
It is being financialized.
The universities may still own the jerseys.
The fans may still sing the fight songs.
But increasingly, somebody else may be financing the players, somebody else financing the athletic department, and somebody else owning a contractual claim on the money those players and fans generate.
Private equity doesn’t have to buy your college football team.
A billionaire can rent the roster.
Wall Street can rent the revenues.
And public money may help finance both sides of the game.
Allison Ball has spent years telling Kentucky taxpayers that ESG creates conflicts for public pension fiduciaries.
Maybe somebody should audit Allison Ball.
Because when you follow the money from Kentucky’s pension funds to KKR, and then from KKR into the State Financial Officers Foundation orbit, the anti-ESG crusade starts looking considerably less principled. KKR is also a major funder of Data Centers.
Ball isn’t some casual SFOF member.
She was SFOF national vice chair in 2018, national chair in 2019, and is now SFOF’s 2026 Auditor at Large. SFOF itself currently lists Ball in that position.
And the relationship became even more personal.
Meet O.J. Oleka: From Allison Ball’s Office to Running SFOF
O.J. Oleka wasn’t merely another Kentucky Republican who happened to end up at SFOF.
He worked for Allison Ball.
Oleka joined Ball’s Kentucky Treasury staff, served as communications director and was promoted to chief of staff and assistant/deputy state treasurer.
Ball explained the promotion by saying Oleka had spent the previous year shaping the message coming from her office and helping develop its policy goals.
SFOF liked him too.
While working in Ball’s Treasury, Oleka was named SFOF’s 2018 State Staffer of the Year.
He later joined SFOF’s board.
Then Oleka ran for Kentucky state treasurer in 2023.
Guess who endorsed him?
Allison Ball.
Oleka lost the Republican primary to Mark Metcalf.
But politics provided another landing spot.
In October 2024, Oleka became CEO of SFOF.
So the organizational family tree isn’t complicated:
And the relationship remains remarkably close. In April 2026, Ball and Oleka appeared together as witnesses before the House Oversight Committee at a hearing on fraud prevention.
You couldn’t invent a better illustration of the revolving door.
Now Add KKR
Here is where this gets interesting.
KKR has been identified as a former “Friends of SFOF” sponsor.
Think about that.
SFOF became one of the loudest organizations in America attacking Wall Street firms for ESG.
Yet KKR—one of the world’s largest private-equity firms—was itself inside SFOF’s sponsorship ecosystem.
And KKR is hardly an anti-ESG firm.
KKR has been a signatory to the UN Principles for Responsible Investment since 2009 and has embraced sustainability programs, climate initiatives, ESG integration and other commitments designed in part to satisfy institutional investors in Europe and blue states.
So apparently ESG wasn’t inherently disqualifying.
It depended on which Wall Street firm was practicing it.
Ball’s Bigger KKR Problem: Kentucky Teachers
Ball’s hypocrisy becomes much harder to explain when you look at her actual fiduciary responsibilities.
As Kentucky state treasurer, Ball sat on the Kentucky Teachers’ Retirement System Board of Trustees.
She wasn’t commenting on pensions from Fox News.
She was a pension fiduciary.
During Ball’s tenure, Teachers approved major new commitments to KKR, including as much as:
$55.5 million to KKR European Fund V in 2018.
Then:
$40 million to KKR Health Care Strategic Growth Fund II in 2020.
That’s as much as $95.5 million of additional KKR commitments during Ball’s tenure.
I have not found evidence that Ball personally made or seconded those investment motions, so let’s not pretend otherwise.
But she was sitting on the governing board.
And KKR’s ESG credentials weren’t secret.
KKR had already been a UN PRI signatory for nearly a decade when Teachers approved the 2018 commitment.
Apparently that wasn’t an ESG emergency.
Then Kentucky’s Attorney General Put KKR’s Teachers Business Into a Lawsuit
This is where the story becomes extraordinary.
In July 2020, Republican Kentucky Attorney General Daniel Cameron revived the massive Kentucky pension litigation against KKR/Prisma, Blackstone and others.
Cameron didn’t limit his allegations to Kentucky Retirement Systems.
He explicitly brought Kentucky Teachers’ Retirement System into his factual case.
Cameron’s complaint identified approximately:
$79 million of KKR investments at Teachers
and
$69 million of Blackstone investments.
That’s $148 million.
The attorney general alleged that KKR/Prisma and Blackstone had sold alternative investments to both Kentucky pension systems and characterized the products as similarly risky and expensive.
Those were allegations, not judicial findings, and KKR and Blackstone denied wrongdoing.
But think about what happened next.
Ball was sitting on the Teachers board.
Kentucky’s own Republican attorney general had just put Teachers’ KKR and Blackstone relationships into a major pension lawsuit.
And Teachers subsequently approved another KKR commitment.
