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HRD-86-53 1 (1985-12-13)

handle is hein.gao/gaobabnvc0001 and id is 1 raw text is: 

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COMPTROLLER GENERAL OF THE UNITED STATES
              WASHINGTON D.C. 20548


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128706


The Honorable James J. Florio
Chairman, Subcommittee on Commerce,
  Transportation, and Tourism
Committee on Energy and Commerce
House of Representatives


  December 13, 1985

RESrTRIC1TED '~~
ot to be released  Outside  O.4  it
approval by the Office of Conrehour


            RELEASED


The Honorable James R. Jones
Chairman, Subcommittee on Social Security
Committee.on Ways and Means
House of Representatives

     Subject: Redemption of Railroad Retirement Account
               Investments (GAO/HRD-86-53)

     In November 1985, you asked us to/investigate Treasury's
unilateral sale of securities from theRailroad Retirement
Account. Specifically you asked us to

     --analyze the legality of Treasury's sale of securities
       without Railroad Retirement Board approval and of the
       sale of securities in an amount in excess of what was
       required to make benefit payments;

     --determine the amount of interest lost by the Railroad
       Retirement Account as a result of this action; and

     --determine how Treasury's action would be characterized
       under fiduciary standards generally applicable to
       pension plan managers.

     We found that on November 1 and 4, 1985, Treasury redeemed
almost $445 million of Railroad Retirement Account securities
without Board approval and in excess of what was needed to make
benefit payments. It is our view that these actions were not
authorized under applicable law. After the Board notified them
that these actions were of questionable legality, Treasury
officials quickly corrected the errors, pointing out that the
national debt ceiling crisis placed unusual demands on Treasury
staff and the errors were not intentional violations of the
Board's investment authority. The corrections restored all
principal and interest legally due the Railroad Retirement
Account for these redemptions.


                                                       (105225)


S o05


B-221127

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