California Assembly Bill AB1743 Amended / Bill

 BILL NUMBER: AB 1743AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 17, 2010 INTRODUCED BY Assembly Member Hernandez (Principal coauthor: Assembly Member Lieu) (Coauthors: Assembly Members Block, Blumenfield, Buchanan, Ma, Portantino, Saldana, and Audra Strickland) (Coauthor: Senator Correa) FEBRUARY 8, 2010 An act to amend Sections 7513.8  and 82002   , 82002, and 82039  of, and to add Sections 7513.86  and 7513.87   , 7513.87, 82025.3, and 82047.3  to, the Government Code, relating to the Political Reform Act of 1974. LEGISLATIVE COUNSEL'S DIGEST AB 1743, as amended, Hernandez. Political Reform Act of 1974: placement agents. Existing law regulates investments made by public pension and retirement systems and defines the term "placement agent" to mean a person or entity hired, engaged, or retained by an external manager, as defined, to raise money or investment from a public retirement system in California. Existing law, the Political Reform Act of 1974, provides for the comprehensive regulation of the lobbying industry, including  requiring   defining the term "lobbyist" and regulating the conduct of lobbyists. Among its provisions, the act requires  lobbyists to register with the Secretary of State and  prohibiting   to file periodic   disclosure reports, and it prohibits  lobbyists from engaging in certain activities in connection with legislative and administrative actions, as defined. This bill would  amend the existing definition of "placement agent" to mean a person or entity hired, engaged, or retained by an external manager, as defined, to raise money or investment from a public retirement system in California, but would exclude from that definition an employee, officer, director, equity holder, partner, member, or trustee of an external manager who spends   1/3   or more of his or her time, during a calendar year, managing the assets controlled by the e   xternal manager. The bill would define "placement agent" in a similar way for purposes of the Political Reform Act of 1974, except that the   definition would also include an individual acting independently to raise money or investment from a public retirement system in California. In addition, the bill would  prohibit a person from acting as a placement agent in connection with any potential system investment made by a state public retirement system unless that person is registered as a lobbyist and is in full compliance with the Political Reform Act of 1974 as that act applies to lobbyists. The bill would also require 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 applicable requirements imposed by a local government agency in addition to those imposed by state law.  However, the bill would exempt from these requirements an employee, officer, director, equity holder, partner, member, or trustee of an external manager who spends one-third or more of his or her time, during a calendar year, managing the assets controlled by the external manager.  The bill would  provide that an individual acting as a placement agent is a lobbyist for purposes of the Political Reform Act of 1974 and is thereby required to comply with all regulations and restrictions imposed on lobbyists by the act, and the bill would  further expand the definition of "administrative action" for purposes of the  Political Reform Act of 1974   act  to include, with regard only to placement agents, the decision by any state agency to enter into a contract to invest state public retirement system assets  on behalf 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 2/3 vote of each house and compliance with specified procedural requirements. This bill would declare that it furthers the purposes of the act. Vote: 2/3. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 7513.8 of the Government Code is amended to read: 7513.8. As used in Sections 7513.85, 7513.86, 7513.87, 7513.9, and 7513.95: (a) "Board" means the retirement board of a public pension or retirement system, as defined in subdivision (h) of Section 17 of Article XVI of the California Constitution. (b) "External manager" means an asset management firm that is seeking to be, or has been, retained by a public retirement system in California to manage a portfolio of assets, including securities, for a fee. (c) "Placement agent" means any person or entity hired, engaged, or retained by, or acting on behalf of, an external manager, or on behalf of another placement agent,  to act or having acted  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.  Notwithstanding the foregoing, an employee, officer, director, equity holder, partner, member, or trustee of an external manager who spends one-third or more of his or   her time, during a calendar year, managing the assets controlled by the external manager is not a placement agent.  SEC. 2. Section 7513.86 is added to the Government Code, to read: 7513.86.  (a)    A person shall not act as a placement agent in connection with any potential system investment made by a state public retirement system unless that person is registered as a lobbyist in accordance with Chapter 6 (commencing with Section 86100) of Title 9 and is in full compliance with the Political Reform Act of 1974 (Title 9 (commencing with Section 81000)) as that act applies to lobbyists.  (b) This section does not apply to an employee, officer, director, equity holder, partner, member, or trustee of an external manager who spends one-third or more of his or her time, during a calendar year, managing the assets controlled by the external manager.  SEC. 3. Section 7513.87 is added to the Government Code, to read: 7513.87. (a) A person acting as a placement agent in connection with any potential system investment made by a local public retirement system  shall file any applicable reports with a local government agency that requires lobbyists to register and file reports and  shall comply with any applicable requirements imposed by a local government agency pursuant to Section 81013, in addition to the  applicable  requirements of this chapter. (b) This section does not apply to an employee, officer, director, equity holder, partner, member, or trustee of an external manager who spends one-third or more of his or her time, during a calendar year, managing the assets controlled by the external manager. SEC. 4. Section 82002 of the Government Code is amended to read: 82002. (a) "Administrative action" means either of the following: (1) The proposal, drafting, development, consideration, amendment, enactment, or defeat by any state agency of any rule, regulation, or other action in any ratemaking proceeding or any quasi-legislative proceeding, which shall include any proceeding governed by Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2. (2) With regard only to placement agents, the decision by any state agency to enter into a contract to invest state public retirement system assets  on behalf of a public retirement system  . (b) "Ratemaking proceeding" means, for the purposes of a proceeding before the Public Utilities Commission, any proceeding in which it is reasonably foreseeable that a rate will be established, including, but not limited to, general rate cases, performance-based ratemaking, and other ratesetting mechanisms. (c) "Quasi-legislative proceeding" means, for purposes of a proceeding before the Public Utilities Commission, any proceeding that involves consideration of the establishment of a policy that will apply generally to a group or class of persons  ,  including, but not limited to, rulemakings and investigations that may establish rules affecting an entire industry.  SEC. 5.   Section 82025.3 is added to the   Government Code   , to read:   82025.3. "External manager" means an asset management firm that is seeking to be, or has been, retained by a public retirement system in California to manage a portfolio of assets, including securities, for a fee.   SEC. 6.   Section 82039 of the   Government Code   is amended to read:  82039. (a) "Lobbyist" means  any   either of the following:   (1)     Any  individual who receives two thousand dollars ($2,000) or more in economic consideration in a calendar month, other than reimbursement for reasonable travel expenses, or whose principal duties as an employee are, to communicate directly or through his or her agents with any elective state official, agency official, or legislative official for the purpose of influencing legislative or administrative action.  An   (2)     A placement agent, as defined in Section 82047.3.   (b)     An  individual is not a lobbyist by reason of activities described in Section 86300.  (b)   (c) For the purposes of subdivision (a), a proceeding before the Public Utilities Commission constitutes "administrative action" if it meets any of the definitions set forth in subdivision (b) or (c) of Section 82002. However, a communication made for the purpose of influencing this type of Public Utilities Commission proceeding is not within subdivision (a) if the communication is made at a public hearing, public workshop  ,  or other public forum that is part of the proceeding, or if the communication is included in the official record of the proceeding.  SEC. 7.   Section 82047.3 is added to the   Government Code   , to read:   82047.3. "Placement agent" means an individual acting independently, or hired, engaged, or retained by, or acting on behalf of, an external manager, or on behalf of another placement agent, to act or having acted, 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. Notwithstanding the foregoing, an employee, officer, director, equity holder, partner, member, or trustee of an external manager who spends one-third or more of his or her time, during a calendar year, managing the assets controlled by the external manager is not a placement agent.   SEC. 5.   SEC. 8.  No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.  SEC. 6.   SEC. 9.  The Legislature finds and declares that this bill furthers the purposes of the Political Reform Act of 1974 within the meaning of subdivision (a) of Section 81012 of the Government Code.