The $1 billion Atlanta General Employees' Pension Fund will hire a firm to conduct a forensic audit of its investment consultant, Gray & Co., and the pension fund's alternatives investments, confirmed J. Anthony Beard, the city's CFO and member of the board of trustees.
The city wants to make sure Gray & Co. handles its responsibilities as fiduciary of the fund, Mr. Beard said in a telephone interview. Yolanda Waggoner-Foreman, co-CEO at Gray & Co., did not return a phone call for comment by press time.
The pension fund made its first alternatives commitment late in 2012, following passage of a law in April that year that allowed most public retirement systems in Georgia to invest in alternatives.
Trustee Angela Green filed a complaint with the Securities and Exchange Commission earlier this year arguing that Gray & Co. did not adequately reveal to the board that it was the manager of a private equity fund called GrayCo Alternative Partners II, to which the board had approved a commitment of up to $28 million in November.
Detroit pension freeze
Kevyn Orr, the state-appointed emergency manager handling Detroit's bankruptcy, proposed closing and freezing the city's pension plans effective Dec. 31, confirmed William Nowling, Mr. Orr's spokesman.
All future employer contributions would go to a new 401(a) plan, and there would be no future cost-of-living adjustments with respect to accrued benefits. A 457(b) deferred compensation plan would also be created as part of the proposal.
Active members not vested in the defined benefit plans at the time of the freeze would not be entitled to benefits, according to the proposal obtained by Pensions & Investments.
Detroit's two municipal pension plans are the $3.4 billion Detroit Police and Fire Retirement System and $2.77 billion Detroit General Retirement System. Mr. Orr has said the systems have about $3.5 billion in combined unfunded liabilities.
The proposal, which a GRS spokeswoman said was formed without the system's input, came as the city's auditors released a report on the city's pension and health-care benefits that claimed there were several inconsistencies with pension disbursements and unemployment compensation.
Az. fund axes bonuses
The $7.2 billion Arizona Public Safety Personnel Retirement System indefinitely suspended investment staff bonuses at a board meeting Sept. 25.
Brian Tobin, the president of the pension fund's board, defended the investment staffers, saying they had been unfairly scrutinized, but stated the pension fund's costs needed to be put ahead of the personal interests of staff members.
Four investment staffers have recently resigned, contending the system inflated its rate of return for the last two years by allowing a real estate manager to set its own valuations of its investments. For the fiscal year ended June 30, the manager, Desert Troon, valued the real estate portfolio at $82.2 million more than the $262.1 million estimated by an appraiser hired by the board, Ernst & Young, which used market values.
Separately, on Sept. 27, the Arizona Police Association asked the state Attorney General's Office to investigate management of the retirement system to determine whether pension fund executives covered up investment losses through deceptive, false and fictitious statements, a felony in Arizona, according to a letter by Levi Bolton, executive director of the APA.
In the letter to Andrew Pacheco, chief counsel of the attorney general's criminal division, Mr. Bolton says PSPRS' relationship with Desert Troon is at the heart of the matter. The association represents more than 30 Arizona police departments whose staffers are members of the pension fund.
A spokesman for PSPRS, Doug Cole, said in an e-mailed response that the pension fund had acted properly and would cooperate with any investigation.
Illinois cuts large-caps
The $28.8 billion Illinois Municipal Retirement Fund's board on Sept. 27 voted to terminate Piedmont Investment Advisors from a $168 million active domestic large-cap core equity portfolio and reduce a similar-style portfolio managed by Progress Investment Management by $200 million.
The money will be moved to cash, in part to pay benefits and to fund previously approved private market commitments.
Piedmont was not dropped for performance and had not been on watch, Dhvani Shah, CIO, told the board at the meeting. Piedmont is still a very strong manager for us, Ms. Shah said.
The Oregon Investment Council, which runs the $63.1 billion Oregon Public Employees Retirement Fund, hired William Blair to manage $100 million in emerging markets small-cap equity, confirmed spokesman James Sinks.
It is the pension fund's first dedicated strategy in emerging markets small-cap equity, although the pension fund has exposure to small caps through core emerging markets managers. Funding is coming from cash, Mr. Sinks said. William Blair already manages about $187 million in a core emerging markets equity portfolio.
Orange County picks 2
The $10.5 billion Orange County (Calif.) Employees Retirement System hired Acadian Asset Management and City of London Investment Management to run $125 million each in active emerging markets equities, confirmed spokesman Robert Kinsler.
The pension fund searched for managers in June as part of a review of AllianceBernstein, which ran the entire portfolio and was on watch.
The $264 million Spokane Employees' Retirement System invested $7 million in Beach Point Capital Management Select, a debt-related alternative fund that invests all along the capital structure, said Jayson Davidson, partner and managing director of consulting services at Hyas Group, the pension fund's investment consultant.
Funding is coming from global equities.
Fidelity boosts equity
Fidelity Investments will boost equity target allocations in most of the portfolios in its Fidelity Freedom target-date fund strategies, confirmed spokeswoman Nicole Goodnow.
The asset allocation changes announced Sept. 26 follow changes in the glidepath, the result of a new review of the demographics and behavior of participants in Fidelity's record-keeping database, updated capital markets assumptions and a new risk-capacity framework.
The changes would increase targets to domestic and international equities, and cut targets to fixed income and other short-term funds.
Ohio adds real estate
The $11.3 billion Ohio School Employees Retirement System made a follow-on commitment of $100 million to RREEF America II, a core real estate fund, confirmed spokesman Tim Barbour.
The pension fund had $70 million invested in the real estate fund as of June 30, 2012, according to the pension fund's most recent annual report. Funding will come from cash.
Iowa watching 3
The $25.1 billion Iowa Public Employees' Retirement System placed on watch Oaktree Capital Management, RREEF Securities and Western Asset Management, which manage nearly $2.1 billion combined for the pension fund, according to Karl Koch, IPERS CIO, in a statement. Wilshire Associates assisted.