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Office of the Illinois State Treasurer Request for Information: Securities Lending 370-300-19-006

The Office of the Illinois State Treasurer (“Treasurer”) is issuing this Request for Information (“RFI”) to explore the use of securities lending programs. Specifically, the Treasurer may have interest in using a securities lending program to enhance the performance of its local government investment pool. Service providers (“Respondents”) must submit their responses to this RFI (“Responses”) by 2:00 p.m. CT on October 1, 2018. Responses will help the Treasurer identify interest in providing this service, evaluate the primary risks of securities lending programs, and assess the benefit, if any, that a securities lending program would have on the return performance of the investment portfolio. Click here to read full RFI.
Sens. Booker, Warren Lead Letter to Railroad Retirement Trust Urging Them to Prioritize Diversity When Selecting Asset Mangers
On September 21, 2016, U.S. Sens. Cory Booker (D-NJ) and Elizabeth Warren (D-MA), sent a letter to William J. Carr III, interim CEO of the National Railroad Retirement Investment Trust (NRRIT) asking the Trust to clarify details around the current process of how it identifies and selects external managers to handle the assets of federal employees. They were joined on the letter by Sens. Kirsten Gillibrand (D-NY), Ben Cardin (D-MD), Bernie Sanders (D-VT), Sherrod Brown (D-OH), Richard Blumenthal (D-CT), Mazie Hirono (D-HI), and Robert Menendez (D-NJ).

“Our economy and nation thrives when we develop inclusive political and economic institutions. Therefore, it is in our national best interest to share in a common goal of ensuring government better represent the diversity of our nation,” the Senators stated. “We believe there is a great opportunity for your plan to set a clear example for institutional investors and the PBGC’s initiative could be a model for increasing investment with diverse managers across all asset classes… Accordingly, we request that you submit a plan that outlines how the NRRIT could similarly create a program for smaller and diverse asset managers,” the Senators concluded.

In July 2014, Senator Booker led his colleagues in raising “the severe underrepresentation of diverse and emerging managers” at the Pension Benefit Guaranty Corporation (PBGC), after learning that the PBGC had allocated $0 of its over $85 billion in assets to diverse managers. In May of 2015, the PBGC launched a pilot program for smaller asset managers and earlier this year, the agency allocated $875 million to five investment managers selected for the pilot.

The full text of the letter can be found here

Walters Art Museum Launches Investment Manager Diversity Initiative

In a press release from July 28, 2016, the Walters Art Museum announced the launch and hiring four MWBE firms as part of their Investment Manager Diversity Initiative.

As part of a commitment to diversity and inclusion, the Walters Art Museum has launched a new initiative to hire diverse-owned investment firms to manage a portion of the Walters’ endowment portfolio, which is valued at $116 million. The Investment Committee of the Walters led the initiative, which was strongly supported by the museum’s Board of Trustees.
“I am excited that the Walters has been able to take this critical step in aligning investment policy with inclusive practices and excellence in performance,” said Board President Ellen Bernard. “We made it a priority to engage more minority and women-owned investment management firms. “By doing this, we are adding a group of high performing managers to the Walters’ investment portfolio.”
The Walters used an objective process to identify the best-in-class independent money managers to oversee a portion of the funds. In partnership with the museum’s investment consultant, Marquette Associates, the Walters’ Investment Committee selected four diverse-owned firms that consistently outperformed their respective asset-class benchmarks over a one, three, five and 10 year period.
Brown Capital Management, a Baltimore firm with more than $7 billion in assets under management (AUM), was selected to manage a portion of the portfolio assets allocated to International  Equity. Brown Capital’s International Equity Fund Investor Class is rated five-star (highest rating) by Morningstar, Inc.;
Channing Capital, based in Chicago, Illinois, has a noted record of investing in         U.S.- based small-to-medium-sized undervalued companies. With over $2.5 billion in AUM, this boutique investment firm has consistently generated a return on its small cap value service in excess of 200 basis points (net of fees) over its benchmark during the  short- and intermediate-term, and since inception;
Elizabeth Park Capital Management, located in Cleveland, Ohio, is an equity hedge fund manager focused on small/mid-cap banks and thrifts and select mortgage real estate investment trusts. Since 2008, Elizabeth Park has been a consistent top quintile, risk-adjusted performer among similar U.S. bank-focused funds; and
Garcia Hamilton & Associates, a Houston, Texas-based high quality domestic fixed income firm with more than $7 billion in AUM, was named 2010 Core Fixed Income Manager of the Year by Emerging Manager Monthly, Intermediate-Term Fixed Income Manager of the Year for 2014 and Fixed Income Intermediate – Term Manager of the Year 2015 and 2016 by Institutional Investor magazine.
“We hope to create a ripple effect in the arts community in Baltimore and nationally in the art museum field, encouraging other non-profit organizations to hire diverse-owned firms to manage their endowment portfolios,” said Julia Marciari-Alexander, Andrea B. and John H. Laporte Director of the Walters Art Museum. “Together we can transform our institutions and communities and build a more diverse and inclusive economy.”

