CalPERS Laughingstock: Marcie Frost, Who Previously Pursued Non-Existent Dual Bachelors/Masters Degree, Designates Herself Law School Grad and Bar Member; Investment Committee Chair Theresa Taylor Admits Not Knowing What SPACs Are

CalPERS continues to demonstrate how far the institution has fallen. It’s not a good look that that key actors are broadcasting the CalPERS’ diminished state by seeming totally clueless when making fools of themselves.

Marcie Frost, Now Lawyer Extraordinaire

Napoleon crowned himself Emperor of France. One must conclude that Marcie Frost has imperial fantasies in designating herself a member of the California bar, which also requires having a law degree or having completed four years of study in a law office or under a judge.

A CalPERS insider1 described how Frost has taken to labeling internal e-mails from her to non-lawyers as “Confidential Attorney-Client Privileged” and “ACP/AWP” as in “Attorney-Client Privileged/Attorney Work Product”. These missives are unquestionably from Frost and not a CalPERS staff lawyer. They are from her e-mail address and signed “Marcie.” By their own presentation, these messages are from her and her only, as opposed to a forward of a cut-and-pasted e-mail from a member of the legal department or outside counsel under their signature but sent from Frost’s account. These cases do not include any attorney-produced content, such as an attachment from counsel or a summary of or direct quote from in-house or outside counsel.

Is Frost delusional or just the biggest rube sitting as an organizational chief? Let us turn to Cornell Law School:

Attorney-client privilege refers to a legal privilege that works to keep confidential communications between an attorney and his or her client secret.

The privilege is asserted in the face of a legal demand for the communications, such as a discovery request or a demand that the lawyer testify under oath.

Attorney-Client Relationship

This privilege exists when there is an attorney-client relationship.

On top of that, attorney client privilege applies only when an attorney is providing legal advice. Mere business or personal advice, such as how to handle a negotiation, is not protected.

Frost may try to blame CalPERS’ General Counsel Matt Jacobs for this embarrassment. Good luck with that. Even though Jacob has made himself notorious for making indefensible legal readings to keep CalPERS executives and the board from having to do the right thing, the spectacle of regular and obvious abuse of the attorney-client privilege claim exposes CalPERS to having a judge correctly question other assertions of privilege. Judges are normally deferential to counsel on claims of privilege. But this level of abuse opens other CalPERS’ assertions of privilege to challenge in litigation.

So the only conclusion one can reach is Frost is so high on her deceptions that she thinks she can pretend to be an attorney, the same way she pretended to be enrolled in a degree program at The Evergreen State College that never existed, or she is cringe-makingly ignorant of legal basics despite heading a major financial institution that is regularly involved in lawsuits.

Theresa Taylor, the Investment Committee Chair Who Is Shamelessly Ignorant About Investments

As the lawyers like to say, res ipsa loquitur, the thing speaks for itself:

From a recording of the Investment Committee meeting:

State Controller Betty Yee: [Addressing investment office members] And I have a question related to private equity. We are hearing more and more discussed about these special purpose acquisition companies or SPAC. And I am curious. These are companies that um, sole purpose is to raise capital to take private companies public. And I want to know your take on that. Whether that provides an opportunity, threat or challenge to the private equity investments….

Investment Committee Chair Theresa Taylor: Thank you I never had heard of those. And I saw [Interim Chief Investment Officer] Dan [Bienvenue] nodding his head vehemently. And sounds like something we are not getting in for a while that is for sure.

Needless to say, the recent vogue for SPACs, or Special Purpose Acquisition Corporations, is another case of financiers selling old wine in new bottles. They’ve been around for decades but had been mainly the province of penny-stock scamsters, who’d create or buy public shell companies, merge actual businesses into them, and run the stock price up and down. I had a former client go this route with monetizing a software venture. His stock would regularly round-trip from 15 cents to a bit over $4. And you’d feel like taking a bath after meeting with the Florida operators who took him public this way). Nevertheless, SPACs have become a fad.

Not only have SPACs been covered by Bloomberg, the Wall Street Journal, Reuters, the Financial Times, and the New York Times, but regularly by general interest publications, including:

Los Angeles Times

USA Today

Washington Post

In other words, if someone followed the business and finance news even casually, it’s hard to have missed SPACs. And that raises the question of how seriously Taylor takes her CalPERS duties.

