CalPERS will consider a staff-recommended consultant disclosure policy at their meeting on Monday. The staff "believes that this policy addresses a critical need, particularly in light of the recent SEC report" recommending that consultants tighten their compliance policies "to ensure that they are fulfilling their fiduciary obligations," according to a CalPERS report.
The Consultant Conflict of Interest Protocol states in part that the $186 billion California Public Employees' Retirement System, Sacramento, recognizes its consultants "may have economic and/or personal interests that may not be fully aligned with CalPERS' interests." The policy would require that consultants "disclose to CalPERS those circumstances that may create actual, potential or perceived conflicts of interest" so CalPERS could "evaluate the disclosures to determine whether assignments should be precluded."
In Florida, Carl Domino, a Florida state representative and president of Carl Domino Inc., Palm Beach, said he is considering introducing legislation requiring consultant disclosure of conflicts. His firm manages about $60 million in value equities.
"There are issues with consultants, particularly broker consultants," about potential conflicts in recommending managers, Mr. Domino said. "Are we sure when a consultant recommends (a manager) to a pension fund that the manager wasn't recommended because he is giving commissions directly or indirectly to the broker consultant?"