Calpers Chief to Face Trustees Questioning Over CIO’s Departure

California’s giant pension fund is preparing for what could be a fraught emergency board meeting Monday, called to discuss the sudden exit of its chief investment officer.

Marcie Frost, chief executive officer of the California Public Employees’ Retirement System, will face questioning from trustees after it became public that former CIO Ben Meng was under investigation for a conflict of interest. Frost hadn’t told the board before Meng stepped down on Aug. 5 from his position managing the fund’s $400 billion portfolio.

California state controller Betty Yee, an ex officio board member, has said she wants to examine Frost’s role overseeing and implementing the fund’s policies on conflicts.

In a statement, Yee urged her colleagues to contemplate “any additional safeguards necessary to ensure this does not happen again.”

Calpers spokesman Wayne Davis declined to comment.

Frost’s job requires navigating not just boardroom dynamics but also the multiple levels of scrutiny that come with safeguarding the retirement benefits of some 2 million Californians. Of Calpers’s 13 trustees, six are elected by pension plan members, four are ex officio, two are installed by the governor and one is appointed by the state senate.

“Public pension funds, as a group, are lightning rods,” said Larry Powell, the former deputy CIO at Utah Retirement Systems, now a consultant in Austin. “The more assets under their control, the bigger the target.”

Meng’s error was approving an investment in a private equity fund managed by Blackstone Group Inc. while at the same time holding shares of Blackstone in his personal account, Bloomberg reported this month. That conflict, a violation of Calpers’s rules, was discovered by an internal compliance team in April. The full board didn’t find out until after Meng resigned.

Read more: Calpers CIO Meng’s Mysterious Exit Preceded by Months of Torment

Margaret Brown, an elected member who’s been critical of Frost’s leadership, demanded to know more in an email to President Henry Jones. He replied that Frost would explain everything at Monday’s meeting.

Will the Board act as Fiduciaries protecting the pension and healthcare benefits promised to workers?2:55 AM · Aug 15, 2020

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See Margaret Brown, CalPERS Board Member’s other Tweets




Brown has since called for an investigation and accused the board of being “bystanders.”

“We have a duty of inquiry,” she said in an interview. “We need to ask questions. It has to be done independently.”

— With assistance by Michael McDonald

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