CalPERS Tries Ineffective Mudslinging in Response to Our Ongoing Private Equity Investigation

I hope readers don’t think I’m turning Naked Capitalism into “all CalPERS, all the time”. However, it was only yesterday that I learned of a press release that the California Public Employees’ Retirement Systems issued last Friday about our suit against the giant public pension fund. And as you’ll see, this document begged for a response.

By way of background, last September, we filed a Public Records Act request (California’s version of FOIA) for private equity return data that CalPERS had not previously published. While CalPERS has published quarterly data on a fund-by-fund basis since settling an earlier Public Records Act case in 2002, three researchers at Oxford published a paper in 2013 which discussed specifically and in detail how they were the first to obtain the entire history of CalPERS’ investing in private equity, back to its first participation in the strategy in 1990. They stated that they got previously non-public data back to 1990. In addition, the paper indicated that the scholars obtained cash flow information on the timing of capital contributions (when the private equity funds asked them to send money) and distributions (when the private equity funds returned money, most often via the sale of companies). For more background, see this post.

Note that in California, once an agency has given out a record to one member of the public, it has forever waived the right to claim any exemption from disclosing the records to others. So it seemed that our PRA request should be straightforward. Silly us.

You can find the blow-by-blow of CalPERS’ inconsistent actions and disconnect between its statements (that it was cooperating) and its actions (delivering records that fell well short of what we’d asked for) here and here.

The latest development is their press release, which is revealing, and not at all in a good way. Let’s start with the fact that it is highly unusual for a large organization to respond to a lone critic, particularly an entity like CalPERS, which does not face the pressure of adverse stock price movements or analyst follow-through. In other words, this is a remarkably defensive response to a small-potatoes lawsuit.

Second is that if the point is to reach the public, this press release appears to be ineffective. I now have a number of former CalPERS employees who are interested in the issues I’ve raised and are part of various relevant social networking groups as correspondents. I heard about the press release only today from one particularly vigilant CalPERS watcher. So from what I can tell, CalPERS’ missive is not making the rounds.

But the big surprise is how inept it is and how many falsehoods it contains. This is looks to be a classic case of an organization trying to believe its own PR, except in this case the PR is pretty poor.

Let’s start with the top, where it tries taking the tone of a mildly vexed adult lecturing to children (implicitly yours truly and CalPERS beneficiaries):

Chris Witkowsky with PEHub is right when he mentions in his latest article that the entire issue with blogger Susan Webber regarding her request of CalPERS Private Equity data could have been resolved without bringing in the lawyers. CalPERS was in the process of gathering the data she wanted, and working in good faith, when she hired her own lawyer and filed suit against CalPERS, escalating the situation.

In fact, all you need to do is look at a timeline to see what a remarkable misrepresentation this is.

1. I filed my request September 29 which CalPERS claims they never got (!) and recreated in mid-October.

On December 18, they said they would be delivering the records in ten days. When nothing arrived, I kept calling and e-mailing as instructed, but got no reply. Since when is going silent for weeks “cooperating”?

I got my attorney, Timothy Y. Fong, to contact them at the end of January and only then did we find out they had sent a letter dated January 27 that they had no responsive records and the matter was closed.

Now understand, that early on, they and not we set the pattern of being uncooperative and responding to our inquiries only when prodded by my attorney.

2. Fong wrote a letter strenuously objecting to their decision. CalPERS reopened the matter. Now pray tell, dear readers, do you seriously think that if I had written a letter in my own name making the same strenuous objections that they would have relented?

3. CalPERS asked what we wanted and we sent a letter detailing what the academics had gotten, and also askied that they also bring the records up to date. In other words, since they told us they wanted to cooperate, we tacked on an additional request that we felt we could obtain via a separate PRA request (in the spirit of getting this done and us out of their hair).

On February 12 CalPERS a letter that cherry picked our request and a CD which they said were the responsive records and again said the matter was closed. The CD contained ONLY 2012-2013 records, which were extras we had asked for (this did, by the way, include detailed cash flow information of the sort we had hoped to receive for earlier time periods). We still had not gotten any of the records the academics had gotten. And mind you, this is old data which could not possibly make anyone now at CalPERS look bad. Why all the resistance?

