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Internal Documents: UC Regents Stand Behind CIO Jagdeep Bachher

UC president Janet Napolitano reassured Bachher she’s “fully confident” in him following accusations of mismanagement; investments chair Richard Sherman writes of “complete confidence.”

The University of California’s president and investments committee chair are standing by chief investment officer Jagdeep Bachher following charges of mismanagement at the $118 billion investment office. 

An investigation by Institutional Investor, published September 6, found Bachher had allegedly used investment staff for personal errands, overrode asset-class heads’ opposition to invest with UC’s ex-investments chair, and twice leaked confidential information about an outgoing employee.  

[II Deep Dive: Crisis at Jagdeep Bachher’s University of California Investment Office]

“Just read the story. It’s an ugly one, no doubt,” UC President Janet Napolitano apparently wrote Bachher in a September 6 email, which he forwarded to staff. II obtained and verified a copy, along with several other internal documents. “You should know that I remain fully confident in you and your abilities,” Napolitano continued. “You are an important and integral part of our leadership team.”

Napolitano has not issued a public statement addressing the claims or supporting Bachher. She did not respond to an invitation to comment by time of publication.

However, the Office of the President did attempt to “calm nerves” within the UC community, according to an email from press secretary Dianne Klein, sent September 7.

“As you might imagine, we have concerns about the reactions of key internal audiences to yesterday’s article,” Klein wrote to two other officials. She appended a statement of support from investments chair Richard Sherman and asked for it to be sent to “foundation presidents and CFOs.”

Bachher’s unit is the central investment office for the UC system, but some universities also opt to run their own foundations separately, including UC Berkeley, UC Davis, and the University of California Los Angeles. 

“This is not for external release, not to media,” Klein wrote in the email. “It’s simply meant to calm nerves.” 

The statement from Sherman — a UC Regent, or trustee, since 2014 and CEO of the David Geffen Company — wholly backed Bachher, while critiquing II’s article as “an inaccurate and misleading picture of Jagdeep’s leadership.” (Sherman did not respond when asked to point out the alleged inaccuracies. He also did not respond to a request to comment for this story.)

Among other things, he defended the portfolio’s performance and Bachher’s decision to override his senior team in investment decisions.

“I continue to have complete confidence in Jagdeep and the work he is doing as an investor, manager, and steward of the public funds he manages on behalf of the UC Regents,” Sherman said in the statement. 

“Regent Hadi Makarechian and I have visited the office in Oakland and talked directly with the employees there about how investment decisions are made and about the office culture. Both Hadi and I are very comfortable with the process. Jagdeep seeks and encourages input before he makes decisions. It is a collaborative effort. But the buck stops with him; he is the CIO, and he will have the final say.”

Sherman and Makarechian’s discussions with staff happened before the original II article came out and with Bachher present, according to two sources familiar with the matter.

During a team meeting, the two visiting Regents “asked for feedback, and received positive things. They were standing next to Jagdeep the whole time,” according to an internal source.

Email from UC president Janet Napolitano to CIO Jagdeep Bachher, September 6

From: Janet Napolitano

Date: Thursday, September 6, 2018
To: Jagdeep Bachher
Subject: Re: Just out

Just read the story. It’s an ugly one, no doubt. You should know that I remain fully confident in you and your abilities. You are an important and integral part of our leadership team. Let me know if I can do anything to help. My advice: keep your head down and keep moving forward. We’ll get through this. Janet

Internal Statement from UC Regent Richard Sherman, chair of Investments Subcommittee, to UC Foundation Officials, September 7, 2018

“I continue to have complete confidence in Jagdeep and the work he is doing as an investor, manager, and steward of the public funds he manages on behalf of the UC Regents. The article in Institutional Investor paints what I believe to be an inaccurate and misleading picture of Jagdeep’s leadership and the culture in the Office of the Chief Investment Officer.

“Regent Hadi Makarechian and I have visited the office in Oakland and talked directly with the employees there about how investment decisions are made and about the office culture. Both Hadi and I are very comfortable with the process. Jagdeep seeks and encourages input before he makes decisions. It is a collaborative effort. But the buck stops with him; he is the CIO, and he will have the final say.”

“And despite what the Institutional Investor article implies, the employee turnover over the past four and a half years since Jagdeep’s arrival has not been extraordinary. It is also worth noting that 14 of those departures were long-time employees who retired.

“Moreover, from an investment standpoint, the results have been strong, both in absolute and relative terms. They have also been consistent. We are either beating or meeting our benchmarks. As part of the UC Board of Regents normal periodic review process, we will continue to evaluate the performance of Jagdeep and the other UC leaders who report directly to the board.”

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