Trustees of the Oklahoma Public Employee Retirement System voted Wednesday to take a financial exemption from a new law forbidding state pension systems from doing business with banks perceived to be hostile to oil and gas companies.
Taking the exemption means the pension system, which has more than $10 billion in assets for retirees, won’t have to divest more than 60% of its holdings from BlackRock Inc., one of the six remaining banks on a list of restricted companies put out by state Treasurer Todd Russ. The system’s staff and outside investment advisors said it may cost an estimated $10 million to divest from holdings invested with BlackRock and other banks on the list.
The trustees voted 9-1, with Russ casting the lone no vote. He said the system may be opening itself up to legal challenges by taking a fiduciary duty exemption under the Energy Discrimination Elimination Act. Russ said that exemption didn’t cover trading losses or brokerage fees, which he said made up most of the estimated losses.
“The letter of the law is very explicit,” Russ said after the vote. “It says for loss of asset value. I think the Legislature was wise enough to assume there would be administrative costs and those types of costs weren’t enough of a barrier to keep us from divesting from these companies that are discriminating against the energy industry.”
Other trustees said they thought presentations by the pension system’s staff and its outside financial advisor, Verus, were persuasive...
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