SACRAMENTO, Calif. CalPERS trustees approved a pilot infrastructure program that could invest as much as $2.5 billion, confirmed spokesman Clark McKinley. The allocation, approved on Sept. 10, will be part of a new inflation-linked asset class that will also include investments in commodities, inflation-linked bonds and timber. The exact allocation wont be determined until an asset-liability workshop in November. Staff will likely tap new inflation-linked investments on an opportunistic basis, said Mr. McKinley. A funding source was not identified. Trustees at the $247.7 billion California Public Employees Retirement System, Sacramento, also reallocated $450 million in existing commodities investments and $123 million in existing infrastructure investments to include them in the new asset class.
Separately, CalPERS took a $600 million stake in Apollo Management Group, a private equity company that joined the ranks of alternatives firms trading shares on proprietary systems. In a closed session on June 18, the CalPERS board approved an investment of up to $700 million to acquire an ownership interest of up to 10% in the firm, according to an agenda item for the Sept. 10 meeting. The transaction closed in July. No further details were available.
Apollo reportedly raised $828 million in a private stock sale in early August.
SEC, Yanni Partners settle in conflict-of-interest probe
WASHINGTON The SEC reached a settlement with Yanni Partners and its president, Theresa A. Scotti, after a three-year investigation and administrative proceeding regarding conflicts of interest. Yanni Partners and Ms. Scotti agreed to pay civil penalties of $175,000 and $40,000 respectively, to settle the matter without admitting or denying the SECs findings.
According to documents released by the SEC, Yanni Partners didnt adequately disclose to potential pension fund clients that its database to assist clients in money manager selection was also used to provide additional revenue. The SEC said Yanni sold subscriptions to a monthly performance evaluation report based on database information to between 30 and 40 money managers that it also recommended to clients. Money managers paid $13,500 annually for the reports; Yanni took in $600,000 between 2002 and 2004 from the service. The SEC said Yannis ADV discussed the money manager subscription practice, but that not all RFP/RFI documents issued to potential clients made the same disclosure. The subscription service was stopped in 2005 and a chief compliance officer was appointed by Yanni to address potential conflicts of interest, according to the SEC.
Ms. Scotti said: We are obviously disappointed that we did not meet the SECs standards regarding this disclosure issue, but are pleased that the three-year investigation is behind us. We corrected the problem two and one-half years ago and appreciate that our clients have remained very loyal during this time.
Continental Airlines adds $50 million to plans
HOUSTON Continental Airlines Inc., Houston, contributed $50 million in cash to its pension plans on Sept. 11, bringing its total year-to-date contribution to $261 million, said spokeswoman Julie King. Company executives expect to contribute more than $325 million to the plans, exceeding its minimum funding requirement of $187 million for the year. We continue to focus on doing the right things for our co-workers and fulfilling our pension commitments, Chairman and CEO Larry Kellner said in the release. Continental has $1.5 billion in pension assets.
U.S. pension funding level falls in August
NEW YORK The funding level of the typical U.S. pension plan dropped 0.9 percentage points in August, mainly due to declining Treasury bond yields, according to BNY Mellon Asset Managements Pension Liability indexes. The August level is still two percentage points higher than the start of 2007.
Liabilities for a typical pension plan increased 2%, while assets of a moderate-risk pension portfolio climbed just 1.1%. Since January, though, assets have risen 4.5%, and liabilities have increased 2.5%.
CalSTRS approves limits in campaign contributions
SACRAMENTO, Calif. CalSTRS board has approved proposed regulations limiting the amount its money managers can contribute to a CalSTRS board members campaign. Its the first such legislation in the state, according to a news release from the fund. The regulations, approved on Sept. 6, also apply to firms responding to RFPs issued by CalSTRS or companies having an investment relationship with the fund, according to the proposal. The regulation limits contributions to a maximum of $1,000 from an individual or $5,000 in aggregate from a firm over 12 months. Board members who have received contributions would have to recuse themselves from decisions regarding those managers. Firms that violate the regulations would not be allowed to do business with the fund for two years.
The regulations proposed by the $169 billion California State Teachers Retirement System, Sacramento, have to be approved by the state Office of Administrative Law in order to take effect. The office has 30 days to review the proposal, said Linda Brown, deputy director at OAL.