Lee Leaves Texas Fund, Citing Time Constraints

January 12, 2009 (PLANSPONSOR.com) - James Lee, the board chairman of the $80 billion Teacher Retirement System of Texas, has stepped down less than a year after taking the helm.

On Friday Governor Rick Perry appointed Linus Wright, the board’s vice chairman and a retired educator, to lead the Board of Trustees of one of the country’s largest public pension systems, according to the Austin Statesman.

Lee, a pioneer of the day-trading industry, said he is buying a company, and could no longer make the necessary time commitment to the board, according to the report.

“Time to Move On”

“I don’t think there is a more important agency or system in the state in terms of what we do or how many people rely on us,” Lee said, according to the Statesman. “I feel good about where we are, and it’s time to move on to my business interests full-time.” Lee provided no specifics about his new business endeavor other than to say it is in the “professional services” industry and a public announcement should come later this month.

Lee, who has been a trustee since 2006, was named chairman by Perry last spring. Lee was the co-founder of Houston-based Momentum Securities LLC, a day-trading firm that grew to be one of the largest such operations in the country. It merged with Tradescape Corp. in 1999, and brokerage ETrade Group Inc. acquired the combined entity in 2002.

Wright, 81, worked in education for 40 years as a teacher, coach, principal, superintendent of the Dallas school district and undersecretary for education under President Ronald Reagan. He has been a trustee for eight years.

As the pension fund’s unpaid chairman, Lee initiated a series of major organizational changes, including replacing a long-time outside legal adviser and the chief operating officer. And as the pension fund’s chairman, Lee championed a strategy to diversify the fund’s holdings by moving billions of dollars into private equity and other alternatives to traditional investments.

Casino Controversy

Concerns have arisen lately regarding a claim that Lee owed a $110,000 “gaming debt” to the Bellagio casino and hotel in Las Vegas – and issue that might have been an issue during confirmation hearings for Lee as chairman.

Citing documents filed in Clark County, Nevada district court, the Statesman said that Lee obtained $130,000 in credit from the Bellagio in 2005. The following year, the casino tried to collect on the debt, but “credit instruments” in Lee’s name drawn on Wells Fargo Bank were returned for insufficient funds, the lawsuit said. The lawsuit said Lee made payments totaling $20,000, the last of which was made in June 2007, and the casino then filed suit in November 2007 to collect the $110,000 balance plus interest, the lawsuit said.

Lee said there had been a dispute in 2005 over the amount he owed, but he said he believed the matter had been resolved at the time. He also said the suit was settled out of court January 2.