CalPERS adopted a conflict of interest policy to assure consultants' investment advice is fair and unbiased, according to an announcement by the $186 billion fund. "The policy requires current consultants to identify any future circumstances that may create actual, potential or perceived conflict of interests prior to providing advice on a specific subject or investment, including a recommendation on a money manager," the statement said. "Consultants seeking to do business with CalPERS would also be required to disclose conflicts as part of the bidding process."
The California Public Employees' Retirement System, Sacramento, had relied on a state-required statement of economic interests disclosure form, SEC filings and disclosures by consultants during the contract process, the statement noted.
The staff "believes that this policy addresses a critical need, particularly in light of the recent SEC report" that recommended consultants tighten their compliance policies "to ensure that they are fulfilling their fiduciary obligations," according to another CalPERS report.
CalPERS uses 28 investment consultants, including Russell, Pension Consulting Alliance, R.V. Kuhns, Strategic Investment Solutions and Wilshire for general investment matters. It uses nine consultants for alternative investments, five for real estate and nine for corporate governance.
CalPERS also approved a country selection policy for investing in emerging-markets debt, based on credit ratings issued by Standard & Poor's, Moody's and Fitch. Debt issued in developed markets would have to carry at least a BB- rating, while local-currency debt and debt issued by subnational governments and corporations would have to carry an investment-grade BBB- rating.
