BILL NUMBER: SB 398INTRODUCED BILL TEXT INTRODUCED BY Senator Hernandez FEBRUARY 16, 2011 An act to amend Sections 7513.8 and 82025.3 of the Government Code, relating to retirement. LEGISLATIVE COUNSEL'S DIGEST SB 398, as introduced, Hernandez. Retirement: external managers. 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 a public 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. This bill would make technical, nonsubstantive changes to those provisions. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. 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 either of the following: (1) A person who is seeking to be, or is, retained by a board to manage a portfolio of securities or other assets for compensation. (2) 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. (c) "Person" means an individual, corporation, partnership, limited partnership, limited liability company, or association, either domestic or foreign. (d) (1) "Placement agent" means any 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, either directly or indirectly. (2) Notwithstanding paragraph (1), an individual who is an employee, officer, director, equityholder, partner, member, or trustee of an external manager and who spends one-third 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 is not a placement agent. (3) For purposes of this subdivision, "investment vehicle" means a corporation, partnership, limited partnership, limited liability company, association, or other entity, either domestic or foreign, constituting or managed by an external manager in which a board is the majority investor and that is organized in order to invest with, or retain the investment management services of, other external managers. SEC. 2. Section 82025.3 of the Government Code is amended to read: 82025.3. "External manager" means either of the following: (1) A person who is seeking to be, or is, retained by a state public retirement system in California to manage a portfolio of securities or other assets for compensation. (2) 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 state public retirement system in California.