4. The only appeals process to a denial of a request (aside from having a lawyer write a nastygram, which was you can see we tried and had failed) is suing, so that’s what we did.

5. After we sued, CalPERS again told us they wanted to cooperate. They also reversed themselves. Before, they insisted they had not given any records to the academics (which amounts to calling them frauds). Now they said they had interviewed a former manager and knew what records had been sent. They claimed the document was a 226 page PDF. (Notice that while CalPERS believes that to be what was provided to the academics, remember that CalPERS has also implemented a very aggressive e-mail deletion policy. Based on their communication with us, our understanding is that they identified or more likely recompiled this record based on the 4.5 year old memories of a former employee; they’ve not mentioned any other basis for believing that this document is indeed what was given to the academics. Moreover, if the ex-employee gave the academics even more than he perhaps should have, he’d have an incentive to be sparing with the truth).

As we told them, that was not an acceptable record. The law stipulates that records must be sent in the form they were kept. CalPERS clearly does not keep records in PDF form; they would generate a PDF from underlying data in a database. CalPERS also sent some Excel files, which are proper responses, but as we’ve written, the information in them falls far short of what they were required to provide.

So in short, CalPERS “cooperated” each time only as a result of having my lawyer turn up the heat.

Let’s briefly review the rest of the issues.

CalPERS says that the provided us with “the” PDF, which they also published on the site. First, as we’ve discussed, that is not a proper response under the PRA. We also harbor doubts as to whether that is the same document the Oxford academics received. CalPERS complains that we’ve lodged additional PRAs, but fail to mention that some are in the interest in verifying the accuracy of CalPERS’ claims, given their history of false statements to us and incomplete investigation. Moreover, CalPERS also omits that some of the PRAs are on entirely new matters (readers may recall our discussion of a PRA response from Los Angeles public pension fund LACERA; CalPERS isn’t the only place where we are looking for information).

They also tried to rebut some remarks we made about errors in the data that they sent, that three funds that were not PE funds were included in files that were meant to be exclusive to PE. CalPERS waves that off and says that they are in their PE database on their website, so they, not we, are right. This is both untrue and misleading. One of the funds at issue was from the early 1990s, and hence not among the 2002 and later funds. The fact that the other two, which are “realty” funds, are listed, does not prove that their inclusion in proper. The industry database Preqin does not include those two funds in its comprehensive list of all CalPERS private equity funds, nor does it include the early 1990s fund by Relational, an activist investor in liquid stocks (hence a hedge fund, not a private equity fund). This shows that an outside expert agrees with our contention that these three funds are misclassified and raises doubts about CalPERS’ recordkeeping.

CalPERS refers to another bone of contention, as to whether the academics received additional information, as in actual cash flow details (precisely what funds were paid out and received). Right now, analysts can extrapolate quarterly changes, but that is approximate. We have repeatedly pointed out where in the Oxford paper the academics say they received more. Yet despite pointing to the actual language of the paper, with page references, CalPERS has seemed unwilling to take it on face value.

The next paragraph is a PR 101 bomb:

Next, and perhaps most suspect, is that in none of her blogging since the time of the initial request has she made much actual use of the data. Instead, she’s used the situation as a reason to obsess over CalPERS in her sensational, erroneous and conspiratorial-themed blog postings about us

So get a load of what happened: CalPERS descends to name-calling, which is generally a sign of desperation, yet also linked to a full set of our posts! In other words, they’ve made it trivial for anyone who wants to see how “sensational” our posts are to have a look, where they will find that we’ve explained all of our issues and charges in considerable detail and provided supporting evidence.

Then CalPERS launches into an attack on journalism:

This leaves one to speculate that perhaps the true intent of her infatuation with CalPERS was to seek a means to gain exposure for herself, her financial advisory services firm, or her blog (where paid advertising and her own book for sale are prominently displayed).

Had CalPERS bothered to investigate us, they’d know we have an established reputation, have a strong following among financial regulators and on the Hill, and have taken on bigger targets than them, starting the mortgage-industrial complex. And if they had done that homework, they’d also know that industry defenders then tried to depict us as overreaching and exaggerating, when as events panned out, we consistently underestimated the depth and extend of abuses.

