CalPERS has called an emergency meeting for Monday, August 17 over the abrupt resignation of Chief Investment Officer Yu Ben Meng.
Meng’s departure was announced last Wednesday after less than two years on the job. A news release stated Meng wished to concentrate on his health and his family, but an alternative explanation soon emerged.
“The resignation last week of CalPERS’ chief investment officer followed an anonymous complaint to the state’s ethics watchdog agency amid allegations that he had approved a $1 billion deal with a firm in which he’s a shareholder,” the Sacramento Bee reports.
“Yu Ben Meng, who was in charge of overseeing the giant public employee pension fund’s $411 billion portfolio, had OK’d in March a $1 billion investment with a private equity fund controlled by Blackstone Group Inc., a New York financial firm. Meng’s conflict-of-interest disclosure statements showed he held as much as $100,000 in Blackstone stock."
A tipster filed a complaint with the Fair Political Practices Commission the day before Meng stepped down.
Meng was at the center of multiple controversies during his short tenure. Under Meng, the fund abandoned a risk mitigation strategy that would have left it with a $1 billion windfall just weeks before the pandemic caused a financial meltdown. CalPERS board member Margaret Brown says Meng then lied to the board by telling them the strategy was still in use.
Meng was also criticized by a Republican congressman for the fund’s investments in Chinese firms.
Meng’s departure is a major shakeup for the nation’s largest pension fund, and it comes at a highly sensitive and turbulent time. CalPERS was already struggling to meet its 7% return goal before the pandemic set off a recession. It earned just 4.7% in the latest fiscal year.