LACERS Enacts Paid Agent Disclosure Rules

May 1, 2009 ( - Officials at the Los Angeles City Employees' Retirement System (LACERS) stopped short of a total ban on the use of paid intermediaries on behalf of money managers seeking fund business, but have ordered more disclosure of the practice.

A Wall Street Journal news report said LACERS board members this week approved a measure requiring that firms seeking a LACERS investment mandate disclose the identity of third-party marketers or individuals used to market their funds.

According to the Journal account, LACERS looked at a number of options for improving transparency, including an outright ban on third-party marketing, but opted for the disclosure rule under the notion it strikes a suitable balance and will be effective at limiting conflicts of interest.

The move comes as New York’s Common Retirement Fund recently banned the use of third-party marketers by firms that wish to do business with it (see  DiNapoli Bars Placement Agents for Empire State Fund ), and New York City’s pension systems are considering a similar move.

New Mexico, meanwhile, has passed a law requiring firms to disclose their employment of placement agents when seeking capital from its state retirement systems (see  Auto Czar Also Indicated in NM Pay-to-Play ) and the California Public Employees’ Retirement System (CalPERS) is considering a similar move, the Journal said.