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State begins inquiry into county investments

Copyright © 2013 Albuquerque Journal

Investigators for the state Securities Division are taking a look at Bernalillo County’s investments, according to the county.

Some of the county’s top executives and commissioners have been interviewed, and the state also has requested information on county investment policies and its portfolio, county spokeswoman Tia Bland said Wednesday.

The state inquiry comes as the County Commission and County Treasurer Manny Ortiz are at odds over how the county is investing its tax revenue.


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Commissioners and top county executives say too much of the county’s cash is tied up in long-term investments and unavailable to pay daily bills. The county, for example, lost about $758,000 in recent months when Ortiz sold bonds at a loss to cover expenses.

Ortiz maintains he’s used his authority to invest wisely and generate millions in revenue for the county.

The state Securities Division regulates investment brokers and advisers. S.U. Mahesh, a spokesman for the division, confirmed Wednesday the agency is “conducting an inquiry in Bernalillo County.”

But, he said, “We can’t comment on any ongoing investigation as matter of policy to protect the integrity of the inquiry process.”

County Commissioner Wayne Johnson said Wednesday he was interviewed by state investigators.

“It’s unusual for a portfolio of almost $300 million to be completely turned over in 18 months,” Johnson said. “They seemed interested in the number of trades that were made and investments that were turned.”

Johnson said he, too, is concerned about all the investment turnover, but he said it’s not clear the activity was improper.

The Journal was unable to reach Ortiz on Wednesday. He has refused to attend commission meetings this month to discuss potential changes to the county’s investment policy.

Instead, Ortiz has sent letters to the commission outlining his position.


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He said he is using his legal authority to “prudently deposit and invest county funds” and will continue to do so. The county has realized $3.5 million in investment income this year, Ortiz said.

Ortiz took office Jan. 1. Before that, he served as the county treasurer’s investment officer.

Analysts hired by the County Commission have raised questions about the county’s investment portfolio.

One firm that reviewed county investments, Jeffrey Slocum & Associates Inc., said the county faces “significant interest rate risk.” That means some investments would see their value drop if interest rates go up.

Another adviser, RBC Global Asset Management, said the county’s portfolio had a purchase cost of $256 million on Sept. 13 but a market price of $234 million three days later. That means the county would lose about $22 million if it sold the entire portfolio, according to an analysis prepared by RBC last month.

The Slocum firm noted that the portfolio had “experienced over 100 percent turnover since May 2012.”

Bland, the county spokeswoman, said that means “all investments within the portfolio as of September 2013” had been purchased since May 2012.

“All past purchased long-term investments were called or sold and replaced with newer long-term investments resulting in 100 percent turnover since May 2012,” she said in a written statement.

Ortiz, in letters to the county, has said he has the freedom to select the best investments for the county, within policies approved by the commission. He said he has been diversifying the portfolio and will work with the commission to maximize return on investments, minimize risk and keep enough money easily accessible to pay bills.

Bland said County Manager Tom Zdunek, Deputy County Manager Teresa Byrd and “commissioners” had been interviewed by the state.

The Securities Division also requested information on the county’s investment portfolio, current investment policy and any suggested changes to the policy.