Suing CalPERS is hardly beneficial to this blog; if CalPERS had again bothered to check, the average number of comments on CalPERS’ posts is lower than for our normal posts, in fact indicating that our readership doesn’t see our efforts to pin down CalPERS as a wildly exciting topic. But that idea must be inconceivable in Sacramento.

Finally, notice the attack on journalism: the fact that I run advertising is depicted as suspect. So CalPERS is insinuating that every major news outlet is corrupt because it operates on a commercial basis.

And the signoff is more of the same:

All of that aside, CalPERS has been closely working with Webber’s legal representative throughout this process and will continue to do so. Furthermore, as always, we stand ready to release any information which can be disclosed under the California Public Records Act.

As a matter of fact, CalPERS is no longer working with my lawyer; they’ve brought in outside counsel. His first call to my attorney was hostile and he has failed to respond to our having told him that the records (the Excel spreadsheets, which are the only records that count) are well short of what was clearly the basis for the paper. It’s been two weeks and we’ve heard not a peep on that issue. If that’s what they think “closely working with” looks like, then maybe that’s why we’ve gotten nowhere. They have an idiosyncratic notion of what cooperation looks like.

And as for “standing ready” that contention is belied by the fact that we didn’t get the records as we were promised the first time, at the end of December.

I’ll leave it to readers to speculate why CalPERS has decided to turn what ought to be a molehill into a mountain. But they seem not to recognize that this fight is a tar baby for them, and they’d be wise to extricate themselves rather than punching their way into more trouble.

Print Friendly, PDF & Email


  1. TheCatSaid

    Yves, I appreciate the detailed updates. Your description of events is clear and compelling. CalPERS’ lack of integrity, combined with apparent incompetence and lack of transparency, makes it look very bad indeed. Perhaps California folks who have funds with CalPERS will ask the California regulator and the SEC to take a closer look. CalPERS does not seem to be meeting the conditions it agreed to in their prior settlement–could that investigation be reopened?

    CalPERS’s actions are revealing. They just keep digging themselves in deeper. Are there huge skeletons in their closets? Data that has gone missing or that they cannot reassemble? Not keeping business records that they should have kept? What are they trying to avoid that is apparently worth all this effort and expense on their part? (Delays, lying, more delays, lawyering up, PR damage control strategy, whatever they think of next . . .) It does not pass the smell test.

    When you have a moment, 4th paragraph, “here” and “here” need their links.

    1. Yves Smith Post author

      Thanks, I hit the launch button by mistake before all the links had gone in, but never hurts to remind me!

    2. R Foreman

      It’s almost like they’re trying to cover up some kind of crimes or wrongdoing, and they’re just making things up as they go… sort of like the Fed, the Congress, the POTUS, and all their cronies are doing.

      Interesting how crime begets more crime, until it pervades the fabric of society.

  2. William

    Been reading this series with great interest and for entertainment value. Great to see this exposure of a microcosm of how many bureaucratic/financial institutions treat inquiries into their dealings.

  3. allcoppedout

    Think I’ve said this before but I’m feeling old and dyslexic. The Calpers briefings are a great example of a much wider problem and of great interest in the struggle against institutional secrecy. Psychology has contributed a lot on the ‘backlash effect’ regarding and victims trying to question abuse by the very agencies supposed to protect their interests. How long before Yves gets some mud on being an agentic woman (

    The only problem I see with the tarbaby approach is the length of time the institutions can keep fighting instead of fessing up. The Rodney King beating is a good example:

    The wearing down of justified complainants should be a criminal offence.

    1. Yves Smith Post author

      Thanks for your concern, but I don’t believe the agenic issue applies. If you read the study, it was how women were perceived in an organizational context and how more male (or merely gender neutral) management styles were used against women. I wrote about the stereotyping issue as it applies to women and other out groups in this article:, and it’s more complex than you might think.

      For women who operate outside an organizational context, the rules are much looser. Look at how women with very aggressive personas (Anne Coulter springs to mind) have been extremely successful. My media persona (on radio and TV) is matter of fact and despite my advancing years, I make sure to tart myself up as best I can. I can also think of some extremely successful women in finance (Darla Moore, the inventor of DIP financing, and the first woman partner at Lazard, Christina Mohr) who are brutal in negotiations, to the point men are afraid of them. They make me look like a shrinking violet by comparison.

