CalPERS General Counsel Matt Jacobs Violated “Zero Tolerance” Policy via Manhandling CEO Marcie Frost; Will CalPERS Sanction Jacobs or Change the Policy?

As much as we enjoy mining the seemingly bottomless vein of misconduct at  CalPERS, we feel compelled to commemorate an incident from last week’s offsite because it so deeply offended the people who saw it live — many of them CalPERS beneficiaries who are retired after decades of honorable government service.

This incident, of General Counsel Matt Jacobs literally draping himself over CEO Marcie Frost’s shoulders for a long tete-a-tete, was a cut-and-dried violation of CalPERS’ Harassment, Discrimination, and Retaliation Prevention Policy. It epitomizes CalPERS’ hypocritical and two-faced posture toward board members and senior staff, by which members of the power faction are never held to account or even criticized. By contrast, those who are seeking to clean up CalPERS’ misconduct and incompetence are often severely sanctioned, in ways designed to interfere with the performance of their fiduciary duties.1

This misconduct was highly visible to everyone at the offsite on the Monday of the offsite, July 15. If you look at the YouTube videos of the event, the “grownup” tables were arrayed in a U shape, with the screen and the guest speakers seated on the open portion of the U. Frost and Board President Henry Jones were seated opposite the screen and speakers, with the audience seated in rows behind them. So an estimated 20 CalPERS employees plus beneficiaries and other participants were staring straight at this display.

Reports from a half dozen independent sources show that these witnesses were appalled. In fact, the degree of upset was what led one observer to take the pictures above, noting:

Matt ❤️ Marcie.  CalPERS Santa Rosa off-site.  I was a little slow with my camera, so I missed the minutes-long embrace from the other side — because I couldn’t believe that this was actually happening.

I was sitting with a woman from XXX and a woman from YYY who both attend SCORE. There was a third woman who I had just met that day who was a [former government job]. They were freaking-out.

It started looking like a casual huddle to whisper, but it lingered on-and-on to the point that the women were saying, “Somebody take a picture, this is completely inappropriate!”  Jacobs had draped himself over both of Frost’s shoulders with his left arm, his hand casually cupping one of them.  I couldn’t tell if it was a “power move” to dominate her or if there was some sort of creepy mutual cuddle-thing going on, because I couldn’t see their faces.

He’s huge and she’s tiny; which made the whole incident even creepier from the peanut gallery. Just a horrible “look” smack in front of a group of retired female shop-stewards. There’s also still a soupçon of salaciousness.

Other reactions, each from additional sources:

Audience Member 1: Attorney Mr Jacobs went to CEO Ms. Marcie Frost and proceeded to put his arm around her shoulders to have a private conversation, he then went to board President Mr. Jones and CEO Ms. Frost and repeated this act from the other side. During this interaction the previously mentioned board member [Theresa Taylor] glanced at this interaction and said nothing.

I found the interaction as unacceptable staff interaction and the non action of the board member as conflicting…Persons seated near me commented that the interaction appeared to be inappropriate contact between supervisor and subordinate.

Audience Member 2: His behavior was unsettling. I don’t know if he was being controlling or sexual towards little Marcie but it was unprofessional at best and sexual at worst.

Audience Member 3: It wasn’t appropriate For a staff member and his boss. It was sexual harassment.

Audience Member 4: It was gross. It looked like it could have been sexual but I doubt that. It reminded me more of a big dog we had. He’d put his paw on other dogs to show he was the boss.

It is noteworthy that most of the individuals above were older women. Generally speaking, older women grew up in an era where sexual banter and flirting in the workplace were seen as acceptable within bounds. The fact that women of this age group were deeply disturbed suggests that young women would have been even more upset. But as the last comment made explicit, they were disturbed by the power dynamic/ By putting his hands on Frost and keeping them there, Jacobs was making a big and very public display of his dominance.

One male observer spent a lot of energy wondering whether Jacobs could have executed his move without brushing against Frost’s breasts. This is not how you want the public to think about the head of a $360 billion fund.

Yet another observer speculated that perhaps Frost had gotten some bad news and Jacobs was trying to comfort her. One of the audience members in close range pooh-poohed that idea:

The body language was not consoling. It was conspiratorial. The female retirees in the seating area were appalled by the appearance being given off. Frost cynically projects sexual vulnerability in order to manipulate, while Jacobs bullies through physical intimidation. Not a good look, but readily apparent to the retirees.

