EXPOSED: Transcript of CalPERS Closed Session on Ben Meng Departure Shows Clear and Extensive Violations of Transparency Laws, Builds Case for Contempt Ruling by Judge Markman (Presiding)

As readers may recall, last March, former board member JJ Jelincic sued CalPERS over alleged failures to disclose information as required under California’s version of FOIA, its Public Records Act.

Jelincic was pursuing two issues. One was CalPERS had discussed the abrupt and embarrassing resignation of Chief Investment Officer Ben Meng in a board “closed session” when there was no legal basis for conducting this meeting in secret. The second was failing to produce records related to nearly $600 million of real estate write-downs.

CalPERS looks to have committed a huge own goal via publicly posting about 80% of the transcript that Jelincic has been fighting to have released.1 We have embedded a searchable version at the end of the post.

This redacted version demonstrates:

CalPERS has engaged in a flagrant violation of the Bagley-Keene Open Meeting Act in holding this meeting in secret

Redacting any of the document is an insult to Judge Michael Markhman and confirms that CalPERS believes it is above the law

There’s a lot more to be gleaned from this transcript, which we will address in future posts. We’ll give some background for the benefit of those of you who are not yet CalPERS junkies, then we’ll turn to the two issues listed above.


California has strong open government laws. The centerpieces are the Bagley-Keene Open Meeting Act (and a local government counterpart, the Brown Act), and the California Public Records Act.

California requires that all official business be conducted in public. The few exemptions include personnel matters and pending litigation, and the litigation has to be ripe, not general or potential exposure.2

Similarly, the Public Records Act requires that government bodies provide records promptly and give specific reasons when they don’t, citing relevant statute.

The Public Records Act also stipulates that a requestor who has to go to court to obtain records and receives them after lodging the suit is entitled to recover attorneys’ fees.

As we have documented, CalPERS regularly flouts Public Records Act requests, even when there is case law contradicting their position in closely parallel cases. Despite being clearly in the wrong, the giant fund knows attorneys will not take a Public Records Act case fully on spec, and the cost of fronting a legal action can add up quickly.

Conversely, CalPERS quickly folds when up against a deep pocket. For instance, Bloomberg threatened to sue CalPERS when it refused to produce a closed session presentation by BCG on its eventually scuppered “four pillars” private equity scheme. CalPERS caved and produced most of the document.

Transcript Confirms Jelincic Case: Multiple, Flagrant Violations of Bagley-Keene Open Meeting Act and Resulting Impermissible Withholding of the Meng Transcript

Recall that Chief Investment Officer Ben Meng resigned with immediate effect on August 5, 2020, a mere three days after we documented that he had approved a $1 billion investment in a Blackstone fund when he also held stock in Blackstone, a clear cut violation of California’s conflict of interest laws. Two individuals almost immediately petitioned the California Fair Political Practices Commission to investigate.

Recall this was a self inflicted wound. CalPERS knew Meng held stakes in Blackstone, Carlyle, and an Ares credit fund as of when he filed his first financial disclosure form on January 31, 2019, more than a full year earlier. Given how regularly CalPERS invests with Blackstone and Carlyle, Meng was bound to get himself in hot water if he didn’t dump those shares. Yet no one at CalPERS insisted he do so.

CalPERS’ damage control only made matters worse. The giant fund admitted it had known of Meng’s rule-breaking investment shortly after he’d approved it, in April 2020. Rather than telling the board and taking corrective action, CalPERS went into cover-up mode, keeping most of the board in the dark about the fact that it had hired a law firm to investigate…and did not have them complete the report as of August.3

State Controller and board member Betty Yee was particularly disturbed at the board having been frozen out of such an important development. Yee demanded a special board meeting after Meng resigned:

…regarding potential violation of laws, adequacy of existing policies, safeguards that could prevent a recurrence of the situation, and the Chief Executive Officer’s oversight and implementation of policies and safeguards.

Bear in mind that “potential violation of laws” isn’t even close to what California deems necessary to invoke the “pending litigation” secrecy cloak. General policy discussions are clearly open session matters.

