US - The California Public Employees' Retirement System (CalPERS) says new rules governing the registration of placement agents will improve the transparency in the fund's investment process.
Under new State legislation, placement agents who solicit pension fund business must now register as lobbyists. As such, placement agents who do business with CalPERS and the California State Teachers' Retirement System will be subject to lobbyist reporting and ethics rules under the California Political Reform Act - including bans on campaign contributions and contingent fee arrangements.
The bill, AB 1743, was authored by Assembly Member Dr. Ed Hernandez, D-Baldwin Park and co-sponsored by CalPERS, State Treasurer Bill Lockyer and State Controller John Chiang, ex-officio members of the pension fund's Board.
"We're grateful to Controller Chiang, Treasurer Lockyer and Assembly Member Hernandez for their work in the development of this important law and for the Governor's signing of the law," said CalPERS Board president Rob Feckner. "It brings strong measures to ensure full transparency and accountability in our investment process."
"The Governor's signing of AB 1743 is a victory for taxpayers and working Californians," added Hernandez. "This new law will safeguard the integrity of investment decisions made by our public pension systems, and ensure that the interests of people on Main Street are shielded from the worst kind of influence peddlers on Wall Street."
In response to federal and State investigations, the CalPERS Board adopted a policy in May 2009 requiring investment partners and external managers to disclose their retention of placement agents, the fees they pay them and the services they perform.
Elements of that policy were included in State law enacted in October 2009. Two months later, the CalPERS Board voted to sponsor the legislation that Hernandez introduced in February 2010.
"This bill says public pensions are not for sale," said Lockyer. "It embodies a principle that has been forgotten and flouted in California and across the nation: Workers, retirees and taxpayers come before politically-connected middlemen and wealthy Wall Street interests.
"AB 1743 ensures public pension investment decisions are made on the merits, adds transparency to the process and helps prevent corruption. The Legislature and Governor deserve credit for making it law."
The role of placement agents is at the heart of an ongoing investigation into corruption at the New York State Common Retirement Fund (Global Pensions: 30 September 2010).
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