Yet somewhere as Cameron’s litigation progressed, Teachers essentially disappeared from the surviving case.
The later litigation and proposed settlement became a KPPA/KRS affair.
Where did the Teachers claims go?
That deserves an answer.
And Then Ball Discovered the Dangers of ESG
By 2022, Ball had become one of America’s prominent anti-ESG financial officers.
Ball and Cameron demanded information about ESG practices in Kentucky’s public retirement systems.
Ball argued that pension managers must focus on beneficiaries rather than political objectives.
Excellent principle.
Let’s apply it retroactively.
Where was that aggressive fiduciary scrutiny when Teachers was committing money to KKR?
Where was it after Cameron’s own lawsuit put KKR’s relationship with Teachers under a spotlight?
And why did KKR’s membership in the same ESG universe that SFOF would use against BlackRock apparently cause so little concern?
The obvious comparison is devastating.
BlackRock ESG = fiduciary crisis. These are primarily low fee low risk investments
KKR ESG = apparently compatible with tens of millions of dollars of Kentucky Teachers commitments. These are high fee high risk assets with big budgets to give to organizations.
Even more remarkably:
KKR itself was once a sponsor of SFOF.
Did KKR Pay Oleka’s Salary?
We don’t know.
And that distinction matters.
SFOF is a nonprofit organization funded overwhelmingly by contributions. Its 2024 Form 990 reported approximately $2.84 million in contributions out of $2.92 million in total revenue.
Its 2024 return reported about $559,000 in executive compensation.
Oleka didn’t become CEO until late 2024, so the publicly available 2024 Form 990 still principally identifies predecessor Derek Kreifels’s compensation rather than giving us a clean annual Oleka salary figure.
More importantly, SFOF does not publicly disclose every donor.
We know KKR was formerly identified as a SFOF sponsor.
We do not currently have evidence showing that a particular KKR contribution paid a particular dollar of Oleka’s compensation.
That shouldn’t end the inquiry.
It should start it.
Is SFOF Allison Ball’s Political Slush Fund?
“Slush fund” is too strong without evidence that money was diverted or improperly used.
But there is a perfectly legitimate question underneath it:
Has SFOF become a privately financed political infrastructure for elected state financial officers?
Look at the structure.
Private organizations and financial companies fund SFOF.
SFOF provides elected treasurers and auditors with national meetings, policy infrastructure, messaging, networking, media exposure and an organized platform for coordinated campaigns.
Ball rose through SFOF’s leadership while holding statewide office.
Her own senior government aide received an SFOF award while working for her.
That aide later joined SFOF’s board, ran for Ball’s old statewide office with Ball’s endorsement, and ultimately became SFOF’s CEO.
Ball remains an SFOF officer.
And Ball and her former staffer now appear together before Congress—Ball as Kentucky’s elected auditor and Oleka as CEO of the organization in which Ball holds a leadership position.
Maybe everything about that arrangement is perfectly proper.
But taxpayers are entitled to ask:
Who is paying for it?
Follow the Money, Not the ESG Talking Points
The biggest irony is that SFOF says its mission includes protecting taxpayer dollars and responsible financial management.
Fine.
Open the books.
Publish every corporate sponsor and contribution.
Publish sponsorship levels.
Publish payments for conferences attended by elected officials.
Publish travel, lodging and entertainment provided to officials or their staffs.
Publish compensation of senior executives.
Publish communications between sponsors and SFOF officials involving state investments.
And most importantly, disclose whether financial firms sponsoring SFOF were simultaneously seeking or maintaining investment-management business from pension systems overseen by SFOF members.
KKR makes that question impossible to dismiss.
KKR was a SFOF sponsor.
KKR was managing Kentucky pension money.
KKR was being sued by Kentucky’s attorney general over pension investments.
KKR had extensive ESG commitments.
And Allison Ball was simultaneously a Kentucky pension fiduciary and a major SFOF figure.
Yet the political villain somehow became BlackRock.
The $64 Billion Question
This isn’t really an argument about whether ESG is good or bad.
It is about consistency.
If ESG affiliations create an unacceptable fiduciary conflict, apply the standard to KKR.
If UN PRI membership makes BlackRock suspect, apply the standard to KKR.
If financial firms influencing public officials create conflicts, disclose KKR’s SFOF sponsorship.
If pension fiduciaries must put beneficiaries first, explain why Kentucky Teachers continued doing business with KKR while Kentucky’s own attorney general was raising serious allegations concerning KKR’s Kentucky pension business.
And explain why Teachers subsequently disappeared from that litigation.
Allison Ball wants Kentucky taxpayers to believe the big threat to their pensions is ESG.
Maybe Kentucky taxpayers should ask a simpler question:
Who funded the people telling them that—and who got the pension money?
The CommonSense 401k Project 