Tensions between board members at the US’s biggest public pension system burst onto social media Wednesday, as turmoil surrounding the sudden resignation of former chief investment officer Ben Meng hit a new level.
Theresa Taylor, the vice-president and investment committee chair of the California Public Employees’ Retirement System board, publicly accused a fellow board member of breaching her fiduciary duty to the fund, and said she and a prominent financial journalist “deal in half truths, lies and conspiracy theories”.
The catalyst came when board member Margaret Brown, a frequent critic of CalPERS’ investment practices, took to Twitter to share a Buyouts article wherein she called for a hold on all PE investment activity until an investigation into Meng’s departure is completed.
Taylor responded to Brown’s post by stating the possible consequences of suspending PE investment. “So let’s ask employers if they are willing to have a 6 percent discount rate? Because if we don’t move forward with PE, then that is what will happen,” Taylor wrote. “The board will have to reduce the discount rate from 7 percent to 6 percent. Will that help your re-election efforts?”
“Fiduciary duty to participants and beneficiaries shall take precedence over any other duty,” Brown responded. “Employers and beneficiaries need transparency.”
“The entire board voted before Ben [Meng] even got here to move forward on more PE,” Taylor said in a separate post. “And it would seem that you are not trying to protect the fund. Grandstanding as a single voice hurts the reputation of the fund.”
Brown responded by bringing up reports, such as this by Bloomberg, that staff and some board members were aware of issues with Meng’s financial disclosures as far back as April.
Board president Henry Jones told sister publication Buyouts on 6 August that the pension knew about the disclosure concerns before Meng resigned, but did not say when. The concerns had since been addressed, he added.
“It’s secrecy that hurts the fund, not transparency,” Brown said in a Twitter post Wednesday. “The CEO and a few board members knew for months and hid it from the rest…I may be one vote, but I’m the ONE who will get to the truth.”
“It’s not secrecy Margaret,” Taylor said in reply. “It’s common sense privacy laws that apply to civil servants. Your transparency is a bogus attempt at grandstanding. You are very sad. And you are breaching your fiduciary duty.”
In a later response, Taylor appeared to compare Brown to president Donald Trump: “Ooh! And you’re ‘the ONE’? Please! Ya sound just like someone else who thinks he’s ‘the One’ and most Americans call him an authoritarian.”
Taylor’s Twitter bio includes several anti-Trump slogans as well as a doctored photo of the Hindenburg disaster with Trump’s campaign logo on it.
The spat was joined by Susan Webber, the main writer at the financial blog Naked Capitalism, who began quote-tweeting Taylor’s posts, needling her about her own financial disclosures.
Webber, who writes under the pseudonym Yves Smith, has been covering CalPERS critically for several years. She wrote a 2 August post that initially revealed Meng held stock in several publicly-traded PE firms, including Blackstone, to which CalPERS had recently committed $1 billion, an amount only the CIO can approve without going to the board, according to CalPERS’ private equity policy. Meng resigned later that week.
“I’m not speaking to you, nor giving credence to any accusations you make,” Taylor said to Webber.
In another post, Taylor attacked Brown and Webber, saying they “deal in half-truths, lies and conspiracy theories. But that is the world we currently live in where people don’t believe truth, they buy into the snake oil salesperson.”
“I want to stress that the CalPERs board, beneficiaries, employers and taxpayers deserve the unvarnished truth of what happened,” Brown texted Buyouts Thursday. “Otherwise it looks like a cover-up under the guise of a personnel matter.”
Webber, Taylor, board president Henry Jones and the other board members did not respond to requests for comment.
This article first appeared in sister publication Buyouts
Editor’s note, September 1, 2020. This article was changed after publication to remove a reference to Susan Webber by Theresa Taylor