CalPERS CEO Marcie Frost Says She’s Not in Charge and Lies to the Board About Receiving a Warning from the Fair Political Practices Commission

One of our favorite headlines was about the HUD Secretary during the foreclosure crisis: Memo to Shaun Donovan: Your Nose is Getting So Long You Need to Get a Hacksaw. We’ve resisted the temptation to reprise it with CalPERS CEO Marcie Frost as the Pinocchio wannabe. But yet another incident of Frost’s casual lying shows it to fit.

Readers may recall that former CalPERS board member JJ Jelincic filed complaints with the Fair Political Practices Commission with respect to board member Theresa Taylor’s failure to report over $30,000 of income, as required under California law. From a July post:

As we’ll show, Taylor has made a cut-and-dried violation of California requirements for California officials to report all income and assets received from non-government sources in their jurisdiction. Specifically, Taylor hid at least $30,000 of income she received as Vice President/Secretary-Treasurer of SEIU 1000 from 2016 to 2018.

Taylor failed to disclose this income on the Fair Political Practices Commission’s Form 700, a disclosure of economic interests, which is a form sworn under penalty of perjury. Perjury is a felony in California.

The conflict of interest is real, since Taylor did not recuse herself over matters before the board that affected SEIU 1000 members.

Jelincic filed two complaints. The first, on June 20, was about Taylor’s failure to report the >$30,000 of income. He filed a second compliant about CalPERS apparently having taken 50 days to file Taylor’s amended Form 700 with the Fair Political Practices Commission (FPPC) when the required time for a filing officer to forward required documents to the FPPC is 5 days. The text of his second complaint is at the end of this post. Jelincic’s second complaint effectively said that either CalPERS filed the amendment impermissibly late or falsified the document by backdating when it received the amended form from Taylor.1

Bear in mind that the investigation of original complaint about the under-reporting of income has not been resolved. Given that Taylor admitted to her failure to report income by submitting an amended form, it’s reasonable to surmise that the FPCC is trying to determine what sort of sanction to deliver.

Mind you, the filing abuse at CalPERS that Jelincic flagged, though a real violation, is minor compared to Taylor’s sin of not reporting a significant amount of income.

Yet CalPERS CEO Marcie Frost is so desperate to scapegoat anyone rather than accept responsibility and perhaps even try to do an adequate job of managing that she denied being in charge of CalPERS and lied to the board about the FPCC’s action about Jelincic’s second complaint.

The first embedded document at the end of the post is the response by Lance Olson, outside counsel to CalPERS, on behalf of Frost and two CalPERS employees cited in the second Jelincic complaint, Chief Compliance Officer Marlene Timberlake D’Adamo and the apparent FPPC “filing officer,” Tifani Vincent.

This remarkable statement appears near the beginning of Olson’s missive, under the header “Background”. Notice this is the only defense offered for Frost’s inaction:

As the complaint notes, Respondent Marcie Frost is the Chief Executive Officer of CalPERS. As CEO Ms. Frost has no specific duties related to the filing of statements and reports required of CalPERS board members and employees pursuant to the Political Reform Act.

This is the second time in mere months that Frost has said directly or though her attorney that she’s repudiating duties she accepted in writing as the CEO. Recall that Frost had said earlier that she’s not in the compliance business when she denied responsibility for failing to act upon Chief Investment Officer Ben Meng’s conflict of interest with respect to a $1 billion Blackstone fund. As we wrote of Frost’s “Me? I just work here” response to her dereliction of duty with respect to Meng:

But the piece de resistance came in Pensions & Investments, when Frost flat out said she’s not doing the CEO job:

It is important to guard against the appearance of impropriety, Ms. Frost said. Currently, it is up to each investment staff member to ensure there are no conflict of interests between their personal investments and their job at CalPERS, she said.

CalPERS main role is education, Ms. Frost said, noting that each staff member has a “personal responsibility” to ensure they recuse themselves from participating in activities in which they have a conflict.

