Insurance regulation in the United States is often described as “state-based.” That sounds reassuring. Local accountability. Fifty insurance commissioners. Fifty departments. Fifty sets of eyes.

The reality is far less comforting.  We have 50 separate regulators, each with its own budget constraints, political pressures, industry relationships, and transparency standards. There is no unified federal insurance regulator. No SEC-equivalent for life insurers. No ERISA-style fiduciary overlay governing retail annuities.

Instead, we have coordination through the National Association of Insurance Commissioners (NAIC). And that’s where the real story begins.

---

The NAIC: The Quiet Nerve Center of Insurance Regulation

While insurance regulation is technically state-based, the NAIC writes the model laws, develops solvency standards, drafts accounting rules, and coordinates national policy.

State regulators almost uniformly adopt NAIC models. When NAIC moves, the states follow.

Which means this private, membership-based organization effectively shapes the rules governing:

• Trillions in life insurance reserves
• Over $2 trillion in individual annuity reserves
• The solvency standards protecting retirees
• The accounting treatment of general account assets
• The risk-based capital formulas that determine whether insurers survive or fail

And yet, for something that central, transparency has lagged far behind modern expectations.

---

The Velvet Rope Around “Public” Meetings

Peter Gould — a retiree and annuity contract owner — submitted a formal amendment proposal to the NAIC Executive Committee on August 7, 2025.

His request is remarkably simple: If a meeting is designated “public,” then livestream it for free.  Archive the recording.  Post the materials.

No paywall. No $875 virtual attendance fee. No closed archive.

In his own words, Gould explains that as an annuity owner, he depends on regulators to proactively prevent insurer insolvency — yet he has no contractual rights to ensure that happens.

He is entirely dependent on regulatory competence and regulatory transparency. But if a retiree wants to virtually attend a public NAIC session, the cost can be hundreds of dollars. If he misses a meeting, the only official record may be curated minutes — which, as Gould notes, are a “summation rather than a complete transcript.”

The technology already exists. NAIC already livestreams internally. Webex links can be posted. Archiving is trivial. The barrier is not technical. It is institutional.

---

What Gould Is Actually Asking For

In his formal talking points submitted to the Executive Committee

, Gould outlines a proposal that would:

1. Livestream all public meetings without charge
2. Archive recordings and make them freely accessible
3. Post meeting materials in a timely manner
4. Maintain reasonable registration controls (but no payment requirement)

He notes that NAIC’s credibility depends on trust and broad stakeholder engagement — yet practical access barriers restrict participation to well-resourced entities and industry-paid lobbyists.    That is the heart of the issue.  If only large insurers and trade groups can afford full participation, the appearance — and perhaps the reality — becomes regulatory capture.

---

The Outdated Videotaping Policy

The current NAIC policy statement on videotaping dates back to 1998 and was revised in 2010.   It predates the Webex era. It predates routine livestreaming. It predates modern digital transparency standards.

Gould’s redline amendment would modernize the policy to explicitly require livestreaming and recording of all public meetings and to display access information directly on NAIC’s website. This is not radical.

Federal agencies routinely livestream and archive proceedings.  State legislatures do the same.  City councils do the same.   Why is insurance regulation different?

---

Why This Matters for Annuities

As argued previously in “Annuities: The ERISA Regulatory Hole No One Wants to Talk About,” retail annuities sit outside ERISA’s fiduciary framework and are governed almost entirely through state insurance regulation.

If that regulatory system is fragmented and opaque, then trillions of retirement dollars rest on a structure that is:

• Non-uniform
• Politically sensitive
• Industry-influenced
• Largely invisible to the public

Insurance companies operate through general accounts that are not benchmarked like mutual funds. Spread is undisclosed. Asset allocation is opaque. Private credit exposures are growing.

The one safeguard consumers have is solvency regulation.

If the solvency regulators operate behind velvet ropes, that safeguard weakens.

---

Fifty Regulators — But One Gatekeeper

The NAIC is not a federal agency. It is a standard-setting body composed of state regulators. It is deeply influential, yet structurally private.

That hybrid status creates ambiguity:

• Not fully public
• Not fully private
• Not fully accountable
• Not fully transparent

Gould’s proposal is modest. It does not change capital standards. It does not alter accounting rules. It does not weaken solvency requirements.

It simply says: If a meeting is public, let the public see it.

---

Transparency Is Not Anti-Insurance

Supporting this proposal is not anti-insurer. It is not anti-regulator.

It is pro-legitimacy.

In an era of:

• Private credit expansion inside life insurers
• Offshore reinsurance structures
• Bermuda-based balance sheet engineering
• Rising scrutiny of insurer asset risk

Public confidence in solvency regulation matters more than ever.  If regulators are doing strong work, transparency strengthens them.   If regulators are under pressure, transparency protects them.

---

Why I Support Peter Gould

Gould is not a hedge fund.
Not a trade association.
Not a plaintiff’s firm.

He is a retiree who depends on annuity contracts for income he cannot outlive.

He is asking for basic visibility into the regulatory body that determines whether his insurer remains solvent.  That is not radical.

That is commonsense.

---

The Bigger Picture

Insurance regulation in America has always been decentralized. That is unlikely to change.  But decentralization does not require opacity.

If the NAIC wants to reinforce its leadership position, it should embrace full transparency of public proceedings — livestreamed, archived, and freely accessible.

Because when trillions in retirement assets depend on solvency standards written in committee rooms, the public should not have to pay admission to watch.

Transparency is not a threat to insurance regulation.  It is the only way to preserve trust in it.

New York progressives have never been shy about demanding that public pensions align with public values. They have pushed divestment from fossil fuels.
They have called out Palantir.   They have criticized excessive private equity fees.  They have criticized investments linked to genocide in Gaza

Why is Apollo Global Management still deeply embedded in New York’s public pensions?    They are worst of worst

And why has there been no serious divestment debate in Albany or City Hall, despite renewed scrutiny of Apollo’s leadership over their documented ties to Jeffrey Epstein?  New and disturbing information on pedophile issues around Leon Black and ownership of school photo firm Lifetouch are in the news daily.

---

The Money Is Not Small

New York’s exposure to Apollo is not theoretical. It is massive and multi-vintage. Near $1 billion

According to New York State Common Retirement Fund (NYSCRF) reports and transaction disclosures:

• August 2013 — Apollo Investment Fund VIII, L.P.
  $400 million commitment
• 2015 (report dated August 2015) — Apollo Natural Resources II, L.P.
  $400 million commitment
• December 2021 — Apollo Impact Mission Fund
  $150 million commitment
  (Monthly report describes Apollo as an “existing relationship”)
• December 2022 — Apollo Investment Fund X, L.P.
  $350 million commitment
• March 2023 — Apollo Excelsior PE Co-Invest, L.P.
  $350 million commitment
• https://commonsense401kproject.com/2026/02/05/the-apollo-epstein-files-why-public-pensions-should-reopen-the-2019-divestment-debate/

New York City pensions—including the Teachers’ Retirement System (TRS NYC)—have also been reported to have commitments to Apollo funds.

This is not a legacy relationship winding down.
It is active, expanding, and ongoing.

---

The Epstein Question Is Not Going Away

Leon Black paid Jeffrey Epstein more than $150 million over years, including after Epstein’s 2008 conviction. Marc Rowan and other Apollo executives have faced renewed scrutiny following document releases and calls from national organizations for regulatory review.   As reported in FT,  Marc Rowan lied or at best, misled public pensions on the extent of their involvement with Jeffrey Epstein.

The American Federation of Teachers (AFT) and American Association of University Professors (AAUP) have formally urged the SEC to investigate disclosures relating to Apollo executives’ contacts with Epstein.   https://www.aft.org/press-release/aft-aaup-demand-sec-probe-over-apollo-execs-epstein-contacts   Hopefully, this will lead to their member trustees calling for divestment nationwide.

New York is home to some of the most progressive pension governance rhetoric in the country. Yet there has been no sustained demand that:

• NY Stat re-underwrites its Apollo relationship
• NYC pensions conduct a public governance review
• Trustees disclose how reputational risk is assessed

---

The $59 Billion Fee Problem

• New York pensions have already been criticized for excessive private equity fee leakage—what has been described as $59 billion in excessive costs over time through opaque private markets structures. https://commonsense401kproject.com/2026/01/18/ny-pension-called-out-for-59-billion-in-excessive-fees/

Progressives regularly argue that private equity extracts wealth from workers and communities.

Apollo is one of the largest beneficiaries of that structure.

If New York believes private equity fees function as a hidden tax on retirees, then the firm receiving hundreds of millions in commitments deserves enhanced scrutiny—not immunity.

---

Marc Rowan’s Expanding Political Role

Besides Epstein ties Marc Rowan’s reported appointment to a Trump-era Gaza advisory board adds a geopolitical dimension that many progressive voters will find troubling.   Most progressives oppose the Genocide in Gaza, so this should be especially disturbing. 

Public pensions must consider not only financial performance but governance risk, reputational exposure, and political entanglement.