CalPERS agenda for its board meeting on August 17 listed only one topic for the closed session, and it had precious little to do with what Yee and presumably other board members wanted to talk about:

Note that any personnel exemption for Meng is extremely narrow and not applicable. CalPERS cited Section 11126(a)(1), which is a general personnel carveout, but it is superseded by later section which CalPERS also invoked but ignored. From Jelincic’s lawsuit:

Government Code § 11126(a)(1) allows public bodies to hold closed sessions to discuss a range of topics relating to personnel matters. However, this provision does not apply to discussions relating to the CalPERS CIO, which are expressly governed by a more-specific subdivision, § 11126(g)(1). This subdivision applies only to the CEOs and CIOs of CalPERS and of the Teacher’s Retirement Board. As relevant here, this statute allows the Board to meeting in closed session only “when considering matters pertaining to the recruitment or removal of the Chief Investment Officer of … the Public Employees’ Retirement System.”….

The agenda for the Board’s August 17 meeting listed as its sole substantive item the “Chief Executive Officer’s Briefing on Performance, Employment, and Personnel Items,” which was to be closed to the public under Government Code §§ 11126(a)(1), (e), and (g)(1). Subdivision (a) (1) allows the Board to discuss certain topics relating to employee performance in closed session. Subdivision (e) allows it to discuss certain matters relating to litigation in closed session, and also requires that a litigation memorandum be prepared if this occurs. The reference to subdivision (g)(1) indicates that the Board was to consider matters relating to the CIO or CEO.

Since Meng had already quit, there could be no discussion of his removal in closed session.

During the meeting, as you can see from the transcript below, CEO Marcie Frost and her staff tried to exhaust the board into numbed silence with a long and almost entirely irrelevant discussion of the how CalPERS compliance function works (which the board ought to know full well) and what CalPERS’ duties were in getting covered staff to complete the so-called Form 700, the annual financial disclosure filing. There was absolutely no basis for holding that discussion in secret.

And this presentation also shows the contempt in which staff holds the board. Staff was trying hard to sell the idea that CalPERS had done nothing wrong because they’d complied with FPPC requirements for Form 700 filings. But there was nothing wrong with Meng’s Form 700. Going on about that was a deliberate diversion.

Fortunately board member Stacie Olivares managed to stay awake despite CalPERS having the fog machine turned on high and objected:

There have been a couple comments regarding compliance. And I wanted to make comments on this. The FPPC is not responsible for investment compliance. CalPERS is. We are as a Board. These are two separate things. One is looking at political practices and trying to ensure that there is not a conflict of interest. But public entities engaged in investments should have their own processes — actually, must have their own processes for preventing conflicts of interest. There is significant precedent for this with the Treasury Department, with the Federal Reserve Bank. And within the State of California, I led an investment fund and we had that…

So again, this is the responsibility, I believe, to be of CalPERS and not the FPPC…

There is significant risk to the fund on these conflicts of interest. I sold my shares when I joined the Board. To me, that’s standard practice, right, because I can’t recuse myself from the Investment Policy and the investment decisions. I can’t as a Board member.

I say the same for the CIO. And again, I’m also sorry to see Ben leave, but he can’t recuse himself for the decisions made by his staff.

Mind you, this is one of the most pointed parts of what we can see of the transcript. It’s about policy, process, and procedure, like the next steps for hiring a new CIO. Nada about anything even remotely rising to the level of closed session treatment, including the whinging about blogs.

If you skim the transcript, you’ll notice General Counsel Matt Jacobs mention that Meng has hired an attorney “with an eye toward potential action of some sort.” The next paragraph is redacted.

This redaction (as is certainly true of the others but we have less basis for guessing what they are about) is impermissible. Since Meng up and quit, it’s hard to think how he could sue. The bar for defamation is extremely high in the US, and even more so for public figures. As we indicated above, the litigation exemption under Bagley-Keene is only for pending litigation. That is not “theoretically someone could sue us”. Under Bagley-Keene, that translates into “a suit has been filed or is so close to being filed that disclosing our discussions about it might reveal our litigation strategy.” A vague threat from a year ago that has gone nowhere does not begin to cut it.

