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State panel to investigate complaints of Calpers investment conflict

California’s Fair Political Practices Commission says it will probe conflict-of-interest and disclosure complaints tied to former investment chief Ben Meng

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California’s Fair Political Practices Commission says it will probe conflict-of-interest and disclosure complaints tied to former investment chief Ben Meng.

California officials said they opened an investigation into whether the former investment chief for the nation’s largest pension fund violated state conflict-of-interest laws by holding personal investments in private equity firms in which the fund is also an investor.

Several board members at the California Public Employees’ Retirement System, known as Calpers, are seeking more information about the circumstances surrounding the 5 August resignation of former investment chief Ben Meng, including when chief executive Marcie Frost learned about possible investment conflicts and what procedures the fund has in place to keep investment officials from running afoul of conflict-of-interest rules.

Calpers this month referred an internal review concerning Meng’s personal investments to California’s Fair Political Practices Commission, according to a person familiar with the matter. The commission said it received two formal complaints regarding Meng’s investments and his disclosure of them, and will investigate both. The commission investigates civil violations of laws concerning political campaign spending disclosures and public officials’ conflicts of interest and can levy fines of up to $5,000 per violation.

Meng’s abrupt exit sent shock waves through the pension fund, which has grappled with chronic turnover and has on hand only about 70% of assets needed to meet future pension promises.

Unlike his predecessors, Meng had investment experience on Wall Street. In his first full year, Calpers reversed a streak of underperformance relative to other large pension plans, earning 4.7% for the 12 months ended June 30 despite losses in the first quarter during the early days of the pandemic. Months before his departure, he had embarked on a push to address Calpers’s shortfall and hit the pension’s ambitious investment target by borrowing against the fund.

One focus of Calpers’s review, launched in April, was Meng’s personal ownership of Blackstone Group shares in 2019 during the period Calpers pledged $750m to a private equity fund managed by the firm, a person said. Meng disclosed between $10,001 and $100,000 of shares on forms submitted shortly after he became investment chief in January 2019 and in April of this year.

A Calpers spokesman declined to comment on any role Meng played in the pension fund’s Blackstone investment and on the commission’s investigation.

There is no evidence that 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. Tom Byrne, who chaired the New Jersey State Investment Council between 2015 and 2018, said he left the room during discussions on Blackstone and recused himself from decisions involving the firm. The investment firm he runs held shares in Blackstone for clients around that time.

Calpers has faced pressure to avoid the appearance of impropriety ever since a bruising scandal in the 2000s that led Calpers’s former CEO to plead guilty to involvement in a bribery scheme. Calpers asks investment staff to disclose personal investments upon arriving and then annually for the previous year. Individuals take mandatory training on conflicts of interest, and officials have opted to recuse themselves on investments for a variety of reasons, people familiar with the pension’s practices said.

A Calpers spokesperson declined to say whether Meng’s initial disclosure of Blackstone shares, more than a month before the March 2019 Blackstone commitment, raised any flags for Calpers, or whether the fund took steps to protect him from running afoul of conflict-of-interest rules.

Meng said at the start of his tenure that he intended to expand Calpers’s private equity portfolio, a longstanding Calpers goal as the fund seeks to earn annual returns of 7% in an era of low interest rates. Blackstone ranks among the largest private equity managers.

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

Institutions can help prevent problems by monitoring investments, pre-screening decisions and flagging potential conflicts for officials in real time, experts said. “If you’re going to say [officials] can continue to own stock, proactively be involved,” said Robert Rizzi, a partner with the law firm Steptoe & Johnson who teaches government ethics at Harvard Law School. “Otherwise you’re just creating a trap for the unwary”.

A 2 August post on the blog Naked Capitalism called attention to Meng’s disclosures. In the following days, Calpers referred its internal findings to the state, according to a person familiar with the matter. A Calpers spokesman said that action wasn’t prompted by the blogger.
Several board members are questioning the way Calpers has handled the issue.

State controller Betty Yee called for a review of Calpers’s conflict-of-interest policies, “the CEO’s oversight and implementation of these policies, and any additional safeguards necessary to ensure this does not happen again”.

