SACRAMENTO AND LOS ANGELES — The leader of the California Public Employees' Retirement System -- the country's largest public pension fund -- on Monday ordered its staff to draft a policy requiring investment companies hired by the fund to disclose fees paid to the firms' outside marketers.
The move by the state agency, known as CalPERS, came after an investigation of alleged pension-fund improprieties in New York state expanded to focus on two board members of a pension fund for Los Angeles city police officers and firefighters. One member is a former president of CalPERS.
Rob Feckner, the current board president at CalPERS, which manages $176.7 billion in retirement money for state employees, said he was pressing for more disclosure because he wanted to ensure that the Sacramento-based agency operated with "appropriate standards of transparency, accountability and integrity in our investment process."
Meanwhile, an agency that invests retirement assets for civilian Los Angeles city employees is also taking steps to highlight the role of so-called placement agents, intermediaries who help market investments to the agencies overseeing pension funds.
The board of the Los Angeles City Employees' Retirement System, or LACERS, is scheduled to vote today on requiring an investment firm seeking business from the pension fund to reveal the names of its placement agents and to state whether they would receive fees if the firm obtained a contract with LACERS.
Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said the moves to bolster disclosure were advisable in light of the widening investigations of placement agents.
"Given what's happened, anything you can do to shore up public confidence in the integrity of the fund makes sense," he said.
The policy shifts by the city and state agencies mirror actions in recent years by two other California and Los Angeles pension funds.
In New York, where the placement agent scandal surfaced, city and state pension funds are going further, taking steps to ban outright the involvement of middlemen in investment decisions. New York Atty. Gen. Andrew Cuomo, who has been investigating investment marketers in conjunction with the Securities and Exchange Commission, called those actions "a long-overdue reform."
