The Arizona Capitol Times obtained more than 1,000 e-mails between an employee of the State Treasurer’s Office and a securities trader with Banc of America.

A former trader in the Treasurer’s Office appears to have had a closer than arm’s-length relationship with a broker from whom he purchased nearly $19 million in securities for the state, as revealed in more than 1,000 pages of e-mail correspondence obtained by Arizona Capitol Times.
State Treasurer David Petersen handled an internal investigation of the alleged relationship between trader Minh Trang and Renee Kuo Burnside, an agent with Banc of America Securities LLC.
According to a source in the Treasurer’s office, staffers told Mr. Petersen that Mr. Trang had begun a social relationship with Ms. Burnside, and Mr. Trang allegedly accepted gifts in violation of state conflict-of-interest laws.
Nothing came of the investigation after Mr. Petersen went to Mr. Trang and informed him of questions about his dealings with Ms. Burnside, the source said.
A communication from Mr. Trang thanking Mr. Petersen for alerting him that his e-mails were being scrutinized is now in the hands of the Attorney General’s Office, sources close to the matter said. The AG’s Office is looking into allegations that Mr. Petersen has committed felonies in his role as state treasurer.
Mr. Petersen declined to be interviewed about Mr. Trang, citing advice from the Attorney General’s Office not to discuss personnel matters with reporters.
Andrea Esquer, spokeswoman for the AG, was asked if Mr. Trang was part of the Petersen investigation.
“I can’t confirm that,” she said.
Mr. Trang and another trader, Ken Fisher, walked away from their jobs in February on the day investigators from the AG’s office seized computers and documents from Mr. Petersen’s office. Mr. Trang was not reprimanded for his relationship with Ms. Burnside, according to sources.
Mr. Trang and Mr. Fisher removed their shirts and danced around the trading room shortly before they left, the sources said.
From the e-mails it appeared that Mr. Trang attended a concert in Phoenix and had dinner with Ms. Burnside on at least two occasions.
Neither Mr. Trang nor Ms. Burnside could be reached for comment as of Capitol Times print deadline Aug. 17.
On four occasions last year, Mr. Trang purchased securities from Ms. Burnside totaling $18.9 million, Chief Deputy Blaine Vance reported in an Oct. 27, 2005, e-mail to Kathleen Spacone, an investigations manager with Bank of America. Ms. Spacone, who would not answer questions from Arizona Capitol Times, had a phone conversation with Mr. Petersen last October and requested a copy of all correspondence between Mr. Trang and Ms. Burnside.
She said the result of her investigation was confidential, but she did confirm that Ms. Burnside still works for Banc of America Securities in Los Angeles, a division of Bank of America. Mr. Vance also said the state still trades with Banc of America Securities, and the investments have performed well.
He also said Mr. Petersen took over the investigation into Mr. Trang’s dealings with Ms. Burnside, but nothing ever came of it.
“What I felt was there was a potential conflict of interest with him [Mr. Trang],” Mr. Vance said. “We’re supposed to keep an arm’s-length relationship and not to put ourselves in any position that will compromise our ability to be objective in what we’re doing. It depends on the extent of the social relationship” as to whether it violates treasury policy.
“We don’t date,” he said, adding that Mr. Trang’s relationship with the agent was questionable behavior. Mr. Trang was among treasury employees who attended character education classes conducted at the Treasurer’s Office.
In a Feb. 25, 2005, e-mail to Ms. Burnside, Mr. Trang wrote: “You can come here and I’ll take you to the Killer’s concert.”
On March 11, 2005, Ms. Burnside asks Mr. Trang where they should eat in Phoenix. She suggests Los Dos Molinos, “but maybe there’s someplace safer,” she wrote.
Conflict of interest laws
State conflict of interest laws prohibit state employees from accepting anything of value of more than $25 from someone doing business with the state.
For months the two discussed their jobs, music, sports and personal matters, and their communications included text messages and phone calls, sometimes on weekends, and exchanges of music CDs, according to the documents provided to Arizona Capitol Times under the Arizona Public Records Act.
Banc of America, meanwhile, found Ms. Burnside had not violated company policies in her dealings with the Treasurer’s Office, Mr. Vance said.
Board of Investment member: ‘This is very troubling’
“It does not sound proper to me,” said Bill Bell, a member of the Board of Investment, which oversees the state’s $9.5 billion portfolio.
“It’s something that I would have hoped would have been brought to the board. This is very troubling and something that needs to be explored, and I intend to raise some questions as soon as I possibly can. You can be assured of that,” he said.
Another board member, Felicia Rotellini, director of the Department of Financial Institutions, said she would have no official comment on the situation, but is not worried about the state’s investments.
“I am grateful Blaine Vance is the deputy, I think he is doing a very good job,” she said. As long, as he’s there overseeing the traders, I feel confident that the Treasurer’s Office is acting appropriately.”