California Proposes Having Placement Agents Register

Placement agents would have to register as lobbyists under legislation proposed by Assemblyman Ed Hernandez (D-West Covina). The legislation would define placement agents as lobbyists in accordance with the state’s Political Reform Act. Placement agents would have to register as lobbyists before pitching investment ideas to public pension plans in California.

It seems like the big California pension funds want access for pitches from small investment firms without their own marketing staff. So they are not following the lead of New York with its outright ban on placement agents.

The bill is sponsored by State Controller John Chiang, the California Public Employees’ Retirement System (CalPERS), and Treasurer Bill Lockyer.

The bill is straightforward, defining a placement agent as:

“any person or entity hired, engaged, or retained by, or acting on behalf of, an external manager, or on behalf of another placement agent, as a finder, solicitor, marketer, consultant, broker, or other intermediary to raise money or investment from, or to obtain access to, a public retirement system in California, directly or indirectly, including, without limitation, through an investment vehicle.”

There is an exemption for employees of external managers who spends at least one-third of their time managing the assets of their employer.

As a “placement agent” you are required to report quarterly on fees, compensation and gifts under the Political Reform Act (Government Code §81000-81016).


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