CalPERS to extend contract of financial firm accused of fraud

SaC bee ^ | 2/16/10 | Dale Kasler

[NormsRevenge]

CalPERS plans to extend a management contract with financial services giant State Street Corp., the same firm accused in a lawsuit of defrauding CalPERS and CalSTRS.

The one-year extension, announced Tuesday at a meeting of CalPERS' investment committee, brought concern from state Treasurer Bill Lockyer, a fund board member.

"My question is whether we ought to be extending business relationships with firms that may have defrauded the state of California," he said in an interview.

But the California Public Employees' Retirement System staff said the bidding process on a new contract is so lengthy, the one-year extension became a necessity.

State Street manages assets for the two pension funds in what are known as custodial accounts; its account with CalPERS dates back to 1992.

Attorney General Jerry Brown sued State Street in October, saying it had defrauded CalPERS and the California State Teachers' Retirement System of $56.6 million by overcharging them on foreign currency trades. The two funds say they have been cooperating with Brown's office.

CalPERS pays State Street about $4.1 million a year to act as custodian, said the fund's spokesman Brad Pacheco.

[happygrl]

Throws up hands in the air.

Calpers must have some real "operators" on its board.

Twenty years ago, it was the gold standard for a pension fund.