CalPERS-backed bill introduced to classify pension placement agents as lobbyists

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Sales intermediaries who open doors at public pension funds for outside investment managers would have to register as government lobbyists under a bill introduced by Assemblyman Ed Hernandez (D-West Covina).

The proposal is supported by the California Public Employees’ Retirement System, state Treasurer Bill Lockyer and state Controller John Chiang. It’s aimed at reducing the huge fees paid to so-called placement agents by making it illegal for middlemen to collect a commission based on a percentage of a successful investment commitment by CalPERS and other funds to a client.

The measure also calls for strict limits on gifts to pension fund board members and prohibits campaign contributions.

CalPERS backed the idea after learning that one such placement agent, Alfred J.R. Villalobos, a former CalPERS board member, received more than $60 million in fees for helping half a dozen investment funds win business from CalPERS.

Villalobos’ fees and those of other placement agents are being investigated by the California attorney general’s office and an internal CalPERS probe.

‘This bill enhances transparency and removes any cloud of secrecy around investment decisions made by public pension funds,’ Hernandez said.

Many placement agent and investment fund managers are expected to oppose the legislation, arguing that middlemen play a positive role helping small, start-up venture capital funds get the attention of large institutional investors such as CalPERS.

-- Marc Lifsher