Don’t expect Kansas Treasurer Lynn Jenkins or the state’s other pension investment professionals to lead the charge for Wall Street reform any time soon.

Instead, Jenkins and the executive director of the Kansas Public Employee Retirement System, or KPERS, said they’re mainly lending moral support to the efforts of fellow state investment leaders.

Jenkins said she hadn’t been as vocal as other treasurers across the country because unlike many state treasurers her office does not have final authority over the state’s pension funds. Instead, Jenkins is one of nine members on KPERS board of directors that oversees the state’s $9.6 billion in pension funds.

“I’m supportive of what they (other treasurers) are doing ,” Jenkins said. “But the reason they have such a bully pulpit is because they have complete control over those funds.”

If Kansas wants to become a crusader for corporate change, the KPERS board would be the more likely leader, Jenkins said.

Glenn Deck, executive director of KPERS, said the organization mainly was lending its support by belonging to trade associations, like the National Association of Retirement Administrators, that are lobbying for Wall Street reform.

Deck said the state’s pension system didn’t have the resources or clout — that many of the most vocal states have — to pursue lawsuits or formal campaigns seeking Wall Street change.

“California’s pension system is over $150 billion and ours is about $9 billion,” Deck said. “When California treasurer Phil Angelides is talking, he’s a very big player.”

Scandals’ effects

Both Deck and Jenkins said the state’s investments had been affected by some of the corporate scandals, though not to a large degree. For example, Deck said the state’s pension fund took about $1.2 million in losses related to Enron fraud and about $6 million in losses related to Worldcom fraud. Deck said the losses were concerning but not a threat to a nearly $10 billion fund.

“There are times that when the market goes poorly that we’ll lose more than that in a day,” Deck said. “But let me tell you that we do care a lot about those losses.”

Deck said the state participated in class action lawsuits to try to recover losses from companies like Enron and Worldcom, but said those suits usually only produced “pennies on the dollar.”

The growing mutual fund trading scandal is giving KPERS plenty of activity to monitor. Deck said KPERS doesn’t directly invest in mutual funds, but does contract with some mutual fund companies who provide management services to the pension fund.

Some of the companies are under investigation by federal regulators. In December, the KPERS board placed Alliance Capital on probation after the company agreed to a $250 million settlement with New York state over allegations of improper trading.

Deck said KPERS didn’t believe any of the practices cost the pension fund money, but it did create questions about the company’s ethics. He said the probation was formal notification to the company that it’s being closely monitored and that the state may pull its business.

“It means they are on sort of a watch list,” Deck said.

Others under watch

He said the board also was closely monitoring PIMCO, another mutual fund company that provides management services to KPERS. The company recently received a subpoena as part of a California investigation. Deck said it didn’t appear any of the allegations put Kansas funds at risk.

Jenkins said she was willing to take a wait-and-see approach before pulling any of the state’s business from the funds in question.

“The story is not all told yet,” Jenkins said. “I imagine there will be some changes made, but we don’t want it to be a knee-jerk reaction.”

Jenkins said her office also was monitoring Charles Schwab and Co. The mutual fund giant is used by the treasurer’s office as a money manager for Kansas Learning Quest, the state’s 529 college savings plan.

Schwab in November disclosed that an internal investigation revealed a limited number of illegal late trades were allowed by its employees.

Jenkins said it didn’t appear any of the trading activity affected Learning Quest holdings. She said she had no plans to drop Schwab unless evidence showed the practices were widespread.

“If that happens, then we have a problem and we’ll react accordingly,” Jenkins said.