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Sen. Mark Herring is asking why the state retirement system bought into Star Scientific.
Friday, August 2, 2013
The Democratic candidate for attorney general is calling on the state’s watchdog agency to investigate the circumstances surrounding the Virginia Retirement System’s investment in Star Scientific stock last year.
“The fact that our state’s pension fund would decide to invest in Star Scientific, a company that has suffered tens of millions of dollars in losses over the past decade, raises the possibility of serious flaws in the processes by which investment professionals within the Virginia Retirement System choose investments on behalf of our state employees,” state Sen. Mark R. Herring, D-Loudoun writes in a letter to Del. John O’Bannon, R-Henrico and Sen. John Watkins, R-Powhatan.
They are chairman and vice chairman of the Joint Legislative Audit and Review Commission.
“I ask that you initiate a review...to determine who, if anyone, communicated directly or indirectly, wtih VRS about this stock, company, or Mr. Williams,” he asks, referring to Star Scientific CEO Jonnie Williams Sr. JLARC has legislative oversight of the Virginia Retirement System.
Herring is the Democratic candidate for attorney general this year. He is running against Sen. Mark Obenshain, R-Harrisonburg.
Last month, the Richmond Times-Dispatch reported that VRS bought, and subsequently sold, 72,000 shares of stock in the troubled Henrico-based company during a three-month period between August and November, 2012, ultimately losing $87,000.
VRS officials said the purchase was suggested by a computer program designed to spot under-valued stocks and then executed by a team of investment professionals in the VRS office.
They said the leader of the team was questioned over the decision to buy the stock and said he had no contact with the governor’s office regarding the transaction.
The VRS manages a $58 billion investment portfolio of current and former state and local government employee pensions.
Still, lawmakers and others have questioned the investment in the struggling former tobacco company — which has lost millions of dollars over the last 10 years and is the subject of a federal securities investigation.
Williams is also at the center of at least two investigations into Gov. Bob McDonnell over the gifts he and the first family received from Williams. Investigators have said they are aware of the VRS investment in Star.
Watkins has previously indicated he was making inquiries to determine the nature of the Star transaction for VRS.
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