September 17, 2014

State Employees’ Retirement System Receives Report On Former CIO Investigation

The Board of the Pennsylvania State Employees’ Retirement System meeting Wednesday received a report on the independent investigation of allegations involving the system’s former CIO and a report on the fund’s second quarter investment performance, and approved $100 million in alternative investments.
During executive session, the board received a report from Walter Cohen of Obermayer, Rebmann, Maxwell and Hippel, LLP, the firm retained in January to examine the allegations. After executive session, Board Chairman Glenn Becker provided the following statement:
“On behalf of the board, I’d like to express our thanks for the patience and support that has been extended to us during this comprehensive, independent investigation and to those who refrained from drawing any conclusions before facts were known.
“We felt strongly that the quarter of a million SERS members and the state’s taxpayers deserved no less than a systematic, thorough examination. Today, we have received a report from Obermayer, Rebmann, Maxwell and Hippel, LLP, on the results of their investigation.
"The letter of transmittal from Obermayer, summarizing their report, will be made available through the normal SERS news release following this meeting’s adjournment.
"We view this challenging experience as an opportunity to enhance our review processes and revisit internal policies and practices to ensure that all reflect best practices.”
In other business, investment office staff and general investment consultant RVK reported a second quarter net-of-fees return of 3.5 percent. That return contributed to a net-of-fees return of 6.3 percent for the first half of the year, which added nearly $1.7 billion to the fund.