- A WilmerHale review found former Alaska DOR Commissioner Adam Crum had authority to pursue up to $75M from the CBRF but failed key fiduciary and procedural standards, including due diligence and expert consultation.
- Alaska invested $20.6M in DigitalBridge, never funded the remaining commitment, and exited with about an $860K cash loss from fees and expenses.
- Governor Dunleavy issued Administrative Order 362 to implement all four WilmerHale recommendations to tighten oversight and documentation for nonroutine investments.
- Sen. Bert Stedman introduced SB 221 to statutorily bar all state fiduciaries from investing in or doing business with DigitalBridge or its affiliates.
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The WilmerHale report confirms a tension between legal authority and responsible risk management in state fund administration. While Commissioner Crum legally revived the long-dormant subaccount of the CBRF to pursue higher yields via private equity—allowed by statute—he did so while sidestepping core fiduciary norms, including limited prospect analysis, insufficient legal and investment advisement, and communication breakdowns with legislative oversight entities and internal staff.
The actual financial consequence was contained: only $20.6 million of a proposed $75 million commitment were invested, and that position has now been sold off, ending further financial exposure. Still, even this short-term exposure incurred a loss (~US$860,000), mainly from fees and costs—raising questions about cost-benefit trade-offs in pursuing illiquid, higher-risk alternatives under fiscal uncertainty.
Administrative responses via Order 362 are structurally sound: they aim to close gaps in nonroutine investment protocol, increase transparency, and ensure legal oversight. These measures may restore internal checks and improve legal defensibility for future decisions. However, their success depends on enforcement and whether state fiduciaries resist or adapt to the new layers of procedure.
Legislative action—SB 221—reflects political backlash and a push to codify restrictions. The proposed ban would remove discretion from agencies like the Permanent Fund Corporation and Retirement Management Board, not just the Department of Revenue. While strong on accountability, such a ban risks limiting future strategic flexibility and could discourage state agents from exploring alternative investment opportunities, even when structurally appropriate and well-supported. There is a trade-off between risk mitigation and agility.
Key strategic implications:
- Short term: The state is likely to see tighter control over its rainy-day funds—fewer “bold” investment experiments, higher procedural overhead, and greater legislative involvement.
- Political: Crum’s actions are now fodder during the 2026 gubernatorial cycle; scrutiny could affect candidate credibility, especially around fiscal governance and transparency.
- Investment culture: The precedent may shift risk tolerance downward, leading to more conservative asset allocations for public reserves, possibly resulting in lower returns but higher liquidity.
- Legal and policy uncertainty: Fiduciary boundaries, the definition of “nonroutine investments,” and the authority of commissioners vs. governance boards are now more contested.
Open questions include:
- How will the state define thresholds or criteria for “nonroutine” investments, beyond just dollar value?
- Will Order 362 components be codified into statute to ensure durability across administrations?
- What is the impact on expected long-term returns if future CBRF or similar accounts stick to cash-equivalent or short-term assets only?
- Could the ban on DigitalBridge extend to similar firms or technologies, potentially excluding beneficial infrastructure investment classes?
Supporting Notes
- The WilmerHale independent review was released by the Dunleavy Administration January 20, 2026, examining a decision to commit up to US$75 million of CBRF subaccount funds to DigitalBridge and two other private equity funds.
- The report found Crum had the legal authority to make such investment but violated fiduciary standards including inadequate due diligence, lack of risk analysis, and failure to adhere to established protocols.
- Only US$20.6 million were actually invested before the contract was sold; the rest of the commitment was never funded.
- The investment incurred a loss of US$860,000 due to fees and expenses; the state now has no ongoing exposure.
- To address deficiencies, the WilmerHale report made four key recommendations, all of which were immediately adopted through Administrative Order 362.
- Senate Bill 221, sponsored by Sen. Bert Stedman, was introduced January 21, 2026; it aims to ban investments or business dealings between state fiduciaries and DigitalBridge or its affiliates.