The $200 billion state pension fund said in a statement that its probe centers on payments of more than $50 million that outside managers made over a five-year period to
CalPERS said it has notified the U.S. Securities and Exchange Commission and California’s top law enforcement officer of its probe, adding that it will work with both as needed.
Spokesman Scott Gerber said California Democratic Attorney General Jerry Brown is pursuing his own review of middlemen used by investment managers seeking public pension contracts and is open to working with CalPERS, the SEC and others.
At issue for CalPERS is the role Villalobos’ firm played as a placement agent for investment institutions seeking the fund’s business. Villalobos could not be reached for comment.
The move by CalPERS followed news that Saul Meyer, founding partner of placement agent
“The placement agent industry has been a focus of state authorities and the SEC over the last year, and we believe it prudent to conduct a full review of the matters related to these recent disclosures to us,” CalPERS Chief Executive Anne Stausboll said in a statement.
CalPERS spokeswoman Pat Macht said its managers reported fees to ARVCO for the seven funds managed by buyout firm
CalPERS this year also backed a state bill, which Republican Gov. Arnold Schwarzenegger has signed into law, to increase disclosure of payments to placement agents tied to its investments and those at the California State Teachers’ Retirement System. The bill also bars former CalPERS and CalSTRS officials from soliciting business at the funds for two years after leaving them.
“Ultimately we’re trying to develop a database … and to confirm that at the end of the day that CalPERS was not victimized by bearing these fees,” Macht said.
Villalobos is the second former CalPERS board member to be swept up in reviews of placement agents this year. In May, former board member Sean Harrigan resigned as president of the board of the
Harrigan had been a consultant to a Los Angeles placement agent firm referenced in New York’s indictment of Henry Morris, a onetime advisor to former New York Comptroller Alan Hevesi. Morris, whose lawyer says he is innocent, is accused of taking kickbacks to help firms win business with New York State Common. —Reuters