CalPERS Board Member Margaret Brown Still Illegally Locked Out, Given Only Highly Restricted Access to Transcripts

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Some readers asked whether Margaret Brown was making progress against the concerted campaign by CalPERS Board President Priya Mathur , aided and abetted by CalPERS staff under the supervision of CEO Marcie Frost, to undermine Brown’s performance of her duties of office. Since Brown is a fiduciary, this also means the Board President and CEO are putting their personal prerogatives ahead of performance of fiduciary duties.

And this behavior is persisting despite Brown objecting to it on March 19, as you can see at the end of this post, and Los Angeles Times reporter Mike Hiltzik depicting it as childish and a too-convenient distraction from what the board should be concerned about in a story yesterday.

Brown was still locked out of her office yesterday, even though it was board meeting week. Under the terms of her procedurally improper punishment she was still supposed to have access to her office then.

Moreover, Brown is not being given anything remotely resembling a reasonable opportunity to review transcripts of past “closed sessions,” meaning the portion of board meetings that are held in private.

As we wrote earlier this week:

Brown requested access to a full year of closed session transcripts, since she realized after her first set of closed session board meetings in February that there was a great deal of history behind many of the issues under discussion. She needed to have the backstory to be adequately informed and make good decisions.

Brown has been given the runaround for months by the staff and the board. Board President Priya Mathur insisted she’d understand the transcripts better if she was briefed first by Chief Investment Officer Ted Eliopoulos about CalPERS’ vaunted research into private equity business models. Not only did she never get that talk, when she finally meet with CEO Frost and John Cole of the Investment Office, they admitted there was no information or documents to review.

Brown has also been subjected to limits on access to records….Brown has been allowed to read only very limited printouts of closed session transcripts, and then only in the office of the head of Board Services unit head Karen Perkins, as if Perkins were a prison guard ward.

Perkins has offered Brown very few time slots, and ruled out an entire week, even though Brown is regularly in Sacramento. As a result, Brown has only had one reading session in which staff cherry picked what she saw. That amounted to only about 50 pages of transcripts, with some pages partially redacted. Moreover, Karen Perkins failed to provide slides and reports that were an integral part of the discussion that Brown reads, despite repeated requests by Brown.

Despite Brown’s attorney James Moody sending Mathur a stern letter telling her to provide immediate access to all the closed session transcripts she asked for, either by burning them onto a disk or e-mailing them, CalPERS is still harassing Brown:

From: “Perkins, Karen”
Date: April 16, 2018 at 12:22:32 PM PDT
To: “Brown, Margaret”
Cc: “Mathur, Priya”
Subject: Re: 2017 Investment Committee and Board of Admin closed session transcripts

Hi, Margaret – I understand the transcripts you requested have been downloaded to the desktop of the computer in your Chambers office. They are in a folder named “Board” and are organized by committee.

Per Priya’s direction, I have requested for you to have badge access to Chambers on Thursday, April 19.

Please let me know if you have any questions or need anything else. Thank you, -KP

So this is another flavor of prison guard behavior. Brown still can only read the documents on CalPERS premises at times of Karen Perkins’ choosing, when the staff is supposed to work for the board, and not vice versa.

Moreover, since Brown’s badge is not working, the promised Thursday time could prove to be another exercise in jerking Brown around, by having her show up and either not be able to get into her office, or be put through hoops to do so. That is the epitome of the sort of petty abusive behavior that Hiltzik called out as evidence of what a laughingstock the CalPERS board had become.

Needless to say, Brown should not be subjected to any time and space constraints on when she reviews the transcripts. Not only are they likely to amount to more than what she can read in a day, she is likely to need to trace the history of certain issues across meetings, using keyword searches, so as to put the sequence of discussion properly.

And to add insult to injury, even on the mere 50 pages or so that Brown has read to date, she’s asked for documents that were presented in the same closed session and referenced in the transcript, such as slideshows and reports. In yet another show of intransigence, Perkins has refused to provide them even though Brown has made multiple requests.