It should come as no surprise that there’s no discussion of any particulars about Meng, not that those could legitimately be relegated to closed session. Because Frost and Jacobs thought they could successfully cover up Meng’s violation of California law, the last thing they want to go into is who knew what when, because that would put the focus on their culpability for this fiasco.

The one item could have justified a closed session is that State Controller Yee, in her letter, had demanded a frank discussion of Frost’s screw up. But not only did the closed session agenda on its face indicate that Frost was not being examined (you can’t be the party conducting a briefing if you are in the hot seat) but CalPERS spokescritters also said at the time Frost’s conduct was not under review.

And there was an additional Bagley-Keene violation not included in the Jelincic suit because he could not possibly have known about it. The board held a vote during this closed session on a motion by board member Jason Perez, that board members be able to read the full investigation report (the “Olson report”) at CalPERS’ Sacramento office. Any vote taken during closed session must later be reported out in open session. But this vote instead was impermissibly kept secret.

CalPERS Defies Judge Markman

We’ve said repeatedly that CalPERS regards itself as above the law. This new example should settle any doubt. CalPERS has defied the court by refusing to provide a full transcript of the closed session and presumably the full audio.

The whole point of an in camera review of documents and evidence is for a judge to determine if the party asserting attorney-client or some other basis for confidentiality, like trade secret status, is actually entitled to it. For instance, from the National Institute for Trial Advocacy:

The United States Supreme Court has held that a trial court is responsible for determining, through in camera review, if each individual document presented by the party claiming privilege is actually privileged material.[20] As this article demonstrates, judges are the only people who will review potentially privileged material. It is difficult to find language in any case law or statute that sets forth any limitation on the principle of the judge acting alone.

CalPERS willy-nilly withholding material is a slap in Judge Markman’s face. At most, CalPERS should have presented the complete transcript and perhaps also one with the redactions it sought and have made its case as to why each was warranted.

The only sort of redaction that might be permissible here are the ones carved out for truly personal information. From the First Amendment Coalition on resignation letters, which are required to be disclosed save for truly personal information like home address and Social Security numbers. A key section of this discussion:

Under the California Public Records Act, the exemption set forth in Government Code 6254(c) is specifically designed for “[p]ersonnel, medical, or similar files, the disclosure of which would constitute an unwarranted invasion of personal privacy.” Gov’t Code § 6254(c) (emph. added). Section Government Code 6254(c) “was “ ‘developed to protect intimate details of personal and family life, not business judgments and relationships.”

Even though Meng had already resigned and this board meeting could never constitute part of his personnel file, Meng claimed when he resigned that it was for health reasons. If Frost or Jacobs had offered details, like Meng having sought treatment for depression or anxiety, I doubt that Judge Markman would object to having that kept secret. But there’s far too much blacked out for it to be about Meng’s condition.

We tried giving some advice to CalPERS’ attorney, Ragesh K. Tangri of Durie Tangri, in March:

Someone should pull Tangri aside and advise him that outside the CalPERS bubble, the Matt Jacobs style of lawyering, which is a combo plate of making shit up and bullying, not only isn’t very successful but it also tends to reflect badly on the attorney who has been persuaded to attempt it.

We anticipate that Judge Markman’s order will prove us correct. It is hard to imagine he will view CalPERS’ antics in a favorable light.


1 We don’t see how exposing this document was an accident on purpose. CalPERS has been trying to drag this case out beyond the board elections underway. Resolution of this case in favor of Jelincic would favor the challenger to David Miller’s seat, Tiffany Emon-Moran, particularly since the transcript shows Miller in a very poor light, and reformer/board member incumbent Margaret Brown. Conceivably, CalPERS could have been trying to establish facts on the ground with this publication, that most of the transcript was now out there, so why not just dismiss the case so the judge could clear his docket? Having the case dismissed with the most CalPERS (really Matt Jacobs) damaging parts staying hidden would also keep the judge from delivering on one of the findings by Jelincic’s attorney Michael Risher: ruling that CalPERS had violated the Bagley-Keene Open Meetings Act. This outcome would not merely be a black eye for Marcie Frost and Matt Jacobs, but would also facilitate other lawsuits to have impermissible closed session discussions made public.

