The most annoying job in the investment biz

Just got finished reading this story at the Wall Street Journal and I still don’t understand it.

So, there’s a guy named Ben Meng who was in charge of the investments for Calpers, which is California’s gigantic public employees’ pension fund. And he also happened to own between $10,000 and $100,000 worth of Blackstone shares, which trades publicly. And during this time, Calpers hired Blackstone to run a part of its pension fund. Which, pretty much every large pension in America does. And without even deciding whether or not there was something problematic, he had to go.

Here’s WSJ:

There is no evidence that Mr. Meng attempted to benefit personally from his work at Calpers. Public officials can run afoul of state law simply by participating in government decisions that create the appearance of a conflict of interest.

Read that second sentence again. “Create the appearance” seems to be the problem. Blackstone manages $571 billion for institutional investors all over the country. It would be stranger if Calpers didn’t have any money with them.

Meng had disclosed his ownership of Blackstone shares before the decision was made for Calpers to allocate to the firm. Not good enough. Remember, we’re talking about appearances.

There’s a 13-person board that oversees the investment activities of the personnel at Calpers. I would imagine the whole thing is massively political. And now the board has to chase this guy out and cover their own asses. Even after he took action to get rid of the potential conflict:

Calpers didn’t flag any problems with Mr. Meng holding Blackstone shares until 2020, a person familiar with the matter said, and he subsequently sold the stock.

Meng was born in China and worked for the state’s foreign exchange team before coming here, working at Morgan Stanley and Barclays, then becoming an American citizen. This means he’s clearly talented, to have been able to do that with his career. It also opens brand new doors to even more politics.

Of all the jobs in the investment biz, this seems like it could be the most annoying and politically fraught. It’s only titularly about “investing” – there’s way too much other stuff that comes along with it that isn’t worth the aggravation.

People close to Mr. Meng said that even before the internal review the investment chief was worn down by the public spotlight.

No s***. I’m worn down just thinking about it. Now the grandstanding begins and the new rules and regs. It would have been easier to just tell employees they couldn’t own stock rather than have them trap themselves in a game of optics.

Source:

Calpers Faces Questions Following Investing Veteran’s Abrupt Exit (WSJ)

 

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