    2. human

      It is:
      “the right of the people…to petition the Government for a redress of grievances”

  4. vlade

    Note to CALPERS: when you’re in a hole, stop digging. Unless you want to buy our shovel.

  5. JGordon

    Well I for one appreciate your efforts to bring a bit of light to this, even if it’s not something I find particularly worth commenting on.

    I am however interested to know that many regulators and policy makers read NC, and that they are potentially being exposed to alternative viewpoints that may (however unlikely) cause them to examine their unwarranted assumptions about how things work.

    I myself am beginning to suspect that people in the system aren’t truly evil, it’s just that the momentum and logic of the system dictates that they must act like they are evil. That is why we should have some pity on the poor folks running CALPERs; a lot of them probably feel pretty dirty about what they are doing–that’s who folks like Snowden come out of the woodwork after all. That was a hint by the way.

    1. Jim Haygood

      Calpers: ‘… conspiratorial-themed blog posts’

      Congratulations, and welcome to Conspiracy Club!

      That’s how you know you’ve hit paydirt: when uncomfortable facts that have no reasonable explanation other than official misconduct are unearthed, the official sector’s last resort is to dismiss their critics as wacko ‘conspiracy theorists.’

      It’s the surest confirmation of an official cover-up. As Dick Nixon could tell Calpers, were he still around, it’s not the peccadilloes that get you, but the cover-up.

  6. diptherio

    I could actually see this being sheer incompetence, compounded by someone trying to cover their ass. It might be that they’re trying to hide some malfeasance, or it might be that their record keeping system is a complete wreck and they actually have sent you everything they can find so far…and they’re trying to cover their ass.

    That might sound overly generous, but if they really were so concerned with keeping the PE data out of the public eye, they wouldn’t have sent it to the academics in the first place, right? But maybe they would have, being all incompetent and whatnot. I could see it going either way: maybe the PE data contains some smoking gun they really do not want a pitbull like Yves to get her hands on, or maybe they’re trying to cover for shoddy record keeping.

    As for the non-released press release, it’s pretty whiny for an official communique. Almost makes me wonder if it wasn’t a draft release that someone thought better of issuing. The whole “she hasn’t published anything using the incorrect partial data we sent her” line is pretty f’n rich.

    1. Trinity River

      I’m sorry, Diptherio. You give them too much credit. If CALPERs has any competence at all, they do not have databases that include both real estate and private equity. They are taking the Larry Summers approach and saying to the public, “Now this little woman doesn’t understand numbers, and she shouldn’t worry her little head over this. We are the experts.” I’ve watched this charade before from up close.

  7. Michael G

    I am trying to look at this from the perspective of a member of the CalPERS Board of Administration. I was a trustee of a billion dollar UK pension fund for 16 years, and have some sympathy for their position. In the UK, pension fund trustees (but not administrators or investment managers) carry unlimited personal liability for their actions. You would think this would make them more proactive, but I suspect it makes them easier to intimidate – you are an amateur and if you persist and are found to be wrong, you may lose your home and life savings.

    I would be astonished if several members of the board have not asked the administrator what on earth is going on? I do not know, but I suspect the answer might be:
    a) Susan Webber is a well-known marxist/liberal/left wing/socialist crank who should not be taken seriously
    b) We are advised by our expert lawyers that we have already given her all the data she asked for.
    c) In the end she will either go away or lose the lawsuit. No need to worry.

    However, if I were a conscientious board member I would try to contact Susan Webber in strict confidence (apart from NSA), to get answers to two questions:
    a) What exactly is the missing information?
    b) More important, why is this information necessary to get a proper understanding of the private equity portfolio?

    I would then ask as a board member for the full information. Of course, I could not pass it on, but CalPERS could not deny that the information existed. If I was told that the information did not exist and was too expensive to gather, I would be armed with reasons that the board had a fiduciary duty to obtain and scrutinise the information.

    Can CalPERS ordinary members put pressure on their elected board representatives to do this?

    1. Joe C.

      Here’s the contact information for members of the CalPERS board:

      Bilbrey, Michael

      Chapman, Julie

      Chiang, John

      Costigan, Richard

      Diehr, George

      Feckner, Rob CalPERS

      Jelincic, J.J. CalPERS

      Jones, Henry CalPERS

      Lind, Ron

      Lockyer, Bill

      Mathur, Priya CalPERS

      Slaton, Bill

      1. John Mc

        Yves, your efforts on this are appreciated.

