It seems getting some of the nation's biggest institutional investors to agree on a common plan for cleaning up Wall Street and corporate America is a lot harder than one might think. Employee pension fund officials from more than a dozen states met Monday to formulate a united strategy for promoting good corporate behavior in the aftermath of the corporate scandals at Enron, WorldCom and other companies. But at the end of the day, the most the group could agree on was to keep talking about taking some sort of action. "There's power in numbers, and beginning today, corporate America is going to feel our power," said New York State Comptroller H. Carl McCall, who organized the meeting of state treasury and state pension fund officials. "By working together we can achieve more than working separately." But for now, at least, the threat of some of the nation's biggest public pension funds joining together to force corporate boards to become more responsive to shareholder rights seems more a case of wishful thinking than reality. The group, for instance, considered condemning the practice of some U.S. companies of relocating their headquarters to offshore locations in order to evade federal tax laws. But the public pension fund managers couldn't agree on whether they should collectively pull their money out of any U.S. company that already is operating in some offshore tax haven such as Bermuda or the Cayman Islands. Frank Sobrino, a spokesman for McCall, said it was unrealistic to expect the state pension fund mangers to do much more than talk at this point, since many of them cannot take any action without getting approval from their respective boards or state legislators.
Several of the participants at the conference -- which was attended by officials from states including California, Connecticut, Florida, New Jersey, North Carolina and Pennsylvania -- said the most important thing is for public pension fund managers to start thinking as a group and not simply act as individual stock market players. "Today is a start. We are not going to get unity on every issue," said California State Treasurer Philip Angelides. "This is a new shareholder movement." The meeting, attended by officials who are responsible for managing nearly $1 trillion in investments, comes on the heels of another joint initiative by several of the same pension fund managers. Last month McCall, Angelides and North Carolina Treasurer Richard Moore announced that their states would stop doing business with Wall Street institutions that don't abide by the highest ethical standards. McCall, in July, sent a letter to the 60 Wall Street investment banks and money management firms that New York State contracts, asking them to adopt a list of ethical guidelines -- some of which incorporate the terms of Merrill Lynch's ( MER) analyst conflict-of-interest settlement with the New York State attorney general's office. The firms have until Oct. 15 to respond to the request. Separately, state pension funds have been filing lawsuits the past few months against some of the Wall Street firms that underwrote stock and bond offerings for Enron and WorldCom. The lawsuits contend that big banks such as Citigroup ( C) and J.P. Morgan Chase ( JPM) knew, or should have known, of the alleged accounting scams at those companies.