If CalPERS wants to tell the world it is corrupt to the core, this is precisely the way to do it.

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  1. The Rev Kev

    Look, this is getting ridiculous and locking her out of her own office is nothing short of a petty d*** move. I have little idea of how things are organized over there but is there no department for corporate governance in place? Maybe under the Californian Department of Justice? Possibly the Californian Bureau of Investigation? I understand that in the US that such matters are done on a State level rather than a Federal level?

    If Brown has fiduciary duties that she is legally required to perform and members of the Board are undermining that, isn’t that a matter for governmental authorities? If they are not willing to do anything about fixing this, then at least getting it on file might be an idea when sooner or later the balloon goes up for CalPERS. Without a formal Board meeting on the subject, I cannot see how anything that is being done is legal and if it is illegal, then certain people have really stuck their neck out.

    Come to think of it, if CalPERS is a State organization, how about FOI requests.

    1. MK

      Why is there no Show Cause Order?

      There are enough lawyers in CA reading this – pro bono even?

      Again, why is this circus not addressed by anyone in CA courts (or Federal RICO)?

  2. Superduperdave


    I look at the educational qualifications and experience of the Calpers board and am amazed that the people responsible for running an institution of this magnitude all seem far, far out of their depths. As in, a bunch of ninnies, utterly incapable of doing their jobs; yet someone clearly is running the shop.

    Where is the real power in this institution? Is it all outsourced somehow to Wall Street? To the hedge funds themselves?

    1. Yves Smith Post author

      It isn’t just the board. Let us not forget that the CEO has only a high school diploma. And two members of the board are lawyers (Richard Costigan and Dana Hollinger). John Chiang, the state Treasurer, has a JD from Georgetown, Betty Yee, the state Controller, has a BA from Berkeley and an MPA.

      I get your point, but even in countries where the boards are even more dominated by union members than CalPERS (in Sweden) who might be wanting in academic pedigrees, they have courses on how to oversee pension funds that they not only have to take…but they also have to get passing grades. And recall that the recently retired board member JJ Jelincic started out as a trucker but got an MBA and was a member of CalPERS’ investment staff…which meant he had substantive knowledge. And the rest of the board ostracized him.

      Shorter: the problem here is less one of education, although I agree that is an issue, than capture. The board, with the exception of Brown, really believes its job is to defer to and defend their trusted staff. They regularly praise staff to the skies for merely doing their job. Having smooth interpersonal dealings is far more important than substance.

      1. EoH

        The board’s priorities seem borrowed from corporate America. One need only substitute “senior management” for “trusted staff.”

        That attitude among board members of large businesses allows senior managers to hide behind the false notion of shareholder value, while operating the business largely for their own enrichment.

        CalPERS, however, is a public institution. Its board members have fiduciary obligations that they seem to be ignoring. Harm will come not to shareholders and employees, but to California taxpayers and pension beneficiaries. I can only hope your series, and pressure from such sources as the LA Times, will focus state government’s attention on a festering problem it needs to fix.

  3. sd

    Does the Department of Labor have any oversight of CalPERS given its connection to union labor?

    1. Yves Smith Post author

      No. The Department of Labor is responsible for ERISA, but public pension funds are not subject to ERISA. They voluntarily adhere to most or all of the principles of ERISA, and some states incorporate a lot of ERISA-tracking language into the relevant statutes, but public pension funds are state and local affairs.

  4. ambrit

    Are there any rules about board members’ personal responsibilities concerning losses to the funds under management? If negligence that results in losses, even including under performance issues, can be proven, can the Board members be held responsible and fined? (I thought that ‘fiduciary responsibility’ included such possibilities.)

  5. Clive

    It’s worth restating that CalPERS has $360 billion in funds under management. I would not trust them to manage a Women’s Institute cake stall.

        1. skippy


          That is so period greasy, young lions attached to a bird with some moxie [monies], get me some water lmmao, heck I remember wearing such suits. Then the old lions bemoan loss of future virility and status, what would the club think.

