Contact: Sharon Lee (212) 669-3747 June 22, 2010
NEW DISCLOSURE REQUIREMENTS FOR
PENSION FUND INVESTMENT PROCESS AT BERS
NEW YORK, NY – New York City Comptroller John C. Liu announced that his transparency and disclosure initiatives will also be implemented by his office relating to money managers seeking to do business with the Board of Education Retirement System (BERS), totaling $2.5 billion in assets as of April 2010. This comes on the heels of an announcement earlier this morning about the new disclosure requirements for money managers seeking to do business with the Teachers’ Retirement System (TRS) and the New York City Employees’ Retirement System (NYCERS), also part of the New York City Pension Funds.
In February, Comptroller Liu announced proposals to enhance integrity in the investment process at the New York City Pension Funds. Since the announcement, Comptroller Liu has been in discussion with the Board of Trustees. Effective July 1, 2010 (Fiscal Year 2011), there will be new policies relating to disclosure in the due diligence investment process at BERS.
“The Boards of Trustees and my staff, lead by Chief Investment Officer (CIO) Larry Schloss, have worked hard at developing these reforms and they will go a long way in ensuring a fair and transparent investment decision-making process and added protections for retirees and taxpayers,” Comptroller Liu said. “By instituting these new policies, we are holding investment managers to higher standards than ever before. Any violation of these rules could result in financial and reputational damage to the investment manager.”
“Working side by side to enact these reforms, the Board members of BERS and the Comptroller’s Office are providing a more open and transparent process with strict penalties for any violation of these rules,“ said Joseph D’Amico of the International Union of Operating Engineers Local 891. “We are accountable for protecting the pensions of our membership, and these new policies will ensure that those tasked with managing these funds are held accountable as well.”
Effective July 1, the following policies will be in place:
- Investment managers must certify in writing that they have not given any gifts to any employee in the Comptroller’s Office, and have complied with NYC Conflict of Interest Board gift restrictions for the Systems and Trustees ;
- Investment managers must disclose all contacts with employees of the Comptroller’s Office regarding new investments as well as contacts with other individuals, such as Trustees, involved in the investment decision-making process;
- Investment managers must certify / agree to the following:
- No placement agent was used in the connection with securing the Systems’ commitment to any private equity investment transaction;
- Full disclosure of all fees and terms relating to any firm retained to provide marketing or placement services for transactions that are not covered by the placement agent ban;
- Marketing/placement fees, if any, shall be fully borne by the investment manager;
- They have read and complied with Chapter 68 of the NYC Conflict of Interest Board rules and have not caused any employee of the Comptroller’s Office or Trustee or employee of NYCERS or TRS to breach them in any way;
- Agree that Systems may terminate an investment commitment or contract, and any obligations to pay future management or performance fees, for violation of the Systems’ placement agent policy and related disclosure requirements.
In addition, Comptroller Liu has voluntarily agreed not to accept any campaign contributions from investment managers and their agents doing business with, or seeking to do business with, the New York City pension systems.
In February, Comptroller Liu proposed a number of reforms to the investment decision making process, including potentially lifting the suspension of placement agents working to secure investments on behalf of investment managers. After discussions with the Boards, the current ban on placement agents will remain in place.
“In light of the evolving regulatory environment in Washington and based on our discussions with the Boards of Trustees, we found it appropriate to keep in place the ban on placement agents for private equity,“ Comptroller Liu said.
The Trustees of BERS are as follows:
Mayoral appointees Schools Chancellor Joel Klein, Philip Berry, Gitte Peng, David Chang, Tino Hernandez, Joe Chan, Tomas Morales, Linda Laursell Bryant, and Lisette Nieves; Patrick Sullivan (Manhattan BP), Gbubemi Okotieuro (Brooklyn BP), Anna Santos (Bronx BP), Dmytro Fedkowskyj (Queens BP), and Joan Correale (Staten Island BP); and employee members Joseph D’Amico of the IUOE Local 891 and Milagros Rodriguez of District Council 37, Local 372.