Shareholder Spotlight : Franklin Street Advisors – A Talented Player in the Game of Greed

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In the rodent-infested world of high-finance wealth management, where suits in Chapel Hill pretend to safeguard the fortunes of the elite while dipping their hands into public coffers, Franklin Street Advisors Inc. NC stands out like a sore thumb. This firm, masquerading as a prudent steward of assets, has a history riddled with allegations of dodgy dealings, exorbitant hidden fees, and piss-poor performance that screws over hardworking retirees. And now, to top it off, we’ve got confirmation they’re knee-deep in Cummins Inc., holding a hefty $11.35 million stake – that’s 34,660 shares as of their latest 13F filing. It’s just another shit stain in the Cummins ecosystem, and now another rock on the mountain of controversies already dissected on TCAP, from emissions scandals to ethical lapses that make your stomach turn. But we’re not here to rehash those; no, this is about peeling back the layers on Franklin Street itself, exposing another player that’s been festering for years.

These bastards aren’t some fly-by-night operation. Founded in the 1990s, they’ve grown into a firm managing billions, catering to high-net-worth individuals and institutions with a veneer of Southern charm. But scratch the surface, and you find a pattern of behaviour that’s anything but charming – it’s greedy, opaque, and allegedly corrupt. Acquired by BNY Mellon in 2018, you might think that brought some oversight, but the stains from their past linger like a bad hangover. We’re talking about a firm that’s been accused of playing fast and loose with public pension funds, all while raking in fees that could make a loan shark blush. And their investment in Cummins? That’s not just a portfolio pick; it’s a bet on a company whose own baggage is so heavy it needs its own freight train.

The Pay-to-Play Stench That Won’t Wash Off

Back in 2007, when the financial world was still high on its own supply before the crash hit, Forbes blew the lid off what looked suspiciously like a pay-to-play scheme involving North Carolina’s state treasurer Richard Moore and Franklin Street Partners. Here’s the grubby details: the state’s Teachers’ and State Employees’ Retirement System (TSERS) ploughed $400 million into Franklin Street’s hedge fund-of-funds. Coincidentally – or not – Moore pocketed $15,000 in campaign contributions from Franklin Street bigwigs. Allegedly, this was the classic quid pro quo, where political donations grease the wheels for lucrative public contracts. Moore denied any wrongdoing, of course, spouting the usual crap about no “culture of pay-to-play” in his office. But come on, who the hell believes that when the timing stinks to high heaven?

This wasn’t some isolated whisper; it was part of a broader scrutiny into how North Carolina’s pension investments were being doled out like favours at a backroom poker game. No charges were ever filed, but the damage was done – public trust eroded, and Franklin Street’s name was forever linked to the kind of influence peddling that makes you want to puke. In a state where teachers and civil servants rely on that pension to not die broke, this alleged cosy relationship between politicians and asset managers is nothing short of infuriating. It’s the kind of raw greed that keeps the little guy down while the connected few laugh all the way to the bank.

Opaque Fees Bleeding Pensions Dry

Fast forward to 2014, and the shit really hits the fan. A forensic investigation commissioned by the State Employees Association of North Carolina (SEANC) tore into Franklin Street’s management of TSERS assets, revealing a cesspool of undisclosed fees and lack of transparency that would make even the most jaded investor rage. Managing around $260 million for the pension in 2012-2013, Franklin Street reportedly disclosed $1.8 million in asset-based fees and $800,000 in incentives. Sounds reasonable? Bollocks. The report alleged that hidden layers – including underlying hedge fund fees estimated at 2% asset-based and 20% incentives, plus trading costs and expenses – ballooned the total to a staggering $20.1 million annually. That’s nearly ten times the reported figure, and over the years since 2002, it could have topped $200 million sucked out in secret.

