Court dismisses lawsuit against South Carolina treasurer

South Carolina’s Supreme Court dismissed a lawsuit as ‘moot’ after the state’s treasurer funded an $11.7m capital call to Warburg Pincus Fund XI.

The Supreme Court of South Carolina has dismissed a lawsuit filed by the South Carolina Retirement System Investment Commission against state treasurer Curtis Loftis. 

The $26.6 billion retirement system’s investment commission filed the lawsuit last week against Loftis for refusing to sign an $11.7 million capital call to Warburg Pincus Fund XI. Loftis and the other members of the investment commission voted to approve a commitment of up to $50 million to Warburg Pincus in November, but the treasurer refused to sign the capital call until the investment commission produced additional legal documentation related to the terms of the investment, including fees and the length of the contract. After receiving the proper documentation, Loftis approved the commitment Monday, one day before the system would have defaulted on its approved private equity commitment.

“Standardized forms, policies and procedures are common banking practices across South Carolina and the public’s treasury should be no different,” Loftis said in a statement. “The Retirement System should never pay more fees than were approved.”

On Tuesday, both Loftis and the investment commission appeared in court to deliver oral arguments regarding future commitments from the retirement system.  

“We’re looking for clarity on rules,” chief operating officer of the retirement system’s investment commission Darry Oliver told Private Equity International on Wednesday.

The investment commission asked the court to “consider injunctive relief to direct [Loftis] to follow Commission directives to fund future investments” according to legal documents. The court dismissed the issue, saying in its decision: “A case is moot where a judgment rendered by the Court will have no practical legal effect upon an existing controversy because an intervening event renders any grant of effectual relief impossible for the Court.”

The dispute between Loftis and the investment commission is the most recent in a long feud between the treasurer and his fellow commissioners. In February, the commission voted to censure the treasurer for a series of critical public statements he made about the commission’s investment practices dating back to 2009. 

Among Loftis’ criticisms of the investment commission are claims that the retirement fund performs poorly relative to other state pensions, pays too much in fees and has a portfolio that is too complex. 

South Carolina generated a return of 12.4 percent during 2012, nearly five percentage points above its benchmark return. Loftis maintains that the retirement system’s performance falls below an average return of 13.4 percent for large state pension plans.