Frost should be fired for that statement. No financial institution can afford to have its top executive say that it’s not in the compliance business, that everyone is expected to know how to behave and allowed to operate willy-nilly

She is also clearly being insubordinate by refusing to perform her official duties. From the CalPERS Delegation Resolution for the Chief Executive Officer:

Despite her affirmation above, Frost has apparently forgotten that CalPERS has a compliance function, called Enterprise Compliance or ECOM in CalPERS-speak, although since she’s kept its staffing at a mere 21, versus, depending on how you count it, 79 or 81 for her PR department,2 it’s apparent what matters to her.

And Frost also appears to have forgotten that the top initiative of the compliance function that she lost track of was improving its oversight of conflict of interest rules:

Back to the current post. The FPPC agreed with Jelincic, that CalPERS had violated its requirements, but gave CalPERS a break for its “Covid ate my schedule” excuse, and issued only the mildest sanction, a warning, as you can see in the second letter embedded at the end of this post.2

The FPPC also acknowledged that the law was unclear as to whether the requirement to forward Forms 700 filed by board members to the FPPC within five days of being filed with CalPERS applied to amendments.

However, the FPPC dinged CalPERS for falsifying dates:

The complaint alleged that your clients violated the filing officer duties provisions of the Act by failing to forward to the FPPC within 5 days amended SEIs filed by Board Member Theresa Taylor….

While Regulation 18115 is not clear if the 5-day requirement applies to amended SEIs [Statements of Economic Interests], your clients’ actions violated the Act by failing to correctly indicate the date CalPERS received the amendments filed by CalPERS Board Member Theresa Taylor.

The FPPC clearly included Frost in its warning. The FPCC letter went to Olson on behalf of Frost, Timberlake D’Adamo, and Vincent, and it refers to “clients” in the body, not once excluding Frost. That is because the FPPC held the Enterprise Compliance function, and not just particular officials, responsible, and by implication, recognizes that Frost is ultimately accountable. The key sentence:

In this matter, the Office of Enterprise Compliance at CalPERS (“Compliance Office”) acts as both a filing officer and a filing official.

So what did Frost do about having been issued a warning from the FPPC? She flat out lied to the board, hoping that her “nothing to see here” falsehood would keep them from reading the FPPC missive and seeing otherwise:

From: “Frost, Marcie”
Date: October 8, 2020 at 6:50:42 AM PDT
Subject: Jelincic complaint to FPPC

Good morning Board members,

Mr. Jelincic filed an FPPC complaint regarding filing of Ms. Taylor’s amended Form 700. Attached are the relevant documents. The FPPC declined opening an investigation and issued the attached letter.


Frost is effectively accusing the FPPC of running a kangaroo court, of issuing judgments without looking at facts. Not only did the FPPC not decline to open an investigation, it assigned a case number, conducted an investigation, and issued a warning letter, which it stated also allows it to “conclude” the case.

Or perhaps, as one wag put it, “I guess they didn’t teach reading at The Evergreen State College as part of its BA/Masters program.”


1 This is the text of Jelincic’s complaint, which became Complaint Number COM-08302020-01527:

The Board of Administration is responsible for the administration of the California Public Employees’ Retirement System (CalPERS)

Marcie Frost is the Chief Executive Officer of the CalPERS. According to her delegated authority she is responsible to conduct, approve and oversee the administration and management of all functions within CalPERS, including without limitation all actuarial, audit, financial, investment, and legal functions, with independence and in conformance with professional standards, and in conformance with the direction of the Board.

Marlene Timberlake D’Adamo is the CalPERS Chief Compliance Officer. According the the CalPERS website she is responsible for all aspects of the Enterprise Compliance Division.

Tifani Vincent has been identified by the Officer of the State Treasurer to be the CalPERS FPPC filing officer. Although I can find no other documentation of that.

On June 20, 2020 I filed a complaint with the FPPC that Theresa Taylor, Member CalPERS Board of Administration, had failed to disclose reportable income on her 2016, 2017 and 2018 annual Form 700s. (COM-06302020-01129)

On July 1, 2020 Theresa Taylor completed and filed with CalPERS amended Form 700s for those three years.
On July 10, 2020 FPPC open a case (2020-00562)

On August 20, 2020 the amended Form 700s were filed with the FPPC. This is a 50-day delay, well beyond the maximum 5 days permitted by the regulations.

