Updated with correction
The taint of pay to play has moved to the nation's largest pension fund.
Charles Valdes, a longtime board member at the $194 billion California Public Employees' Retirement System, Sacramento, is under investigation by a state agency for taking campaign contributions from executives at a placement agent that works for CalPERS.
The investigation by the Fair Political Practice Commission involves contributions made by officials at ARVCO Capital Research of Stateline, Nev., to Mr. Valdes' campaign to be re-elected to the CalPERS board in 2005.
At the same time, a California bill that limits the use of placement agents was passed by the Senate and returned to the Assembly last week for its approval of Senate amendments. Once an agreement is reached, it will go to Gov. Arnold Schwarzenegger for his signature or veto.
In addition, the U.S. Securities and Exchange Commission is creating a national version of placement agent regulations. Individual pension systems across the nation are also instituting their own placement rules, ranging from outright bans and stiff restrictions to disclosure requirements.
The CalPERS investment committee at its Sept. 14 meeting will consider restricting campaign contributions and charitable contributions to system board members or individuals running for board positions, said Brad Pacheco, spokesman. The board is also expected to be asked for direction on how to respond to the SEC's proposed placement agent rules, he said. (Comments are due to the SEC by Oct. 6.)
The investigation into Mr. Valdes' contributions was launched as a result of an audit of campaign finances for his December 2005 re-election, confirmed Roman Porter, executive director of the Fair Political Practice Commission.
Mr. Valdes' re-election campaign accepted $38,600 in donations from ARVCO employees and Capital Formation Partners LLC, according to Mr. Valdes' campaign records obtained by Pensions & Investments. Alfred Villalobos, a former CalPERS board member, is chairman and senior managing director of both companies.
Mr. Valdes could not be reached for comment. Mr. Villalobos did not return repeated phone calls by deadline. Billy Joe Hughes, Mr. Valdes' campaign manager, declined to comment.
Neither Mr. Villalobos nor his firms has been charged with wrongdoing in any transaction.
(Mr. Valdes' term expires in January and he is not seeking re-election, Mr. Pacheco said.)
Among the donors listed in the campaign records are Carrissa Villalobos, ARVCO's general counsel and chief of real estate, and daughter of Mr. Villalobos; Dustin Fox, analyst at ARVCO; and Brian S. David, vice president at ARVCO. Mr. Villalobos did not contribute.
ARVCO successfully secured $3.4 billion in commitments from the giant pension fund from 2006 through 2008; it could not be learned how much the firm was paid.