---

Comptroller Candidates Have Already Set the Standard

Comptroller candidates Drew Warshaw and Raj Goyle have already called for:

• Divestment from Palantir
• Divestment from fossil fuels
• Reduction of excessive private equity fees

Apollo Global Management is the largest private equity owner of hospitals in the United States, controlling approximately 220 facilities across 36 states through Lifepoint Health and ScionHealth Senate investigators found that Apollo holds a 97% ownership stake in Lifepoint, which pays Apollo $9.2 million annually in management fees and has paid substantial transaction fees, including a $55 million fee tied to a major acquisition These payments occurred while Apollo-owned hospitals faced service cuts, staffing reductions, declining patient satisfaction, and failure to meet legally binding capital expenditure commitments

Public Citizen and the Private Equity Stakeholder Project identify Apollo among private equity firms backing oil and gas companies drilling on federal lands since 2017, with inadequate bonding to cover potential cleanup liabilities. The report estimates that private equity-backed drillers could leave taxpayers exposed to hundreds of millions of dollars in environmental remediation costs, as bonding requirements cover only a small fraction of potential cleanup obligations

https://www.drewwarshaw.com/ideas/dinapolitax

Our Vision

The Fiduciary Standard Cuts Both Ways

This is not a call for performative politics. It is a call for fiduciary consistency.

A proper review would require:

1. Public disclosure of total exposure to Apollo across all NY state and city plans
2. A formal board discussion of reputational and governance risk
3. Review of all side letters and fee structures
4. Independent counsel analysis of whether prior disclosures relied upon by trustees remain accurate in light of newly surfaced information

If the conclusion after such review is to maintain the relationship, so be it. But silence is not prudence.

---

The Political Reality

New York prides itself on progressive pension leadership. Yet Apollo continues to receive fresh commitments—Fund X in 2022, co-investments in 2023—while national headlines about executive ties to Epstein resurface. The question for Albany and City Hall is straightforward:  Are New York pensions governed by values and transparency—
or by inertia and access?

---

Yes, Les Wexner deserves scrutiny for his historic ties to Jeffrey Epstein. But while Ohio media fixates on Wexner, another name—Leon Black of Apollo Global Management—barely crosses the front page. That silence is not a coincidence. It’s a governance problem.  While Lex Wexner provided a lot of seed money to Epstein,  post his 2008 conviction Leon Blacks was his largest funder.

Because while Ohioans debate Wexner, Ohio taxpayers and teachers have paid hundreds of millions of dollars in fees and profit streams to Apollo through state pension investments—often via opaque, no-bid private market commitments buried in Alternative Investment schedules. And in 2026, new disclosures and calls for investigation from national labor and academic organizations have reopened questions that Ohio leaders can no longer pretend were settled in 2019.  https://www.aft.org/press-release/aft-aaup-demand-sec-probe-over-apollo-execs-epstein-contacts 

---

Wexner in the Headlines. Apollo in the Shadows.

It is widely reported that Leon Black paid Jeffrey Epstein more than $150 million over years—much of it after Epstein’s 2008 conviction. Those payments were characterized as tax and estate planning services. Internal reviews were conducted. Black stepped down. End of story, we were told.

But now the American Federation of Teachers (AFT) and American Association of University Professors (AAUP) are demanding a formal SEC probe into Apollo executives’ contacts with Epstein, citing newly disclosed documents and inconsistencies in prior representations. That is not gossip. That is a call for regulatory review.

And yet in Ohio, you would barely know this debate exists.

Why?

---

Ohio’s Pension Money and Apollo

Ohio’s major public retirement systems—including STRS Ohio, OPERS, and SERS and Highway Patrol—have invested repeatedly in Apollo-managed private equity and credit funds. These are typically structured as long-term, illiquid partnerships:

• No public bidding process
• Limited disclosure of underlying portfolio holdings
• Confidential fee structures
• Limited transparency into side letters and GP economics

In other words: perfect vehicles for taxpayers to be exposed to governance risk without knowing it.

If Ohio pensions have committed capital across multiple Apollo vintages—as publicly available alternative investment schedules suggest—then Ohio educators, firefighters, and taxpayers are not peripheral observers in the Apollo story. They are participants.

And here’s the uncomfortable extension: The Ohio State University endowment also participates in private markets. If Apollo exposures exist there as well, that would mean Ohio’s flagship university is financially tied to a firm still defending its executive contacts with Epstein.

That is not guilt by association. That is fiduciary exposure.

---

The Lifetouch Question

Apollo is not merely a Wall Street fund manager. It owns operating businesses—including Lifetouch, the school photography company that collects millions of children’s photos across America.

When a firm that profits from public pensions and owns companies interacting with children is simultaneously tied to executives who maintained contact with a convicted sex offender, fiduciaries do not get to shrug and say, “That’s someone else’s problem.”

It becomes a governance issue.

---

The Media Conflict Ohio Won’t Discuss

Here’s the deeper structural problem.

The Columbus Dispatch and the Cincinnati Enquirer are owned by Gannett. Gannett has been financed and supported by private equity structures tied to Apollo in past transactions. Whether through direct financing arrangements or broader capital structure ties, Apollo has had material involvement in Gannett’s financial ecosystem.  https://commonsense401kproject.com/2025/08/22/ohio-medias-complicity-how-a-fake-scandal-hid-the-real-teacher-retirement-system-corruption/   

That means the two largest Ohio newspapers covering state pensions are financially connected—directly or indirectly—to a firm profiting from those pensions.   Only the Toledo Blade has given accurate coverage.

Even if no editor is ever told what to write, the conflict is obvious:

• Apollo profits from Ohio pensions.
• Apollo is tied to executives under renewed Epstein scrutiny.
• Ohio’s major newspapers have financial relationships within Apollo’s orbit.

Ohioans deserve to ask: Who investigates the investigator when the newsroom is financially intertwined with the subject?

---

STRS Ohio: Will Trustees Demand Divestment?

This is where it becomes specific—and urgent.

At STRS Ohio, trustee battles have already exposed deep governance divides. AFT- and AAUP-affiliated trustees have historically clashed with gubernatorial appointees. Most recently, Ohio’s Attorney General’s office attacked AAUP representative Rudy Fichtenbaum in board disputes tied to investment transparency and governance reform.

Now that AFT and AAUP nationally have called for an SEC probe into Apollo over Epstein contacts, Ohio’s affiliated trustees face a simple question:

Will they call for Apollo divestment or at least a formal re-underwriting review?

If not, why not?

If so, will Ohio’s political leadership allow that debate—or suppress it?

---

Ohio Leaders Cannot Pretend This Is 2019

In 2019, many pensions declined to divest from Apollo, citing internal reviews and assurances. But new disclosures and external regulatory pressure change the fiduciary calculus.

Divestment is not about punishment. It is about:

• Reassessing reputational risk
• Evaluating disclosure integrity
• Re-examining prior reliance on GP statements
• Protecting beneficiaries from governance contagion

The duty of loyalty does not end when headlines fade.

---

The Hard Questions for Ohio

1. How much capital—current NAV and unfunded commitments—does each Ohio pension have invested with Apollo?
2. What total fees (management + carried interest + transaction fees) have been paid to Apollo since 2007?
3. Were any of those commitments made without competitive bidding?
4. Has STRS or OPERS re-evaluated Apollo exposure since the 2026 AFT/AAUP letter?
5. Do any Ohio public institutions—including OSU—have Apollo exposures?
6. Will trustees request executive-session briefings specifically on Apollo’s Epstein-related disclosures?

If those answers are not publicly available, that is precisely the problem.

---

Ohio’s Pattern of Silence

In prior Commonsense investigations, we documented how Ohio media diverted attention toward manufactured scandals while avoiding deeper structural pension issues. We saw how executive compensation ballooned while teachers bore the cost. We saw how governance critics were attacked rather than answered. While the pension scandal dwarfs that of First Energy, the culture of corruption in government and media has kept it under wraps

Now, as national attention turns again to Epstein-linked financial networks, Ohio risks repeating the same mistake: focusing on the name that dominates headlines while ignoring the one still writing checks from public pension capital.

---

In 2019, when Jeffrey Epstein was arrested, and the first public scrutiny fell on Leon Black — co-founder of private capital giant Apollo Global Management — many public pension funds faced a simple choice: do we continue investing with a firm deeply connected, even if indirectly, to a convicted sex offender? Almost all chose not to divest.    Funds asked questions. One major plan paused new commitments. But nearly all maintained existing exposures. At the time, the narrative trustees were given — both publicly and privately — was this: by CEO Marc Rowan

Leon Black’s relationship with Epstein was personal, isolated, and unrelated to Apollo’s business. Apollo itself had never done business with Epstein. This lie was exposed first in the Financial Times article https://www.ft.com/content/092d9e44-ec17-4da7-8b58-e43bf09113ab and then in Bloomberg https://www.bloomberg.com/news/features/2026-02-13/the-leon-black-files-epstein-was-a-fixer-for-billionaire-s-deepest-secrets?, additional color on Rowan on political fallout at https://www.thekomisarscoop.com/2026/02/the-board-of-peace-already-has-a-corruption-problem/ The AFT and AAUP’s letter to the SEC further highlights this deception. https://www.aft.org/press-release/aft-aaup-demand-sec-probe-over-apollo-execs-epstein-contacts

That representation, backed by a commissioned Dechert LLP review released in 2021, https://www.apollo.com/insights-news/pressreleases/2021/01/apollo-global-management-announces-conclusion-and-release-of-independent-review-211549270 was enough to calm many boardrooms. But the public record today — rich with subsequent reporting, legal filings, government investigations, and newly released DOJ emails — shows that premise was deeply flawed, if not false.