But perhaps she is trying to bolster the “know nothing” defense that she’s deployed in response to a complaint alleging perjury for her failure to report significant amounts of income as required under California’s financial disclosure laws. But Taylor was a Tax Compliance Officer for the Franchise Tax Board, so it’s hard to think she can credibly claim that she didn’t know that SEIU officer stipends weren’t income under the law or managed to miss receiving over $30,000, a significant amount compared to the rest of her compensation.

The more likely explanation is no more flattering. Many members of the CalPERS board have stated on the record that they regard CalPERS staff as their only source of information.

But that lame excuse doesn’t save Taylor either. Staff in fact makes a point of keeping the board and employees current on important news, which it curates via its “CalPERS Today” weekday e-mail,3 which has headlines, with links to the full text of articles, and a snippet. CalPERS has attempted to educate board members like Taylor about SPACs. Some examples:

Needless to say, this level of deliberate ignorance and acquiescence is a repudiation of fiduciary duty, particularly at an institution where a former CEO is now in Federal prison for taking bribes and the current CEO has fabricated her background to the degree that would be a firing offense in any well functioning institution.2 Sadly, CalPERS beneficiaries and California taxpayers are along for this ride.


1 CalPERS loves blaming a particular board member for any and all unfavorable press. This story did not come to me from a board member. Frost and her minions are apparently in denial that more than a few staff members are unhappy with her background fabrications and scapegoating, particularly since many of them worked hard to attain their educational and professional credentials.

2 Frost’s falsehoods go beyond misrepresenting her education during and after she was hired. See:

CalPERS’ CEO Marcie Frost’s Misrepresentations Regarding Her Education and Work History During and After Her Hiring

Financial Times Publication Confirms Accuracy of Our Reporting on CalPERS CEO Marcie Frost’s Resume Misrepresentations; Board Refuses to Investigate and Instead Attacks Us

3 This is the successor to the “Daily News Summary,” which we exposed as a massive, long-term, flagrant copyright violation, leading to a multi-million dollar settlement with Dow Jones (surprisingly most other pubs were less willing to defend their intellectual property and either did nothing or entered into much more modest settlements).

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  1. The Rev Kev

    Must be all the purple that Marcie Frost is wearing that is giving her such pretensions. Personally I wouldn’t care if she styled herself the Queen of Sheeba so long as she did her job and did it well. But as has been fully documented over the years, she can’t and she won’t. But the Californian political mafia families are fine with that just so long as it does not effect them. Good luck with that assumption, mate. If she is trying to claim attorney-client relationships in her emails then I say let her. Here Marcie, have some extra rope. It should really stand up in a court of law. Did Matt Jacobs suggest it? If so, he must have gotten his law degree from the back of a box of corn flakes.

    From Marcie I would expect no more but Investment Committee Chair Theresa Taylor is either trying to be disingenuous or is literally at sea saying that she never hear of a SPAC. I’m sure that she had her smart phone with her and I am sure that she has Google on it as well. She could have pretended to be sending an important message while Googling the term. As it turns out, she could have learned a lot from one of the first links to come back-

    Most of the CalPERS Board here are pretty mediocre people and the only thing that you can say about that is that the mediocre are always at their best.

    1. tegnost

      Personally I wouldn’t care if she styled herself the Queen of Sheeba so long as she did her job and did it well

      You’re assuming her job is to manage the pension but what if her job is to feed the pension to wall st.? Busting unions and fragging labor, as can occasionally be seen in the NC comments, are essential to control inflation and keep the social order stable. First you fleece the pension, then you say OMG, we’re not fungible! Of course those lifeguards don’t deserve a pension anyway so whatev.
      Forget it Rev, It’s Sachsatown

  2. vlade

    I’m almost sure Marcie is using this as a pretend cludge to stop internal leaks etc., so she can pressure people not to say anything as it’s “priviledged conversation”.

    If an email like that would escape into the wild, be shared, I’m pretty sure Clifornia bar would have something to say about it. Wouldn’t that be fun?

    1. JTMcPhee

      Slightly aged California Bar story:

      “Big Jim” Thompson was an Illinois lawyer who climbed the often-trod path from prosecuting a Big Name in Illinois politics (shooting fish in a barrel) for corruption to high political office. His most famous target, from the US Attorney’s office, was Otto Kerner, who was feted as a rare “Mr. Clean” as Governor. Here’s the setup:

      Kerner, who was governor of Illinois from 1961 to 1968, seemed like the perfect politician. His father had been attorney general of Illinois. His father-in-law was Chicago Mayor Anton Cermak, founder of the city’s Democratic Machine. Handsome, with a full head of wavy hair, Kerner earned a degree from Brown University and a Bronze Star in World War II.

