SPRINGFIELD, Ill. — Fears of market manipulation have prompted the $36.5 billion Illinois Teachers' Retirement System to join a growing list of large public pension funds clamping down on disclosing money manager hires and terminations.
The move is essential to protect information that could affect re- turns and keep transition costs down, pension executives, transition managers and consultants say.
Stan Rupnik, chief investment officer of the Springfield-based plan, said staff had noticed "irregular trading" in three of the fund's four asset transfers since June 30, leading to a new silence policy: Money manager hires and terminations no longer will be announced prior to active trading in the portfolio of a new manager.
"In terms of best practices, protection of information is crucial," said Brian Roberts, head of transition management in North America, Russell Implementation Services, Tacoma, Wash.
It has been TRS' practice to announce asset allocation and manager changes in a news release after each board meeting. TRS staff informed trustees Nov. 3 of the new process. To further plug any leaks, Mr. Rupnik said, TRS officials are considering asking the board to move into closed session during its public meetings to discuss manager changes.
Trading activity in advance of each of TRS' three transitions doubled anticipated costs, particularly when the trades involved less liquid small-cap stocks. Mr. Rupnik said the teachers' plan was affected on both sides: Pre-trading activity lowered the prices of securities being sold from a terminated manager's portfolio and raised the cost of securities TRS was buying as it moved assets to the new manager. He wouldn't give costs.