---

What Naked Capitalism and Other Sources Showed Back in 2019–2023

In July 2023, finance observers at Naked Capitalism laid out what was already obvious from the early media coverage of the Black–Epstein ties:
Leon Black had paid Epstein eye-popping sums — tens of millions of dollars annually — for “tax advice” despite Epstein having no recognized tax credentials, and there was legitimate skepticism about whether that amounted to anything more than paying for influence or access. The Senate Finance Committee was openly probing the arrangement as emblematic of how super-wealthy elites use opaque tax structures to avoid taxes altogether.

The commentariat also noted that many pensions did not act even when the story broke — that file shows PSERS froze new commitments and other investors expressed concerns, but most limited partners simply let the issue fade. Reuters wrote how Leon Black downplayed his relationship with Epstein and denied no Apollo connections https://www.reuters.com/business/finance/apollo-seeks-tame-investor-concerns-over-ceos-ties-epstein-2020-10-21/https://www.reuters.com/world/asia-pacific/apollo-ceo-black-says-he-regrets-ties-epstein-denies-any-wrongdoing-2020-10-13/

Naked Capitalism was blunt: paying $158 million to someone unlicensed for tax or estate planning — and doing so without a formal fee agreement — was not only “unseemly” but abnormal even by private-markets standards.

---

What the Government and Press Have Disclosed in early 2026

Appendix: The “No Relationship” Defense Is Structurally Implausible

Marc Rowan’s spokesperson now asserts that neither Rowan nor anyone else at Apollo (excluding Leon Black) had a business or personal relationship with Jeffrey Epstein. That defense hinges on a narrow semantic distinction — as if sporadic communications, returned calls, arranged meetings, and interactions involving Apollo personnel somehow do not constitute a “relationship.” But governance does not turn on wordplay. If Epstein was fielding calls from Rowan, arranging in-person meetings, communicating with Apollo colleagues, and inserting himself into matters touching corporate staff and financial structures, then the claim of “no relationship” becomes structurally implausible. At minimum, it reflects contact and operational interface during a period when Epstein was simultaneously serving as Black’s fixer across financial, reputational, and legal risk domains. For public pension fiduciaries evaluating counterparty governance, the relevant question is not whether Rowan socialized with Epstein. It is whether senior leadership had interactions with, access to, or reliance upon an individual later revealed to be deeply embedded in sensitive matters involving the firm’s co-founder. If the answer is yes — even episodically — then the categorical “no relationship” defense collapses under its own weight.

The Financial Times’ 2026 Emails Dump

In early 2026, a tranche of Department of Justice emails released as part of the Epstein files showed that Apollo’s leadership may have mischaracterized key facts:

• Epstein was not just a personal advisor to Leon Black — he was given internal financial documents from Apollo executives, including current CEO Marc Rowan, and was involved in discussions over firm tax arrangements.
• Epstein requested and reviewed sensitive tax receivable agreement figures and potential tax strategies for Apollo’s internal transactions, contradicting earlier Apollo statements that no business was conducted with Epstein.
• Emails indicate that not just Black, but Rowan and co-founder Josh Harris, were earmarked as needing to sign off on Epstein-connected plans — placing them squarely inside matters previously described as personal affairs.

That’s a seismic shift: the firm’s public defense was personal dealings only; the record now shows Epstein engaged in substantive discussions over corporate and tax strategy involving multiple senior executives.   https://www.ft.com/content/092d9e44-ec17-4da7-8b58-e43bf09113ab

The following contacts, contained in the letter, are just a small portion of the hundreds of documents in the Epstein files that refer to Marc Rowan, Leon Black and Apollo. Epstein was first convicted of sex crimes in June 2008. From https://www.aft.org/press-release/aft-aaup-demand-sec-probe-over-apollo-execs-epstein-contacts

• Rowan and Epstein apparently met for the first time on Sept. 3, 2013, at Apollo’s offices.
• Rowan and Epstein met on the morning of Sept. 8, 2013.
• Rowan and Black had breakfast with Epstein on Oct. 22, 2013.
• Black instructed Rowan to call Epstein regarding “donor advised funds” in January 2014.
• Rowan met Epstein for breakfast on Jan. 6, 2016.
• Rowan met with Epstein at his New York City mansion on Jan. 14, 2016. It is likely at this meeting they discussed what Epstein described as involving “Athene, Montauk Rothschild. Planes boats etc.”
• Epstein inquired about the costs and specifications of a plane that Rowan was selling in January 2016.
• In February 2016, Rowan and Epstein discussed working with Edmond de Rothschild to finance an Apollo inversion. Epstein appears to have been the conduit for the introduction to the bank.
• Rowan appears to have sought Epstein’s advice on Apollo calculations for a tax receivable agreement on March 4, 2016.
• Epstein introduced Nicholas Ribis, an executive with Trump’s resort empire, to Rowan in March 2016. Ribis appears to have tried to get himself appointed as examiner in the bankruptcy of Caesars Entertainment Inc.
• In September 2016, Apollo’s Brad Wechsler asked Apollo staff to keep Epstein cc’d on materials related to tax matters for family offices of the three Apollo founders, including Rowan, for his “substantive expertise.”

The February 17, 2026 letter to the SEC from the American Federation of Teachers and the American Association of University Professors dramatically undercuts the premise on which many public pensions declined to divest in 2019. www.aft.org/sites/default/files/media/documents/2026/Letter_to_SEC_re_Apollo_Global_Management_February_17_2026.pdf The letter details newly released Justice Department documents showing that Marc Rowan and Joshua Harris met repeatedly with Jeffrey Epstein between 2013 and 2016, discussed matters involving Athene and potential Apollo transactions, sought Epstein’s advice on tax receivable agreements, and even involved him in introductions related to financing and bankruptcy proceedings

These disclosures stand in direct tension with Apollo’s January 25, 2021 Form 8-K https://www.sec.gov/Archives/edgar/data/1411494/000119312521016405/d118102d8k.htm and accompanying Dechert report, which asserted that Leon Black “never promoted Mr. Epstein’s services to other Apollo senior executives” and that neither Harris nor Rowan hired or consulted Epstein on personal matters.  The AFT letter states plainly that the DOJ files suggest those statements were “misleading” and that investor communications currently give an “inaccurate and incomplete picture” of Apollo’s ties to Epstein . For public pension fiduciaries, this is no longer merely a reputational issue—it is a disclosure integrity issue. If the representations that underpinned the 2019 decision not to divest are now credibly challenged by federal document releases, trustees have a renewed duty to re-examine whether continued exposure to Apollo satisfies their obligations of prudence, candor, and risk oversight. The Financial Times published a paywall piece on the AFT letter on 2/17/26 https://www.ft.com/content/9f96ca88-2cee-4ca1-a076-58cf3440ac55

The “No Relationship” Defense Collapses Under Documentary Evidence

In 2019, public pension trustees were assured that Jeffrey Epstein’s relationship was personal to Leon Black, contained, historical, and irrelevant to Apollo’s institutional governance. Marc Rowan and Apollo representatives emphasized that no broader operational or business integration existed. That narrative is now irreconcilable with the documentary record.

The newly released Justice Department files, detailed in Bloomberg’s February 13, 2026 investigation, show Epstein operating not as a passive estate planner but as a “stealthy do-it-all fixer” deeply embedded in financial structuring, asset leverage, tax positioning, corporate entities, and sensitive personal matters involving Apollo’s co-founder

---

Why This Matters to Public Pensions

1. Pension Boards Relied on a False Premise

In 2019–2021, trustees were told:

• Apollo had no corporate relationship with Epstein
• Black’s payments were personal and non-business-related
• Nothing in Apollo’s governance or operations was implicated
• That representation was material to trustees’ fiduciary judgments — especially for those whose due diligence pointed to reputational risk, governance risk, and long-term fund performance.

Today’s evidence suggests that the premise trustees used to decline divestment was incorrect.

That’s not just a reputational wrinkle — it’s a fiduciary risk oversight failure.

---

2. The Naked Capitalism Frame Was Right About the Real Question

Back in 2019, commentators questioned the real value of Epstein’s services and whether the arrangement was something other than benign advice. Naked Capitalism suggested: Paying someone like Epstein $158 million, without a professional fee agreement or credentials, was implausible outside of influence, access, or other undisclosed benefits — especially when vetted tax professionals could have done similar work for a fraction of that fee. That same skepticism now resonates with the newer evidence showing Apollo executives shared sensitive tax-related information with Epstein — something that goes well beyond “advice.”    https://www.nakedcapitalism.com/2023/07/former-apollo-chief-leon-black-has-more-jeffrey-epstein-splaining-to-do-with-tax-evasion-alleged-rape-of-autistic-16-year-old.html

---

The Broader Governance Pattern Pensions Should Recognize

This episode fits a much larger pattern — one these same pensions have repeatedly confronted in private markets: When you ask managers for transparency on governance concerns, the first answer is usually a controlled narrative.
Only later, often under external pressure or legal document release, does a more complex, less flattering story emerge. This is the same dynamic you’ve documented in retirement investment analytics — where private-market disclosures are often opaque until forced into daylight.

---

The Fiduciary Question Trustees Must Now Ask

Not: Should we feel bad about Apollo’s historic transgressions? But: Did we make our 2019 divestment decision based on facts that were materially incorrect? If so, should we revisit that decision now?

And if Apollo’s prior disclosures were materially inaccurate:Did trustees receive updates that corrected the record at the time? Did pensions perform iterative due diligence as new facts emerged? Did funds that continued to invest explain how they evaluated the governance impact? Should pension committees reopen investment decisions in light of new evidence?