        I am surprised they did not send you a three page fax asking for $700 Billion and then they will release it. This kind of evasive action, fraud, and lying remind me of the desperation and delay tactics that led to MERS and Robo-sigining.

        It is enough of a behavior pattern to pursue, most definitely. Let me know if I can help you, and NC in any way.

  8. ambrit

    As some above have said, some sort of “shoddy recordkeeping” is probable. Which goes to highlight the underlying problem; bad record keeping. I thought that accurate records were the backbone of any financial enterprise. Otherwise, how does anyone know where the money came from and where it goes? Considering the size of CALPERS, that is very disturbing.
    Not only does the King have no clothes, but neither do many of us more plebian types now, either.

    1. JTFaraday

      I don’t think it’s just “shoddy record keeping.” That may be true enough and that may be the conclusion they want people to end up with, but even I know that’s not remotely the whole story here.

      I think they’re immediate arrogant response to the records request is more that the pension funds know that the US federal government just let the real estate and banking industries get away with mortgage and securities fraud on an unprecedented scale, with only the tiniest slap on the wrist. If that.

      Therefore they’ve somewhat “justifiably” become accustomed to thinking that they have a green light from the federal government itself to do whatever they want without ever having to answer to anyone anywhere.

      So, they figure, they’re just not going to. The public records laws just don’t apply anymore because none of the laws apply anymore.

      In addition, with reference to public pension funds per se, even well funded ones now have the cover offered by the whole idea that they are all going bankrupt, and taxpayers don’t want to pay for them anyway, and therefore would-be pensioners are never going to receive them.

      That cover story enables private equity and hedge funds and whatever-they-invent-next to take out enormous chunks of money up until the day they leave would-be pensioners holding the bag without the public even understanding their role.

      People who have such pensions (and those who are interested in an accurate accounting of economic history), need to know who is taking what, right away. No one can assume benign intentions or mere incompetence in this lawless environment, where “It was there, so I took it” seems to be the new normal.

      Then there’s the crooked politician angle, which simultaneously creates the problem and ensures it never gets fixed. See “Christie, Chris” for reference:

      1. Frances

        Your analysis of the context in which this CalPERS issue is playing out is very much appreciated. And your foretelling of the beginning of the end regarding state pension funds is sadly true unless the public begins to understand what is going on regarding who/what really runs this country.

        Thank you. I look forward to reading more of your comments.

      2. psychohistorian

        This is a good summary of my view of the situation, thanks!

        Good journalism had been dead for so long that few know what it looks like in the real world. And good journalism use to be followed up by effective prosecution of the perps but that concept is now so last century.

        This is what we get with systemic rot.

      3. John Kissinger

        The topic interests me in part because I am a CALPERS retiree, and naturally hope the revenue stream continues as long as I do. Would hate to discover it all been pissed away on fat fees to hedge funds that lose money.
        If CALPERS was a federally charted bank, your comment that laws don’t apply to them would of course be correct. However, this is a CA non-bank institution, and, just possibly, CA laws might in fact apply. The LA Times has had some success in rooting out CA corruption, perhaps they might take an interest here.

  9. JTFaraday

    “the average number of comments on CalPERS’ posts is lower than for our normal posts, in fact indicating that our readership doesn’t see our efforts to pin down CalPERS as a wildly exciting topic.”

    I don’t think I’ve commented, but I’ve read them all. It is true it isn’t wildly exciting yet, but the way CalPERS has responded to a simple public records request suggests that down the road it will be.

  10. Doug Terpstra

    The dishonesty of the press release is surprisingly clumsy and easy to rebut. Even worse is the petulant tone with juvenile insults, as if written by a junior intern without adult oversight. It’s cartoonishly amateur, like using a 12-guage on one’s own foot.

    They’ve only made the case more interesting. The odor now seeping from CalPERS’ closet is impossible to ignore. Fortunately for them, Eric Holder, the SEC, and CA regulators apparently have no sense of smell. I wonder if Holder combs camphor into his mustache every morning.

  11. washunate

    Fantastic work!

    About that sign off:

    “…we stand ready to release any information which can be disclosed under the California Public Records Act.”

