Crisis at Jagdeep Bachher’s University of California Investment Office
A famous investor faces serious charges of mismanagement.
Niclas Winterstorm says he took a job from Jagdeep Bachher on a handshake deal, then quit when he realized “Jagdeep cheated me.”
Eduard van Gelderen — now chief investment officer of a massive Canadian pension fund — spent a year at the University of California’s investment office in Oakland working for Bachher. Van Gelderen says he was shocked at his first board meeting to see “one of the investment fellows literally carrying Jagdeep’s suitcases.” It was a trend. “Every single Friday a guy goes shopping at the farmer’s market in downtown Oakland for Arthur” — Guimaraes, Bachher’s righthand man — “and Jagdeep. It goes so far that when Arthur went on holiday, he ordered one of his guys to actually bring out the garbage [at his house]. They really didn’t like to do it, but felt that they were forced into a position that they needed to do these things.”
Van Gelderen quit his post as senior managing director in July — one year almost to the day since he’d joined the $118 billion investment office. The team lost three core members within weeks this summer, none of whom had successors in place or gave more than a few weeks’ notice. Scott Chan — head of UC’s $55 billion stock portfolio since 2015 — kicked things off in late June. Then, in early July, investment officer Tom Fischer announced on a Monday that his last day would be Friday. He told a reporter on his way out the door that “there has been a high number of departures, and I expect there will be more. I think the proof is in the pudding.” Fischer was proven right less than two days later, when news broke of van Gelderen’s exit.
Those three followed scores of others who’ve left since Bachher became UC’s chief investment officer in the spring of 2014. By Bachher’s own estimation, more than three quarters of the 46- or 47-person staff has turned over. Shake-ups and exits are expected when a new leader takes over. But if the first wave of turnover can be justified as the natural transition to a new administration, this second wave can’t be.
Approximately half of the people Bachher’s team hired are gone, including van Gelderen, Fischer, Chan, and Winterstorm; real estate director Lindsey Adams; senior advisers Ashby Monk, Brian Gibson, and Amy Meyers Jaffe; and support professionals Julie Lydon, JoAnne Yonemura, and Karla Campbell.
Some left amicably, as Bachher points out. Campbell hit her ten-year service threshold and retired to start her own business. (“Jagdeep has a vision,” she said when contacted.)
Gibson and Bachher had previously worked together, and Gibson spent a year on contract advising on the public equities portfolio and who should lead it, Bachher says. “When we hired Scott Chan, Brian’s term ended.”
In other cases, Bachher’s account conflicts with those of his former staff members. Of former senior adviser Monk, Bachher says, “He still works for us.” But according to Monk, “I went off the payroll in October 2016 and have not been formally working there since.”
Furthermore, Bachher says that when Winterstorm moved from Norway to the Bay Area in 2014, the understanding was always that he’d be a temporary consultant. “Nic Winterstorm was with us on a contractual term. When his contract expired, he left.”
Winterstorm flatly denies that this was the plan. His former co-workers agree. “He fooled me,” says Winterstorm, who had worked at Norway’s $1 trillion sovereign wealth fund for eight years and left a senior post there to join UC. During negotiations, he recalls, “Jagdeep asked me if it was okay to be a contract employee and we could adjust it later — that this was a smoother, faster way for me to get hired. I said, ‘Yes, let’s shake on it. And then we can revisit this in a year: both the salary and changing contract to being a staff employee.’ I trusted him totally.” But a year passed, and nothing changed. Winterstorm resigned when he felt that nothing ever would, and faults himself for taking Bachher at his word. Still, he says, “I felt screwed: no bonus, no salary increase, no permanency.” (Bachher himself said in late 2014 that he’d created the role of operational risk management director specifically for Winterstorm, with no mention of a temporary contract. “I’ve known him for a while and thought, ‘He can really add value,’ ” Bachher said at the time. “So let’s create a job for him.”)
This second wave of departures likely hasn’t crested. At least three members of the senior investment staff are actively eyeing the door. “I am hanging by a thread,” says one, who, like all current employees, spoke on the condition of anonymity owing to investment office policy and fear of retribution. Another says, “I of course am looking. The reason I haven’t walked out the door yet is because I’m looking for the right opportunity.” In the words of a third senior investor, “The only people who stay here are those who can’t leave.”
At that point, all I knew of UC’s investment office was its precipitous rise under Bachher, who had recruited arguably the most star-studded team of institutional investors on the planet. Performance has also been solid: The pension and endowment funds have outperformed their passive benchmarks over the past three years. The anonymous tipster refused to speak by phone — “SORRY – NO TALK” — but continued to pass tips and urge investigation.
