More on Union-Sponsored Investments

From EIA's (see blogroll at left) 6/12 Communique:

Chain of Kickbacks. The Wall Street Journal added a detail to the ongoing investigation of teachers' unions and their endorsed mutual fund brokers. The New York attorney general is examining the arrangement between New York State United Teachers and the ING Group. ING pays NYSUT $3 million annually for the exclusive right to market its funds to NYSUT members. A Los Angeles Times story last April revealed that these funds often have high fees and poor returns.

Now, securities regulators in New Hampshire claim ING was accepting fees of its own, from the poorly performing mutual funds. In short, the allegations are that a form of payola was going on, with the mutual funds paying ING to include them in their menu of options, and ING paying NYSUT for access to the members, to whom they then sold these underperforming funds. Everyone made a tidy profit except for teachers and support employees, who received poor returns for their investment.