The reasons we think CalPERS can’t have meant to have exposed this transcript are:

1. This revelation does nothing to address the other half of Jelincic’s compliant, for records involving the $583 million write-down of real estate assets. So it does not provide a path for getting the case off Judge Michael Markman’s docket materially faster, which would be his main motivation for cutting CalPERS a break.

2. In the one past Public Records Act case we know of where a government body at the 11th hour posted most of the records at issue and asked the judge to dismiss the case, it backfired. The judge was enraged and in a harshly worded order, stipulated that all records at issue be made public.

2 The relevant sections. See (2):

ARTICLE 9. Meetings

11126…(e) (1) Nothing in this article shall be construed to prevent a state body, based on the advice of its legal counsel, from holding a closed session to confer with, or receive advice from, its legal counsel regarding pending litigation when discussion in open session concerning those matters would prejudice the position of the state body in the litigation.

(2) For purposes of this article, all expressions of the lawyer-client privilege other than those provided in this subdivision are hereby abrogated. This subdivision is the exclusive expression of the lawyer-client privilege for purposes of conducting closed session meetings pursuant to this article. For purposes of this subdivision, litigation shall be considered pending when any of the following circumstances exist:

(A) An adjudicatory proceeding before a court, an administrative body exercising its adjudicatory authority, a hearing officer, or an arbitrator, to which the state body is a party, has been initiated formally.

(B) (i) A point has been reached where, in the opinion of the state body on the advice of its legal counsel, based on existing facts and circumstances, there is a significant exposure to litigation against the state body.

(ii) Based on existing facts and circumstances, the state body is meeting only to decide whether a closed session is authorized pursuant to clause (i).

(C) (i) Based on existing facts and circumstances, the state body has decided to initiate or is deciding whether to initiate litigation.

(ii) The legal counsel of the state body shall prepare and submit to it a memorandum stating the specific reasons and legal authority for the closed session. If the closed session is pursuant to paragraph (1), the memorandum shall include the title of the litigation. If the closed session is pursuant to subparagraph (A) or (B), the memorandum shall include the existing facts and circumstances on which it is based. The legal counsel shall submit the memorandum to the state body prior to the closed session, if feasible, and in any case no later than one week after the closed session. The memorandum shall be exempt from disclosure pursuant to Section 6254.25.

(iii) For purposes of this subdivision, “litigation” includes any adjudicatory proceeding, including eminent domain, before a court, administrative body exercising its adjudicatory authority, hearing officer, or arbitrator.

(iv) Disclosure of a memorandum required under this subdivision shall not be deemed as a waiver of the lawyer-client privilege, as provided for under Article 3 (commencing with Section 950) of Chapter 4 of Division 8 of the Evidence Code.

3 Keeping the investigation in an incomplete/advanced draft state was presumably seen as an insurance policy: the main actors could claim they had Done Something even though they hadn’t, and not finalizing the draft would allow them some freedom as to final edits, assuming events broke so they needed to complete the document. But the Meng situation unravelled so quickly that the fact of a mere draft report months after factually simple misconduct worked against the cover-up crew.

Confirming our view, board member Lisa Middleton zeroed in on the fact that there were no new developments after May, yet the staff had sat on the report. Her remarks:

I think as most of you know in a prior life, I actually conducted and led investigations into potential mis·conduct of senior individuals in the organization I worked for at the time, a State agency….

I would share with Controller Yee and I think others the concern that the conclusion of an investigation is too late for notice to the full Board when the investigation involves matters of this significance.

CalPERS Meng Transcript Filed In Camera
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  1. vlade

    Ohh, I do so hope the judge reacts.