          Alas I did not fit in as they say, one such occasion a VIP lass tried to mentor me in L.A., if it were not for statues I could possibly file a grievance akin to the RCC thingy.

          On a more serious note I submitted a few white papers back on the day here at NC about the board room issue.

    1. Norb

      While the observation is very funny, I wonder if the humor will soon be followed by tragedy. It is almost beyond comprehension to me how the good will of working class people can be so cynically abused. How can one explain away the broken trust as these funds are mishandled?

      A day of reckoning must surely come.

  6. vlade

    What legal leverage Brown has? If it was a SEC regulated enterprise, there would be some (after Wells debacle I’d not say “significant”), but since it’s state enterprise, is there anything? Is the fiducary duty a legal duty at CalPers?

    1. Yves Smith Post author

      CalPERS’ board is supposedly held to a fiduciary duty. However, as you can see, that does not mean much in practice. First, as we have documented, CalPERS’ general counsel regularly lies and gives what can at best be called extremely strained readings of statute. But from the board’s perspective, that’s just dandy because as long as they follow the advice of experts, they aren’t liable. Second, in theory, the board has an outside fiduciary counsel. However, that fiduciary counsel is also staff’s fiduciary counsel, and in screened by staff and has its bills paid by staff….so who do you think it really regards as its client? Third, even though board members in theory are personally liable, they of course have directors & officers insurance.

      1. Synoia

        I doubt the insurance covers conspiracy and fraud, with a smattering of obstruction.

        The lockout is not just an exercise of power.

        Lawsuit + discovery looks necessary.

    1. Yves Smith Post author

      Suing takes time, energy, and money, and CalPERS is a very deep pocket.

      The problem is that this punishment is time limited. By the time Brown were to sue, it will be over. And what damages can she show? The transcript stonewalling similarly does not lend itself to damages.

      If you are a deep pocket and could fund litigation, that would change matters, however. But people who propose this sort of thing are seldom up for writing big checks.

      1. none

        IANAL but I’ve gotta think there’s an ambulance chasing attorney out there who is ready to sue the Board president and her cronies for breach of duty.

        1. Paul p

          Limited motion for access and summary judgment based on status as board member and duties of board member. Seek an order to provide access, against board members and officers of corporation, which would make them subject to contempt. This need not be deep pocket litigation.

          1. Yves Smith Post author

            Please don’t play armchair attorney. Summary judgment is a viable strategy only when there are (presumably) no facts in dispute. CalPERS has lots it would dispute, starting with Brown’s argument that Mathur lacked the authority to implement this punishment. Even though Brown would almost certainly prevail, a judge will not accept that on her say-so. As a result, summary judgment is most commonly used to argue that the other side’s case as presented is so obviously inadequate that the judge should throw it out.

            Plus she can’t even get a court date quickly enough, much the less a ruling.

            1. Paul P

              The facts of this case of a board member’s right to see work of the board, presumably, would be on documents. Seeking an order would subject the
              board, the CEO, whomever, to contempt as an
              expeditious remedy ongoing. Don’t play armchair
              lawyer is good advice.

  7. Christopher Tobe

    I had similar experiences as a trustee at Kentucky. This is all about fiduciary capture of CALPERS by the Private Equity industry.

    1. flora

      Were you obstructed from reading information you were entitled to read ? If so, how did you get around the obstacles? Did someone on the inside quietly help you get access? Was confrontation with the board required? What did the voters who voted for you think about being denied effective representation?

  8. diptherio

    Once again, when do the protests outside CalPERS board meetings, and outside Priya’s house begin? Sounds like the time for direct action has definitely arrived.

  9. Enquiring Mind

    Michael Hiltzik at LA Times has a Business Section page 1 article today about CalPERS (and nice references to Susan Webber and Naked Capitalism) so that should get a few more of his readers to ask more questions. I tried to find a link to the story but perhaps that will show up tomorrow.

