Reply #15: let's not forget the questionable investments made with the calpers fund...

[amborin]

http://dealbook.nytimes.com/2009/11/25/calpers-investigates-hedge-fund-oversight/


CalPERS probes oversight of two outside hedge fund advisors
The firms were working without required contracts. The official who oversees the pension fund's $5.8-billion hedge fund portfolio reportedly was disciplined.
November 25, 2009|By Evan Halper and Marc Lifsher
Reporting from Sacramento — California's huge public employee pension fund, under scrutiny after suffering billions of dollars in investment losses, is now investigating its own oversight of hedge fund deals.

As part of the inquiry, California Public Employees' Retirement System officials found that $36 million was paid to two hedge fund advisors who had been working without contracts. The official who oversees the $5.8-billion hedge fund portfolio was temporarily placed on leave and fined, according to people briefed on the matter.


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A CalPERS spokesman declined to discuss the disciplinary action but acknowledged that CalPERS was investigating its dealings with two outside advisors, hedge fund management firm Paamco and a unit of Swiss banking giant UBS.

Both firms have been working with CalPERS since 2003, but their contracts lapsed two years ago. CalPERS continued to do millions of dollars of business with them regardless, which financial experts say exposed the system to legal and financial risk.

"We recently discovered that certain CalPERS controls and procedures were not followed in the last two years," fund spokesman Brad Pacheco said in a statement. "We have taken immediate steps to correct the issues and are working to strengthen our procedures to ensure that all policies are followed correctly and proper controls are in place.

"While we can't talk about specific personnel, we are reviewing the actions taken by our staff," he said.

The disclosure is the latest in a series of incidents tarnishing the reputation of CalPERS, the nation's largest public employees' retirement plan with an investment portfolio of $200 billion. The fund's once-sterling reputation has been rocked by huge investment losses and by revelations of rich fees earned by middlemen who help Wall Street firms win investment capital from CalPERS.

The official placed on leave was Kurt Silberstein, who oversees the CalPERS hedge fund program in his job as senior portfolio manager for global equity, according to people briefed by CalPERS who were not authorized to speak publicly and spoke on the condition they not be named.

These people said that Silberstein was forced to forfeit 10% of his $222,249 annual salary for six months and was placed briefly on administrative leave while the matter was investigated.