Hedge Fund CEO Dave McCormick Faces Scrutiny Over Mismanagement of Police and Firefighter Pensions

Photo byDavid McCormick for Senate

PENNSYLVANIA — David McCormick, a Connecticut hedge fund CEO and Pennsylvania U.S. Senate candidate, is under fire for his handling of pension funds for police officers and firefighters during his tenure at Bridgewater Associates. According to a recent report by American Journal News, McCormick’s management of these investments led to higher retirement costs and prompted over 400 police officers to resign.

Mismanaged Investments Led to Higher Costs and Resignations

From 2007 to 2017, Bridgewater managed up to $133 million for the Dallas Police and Fire Pension System (DPFPS), representing 3.4% to 4.2% of the pension fund’s total assets. Despite collecting over $17 million in management fees, Bridgewater’s investment strategy involved high-risk assets that contributed to a financial crisis for DPFPS in 2015. The crisis forced the Texas state legislature to pass a bill cutting pension benefits, eliminating cost-of-living increases, raising the retirement age, and increasing the contribution requirements for police and firefighters.

The resulting changes led to a mass resignation of over 400 police officers in 2016, highlighting the detrimental impact of Bridgewater’s management on the pension fund. In response, a new governing board was appointed in 2018 to restore the fund’s solvency, and one of their first actions was to liquidate Bridgewater’s holdings.

Similar Issues Reported with Los Angeles Fire and Police Pensions

Bridgewater’s mismanagement extended beyond Texas. The Los Angeles Fire and Police Pensions (LAFPP) paid the firm over $30 million in fees between 2007 and 2022, only to see underperformance in 2017, 2019, and 2020. LAFPP terminated its relationship with Bridgewater in 2021 due to the disappointing returns, marking another instance where McCormick’s leadership at Bridgewater failed to meet expectations for critical pension funds.

McCormick’s Response and Political Implications

Despite the growing scrutiny, McCormick has not publicly addressed the specifics of these reports. In a 2023 interview with the American Enterprise Institute, McCormick stated, “I was the CEO, so whatever we did I’m responsible for,” acknowledging his role in the decisions made under his leadership. However, his campaign has yet to respond to the recent allegations from American Journal News, leaving many questions unanswered as he seeks public office.

As McCormick campaigns for the U.S. Senate, these revelations are likely to be a focal point for critics who argue that his business decisions demonstrate a prioritization of profits over the well-being of public servants like police officers and firefighters. The implications of his past management of pension funds may pose significant challenges to his political ambitions, as voters weigh the impacts of his leadership on those who serve their communities.

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