These are not political questions. They are fiduciary ones.

---

What Pension Fiduciaries Should Do Now

In light of the newly revealed evidence and other reporting:

1. Request Apollo to explain, in writing, the extent of Epstein’s involvement in firm matters now shown after 2019 facts. Trustees should demand transparent, verifiable responses from Apollo on: What documents were shared with Epstein . Who in Apollo communicated with Epstein . What strategic matters Epstein was consulted about. Whether Apollo’s prior statements to investors continue to be accurate 2. Re-evaluate all Apollo commitments against fiduciary standards This should include: Governance risk assessments, Reputational risk analyses, Operational due diligence, Cost/benefit of continuing exposure vs. risk mitigation 3. Consider divestment, or exit strategies where appropriate Funds that maintain significant exposure should periodically reassess whether continued involvement aligns with prudent investor standards — especially when the manager’s transparency has been called into question.

---

Conclusion: This Is Not Ancient History

What happened with Apollo in 2019 was not settled history. Too many trustees accepted an incomplete — and now demonstrably inaccurate — narrative. The Naked Capitalism critique back then was more than snark; it was fundamentally right about the depth and implications of the relationships at play. Pensions can no longer rely on the original premise they were given. It’s time to ask: Should we continue to invest with a manager whose senior leadership repeatedly mischaracterized material governance facts to public investors? That is the commonsense fiduciary question of 2026.

Sources-

https://www.truehoop.com/p/when-josh-harris-and-jeffrey-epstein https://www.thedp.com/article/2026/02/penn-marc-rowan-jeffrey-epstein-files-emails https://www.haaretz.com/us-news/2026-02-04/ty-article/.premium/pro-trump-billionaire-on-gaza-board-of-peace-linked-to-jeffrey-epstein-in-new-doj-files/0000019c-2887-db08-abdd-6b8ffaff0000 https://www.inquirer.com/news/marc-rowan-plane-epstein-penn-20260130.html

United States public pensions (confirmed in public sources)

• Pennsylvania PSERS (Public School Employees’ Retirement System of PA) — PSERS board resolution for Apollo Investment Fund IX notes prior PSERS commitments to multiple Apollo partnerships and states PSERS had committed $620m to Apollo-managed partnerships since 2012 (as of that 2017 resolution).
• Pennsylvania SERS maintained exposure to flagship buyout funds during Apollo Fund VI–VIII cycles.
• California CalPERS (CA Public Employees’ Retirement System) — identified in SEC filings as one of Apollo’s “Strategic Investors.” Huge Holdings in billions
• California CalSTRS (CA State Teachers’ Retirement System) — CalSTRS’ own Private Equity Portfolio Performance table lists multiple Apollo vehicles (e.g., Apollo Investment Fund IX; Apollo Hybrid Value Fund II; Apollo Investment Fund X) with commitments shown.
• Florida State Board of Administration (Florida SBA) — Florida SBA performance report lists multiple Apollo private equity funds (e.g., Apollo Investment Fund IV, V) with commitment amounts; separate reporting also describes commitments to Apollo credit funds. Apollo Accord Fund V and VI LP
• Ohio State Teachers Retirement (STRS) $600mm in Apollo Private Equity Partnerships Apollo S3 Equity and Hybrid Solutions Fund I Apollo Global Management (APO)
• OPERS: Holds Apollo Global Management (APO) equity (.
• Ohio SERS: Apollo Global Management , “Core Farmland Fund, LP —
• Ohio Highway Patrol SHPRS: “Apollo Investment Fund” appears as a line item in ORSC report snippets (with dollar amounts shown
• Virginia Retirement System (VRS) — reported commitments to Apollo vehicles (e.g., $50m in 2020 and $250m commitment reported in 2022).
• Teachers’ Retirement System of Texas (TRS Texas) — reported as a major investor/LP in Apollo funds (e.g., Reuters/industry coverage of Apollo funds; PERE notes TRS Texas as a major investor in Apollo Investment Fund VIII). PE Hub
• Teachers’ Retirement System of Louisiana (TRSL) — reported commitments to Apollo strategies (e.g., Apollo Natural Resources fund commitments, plus later credit commitments).
• New York City Teachers’ Retirement System (TRS of the City of New York) — Reuters reported NYC pension commitments to Apollo and mentions TRS NYC’s specific commitments to Apollo funds. PE Hub
• New York State Aug 2013: Apollo Investment Fund VIII, L.P. — $400 million commitment (NYSCRF report).
  • (Report dated 2015-08): Apollo Natural Resources II, L.P. — $400 million commitment (NYSCRF report).
  • Dec 2021: Apollo Impact Mission Fund — $150 million commitment (Monthly Transaction Report; also states Apollo is an “existing relationship” and notes “no placement agents”).
  • Dec 2022: Apollo Investment Fund X, L.P. — $350 million commitment (Monthly Transaction Report).
  • Mar 2023: Apollo Excelsior PE Co-Invest, L.P. — $350 million commitment (Monthly Transaction Report).
• Los Angeles City Employees’ Retirement System (LACERS) — LACERS performance update document references Apollo Investment Fund VI (example of an Apollo commitment appearing in a LACERS consultant report).
• TRS Illinois makes $200mm to Apollo Investment Fund X Oct.22 PE Int
• South Carolina Apollo reference 2011 PE INT.
• Connecticut $111mm Apollo Fund VIII chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://portal.ct.gov/-/media/ott/pdfs/2018cifcafr.pdf
• Iowa hiring of Apollo Strategic Origination Partners (Dakota.com), Apollos Insurance Company, and Athene is domiciled in Iowa
• Indiana Added $180mm 2024 https://www.dakota.com/fundraising-news/indiana-prs-invest-180m-to-private-equity-private-credit-hire-international-equity-manager https://www.alternativeswatch.com/2022/05/19/indiana-public-employees-retirement-system-inprs-alternative-investments/  Apollo $150mm Origination Partnership Private Credit
• Kansas Public Employees Retirement Systems has $100s of millions in Apollo Investment fund VIII, IX
• Michigan invests $100s of millions in Apollo Investment fund VIII, IX  Apollo Hybrid Value Funds, Apollo Credit/ Opportunistic Credit
• Mississippi has held Apollo VIII IX Private Equity funds
• Rhode Island invests $100s of millions in Apollo Investment fund VIII, IX   Apollo Hybrid Value Funds
• Oregon PERS invests $millions in invests $100s of millions in Apollo Investment fund  VI, VII, VIII, IX Private Equity
• Washington State Investment Board  Apollos S3 Equity & Hybrid Solutions Fund  https://www.dakota.com/resources/blog/consultant-led-private-equity-allocations-from-q4-2025?utm_source=chatgpt.com
• New Mexico SIC → Apollo credit fund: $100M 2007 NMERB PE: Apollo Investment Fund VII (2008), $40M. Apollo Investment Fund VIII (2013, $50M.

Canada (confirmed)

• CPP Investments (Canada Pension Plan Investment Board / CPPIB) — CPPIB’s own press release states it made a US$150m commitment to an Apollo private equity fund (older but directly documented).
• Ontario Teachers’ Pension Plan (OTPP) — documented deal with Apollo-affiliated funds (CareerBuilder acquisition) showing direct co-investment/transaction participation alongside Apollo funds.

UK public pensions (confirmed)

• London Pensions Fund Authority (LPFA) — industry pension press reports LPFA selecting Apollo (manager selection / mandate).
• Cumbria Local Government Pension Scheme (LGPS) — a published LGPS alternatives holdings spreadsheet includes an “APOLLO MULTI-CREDIT FUND” line item.

Mentions Singapore fund

 Apollo was Fined $53 Million by the SEC in 2016 following charges that it misled investors regarding fee practices. ^[iii]   

In 2022 Apollo hired outgoing Connecticut Treasurer Shawn Wooden to get more public business https://www.ai-cio.com/news/former-connecticut-treasurer-named-chief-public-pension-strategist-at-apollo-global-management/

In 2015 Apollo was involved in a massive pay-to-play scheme involving a trustee and CEO of CALPERS the US largest public pension.  The CALPERS CEO, Buenrostro, was sent to prison and the trustee Villalobos committed suicide before serving his term. Apollo was rewarded with more investments. ^[iv] https://www.latimes.com/business/la-fi-villalobos-suicide-20150115-story.html

Donald Huffines is running for Texas Comptroller which sits on the board of the $60 billion Texas Permanent School Funds which holds $millions with Leon Black’s Apollo.https://tx.localnews.com/texas-permanent-school-fund-corp-raises-position-in-apollo-commercial-real-estate-finance/

Apollo, via its debt control of Gannett, controls the main state media in many of the markets, especially state capitols of the above Public Pension Plans, like the Columbus Dispatch, Cincinnati Enquier and 12 other smaller Ohio papers. Tallahassee Democrat, Jacksonville Times Unon and 15 other Florida papers. Springfield State Journal, Peoria Journal Star, Rockford Register Star, and 10 other Illinois papers. Austin American-Statesman El Paso Times, and 6 other Texas papers. Indianapolis Star, Des Moines Register, Topeka Capital-Journal, Lansing State Journal, Jackson Clarion-Ledger, The Providence Journal

I point out California Media conflicts some Apollo at https://commonsense401kproject.com/2025/11/08/why-private-equity-sees-katie-porter-as-a-strategic-threat-as-california-governor/

An industry piece from Plan Sponsor featuring a bogus study by industry lawyers is making the rounds with a tidy, outrage-ready statistic: https://www.planadviser.com/erisa-settlements-provided-68-per-plaintiff-in-2025/?utm_source=newsletter&utm_medium=email&utm_campaign=PAdash

“Median participant recovery: $67.79.
Average plaintiff attorney fee: $1.59 million.”