I question whether Jacobs is Frost’s de facto subordinate. Jacobs was engaging in a domineering and paternalistic behavior toward both Frost and Jones. This was my take-away from the interaction.

According to CalPERS written policy, Jacobs’ conduct is clearly verboten and grounds for investigation and punishment:

CalPERS has zero tolerance for harassment and discrimination of any kind based on any protected characteristic. CalPERS expects its managers and supervisors to vigorously and visibly promote a harassment-free and discrimination-free work environment and expects its employees to read, understand and comply with this policy…

Common Forms of Prohibited Conduct

Unlawful harassment for the purposes of this policy includes, but is not limited to, the following….

• Physical touching or assault, as well as impeding or blocking movements….

All such conduct violates this policy and is unacceptable in the workplace and in any work-related settings, such as business trips and business-related social functions.

Moreover, as multiple CalPERS insiders pointed out, the standard is understood to be not simply if the conduct is unwelcome by the recipient, but if it makes the people who saw the conduct uncomfortable. One can imagine a superior and a subordinate openly having a consensual affair. Even though displays of affection would be consensual and even welcomed by the subordinated, they would send an inappropriate message that sexualized conduct in the office is OK and would also remind co-workers that the couple don’t have an arm’s length professional relationship. That makes it all too obvious that the boss is likely to favor his lover.

As a consequence, the policy obligates employees to report conduct that they think may be violations of policy. Specifically:

Employee Responsibilities

All employees are responsible for ensuring that violations of this policy do not occur by:..

• Reporting conduct that they reasonably believe violates this policy…

Manager and Supervisor Responsibilities

Managers and supervisors must take affirmative steps in regard to conduct that violates this policy. When managers and supervisors obtain information indicating that a violation of this policy may have occurred, even if not directly within their line of supervision or responsibility, they have an affirmative obligation to immediately inform their manager or supervisor immediately and concurrently report the matter to the EEO Officer, so CalPERS can try to resolve the claim internally.

Important! Failure to promptly report perceived violations of this policy may subject a manager or supervisor to disciplinary action

Here, the photo plus multiple eye-witness accounts is unambiguous evidence that Jacobs did violate the policy. Marcie Frost herself is therefore obligated to sanction Jacobs under the “zero tolerance” policy terms.

But we can also see from the section above that the policy is designed for selective enforcement. Reporting a violation by a boss, even to an “EEO officer” is career suicide if the object of the complaint is a direct report to the CEO and therefore senior to the EEO officer or otherwise in an influential position.

If CalPERS wanted to look half-way serious, it would have an external hot line with the complaints investigated by a more-neutral-looking party, such as an outside law firm. Of course, with Jacobs sitting atop all compliance functions, there’s no such thing as an independent investigation.

But there is an important lesson in what on the surface seems to be merely yet another eye-rolling example of how CalPERS executives do the institution and themselves harm by acting as if they are above the law and good governance standards.

This incident proves that when CalPERS waves the “harassment” bloody flag, it’s a joke. The entire point of a policy with overreaching grounds for deeming an individual as a harasser and toothless enforcement (the “so CalPERS can try to resolve the complaint internally” says it all) is to pick and choose who gets charged. Those who have become inconvenient or demanding are accused on thin, subjective grounds, while the true members of protected classes, like Matt Jacobs, get away scot free.

_____

1 This is not an exaggeration. Readers may recall that then new board member Margaret Brown was sanctioned because a friend who was helping her perform CalPERS duties also, without Brown’s knowledge, scanned a few documents on a copier on CalPERS’ premises and e-mailed them to herself. Note that this involved no cost to beneficiaries or the state. CalPERS board president Priya Mathur denied Brown access to the CalPERS building by having her access card turned off, which resulted in Brown missing a board closed session. Brown was also denied access to her office for two months, preventing her from accessing board information such as closed session transcripts, documents on closed session agenda items, and official e-mails. Not only did this prevent Brown from meeting outside parties, but it also made it impossible for Brown to access records important for her to perform her duties as a fiduciary and an elected state officer.

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32 comments

  1. The Rev Kev

    It seems that gross behavoiur like this can be considered a bit of a moveable feast depending who was doing what to whom – and who gains by it. I mean what Matt Jacobs did was out of line and it looked like what he was attempting to do was a lower manspread with a full gainer and at his age he should know better. If he does not then perhaps it is best that he steps aside and makes place for someone else who does – before CalPERS ends up with a helluva lawsuit on its hands. In any case the cameras were running and he did not care which is not a good sign for a person who has the job of General Counsel.

