Stephen Cochrane, the former executive director and chief investment officer of the North Dakota State Investment Board, Bismarck, who died in an apparent suicide earlier this year, followed the system's policies and procedures prior to his death, according to an external audit.
The audit states that it was “not designed specifically to detect fraud or illegal acts” but did determine that Mr. Cochrane adhered to the system's policies concerning investment risk and conflicts of interest, among other policies.
However, the results of the audit could lead to some changes to how the board, which oversees $3 billion in pension assets, does business.
External auditor Clifton Gunderson conducted the audit following Mr. Cochrane's death on April 10.
“During our review of available documentation, including our forensic data analysis ... we did not find any indication of fraud, illegal acts, violations or provisions of contracts or grant agreements, or abuse,” the report on the audit's findings states.
Although the audit did not find any irregularities with Mr. Cochrane's stewardship of the funds, it did find some shortcomings with the way the funds are managed. It noted, for example, that current policy tasks the chief investment officer solely with determining which single investment manager is presented to the board for consideration.
“We would recommend the introduction of at least one other individual or group to be involved in the determination of which manager(s) are presented to the board for approval,” the report states.
North Dakota Treasurer Kelly L. Schmidt said the board has established a policy committee that meets on an as-needed basis to review the recommendations and determine whether changes need to be made. She said a date has not been set for when the policy committee will meet.
She said the audit's determination that Mr. Cochrane followed the system's policies “confirmed what we knew” about Mr. Cochrane. “Steve served North Dakota and the state investment board very well, and the audit confirms that,” she said in a telephone interview.
LeRoy Gilbertson, interim chief investment officer and executive director, said the audit gives a “clean bill of health” to the system.
“It gives a degree of assurance that there wasn't anything unlawful,” he said in a telephone interview.
The North Dakota State Investment Board is searching for a chief investment officer/executive director. n