And the implied message is obvious:

“The real problem in 401(k) lawsuits is the lawyers, not the fiduciary misconduct.”

That framing is not just misleading.
It’s a defense narrative that flips the economics of ERISA litigation on their head.

Let’s do the math the article avoids.

---

What the settlement numbers actually say

Using the same figures being cited:

• Total settlements: $5.3 million per case
• Plaintiff fees: $1.59 million
• Participant recovery: $3.71 million

That means participants received 70% of the settlement dollars.

Not the lawyers.

Now the part no one mentions:

Those settlements typically represent 10–20% of the actual damages.

That’s not speculation. That’s how settlement economics work in these cases after years of motion practice, discovery fights, and judicial hostility at the pleading stage.

If $5.3 million is ~15% of actual damages, then:

Actual participant losses ≈ $35.3 million

That’s the real number.  Wall Street Defense attorneys force the participants to take $3.71 million of the $35 million taken from them.

---

The number they don’t want you to see

As actual damages are roughly $35 million per case, then the hidden story is this:

Defense lawyers are helping fiduciaries settle cases for 15 cents on the dollar.

That’s about $30 million per plan in losses that never get repaid.

And the trade press wants you mad at the lawyers who took a third of the clawed back 15%.

---

Why settlements are so small relative to damages

Because courts increasingly:

• Dismiss cases before discovery,
• Demand “meaningful benchmarks” that don’t exist,
• Misapply standing rules,
• Treat revenue sharing and proprietary funds as normal,
• Block prohibited transaction claims at the pleading stage.

This forces plaintiff firms into a brutal risk calculus:

Take a discounted settlement now, or risk total dismissal later.

That is not a sign the cases lack merit.

That is a sign the legal environment is tilted.

---

The inversion

Here’s the real flow of money per case:

Where the money goes	Approx. amount
Participant losses	$35,000,000
Settlement paid	$5,300,000
Participant recovery	$3,710,000
Plaintiff attorneys	$1,590,000
Unrecovered losses kept by fiduciary ecosystem	~$30,000,000

And the headline focuses on the $1.59 million.

That’s the inversion.

---

Why this narrative exists

Because if the story were told honestly, it would read:

“401(k) fiduciaries and service providers avoided repaying $30 million per case thanks to procedural defenses and judicial pleading barriers.”

That’s not a comfortable story for an industry publication.

So instead, they write:

“Look how much the lawyers make.”

---

What this really shows

These cases are not evidence of plaintiff excess.

They are evidence of how hard it is to hold fiduciaries accountable under modern ERISA jurisprudence.

Despite:

• Documented fee disparities,
• Revenue sharing conflicts,
• Proprietary fund steering,
• Opaque CIT and annuity structures,
• Consultant conflicts,

Participants are recovering pennies on the dollar.

And the industry wants you to blame the only people who forced any recovery at all.

---

The uncomfortable truth

If plaintiff firms disappeared tomorrow, participants wouldn’t keep that $1.59 million.

They would lose the entire $35 million.

Because nothing else in the system is forcing fiduciaries to return money.

Not regulators.
Not consultants.
Not auditors.
Not recordkeepers.

Only litigation.

---

The punchline the industry hopes you miss

That $68 statistic is not proof lawsuits are broken.

It’s proof that:

Fiduciary breaches in 401(k) plans are so large, and recoveries so discounted, that even billions returned looks small when averaged out.

And the real scandal is not what the lawyers took.

It’s what the fiduciary ecosystem got to keep.

The retail side of a trillion-dollar secret hiding in plain sight

The phrase is crude. Intentionally so.

Definition and Etymology of “Annuity Whore”  https://iask.ai/q/Definition-of-annuity-whore-f7vv190  

The term “annuity whore” is a derogatory slang expression used within the financial services industry, particularly among stockbrokers, investment advisors, and insurance agents.^[1] It refers to a financial professional who aggressively pushes or sells annuities to clients—often regardless of the client’s actual financial needs—primarily to capture the high upfront commissions associated with these products.^[2] [3]

Inside parts of the brokerage and insurance world, “annuity whore” is slang for the advisor who pushes annuities first, asks questions later—because annuities are where the money is. Not the client’s money. The advisor’s.

And in 2026, as indexing, ETFs, and fee transparency squeeze traditional commissions to dust, the least transparent corner of the financial system has quietly become the revenue engine for huge swaths of the advisory industry:

State-regulated insurance products.  Annuities.  Spread.  Hidden fees.  Misleading performance.

Not disclosed like an expense ratio.
Not benchmarked like a mutual fund.
Not visible on Morningstar.
Not visible on your statement.

But worth trillions.

---

The modern advisor compensation problem

As trading commissions went to zero and clients learned to ask, “What’s your fee?”, many advisors didn’t become fee-only fiduciaries.

They went where the fees are invisible.

They went to insurance.

They went to annuities.

And they wrapped it in the most comforting phrase in finance:

“Retirement income planning.”

---

The three channels where annuities quietly dominate

1) Independent insurance / hybrid advisors (often CFPs)

• RIA + insurance agent at the same time
• Insurance license is the revenue engine
• Annuities are often the largest payout product
• “Fiduciary advice” on the front end, insurance contract on the back end

Many of these advisors are credentialed by the CFP Board and truthfully say they are fiduciaries.

They are.

But the product they recommend:

• does not disclose spread,
• cannot be benchmarked like a fund,
• embeds compensation inside the contract,
• and, in retirement plans, can create ERISA conflicts.

That’s the fiduciary paradox.

---

2) Wirehouses and regional broker-dealers

At firms like Merrill Lynch, Morgan Stanley, Stifel, and Edward Jones:

• There are dedicated annuity desks
• Internal wholesalers
• Payout grids that reward annuity production
• Retirement campaigns built around “guaranteed income”

Do their 10-Ks say, “50% of this branch’s book is annuities”?

No.

They bury it in:

“commissions and fees,”
“insurance revenues,”
“transactional revenues.”

It’s disclosed.
Just not in a way a client could ever piece together.

---

3) Retail retirement accounts and IRA rollovers

This is the part that almost no one measures correctly.

Annuities don’t show up in:

• ETF flow tables
• Mutual fund league tables
• Morningstar categories

They show up on insurance company balance sheets as general account reserves.

According to the Federal Reserve Financial Accounts (Z.1):

• Life insurers’ individual annuity reserves ≈ $2.8 trillion
• Household life insurance & annuity entitlements ≈ $6.7 trillion

That is not fringe money.
That is one of the largest pools of retirement assets in America.

There are literally thousands of different insurance products and some are worse than others.   There are some responsible people in the industry calling out the worst products but they are a minority.

---

Why the public massively underestimates annuities

Because they are not counted like investments.

They are counted like insurance liabilities.

Which means:

• No ticker
• No expense ratio
• No performance chart
• No easy comparison

Just a crediting rate… set by the insurer… after they take their spread.

---

How to tell if your advisor lives off annuities

You don’t ask them.

You read what they are required to disclose.

1. Look up the firm on the SEC site:
   SEC AdviserInfo
   Read the Form ADV Part 2. Search for:

• insurance products
• annuities
• revenue sharing
• affiliates

2. Look up the broker on:
   FINRA BrokerCheck
3. Look for dual registration:

• Investment adviser
• Insurance agent

That combination is where the annuity money lives.

---

The uncomfortable truth

A very large portion of the financial advisory industry would struggle to survive on transparent fees alone.

Annuities solve three problems for advisors and firms:

1. High, durable compensation
2. Client stickiness (hard to move once placed)
3. A simple retirement income story

And for clients, they sound comforting:

• “Principal protection”
• “No volatility”
• “Guaranteed income”

What almost no one asks:

• What is the spread?
• What is the insurer earning versus you?
• How is the advisor paid inside this?
• Could this be replicated cheaper with transparent investments?

---

Even fiduciaries sell them

This is where it gets uncomfortable for the industry.

A CFP can say, honestly:

“I am a fiduciary, and this annuity is in your best interest.”

And believe it.

Because the system never forces reconciliation between:

• fiduciary duty,
• opaque product economics,
• and embedded compensation.

That’s the gap.

That’s the dirty secret.

---

Why this matters beyond retail (and why it’s explosive)

As documented at the Commonsense 401k Project, even retirement plans have quietly filled with these products. But the retail side is much bigger and has been hiding in plain sight for decades.

You are not looking at a fringe misuse.  https://commonsense401kproject.com/2026/01/23/fixed-annuities-are-the-dirty-secret-hiding-in-401k-and-403b-plans/ 

You are looking at a dominant distribution product in American retirement investing that:

• is opaque,
• is compensation-heavy,
• and is sold by people calling themselves fiduciaries.

That’s not a small problem.

That’s structural.

---

The thesis

If your advisor talks endlessly about:

“income,”
“guarantees,”
“sleep at night,”

…and you see insurance contracts instead of transparent funds…

You may not have a fee problem.

You may have an annuity problem.

And the way to tell is not what they say.

It’s what they disclose in the fine print they hope you never read.

You can benchmark a mutual fund.
You can benchmark an index fund.
You can even benchmark a synthetic stable value fund—if you know what you’re doing.

