FORTUNE — On Monday, the SEC filed fraud charges against ex-CalPERS president Fred Buenrostro and private equity placement agent Al Villalobos. I reported on the situation Tuesday morning, concluding that the complaint raised several new questions about decisions made by CalPERS during Buenrostro’s leadership (for the record, Buenrostro has denied wrongdoing).
The largest one, from my perspective, was why CalPERS chose not to sign an investor disclosure letter that Villalobos submitted at the behest of client Apollo Global Management? After exhausting all other reasonable possibilities, I theorized that the refusal was an effort to establish plausible deniability of Villalobos’ shady placement dealings with the pension system.
Well, it seems CalPERS didn’t take too kindly to my post.
In a section of its website called CalPERS Responds, the system has penned a post of its own titled “Primack’s Conspiracy Theory Doesn’t Hold Water.”
What follows is the CalPERS post (it’s not too long), with my comments in italics:
So what? As I wrote in my original post, novelty is not an automatic disqualifier at CalPERS — which is known for creating innovative investment structures, and for investing in new fund managers. Perhaps seeing something new would prompt additional review, but that’s not what happened here. According to the SEC complaint, investment staff gave it to counsel, who said not to sign it (which is different than, “we need more time”).
Let’s take the second part first: This is silly. All CalPERS had to do was call Apollo Global Management, with which it had an existing relationship, and ask for confirmation of the represented facts. Would have taken five minutes. As for the first part, the benefit would have been that Villalobos had been placing funds with CalPERS for years and, as such, CalPERS must have believed his business benefited CalPERS and its members. All Villalobos wanted (at the beginning) was to get paid for services rendered by getting the placement agent version of a receipt.
I still do not see how staff made a “good judgment call” by not signing the letter, given that no one (including the SEC) is alleging that the letter contained any false or misleading information. In fact, the “good judgment call” prompted bad actors to commit bad acts that, ultimately, tarnished CalPERS’ reputation. There also is a secondary issue of why this letter, once submitted to CalPERS counsel, didn’t raise some red flags about how much Villalobos was being paid to hawk Apollo funds.
Again, let me be very clear: I am not asserting that anyone from CalPERS lied under oath, or that there was some vast conspiracy related to this letter. I’m simply saying that CalPERS was presented with an unexpected opportunity to distance itself from someone who many within the organization believed was of questionable character. And it took advantage of that opportunity.
CalPERS has still not provided a compelling legal reason for why it didn’t sign the letter, even though its lawyers made the decisions. That’s not fiction. It’s just the facts.