SB 398 — Retirement: placement agents.

Summary

Existing law regulates investments made by public pension and retirement systems and defines the term "external manager" to mean a person who is seeking to be, or is, retained by the retirement board of a public pension or retirement system to manage a portfolio of securities or other assets for compensation, or a person who is engaged, or proposes to be engaged, in the business of investing, reinvesting, owning, holding, or trading securities or other assets and who offers or sells, or has offered or sold, securities to a board. Existing law also defines the term "placement agent" to mean a person hired, engaged, or retained by, or serving for the benefit of or on behalf of, an external manager, or on behalf of another placement agent, who acts or has acted for compensation as a finder, solicitor, marketer, consultant, broker, or other intermediary in connection with the offer or sale of the securities, assets, or services of an external manager to a board or an investment vehicle, as defined. The Political Reform Act of 1974 defines those terms in a similar way for purposes of an individual acting as a placement agent in connection with a state public retirement system. This bill would instead define an external manager to mean a person who is seeking to be, or is, retained by a board or an investment vehicle to manage a portfolio of securities or other assets for compensation, or a person who manages an investment fund, as defined, and who offers or sells, or has offered or sold, an ownership interest in the investment fund to a board or an investment vehicle. In addition, the bill would define a placement agent to mean a person directly or indirectly hired, engaged, or retained by, or serving for the benefit of or on behalf of, an external manager or an investment fund managed by an external manager and who acts or has acted for compensation as a finder, solicitor, marketer, consultant, broker, or other intermediary in connection with the offer or sale to a board or investment vehicle either the investment management services of the external manager or an ownership interest in an investment fund managed by the external manager. The bill would make conforming changes in the definitions of external manager and placement agent for purposes of the Political Reform Act of 1974. Existing law requires a person acting as a placement agent in connection with any potential system investment made by a local public retirement system to file any applicable reports with a local government agency that requires lobbyists to register and file reports and to comply with any other applicable requirements imposed by a local government agency, unless the person is an employee, officer, director, equityholder, partner, member, or trustee of an external manager who spends 13 or more of his or her time during a calendar year managing the securities or assets owned, controlled, invested, or held by the external manager. This bill would also exempt a placement agent from any requirements imposed by a local government agency if the placement agent is an employee, officer, or director of an external manager, or of an affiliate of an external manager, and the external manager is registered as an investment adviser or a broker-dealer with the Securities and Exchange Commission or any appropriate state securities regulator; the external manager is participating in a competitive bidding process, such as a request for proposals, or has been selected through that process and is providing services pursuant to a contract executed as a result of that competitive bidding process; and the external manager, if selected through a competitive bidding process, has agreed to a fiduciary standard of care, as defined by the standards of conduct applicable to the retirement board of a public pension or retirement system and set forth in the California Constitution, when managing a portfolio of assets of a public retirement system. Existing law makes a knowing or willful violation of the Political Reform Act of 1974 a misdemeanor and subjects offenders to criminal penalties. This bill would impose a state-mandated local program by creating additional crimes. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the act's purposes upon a 23 vote of each house and compliance with specified procedural requirements. This bill would declare that it furthers the purposes of the act. This bill would declare that it is to take effect immediately as an urgency statute.

Bill Text

• Chaptered 10/09/11 - Chaptered Current pdf October 09, 2011
• Enrolled 08/26/11 - Enrolled pdf August 26, 2011
• Amended 03/24/11 - Amended Senate pdf March 24, 2011
• Introduced 02/16/11 - Introduced pdf February 16, 2011
• SB398 View text html

Action History

1. October 09, 2011

   Chaptered by Secretary of State. Chapter 704, Statutes of 2011.

2. October 09, 2011

   Approved by the Governor.

3. August 30, 2011

   Enrolled and presented to the Governor at 11:30 a.m.

4. August 25, 2011

   In Senate. Ordered to engrossing and enrolling.

5. August 25, 2011

   Read third time. Urgency clause adopted. Passed. (Ayes 78. Noes 0. Page 2595.) Ordered to the Senate.

6. August 22, 2011

   Read second time. Ordered to consent calendar.

7. August 18, 2011

   From committee: Do pass. Ordered to consent calendar. (Ayes 17. Noes 0.) (August 17).

8. July 06, 2011

   From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 7. Noes 0.) (July 5). Re-referred to Com. on APPR.

9. June 22, 2011

   From committee: Do pass and re-refer to Com. on E. & R. with recommendation: To consent calendar. (Ayes 6. Noes 0.) (June 22). Re-referred to Com. on E. & R.

10. June 02, 2011

    Referred to Coms. on P.E., R. & S.S. and E. & R.

11. May 23, 2011

    In Assembly. Read first time. Held at Desk.

12. May 23, 2011

    Read third time. Urgency clause adopted. Passed. (Ayes 39. Noes 0. Page 1062.) Ordered to the Assembly.

13. May 18, 2011

    Read second time. Ordered to consent calendar.

14. May 17, 2011

    From committee: Be placed on second reading file pursuant to Senate Rule 28.8 and ordered to consent calendar.

15. May 06, 2011

    Set for hearing May 16.

16. May 04, 2011

    From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 5. Noes 0. Page 852.) (May 3). Re-referred to Com. on APPR.

17. April 13, 2011

    Set for hearing May 3.

18. April 12, 2011

    From committee: Do pass and re-refer to Com. on E. & C.A. (Ayes 5. Noes 0. Page 620.) (April 11). Re-referred to Com. on E. & C.A.

19. April 05, 2011

    Set for hearing April 11.

20. March 31, 2011

    Re-referred to Coms. on P.E. & R. and E. & C.A.

21. March 24, 2011

    From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS.

22. February 24, 2011

    Referred to Com. on RLS.

23. February 17, 2011

    From printer. May be acted upon on or after March 19.

24. February 16, 2011

    Introduced. Read first time. To Com. on RLS. for assignment. To print.

Sponsors

• Hernandez · Primary

Votes

Subjects