    In contrast, The Sacramento Bee let itself be used about a fortnight ago in publishing three articles to air old charges against J.J. Jelincic Jr while running for a position on the Board again. In a leaked letter, State Treasurer Fiona Ma, State Sen. Connie M. Leyva and CalPERS Vice President Theresa Taylor accussed him of what amounts to “stuff” that he was supposed to have done eight years ago. So these accusations were being pinned to the #MeToo movement to stop him running while I bet that they give Matt Jacobs a free pass. I will be curious to see if the Sacramento Bee re-publishes this article.

    But I won’t be holding my breath.

    Reply
    1. Yves Smith Post author

      I obtained the State Personnel Board file on the Jelincic charges years ago and read them, which I suspect none of the people getting on their high horses about this have done (the SPB is cooperative but not very fast about producing records). It was remarkable to see what a nothingburger they were, yet the SPB signed off on them. One has to wonder if CalPERS is capable of doing the equivalent of jurisdiction-shopping in influencing who is assigned to a case, or if JJ’s advocate did a crappy job in the hearing.

      Three women, one incident each. One women complained that JJ said she had nice shoes. I gather from people then at CalPERS that this woman had quite a shoe collection and one would think she’d want them noticed. He said something approving about a dress another woman was wearing (I have less good recall about this one, but his comments were about the dress, not her physique). A third woman accused him once of looking her up and down “with bedroom eyes”.

      If you have ever seen JJ in person, he wears thick glasses. Someone would have to have better than 20/20 vision to see that much about his eyes through those glasses.

      Compare that to what Jacobs did and many years later, in the #MeToo era, where norms have become even more stringent.

      Reply
      1. The Rev Kev

        The stuff mentioned in those articles was the same sort of rubbish and it was just a series of hit pieces. The Sacramento Bee must be very proud of themselves. If Jelincic had opened a door for one of those women, that would have been part of those accusations as well. What Matt Jocobs did was just creepy and should entail a response like “Jacobs, you’re so close now that I can’t tell if that is my feet that I am feeling or yours”.

        Reply
      2. Sinecure @ MS

        A couple of the JJ accusers promptly got promotions after fabricating their stories i mean coming forward. That’s Ann Stausboll’s legacy, petty vindictiveness, cankles with birkenstocks and an out of control organization

        Reply
  2. none

    Meh, if they were both into it then I’d just ask them to get a room. It’s tacky to do that in public.

    Reply
  3. PlutoniumKun

    This is just plain weird. Even if they were very close buddies and did this sort of thing all the time in private, to do it in plain sight in an important public event tied to work shows an amazing lack of self awareness and tact. Even in Mad Men days this wouldn’t have been acceptable behaviour for senior officers.

    Its grossly unprofessional of Jacobs to do something like this, and equally unprofessional by Frost not to have stopped him.

    Reply
    1. EoH

      Yes. It was an overt display of dominance. Jacobs was marking his tree and telling the board, employees, and the public that he’s the real boss. Frost allowed and joined in it. That would appear both to acknowledge and manipulate his claim. Neither behavior is legitimate.

      If they were high-flying middle managers, HR would call them in for separate all-day sessions. Instead, HR will cover for them, and gaslight everyone who believes their own lying eyes. Imagine what other conduct this conduct enables, and, more importantly, the beneficial conduct it precludes.

      Reply
  4. diptherio

    Little typo at the end of the footnote. Looks like there was maybe some more to that last sentence.

    Reply
  5. diptherio

    Really makes you wonder about the dynamic between Jacobs and Frost, doesn’t it? She’s the CEO, but he’s making it clear who’s really in charge, or so it appears. Not surprising, I guess, that he’d be the one really calling the shots, given Marcie’s notable lack of credentials.

    The question I keep coming to, though, is “why?” Why do this kind of thing in a public setting? Why make such a display? Who is the display intended for?…or is Jacobs just so f’n oblivious that he didn’t realize how handsy he was being?

    Really wondering when there’s going to be a widespread beneficiary revolt against the yahoos in charge of their retirement money…I would love to see some protests outside board meetings.

