Dec. 1, 2009 – Various websites are reporting information about a McClatchy Company Retirement Plan investment that suffered losses as a result of a Wall Street scandal involving Westridge Capital Management. These posts suggest that the loss has somehow imperiled our pension plan. While it is true that our pension plan does have an investment in Westridge (an investment inherited as a result of the Knight Ridder acquisition in 2006), the amount is relatively small given the nearly $1 billion in assets held by our pension plan. In addition, we do expect to make a partial recovery of these funds through a legal process that is well under way. Any losses our pension plan may ultimately suffer as a result of this situation will not jeopardize the overall health of our pension plan, which is broadly diversified and generating healthy returns. Moreover, the anticipated loss and our expected recovery were previously and appropriately accounted for and publicly disclosed earlier this year.
Here are the facts related to The McClatchy Company Retirement Plan and its investment with Westridge:
As mentioned above, The McClatchy Company Retirement Plan inherited the investment in the Westridge fund, which was an S&P 500 enhanced index fund, with McClatchy's 2006 acquisition of Knight Ridder and the Knight Ridder Pension Plan.
On Dec. 19, 2008 –- prior to any knowledge of potential problems or allegations of fraud –- McClatchy management decided to leave the fund and requested a full redemption of our pension plan's investment. The redemption required a six-month notice period and, as a result, was not executed before discovery of the alleged fraud and the seizure of the Westridge fund by the Securities and Exchange Commission (SEC) and its ultimate turnover to a court-appointed receiver.
As of Jan. 31, 2009, The McClatchy Company Retirement Plan had $64.4 million invested with Westridge.
In February 2009, the FBI arrested two New York men, Paul Greenwood and Stephen Walsh, who were principals of the Westridge fund. The two have been charged with running a fraudulent trading and investment scheme through companies they controlled, including Westridge Capital Management. The two are accused of misappropriating hundreds of millions of dollars of investor funds to finance their lavish lifestyles.
Based on published reports, many other firms and institutions also had investments with Westridge, including Wells Fargo & Co., the Sacramento County Employees' Retirement System, Carnegie Mellon University and the Iowa Public Employees' Retirement System.
McClatchy publicly and appropriately disclosed and reported the misappropriation soon after we were informed of the issue in our 2008 Form 10-K, which was filed with the SEC in February 2009. At that time, based on the knowledge we had, we estimated our recovery of these investment funds to be only $15 million.
In the pension plan's Form 5500 filed in October 2009 with the U.S. Department of Labor, we took the most conservative approach in reporting the total loss from this investment of about $77.8 million, which reflects the combination of market-related losses from the beginning of 2008 and fraud and dishonesty. However, based on our most recent communications with the court-appointed receiver about our potential recovery, as well the value of the investment on Jan. 31, 2009, McClatchy expects that loss to be closer to $32 million.
McClatchy's pension plan investments earned healthy returns of 22.05 percent for the first nine months of 2009. Total assets in the retirement plan as of Sept. 30, 2009, were $970.5 million.
McClatchy is actively pursuing our pension plan's claim through the legal process and court proceedings, and we now expect to recover a substantial portion of the plan's investment. However, because this issue is still being litigated in both criminal and civil proceedings, the actual recovery remains uncertain and we are unable to comment further at this time.
I'll ignore the first words -- "various websites are reporting" -- this blog is the only site I know of that has posted anything about McClatchy's pension losses, other than a few postings at the Yahoo Message board. (Update 8:23 PST: The Medium The Message posted an item yesterday, so did Jeff Taylor.) About this letter from corporate -- the company should have informed employees last spring. And I'll have more for you later on McClatchy's disclosure of the fraud -- and you can judge for yourself whether it was "publicly and appropriately disclosed." (Thanks to the reader who sent it to me.)
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25 comments:
Like ClimateGate, DealthCare, Dear Leader and his cronies, and the liberal media, they only address these real life issues when someone points it out to them (sticks their noses in it) and they can no longer cover it up.
Now, back to our normally biased programming of scribing of DNC talking points and calling it news.
“Truth to Power” More like "Truth to the Pawned"
"As of Jan. 31, 2009, The McClatchy Company Retirement Plan had $64.4 million invested with Westridge."
So why did they say it was $77 million on Form 5500?
This explanation from MNI says it all. Yes, they were invested in the fund, yes, they tried to get out, and yes, they were defrauded. Maybe the company will recover some of the money. It is also good to see the value of the fund up near $1 billion. In 2007 at the end of the year it was $1.37 billion, so it is still way down from just 2 years ago.
I am so glad the company has cleared this issue up.
Anon 8:43 "I am so glad the company has cleared this issue up."
Me too. But they only did so because of this blog, and then, only kicking and screaming while running for cover.