The treasurer’s office allegedly hid these details behind North Carolina’s Trade Secrets Protection Act, claiming it protected “proprietary” information. Proprietary my arse – this was about covering up potential abuses like fraudulent performance claims or self-dealing. The report didn’t mince words: it accused the state of concealing massive costs that eroded returns for retirees. Forbes picked up the thread, slamming the layered fees in fund-of-funds setups like Franklin Street’s as a prime example of Wall Street bleeding public pensions dry. It’s outrageous, isn’t it? These pricks allegedly structure deals so complex that no one can follow the money trail, all while public servants’ retirements get short-changed. If that’s not a system rigged for the rich, I don’t know what is.

Underperformance That’s Bloody Criminal

You’d think for all those fat fees, Franklin Street would deliver stellar results. Think again. The same 2014 SEANC report laid bare the firm’s hedge fund-of-funds performance for TSERS: a pathetic long-term return of 1.6% against a 6% benchmark in 2010-2011. Despite this dismal showing, incentives were paid in five out of eight years from 2006 to 2013. How the fuck does that work? You underperform, but still get your bonus? It’s like rewarding a chef for burning the steak.

Critics hammered this as emblematic of TSERS’s broader failures under Treasurer Janet Cowell, where alternative investments cost the pension $6.8 billion in fees and lost opportunities during her 2009-2017 tenure. A consulting report from Hewitt EnnisKnupp even recommended ditching fund-of-funds managers like Franklin Street to slash costs and avoid over-diversification. Yet here we are, with retirees footing the bill for subpar strategies that allegedly prioritise manager profits over beneficiary returns. It’s enraging – a raw deal that exposes the gritty truth of finance: performance is optional when fees are guaranteed.

Conflicts Screaming Self-Dealing

Dig deeper, and the conflicts of interest pile up like unpaid bills. The SEANC report spotlighted how Franklin Street authorised its affiliate, Franklin Street Securities Inc., to handle trades for TSERS accounts, charging commissions well above industry norms. This allegedly added $5.2 million in undisclosed trading costs yearly, with the affiliate pocketing the spread. It’s a classic setup where the firm benefits at the client’s expense, raising red flags about self-dealing that’s as blatant as it is galling.

Franklin Street Securities, which shuttered in 2014, had its own minor brushes with regulators – a 1995 Maryland registration revocation for failing to register an agent, and a 1996 New Jersey caution plus $1,000 fine for a net capital shortfall due to a bookkeeping error. Slaps on the wrist, sure, but they hint at a lax attitude towards compliance. In the cutthroat world of finance, these aren’t just oversights; they’re symptoms of a culture that allegedly puts profits over propriety.

Tied to the Cummins Machine: Another Layer of Filth

And then there’s the Cummins connection. As confirmed in recent filings, Franklin Street Advisors holds 34,660 shares of Cummins Inc., valued at $11.35 million as of 30 June 2025 – a 7.5% increase from the prior quarter. Why does this matter? Because Cummins isn’t just any stock; it’s a behemoth with a rap sheet of controversies that’s been exhaustively covered by TCAP. Without diving into the details – suffice it to say that investing in Cummins links Franklin Street to an ecosystem plagued by allegations of environmental dodginess, alleged labour issues, and corporate sleight-of-hand. It’s not a stretch to see this as yet another example of Franklin Street chasing returns without a damn for the ethical fallout. In a world screaming for accountability, this stake feels like a middle finger to anyone who cares about clean investments.

Franklin Street might have polished its image under BNY Mellon’s wing since the 2018 acquisition, but the grit from their past clings on. No major recent scandals, sure, but the pattern is clear: a firm allegedly built on opacity, conflicts, and political cosiness, now betting big on controversial scumbags like Cummins. It’s the kind of unapologetic greed that boils the blood – a reminder that in finance, the house always wins, and the rest of us get screwed. If you’re a pensioner or investor, maybe it’s time to ask: who’s really looking out for you?

Lee Thompson – Founder, The Cummins Accountability Project

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