BILL NUMBER: AB 1743	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 10, 2010
	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, 82002, and 82039 of, and to add
Sections  7513.86 ,   7513.86,  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 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 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  
for compensation, and  would exclude from that definition an
employee, officer, director, equityholder, 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
external 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   be
limited to  an individual acting  independently
 to raise money or investment from a  state  public
retirement system in California  and would not include in-house
sales employees, officers, or directors of specified external
managers  . 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  . 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 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  state  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)  (1)   "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  for compensation  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 
    (2)     Notwithstanding paragraph (1) 
, an employee, officer, director, equityholder, 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. 
   (3) For purposes of this subdivision, "investment vehicle" means a
partnership, limited partnership, limited liability company, or
other investment vehicle managed by an external manager in which a
public retirement system in California is the majority investor and
that is organized in order to invest in other external managers.

  SEC. 2.  Section 7513.86 is added to the Government Code, to read:
   7513.86.  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.
  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,
equityholder, 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  state  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 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.
   (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.
   (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.   (a)    "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
 ,   for compensation  as a finder,
solicitor, marketer, consultant, broker, or other intermediary to
raise money or investment from, or to obtain access to, a  state
 public retirement system in California, directly or indirectly,
including, without limitation, through an investment vehicle.

    Notwithstanding the foregoing 
    (b)     Notwithstanding subdivision (a)
 , an employee, officer, director, equityholder, 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. 
   (c) Notwithstanding subdivision (a), an in-house sales employee,
officer, or director of an external manager registered with the
Securities and Exchange Commission who is selected by a competitive
bidding process subject to subdivision (a) of Section 20153 and
agrees to a fiduciary standard of care when managing a portfolio of
assets of a state public retirement system in California is not a
placement agent.  
   (d) For purposes of this subdivision, "investment vehicle" means a
partnership, limited partnership, limited liability company, or
other investment vehicle managed by an external manager in which a
public retirement system in California is the majority investor and
that is organized in order to invest in other external managers.

  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. 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.