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Calpers Launching Internal Review Of Fees Paid To Placement Agents
Developing story per the WSJ: In what could become a repeat of the New York State pension fiasco, the fund's California brethren at Calpers are now launching a "special review" of fees paid by money managers to placement agents. Usually where there is smoke... As Zero Hedge has disclosed previously, some of the most prominent private equity firms have for years been recipients of Calpers' generosity. It will be interesting if more kickbacks to and fro these entities is uncovered as a result of the review.
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CALPERs has been throwing new money at apartment REITs (private, and in Cali - of course). But I'm sure all the pensioners would completely agree that this is what they should invest their retirement money in.
As states look for additional revenue streams collecting on these fee structures with interest and fees on the return must look attractive.
Inquiring minds would like to know if or when Florida, Pennsylvania and especially Texas will follow suit.
Calpers would buy a shiny turd if you gave it a fancy name.
Paytoplay.
Ah, my favorite. The Tom Cruise accounting rule.
This is the real dirty laundry. You have no sellers of junk unless you have buyers. Can I interest you in a super secondary REIT offering Mr. Calpers fiduciary, there will be something in it for you of course.
Where are the lurid insider tales of the paytoplay system with the gatekeeper firms hired by the pension funds to sell access? Come on insiders, post your comments now!
I hope they provide a list of who got what from whom. Public pension funds should disclose these transactions on their websites. I am not a big fan of placement agents. For every one worth seeing, there are one hundred dummies that are a complete waste of time.
Teachers' Pension Fund of NJ hired one advisory firm (gatekeeper) that approved any alternative asset managers. So the framework was transparent. Managers had to pay up to attend "beauty contests" though. I want the lurid tales!
This practice has been rampant and has been a problem in almost every big state so far. Shockingly few have been punished. The recent New York State investigation shows why this practice pays. If you get caught, you pay a trivial fine (see Carlyle et al.). If you win the business, you get 2/20 for 10 years. California was even more crooked than NY and Illinois (if you can believe that).
Cali will do what every state has so far (NY,CT,Ill.): pick some poorly-connected dumb bastard to take the fall for the whole system. The truly wired-in will skate away as always. You won't see Ron Burkle getting trussed up over this. He knows too many people and knows where the bodies are buried.