Skip to content
Business
Link copied to clipboard

Former Pa. pension fund manager says he is "exonerated"

An investigation into an unsuccessful investment by the Pennsylvania State Employees' Retirement System (SERS) has "found no evidence of illegality" by Anthony Clark, the system's former chief investment officer, who persuaded the system to pump $250 million into Tiger Management Advisors as the first step in a planned hedge fund strategy.

Anthony S. Clark. (Photo from LinkedIn.com)
Anthony S. Clark. (Photo from LinkedIn.com)Read more

An investigation into an unsuccessful investment by the Pennsylvania State Employees' Retirement System (SERS) has "found no evidence of illegality" by Anthony Clark, the system's former chief investment officer, who persuaded the system to pump $250 million into Tiger Management Advisors as the first step in a planned hedge fund strategy.

"Whether Clark intentionally misled the board by seeking to conceal Tiger's poor performance is open to question," the investigator, former acting state attorney general Walter Cohen, added in his two-page note to the board summarizing his findings.

Clark said Cohen's summary report "exonerated" him and confirmed that he "did nothing illegal, unethical, immoral or against SERS policy" while serving as the top investment picker for the underfunded, $27 billion, taxpayer-backed system.

Despite Tiger's losses, other SERS investments recovered on his watch, Clark added. "I have lost nearly a year of my professional life because of frivolous allegations," he said. "I am eager to resume my career."

In Cohen's more detailed 24-page report, which SERS did not make public but which The Inquirer has reviewed, Cohen wrote it was "appropriate" for the board to accept Clark's resignation last autumn - not because Clark broke any law, but because his hedge fund bet, polarizing leadership, and "failure to command the respect and trust of his staff," made it wiser for the board to seek new leadership.

Cohen's review focused on allegations that Clark failed to properly disclose up to $17 million in short-term losses SERS suffered from Tiger Management Advisors, even as the hedge fund group was paid $11 million in fees. Clark had recommended Tiger as a low-risk, profitable investment; contrary to his predictions, the hedge funds lost money after a manager bet big on gold.

The review also looked at Clark's working hours and personal investing. Cohen said SERS should consider tightening its loose inside-information regulations and work rules, and set limits on investing while at work.

Clark retired early in December after longtime SERS chairman Nicholas Maiale urged him take a leave of absence while the board reviewed complaints about his leadership. Maiale's intervention brought a call for his own resignation from state Treasurer Rob McCord. Gov. Corbett then declined to reappoint Maiale as SERS chairman. Maiale said the Cohen report showed he had been right to hire and support Clark.

"I interpreted it as a complete exoneration," Clark said of Cohen's report. Asked about what Cohen called the "open question" of Clark's Tiger disclosures, he said he saw it as Cohen's acknowledgment that "some board members saw that as an attempt to conceal while others did not."

Clark blamed the "confusion" on changes in SERS reporting methods.

According to Cohen's report, Clark was an aggressive manager who intimidated members of a demoralized staff already reeling from the investment market collapse of 2008.

"My mandate when I was hired was to come in and elevate the stature and capabilities of the investment office and to be a strong leader," Clark said. "I was demanding. I held people accountable, just as I was accountable to the board. I expected people to do their jobs to their best ability."

He added: "In my judgment, the results speak for themselves."

Profits replaced losses as investment markets recovered; SERS benefited from Clark's increased investments in U.S. stocks.

"If I had just accepted the current environment and culture and not rocked the boat, the fund would have continued to experience mediocre performance," Clark said.

215-854-5194

@PhillyJoeD

www.inquirer.com/phillydeals