RFP: State of Illinois Secure Choice Market Analysis

The Illinois Secure Choice Savings Board (“Board”) authorized the Illinois State Treasurer’s Office (“Treasurer”) to issue this Request for Proposals (“RFP”) for a Market Analysis Report (“Report”) on behalf of the Board. The successful Respondent (“Contractor”) shall provide the Board and Treasurer with a final report, analyzing the financial feasibility of Secure Choice, including, but not limited to, determining when the Illinois Secure Choice Savings Program (“Secure Choice”) will be selfsustaining, as well as recommendations for how to optimize Secure Choice participation and performance. Respondents must submit their Proposals by 2:00 p.m. CT on September 6, 2016.

RFP 370-200-17-00 can be found at the following link:
NASP-Detroit Member Portia Roberson, Newly-Elected Chair, Detroit Police & Fire Pension - Makes History

The Detroit Police & Fire Retirement System has elected Attorney Portia Roberson to serve as Chair of the Board of the Detroit pension system. Roberson, who serves as a Board appointee of Mayor Michael Duggan, is the first ex-officio African-American woman to serve as Chair of the Board of the $3.2 billion pension system, serving some 8,000 retired police and fire and approximately 3,500 active duty first responders. Roberson is an attorney and heads the Civil Rights and Ethics Division for the City of Detroit. In an official statement Roberson shared:  "I am honored to serve the members and beneficiaries in this leadership role as Chair at a time when we continue to establish best practices for operations and investments to make the Police and Fire Retirement System a model for the nation."
NASP and NASP Detroit overwhelmingly applauds the accomplishment of Attorney Roberson and is proud that the Detroit Police & Fire Retirement, has maintained the tradition and spirit of inclusion that has defined the City of Detroit and the Detroit Pension Systems over the years.

Top Pensions Fight to Boost Diversity Despite Recruiting Challenges, Fundfire, June 24, 2016

While many public pensions haven't talked about increasing staff diversity, many  have focused on the importance and strategized around it.  Pension funds, organizations, asset managers and other stakeholders all know and agree that more work needs to be done.

A recent article in FundFire noted that while some pensions are still working on increasing diversity,  New York City Pension System’s Bureau of Asset Management has a staff with a make up similar to the city it serves. Forty-seven percent of the workers are white, 22% are African-American, 24% are Asian and 7% are Hispanic. Nearly two out of five investment staffers are women and several members of the senior team are women and minorities.

CalSTRS has an investment staff that is 52% white and has been vocal of its support for diversity.  FundFire reported that since he became CIO in 2000, CalSTRS’ CIO Chris Ailman has strengthened efforts to promote diversity including recruiting trips to campus groups representing minorities, creating internships, pushing hiring managers on the topic and not accepting non-diverse slates of candidates from recruiters. And on the 12-person investment team of the  IMRF. there are five minorities and five women.

“For some states it’s not even on their radar screen. They’ll say ‘yeah, that’s something we need to do,’ but there doesn’t appear to be any emphasis or strategy around it, but for some larger plans there is a strategy around it,” said Michael Kennedy of executive recruiting firm Korn Ferry.

View full article via FundFire.

