CalPERS Beefs Up Board Ethics Rules

December 30, 2009 ( at the California Public Employees’ Retirement System (CalPERS) have approved a beefed-up ethics policy that, among other things, requires board members to refer any communications about an investment to the system’s chief investment officer.

A CalPERS news release said the new policy also bars board members from lobbying about investments with staff members anywhere other than at a meeting of the full board or a board committee.

The new policy approved by the 13-member panel also gives President Rob Feckner authority to discipline board members who violate the mandate, and board members now have to attend annual ethics training sessions. The disciplinary action could include admonishment, censure, temporary termination of travel privileges, removal as a committee chair or vice chair, or the requirement of additional ethical or fiduciary training. The vice president is responsible for any action against the Board President.

“By toughening our governance policies, we’re making sure that Board Members are held to the strictest standards,” said Feckner, in the announcement. “The guidelines help us keep the focus on what’s important – the quality of our investments.”

According to the news release, the moves followed a review of CalPERS’ Statement of Governance Principles that began in the fall. Among other things, the principles outline the working relationships between the board president, vice president, committee chairs, vice chairs, chief executive officer, and CalPERS staff.

At CalPERS and other public pension programs across the country, officials have instituted new protective measures in response to a sweeping probe that started with the New York state pension fund’s use of private placement agents (see CalPERS Votes to Support Requiring Placement Agents to Register as Lobbyists). State and federal investigators have since alleged that certain of the private placement agents, who helped money managers win pension fund management mandates, improperly benefited from the transactions.