But you cannot benchmark a General Account or Separate Account fixed annuity.

That is not an accident. That is the design.

And it is the reason fixed annuities do not fit inside an ERISA fiduciary framework built on comparability, measurability, and transparency.

You’ve written for years that GA/SA annuities are prohibited transactions in practice. The missing piece most fiduciaries, consultants, and courts still don’t grasp is this:

Fixed annuities have comparables in the marketplace.
They do not have a legitimate benchmark.

That difference is everything.

---

What a benchmark actually is (and why annuities can’t have one)

From the CFA Institute’s trustee framework and the Restatement of Trusts logic applied in cases like Brotherston, a benchmark must:

1. Be investable
2. Be transparent
3. Use market value accounting
4. Allow apples-to-apples fee and performance comparison
5. Reflect the same risk profile

SEC-registered mutual funds do this perfectly. That’s why 401(k)s are built around them.

As your book chapter explains, fee transparency + performance transparency is the foundation of fiduciary oversight. Once disclosures improved in 2012, litigation increased, and fees fell. That is how the system is supposed to work.

Annuities break this system at step one.

They use:

• Book value accounting
• Opaque spread compensation
• No market pricing
• No fee disclosure
• No investable comparator

So what do consultants do?

Annuities Are a Prohibited Transaction — DOL Exemptions Do Not Work Update 1/21/26

---

The fake benchmarks consultants use

1) Money market funds

2) Short Treasuries

3) Hueler Pooled Fund Index

4) Synthetic stable value peer medians

These are not benchmarks. They are deflection devices.

Because these comparators are far less risky than a General Account annuity.

You’ve documented the risk differential from Fabozzi/Griffin:
GA annuities carry roughly 10× the credit risk of diversified synthetic stable value.

Yet consultants routinely say:

“This annuity is competitive with money markets”
“This annuity is in line with Hueler”
“This annuity beats cash”

That is like benchmarking a junk bond fund to a Treasury bill.

It is not just wrong. It is intentionally misleading.

---

What fixed annuities actually have: comparables

There is only one legitimate way to evaluate a fixed annuity:

Compare its crediting rate to the highest-credit, lowest-spread annuity in the market.

And there is one firm everyone knows fits that description.

TIAA as the market comparable

TIAA:

• Carries equal or higher S&P/Moody’s ratings than most GA providers
• Is known to take the lowest spreads in the industry
• Operates at scale
• Has enormous general account assets
• Is itself a party in interest in ERISA plans

Which is precisely why they should be forced to disclose their spread.

You estimated ~150 bps to NBC. TIAA refused to comment.

TIAA Exposed for Excessive Hidden Annuity Spread Fees — Again

That refusal tells you something critical:

The spread is the fee.
And they will not say it out loud.

If TIAA—widely believed to be the lowest spread provider—is keeping ~150 bps, then what are the others keeping?

200? 250? 300?

The Stable Value Efficient Frontier

This is the only meaningful comparison available in the marketplace.

Not money markets.
Not Hueler.
Not synthetic stable value.

Another annuity with the same risk profile and better credit.

---

Why synthetic stable value is not a valid “benchmark” for annuities

Synthetic stable value:

• Diversified bond portfolios
• Multiple wrap providers
• GIPS-presentable components
• Market value transparency underneath
• 1/10th the credit risk

Consultants love to say:

“Your annuity rate is similar to what Hueler shows.”

That is not benchmarking. That is concealing spread.

Because if a product with 1/10th the risk produces a similar crediting rate, the only explanation is:

The annuity spread is enormous.

. Fees drive performance. Transparency exposes fees. Litigation lowers fees.

Annuities are built so this cannot happen.

Stable Value: Why General Account and Separate Account Products Are ERISA Prohibited Transactions — and Why Diversified Synthetic Stable Value Is Not

---

Why courts and consultants get fooled

Because they are trained to think in terms of benchmarks.

And annuities do not have one.

So defense experts muddy the water:

• “No apples-to-apples benchmark”
• “Unique accounting”
• “Principal protection”
• “Smoothing”
• “Different objectives”

All true.

All irrelevant.

Because you are not looking for a benchmark.

You are looking for a comparable.

And that is another annuity with:

• Better credit
• Lower spread
• Higher crediting rate

That’s it.

---

The fraud hiding in plain sight

When a consultant tells a plan committee:

“This annuity is competitive with stable value peers”

They are comparing:

• A 10× risk product
• To a 1× risk product
• With a similar rate

That statement is materially misleading.

It disguises the embedded fee.

It disguises the risk.

It disguises the prohibited transaction.

---

Why SEC registered mutual funds don’t have this problem

Because:

• Expense ratios are visible
• Performance is visible
• Benchmarks are obvious
• AMVR works
• SPIVA works
• Brotherston logic works

You can’t hide.

Weak state regulated Annuities are the only major asset class in 401(k)s where none of this applies.

Which is why they proliferate in:

• Small plans
• Insurance-sold plans
• Legacy menus
• Consultant-controlled plans

---

The single question fiduciaries never ask

“What is the spread relative to TIAA?”

If that question were asked in every RFP, annuities would disappear from 401(k)s overnight.

Because there is no good answer.

---

The reason this matters for ERISA

ERISA fiduciary law assumes:

• Transparent fees
• Comparable performance
• Objective benchmarks
• Measurable prudence

Fixed annuities are constructed to defeat all four.

They can only be evaluated by comparables, not benchmarks.

And the industry intentionally substitutes fake benchmarks to prevent fiduciaries from seeing the spread.

That is not poor practice.

That is systemic concealment.

The bridge between Trust Law, ERISA, and what modern pensions forgot

When Congress wrote the Employee Retirement Income Security Act, they did not invent fiduciary duty.

They imported it from the Restatement (Second) of Trusts.

When the investment industry professionalized itself after the 1960s scandals, the CFA Institute did not invent fiduciary duty either.

They translated trust law into operational rules for investment professionals:

• Put the client first
• Disclose conflicts
• Present performance honestly
• Disclose fees fully
• Avoid structures you cannot explain

The CFA Code, GIPS, and the Asset Manager Code are not “best practices.”

They are trust law made practical.   https://commonsense401kproject.com/2026/01/30/before-erisa-before-the-sec-there-was-trust-law/

Which is exactly why private equity, hedge funds, opaque annuities, and many modern pension structures cannot comply with them.

Not don’t comply.

Cannot comply.

---

Trust law asks one simple question

Can the beneficiary see what you are doing with their money?

CFA standards ask the same question in three ways:

Trust Law	CFA Code	GIPS	Asset Manager Code
Duty of loyalty	Put client first	Net of all fees	Investors first
Duty to disclose	Conflicts disclosure	Verifiable performance	Full fee transparency
Duty of prudence	Fair dealing	Reproducible returns	No preferential treatment
Duty to inform	Honest communication	Independent valuation	Independent oversight

If you can’t meet CFA standards, you can’t meet trust standards.

And if you can’t meet trust standards, you are violating the spirit of ERISA.

---

Why this is exploding now

Aannuites and private-equity and of course crypto show the same thing:

These products are engineered to sit outside:

• The Investment Company Act of 1940
• The trust-law spirit of ERISA
• The transparency discipline of CFA standards

That is not accidental.

GIPS requires:

• Reproducible performance
• Net-of-fee reporting including underlying fees
• Independent valuation
• Audit rights

Private equity contracts forbid those things.

Annuity contracts obscure those things.

You cannot be GIPS-compliant and run those structures the way they are run today.

---

The uncomfortable fact for CFA charterholders in pensions

Tens of thousands of CFA charterholders sign this every year:

“Place the integrity of the profession and the interests of clients above their own.”

Many public pensions are staffed and advised by CFA charterholders.

And yet they:

• Accept performance reporting that is not GIPS-reconstructible
• Accept contracts that waive fiduciary duty by general partners
• Accept fee structures that cannot be fully disclosed
• Participate in performance games that influence bonuses and narratives

This is not ignorance.

This is looking the other way.

---

Why CalPERS, Kentucky, Minnesota, and others all converge here

Kentucky literally wrote CFA standards into law in 1991 and again in 2017 — and then ignored them.

In Ted Siedle’s Minnesota work, you see the same structural problem without the CFA overlay:

• Opaque alternatives
• Governance conflicts
• Self-policing fiduciaries
• Performance that cannot be independently verified

CFA standards would expose both instantly, and will be featured in an upcoming CALPERS report I am assisting Ted Siedle on.

Because CFA standards were designed precisely to prevent:

• Cherry-picking
• Opaque valuations
• Hidden fees
• Self-dealing
• “Trust us” reporting

---

Why GIPS is the bright-line test

Look at the CFA GIPS firm list.

• BlackRock — listed
• JPMorgan Asset Management — listed
• Apollo Global Management — not listed
• KKR — not listed
• Carlyle Group — only liquid credit listed
• Blackstone — credit/insurance listed, not PE/real estate

That is not a coincidence.

Traditional managers can comply.
Private equity structures cannot.

---

The key insight

CFA standards are not aspirational ethics.

They are a functional test of whether an investment structure is compatible with fiduciary duty.

If a manager cannot meet them, a pension fiduciary should not be hiring them.

Period.

---

Why this ties directly back to trust law

A trust court would never allow:

• Secret contracts
• Manager-set valuations
• Hidden fees
• Preferential GP treatment
• Performance that cannot be independently verified

CFA standards say the same thing, in modern language.

