By Kalea Hall and Nora Eckert
April 30 (Reuters) - A federally appointed monitor overseeing the United Auto Workers found “multiple points of breakdown” in a delayed investment of union funds that could have cost the labor group millions in unrealized stock gains.
Reuters first reported last June that the union’s leadership was in turmoil over an alleged investment blunder that officials said at the time cost the UAW about $80 million in potential gains from its financial portfolio.
Investment money
was liquidated in 2023 to fund the UAW’s strike against the three Detroit automakers, but the funds were not reinvested in accordance with the union’s investment policy for more than a year after the six-week strike, Reuters reported, citing sources and documents.
A report released Thursday by the union’s federal monitor, attorney Neil Barofsky, “uncovered significant dysfunction, supervisory shortcomings, communication failures, and governance weaknesses that contributed to the Union’s investments being out of alignment.”
Barofsky found “no evidence” of misconduct by Secretary-Treasurer Margaret Mock, but his investigation concluded there were “significant governance and communication failures” including in her office.
The report also said the UAW’s policies “created a significant lack of clarity about roles and responsibilities” over its investments and that some relevant decision makers lacked experience to manage the union’s investment portfolio. It added that the Secretary-Treasurer’s office did not effectively notify UAW leadership about investments not being in compliance.
In a statement, the UAW said it strongly disagreed with aspects of the report, without citing specifics. The union said it had been in compliance with its investment policy for almost a year, and would implement the monitor’s recommendations to enhance its governance and investment-management processes.
Neither UAW President Shawn Fain nor Mock immediately responded to requests for comment.
MONITOR CALLS $80 MILLION FIGURE 'EXAGGERATED'
The unrealized investment gain of about $80 million was based on internal UAW calculations of what the union would have earned had the money been invested in the stock market and other assets in accordance with the union's policy during that time, Reuters reported last June. The UAW declined to comment on the investment concerns at that time.
The monitor’s report said it did not attempt to quantify any forgone investment gains, though it concluded that the union’s calculation was “based on deeply flawed and inaccurate assumptions that significantly exaggerated any loss amount.”
For example, he wrote that the union calculated the potential loss using specific target allocations in equities, fixed income and alternative investments, instead of allowing for the policy’s stated ranges, which could have changed the $80 million figure.
Union staff used the 30% equity policy target to calculate the $80 million figure, whereas the policy allows for equity investments to make up between 22% and 38% of its portfolio, the report said.
Barofsky was appointed as part of a 2020 settlement between the UAW and the U.S. Department of Justice to resolve a union corruption scandal.
In its story last June, Reuters reported the UAW’s board voted to liquidate about $340 million in investments in August 2023 to pay workers on the picket lines and other strike costs. The vote stipulated that the money would be reinvested after the strike ended, but it did not specify how quickly.
Almost none of the portfolio was invested in stocks in the year after the strike, Reuters reported in its story last June. Reuters was unable to determine why the stock investment was not made.
In its report posted Thursday, the monitor cited an email confirming the details of that board action, and stated that the entire board voted in favor of the liquidation.
REPORT CITES 'RETALIATORY ACTIONS' BY FAIN
The monitor’s report notes the August 2023 board vote did not specify a plan or timeline for the reinvestment of the funds, and union officers did not understand their responsibilities with investments.
The monitor said the union returned to compliance with its policy by the end of June 2025, with a 22% equity allocation.
The report also discusses simmering tensions between Fain and Mock. It says Fain’s office sought to blame the delayed investment of the strike funds on Mock, but that Fain’s actions amounted to “retaliatory actions” against Mock.
The monitor recommended new policies to clarify roles and responsibilities with its investments and yearly financial-management training for its investment committee and board.
(Reporting by Kalea Hall and Nora Eckert in Detroit; Editing by Mike Colias and Kate Mayberry)
