North Carolina CIO was fired

Patricia Gerrick, the chief investment officer of the $60.2 billion North Carolina Retirement System, was fired from her job, contrary to previous statements from the plan sponsor.

A memo uncovered by television station WRAL-TV in North Carolina shows that Treasurer Janet Cowell asked Gerrick to resign. Gerrick refused and Cowell fired her, with no reason yet given for Gerrick’s termination.

“A review of various agency records supported my determination that separation of … Gerrick was appropriate,” Cowell said in the memo. “I informed her of my decision on August 24, 2009. She indicated that she hoped for the opportunity to resign.

“On September 4, 2009, Ms. Gerrick informed the department legal counsel that she had elected not to resign. That same day, the original separation letter was delivered to Ms. Gerrick reflecting the separation effective date of August 24, 2009,” Cowell said in the memo. 

The station also uncovered an email sent to Gerrick asking for repayment of $3,045 for personal cell phone calls.

In late August, Cowell said in a public statement she would lead a nationwide search for a CIO “in light of the resignation of Patricia Gerrick, former head of the investment division”. Gerrick was being paid $340,000 a year at the time of the firing.

Gerrick helped guide North Carolina into greater depths of private equity and real estate investing during her five-year tenure. North Carolina’s real estate portfolio started at 1.9 percent in 2001 and grew to 5.8 percent at the end of fiscal 2008, according to the 2007-2008 annual investment report. The state’s alternatives portfolio was launched in 2001 and grew to 4.8 percent by the end of fiscal 2008, the report shows.

Records examined by WRAL-TV and other media outlets show that investment firms doing business with the pension paid for Gerrick to travel around the world to meet with fund managers. No details were available about the firms funding Gerrick's trips.

“It is not uncommon nor a violation of the law for firms that have relationships with public pension funds to reimburse for these types of travel expenses,” a spokesperson for the pension said.

A market source told PEO that usually investment firms do not fund the travel of public pension investment officers to meet fund managers. Normally, “for those funds the plan decides are interesting, private equity staff of the plan and/or their private equity consultant would then travel to the GP’s headquarters for an on-site due diligence, after preparing detailed questions in advance generated by a review of the PPM and supporting material”, the source said. “The expenses of the on-site trip are (in all cases I know of) borne by the pension plan so that the fund could not curry favour by providing first class travel and accommodations.”

The Carolina Journal newspaper ran an article last week showing that some individuals tied to investment firms that have done business with the pension donated money “in Gerrick’s honour” to a nonprofit organisation.

For example, according to the web site for the State Employees Credit Union Family House in Chapel Hill, North Carolina – where Gerrick has served as a director and on the fundraising committee – such donors include Wendell McCain, one of the founders of Parish Capital Advisors. The pension has committed more than $460 million to the North Carolina-based firm and paid more than 3.6 million in management fees since 2004.

Meanwhile, other firms with ties to individuals who donated money “in Gerrick's honour” include TrueBridge Capital Partners, Credit Suisse, Piedmont Investment Advisors, Avista Capital Partners and Capital Advisors, according to The Raleigh Telegram.