      When President Lyndon Johnson was looking for someone to lead an investigation into the urban riots of the 1960s, he chose Kerner. The National Advisory Commission on Civil Disorders is best known as the Kerner Commission, and best remembered for the conclusion that “our nation is moving toward two societies, one black, one white — separate and unequal.”

      While Kerner was serving on this blue-ribbon panel, he was also buying stock in Arlington Park racetrack at a deep discount. In exchange, he made sure the track got favorable racing dates, and two highway exits located for the convenience of horseplayers.

      Kerner left office in 1968, to become a judge on the U.S. Court of Appeals in Chicago. The next year, his corruption came to light when Marge Everett, Arlington Park’s manager, listed the bribe she paid to Kerner on her taxes. Everett assumed that graft was the cost of doing business in Illinois.

      Kerner, who had been known during his governorship as “Mr. Clean,” was indicted by U.S. Attorney James Thompson, and convicted of bribery, conspiracy and income tax evasion.

      Evert (the correct spelling) testified against Kerner, got a sweetheart plea deal from Big Jim to inflate his political aspirations, but was disbarred in Illinois for bribing Kerner and other shenanigans.

      Part of the plea deal was that Thompson would fly Evert to California on a hired airplane, and testify positively on her behalf before the fitness committee of the California Bar. Which he did. Evert was admitted, on that basis, to the Cal bar despite her conviction for corruption, as a morally fit member of the Bar.

      Subsequently she was also charged with similar bribery in connection with horse racing in CA, and eventually disbarred there. Leopard and spot story, no? One anecdote on the Cal bar. Apparently there are others:

      Thompson died in 2020, with his reputation as a good moderate Republican intact —

      Full service, for the greater good.

      1. vlade

        In that case, I’m surprised Marcie didn’t admit herself to the bar years ago. But we have seen she’s a slow learner.

      2. Tinky

        Actually, “Everett” is the correct spelling. I worked in the racing industry, and know a bit about her. She was a very interesting figure, well beyond her involvement with Kerner.

    2. km

      I am certain that is why Marcie was claiming spurious privilege.

      And if Marcie were a normie, the Cali State Bar would be all over that like white on rice.
      IfMarcie were a normie.

  3. PlutoniumKun

    I think its been a couple of years now of reading these articles thinking ‘this surely must be the last straw, no organisation can possibly withstand this sort of exposure and not have the media and political establishment come down like the wrath of God’. But somehow, the cavalcade of stupidity keeps coming. And Marcie Frost is still in charge. You quite literally wouldn’t run a junior sports team or local neighbourhood committee this badly and expect to get away with it.

    I can only assume that something is deeply rotten in the State of California that this can keep on happening, year after year, with nobody apparently willing to step in.

    1. km

      Have you not learned, the Great and Good can get away with incompetence and self-dealing that would get would get a normie out of a job and/or in prison?

      In fact “get away with” is too mild a term. Such people inevitably thrive and prosper, and we’re told that such are the fruits of meritocracy.

    2. John A

      You quite literally wouldn’t run a junior sports team or local neighbourhood committee this badly and expect to get away with it.

      When I hear of Marcie Frost, I raise you Dido Harding.

      Incidentally, Harding’s husband has been Anti-Corruption champion in Britain since 2017

    3. Tom Stone

      No, no PK!
      Attorney General Becerra is gonna be all over this like witeout on a computer screen!
      Any day now.

  4. Synoia

    Don’t be so hard on Marcy. We all need to chip in and buy her the Crown she converts so much, or She could always try a relationship with Prince Andrew.

  5. David in Santa Cruz

    Let’s cut to the chase. California Business and Professions Code section 6126 makes criminal any person, “…holding himself or herself out as practicing or entitled to practice law or otherwise practicing law who is not an active licensee of the State Bar...”

    Of course, the usual CalPERS defense of “I’m just an ignorant high school educated clerk-typist holding myself out as an expert” may be raised. Even our notoriously dyslexic governor had a college degree purchased for him by the Getty family, but don’t expect him to take any action on this, as it might cause an “Emperor’s New Clothes” domino effect for his upcoming recall election…

    Where are the “news media” on this? Wholly-owned by the same greed-heads who are looting the CalPERS trust fund.

    1. Tom Stone

      David, it’s “Bidness as usual” in the State of California.
      Ca[Pers is not an outlier, to my regret.