Could it be an elaborate catfishing expedition? An attempt to suss out leakers or to trick II into publishing false information? Or, most likely, was it just a disgruntled low-level staffer trying to stick it to the boss who’d sidelined him or her?
Aiming to find out, on February 28 I replied, in part, “Why do you think the staff is mostly unhappy (if they are)? It’s disheartening — I remember how excited everyone was to be part of that team.”
Then, a few weeks later: “THE MESS GROWS…ASK ABOUT THE MANULIFE TRANSACTION.”
I did, while casually chatting off-the-record with a member of UC’s leadership team.
The question was met with stunned silence.
Then: “How do you know about Manulife?”
Whoever this pensions Deep Throat was, he or she knew about a highly confidential and closely held deal in the works. For months a small group of staffers has been working through a multibillion-dollar portfolio of assets that insurance firm Manulife is quietly looking to sell. Bachher, who used to work at Manulife, sourced the deal. “He came out very excited about it,” says one of his senior employees. It had megatransaction potential, which the staff has winnowed down to a smaller pool of attractive assets. “It’s a tough deal, but I think the outcome is very positive,” the investor says. “Jagdeep is a great dealmaker. He has the communication skills, he has the mission, he has these moments of genius. But he’s not an investor,” notes the employee, who has a more positive relationship with the CIO than do most of his counterparts.
In his and others’ view, the Manulife transaction represents the substantial value Bachher can bring to an investment organization. “He brings groups of people together and makes connections with whole firms, like Goldman. I believe if he was kept in constraints, he would be great. The Regents” — UC trustees on the investment committee — “are weak. They’re terrible. They are all smart, successful people with no incentive to govern.”
UC’s governance model endows the chief investment officer with extraordinary power and provides scant oversight. There is no investment office CEO to serve as a check on the CIO, as is the case at many other funds of UC’s size and complexity. As it is, Bachher’s employee thinks “he shouldn’t have this job.” But what if UC had a proactive investment board of Regents, and they installed a CEO?
The employee pauses and takes a long gaze toward UC’s office tower.
“No. No, the Regents should remove him.”
Yet the CIO perch at the University of California is even more prestigious. To win it from Bachher’s position in 2014 — responsible for a $500 million venture and innovation program at Aimco — was a feat. And he won it outright.
Contrary to some rumors, UC’s selection committee got its No. 1 pick in Bachher, according to former investment chair and hiring chief Paul Wachter, who stepped down from the board in February 2016. Bachher was the only person to receive an offer. Some obvious targets such as Chris Ailman — the powerhouse veteran CIO of California’s teachers’ retirement system — declined to pursue the job, says someone involved in the search, but this is typical.
“We interviewed five or six people and narrowed it down to two finalists: Jagdeep and another guy, more of a hard-core public equities investor type,” says Wachter, whose firm, Main Street Advisers, manages the personal fortunes of the celebrity elite, said to include LeBron James, Arnold Schwarzenegger, Bono, and Jimmy Iovine. The committee took its time, Wachter says, and was pressured only to pick a successful CIO — not to name someone quickly or from UC’s alumni pool.
“I felt from the beginning that you never know when you hire someone, but he had very strong credentials from Canada,” Wachter remembers. “Clearly, Jagdeep was incredible on process; my concern was with the investing. So we interviewed a lot of people, and everybody said, ‘No, he’s a really good investor.’ ” UC’s hiring committee checked his references, and they checked out. The fact that Aimco’s leadership no longer desired a future with Bachher did not, apparently, come up.
Former Aimco CEO Leo de Bever oversaw both Bachher and Guimaraes throughout their formative years in Edmonton, from 2009 until they left for California in 2014. He praises Bachher’s early work as then-COO through Aimco’s chaotic stage, and his late-tenure management of the venture and innovation fund. “That was a really tough place to be, and he did a pretty decent job,” says his former boss. The problems arose in the middle. When de Bever put his COO in charge of a critical systems upgrade, Bachher’s “hierarchical” management style made true believers out of some people, Guimaraes included, and alienated others. “So I had to intervene toward the end and step in and make some quick shifts. That didn’t go over very well,” de Bever recalls.
Ultimately, “he was not asked to leave, [but] I think he saw the writing on the wall. If you’re alone and you’re not interacting with the rest of the team, your opportunity for advancement is probably going to be limited.” Still, de Bever says, “he did a tremendous job projecting an image in front of the board. The whole management team may have been in line with what I was trying to do” — consciously uncouple Aimco and Bachher — “but when he finally announced he was leaving, it caused me some grief. In other words, the notion was we should have kept him because he was a good guy. And I’m not saying he’s not a good guy. He’s a very bright guy in many, many ways. But when you run an organization of 350 people and you have the four or five senior managers on the technical and on the investment side, they all need to interact in a productive way, and that was very difficult.”
