BILL NUMBER: AB 1743	AMENDED
	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.