Board chairman Henry Jones said, “Our CEO advised me of this issue when she became aware of it. It had been scheduled to be brought to the Board upon completion of the investigation.” He previously said the issues over Meng’s investments are “private personnel matters and already have been addressed according to our internal compliance protocols.”

Calper’s CEO Frost said in a statement that the pension fund plans to propose policy changes at the board’s September meeting, but the statement didn’t say what they would be. “We are committed to strong compliance protocols,” she said.

People close to Meng said that even before the internal review the investment chief was worn down by the public spotlight. Meng came to Calpers from a job as deputy chief investment officer of China’s State Administration of Foreign Exchange, the agency in charge of the country’s more than $3tn in foreign reserves. Before that he worked at Calpers from 2008 to 2015 and had stints at Morgan Stanley as well as Barclays Global Investors. Meng is from China and became a US citizen.

As US-China ties soured, Meng’s past role with China’s State Administration of Foreign Exchange prompted some Washington politicians to call attention to Calpers’s Chinese investments.

Meng confided to acquaintances that he was troubled by that mounting scrutiny, associates said. After the conflict-of-interest questions became public, Meng decided to resign rather than deal with another controversy, people familiar with the matter said. “It’s important for me to focus on my health and on my family,” Meng said in a statement, “and move on to the next chapter in my life.”

On a call with investment staff this month, interim investment chief Dan Bienvenue said Calpers would continue with its investment plan. Calpers hopes to find a replacement who is also an experienced investor, said a person familiar with Calpers’s plans.

From The Wall Street Journal

Source: https://www.penews.com/articles/state-panel-to-investigate-complaints-of-calpers-investment-conflict-20200825

Private Equity

Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform. RBC Dominion Securities describes the A+ as the next level of wealth management.

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Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

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The A+ is for you if “you require serious investment management for your serious money.”

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform.

RBC Dominion Securities describes the A+ as the next level of wealth management.

For select clients with serious money, the platform provides greater convenience, customization, RBC’s Unified Managed Account technology, access to elite money managers worldwide, and tax efficiency.

Accelerate’s Alt ETFs on RBC A+

The range of alternative ETFs from Accelerate allows investors to diversify beyond stocks and bonds by including alternative asset classes in their portfolios.

The firm is known as a pioneer in institutional caliber alternative ETFs including hedge fund and private equity ETFs. It claims it is “disrupting the asset management industry by offering performance-oriented alternative investment strategies previously reserved for wealthy investors at a fee significantly lower than competitors.”

“We are pleased to be chosen by RBC Dominion Securities, a global leader in wealth management, as one of the select group of high-quality investment managers on the exclusive A+ platform for RBC Dominion Securities advisors and their clients,” said Accelerate CEO Julian Klymochko. “In an era of rock-bottom interest rates and record-high stock market volatility, we are pleased to provide investors with diversification, alternative yield, and alpha generation solutions through alternative investment strategies including absolute return, arbitrage, enhanced equity, and private equity replication.”

Selected ETFs

The alternative ETFs on the RBC Dominion Securities A+ platform include:

  • Accelerate Absolute Return Hedge Fund (TSX: HDGE) – a diversified, liquid, and performance-oriented long-short equity hedge fund
  • Accelerate Arbitrage Fund (TSX: ARB) – provides exposure to SPAC arbitrage and merger arbitrage investment strategies
  • Accelerate Enhanced Canadian Benchmark Alternative Fund (TSX: ATSX) – combines exposure to the S&P/TSX 60 plus a long-short Canadian equity overlay
  • Accelerate Private Equity Alpha Fund (TSX: ALFA) – designed to provide investors with private equity-like investment returns

Related Story:  Liquid Alt ETF Provider Accelerate Offers Ready-Made Alternative Investment Strategy                                                

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Source: https://dailyalts.com/accelerates-alt-etfs-now-on-rbc-dominion-securities-a-platform/

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Private Equity

Venture Capital: AgTech Startup Benson Hill Lands $150M

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures). It uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

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Venture Capital: AgTech Startup Benson Hill Lands $150M

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Benson Hill uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures).

