Following Questions Over Blurred Roles, SDCERA's Acting CIO Departs

(April 21, 2011) — The acting chief investment officer of the San Diego County Employees Retirement Association (SDCERA), Lisa Needle, has resigned to work at Albourne Partners Ltd, a London-based alternative-investment consultancy, effective May 13.

Needle’s move comes slightly more than three months after a string of internal emails indicated questions and concerns about her role as CIO at SDCERA, which has faced issues over conflicts of interest when it hired Lee Partridge to serve as the fund’s portfolio strategist. At first, Partridge declined the offer because county rules prohibited employees from earning a salary of more than $301,000 a year. Eventually, the board hired Partridge as an outside contractor to supplement the fund’s investment expertise with a contract worth up to $4.5 million and stipulations that he would be unable to direct staff.

In early March, emails obtained under the California Public Records Act showed that having both an internal CIO and a contracted portfolio strategist at the the nearly $8 billion public pension scheme raised questions about their independent roles and how they should cooperate. “If I’m not, or the CIO isn’t, managing the investments on a daily basis, then who is?” wrote Needle in an email on January 11 to Brian White, the fund’s Chief Executive Officer. “Must be the Portfolio Strategist, since it cannot be anyone else on staff.”

Needle noted that the revised description of the scheme’s chief investment officer role from managing the day-to-day investments to managing the day-to-day investment staff has “strong implications” regarding the responsibilities of the position. Needle explained to White that therefore Partridge should assume complete ownership of the fund on a daily basis. The problem, she indicated, was the fact that her role allowed her to only interact with Partridge and his team four days per month. “It would be useful to have that clearly articulated to all parties involved so that responsibility for the fund can be accepted by the appropriate person,” she wrote.

Yet, despite the controversy that has arisen at SDCERA in recent months, Needle says the reason for her departure stems from her desire to pursue other challenges. “Although it has been a privilege to have served the organization and its members for more than 10 years, it is the appropriate time in my career to pursue other avenues and challenges,” Needle states. “I am proud of the success the fund has achieved during my time with SDCERA and have confidence it will have continued success into the future,” she says, referring to SDCERA’s growth from about $3.8 billion to over $8 billion during her time at the fund.

“Lisa has been a great investor and has been a driving force behind SDCERA’s innovative and successful investment approach,” Partridge tells aiCIO. “Albourne has been on the cutting edge of alternative investments for over a decade. This will be a great combination.”

Clarifying Needle’s new position, SDCERA Board of Retirement Chairman Douglas Role states in a release: “Lisa’s work for Albourne will be for other clients, not for SDCERA, in compliance with the law that requires a two year waiting period before a former pension employee may appear before the board or communicate with the retirement system. Additionally, during negotiations, she conducted no SDCERA business with Albourne.”

Click here to see an aiCIO video of SDCERA’s Lee Partridge explaining opportunities and conflicts of the increasingly popular outsourcing model.