Updated with correction
CalPERS on Thursday scheduled a board meeting for Aug. 17 to discuss personnel matters following the resignation of former CIO Yu “Ben” Meng a day earlier, said Henry Jones, board president in a written statement.
Earlier in the day, California Controller and CalPERS board member Betty T. Yee called for an emergency board meeting to discuss the circumstances of Mr. Meng’s departure.
“I take my fiduciary duty to safeguard CalPERS investments on behalf of the members very seriously,” Ms. Yee said in a written statement. “I am incredibly disappointed to hear about the former CIO’s lapse in both judgment and adherence to standard conflict-of-interest policies.”
“I have called for an emergency board meeting to discuss this situation, review these policies, the CEO’s oversight and implementation of these policies, and any additional safeguards necessary to ensure this does not happen again,” Ms. Yee said.
At California Public Employees’ Retirement System, Sacramento, only the CEO reports to the board. The CIO reports to CEO Marcie Frost.
Mr. Meng disclosed in a statement of economic interest form filed with CalPERS that he personally invested in stocks of three private equity firms, Carlyle Group, Blackstone Group and Ares Management’s business development company, Ares Capital Corp. Since Mr. Meng became CalPERS CIO in January 2019, CalPERS committed $328 million in Carlyle Europe Partners V and $1 billion to Blackstone Core Equity Partners II, a long-hold buyout fund managed by Blackstone Group.
“CalPERS has known about questions regarding Ben’s fair political practices disclosure filings,” Mr. Jones said. “These are private personnel matters and already have been addressed according to our internal compliance protocols.”
CalPERS is moving forward and is recruiting a new CIO, he said.
During Mr. Meng’s tenure, CalPERS centralized the use of leverage across its portfolio, including leveraging the entire portfolio up to 20% in order to commit more capital to private equity and private credit. CalPERS board is expected to consider embedding leverage in its asset allocation during its asset-allocation review in scheduled to start in 2021.
Dan Bienvenue, deputy chief investment officer, total portfolio, was named interim CIO, according to a news release published on the pension fund’s website late Wednesday. The fund first announced the news via its official Twitter account.
CalPERS will start an immediate search for a permanent CIO, the release said.
“He started out by conducting a comprehensive review of the portfolio and built measures to protect it in a market crisis, which did happen,” California Treasurer Fiona Ma said of Mr. Meng in an email. “His preparations helped CalPERS greatly in navigating through the COVID-19 crisis, and despite all the challenges, the portfolio delivered a respectful return of 4.7% and beat its benchmark of 4.3%.”
“Ben also set the portfolio on a better path toward a 7% solution with better and more assets,” Ms. Ma added.
CalPERS’ recently announced a 4.7% preliminary net return for the fiscal year ended June 30. CalPERS’ has a 7% expected rate of return. Assets totaled $403.8 billion.
CalPERS spokeswoman Megan White declined to comment beyond the news release stating it was a personnel matter.
Mr. Meng rejoined CalPERS as CIO in January 2019, after more than three years as deputy CIO at China’s State Administration of Foreign Exchange. Prior to SAFE, he spent seven years at CalPERS in roles including investment director of asset allocation.
“I deeply believe in the CalPERS mission of serving those who serve California,” Mr. Meng said in the release. “I’m proud of the work we did to change the portfolio, build a skilled investment office, and set CalPERS on a strong path to achieve our return target. But at this time, it’s important for me to focus on my health and on my family and move on to the next chapter in my life.”
