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Pension Plans Review Wilshire Deals

Iowa and Ohio join California in evaluating consulting contracts after a management shakeup and SEC probe.

March 09, 2004|Josh Friedman | Times Staff Writer

Two state pension funds said Monday that they are reviewing their consulting contracts with Santa Monica-based Wilshire Associates in the wake of a recent management shakeup at the investment advisory firm.

The moves by the $17-billion Iowa Public Employees' Retirement System and the $9-billion Ohio Police & Fire Pension Fund follow previously announced reviews by the $167-billion California Public Employees Retirement System and the $29-billion Massachusetts pension plan.

Ohio decided to put its pension consulting contract out to bid after 23-year Wilshire veteran Stephen Nesbitt left last month as head of the firm's consulting and asset management units, and two other consultants, Dennis Sugino and Kathy Barchick, quit in late February.

The shakeup started Feb. 6 when Wilshire Chairman Dennis Tito split Nesbitt's duties and named Julia Bonafede as head of consulting.

Ohio has asked Wilshire and other firms to submit bids by the end of March, said plan spokesman David Graham. Plan officials, who had a long-standing relationship with Sugino, "decided this was as good a time as any to see who else is out there," Graham said Monday.

Iowa put Wilshire on its "watch list" effective Feb. 9. Plan staff "will closely monitor the effect of these changes over the next year."

CalPERS and Massachusetts began monitoring Wilshire after it disclosed in October that the Securities and Exchange Commission was investigating a complex "hedging" strategy the firm's money management division had used involving futures contracts based on its popular Wilshire 5,000 stock market index.

The SEC has brought no action, and an agency spokesman declined to comment on the probe.

In April, CalPERS' board will review Wilshire's management changes and determine whether the moves are acceptable to them, spokeswoman Patricia Macht said. Wilshire's contract expires June 30, 2005, and CalPERS expects to request consulting bids this summer.

Massachusetts has retained Wilshire on a month-to-month basis since October, when it was poised to renew a long-term contract before news of the SEC probe broke, according to Bloomberg News.

Wilshire, whose client assets total $2.5 trillion, said it does not expect the executive shuffle to hurt its consulting business.

"Wilshire Associates in general, and our consulting division in particular, are comprised of many talented and skilled professionals who work extremely hard to support our products and services," Tito said in a statement.

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