ERISA says the same thing, in statutory language.

They are the same rulebook.

---

Why this matters now more than ever

Because modern legislation and regulatory trends increasingly say:

“As long as you document the process, it’s fine.”

Trust law and CFA standards say:

“If the structure itself prevents transparency, it’s not fine.”

That’s the clash happening in pensions today.

---

The blunt conclusion

If public pensions required and enforced:

• CFA Code adherence
• GIPS-compliant reporting
• Asset Manager Code compliance

Most hedge fund, private equity, opaque annuity, and alternative structures in public plans would disappear overnight.

Not because of politics.

Because they fail the fiduciary test that predates ERISA by centuries.

And that is exactly why CFA standards are needed now more than ever.

Lifetime Income Annuities in 401(k) Violate ERISA and CFA Fiduciary and Ethical Standards

Modern 401(k) Plans and Public Pensions Are Violating Rules Written 300 Years Ago

When Congress passed Employee Retirement Income Security Act in 1974, it did not invent fiduciary duty.

It imported it.  Many State Fiduciary laws claim to be similar to ERISA.

The intellectual backbone of ERISA is not a securities statute. It is not an accounting rule. It is not a pension innovation.

It is the law of trusts — as summarized in the Restatement (Second) of Trusts.

That matters, because trust law is old. Very old. And very clear.

---

What a trustee is allowed to do (and not do)

For centuries, courts imposed simple rules on trustees:

1. Duty of Loyalty — the trustee may not benefit himself, directly or indirectly.
2. Duty of Prudence — the trustee must invest as a careful person would with his own money.
3. Duty of Impartiality — treat beneficiaries fairly.
4. Duty to Inform — beneficiaries are entitled to know what is being done with their property.
5. Duty to Avoid Conflicts — even the appearance of self-dealing is forbidden.

These rules were codified and clarified in the Restatement by the American Law Institute.

Then Congress lifted them into ERISA.

---

ERISA is trust law applied to pensions

The people who wrote ERISA — Jacob Javits, Ted Kennedy, and others — were responding to pension looting like the Studebaker-Packard collapse.

Their solution was simple:

Treat pension managers like trustees.

That’s why ERISA uses phrases like:

• “solely in the interest of participants”
• “exclusive purpose”
• “prudence”
• “party in interest”
• “prohibited transaction”

Those are trust law phrases, not finance phrases.

---

The SEC laws did the same thing for retail investors

The Investment Company Act of 1940 did for mutual funds what ERISA did for pensions:

It forced:

• Daily pricing
• Fee transparency
• Independent oversight
• Restrictions on affiliated transactions

Why? Because 1920s investment trusts were abusing investors using the same tricks we see today in private markets.

---

Now look at many 401(k)s and other Public and Private Pensions

Ask a simple trust-law question:

If a trustee invested a widow’s trust in a vehicle where:

• Fees were hidden,
• Pricing was stale for weeks,
• Managers set their own valuations,
• Contracts were secret,
• And advisers were paid for steering money there,

would a court say that trustee met the duty of loyalty and prudence?

Of course not.

But that is exactly how modern pension and 401(k) alternative structures operate.

---

The great workaround of the last 30 years

Private equity, hedge funds, CITs, annuities, and “separate accounts” were all engineered to sit:

• Outside the Investment Company Act  (SEC registered funds)
• In gray zones of ERISA disclosure
• Behind NDAs and proprietary claims
• Beyond meaningful benchmarking
• Under poor state regulation, outside federal regulation ie annuities and CITs

They are, functionally, pre-1940 investment trusts wearing modern legal costumes.

And they would fail a basic trust-law exam.

---

They are about a system that would make an 18th-century English chancery judge say:

“This trustee is hiding the books from the beneficiary.”

Which was the one thing trust law never allowed.

---

The irony

We didn’t need new laws to prevent this.

We wrote them in:

• 1940 (Investment Company Act)
• 1974 (ERISA)

Both based on trust law principles hundreds of years old.

The problem is not the absence of law.

The problem is that modern finance learned how to engineer around the spirit of those laws while technically staying inside the words.

---

The architects of U.S. investment law would look at:

• Private equity in 401(k)s https://commonsense401kproject.com/2026/01/17/the-supreme-courts-intel-case-is-about-secrecy-fake-benchmarks-and-fiduciary-illusions/
• Opaque annuities https://commonsense401kproject.com/2025/11/01/annuities-are-a-prohibited-transaction-dol-exemptions-do-not-work/  https://commonsense401kproject.com/2025/11/22/annuities-the-erisa-regulatory-hole-no-one-wants-to-talk-about/
• CIT secrecy   https://commonsense401kproject.com/2025/12/07/wall-street-journal-exposes-target-date-cit-corruption-but-theyve-only-scratched-the-surface
• Crypto

And say   “We already outlawed this in 1940 and 1974. How did it come back?”

The question courts and regulators should be asking

Not:

“Is this permitted by the plan document?”

But:

“Would this be permitted if this were a private trust and the beneficiary demanded the books?”

That is the fiduciary test ERISA was built on.

And it’s the test many modern retirement structures cannot pass.

Appendix: The Quiet Erosion of Trust Law Inside ERISA

The story above makes a simple point: ERISA is trust law applied to pensions.
Its backbone is the Restatement (Second) of Trusts. Its cousins are the disclosure regimes of the Securities Act of 1933, the Securities Exchange Act of 1934, and the structural protections of the Investment Company Act of 1940. Congress imported those principles into the Employee Retirement Income Security Act after pension looting scandals.

This appendix addresses a harder claim:

Over time—and especially in recent years—new rules, exemptions, and litigation trends have weakened ERISA’s trust-law core, not by repealing it, but by engineering around it.

How erosion happens (without saying “weaken ERISA”)

Modern changes rarely say, “reduce fiduciary duty.” Instead, they:

1. Redefine what counts as adequate disclosure
   Long documents, layered structures, and “proprietary” claims substitute for clarity. Participants receive information, but not usable information.
2. Expand what can be treated as ‘prudently justified’
   Illiquid, opaque, hard-to-benchmark assets are normalized inside daily-valued plans so long as a paper process exists.
3. Rely on exemptions and safe harbors
   Prohibited-transaction exemptions, rollover rules, and advice frameworks create compliance paths that dilute the bright lines trust law once enforced.
4. Narrow who can sue and when
   Litigation doctrines and standing rules reduce the practical ability of beneficiaries to challenge conflicted structures, even when trust-law principles would condemn them.
5. Shift oversight from structure to documentation
   If the file shows a process, courts increasingly defer—even when the underlying structure obscures fees, conflicts, or valuation risk.

The pattern across administrations (and visible now)

This trend did not begin with any single administration. But the current legislative and regulatory push—often framed around ESG, choice, or access to private markets—accelerates the shift from trust principles to paper compliance.

For example, proposals emphasizing “pecuniary factors only” or expanding access to private assets in retirement plans may sound participant-protective. In practice, without parallel requirements for fee transparency, independent valuation, and real benchmarking, they risk:

• Making it easier to justify opaque alternatives on a “financial” rationale
• Hardening the legal defense that complexity equals prudence
• Further distancing ERISA practice from the Restatement’s simple tests: loyalty, prudence, disclosure, and conflict avoidance

What trust law would still ask

A chancery judge applying trust law would ask:

• Can the beneficiary see the fees?
• Can the beneficiary verify the value?
• Can the beneficiary compare the investment to a known benchmark?
• Is anyone in the chain paid more if this option is chosen?

If the answer to any of those is “no” or “we can’t disclose,” trust law’s presumption is against the trustee.

Modern ERISA practice too often presumes the opposite: if it’s disclosed somewhere and documented, it is presumed acceptable.

Why this matters for today’s reforms

When new laws or rules are proposed—whatever their stated political goal—the test should be:

Do they move ERISA closer to or farther from its trust-law roots?

If a change:

• Expands opacity,
• Normalizes illiquidity without valuation safeguards,
• Relies on exemptions over bright lines,
• Or makes challenges harder for beneficiaries,

then it functionally weakens ERISA, even if the statute’s words remain untouched.

The through-line

From 1933 to 1940 to 1974, Congress responded to financial abuse the same way:
force sunlight, ban conflicted structures, empower beneficiaries.

When modern policy trends move in the opposite direction—toward complexity, exemptions, and reduced accountability—they don’t repeal those laws.

They hollow them out.

That is the quiet erosion this article warns about.

/

For years, Morningstar has positioned itself as the independent umpire of the mutual fund world.

The star ratings.  The analyst reports.  The fiduciary consulting.

If Morningstar approves it, fiduciaries feel safe.

But buried in Morningstar’s own SEC filings is something most plan sponsors, consultants, and courts do not realize:

Morningstar is deeply embedded in the business of helping insurance companies design retirement plan investment menus built around CITs, annuities, and proprietary insurance wrappers — the very structures now raising ERISA prohibited transaction concerns.

This isn’t speculation. It’s in their Form ADV.

---

Morningstar Retirement: Not What People Think

Morningstar Investment Management’s “Retirement” division does not simply analyze mutual funds.

They explicitly say they: “construct custom model portfolios for employer-sponsored retirement plans using the investment options available in a plan’s lineup.”

That sounds harmless — until you read the next sentence:  “The universe of underlying holdings is generally defined by the Institutional Client and can include investment products that are affiliated with that Institutional Client.”