      1. John k

        Below the fold on first business page.
        I’m a non voting beneficiary. I’ve been forwarding links to voters at SDSU.

        1. Yves Smith Post author

          Thanks SO MUCH!

          You can write the legislature. You have stature with them. And if you do that, you could send those letters to your voter friends and encourage them to do the same.

  10. Jean

    Enquiring Mind,

    L.A. Times is nice but IMHO every concerned citizen in California should e-mail the URL of this article to their local public officials who are affected by this as CALPERS is holding their retirement money.

    A short note; “Dear_____, As a local resident, I appreciate the job you are doing at______, but we are concerned about threats to your ability to collect your pension because of what’s happening at CALPERS. You might want to inform yourself about this threat to your retirement.”

    Do you think they will ignore that e-mail?

    Start with the mayor, council, building inspectors, fire, police, public health officials–everybody. Don’t forget the county administrators as well.

    In some cases it may be more effective to e-mail it to their aides, secretaries, gophers, interns, whatever who are more likely to have the time to read it and curry favor with their bosses.

    Here’s the URL of this article:

    And those about this subject:

    Note: The word “Naked” sometimes triggers spam or porno blockers and prevents e-mails from being delivered. Follow up with a phone call to make sure they have at least opened/forwarded and read it.

    1. Expat2uruguay

      I used to run a fairly successful Grassroots organizing campaign after the last recession to pressure members of Congress to extend unemployment benefits. I organized it under a MoveOn petition, and gained access to other petitions by directly contacting the petition authors. One of the petitions had over 50,000 signatures and there were a couple of others as well.

      As you can see if you read the petition, I was able to develop the petition signers into a mailing list and organize hundreds of calls into the offices of specific Senators with specific messages. I name this group The Activist Alliance for the Unemployed, or AA4U. (I eventually set up a web page for the work, but I have since allowed the domain to expire and the work to disappear.)
      However, I believe that my work was significant in getting the passage of an unemployment extension bill through the Senate. Unfortunately the bill then went to the house where the whole thing completely fell apart, partly due to timing deadlines.

      At any rate, perhaps something could be organized similarly here. What is needed is an email list of people that are willing to contact their representatives and a person who’s willing to stay on top of what’s going on and alert the list members to when, who, and how to message their representatives.

      The first step would be to build an email list of people willing to contact their representatives on this issue. Let’s call them alliance members.

      The second task of this exercise, of following the play-by-play and developing language to be provided to the list of alliance members, is already being mostly done here by Yves.

      The third task is to take the information created by Yves and write it up a script and who to contact for the email list of alliance members and send it out. I would be willing to lend my experience and energy to this project, if others are willing to help develop the email list.

  11. Tim

    The ongoing CalPERS saga is one more piece of evidence that the “socialism will be making a giant SWF for the economy” that folks like Matt Bruenig have pushed is such an asinine idea.

    1. Jean


      What is SWF?

      “Single White Female?”

      Just because you know what it means doesn’t carry to others.
      Always explain your shorthand.

    2. Outis Philalithopoulos

      I assume by SWF you mean either “social wealth fund” or “sovereign wealth fund” and that you’re suggesting that “the fact that CalPERS is a horror show demonstrates that ideas of implementing a radically new economy through a big or several big ‘social wealth funds‘ won’t work well.” That might be an interesting discussion to have – although not necessarily on this thread – but it would require an argument, not just an assertion that “one thing is like the other.”

  12. Scott1

    This reporting is difficult for me. I read something from David Cay Johnston’s of similar difficulties and believe his comments would be as cogent as one could ever find.
    It is about Financial Duties, and he sure does know Finance.
    Would be to Lambert, Yves & he to identify this sort of financial mismanagement as a trend requiring federal regulation.

  13. Troy

    Get the security log for the badge access change. These things do not just happen. The log will show the time and who deactivated the ID card if it was deactivated. The action to deactivate was requested so that should be easy to find also. Hold the people responsible.

Comments are closed.