  6. Even Keel

    Re: privilege

    The privilege is between the lawyer and the client. The client could be a corporation or organization such as calpers. A corporation works through agents. If agents are conferring in order to facilitate legal advice (to gather information for a lawyer, to formulate questions for a lawyer, or even to implement a lawyer’s advice), then that is often privileged.

    As such, if the specific emails marked as privileged are to gather information for Ms Frost to give to lawyers, or implement legal advice, or otherwise facilitate legal advice, then they may in fact be privileged. Even if no lawyer is copied on the specific message. Not having seen the specific messages, no conclusion can be drawn.

    1. Yves Smith Post author

      The messages no way, no how qualify for privilege. They were communications from Frost to non-lawyers and did not seek information, nor did they convey instructions. The insider for this story was legal expert and while not telling me what the messages said, was very clear on what they did not say or do.

  7. lobelia

    Tom Stone March 18, 2021 at 6:11 pm. re:

    No, no PK!
    Attorney General Becerra is gonna be all over this like witeout on a computer screen!
    Any day now.

    Never you mind, Tom, Xavier Becerra has been confirmed today as BiMala’s US Department of Health and Human Services Secretary – which should horrify everyone (just like Becerra’s predecessor Kamala, has). Just for one thing (for out of staters reading here), Becerra has not done anything to address the decades long corruption and deadly negligence in California’s countless, for profit Nursing Care/Mental Health™/Rehab Facilities, not even during the pandemic.

    But rest assured, Gavin [Getty] Newsom will pick the best Pay to Player he can get away with as Becerra’s replacement California Attorney General – whether it be: Gang of Eighter, Current Chair of the US House Intelligence Committee, Democrat Adam Schiff, who has been lobbying Newsom for the Attorney General role (and reminds me of one of those creeps who drove around with handcuffs and a fake borrowed from a corrupt cop flashing light in their trunk); or any of the countless Identity Politics [IDPol] candidates favored by their respective, highly funded, well connected lobbyists.

    gotta run

  8. Ed Miller

    Marcie Frost is the perfect example of the ruling class mentality, as expressed in the Cory Doctorow tweet thread I read yesterday regarding the Federalist Society.

    “There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.”

    Although I would replace “alongside” with “ruling over”.

  9. Michael

    Information created by a non-attorney may be and often is privileged as “work product” but, in that case, it is not attorney work product. Here is an article explaining the difference:

    The determinative question is whether the information was compiled in good faith primarily for the purpose of litigation. Somehow, I doubt the emails in question qualify (assuming she’s not just sticking them in the signature line).

    It’s pretty bad that a senior CalPERS person doesn’t know how work product works and that CalPERS legal counsel didn’t explain it. You’d think it’d be one of those things very carefully spelled out to protect genuinely privileged documents.

  10. Confused...

    Dear Yves,

    Thank you for covering CalPERS. I am retired from the private sector where I was a practicing CPA. My interest in CalPERS and the State of CA’s expenditures and tax receipts has grown because I am considering leaving the state due to a lack of transparency. My view of the GASB is dim because the standards seem to enable manipulation, reduced transparency, and the State of CA likes to take full advantage of the weaknesses.

    I set up a google search to forward news about CalPERS to my email. A few days ago I received the following from Calpers steps back from four pillars strategy – Private Equity News (

    “In 2020, the $445bn California Public Employees’ Retirement System committed $18bn to private equity, more than 2½ times the $6.9bn it committed to the asset class in 2019, according to a report presented to the pension by its private equity consultant Meketa Investment Group.”

    I think of accounting as flows (cash flow, etc…) and stocks (balance sheet accounts). To grow balance sheet accounts there must be flows into it. In my practicing days I would have found the dramatic increase worth exploring. Some questions I would have asked follow. Where is the cash coming from to grow private equity? How does the growth impact the cash flow for all of CalPERS? Is CalPERS cash flow positive or negative on an aggregate basis? What is driving the change? Is the change, including the impact to cash flow, well thought out and fully understood by all relevant board leaders and managers? How does 2020 compare to each of the prior 5 years? What is the plan going forward and how does that impact flows and stocks?

    There are a lot questions here that the taxpayers should understand since CalPERS is the largest liability of the State of CA.

  11. arnold

    Ok, but *why* does CalPERS protect and retain Frost? It’s inexplicable. Is she someone’s relative, some kind of uneducated pawn that allows other corrupt officials to rob the place blind, or what?

    1. Yves Smith Post author

      All she needs to stay is 7 of 13 votes on the board. The board (save JJ Jelincic, and now Margaret Brown) has totally abdicated its oversight duties.

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