Investigations Deepen at CalPERS | Chief Investment Officer

The SEC has asked the nation’s largest public pension fund whether two former officials had any contact with an alternative investment manager convicted of paying officials for access to funds.

(December 10, 2009) – The California Public Employees’ Retirement System (CalPERS) continues to fall under close scrutiny from federal officials over potential links between former officials and a corrupt financier.

The Securities and Exchange Commission (SEC) has asked convicted graft-giver and head of private equity firm Markstone Capital Group Elliott Broidy whether he had any contact with former CalPERS CEO Fred Buenrostro and former board member and current placement agent Alfred Villalobos, according to The Sacramento Bee. Broidy has pled guilty to paying New York state officials upward of $1 million in return for capital allocations from the funds.

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The SEC’s investigation is a direct result of a probe started to investigate corruption in the New York State Common Retirement Fund. Taking aim at placement agents and other middlemen, the regulator has brought charges against multiple players in the Empire State [to see ai5000’s coverage of the placement agent scandal, click here ]. However, the probe has not stopped in New York: New Mexico, Illinois, and California funds have all been drawn into the probe that is looking to see whether pension officials improperly received kickbacks and favors from placement agents, alternative investment managers, and political contributors.

CalPERS itself already is investigating former officials who may have benefited from contact with placement agents and other groups that do business with the massive state retirement fund. Villalobos, for one, has earned upward of $60 million by acting as a placement agent since leaving the fund’s board in 1995. While both men admit to meeting Broidy, both deny that anything untoward occurred.

To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>

(December 10, 2009) – Liabilities accruing for defined benefit pension plans are inhibiting merger activity in the United Kingdom, a new study shows.

According to a CBI/Watson Wyatt survey, 33% of companies see their pension liabilities as stopping corporate restructurings and mergers because, due to U.K. law, companies winding up a scheme must fund it fully. This figure is double what it was two years ago, before the global financial collapse reduced pension fund levels and sponsors’ abilities to top them up. The outlook was equally as bleak for another parts of the corporate world: Fifty-six percent of respondents claimed that pension costs hurt profits.

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The study also shows that, although many are considering closing or altering existing plans, more than a third polled claimed that they have plans to close or alter existing plans.

The U.K. will, in 2012, introduce new personal accounts similar to the American 401(k), which would require only a 3% contribution from employers. However, at least as of now, 75% of those surveyed said that they would still use auto-enrollment in company-sponsored pension plans, as opposed to the government’s solution.

CBI/Watson Wyatt surveyed 194 companies with a combined total of more than one million employees.

To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>