Under pressure, Nicholas Maiale, the South Philadelphia lawyer who has chaired the $25 billion Pennsylvania State Employees' Retirement System since 1992, is leaving the post from which he oversaw state investments under five governors.
"I often said I'd keep the chairman's job as long as I enjoy it. I haven't enjoyed it since Thanksgiving," when he decided to tell SERS's chief investment officer, Anthony Clark, that he was the subject of an internal investigation, Maiale told me.
Against SERS lawyers' advice, Maiale told Clark that state lawyers were reviewing staff claims that Clark had withheld information about hedge-fund losses and claims that he may have been trading personal investments from his SERS office. Clark chose to retire. His lawyer has denied wrongdoing.
State Treasurer Rob McCord, a SERS trustee, accused Maiale of mismanaging the Clark probe and called on Gov. Corbett to replace Maiale.
Maiale defended his ex-investment chief - "I thought he did a good job" - but acknowledged that the "noise level" surrounding his own tenure had risen.
He said that Corbett's lawyers "didn't serve the board well" in handling the Clark matter, and that "McCord's office added fuel to the fire by making it public." Result: Maiale and Corbett "decided it was time to move on."
"I applaud Nick for putting the system first and stepping down," McCord told me. The treasurer said the next chairman needs a "vigorous review" of the firms that manage pension investments and pocketed at least $176 million in state fees last year.
"Gov. Corbett will review candidates [and] appoint a strong, qualified leader for SERS," Corbett spokesman Jay Pagni told me.
Maiale led SERS's transformation into one of the leading U.S. buyers of high-fee venture-capital, real estate, buyout, hedge, and commodity funds, with mixed results.
"I was open-minded," Maiale said. A Temple Law School graduate, he said he'd learned about business in his old law practice, and as a lobbyist - he claims credit for clinching Comcast's victory in its struggle to win the most valuable cable-TV franchise in Philadelphia, on its way to national dominance.
A 2001 state law that increased pensions without raising money to pay for them piled pressure on SERS. Maiale's advisers, led by then-chief investment officer Peter Gilbert, pumped billions into lightly regulated, high-fee hedge funds.
But hedge funds "didn't turn out to be much of a hedge," Maiale said. They lost value in the financial collapse of 2008, forcing higher taxpayer pension contributions, which Corbett compared to "a tapeworm."
"I have soured on the whole hedge-fund category," Maiale now says. He urged successors to favor buyout funds, global stocks, and easy-to-sell bonds.
Maiale said he fielded questions from all five governors he served - plus "recommendations" from Gov. Ed Rendell, whose contributors included firms that sought, often got, and were sometimes fired from pension contracts.
The chairman wasn't a pushover, said Alan Kessler, financial chairman of the Democratic state committee under Rendell. "I've gone to Nick twice with firms. Neither of them got hired," he told me.
Political insiders describe Maiale in the glowing terms some football fans reserve for the late Pennsylvania State University coach Joe Paterno. Maiale, who has used a wheelchair since 1987 because of multiple sclerosis, is "a beloved figure in the General Assembly," Kessler said. "People in Harrisburg know this is a large part of his life."
"I had friends on both sides of the aisle," Maiale told me. "Things never got partisan, until McCord. I was able to navigate the divides pretty good."