    And, should Newsom be recalled, it right now looks like it’s going to go to Republicans, possibly quite extreme ones. Which likely would remove any and all aircover from CalPERS – at the very least the current board. That is, unless they jump and start filling coffers of someone else, but if that happens, the chances are they will get caught much much sooners, because I suspect that an incoming Republican govt would not be looking at a long-term stuff, but have loot-while-you-can approach.

    1. juno mas

      While it is possible that Newsom will be recalled. None of the alternative candidates have any political experience (savvy) with the predominately Democratic state legislature. Whomever the winner of the recall election, they will have but a year, or so, before the next regular general election; not likely to be won by a Respublican. A few appointment opportunities may be the best that can be expected if Newsom loses recall.

      1. vlade

        If any of the appointed board members are for an appointment in that period (I have no idea), it would still throw a grenade into CalPERS play.

        And, even more, if the governor has any powers of investigation there, he could drag it out as a political case showing to many CP beneficiaries how CalPERS was misusing their money – and if it could be tied to any Dem politicians, that would be a plus for any elections..

    2. ian

      I hope this does get some attention in California. I appreciate the efforts here to expose this ongoing mess, but as a California resident, I am struck by the fact that no one I know there really knows much about CalPers or even cares. Perhaps those who do know about it just assume that whatever happens will be back-stopped by the taxpayers.
      Personally, I’m of 2 minds on the recall (even though I will probably vote for it). I don’t think Newsom has been outright terrible (though there have been some missteps, but it seems to be the only way of getting the attention of the political class.

  2. David in Santa Cruz

    Terrific analysis, Yves!

    What becomes quite evident is that CEO Frost, who appears to have F-ed her way through life, seems to be a big believer that conflicts of interest are a good thing.

    Reading this transcript only confirms that suspicion, leading me to strongly susrmise that Meng’s conflicts of interest were what got him hired in the first place — and that he quit in a huff when Frost, Jones, Feckner, and Taylor’s cover-up failed and the FPPC opened an investigation of his blatant violations of the Political Reform Act.

    As always, follow the money

  3. Tom Stone

    I’m sure Attorney General What’s his name will be all over this like witeout on a computer screen!
    Real soon.
    Any day now.
    Certainly before Christmas unless something more important comes up.

  4. The Rev Kev

    Kudos to Stacie Olivares for being on the ball and being smart enough to pick up on CalPERS fob off responsibility. Unfortunately it may be all for nought. From the publication “SacSh*t”-

    ‘CalPERS today announced the outbreak of a fire at their Sacramento headquarters in their records section. They were reviewing records for an upcoming case involving alleged breaches of the Bagley-Keene Open Meeting Act which meant that unfortunately, all their fire-safes also happened to be open at the same time. ‘It is all a total loss and nothing remain but ash’ says CalPERS. Also unknown is how much money was destroyed in this fire as the records listing what was in the records section was also destroyed. Reporters asked about off-site records but CalPERS regretted to say that they had been brought in for updating and they were also consumed in the flames. ‘It’s terrible as we have have lost so many records.’ stated a spokesperson. ‘So many embarrassing, humiliating, incriminating records.’

    A further tragedy was that so many staff were also caught in in this fire and lost their lives. Staff that by coincidence were intimately connected with this Bagley-Keene case. ‘We had just called a special meeting of all possible witnesses and thought it best to hold the meeting in the records section so that they could refresh their memories with all those records’ the spokesperson said. ‘Such a tragedy.’ When asked why there were cars parked against the outside of the fire-escape doors, CalPERS pleaded ignorance and muttered something about CalPERS having so many bad drivers. When it was pointed out to them that one of the cars that was against the fire-escape doors was on the inside of the building, the spokesperson could only reiterate that some were really bad drivers.

  5. Sacramento Sal

    Finally read the entire transcript and what a cluster. Why did no board member object to this discussion being in closed session when the topics were not properly agendized or meet the exclusions for closed session?

    There are still many unanswered questions and my guess is the good stuff is redacted. Let’s hope the judge removes the redacted parts of the transcript so we all can see what’s really going on at CalPers.

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