CalPERS to Review Pimco-Managed Investment

Spurred by allegations of improper conduct, the California Public Employees’ Retirement System is reviewing its $208-million investment in high-yield bonds managed by Pacific Investment Management Co.

The findings will be presented to the CalPERS board at its April meeting. The review is in line with similar staff investigations that resulted in CalPERS’ decision to fire Putnam Investments as manager of $1.2 billion in pension assets in November and put two other mutual fund managers on a “watch list” for scrutiny.

The probe comes after a fraud lawsuit filed by the New Jersey attorney general against the Newport Beach-based investment firm, known as Pimco. The suit accuses Pimco of allowing a hedge fund to engage in market-timing abuses.

“We want to make sure that our account has not been impacted,” CalPERS spokesman Brad Pacheco said.

Other pension funds are rethinking their use of Pimco funds as well.

The Central Pension Fund of the International Union of Operating Engineers and Participating Employers, which has 160,000 members and $7.7 billion in assets, has asked its consultant for advice on whether to continue investing with Pimco, said the plan’s chief executive, Michael Fanning. The Washington-based fund previously dumped Strong Capital Management, one of the first firms implicated in a growing national mutual fund scandal.

In addition, human resources firm Adecco USA is reviewing Pimco’s status in its $200-million 401(k) plan, according to a published report. Pimco representatives did not return calls Friday seeking comment.

The CalPERS review was first reported by the Orange County Register.