De Bever is reluctant to air criticisms of his former charge. He goes on the record grudgingly, and only for fact-checking.
“No one is 100 percent pure,” he says.
“My job is just to explain what the opportunity set is, but ultimately, I can’t make families move cities without them being compelled based on the opportunity and what it means for them,” he says of the investment supergroup that’s now splintering apart in downtown Oakland. “I wouldn’t necessarily take it as my recruiting ability. I’m not the one with $120 billion, right?”
Van Gelderen had helped oversee $530 billion at APG Asset Management, and took a pay cut to work for Bachher. “I just bought the story,” he admits. “That’s basically what it was. I thought, Well, let’s give it a try; it could be very interesting and a great experience. Turned out to be a very different experience.”
The theory Bachher pitched so successfully gave each senior player three dimensions to his or her role: product, asset class, and region. For van Gelderen that meant owning the $67 billion pension fund, the $55 billion public equities portfolio, and all of Europe. Any deal or decision crossing one of these axes was his to work on — in theory.
“At the end of the day, it is basically Jagdeep who has full control and full responsibility of every position,” van Gelderen explains. “We might have responsibilities on paper, but the reality is we don’t have any responsibilities at all. You could argue that Jagdeep discussed different positions with his senior leadership team, but I never felt empowered to make any decisions. I don’t think anyone in the senior leadership team felt differently. So what happens is everything moved up to Jagdeep, and he decided on everything.”
The stakes of unilateral decision-making became unsettlingly obvious last year, according to four senior investors serving at the time. Bachher decided to invest about $250 million with Main Street Advisors, the wealth management outfit run by ex–investment chair and Bachher backer Wachter. The deals broke no UC rules and had approval from the Office of the General Counsel, as Bachher stresses when asked about it.
Yet four senior investment experts, all fiduciaries for the University of California, say they opposed the move. At Bachher’s direction, UC channeled $20 million into a commingled fund and $220 million into a separate account focusing on real estate and private equity. Neither private equity head John Beil nor real estate chief Gloria Gil wanted Wachter’s funds in their portfolios, according to two of their co-workers at the time. The investment ended up floating in a mixed bucket for a year, before “getting forced on John Beil.” The problems, as per members of Bachher’s UC team: Main Street Advisors has only high-net-worth investors, it was a first-time fund, and it charges fees on committed capital instead of deployed. In summary, as one person puts it, it’s “run by a very successful investor and not an institutional product.”
“I respect Paul Wachter. I don’t want to malign him, and this isn’t his fault,” says a UC investor who was brought into the process late. “It was clear to me that it was not something we were interested in doing. We’re not interested in Cleveland, Ohio–type properties that are LeBron James’s friend or something. I know John Beil declined, even though I understand it’s going to be put in private equity now. I think this is one of those instances where Jagdeep really sold his power. He likes the power of saying, ‘We can invest with you.’ ” And they did.
Bachher contends that Gil and Beil never told him not to make the investments. But pressed to confirm that he had their buy-in, he declined to do so. “Look, ultimately, I am the chief investment officer, and on any investment we make it’s not likely we have a unanimous decision to proceed,” he explains.
Informed of the team members’ opposition to his funds, Wachter admits “it upsets me. Because I really love the UC, and I spent 12 years busting my ass for them. I did everything possible to make this as right as I could [as far as institutional due diligence], and I never had any indication that there was anyone objecting to it,” Wachter says. “I think that Jagdeep has a vision, which maybe his people don’t share or haven’t completely gotten around to yet. He really wants to expand the relationships at the UC beyond the traditional big private equity guys to, for example, working with family offices.” Throughout an hourlong conversation, during which the celebrity investor had a “conference room of people waiting,” Wachter circled back to the same belief. “I hope, in the end, we’ll prove him right.”
Is it true, I asked, that staffer Bill Byrd personally grocery-shops for him and Arthur every Friday at Oakland’s farmer’s market on UC time, as six current and former team members assert? Does Arthur have data and analytics director Albert Yong ferry him and his family to and from the airport when they go on vacation and, on at least one occasion, take out the garbage at their house?
“Look, the farmers’ market is right here,” Bachher replies, unfazed and flexing that famous charm. “It’s a Friday ritual at our office. I don’t do groceries. I’m addicted to buying strawberries on Fridays, and I go religiously. Our companion is Bill Byrd. In fact, even if I forget — 99 percent of the time I’m in a meeting or doing something else — I’m usually dragged out, and he’s saying, ‘Hey, let’s go to the market to get strawberries.’ Look, when you have a family-type of organization and you’re friends, this is part of the culture, right? I have never felt that by going to the market with my colleagues to have lunch or buy strawberries is asking them to do chores for us, in all sincerity.”
