A second investment consultant has put PIMCO on watch, as the $2.2 trillion money manager faces growing scrutiny following allegations of sexism and harassment

• Consultant Meketa has placed Pimco on watch over discrimination allegations, following a similar move by pension adviser NEPC.
• A Pimco client has flagged its $68 million investment upon Meketa’s recommendation.
• Meketa recently enhanced its money manager rating process to more closely evaluate pay equity.
• See more stories on Insider’s business page.

A second investment consultant for pension funds and other institutional investors has flagged $2.2 trillion money manager Pimco for enhanced scrutiny after multiple current and former employees alleged that they faced discrimination and harassment at the firm. 

Westwood, Mass.-based Meketa Investment Group has so far recommended that at least one pension fund client, the San Joaquin County Employees’ Retirement Association, place the money manager on watch. SJCERA had around $68 million dollars invested in a Pimco emerging markets equity fund as of Dec. 31, public board documents show. 

Money managers can be added to consultant and investor watch lists for a range of due diligence issues, including underperformance and organizational concerns. When an investor or consultant puts a firm on watch, it can make it harder for the money manager to raise additional funds and puts its existing investments with the client under added scrutiny.

Meketa’s move follows that of another investment consultant, NEPC, which also recommended that Pimco be placed on watch in a due diligence report presented last month to the Alameda-Contra Costa Transit Employees’ Retirement Plan. The pension fund for transit employees had $53.9 million invested with Pimco as of Dec. 31, according to public board documents.

While that investment represents a tiny fraction of PIMCO’s assets, NEPC and Meketa’s watch recommendations are notable, because concerns raised by prominent consulting firms can impact actions taken by other pension funds, endowments, and foundations that have billions invested with the money manager. 

“SJCERA staff and Meketa recently made the board aware of the ongoing claims regarding Pimco and have decided to put them on watch,” Johanna Shick, the CEO of Calif.-based SJCERA, told Insider in an email Thursday evening. “Meketa had several conversations with PIMCO regarding these claims and is monitoring the situation as it moves forward.”

Newport Beach, Calif.-based Pimco is a defendant in an ongoing lawsuit in Orange County Superior Court in which five current and former female employees alleged that they faced discrimination and harassment while working at the money manager. 

“Pimco discriminates against women by permitting its predominantly male leadership to overtly favor men in pay, promotions, and other opportunities regardless of their qualifications and to otherwise discriminate against women,” the plaintiffs alleged in the complaint, which was amended in February. 

In response to the lawsuit, Pimco denied the plaintiffs’ claims in a March 10 filing in Orange County Superior Court. 

“Pimco vigorously denies that it discriminated, harassed, or retaliated against plaintiffs in any matter, allowed a pay disparity that gives rise to equal pay violations, defrauded or made any misrepresentations to plaintiffs, violated plaintiffs’ privacy, or violated obligations to take reasonable steps to prevent or correct any type of retaliation, harassment, or discrimination,” the firm said in the filing.

In September 2019, another Pimco employee, Andrea Martin Inokon, one of the firm’s senior in-house lawyers, sued the firm for gender, racial, and disability discrimination. That lawsuit is ongoing.

In a follow up email on Friday, Shick told Insider that Pimco was put on watch based on Meketa’s recommendation at SJCERA’s March 12 board meeting. “The watch status will be reevaluated quarterly,” Shick added. 

Pimco and Meketa declined to comment on SJCERA’s decision. 

Meketa’s recommendation comes after the consultant announced in January that it had enhanced its process for rating money managers on the basis of their corporate diversity and inclusion efforts. 

Stephen McCourt, co-CEO of Meketa, said in a January press release that the consultant was “implementing this new questionnaire and rating system to more fully encourage diversity and inclusion in all its forms, which we believe strengthens organizations and outcomes for clients.”

Under the initiative, Meketa said it would assess money managers’ commitment to reporting diversity statistics and ensuring pay equity, along with other areas for manager accountability, the release said.

Meketa has $1.4 trillion in client assets under advisement, according to the release. 

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