    Reply
    1. Joe Well

      I am amazed no one else has mentioned Biden yet. It’s the first thing I thought.

      I think Yves said that the images of Biden’s laying of hands looked like classic dominance displays. Not sexual overtures or groping, but most sexual harassment isn’t that. It made me think of a man patting another man on the head.

      Reply
  6. Tom Stone

    This behavior is not surprising to me, what would be a surprise would be seeing Matt Jacobs disciplined or fired for his conduct here.
    Laws are for little people.

    Reply
  7. David in Santa Cruz

    Well, if you wondered whether the David Petraeus keynote that very morning was a blatant message to the board and to the public about CalPERS management’s views on elite impunity, you have your answer.

    Shame on Theresa Taylor. Shame.

    Reply
    1. flora

      Wonder if Jacobs felt personally compelled to make a manly-man ****-swinging display after Petraeus’ presentation. oops, sorry. that was a bit crude of me. ;)

      Reply
  8. flora

    Good gawd. If it’s consenting, get a room, stop acting like teenagers with no clue. If it’s not consenting, either sanction Jacobs or quit. Frost has no credibility left. (Surprised I just wrote that because I thought her credibility was gone a long time ago. Apparently I was still giving her some teeny tiny benefit of doubt. That’s gone. ) I could say something crude about Jacobs, but that would be wrong. ;)

    Thanks for your continued reporting on CalPERS, PE, and pensions. (And blatant double-standards.)

    Reply
  9. SACRAMENTO Sal

    Is this really Calpers’ general counsel behaving this way? The lawyer that helps craft the rules ignores them? What’s surprising is that he thinks this is nothing since he does this in public. I guess now we know who’s captain of this Titanic.

    Reply
  10. Adam Eran

    And this just in: Jerry Brown has endorsed Jelincic’s opponent in the upcoming CalPERS elections. Not a big surprise…after all, Brown vetoed even a study of a state bank (would be handy now for the marijuana, too).

    Anyway, sabotaging CalPERS has the double reward of demonstrating government is incapable, and diminishing the power of public employees and their unions, one of the last bastions of defense against our plutocratic masters. That’s the “left” coast, too…

    Reply
    1. EoH

      Typical Sacbee pro-management summary of Jelincic, Jones, and PEPRA, while not failing to bring up 2011 allegations of “sexual harassment,” that Jelincic denies. It explains CalPERS’s reported ROI of 6.7% fell “just short of its 7 percent target amid a volatile year for stocks,” implying that that reasonably explains the shortfall.

      That explanation of causation at the troubled CalPERS reminds me of the standard Hollywood coroner’s description of a star’s death as “heart failure,” while adding, sotto voce, that the failure was due to ingesting the contents of five bottles of Nembutal.

      Reply
  11. monday1929

    Not sure if video showing trump with the cheerleader at 1992 party w/ epstein has been discussed here.
    It appears he pulls her back toward him (is she startled for a split second?) and possibly touches/brushes the underside of her breast before slapping her on the rear.
    It demonstrates (if really needed) a pattern of behaviour. Would be good to review in slow motion.
    I believe a photo of trump holding ivanka by her buttocks and then slapping at her rear in parting has been described as a show of dominance (the slap).

    Reply
  12. bruce

    Every once in a long while, I will go up to a woman, put my arm around her shoulders and whisper something to her. If you see me do this, it means two things, 1) she is a very close friend, and 2) I am telling her a secret.

    Saw “manhandling” in post title, clicked in eager anticipation of unique drama and comedy from public officials, and am frankly a bit disappoint. This again. I was hoping “manhandling” meant “he suddenly threw her ass into a swimming pool” or “he trapped her in his car and sent it through a car wash”.

    Reply
  13. Synoia

    Jacobs over Frost’s shoulders…..

    Hmm, they appear to have a close relationship….

    1. Was Jacobs instrumental in hiring Frost?
    2. Do they have a relationship outside work?

    Reply
    1. Yves Smith Post author

      The photo is not from the video (actually a series of videos) but from a member of the audience. The clip readers are talking about was from public comments and that is still up.

      I looked to see if what happened with Frost and Jacobs was picked up on the video, but the way the videos were taken at that offsite make it seem very unlikely. The cameraman would focus on speakers or on the screen, and the focus on the speakers was tight. Frost and Jacobs were obviously not addressing the room and so the cameraman would not have turned his lens on them.

      Reply

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