    Your lawyer is going to have a field day with the word can.

  12. Frances

    Firstly: The tone of the CalPERS press release should be shocking to the present and future retirees it serves, especially as the CPRA request and NakedCapitalism’s subsequent writings involve data that should be transparent. Official press releases by state entities should be signed by an official or a department communication officer who is available for follow-up questions or comments. Was this written in-house by CalPERS or by an outside ‘public affairs’/PR firm? I would request that information. California officials, in my experience, have been known to hire outside PR firms that are also used by PE and hedge funds, even simultaneously. This press release reads like the latter. If CalPERS has hired outside PR consultants, that, including the fees paid, should be publicly available information.

    Secondly: This may have appeared in earlier NC writings, so forgive me if this is repetitive. Reuters peHUB published a piece in 2008 when they were trying to track CalPERS’ PE transactions and found 96 funds missing from a report in 2007 to one appearing in 2008.
    The journalist wrote: “I’ve put in a call to get confirmation … (a) CalPERS spokesman confirms most of the deleted funds were sold in secondary sales … I also plan to make a public records request for financial details about the sales, as it stands to reason that CalPERS should have to disclose disposition values along with carrying values. Also plan to make a separate public records request for the carrying values of its direct general partnership stakes in firms like Apollo Management and Silver Lake Partners.

    Keep up this important work, Yves et al. Looking at the wizard behind the curtain is important and much appreciated.

  13. rich

    I think people are noticing and support your efforts………

    CalPERS Gives PEU Information to Oxford but Not to Naked Capitalism
    CalPERS invested $175 million in The Carlyle Group in 2001. They purchased 5.5% of Carlyle, which fell to 4.2% by the time Carlyle went public in 2012. At the time Reuters reported:

    CalPERS received $225.2 million in carry, fees and distributions from its Carlyle stake. By adding these distributions to the $284.1 million current public value of CalPERS’s shares, CalPERS nets a combined, nominal value for its investment of $509.2 million. That figure represents a cash-on-cash multiple over its initial $175 million investment of 2.9x, and an IRR of between 12 and 13 percent over CalPERS’s 11-year ownership period.

    CalPERS has also invested in 26 Carlyle funds since 1996, making commitments exceeding $4 billion, far more than the $175 million ownership investment in the firm.

    CalPERS did monetize their Carlyle Group equity investment in 2013, grossing and additional $90 million for waiting. Bloomberg reported:

    At Monday’s closing price of $29.39, a sale of CalPERS’ full stake would generate $374 million in proceeds, more than two times the pension fund’s 2001 investment. That return doesn’t take into account the dividends CalPERS has collected from its ownership.

    Carlyle likes to brag about its 30% annual return on equity from its private equity investments. That could be one reason for CalPERS to obfuscate PEU performance information.

    Industry associated researchers seem happy to only include investment winners in their samples. No bankruptcies allowed. Many researchers stop the analysis when the affiliate is monetized. This ignores how debt bloated firms perform after their ejection from the PEU system.

    1. TheCatSaid

      That’s an interesting point–the difference in the returns from the Carlyle investment itself, and the returns (whatever they have been) in the much larger investments in Carlyle investment funds. Is there some way good returns on Carlyle could be a smokescreen for losses in some on various funds? Could the initial overall Carlyle investment have carried some hidden backdoor commitment that CalPERS would invest much more in the 26 funds?

  14. Jerry

    I may have never commented before, but be assured I am reading and interested. My wife’s retirement money is in Iowa’s IPERS which sounds like a CALPERS twin to me. IPERS famously lost nearly $300 million they had put with a fraudster who spent it on himself, horses, rare books, and stuffed animals for his collection.

    Keep digging.

  15. allcoppedout

    Future scenario:
    CalPERS hires Metropolitan Police for independent investigation. Yves receives belated notice investigation delayed as no one knows where the information is or whether it has been destroyed owing to the information on the fate of the original information having been shredded.

  16. dbk

    Echoing others’ affirmations above, I too am reading with great interest your series on CalPERS.

    The retention of Steptoe & Johnson strongly suggests that they anticipate a war of attrition and are betting you’ll give up out of pure frustration.

    It would seem the CalPERS staff delegated to read nc posts on the topic (hello there, greetings!) haven’t caught on to what nakedcapitalism actually represents.

