A former CalPERS employee who alleged she was fired for challenging a cover up of insider trades by fund staff settled her wrongful termination case this morning.
Jeannine Carter, who worked in a watchdog unit that makes sure CalPERS’ investments comply with the law, accepted a payment of $57,200 and her “rejected on probation” status will be changed to show that she voluntarily resigned, said CalPERS’ staff attorney Christopher C. Phillips.
The money equals 13 months of Carter’s pay, Phillips said. The official change in her separation status removes a stain on her record that eases her return to state service.
CalPERS made “an economic decision” to settle with Carter, Phillips said, rather than incur the expense of a protracted hearing before the State Personnel Board, which decides employee termination disputes.
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Neither side admits fault or has any liability in the matter, Phillips aaid.
Carter declined to talk about the details of the settlement.
Meanwhile, the Securities and Exchange Commission is looking into the trades.
If the negotiations had fallen through, Carter’s case would have featured three or four days of public testimony about whether she was let go for badgering management over a non-issue or fired for whistle-blowing.
Her case would have dredged up allegations about CalPERS’ March 2013 stock purchases of nearly $24 million in global financial firm JPMorgan Chase & Co. and almost $2.7 million in Access Midstream Partners LP, an Oklahoma-based energy company. Carter and some of her colleagues in the compliance unit insisted the stock purchases violated insider trading laws and needed to be reversed.
But CalPERS managers didn’t reverse the purchases. The transactions accidentally violated CalPERS’ internal policy that restricts stock trades if just one fund employee has inside knowledge about a company, they said, but the purchases didn’t break insider trading laws and didn’t need to be rescinded.
CalPERS released Carter not long after she raised her concerns about the trades and questioned her managers’ qualifications to run the compliance unit.