Translation:  If Lincoln, MetLife, TIAA, Principal, Empower, or an insurance platform defines the menu, Morningstar builds portfolios using those proprietary insurance products.

They are not evaluating an open market of mutual funds.   They are working inside insurer-defined universes.

---

The MetLife Smoking Gun

Morningstar has a dedicated ADV brochure for: “Advisory Services to MetLife ExpertSelect Program”

In this document, Morningstar openly states:

“We selected the menu of investment options available in the MetLife ExpertSelect Program from the universe of investments that MetLife is authorized to offer.”

They go further:  “We do not review the annuity products in connection with the Program.”

Read that again.  Morningstar — the supposed fiduciary expert — builds the menu but does not review the annuity products.

They also state: “The lineups we build are limited to a universe of mutual funds and other investment vehicles, such as CITs and guaranteed retirement income products such as annuities.”

So Morningstar’s job here is:   Make insurance menus look like diversified retirement lineups.

---

The Target Date Angle Nobody Talks About

Morningstar also offers:

“Personal Target Date Fund Services”  “Custom Model Portfolios”  “3(21) and 3(38) fiduciary services”

But those services are constrained to:  “the investment options available in the plan lineup.”

And those lineups, in insurance platforms, are:

• CITs
• Stable value
• Separate accounts
• Annuity sleeves
• Proprietary trust wrappers

This is exactly the structure now showing up in TIAA, Lincoln, MetLife, and other insurance-based target date designs where:

The participant thinks they are in mutual funds,   But they are inside insurance contracts.

Morningstar is often the firm paid to “monitor” and “approve” these lineups.

---

And Morningstar Gets Paid Very Well For This

Their fee schedules show:

• 2–15 basis points for institutional asset management
• 3–8 bps for fiduciary services
• Minimums of $100,000 to $450,000
• Special target-date and managed account fees

This is a huge revenue business tied directly to insurer retirement platforms.

They even disclose: “We receive direct or indirect cash payments from unaffiliated third parties for referring their services to other advisory firms or investors.”

And:  “We provide compensation to Institutional Clients to provide marketing or educational support…”

This is not a passive ratings agency.    This is an active participant in the insurance retirement ecosystem.

---

Why Their Articles Read the Way They Do

When Morningstar writes articles like:

• “The hidden trend changing 401(k) plans”
• “Target date fund trends”

They present the rise of CITs and insurance-based structures as innovation.

They never mention:

• Prohibited transaction risk
• Party-in-interest issues
• Share class access problems
• Insurance wrapper conflicts
• Hidden spread compensation
• Fiduciary benchmarking problems

Because this is the ecosystem they are paid to support.

https://www.morningstar.com/funds/hidden-trend-is-changing-401k-plans-heres-what-it-means-investors

https://401kspecialistmag.com/target-date-fund-trends-morningstar/

---

The Fiduciary Illusion

Plan sponsors believe:

“Morningstar is monitoring our funds.”

What Morningstar is actually doing in many insurance platforms is:

Monitoring the funds inside the insurance cage.

They are not asking:

Why are we in the cage at all?

---

---

The Real Question Fiduciaries Should Ask

When Morningstar is hired in a Lincoln, MetLife, TIAA, or similar platform, the right question is:

Are they acting as an independent fiduciary reviewer?

Or  Are they being paid to make an insurance menu look prudent?

Because their own ADV says the latter.

---

The Bottom Line

Morningstar is no longer just the referee of the mutual fund world.

They are now a key architect of insurance-based retirement plan menus where:

• CITs replace mutual funds
• Annuities hide inside target dates
• Proprietary wrappers block institutional pricing
• Fiduciary conflicts multiply

And they disclose it all — if you read the fine print.

Most fiduciaries never do.

Appendix: Morningstar’s Dual Role — Ratings Provider and Insurance Scorekeeper

While the main article above documented how Morningstar serves as a referee, scorer, and evaluator for the insurance industry — especially in distributing and marketing annuity products — there is a parallel role that is even more consequential for pension risk transfers and fiduciary decision-making: Morningstar’s participation on the credit-rating side of private insurance-backed securities.

1. Morningstar Is Now a Major Player in Privately Rated Securities

Life insurers have shifted a growing share of their portfolio into privately placed debt, direct lending, and private credit — assets that are not traded publicly and for which there is no market price discovery. To make these assets look “investment grade,” insurers increasingly rely on private letter ratings (PLRs) — credit opinions issued by small, non-S&P/Moody’s rating firms.

Among the few firms active in this market is Morningstar DBRS — the credit rating arm of Morningstar that issues private ratings on securities typically held by insurance companies or structured finance vehicles.

According to industry data, as of year-end 2023, approximately 86% of U.S. insurers’ privately rated securities were rated by small CRPs including Morningstar DBRS. The result is that a large portion of the so-called “investment grade” portfolio backing life annuities is not rated by the major public agencies at all, but by niche providers whose methodologies and transparency are not subject to broad market scrutiny.

---

2. The Conflicted Incentives of Private Letter Ratings

Private letter ratings are fundamentally different from public credit ratings:

• They are paid for by the issuer or sponsor, not by market subscribers.
• They apply to securities that have no public trading market.
• Their output cannot be independently verified by investors or fiduciaries.
• Their methodology disclosures are limited or proprietary.

When Morningstar DBRS assigns an investment-grade letter to a privately placed life-insurer bond or private credit tranche, that rating becomes part of the narrative insurers use to declare that “over 90% of our portfolio is investment grade.” In other words, Morningstar’s rating opinion gets rolled up into insurer marketing and fiduciary disclosures, even though the underlying assets may be opaque, illiquid, and of uncertain credit quality.

This raises an obvious question:
Should a ratings arm of a firm that also earns fees from insurers for scoring insurance products be treated as independent when it privately rates securities sold to those same insurers?

---

3. Egan-Jones, SEC Scrutiny, and Why It Matters Here

The financial press has reported that the SEC is investigating Egan-Jones for its rating practices, raising concerns about whether private CRPs are applying appropriate standards or simply rubber-stamping risk. (See: “Egan-Jones Probed by SEC Over Its Credit Ratings Practices,” Financial Advisor Magazine.)

Morningstar’s credit arm has not been the subject of the same public regulatory scrutiny — but the structural problem is the same:

A firm with revenue streams tied to the insurance ecosystem is issuing “investment grade” opinions on assets that lack public market validation.

That is neither transparent nor consistent with the way public credit ratings are expected to function in capital markets.

---

4. PLRs Populate Annuity Backing Portfolios With Unknown Risk

Even if regulators decide to restrict or ban private letter ratings going forward, that would only affect new ratings. It would not address the estimated $1.6–$1.8 trillion of private credit already on U.S. life insurers’ balance sheets — much of it rated privately by firms such as Morningstar DBRS.

Because these assets:

• Are illiquid,
• Are not publicly traded,
• Do not have transparent pricing, and
• Are often backed by non-bankruptcy-remote structures or reinsurance vehicles,

their credit quality cannot be independently confirmed. The only basis for believing they are investment grade is the letter assigned by a small CRP.

That dynamic helps explain why widely followed market indicators such as credit default swap (CDS) spreads for large life insurers often show persistent credit risk that does not align with the high investment-grade ratings insurers tout. (See your October 29 article on annuity risk as measured by CDS.)

---

5. Morningstar’s Dual Roles Create a Perverse Incentive Loop

Morningstar:

1. Scores insurance products (e.g., annuities) for platforms and distributors,
2. Rates peripheral securities held by insurance companies, and
3. Participates in data and analytics ecosystems that insurers and fiduciaries use for decision-making.

This combination raises two systemic concerns:

A. Conflicts of Interest — When an insurance-industry scoring provider also issues credit ratings for instruments used to back those same products, there is a risk that independence is compromised — or at least perceived to be.

B. Lack of Market Discipline — Because private letter ratings are not subject to public market verification, they allow insurers to present opaque risk as “safe,” undermining the ability of fiduciaries to evaluate risk meaningfully.

---

Conclusion: Ratings Matter — Especially When They Don’t Match Reality

Your main article argues that Morningstar helps design the insurance playbook. This appendix shows a darker side of how that playbook is supported: by obscuring underlying asset risk with opaque ratings.

In a world where:

• General account assets are increasingly private credit,
• CDS spreads suggest elevated insurer risk,
• PBGC backstops are disappearing after PRTs,
• And fiduciaries are told to rely on “investment grade” labels,

it is no longer acceptable to treat privately rated credit as equivalent to S&P/Moody’s investment grade.

ERISA fiduciaries, regulators, and courts need to recognize that:

A rating is only as good as the transparency, independence, and accountability behind it.

If the referee is also the designer of the playbook, and also rates the teams, then the game is not being called fairly — and retirees are the ones on the field with no protection.

https://www.fa-mag.com/news/egan-jones-probed-by-sec-over-its-credit-ratings-practices-84762.html

 https://www.insurancejournal.com/news/international/2026/01/23/855368.htm.     https://commonsense401kproject.com/2025/10/29/annuity-risk-measured-by-credit-default-swaps-cds/

Offshore Private Credit creates ERISA Prohibited Transaction Risks for Life Insurance Products: New Evidence from BIS

TIAA’s Target Date Funds Are Built on a Risk Illusion – other firms copying

Wall Street Journal Exposes Target Date CIT Corruption — Opens up Fiduciary Litigation

State-Regulated Collective Investment Trusts (CITs) as Vehicles for ERISA Prohibited Transactions