CalPERS to Commit Up to $11 Billion with Emerging and Transition Managers by 2020

CalPERS will hold a global solicitation process for its new 
Transition Manager Program that will seek investment proposals from eligible mid-size external investment managers. The solicitation will open in July 2017. Commitments range from $50-$300 million in the Real Estate and Private Equity programs, and $500 million to $1 billion in the Global Equity program. This is in addition to the new commitments to CalPERS' Emerging Manager Programsof up to $4 billion during the same period. The goal is to identify and place up to $11 billion in new commitments with qualified managers by 2020. Click HERE to view the full press release. 

In addition, click HERE to view the Targeted Investment Programs Update which among other things, outlines  CalPERS' exposure to emerging and diverse managers, as well as the timeline for the deployment of capital in both the Emerging and Transition Manager programs. 

PBGC Selects Firms for Smaller Asset Manager Pilot Program

On June 10, 2016, the Pension Benefit Guaranty Corporation selected five investment management firms to participate in its pilot program for Smaller Asset Managers.

The Smaller Asset Managers Pilot Program, announced last year, was created to reduce barriers that smaller investment firms face when competing for the agency's business. Before the pilot program, these contracts were out of reach because the minimum required assets under management, often in the billions, were too large for small firms to qualify.
Each of the firms will be responsible for investing $175 million in US core fixed income instruments. NASP affiliated firms competed in the RFP process. NASP is pleased to note that 
Pugh Capital Management, Inc., in Seattle, Washington was one of five firms selected. To read the full press release, please click HERE.
Dodd-Frank Five Years Later: More Stability, Transparency and Accountability on Wall Street (Press Release from US House Financial Services Committee Democrats, July 21, 2015)
Five years after its passage, a new report from Democratic staff has concluded that while the Dodd-Frank Wall Street Reform Act has been successful in the face of constant attack, more must be done to ensure all Americans can benefit from our nation's recovery. The findings were announced as part of a comprehensive report released by Democratic staff on the Financial Services Committee, at the direction of Ranking Member Maxine Waters (D-CA).

The report highlights the law’s accomplishments since its enactment in 2010, threats to full implementation and next steps in bridging the “recovery gap” for Americans left behind in the post-crisis economy. The report also details repeated Republican efforts to undermine the law, including Republican document requests that have forced regulators to produce over 23,000 pages of responses, reduced funding for Wall Street’s cops, and attempts to stall reform through numerous bills designed to weaken, delay, or repeal important components of the law. Some in the financial services industry have also sought to delay the law through the legal process, by filing at least 11 lawsuits, four of which led to the withdrawal or re-proposal of federal regulatory rules. 

According to the report, Dodd-Frank has empowered regulators with vital tools to prevent a future crisis. And five years later, they have made significant progress, working to fully implement the law, monitor the financial system for risks to its health, finalize rules to help prevent future bailouts, increase transparency in the once-opaque derivatives market, rein in credit ratings agencies, and institute new investor protections. 

Among its more signature achievements, the establishment of the Consumer Financial Protection Bureau (CFPB) under Dodd-Frank has led to more than $10 billion in relief to 17 million Americans who’ve fallen victim to the same types of practices seen in the run-up to the 2008 crisis. As a critical source of protection for service members and consumers, the CFPB has also finalized rules that would both ensure that borrowers have the ability to repay home loans and that many of the tricks and traps seen during the subprime crisis are absent from those loan terms. 

The report also provides a roadmap for regulators and Congress to “bridge the recovery gap” while also addressing small financial institution concerns. 
The full press release can be found here.
Full text of the report can be found here
An executive summary of the report is here.

Final Interagency Policy Establishing Joint Standards for Assessing the Diversity Policies and Practices of Regulated Entities Established
On June 4, 2015, The Department of the Treasury, The Office of the Comptroller of the Currency, The Board of Governors of the Federal Reserve System, The Federal Deposit Insurance Corporation, the National Credit Union Adminstration, the Consumer Financial Protection Bureau, and the U.S. Securities and Exchange Commission released the interagency policy statement. NASP, as well as other associations, companies, and others provided comments to the initial proposal from December 2013 through February 2014.
The statement is part of Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act or Act) which required the OCC, Board, FDIC, NCUA, CFPB, and SEC  to each establish an Office of Minority and Women Inclusion (OMWI) to be responsible for all matters of the Agency relating to diversity in management, employment, and business activities and  instructed each OMWI Director at agencies with regulated entities to develop standards for assessing the diversity policies and practices of entities regulated by the Agency. 

