Legislation requiring placement agents to register as lobbyists before contacting California public pension funds was introduced today in the state Assembly.
The bill was introduced by Democratic Assemblyman Ed Hernandez at the request of the $202.1 billion California Public Employees' Retirement System, Sacramento.
The law would apply to CalPERS, the $134.1 billion California State Teachers' Retirement System, and municipal systems in the state that have lobbyist requirements in place.
It is the latest salvo by CalPERS officials in response to questions about whether the fund's investment contracts are awarded fairly.
Other provisions would impose limits on gifts placement agents could give board members and prohibit placement agents from making campaign contributions to public pension board members.
The bill would prohibit placement agents from receiving compensation based on their ability to help their money management clients win an investment mandate from a public pension fund in California. Money managers would have to sign agreements with placement agents in which the agents would be paid, regardless of whether they successfully win business for their clients.
The legislation also would require placement agents to report to the pension fund boards any fees paid by money managers to the placement agents.
Placement agents are defined in the bill as lobbyists in accordance with the state's Political Reform Act. Placement agents, their firms and the money managers would be required to report quarterly on their fees and compensation and on any honoraria or gifts.
“This bill enhances transparency and removes any cloud of secrecy around investment decisions made by public pension funds,” Mr. Hernandez said in a statement. “The message we're sending is that we won't let a few placement agents damage the credibility of our public pension plans. The focus is on full disclosure and protecting the system from any kind of improper influence.”
Rob Feckner, president of the CalPERS board, agreed, saying in a news release, “This bill will help ensure full transparency and accountability when it comes to our investment decisions.”
Under legislative rules, no action can be taken for 30 days. The bill would then be referred to the Assembly Rules Committee.