Trades made a profit

Last week we saw a large amount of negative press about the bond purchasing practices of Arkansas’ state treasury. Figuring heavily in the coverage is St. Bernard Financial Services Inc. The report notes losses in certain bond transactions and links them, by omission of narrative, to St Bernard.

The press coverage is about an audit of the treasury. In the auditor’s report is a forward-looking projection of opportunity losses in the amount of $58,172. The report offers no distinction between actual losses and opportunity losses. The report describes the lost opportunities as “economic losses” without explaining that these are not actual losses of state monies.

The report states that the $58,172 in “economic losses” is attributed to bond trades conducted by three firms, including St. Bernard. The report does not summarize the amount of economic losses by firm, just a total. When we asked the auditor for a specific number by firm for the economic losses, it was revealed that St. Bernard’s trades were profitable, the losses being attributed to the other firms.

Our complaint is that the auditor fails miserably to make a distinction between opportunity losses and actual losses—of which there were none in St. Bernard’s case—and that the media is reporting this without making adequate effort to clarify the distinction. We are being vilified over an event that we are not guilty of, and we are upset about it. ROBERT KEENAN

Russellville Editor’s Note: Robert Keenan is chief executive officer of St. Bernard Financial Services Inc.