TACOMA, Wash. — Tacoma Employees’ Retirement System renewed its contract with Metropolitan West Asset Management for three years, pending approval by the City Council, Patricia F. Pabst, director of the $1.2 billion system, wrote in an e-mail. The firm manages about $225.4 million in fixed income for the fund. The council will consider the matter at its Jan. 15 meeting. No further information was available.
Separately, at the board’s Nov. 28 meeting, fund officials put BGI on watch for performance, confirmed consultant Andrew Junkin, managing director at consultant Wilshire Associates. BGI manages about $55 million in domestic enhanced index equities for the system. Christine Hudacko, BGI spokeswoman, did not return a call by press time.
Seattle drops 1 manager, puts another on watch
SEATTLE — Seattle City Employees’ Retirement System terminated ING and put Calamos on watch for performance, according to recently released minutes of the $2.1 billion system’s Nov. 1 board meeting. According to the system’s 2006 annual report, Calamos managed $36 million and ING, $19 million, both in domestic stocks.
ING spokesman Dana Ripley said, “We are disappointed we lost the mandate. However, we value the relationship and look forward to doing business with them in the future.” Peter Nash, Calamos director of investor relations, did not return calls seeking comment by press time.
Separately, the investment committee agreed to add $10 million to the system’s in-house portable alpha test program, according to the minutes. No further information was available.
CIO Mel Robertson did not return a call seeking further comment.
San Francisco City & County cuts Brandes from value portfolio
SAN FRANCISCO — San Francisco City & County Employees Retirement System terminated Brandes Investment Partners as manager of a $71 million international small-cap value equity portfolio. Brandes’ portfolio has been underperforming since 2004, according to a staff memo to the board. Year-to-date returns through Sept 30 were 2.3% vs. 14.5% for its benchmark, the Citigroup World Ex-U.S. index including stocks with a market cap below $2 billion. Brandes’ portfolio will be allocated to existing international equity managers.
Brandes’ returns have dragged in part because of its overweight position in Japanese commercial banks and a lack of exposure to mining, real estate and hotels, according to a memo to trustees written by Leslie Kautz, a principal at Angeles Investment Advisors, the $16.9 billion pension fund’s general consultant.
Daniel Hilley, spokesman at Brandes, declined to comment on client relationships. David Kushner, San Francisco’s deputy director for investments, could not be reached for comment.
Separately, the system hired MSCI Barra to provide a risk management system. An RFP was issued in September.
Florida State Board probes causes of pool fund withdrawal
TALLAHASSEE, Fla. — Florida State Board of Administration’s audit committee is reviewing the events that led to investors withdrawing $13 billion from the Local Government Investment Pool in the month leading up to Dec. 6, as well as the state money market fund’s purchase of investments tied to subprime mortgages, confirmed Mike McCauley, spokesman for the $187.5 billion Tallahassee-based board.
The pool had $10 billion in available assets as of Dec. 13. Alex Sink, state CFO, asked the committee to conduct the review in a letter, saying: “Many questions remain. When investors display such an extreme lack of confidence and a ‘run-on-the-bank’ scenario follows, it is essential that the state does all it can in an attempt to restore confidence if the LGIP is to continue.”
Ms. Sink wants to find out how the subprime investments were bought and from whom, how well the board communicated with investors after trouble with the investments was discovered, and whether other board-run investments include overvalued assets.
Separately, in a published letter, state Attorney General Bill McCollum said Florida’s pension system does not hold any subprime-mortgage-backed securities; all mortgage-backed securities are prime and near-prime.
SEC settles suit over San Diego city audit
SAN DIEGO — The SEC settled a civil suit Dec. 10 with the city of San Diego’s independent auditor, Thomas J. Saiz, and his firm, Calderon, Jaham & Osborn, confirmed Kelly Bowers, senior assistant regional director in the SEC’s Los Angeles office. Mr. Saiz and his firm agreed to pay a $15,000 civil penalty and agreed to a judgment in U.S. District Court in San Diego permanently enjoining Mr. Saiz and his law firm from violating the antifraud provisions of the federal securities laws, Mr. Bowers said.
Mr. Saiz did not return calls for comment.
The SEC had charged that Mr. Saiz and his firm issued unqualified audit reports on $260 million in bond offerings in 2002 and 2003 that contained false or misleading information about the city’s pension plan, an SEC news release said. The audits failed to disclose that the unfunded pension liability of the $5 billion San Diego City Employees’ Retirement System’s was expected to increase to about $2 billion by 2009, from $284 million at the beginning of fiscal 2002. The SEC charged that the auditor “failed to exercise professional care and skepticism” that San Diego was disclosing accurate information concerning its pension and retiree-health benefits, said Andrew Petillon, associate regional director for the SEC’s Los Angeles office. Mr. Saiz and Calderon, Jaham & Osborn settled without admitting or denying the allegations, Mr. Petillon added.