It’s too bad they can’t simply report the factual news, and look out for their employees.
Thanks for the great reporting McClatchy Watch! Otherwise, this would have been swept away with only the required corporate/SEC gobblygook nobody reads. This must be what McClatchy is always bragging about but doesn't follow-through on their own housekeeping - "watchdog journalism." Thanks again!
So, Gary does read McClatchy Watch every day. Where else are you going to find all the gory details?
So did anyone ever find where they had "previously reported" this event, or were they just lying and trying to cover it up?
God how I hate thinking these people are in charge of my pension.
Hey, McClatchy. Can you expalin why your form 5500 says you have invested $68,394,940 in Westridge as of december 31, 2007? Your same form says the value has dropped to $32,216,000 as of December 31, 2008?
Neither of these add up to the $77 million you have listed in the schedule H as a fraudulent amount.
And another thing, why doesn't your accounting firm, Deloitte,have full access to audit the entire pension fund? They have washed their hands of the financial statements?
Does it cost more to get a full auudit? Are thhings that bad that your own accounting firm doesn't have the opportun ity to audit the entire pension fund?
MW is NOT the only website reporting this. In fact, it was not the first either. It was posted and discussed first on Yahoo! finance message boards.
Exactly right 9:21.
Those discussion understand what's going on now.
9:04, the business wiz he thinks he is, is still trying to add up to $77m somehow. If you read, and understand what you're reading, you'll see estimate includes market performance and other factors as well.
Just read something else besides MW and you might learn something.
This posting states there were comments on Yahoo boards. You morons who are saying MW wasn't "first" with the news didn't even read the posting. Hope you're not McClatchy reporters or editors. You don't know how to research a damn thing.
who cares who is first with the news??? this is where it reached the people who count. nice work McClatchy Watch!!!!!
***Just read something else besides MW and you might learn something.***
In fact, you might realize that MW has become just another far-right echo chamber for angry, bitter old men.
MW is NOT the only website reporting this. In fact, it was not the first either. It was posted and discussed first on Yahoo! finance message boards.
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A bit of a reading comprehension problem you have there. I sure hope you're not a journalist.
Next time, try reading the article and avoid making a fool of yourself.
In fact, you might realize that MW has become just another far-right echo chamber for angry, bitter old men.
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You have the demographics of the MW readers? ...or are you just projecting your own perception of what you would like them to be? Kind of like a McClatchy journalist?
Instead of arguing about who was first, why
not find out how much of a bonus Lord gary
gives himself for recovring any of it.
What likely happened is that enough McClatchy employees read this blog and feed info to MW.
When documented evidence was posted about the investment fraud and the effect on pension fund, it like started emailed around McClatchy employees with some concern.
So this blog forced the company to come clean and make a more public disclosure about something that the HQ was embarrassed about.
Notice that they tried to blame it on Knight Ridder. They have owned Knight Ridder for years and never bothered to request a redemption. McClatchy needs to own up to their mistake and stop trying to blame others.
SacBee has responded with a story on this. The headline:
"McClatchy pension to lose $32 million in investment scheme"
Guess it's not a story until somebody else prints it. LOL!
Anon 10:38/11:22 Bingo! We have multiple winners!
Good job McClatchy Watch.
I would have loved to have been a fly on the wall at the CEO/Directors meeting while they tried to figure out how to spin this.... he, he. The pricks must have been stressed to no end.
I think more than anything the threat of taking it to the media is what prompted MNI to jump.
Still not addressed is who was in charge, are they still working and what kind of kickbacks they got for helping in the scam ?
Fitz & Jen do their usual sucking up to the chains and have posted their take on McClatchyGate Pension Scam. Here's part of their sucking up:
"McClatchy Watch takes aim at McClatchy for not disclosing this sooner. Or rather, the blog and commenters scold McClatchy for not doing more than filing with the Securities and Exchange Commission in a form 10-K in February 2009.
SEC filings and the mumbled language required for its documents are certainly frustrating but I can see why McClatchy did not want to issue a press release. For starters, it hasn't impacted the fund -- which is in constant flux..."
This story should be bumped to the top because it has generated a lot more interest than a couple of dozen production people being laid off in Miami!!! Just my humble opinion.
Anon 2:03 Great post. It appears more than a just few right wingers visit this site?
Fitz & Jen do their usual sucking up to the chains and have posted their take on McClatchyGate Pension Scam. Here's part of their sucking up:
"McClatchy Watch takes aim at McClatchy for not disclosing this sooner. Or rather, the blog and commenters scold McClatchy for not doing more than filing with the Securities and Exchange Commission in a form 10-K in February 2009.
If someone has my money and takes ten or eleven paragraphs to explain what happened it when one paragraph would do, I would be real nervous.
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