Click HERE to view the Final Standards Issued.
Click HERE to view NASP's comment to the initial proposal submitted to the Federal Register.

New York State Common Retirement Fund: Emerging Manger RFI for Fixed Income Investment Management Services 

Pension Consulting Alliance, Inc. (PCA) working with the New York State Office of the State Comptroller, acting on behalf of the New York  State Common Retirement Fund (CRF), has prepared and is distributing this RFI to identify emerging investment management firms to manage Fixed Income portfolios for the CRF. Proposals are due February 6, 2015.

The current CRF Fixed Income portfolio is composed of investment grade securities and is primarily managed internally by the New York State Office of the State Comptroller Division of Pension Investment & Cash Management. The fund is initiating a program to broaden its exposure to Emerging Managers and is seeking to complement the internally managed Investment Grade Fixed Income portfolio.
This RFI is soliciting proposals for Emerging Managers to manage separate accounts focused on the following Fixed Income market segment products. Each product will be managed separately.  Proposal for each product will be reviewed and rated separately.  Proposers may submit proposals for one or more mandates:
  • Inflation Protected Fixed Income Product (U.S.TIPS or Global Inflation Protected securities (“GILBs”) mandate)
  • High Yield Debt Product
  • Emerging Markets Debt Product
  • Structured Debt Product
Click HERE for the MS Word Version of the RFI from PCA.

Click HERE for the PDF Version of the RFI from PCA.

Sciens Fund of Funds Management Ltd. RFI
Sciens Fund of Funds Management Ltd. has released an RFI for women & minority-owned emerging hedge fund managers. 
Please contact for a copy of the RFI.
Notice of  Search: The Comptroller of the City of New York/New York City Retirement Systems Seeks Developing Managers for Fixed Income/Core Plus Investment Management Services
Please read carefully as this is a recently adopted procurement method. 
The following Systems are participating in this Procurement: 
  • The New York City Employees’ Retirement System (“NYCERS”)
  • The Teachers’ Retirement System of the City of New York (“TRS”)
  • The New York City Police Pension Fund, Subchapter 2 (“Police”)
  • The New York City Fire Department Pension Fund, Subchapter Two (“Fire”)
  • The New York City Board of Education Retirement System (“BERS”)
Minority-owned and women-owned businesses or partnership arrangements with minority-owned and women-owned investment firms are encouraged. Additionally, participation by small and New York City-based businesses is encouraged.
How to Participate in this Search:
To be considered, investment management firms must comply with the following requirements:
1.      All candidates should carefully review the Notice of Search and the Minimum Requirements described in Section B of the RFP.
Interested candidates, including incumbent managers, that meet the minimum requirements, must enter their information in the following two databases in order to be considered by each of the Consultants.  The Consultants will review the following databases and provide BAM with a written report identifying the Investment Managers who meet the minimum requirements set forth in this Notice of Search. 
For Callan, investment firms must submit their information directly to Callan’s database; for Rocaton, SIS, NEPC and Buck, investment firms must enter their information into eVestment Alliance’s database. Information on requirements for entering information into these databases can be found at:
  • Click on “data & tools”, then click on “Manager Questionnaire”
  • Click on register/submit data in the upper right hand corner.
2.       All candidates must ensure that they completely identify the firm and product information, in the above databases.  Additionally, candidates must ensure that the information is current and accurate.
3.      Candidates with multiple eligible products, for example Fixed Income Core Plus products must provide database entry for each product.
4.      There is no fee for entering information into either of the databases. Managers are advised that information in the database may become part of any contract which results from this Search.
Current and accurate data (as of March 31, 2014) must be in the above databases no later thanOctober 7, 2014.
Please see the Notice of Search posted on the Comptroller’s website at for minimum requirements, as well as easy steps that managers can take to ensure they are considered as part of this solicitation.
  • Select “Forms & RFPs” then “RFPs & Solicitations” then “Asset Management RFPs & Solicitation” and click on link provided to “Register”.

