CalPERS looks ahead after investment chief departs

Trustees of CalPERS, the country’s biggest public pension fund, met this week to discuss their next steps after the sudden resignation this month of the fund’s chief investment officer, Ben Meng.

Meng joined the $410 billion California Public Employees’ Retirement System in January 2019 and had produced good results in a tough market, said Henry Jones, president of the fund’s board. But he left abruptly on Aug. 5, a day after an anonymous complaint was filed with California’s Fair Political Practices Commission about possible conflicts of interest involving Meng’s personal investments.

Although the complaint did not list any specific investments, the fivemember commission’s review has focused on Meng’s ownership of shares in the Blackstone Group, a publicly traded investment firm. CalPERS, which has invested in Blackstone’s privateequity funds before, committed $750 million to such a fund after Meng was hired. He had disclosed that he owned a stake in Blackstone shortly after joining CalPERS, using the standard form that state officials use when disclosing their investments. His stake was between $10,000 and $100,000, according to the form.

Meng had worked on Wall Street and at CalPERS earlier. Most recently, he was the deputy investment chief of the State Administration of Foreign Exchange, a Chinese agency in charge of the country’s foreign reserves. Meng was born in China but is a U.S. citizen.

In a statement posted by CalPERS announcing his resignation, Meng said he was proud of the changes he had helped bring about at the fund, “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.”

Meng could not be reached for comment.

With tensions between the U.S. and China rising in recent months, Rep. Jim Banks, RInd., had raised concerns about Meng’s ties to China, including on Twitter. But the concerns he highlighted don’t appear to be what the California commission is investigating.

As of now, there is no evidence that Meng made investment decisions for CalPERS that were designed to benefit his own holdings. On Aug. 11, he received, through his lawyer, a letter from the commission saying that it intends to investigate the anonymous complaint but had “not yet made any determination about the validity of the allegation(s).”

CalPERS said after the resignation that it had been aware of questions regarding Meng’s personal investments but considered them “private personnel matters” that “already have been addressed according to our internal compliance protocols.”

Jones, the board president, said in a statement that Meng had overseen a 12month investment return of 4.7% as of June 30, “during the most volatile market conditions in our country’s history.” That was better than the CalPERS target of 4.3% at the time, he said.

CalPERS’ deputy chief investment officer, Dan Bienvenue, is serving as the interim investment chief while trustees search for a successor. Their discussions were held in a closeddoor session.

“We are committed to strong compliance protocols,” Marcie Frost, CEO of CalPERS, said in a statement. “At next month’s meeting, we will bring to the board specific policy options for their considerations.”

CalPERS is sensitive to even the appearance of conflicts of interest, given its visibility and outsize role in the economic life of California, its cities and its taxpayers. For the past two decades, the fund has operated with far less money invested than it will need to cover all the benefits it must pay. Taxes around the state have gone up as CalPERS has billed local governments for larger and larger mandatory annual contributions.