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New CalPERS ethics policy restricts board members' contacts

The rules, a response to allegations of past conflicts of interest, also counsel that discussions of the state pension fund's investments be confined to board meetings.

December 30, 2009|By Marc Lifsher

Reporting from Sacramento — The California Public Employees' Retirement System board, responding to allegations of past conflicts of interest, has adopted a new ethics policy to govern contacts with outside sales intermediaries and investment fund managers.

The policy, unveiled Tuesday, requires the 13 board members to refer all communications on existing or potential investments to CalPERS' professional staff. Members also are counseled not to advocate on behalf of any particular investment outside of a board meeting.

Violators could be disciplined by the board president with admonishment, censure, temporary termination of travel privileges, removal from committee chairmanships or vice chairmanships, or required attendance at ethical or fiduciary training sessions. The vice president would be charged with disciplining the board president, if needed.

"By toughening our governance policies, we're making sure that board members are held to the strictest standards," said CalPERS Board President Rob Feckner.

The new ethics policy comes as the board conducts an internal investigation into possible influence peddling by so-called placement agents hired by outside investment managers to pitch their funds to CalPERS board members and staff.

One agent, former CalPERS board member Alfred J.R. Villalobos, was paid more than $70 million by fund managers to win investment money from CalPERS over the last decade. Such placement activity in California is also the target of probes by state Atty. Gen. Jerry Brown and the U.S. Securities and Exchange Commission.

marc.lifsher@latimes.com

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