The move by CalPERS, the nation’s largest public pension fund, is short of firing AllianceBernstein from its current $1.4 billion in management contracts, according to a CalPERS statement. AllianceBernstein has managed a US equity portfolio for CalPERS valued at $815.7 million since late 2000, and a $618.1 million emerging market portfolio since late 2002.Alliance, majority-owned by AXA Financial, is the US unit of French insurer Axa.
The CalPERS statement draws a marked distinction between its latest decision regarding AllianceBernstein and its earlier move to fire Putnam Investments. CalPERS said it decided that Putnam’s senior management team breached its general fiduciary duty by not acting when the Putnam compliance office first reported improper trading activities years earlier.
That’s different from the AllianceBernstein case, CalPERS claimed, since AllianceBernstein CEO Lewis Sanders “acted swiftly and decisively in purging the organization of all employees who failed to live up to their fiduciary duty,” as well as instituting significant structural reforms. Also, some of the Putnam investment staff working on the CalPERS account were implicated in the wrongdoing, which was not the case at AllianceBernstein
“Nevertheless, AllianceBernstein is far from out of the woods with CalPERS,” Rob Feckner, chairman of the CalPERS Investment Committee, said in a statement. “We continue to be troubled by allegations in the public domain, but will await the findings of all the appropriate investigative bodies before we make our final decision,”
CalPERS, with more than $157 billion in assets, provides retirement and health benefits to more than 1.4 million state and local public employees and their families. For further information go to visit www.calpers.ca.gov .
Separately, there was word thatAlliance Capital Management Holding LP has offered a 20% reduction in its management fees over the next five years as part of a settlement plan with New York Attorney State General Eliot Spitzer (See Alliance Offers 20% Fee Reduction Over Five Years ). Spitzer and other regulatory officials have been pursuing a widespread investigation of fund trading abuses.