US - The California Senate has passed a bill requiring more disclosure by placement agents looking for business from government pension funds.
The bill, sponsored by California State Controller John Chiang and State Treasurer Bill Lockyer, requires all public pension systems to disclose fees paid to investment placement agents, campaign contributions and gifts made by placement agents to public retirement board members, for the 24 month period prior to solicitation.
The measures also prohibit public retirement board members from selling investment products to other public retirement systems.
It additionally extends the post-employment restrictions on influencing retirement board actions for former board members and system executives who apply to the California Public Employees Retirement System (CalPERS) and California State Teachers Retirement System (CalSTRS), to five years from two years.
The bill, which was passed after a third reading and is now with the assembly, extends these requirements to apply to all public retirement systems in California.
CalPERS adopted these rules in their policy in May, requiring external managers to disclose fees and other information about the placement agents they hire, in order to seek CalPERS business.
CalPERS board president Rob Feckner said: "This policy will help us ensure that our decisions are made solely on the merits of proposed investments with full transparency and disclosure. We want to know who's being hired, how much they're being paid, what they're paid for, and who pays them."
The pension fund said this policy was developed, following public disclosures concerning "pay-to-play" allegations at other pension funds.
Last week, New York State comptroller Thomas Di Napoli released information on 12 direct private equity investments that the New York State Common Retirement Fund made, as part of an investigation into alleged "pay to play" practices. (Global Pensions: September 3).
It said a ban on the use of placement agents, paid intermediaries, and registered lobbyists in investments with the New York State Common Retirement Fund was announced late April while several other pension funds have since adopted the ban. (Global Pensions: April 29).
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