SACRAMENTO, CA â€“ The Senate Public Employment and Retirement Committee approved legislation this week that would require placement agents to register as lobbyists and would end contingency fee arrangements based on winning contracts from Californiaâ€™s public retirement systems.
Authored by Assembly Member Ed Hernandez (Baldwin Park) and co-authored by the committeeâ€™s chairman, Senator Lou Correa (Santa Ana), Assembly Bill 1743 (AB 1743) would help to ensure that transactions that involve placement agents securing investment assets from the stateâ€™s pension funds remain above board.
â€œPlacement agents typically can earn up to 3 percent of the money they place under the management of their client. With billions in California public pension fund investment assets available, and performance pay used as a carrot to win pension fund contracts, the existing system invites corruptionâ€, said Correa.
Senator Correa further added, â€œWhen it comes to public funds, we must hold all to a higher standard of accountability and transparency. This bill provides both.â€
Requiring placement agents to register as lobbyists would make them subject to the Political Reform Act. Under this Act, lobbyists are required to render quarterly activity reports including any honoraria, fees or other compensation. The Act also requires them to attend a biennial ethics class, and places significant limits on gifts, among other requirements.