California Public Employees’ Retirement System chief investment officer Yu “Ben” Meng has resigned, according to a press release, after less than two years at the helm of the US’s largest public pension.
“I deeply believe in the CalPERS mission of serving those who serve California,” Meng said in a statement. “I’m proud of the work we did to change the portfolio, build a skilled Investment Office, and set CalPERS on a strong path to achieve our return target. But at this time, it’s important for me to focus on my health and on my family and move on to the next chapter in my life.”
Deputy CIO Dan Bienvenue will take over on an interim basis while the system launches a search for a permanent successor.
It is not clear why Meng resigned. CalPERS had no comment beyond the press release. His resignation, effective immediately, comes after the financial blog Naked Capitalism revealed he owned stocks in several publicly-traded PE firms.
According to a disclosure form posted on the CalPERS website in June, Meng owns stock in Ares Management, Carlyle Group and Blackstone. The form does not report the exact amount of Meng’s holdings, but says he owns between $10,001 and $100,000 of stock in each firm, for a minimum total of $30,003 and a maximum of $300,000.
In March, CalPERS committed $1 billion to Blackstone’s Core Equity Partners II. Naked Capitalism editor Susan Webber, who writes under the pseudonym Yves Smith, wrote that she had made a public records request as to whether Meng recused himself from the Blackstone commitment.
“Since recusals have to be documented to have legal force, failure of or refusal by CalPERS to provide evidence that Meng had recused himself would be compelling evidence that Meng had failed to do so,” Webber wrote in a Sunday post revealing the stock holdings.
CalPERS did not respond to questions from Buyouts earlier this week about whether Meng recused himself from the commitment or about his stock holdings in general.
Later on Thursday, California State Controller Betty Yee, also an ex-officio member of the board, gave Buyouts a statement confirming that Meng had a “lapse in both judgment and adherence to standard conflict-of-interest policies.”
Her office declined to confirm the conflict of interest was in fact the Blackstone commitment, though. Her statement was first reported by Bloomberg.
Yee has called for an emergency meeting of the CalPERS board to “review these policies, the CEO’s oversight and implementation of these policies, and any additional safeguards necessary to ensure this does not happen again.”
In a statement, Board president Henry Jones said the pension “has known about questions” regarding Meng’s disclosures.
“These are private personnel matters and have already been addressed according to our internal compliance protocols,” Jones said.
Jones told Buyouts a board meeting had been scheduled for August 17 to discuss “personnel matters.” According to an agenda posted on the CalPERS website, it will be almost entirely in closed session.
In addition to his stock holdings, Meng also received income from a “teaching contract” at “Schwarzman College at Tsinghua University” in Beijing, according to the financial disclosure. This school is part of the Schwarzman Scholars program, founded by Blackstone founder Stephen A. Schwarzman, who personally donated $100 million to the program, according to its website.
According to Meng’s filing, he was paid between $10,001 and $100,000 for this job. According to the school’s website, he gave a lecture there in April 2018, before he took the CalPERS CIO job. It was unclear if his association with the school went any further than that. Tsinghua University did not respond to a request for clarification.
Meng recently announced a major leverage-backed push into private credit and private equity, as Buyouts reported, which has been controversial with some stakeholders, drawing criticism from at least one city manager.
The pension is also pushing a bill in the state legislature to decrease the amount of disclosure required for private loans, as Buyouts reported.
Action Item: read Ben Meng’s Statement of Economic Interests form here.
Update: this story has been updated to add that CalPERS had no comment on Meng’s resignation beyond its press release and to add Betty Yee and Henry Jones’s statements.