NASP Board of Directors Adopts Retirement Security Statement Affirming Support of Defined Benefit Plans 

On June 22, 2014, the NASP Board of Directors voted to adopt a statement affirming the associations’’ commitment to defined benefit plans to ensure retirement security of public employees.

On the adoption of the statement, Les Bond, board chair, NASP, said “Public sector employees have been the nation’s civil servants – playing important roles in society as educators, firefighters, police-officers – with the promise of retirement security. It is imperative that we honor the social contract that enabled municipal employers to attract and retain talented individuals to careers in public service.”

Orim Graves, executive director of NASP added “We are committed to working with the SEIU and ensuring that NASP members and public pension plans continue to work together in ensuring retirement security for thousands of public sector employees. NASP believes that in addition to the important role of defined benefit plans, defined contribution programs and personal savings plans are effective ways for future retirees to augment their retirement income as well.” 

To view the statement in a letter addressed to the SEIU, please click HERE.

POLITICO Pro Q&A: Phyllis Borzi
By Kevin Cirilli 11/6/2013
Phyllis Borzi wants to make sure broker-dealers aren’t messing with grandma’s retirement savings.
Borzi, the Labor Department’s assistant secretary for employee benefits security, says her “No. 1 regulatory priority” is issuing a rule requiring broker-dealers to follow a fiduciary standard — meaning they would legally have to act in their customer’s best interest.
The issue is whether broker-dealers sometimes push financial products that make them more money but may not be good investments for their clients.
But Borzi’s push comes as Securities and Exchange Commission officials figure out whether they should issue a fiduciary standard of their own, as the 2010 Dodd-Frank law mandates the agency to investigate. Labor has jurisdiction over retirement accounts, which is where Borzi’s rule would come into play.
Borzi’s critics — including a group of bipartisan lawmakers — say she should wait for the SEC before acting. They argue that two rules would cause compliance headaches and lower the financial incentive for broker-dealers to take on smaller accounts, the same clients Borzi hopes to help.
Last month the House passed 254-166 a bill that would require Labor to hold off on its rule until the SEC has issued its own.
In an interview with POLITICO Pro, Borzi makes the case for why a Labor rule is needed, weighs-in on legislation moving through Congress and offers a new look into how her proposed rule would impact broker-dealer commissions.
The following are excerpts from the interview:
Q: Thanks for speaking with us. First things first, why do you care so much about this issue?
A: It’s my No. 1 regulatory priority. There’s been such a radical change in the market place. Congress passed [the Employee Retirement Income Security Act of 1974] just before I got into this business. Back then, most people had traditional pension plans… they weren’t really required to do much in terms of deciding any of these financial things. That world is unfortunately gone.
Last month, you said publicly that Labor could send the White House Office of Management and Budget a proposed rule by year’s end. Does that timeline still stand?
I’d really be hesitant to say anything like that now because I genuinely don’t know. And so I don’t really like to speculate on a time frame because there are a bunch of moving parts. … We’d like to get it out sooner rather than later but that doesn’t translate into any particular date.
Your push for a new rule has been met with some Hill opposition. Legislation that Rep. Ann Wagner (R-Mo.) introduced in the House passed 254-166 last month. Are you surprised at how much of an interest lawmakers have taken on this issue?
I think policymakers whether they’re in Congress or the administration — I think there’s lots of interest in retirement issues.
Still, 30 House Democrats voted to support Wagner’s legislation — even after White House advisers issued a statement saying they’d recommend that President Barack Obama veto the legislation if it made it to his desk. What do you make of the White House involvement?
I’ll let the White House speak for themselves. … But I thought it was very clear as to the concerns that the administration had. But you know, right now I’m trying to not get distracted by all of these things. I just want to focus on getting this out and getting it right.
Have you been surprised at the division among Democrats on the issue?
We’re just trying to get this rule right. I just try to not to get distracted by this stuff. There’s a broader debate, but I try to keep myself focused on getting our rule out. Part of the problem is that until we get the rule out people can say anything they want with what it does or doesn’t do. It’s really important to get the public debate focused on what we’re actually proposing rather than what people think we’re proposing.

