Public Pensions are Not for Sale in California - Placement Agents Must Register as Lobbyists Under New Law
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Public pensions are not for sale. That was the message surrounding Assembly Bill 1743, signed into law by Governor Arnold Schwarzenegger on September 30. As we reported in February the bill was sponsored by the California Public Employees’ Retirement System (CalPERS), state Controller John Chiang and Treasurer Bill Lockyer, both ex officio members of the pension fund’s Board. Chiang and Lockyer have touted AB 1743 as legislation that would ensure transparency and promote merit based investment decisions.
Aimed at terminating “bounty-based compensation” and unrestricted gift-giving, under the new law, California state pension placement agents must now register as lobbyists and as such comply with California’s Political Reform Act of 1974. In addition, agents are banned from making campaign contributions to elected board members or setting up contingent fee arrangements. Placement agents that do business with CalPERs or the California State Teachers’ Retirement System (CalSTRS) will be required to submit quarterly compensation reports, and their pay cannot be contingent on the outcome of an investment action. Officials at CalPERS and CalSTRS must each send a report on the use of placement agents in connection with investments by August 1, 2012.
Lockyer stated that the bill “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.” Chiang said that the bill provides the transparency needed to protect state retirees and California taxpayers. Only time will tell if their aspirations are realized by the passage of AB 1743.
