US - The California Public Employees' Retirement System, the largest U.S. public pension, said private investment firms paid at least $125m to placement agents for help winning contracts to manage the fund's money.
The pension fund released more than 5,000 pages of documents it sought from fund managers detailing when they hired middlemen and how much they paid. To the best of the pension's knowledge, the top-earning agent was a firm run by former board member Alfred Villalobos, who received $58.9m in the last decade, as Calpers disclosed last year.
The documents show how much Wall Street firms paid middlemen to gain access to the $206bn fund. U.S. securities regulators are already probing influence peddling at the nation's $2 trillion public pension systems, and New York Attorney General Andrew Cuomo is investigating alleged kickbacks involving that state's pension.
"In light of recent questions raised about placement agents, we are working aggressively to take measures to provide transparency, adopt thoughtful reforms, and restore trust in our system," Anne Stausboll, Calpers' chief executive officer, said in a statement from Sacramento.
A former Calpers official, William Crist, received at least 516,933 euros ($748,000) from Governance for Owners, an investment firm in London, for his services, according to one document Calpers released. Crist left Calpers in 2003.
"My value to them, I suppose, was that my friends at Calpers knew I wasn't going to sell them a bill of goods," Crist, formerly the president of Calpers' 13-member board, said in a phone interview today from Turlock, California. "To suggest that I somehow convinced them to make an investment without doing due diligence doesn't give those people much credit."
Peter Butler, a London-based Governance official listed as a contact on the disclosure form released by Calpers, wasn't reachable by phone or e-mail after business hours. No one answered the phone at Governance's New York City after business hours.
In a letter to Calpers last year, also released, Butler said he didn't view Crist as "an intermediary, or even as an agent."
Pat Macht, the retirement fund's director of external affairs, said $125m is probably "the large majority" of the fees investment managers paid to win Calpers' business, and that it likely represents the 10 biggest earners. She said her staff didn't have a total for how much all the brokers earned.
The agents represent hedge funds, real estate money managers, private-equity firms and venture-capital companies.
Calpers' board in May asked its private investment managers to detail the extent to which they use placement agents. In October, the fund said it hired a law firm to investigate after discovering how much Villalobos had earned.
Private-equity funds run by Apollo Management LP, Ares Management LLC and Aurora Capital Group paid fees to Villalobos's company, Arvco Financial Ventures, according to documents Calpers released in October. Villalobos wasn't immediately reachable at his firm in Stateline, Nevada.
The California fund in May also passed rules requiring investment firms to disclose when they hire placement agents, how much those agents are paid and the services they perform. Firms are required to repay any fees from the state, or an amount equal to what they gave the placement agents, if they fail to reveal the relationships.
In December the board decided to seek a change in state law to put placement agents under the same ethics rules as lobbyists. The proposal would ban payments that depend on the outcome of investment actions and would require firms that hire the representatives to report to the California Secretary of State.
Governor Arnold Schwarzenegger signed a bill Oct. 11 requiring more disclosure by agents seeking state and local government pension fund business and lengthening so-called revolving door prohibitions.
Public retirement funds in New York state, New York City and New Mexico have banned the use of the brokers. New Jersey, Connecticut and Florida imposed new disclosure requirements last year on fund managers who use an agent.
The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) have launched a refreshed ScamSmart campaign to warn savers about unsolicited pension communications.
Ann Harris OBE and Mike Dailly have been appointed non-executive directors at the upcoming single financial guidance body (SFGB).
Pension schemes are "placing too much focus" on a narrow section of the private debt market where competition is driving down "compelling opportunities", according to Willis Towers Watson.
Barnett Waddingham's head of business development Adrian Cooper has left the consultancy to join TPT Retirement Solutions in a newly-created role.