The Wave of Pension Fund Reform Moves to the West

12.10.2009

We have previously discussed public pension fund reform laws and regulations in place in New Jersey (SIC Rules), New York (Attorney General Andrew Cuomo’s Pension Fund Code of Conduct and Comptroller Thomas DiNapoli’s Executive Order) as well as a proposed SEC rule.  The wave of reform now reaches California. On October 11, 2009, Governor Schwarzenegger signed into law Assembly Bill 1584 (“AB 1584”), which became effective immediately.  AB 1584 requires that the boards of all public employees’ pension or retirement systems in California implement a disclosure policy detailing payments made to placement agents in connection with system investments in or through asset management firms. Additionally, the required disclosure policy must include a five year solicitation ban on external asset managers and placement agents who violate the disclosure policy.  The required disclosure policy must be adopted by June 30, 2010. AB 1584 also:
  • Requires that intermediaries disclose all campaign contributions made to any member of the board as well as all gifts given to any board member in the preceding twenty-four months before acting as a placement agent in connection with a potential system investment;
  • Requires that intermediaries disclose any contributions or gifts made after becoming placement agents; and
  • Prohibits any board member or board employee from directly or indirectly selling or providing any investment product that would be considered an asset of the fund to any public retirement system.

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