The Los Angeles Times reported that AB 1743 also places the placement agents under the reporting and ethics rules of the California Political Reform Act and includes bans on campaign contributions made in an effort to secure pension business and contingent fee arrangements. The bill, which takes effect January 1, 2011, affects both the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS).
“This bill will make certain that the interests of people on Main Street are shielded from the worst kind of influence peddlers on Wall Street,” said Assemblyman and bill author Edward Hernandez, according to the Times.
Putting placement agents under the eye of the state Fair Political Practices Commission sends the message that “public pension funds are not for sale,” said state Treasurer Bill Lockyer, according to the Times. ”It also ensures that investment decisions are made on the merits, adds transparency to the process and helps prevent corruption.”
Added CalPERS Board President Rob Feckner, in a separate CalPERS statement about the bill signing: “It brings strong measures to ensure full transparency and accountability in our investment process.”
The bill grows out of probes in a number of states and by local governments and at the federal level into the role of placement agents in winning money management business with pension funds, including those in New York and California.