CalPERS to Review Its Pact With Nomura Unit

The California Public Employees’ Retirement System will review its contract for Nomura Securities Co. to manage about $724 million of the pension fund’s money because of reports linking Nomura to organized crime, a fund official said.

“We will be analyzing the situation, but we’re not going to make any rash decisions,” said Sheryl Pressler, chief investment officer for CalPERS, as the fund is known. CalPERS has $111 billion in assets and is the largest public pension fund in the U.S.

Nomura Capital Management Inc., a U.S.-based subsidiary of Nomura, manages its share of CalPERS’ assets “with a Pacific Rim mandate,” Pressler said.

Nomura Capital Management officials in the U.S. weren’t available for immediate comment. A managing director of Nomura Investment Management, the Tokyo-based parent of Nomura Capital Management, said, “We’re worried that if CalPERS does cancel our contract, other states may take similar action.” The executive asked that his name not be used.

Nomura Securities has a 5% stake in Nomura Investment Management.

Nomura Securities said Thursday that two of the firm’s directors had made unauthorized stock trades and funneled the proceeds to a company tied to Japanese organized crime.

The Nihon Keizai newspaper reported Saturday that CalPERS said it may end its management contract with Nomura’s U.S. unit.

The pension fund will begin a review of Nomura through Wilshire Associates, a Los Angeles-based investment consulting firm, Pressler said.

If wrongdoing is evident, Nomura will be expected to present a plan to prevent future problems, Pressler said.

After such a review, which typically takes several months, CalPERS spokeswoman Pat Macht said, the fund may decide on sanctions ranging from probation to canceling its contract with Nomura.