The industry has criticized how your rule might impact their payment model, particularly with how they earn commissions when the make sales. You’ve said in the past that you’re not going to touch commissions —
I didn’t say that. I didn’t say we weren’t going to touch commissions. I said we weren’t going to end commissions. The traditional kinds of commission aren’t really the source of the problems.
The issue that we’re concerned about are things the industry calls commissions but they’re really payments that are really — the industry hates it when I call it this — obscure payments, or preferential distribution payments. They’re payments that are given not necessarily for specific services rendered, but for pushing their products.
What would be a way to fix that?
You just have to wait until the rule comes out. We’re in the stage of rule-making where I can’t say anything specific. One thing I can say is that we’re not going to outlaw commissions completely.
Broker-dealers argue that the rule is unneeded, in part, because their industry is already based on consumer trust. If they weren’t acting in consumers’ best interests — they wouldn’t be in business. Why does their payment model need to be changed?
If what they’re doing today is based solely on what’s in their customers’ best interest, than their behavior shouldn’t have to be altered. But if that’s not what they’re doing than they need to refocus their efforts.
Any update on your interactions with the SEC?
We’ve had a long-standing relationship with the SEC. We’re in regular contact with them not just on this issue but on a wide-ranging set of issues. But they have a statutory framework and we have a statutory framework and they’re different. They’re not incompatible, but they’re just different.
My goal is not that we’ll have the same standard, but that we are working with the SEC to ensure that whatever we put out and whatever they put out meets the following criteria: That compliance with one won’t put you out of compliance with another.
But if a firm has to follow two separate types of rules while advising one client on his or her retirement and savings plans, isn’t is plausible there would be confusion?
There’s already confusion. If I’m a consumer, I believe that people who give me advice on both sides of this — whether it’s for my general savings, but most particularly for my retirement savings — have my best interest in mind and aren’t just recommending things that’s in the broker’s financial interest. Consumers are already very confused by this lack of symmetry.
Could the industry get a phase-in period where the rule could come out and there be a phase-in period?
When we propose the rule, we’ll also propose a date that the rule will become effective and people will be able to comment on it. That will be part of the debate.
Looking at the industry as a whole — there are so many different types of names for different types of advisers: financial advisers, broker dealers, investment advisers, financial planners, to name just a few. Doesn’t that also lead to a lot of consumer confusion?
Unlike other industries, this industry has literally no barriers to entry. Anybody can hold themselves out to be an expert whether they are or are not. But that’s why having a standard that applies across the board to anybody who gives advice — regardless of what they call themselves — is an extraordinary part of consumer protection.
Longer-term, is that something the industry and regulators are going to need to address beyond fiduciary rules?
I know that issue is something the new Consumer Financial Protection Bureau has been working on… They’ve issued a report [in April] that having some sort of uniform credential. We don’t happen to be working on that particular issue but we support their efforts.

Upcoming Facebook IPO Includes 10 Minority and/or Women Owned Firms
On Wednesday, March 7, 2012, Facebook updated its IPO filing and included several minority and/or women owned firms, many which are NASP partners. The following firms are part of one of the most highly anticipated social media IPO’s:

Blaylock Robert Van – A minority-owned investment banking and financial services company in Oakland, Calif.
Cabrera Capital Markets LLC— A Hispanic-owned broker-dealer headquartered in Chicago.
CastleOak Securities L.P. – A minority-owned a New York boutique investment bank.
C.L. King & Associates Inc. – A woman-owned broker dealer and investment bank.
Lebenthal & Co., LLC—A New York based woman-owned broker-dealer.
Loop Capital Markets–An African American-owned investment bank and brokerage firm headquartered in Chicago.
M.R. Beal & Company—An African American-owned full service broker-dealer headquartered in New York.
Muriel Siebert & Co.—A woman-owned discount brokerage in New York.
Samuel A. Ramirez & Co.—A Hispanic-owned investment bank based in New York.
The Williams Capital Group, L.P.—An African American-owned full service broker-dealer based in New York.