Ben Meng, the investment chief of the $400bn Californian employee pension fund, has resigned days after a blog published allegations that he had made incomplete public disclosures about his personal investments.
Calpers said late on Wednesday that Mr Meng, who joined the US’s biggest public sector pension fund early last year, would leave immediately. Dan Bienvenue, Mr Meng’s deputy, was named interim chief investment officer.
A person close to Calpers said Mr Meng had been “brought down” after the Naked Capitalism website published allegations that the executive had failed to fully comply with the California Fair Political Practices Commission in relation to financial disclosure documents.
Elected officials and public employees in California who make influential decisions are required to submit a statement of economic interest, also known as a Form 700.
“The fact that Ben could not be bothered to fill it [Form 700] out correctly or amend it when the errors were first identified is a serious breach,” the person said.
Naked Capitalism alleged that Mr Meng had personal investments in private equity groups where Calpers was also an investor, raising the prospect of conflicts of interest.
California state controller Betty Yee, who oversees the state’s finances, said she had called for an emergency board meeting to discuss Mr Meng’s resignation.
“I am incredibly disappointed to hear about the former CIO’s lapse in both judgment and adherence to standard conflict-of-interest policies,” she said.
Mr Meng told the FT: “I have disclosed all of my financial holdings on the applicable Form 700s.” He declined to comment further on the subject.
“My health has been deteriorating for six months,” he said, adding his abrupt resignation allowed for a “quicker and cleaner transition” to Mr Bienvenue.
Mr Meng took the top investment job at Calpers in January 2019 after leaving China’s $3tn State Administration of Foreign Exchange, the agency that manages the country’s capital account. The China-born American had previously worked at Calpers as the fund’s investment director for asset allocation.
To meet an ambitious 7 per cent annual performance target, Mr Meng led a push into private equity and private debt. These assets can produce higher returns but realising them during times of market stress can be difficult.
In its 2019/20 fiscal year, the Calpers portfolio returned 4.7 per cent.
“Leverage will increase the volatility of returns but Calpers’ long-term horizon should enable us to tolerate this,” Mr Meng told the Financial Times in June.
Mr Meng had drawn criticism for a plan to increase the fund’s leverage to 20 per cent of its value using debt and financial instruments such as equity futures. One board member, Margaret Brown, voted against the plan, saying it reminded her of the fund’s mis-steps during the 2008 financial crisis.
Mr Meng had been brought in to reduce a shortfall in assets, which recently totalled 71 per cent of the amount necessary to fulfil projected payouts to the 1.9m public workers served by Calpers.
Calpers has been marked by executive turnover in recent years. The fund did not have a head of private equity for two years until Greg Ruiz joined in May 2019. Elisabeth Bourqui left as chief operating investment officer in January last year after eight months at the fund.