What Bachher defends as familial culture, many of his employees past and present label a habitual abuse of power. These incidents also appear to violate UC’s standards of ethical conduct, which prohibit use of system resources, including “effort of university personnel,” for personal purposes, particularly if it conflicts with official duties, as witnesses say the errands do. As one former staffer says, “I remember I really needed some portfolio data, like now, and I’m trying to find the data guy” — Albert Yong — “then I’m told he’s driving Arthur to the airport? What?”
“Albert Yong is extremely upset by the situation,” says another ex-member of the senior leadership. Yong, a Canadian, worked at Aimco with Guimaraes and Bachher, and moved with his wife to California when they recruited him to UC. “He was forced to take over Arthur’s lease, and when he said he couldn’t afford it, Arthur reminded him of the ‘great relocation package’ he’d negotiated for Albert,” the same investor recalls. (Yong did not respond to multiple attempts to reach him.) A co-worker observes that the data manager “spent a lot of time in and out of Jagdeep’s office” around the time of Bachher’s interview for this story, and suspects Yong was “interrogated” about leaking.
“A lot of things are asked of people against their will,” says the senior investor. Most people say no sooner or later, according to half a dozen inside accounts. But Yong feels his green card application is being leveraged to coerce him, so he capitulates to acting as errand boy, as several people recount from firsthand conversations.
Bachher denies this. “I don’t want to comment on Albert’s case — but the punchline is that it’s not up to me. We’re not in the business of hiring people illegally. We cannot promise a visa, and we never will.”
Word of his impending exit reached me the next day, but van Gelderen refused to say where he was headed after UC. Until he had a visa, he didn’t have a job.
Nevertheless, shortly before midnight July 12, Guimaraes emailed official comment for the story.
For a major institution to leak confidential information about another organization, and its own employee, is extraordinary. Van Gelderen’s quote came from his resignation email to Bachher, implying van Gelderen had been party to the release. Within moments, Guimaraes pinned the statement on his boss, as van Gelderen frantically tried to keep Institutional Investor from publishing it. By midnight the immigration lawyer, the CEO of PSP, and the editor-in-chief of II had all been roused to handle the chaos. II declined to publish the leaked information.
Van Gelderen was livid with Bachher. “I assume there’s a relationship of trust between an employer, Jagdeep, and an employee, myself,” he says. “So if I share very confidential information with him, the very last thing I expect is that he is going to put it in some kind of press release without telling me. It was a total surprise. My very first reaction was ‘Well, there is no trust between you and me anymore.’ I was very upset.” His new bosses at PSP were likewise shocked by the situation, he adds. PSP had meticulously managed the internal communications to inform the staff directly. “Suddenly they were confronted with this situation, where now our board members will actually read this in the papers. Not nice.”
Bachher insists it was an innocent mistake. “I figured the whole world knew. I’m sitting at a different part of the world here, right?” He says multiple people contacted him about the rumors and pointed out that van Gelderen had not marked his resignation email private and confidential. “If I would have known, of course, I wouldn’t have done that.”
Dutch-language trade publication Pensioen Pro eventually broke the PSP news the following week. Bachher “reported in his email to Pensioen Pro the new job of van Gelderen at the Canadian PSP,” the author says. The news editor who assigned the story “100 percent” confirms his reporter got the emailed PSP scoop at least two days after Bachher leaked it the first time.
If Bachher didn’t know it was confidential the first time around, he certainly did the second time.
Van Gelderen believes Bachher betrayed him for optics, to make UC’s second resignation in two days appear less damaging. “Clearly, it helped if he could have used the PSP name. And he probably knew that if he had asked me, I would have said no.”
Among the most common justifications for UC’s rampant turnover is that people have left for stellar jobs. Indeed, the quality of institutions eager to snap up UC’s talent attests to Bachher’s preternatural recruiting ability. But even that’s faltering.
As team members drop away, replacing them becomes more and more challenging. “It’s hard to recruit when your heart is not there and you want to leave,” says one senior staff member. “It’s hard to look someone in the eye and lie to them — to say, ‘You should come work here. It’s a good place.’ ”
But the people empowered to resolve the crisis are also the ones unable or unwilling to see that it exists, according to many team members current and former. “The board has no idea. They love him. But the market knows” who Bachher is, his employee says. “We all have to wait for the Regents to realize it.”
Got a tip? Email Deputy Editor Leanna Orr.