May 19, 2019

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Oops! CalPERS (California Public Employees Retirement System) Reportedly Violates Insider Trading Policy Again

Jon Ortiz, who writes The State Worker blog for The Sacramento Bee, recently reportedthat the California Public Employees Retirement System has again violated its insider trading policy by purchasing shares in an initial public offering that were on its “restricted securities” list.  Reportedly, the Securities and Exchange Commission was already looking at possible violations that occurred last spring.  See SEC Reportedly Investigating CalPERS’ Stock Trades.

According to Jon Ortiz’ blog, the IPO purchase occurred last November.  That timing is interesting because CalPERS’ issued this press release in late December addressing the two earlier violations, but making no mention of the November purchase (I don’t know when CalPERS first became aware of the problem November trade).  Nonetheless, CalPERS declared in December that its program was “the most comprehensive personal trading program of any public pension system in the United States.”

According to Ortiz’ post, the most recent problem came to light at CalPERS’ Board of Administration meeting last week.  At this same meeting, the Board received its regular report on Public Records Act requests.  Typically, that report wouldn’t be of much interest to me, but I had submitted a request to CalPERS under the Public Records Act in early January seeking documents relating to CalPERS’ insider trading policy.  Oddly, my request was not included in the report provided to CalPERS’ Board of Administration.  I contacted CalPERS regarding this omission and was assured that it was inadvertent, would be looked into and they would get back to me.  However, as I wrote to CalPERS:  “Even if inadvertent, the omission  is of significant concern because it calls into question whether CalPERS has in place adequate disclosure controls (i.e., controls and other procedures that are designed to ensure that information is recorded, processed, summarized and reported to the Board of Administration in a timely, accurate and complete manner).”

In any event, I still have my doubts about the CalPERS’ insider trading policy.  See CalPERS’ Offbeat Personal Trading Policy.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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