FBI, SEC, Whistleblowers Invited To Join CalPERS Investigation

CalPERS CEO Marcie Frost assured Wall Street in response to questions about impending forensic investigation, "CalPERS is not sharing limited partnership agreements... not sharing side letters."

Public pensions are called public for a reason and the reason is because public assets are supposed to be subject to public scrutiny.

In a recent interview with CNBC’s “Squawk on the Street”, CalPERS Expands In Private Markets, CalPERS CEO Marcie Frost responded to final questions from the host about an earlier NBC News report indicating a number of former employees and former board members had hired a forensic pension expert to investigate and provide clarity on the fund’s investments.

After smirking, Frost gratuitously assured Wall Street listeners, “Private markets are called private for a reason… CalPERS is not sharing the limited partnership agreements, CalPERS is not sharing any side letters… we are extremely transparent… But frankly, private markets are private for a reason…”

“Private markets are called private for a reason… CalPERS is not sharing the limited partnership agreements, CalPERS is not sharing any side letters… we are extremely transparent…. But frankly, private markets are private for a reason…”

-Marcie Frost, CalPERS CEO

At the time Frost was making her nonsensical statements (somehow equating secrecy with transparency), fundraising for the participant-led pension investigation had barely begun. No one had requested from Frost, or CalPERS any private investment documentation whatsoever. Thus, there was no reason for Frost to announce on national television that the pension was committed to keeping Wall Street’s secrets from public scrutiny—other than to reassure Wall Street and possibly thwart fundraising for the transparency initiative. (As of today, the CalPERS GoFundMe has already raised nearly 75% of its $250,000 goal.)

Ms. Frost is a controversial figure whose misrepresentations or ambiguities around her educational background (lack of a college degree) and million-dollar-plus compensation have long raised eyebrows.

In our opinion, a savvy public pension fiduciary would have seized the moment to defend the public’s right to transparency and accountability by emphatically asserting: “Public pensions are called public for a reason and the reason is because public assets are supposed to be subject to public scrutiny. Any Wall Street investment managers who are unwilling to be fully transparent, have no business handling public monies.”

Typically, at the completion of our public pension investigations (e.g., Rhode Island, North Carolina, Ohio and Minnesota) we have provided our findings to the FBI and SEC. But this CalPERS case is different. As a result of Frost’s disturbing comments (before our investigation has even begun) evidencing a commitment to Wall Street secrecy schemes, as opposed to restoring accountability to CalPERS stakeholders—including California taxpayers—we are inviting the FBI, SEC and any CalPERS whistleblowers to join in our impending investigation.