A former investment officer at the San Diego County Employees' Retirement Association claimed he was wrongly terminated for telling his supervisors that the $8 billion system breached its investment policy by taking on too much risk.
Jeffrey Baker, who was terminated July 29 from the association, filed a complaint Nov. 8 with California's Department of Labor seeking to get his job back as well as $1 million in damages.
According to the complaint, Mr. Baker reported to Brian White, CEO, and Lee Partridge, chief investment officer of Salient Partners, the system's portfolio strategist, that the fund exceeded its risk budget for high yield and U.S. government securities and that they retaliated against him. Salient Partners' subsidiary Integrity Capital functions as an outsourced CIO for the system.
Mr. Baker alleges he was demoted, suspended, placed on administrative leave and eventually fired in retaliation for bringing his concerns to the office of internal affairs.
The fund was taking on too much risk in an effort to make up for its $1.56 billion unfunded liability, according to the complaint.
Michael Aguirre, who is representing Mr. Baker, said the system had been turned into a hedge fund in order to make up for the unfunded liability. Mr. Aguirre estimates that it will take about 30 days to get a response from the state Labor Department.
“Given the fact that this is an SDCERA matter, I'm going to let them respond,” Mr. Partridge stated in an e-mail.
The San Diego County Civil Service Commission, which handles complaints and appeals of disciplinary actions by county employees, concluded on Nov. 2 that Mr. Baker was not a victim of whistle-blower retaliation, noted a SDCERA statement on behalf of SDCERA, and Messrs. White and Partridge.
“SDCERA is confident the state will derive a similar conclusion. The complaint is fraught with an array of errors and mischaracterizations. For example, SDCERA has not taken on higher investment risk, in fact, the current policy (adopted in 2010) utilizes a more conservative model that strives for moderate but steady gains in an up market and protects against losses in a down market. The plan is working as designed,” according to the statement. “The allegations in the complaint about alleged violations of risk policies are simply wrong.”