Politics & Government

CalPERS chief investment officer dies

Joseph Dear, a politically savvy chief investment officer who helped steer CalPERS through the aftermath of the stock market crash and a bribery scandal, died Wednesday of prostate cancer.

A native of Washington, D.C., he was 62 and had been on a leave of absence intermittently since last May.

Given CalPERS’ standing as the nation’s largest public pension fund, Dear’s role made him a worldwide figure in the investment business, and his comments about market trends and economic issues were widely reported. The scrutiny was intensified by timing; he arrived at CalPERS in 2009, as the pension fund was still reeling from the impact of the market crash. In the coming months, it would be gripped by a bribery scandal that took place before Dear’s time but was about to be uncovered.

“Joe’s one of the most wonderful people I’ve ever worked with, and I’ll miss him,” said Anne Stausboll, CalPERS chief executive, in a statement released by the pension fund. “CalPERS is a stronger organization, and all of us are better people for having known and worked with him.”

Dear, who lived in Sacramento, spent much of his time altering how CalPERS invested its money, overseeing a major restructuring of the pension fund’s battered real estate portfolio. The move steered CalPERS toward safer, less exotic deals. Yet he was careful not to radically overhaul how CalPERS invests its money. “You need to be extra careful not to make changes just because you’re under pressure,” he told The Sacramento Bee shortly after his appointment was announced.

Under Dear’s watch, as the financial markets rebounded, CalPERS’ portfolio steadily improved. Last April, the portfolio was worth $262 billion, meaning it had wiped out the $100 billion worth of losses it took during the crash. It’s now worth $283 billion, although liabilities have soared and CalPERS is still wrestling with significant funding issues.

Even as CalPERS recovered from the market crash, Dear was vigilant about problems looming ahead. In his monthly reports to the CalPERS governing board, he almost always warned about the potential for turbulence in the markets.

Dear came to the California Public Employees’ Retirement System from Washington state, where he was chief executive of the state pension system. He previously ran the federal Occupational Safety and Health Administration under President Bill Clinton. He was a former chief of staff to Washington state’s governor.

In 2012, Dear became part of a pension-industry power couple when he married Anne Sheehan, director of corporate governance at CalSTRS, the teachers’ pension fund.

Dear wasn’t shy about tackling a bribery scandal that reached into CalPERS’ top echelons. A state lawsuit charged that a former CalPERS board member, a “placement agent” named Alfred Villalobos, had bribed former CalPERS Chief Executive Fred Buenrostro and others to gain investment deals for his Wall Street private equity clients. As the scandal gained momentum, CalPERS tightened its rules on gifts and its dealings with placement agents.

At the same time, Dear led an industrywide task force in 2010 that pushed outside money-management firms to reduce the fees they charged to institutional investors such as CalPERS. The effort bore some fruit. CalPERS’ single largest investment partner, Wall Street powerhouse Apollo Global Management, agreed to cut its fees to CalPERS by $125 million. Sources at CalPERS said it was no coincidence that Apollo was Villalobos’ top client and had paid him millions in commissions. Apollo said there was no link between cutting its fees and the commissions that had been paid to Villalobos.

An advocate for shareholder rights, Dear in 2012 was named chairman of a new investor advisory committee at the U.S. Securities and Exchange Commission. The committee was established as part of the Dodd-Frank law overhauling the regulation of the markets following the crash.

Since Dear was diagnosed with cancer last spring, investments at CalPERS have been overseen by Ted Eliopoulos, the head of the real estate program.

“It’s a tragedy,” said Bill Hoover, a retired administrative law judge who knew Dear and his wife. “He was a man who had so much to offer, both professionally and personally, and was cut short in the prime of his life.”

Details on services were pending, but CalPERS said services will be held in Sacramento and Olympia, Wash. Dear’s family asked that donations be directed to the Joseph A. Dear Memorial Scholarship Endowment at The Evergreen State College Foundation, his alma mater. Besides his wife, he is survived by two children from a previous marriage, Annie and Ben.