    Here’s hoping that members/retirees in the system will be sufficiently inspired and infuriated to begin a grass-roots movement in support of full transparency in accordance with the stipulations of the California PRA. It’s the law.

  17. Murky

    What legal penalties can CALPERS suffer if they don’t comply with the records request? Does the law here have real teeth? Or are remedies so limited that CALPERS has no reason to worry about outcomes? Would love to learn of the penalties that CALPERS could possibly suffer if they lose this legal scuffle.

  18. jomo1

    Yves, I have been a daily lurker on your site for several years. I closely follow your work on CALPERS, since my wife works for the state of CA and is vested in their pension plan. As someone with a long-time career in finance, nothing about the CALPERS effort to dissemble on this matter is a surprise. Good luck with the fight!

  19. Foppe

    Just to chip in my $2c: I haven’t commented either, not because I find this topic uninteresting, but just because I don’t really have any particular insight into the mindset of the people running that institution. Secondly, I don’t really know enough about (PE) investing to be able to guess what it is you hope to find, except on a very general level. The fact that they’re being obstructionist feels like par for the course for me (given the general attitude towards transparency), even if it may be inspired particularly by the fact that CalPERS’s “ability” to claim they’re future-solvent (per the models that they are legally required to use to prove that) because of the idiotically high RoI claims they’re making. So..

  20. Jess

    Very interested to watch this play out. If what i suspect is going to come out of this actually comes out of this I will be watching the deadline (think it’s in Feb) for Pulitzer nominations. (Which I understand are fairly easy to make, meaning one or some of us might carry the ball and get Yves a nomination, if not a win.)

  21. MaroonBulldog

    Maybe it’s time to stop sending CPRA requests to CalPERS and have your attorney notice a few depositions of the CalPERS representatives you’ve been interacting with and their higher ups. Find out who the former manager is and notice that person’s deposition as well. If depositions and discovery are available in this type of lawsuit, of course–and I can’t think of a reason why they wouldn’t be. Maybe the prospect of being deposed might motivate the right people to dig a little deeper and come up with all the documents you have been searching for.

  22. LAS

    Not how you’d expect a reasonably responsible fiduciary to respond. I’ll bet there are some big straws sipping from the money pot that would rather not be visible.

  23. MaroonBulldog

    Lawyers for the private equity/alternate investment industry teamed up with lawyers for California public agency investors to write the very same law that NC is proceeding under. They know very well what it says, and they have no reason to believe they can withhold what NC has requested. What do you think would happen if NC got the right CalPERS custodian of records/most knowledgeable person into a deposition, showed that personl a copy of the files CalPERs sent to the Oxford researchers, and asked them, “Did CalPERS send them all this stuff?” There are three possible answers:
    (1) Yes.
    (2) No
    (3) We don’t know.

  24. TerryH

    Are the Oxford academics sworn to secrecy on the information they got from CalPERS? How about offering CalPERS to “save them trouble” by having CalPERS authorize the academics to give what they have to Yves? (I know, expecting reasonable behavior at this point could be a sign of craziness.)

    1. MaroonBulldog

      If I were NC, ideally I would want to see both what the Oxford reCalPERS has made a full and complete disclosure. But the only way NC can know it has received have authentic and complete CalPERS records is to receive them from CalPERS.

      I may have a different reaction to CalPERS act of lawyering up with outside counsel in this case than the reaction others may have. To me, this looks like the attorneys who would normally represent CalPERS are conscious of the weakness of their case, so they sent this lawsuit to outside to show their CalPERS clients and PE partners that they did everything they could to resolve this on the best terms they can get. Any outside counsel will be advising on settlement. The court will likely may push the clients through mediation. Sometimes clients are more willing to take settlement advice from outside counsel than from inside counsel, especially after they’ve paid a few bills for attorneys’ fees generated in discovery fights and heard the weakness of their case described by a mediator. CalPERS should seek to settle. It’s hard to imagine CalPERS garnering any result resembling victory.

      1. MaroonBulldog

        Oops. Meant to say: I w-Would want to see both what the Oxford researchers still have and what CalPERs has to show, in order to be sure that CalPERs has made a full and complete disclosure.