An alternative theory is that amended Form 700s were not in fact completed and filed with CalPERS on July 1, 2020 despite the Enterprise Compliance Division date stamp. If that is the case documents were falsified. This would appear to be an aiding and abetting violation (GC 83116.5)

2 If you read the letter by Olson and then the FPPC response, you can detect some annoyance at the FPPC having to expend energy to dismiss Olson’s ridiculous argument that the FPPC and not CalPERS is the “filing officer”.

00 Response to FPPC Complaint Against CalPERSfiling officer
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  1. vlade

    If she’s not doing the CEO’s duties, should not she be out on her ear faster than she can spell CEO?

    TBH, I can sort of understand (not approve of, but understand) the role of CEO as an expensive human shield, but she’s not even doing that.

  2. PlutoniumKun

    I find it remarkable that she isn’t even trying the token ‘the buck stops with me’ statement before trying to scatter blame and responsibility around. To any casual outside observer, that looks like the actions of someone who is flailing around before the guillotine falls and not even bothering to protect herself from personal liability while doing so. But it seems that with Calpers (and, apparently, Californian politics in general), they’ve lost the operating instructions for the guillotine.

    It really is a wonder that she got so far – most inept senior managers I’ve encountered have at least some skills that enabled them to climb the slippery pole before they got found out. I really wonder what it was in Frost that made someone decide she was CEO material. As others have suggested, she must fulfil an important role for someone powerful, somewhere. The question really for her is at what stage she has become a liability for whoever that person might be.

    1. Yves Smith Post author

      Never attribute to malice (or design) that which can be explained by incompetence. Remember that the CalPERS board, which hired Frost, has showed itself both to be not very competent and not at all inquisitive.

      Frost does appear to once have had a backer, Governor Jay Inslee of Washington. There is no evidence she had any sponsors when she applied for the CalPERS post. From what I heard from JJ Jelincic (who didn’t participate in her hiring but was in the loop of all the gossip) she was the best candidate, which already is a testament to how far CalPERS had fallen.

      At that point in time, the board wanted a CEO who was more willing to do face time with “stakeholders”. The departing CEO was seen as stand-offish.

      The board might also not have recognized that her job in Washington amounted to running a call center and back office. Frost had never been involved in investments or compliance and it shows.

      1. Elizabeth

        This is what I find so difficult to believe – that Frost was the best candidate for the job of CEO. By simply checking her resume, it would have been obvious that she lied about her background. That alone would have kicked her out of the competition. She feels like she can get away with anything, and won’t suffer any consequences – someone high up in Calif. govt. is protecting her – it seems to me. As “David in Santa Cruz” says, “follow the money.”

  3. Procopius

    I hope I’m not being offensive, but I see the phrase “sworn under penalty of perjury” often in your CALPERS reports. Has any person in California actually been charged with perjury for lying on an official statement such as these? Ever? Because I surely don’t see any action to do so in the last few years that you’ve been pointing out these violations of statutes.

  4. lambert strether

    I Am Not A Graphologist, but I can’t help thinking, looking at Frost’s handwritten “7/16/2018,” that it should include a little smiley-face (“:-)”).

    Perhaps there’s one in her (blacked-out) signature.

    1. David in Santa Cruz

      The smiley face ? dots the “i” in “Marcie.”

      What is CalPERS paying Lance Olsen for? I’m certain that he can explain that this “warning letter” is in effect a deferred prosecution, not a declined investigation.

      FPPC Enforcement Division Chief Galena West further fires a shot across the CalPERS bow by stating that the information will be retained and, “…may be considered should an enforcement action become necessary based on newly discovered information or future conduct.” Frost had better hope that Taylor doesn’t throw her under the bus…

  5. flora

    Marcie has put the board on notice that she’ll throw them all under the bus rather than accept responsibility for her own actions or inactions.

    CalPERS CEO Marcie Frost Says She’s Not in Charge

    The Board can make this true by taking back control they’ve ceded and replacing her with someone competent. (Not that they will, but they could do this.)

