CalPERS board member settles contribution dispute

A board member of the California Public Employees’ Retirement System has agreed to pay $12,500 to settle a campaign contribution dispute related to placement agents, an official with California’s political watchdog agency announced last week.

Roman Porter, executive director of the California Fair Political Practices Commission, said his agency has tentatively agreed to accept the payment by Charles Valdes, whose 2005 reelection campaign to the board of the largest public pension fund nationwide, had exceeded political contribution limits.

The matter may be fully settled on Dec. 10 when the agency’s commissioners meet.

“He has agreed to pay that amount and we agreed to accept, pending approval of the commission,” Porter said.

Valdes was not immediately available for comment on the campaign contributions at issue.

They included backing by associates of former CalPERS board member Alfred Villalobos, who has come under scrutiny for operating placement agency firms that have reaped more than $50 million in fees from investment companies that have helped sell investments at the pension fund.

Valdes has served on the CalPERS board since the mid-1980s. He was chairman of the fund’s investment committee at the time of the contributions from associates of Villalobos, who served on the CalPERS board in the 1990s.

Villalobos has also raised eyebrows for hiring former CalPERS CEO Fred Buenrostro, who left the state pension fund last year, and has helped to fuel a controversy at CalPERS this year over placement agents.

In response, the fund’s board has supported new rules and legislation to better police the middlemen.

CalPERS President Rob Feckner is seeking to win support for additional measures to require the agents to be subject to rules for lobbyists.

CalPERS is also surveying its external investment managers to learn to what extent they use placement agents and how much the middlemen earn in fees.

Some have called for a complete ban on placement agents, subjects of a lengthy pay-to-play probe involving New York State Common Retirement Fund by New York Attorney General Andrew Cuomo.

In May, Cuomo won a guilty plea to securities fraud from a former associate of prominent Los Angeles placement agent firm Wetherly Capital Group that raised interest in deals it had helped sell at CalPERS.

At the time, Cuomo said he was on the trail of a wide-ranging scandal: “This investigation has uncovered a matrix of corruption—which grows more expansive and interconnected by the day.”

Former CalPERS board member Sean Harrigan became a casualty of the westward drift of Cuomo’s probe, and the U.S. Securities and Exchange Commission also delving into the business of placement agents.

In May, Harrigan resigned as president of the board of the Los Angeles Fire and Police Pensions fund, citing the SEC looking into his having been a consultant for Wetherly, which was founded by Dan Weinstein, a prominent figure in Democratic politics in Los Angeles.

A spokesman for Wetherly told Reuters the firm is cooperating with authorities, including the office of California Attorney General Jerry Brown, a gubernatorial candidate. —Jim Christie, Reuters