CalPERS officials on Tuesday said they're reviewing the selection of Goldman Sachs Group in the system's real estate consultant pool, claiming the financial firm failed to disclose it was the subject of an SEC investigation.
“It appears that they did not disclose to us in their RFP (request for proposal) the notice that they received from the SEC," Clark McKinley, spokesman for the $204 billion California Public Employees Retirement System, Sacramento, wrote in an e-mail response to questions. “We are reviewing the issue. This is only a pre-qualified pool and Goldman Sachs has no work with us to date in connection with the pool selection.”
Mr. McKinley in a telephone interview said he did not know when CalPERS would take action on the issue. The pre-approved pool of 32 consultants is effective July 1.
Goldman Sachs spokesman Michael DuVally said the firm would have no comment.
Goldman Sachs was among the firms chosen by CalPERS' investment committee at its May 17 meeting. The SEC charged Goldman Sachs on April 16 with fraud regarding the marketing and underwriting of a $1 billion subprime mortgage-linked security.
Officials at Goldman Sachs had applied to CalPERS on March 18, seven months after Goldman received a Wells Notice from the SEC, according to reports, stating that the agency was considering filing an enforcement action against Goldman Sachs in connection with the $1 billion security.
A copy of relevant portions of Goldman Sachs' application to CalPERS, obtained by P&I Daily, shows that the firm stated it was “not known” to be the subject of any federal investigation, but “from time to time” it did receive notices of investigation from the SEC and other federal and state agencies related to various aspects of its business.