  6. The Rev Kev

    You know what? I am so going to so miss Marcie Frost when she eventually flames out, I really will. Take a look at this year. Massive fires in Oz, protests in Hong Kong, a world-wide pandemic the likes of which have not been seen in a century, a stock market crash, an all out oil war, whole countries locked down, Beirut destroyed in an explosion, BLM protests in America and the present chaos of the 2020 election there too. And all through this we have Frost and CalPERS making one screw up after another as regular as clockwork.

    It is almost comforting in its regularity as they flout one law after another. At times it is like watching a balloon being filled up wondering at what point the whole thing will blow up in their faces. At other times it is like watching the orders being given on the “Titanic” to go full speed ahead. You know that it will end up in tears and you are just not sure when exactly. It looks like that all the time that Marcie spent in majoring in a BS in business studies in Evergreen State College paid off. And by BS I do not mean a Bachelor of Science.

  7. LowellHighlander

    Seems to me that “How to Succeed in Business without Really Trying” might be as accurate as it is hilarious. [Either we laugh about this, or we cry. Either way, the play/movie is proving educational.]

  8. JJ Jelincic

    Here is what Marcie Frost wrote:
    “The FPPC declined opening an investigation and issued the attached letter.”

    Here is what the Fair Political Practices Commission wrote:

    “The Enforcement Division has opened this matter into a case, FPPC No.
    2020-00820, and we have issued the enclosed warning letter.”

    I guess it is just “alternative facts.”

    It’s a good thing that CalPERS believes in “transparency”. It would be a better thing if CalPERS used the same definition as the rest of the world.

  9. Ron Cleary

    Do not admit that your retirement funds come from Calipers. Most people in private sector regard fund as poorly run, that will need tax payer bailout.

  10. Michael G

    Britain has its very own Calpers, the Universities Superannuation Scheme (USS).

    Jane Hutton, a distinguished statistican had been a union-nominated trustee since 2015. She asked for figures to support the actuary’s calculations. When she repeatedly failed to get these, she filed a complaint with the UK Pensions Regulator. After further delays, she was suspended as a trustee and a legal firm instructed to prepare a report on her conduct. The report is secret, but on its basis, she was dismissed as a trustee. The whole sorry story is in this link.

    I was never a member of the USS, but I was a trustee of a comparable scheme for 16 years. I find it inconceivable that I would have been denied access to information I needed to perform my duties as a trustee.

    Incidentally, I had a look at the 2020 accounts of USS. I give some numbers, which are so extraordinary that I worry if I have got them wrong.
    In 2020, USS had assets of £67.68 billion pounds.
    The assets yielded an annual income of £1.66 billion.
    Employee contributions for the year amounted to £2.44 billion.
    Employers contributed a further £2.20 billion.
    Giving the fund a total income of £6.30 billion..

    During the year
    The scheme paid out £2.02 billion in pensions and transfers.
    Administration costs were £0.16 billion.
    Giving total expenditure of £2.18 billion
    And a surplus of income over expenditure of £4.12 billion.

    I would love to own shares in a company deemed to be worthless, but with billions of assets, where the predictable income was more than double the predictable expenditure.

    USS, however, thinks differently. On the basis of these numbers they determined that the scheme had moved further into deficit, from £5.4 billion to £12.9 billion. Their actuary used a process called de-risking, working out what would happen if the scheme took no further contributions and moved all its assets to low-yield bonds. Effectively, every £1 of contribution would purchase in real terms 80p to 90p worth of pension. “It’s prudence Jim, but not as we know it.”

    One of the reasons universities go along with this insanity is that USS is a multi-employer scheme. If one university went bankrupt, wealthier universities might have to pick up some of the tab for that university’s pensions.

    The final insanity is that the extra contributions the actuary demands, just further bloat the financial system. The actuary knows this and downgrades the investments again. No matter how much money the scheme pumps in, the actuary will not let it escape from deficit.

    A link to the 2020 USS accounts.

    Over the last year, university teachers have been engaged in a series of strikes to protect their pensions. I hope they pay more attention to the numbers than the contortions of the actuary.

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