CHARLESTON - The West Virginia Investment Management Board will begin reviewing its investment advisers in June as a preliminary step to a complete makeover later this year if voters agree in September to lift a state ban on investing in stocks.
State lawmakers decided to put the issue before voters in a special election Sept. 27 after the West Virginia Supreme Court threw out as unconstitutional a 1996 law that would let state investment programs invest in stocks.
The investment management board - with $5.4 billion in assets, including $3.5 billion in pension money - was created last month through the merger of the West Virginia Board of Investments and the West Virginia Trust Fund Inc.
The new entity inherited the board's three investment advisers - Brinson Partners Inc., Banc One Investment Advisors Corp.and Huntington Trust Co. -as well and the trust fund's four managers - Western Asset Management Co., Investment Advisers Inc., Lincoln Capital Management Co.and Fischer, Francis, Trees and Watts Inc. The merged organization has a 13-member board, retaining all seven members of the board of investments and the six from the trust fund. Gov. Cecil Underwood is chairman; John Poffenbarger, previously executive secretary of the now-defunct board of investments, was named vice chairman; and H. Craig Slaughter, executive director of the board of investments, is acting executive director.
"If the constitutional amendment is approved by voters, then the new investment board can immediately start investing in equities," said Jerry Simpson, assistant state treasurer and, until recently executive director of the board of investments.
Even so, the investment management board would be limited in the amount it can place in equities the first year. As written, the amendment lifting the constitution's prohibition on equity investments would let the board move up to 20% of its assets into stocks the first year, and up to 60% of total assets into stocks after two years.
Even if voters reject the amendment, the board still would need to conduct manager searches because contracts for the current advisers expire at the end of the year, Mr. Simpson said.
The new board will create an investment committee next month "that would start to take a hard look" at the current managers, said David Gardener, previously chairman of the trust fund and now on the board of the new organization.