The company said other strategic and ESG focused investors also participated. These included Argonautic Ventures, Caisse de dépôt et placement du Québec (CDPQ), Emart, GS Group, Louis Dreyfus Company, iSelect Fund, Fall Line Capital, Mercury Fund, Prelude Ventures, Prolog Ventures, S2G Ventures, and additional strategic and family office investors.  (FOOD navigator-USA.com)

Benson Hill technology

Benson Hill uses biotechnology, data science, and AI to enhance the nutritional qualities, flavor, and sustainability of crops and vegetables.

The firm’s “Cloud Biology” is the fusion of data, machine learning, and AI techniques with biology. Its “CropOS” is a proprietary platform that facilitates the accessibility and actionability of Cloud Biology.

The CropOs platform uses plant phenotyping, predictive breeding, and environmental modeling algorithms to better control the plant breeding process and realize these advantages:

  • Produces plants that are highly productive, highly nutritious, and better tasting
  • Better texture
  • Reduce the number of processing steps
  • Reduce the need for additives
  • Grow plants that “do more with less,” thus boosting sustainability

The company’s work so far has been concentrated around soybeans.

Its new, ultra-high-protein (UHP) soy products spiked the interest of investors. They come from a highly productive non-GMO soybean that is rich in oleic oil content.

Use of funds

Benson Hill plans the commercial launch of the first Ultra-High Protein soybean varieties in 2021, among other product launches.

It also plans to expand its team by adding top talent and continue the development of Cloud Biology and CropOS.

“As a society, we’re at a crossroads made more evident as the pandemic has revealed strengths and vulnerabilities in our food system,” said Matt Crisp, Benson Hill CEO. “Food choices that create enjoyment, make us stronger, and help preserve our environment need to be accessible to everyone, and the power of plant diversity and technology innovation can help fuel that evolution.

Related Story:   Smart Farm Technology To Take The Drudge Out of Plant Breeding

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Source: https://dailyalts.com/agtech-startup-benson-hill-lands-150m/

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Private Equity

FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital platform for $450 million of which $100 will be paid through Alliance stock. The transaction would expand Alliance Data’s own digital offerings by including buy-now-pay-later (BNPL) products.

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FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

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Alliance Data will pay in cash and stock for the acquisition.

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital buy-now-pay-later (BNPL) platform for $450 million of which $100 will be paid through Alliance stock.

The transaction would expand Alliance Data’s own digital offerings by including BNPL products. BNPL is a major trend now that consumers have embraced the interest-free, zero-fee facility to pay in installments. Alliance is a provider of data-driven marketing, loyalty, and payment solutions. (Alliance)

Digital BNPL is particularly popular with millennials and the younger set. They prefer not to run up credit card debt and like the speed and convenience. The technology and products acquired from Bread will address this segment of the population.

Bread already has tie-ups with merchants such as online jewelry seller Noémie, the luxury watch seller Hublot and Newton Baby, the crib mattress provider.

BNPL customer experience

“Bread’s flexible, easily-integrated payment solutions, coupled with Alliance Data’s Enhanced Digital Suite, will improve the digital customer experience and support increased acquisition and checkout rates, offering the best payment product to the right consumer at pivotal moments in the customer’s online shopping journey,” Alliance said in a statement.

Alliance intends to leverage Bread’s solutions along with its own existing private label, general-purpose and commercial products.

COVID-19

Its brand partners will therefore get another advantage in the eCommerce channel, with online businesses already getting a boost from COVID-19.

“With the timing of the holiday season upon us, the COVID-19 pandemic has accelerated the adoption of digital technologies, and perhaps nowhere as significantly as in financial services and payments,” said Val Greer, chief commercial officer, Alliance Data.

BNPL is now crowded with cash-rich players

Payments giant PayPal (NASDAQ: PYPL) announced in August that it would begin offering BNPL services, recognizing that COVID-19 had triggered a dramatic increase in their popularity.

Other players in the BNPL field include Klarna, Affirm, Afterpay, and Quadpay.

In a recent study, Tech Crunch found that PayPal had the highest retailer coverage with a presence of 65% retailers. Afterpay was a distant second at 10%, then Affirm 6%, Klarna 5%, and QuadPay 2%.

The study concluded that PayPal was primed to dominate the BNPL wars.

Related Story:   PayPal Challenges Klarna In U.K. BNPL Tussle                                                

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Source: https://dailyalts.com/alliance-data-buys-bnpl-fintech-bread-for-450m/

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