      2. Yves Smith Post author

        No, FOIA cases often wind up in court. Mediation is not the usual outcome. And the posture of opposing counsel has poisoned the possibility of negotiation. They clearly aren’t interested in that route, their public posture to the contrary.

  25. just_kate

    i have been reading all the posts and forwarding them to the CalPERS beneficiaries i personally know. they’d grown weary of my fraud rants but have asked me to keep them informed on this issue. at some point i think they will actually DO SOMETHING themselves.

  26. gab

    I would suggest writing directly to Chiang. He fancies himself a champion of open government and has his sights set on the governorship, so this might be a topic he can campaign on.
    It’s worth a shot.

    1. Yves Smith Post author

      Board members are instructed never to talk to parties that are engaged in litigation. The lawyers are tasked to handle this. But you can write him!

  27. Hugh

    I agree with Frances above. CalPERS as a pension fund for government employees should be consistent and transparent in its activities. It is another example of a public institution which treats the public with nothing but contempt. I don’t think that CalPERS would be running this kind of a stall if this were just about a public pension fund seeking high rates of return by getting into bed with PE firms and hedgies. In my opinion, this has always been a breach of their fiduciary responsibilities, but it’s been known since meltdown. The mention of Carlyle made me wonder if this will eventually turn out to be about PE firms like Carlyle using a public pension fund as their private piggy bank. This in turn makes me wonder what the incentives of money managers at CalPERS are both from CalPERS and how many of them have financial holdings in these firms or subsequently are hired by them. Because what CalPERS’ response so far has been really strikes me as more in tune with CalPERS acting as an extension of these firms. That alone should make current and future pensioners take note, the rot at CalPERS may have progressed so far that its management looks on its real clients as the hedgies and PE firms, not its pensioners.

    A final note. Someone should send the quack who wrote the press release a dictionary. An infatuation is a shallow and foolish affection for someone or something. Its application in this case fails on all counts. It’s like writing a note demanding to be taken seriously in crayon.

  28. CM

    I haven’t commented on this to date, but if you’re using number of comments as a gauge of interest, well, here’s my comment…

  29. Teejay

    Clause collecting? “Yesterday I learned that a press release that the California Public Employees’ Retirement Systems issued last Friday about our suit against the giant public pension fund.” Reminds me of an old Doonesbury press conference: Kennedy trying desperately to skate around all things Chappaquiddick; Mark Slackmeyer pipes up: ” A verb Senator we need a verb.” Thank you for reminding me of one of Trudeau’s funniest.

  30. Sorcha

    Another avid reader who wants to learn more about this situation. Keep up the pressure, Yves!

  31. Peter Pan

    I suspect the PR hack was wearing a tin foil hat while writing this part: “Instead, she’s used the situation as a reason to obsess over CalPERS in her sensational, erroneous and conspiratorial-themed blog postings about us.”

    I love the smell of litigation in the morning.

  32. DWoolley

    I am adding my comment to show support for continued reporting on this topic.

    Hopefully the problems detailed are merely incompetence and not indicative of real problem or crime. Who could have imagined a world in which we cross our fingers in hopes of incompetence? Thanks Great Recession.

    1. DWoolley

      “First they ignore you, then they ridicule you, then they fight you, then you win.” -Gandhi

      According to Mahatma Gandhi, you are about to enter into a fight.

  33. Michael G

    Probably too simple
    If CalPERS just don’t know what data they gave to Oxford, they can simply authorise Oxford to give Susan all the information that Oxford received from CalPERS.
    Oxford should have kept all the raw data, in case their paper was ever challenged.
    But if I were a CalPERS Board Member, I would be asking some serious questions about record keeping.

  34. downunderer

    I’m another non-commenting follower and all-too-occasional contributor who can hardly wait to see how this plays out. As a native Californian whose m-i-l is a CalPERS beneficiary, I have a personal interest. But I am also profoundly interested in your documentation of the extent of the rot in America’s once-trusted institutions, as its progressive revelation has more than once shaped the course of my life. You are performing a public service that I appreciate far more than I can afford to express in more concrete form.

    1. Lambert Strether

      Do consider a Letter to the Editor to your local paper. Politicians really do notice them. The results are better than online petitions, for example, because a letter to the editor is somebody speaking up in a community context. If you’re a writerly type, consider an Op-Ed!

Comments are closed.