BILL NUMBER: AB 17 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 11, 2011
INTRODUCED BY Assembly Member Davis
DECEMBER 6, 2010
An act to add and repeal Section 22204.5 to
of the Education Code, and to add and
repeal Section 20139 to of the
Government Code, relating to retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 17, as amended, Davis. Retirement: pension fund management.
The Public Employees' Retirement Law creates the Public Employees'
Retirement Fund, which is a trust fund created and administered
solely for the benefit of the members and retired members of this
system and their survivors and beneficiaries. The Board of
Administration of the Public Employees' Retirement System has the
exclusive control of the administration and investment of the
retirement fund.
The Teachers' Retirement Law establishes the State Teachers'
Retirement System in order to provide a financially sound plan for
the retirement, with adequate retirement allowances, for teachers in
public schools of the state, teachers in schools supported by the
state, and other persons employed in connection with the schools. The
plan and the system are administered by the Teachers' Retirement
Board.
This bill would require the Board of Administration of the Public
Employees' Retirement System and the Teachers' Retirement Board to
submit a report annually to the Legislature ,
on or before August 1, 2012, and annually each August 1 thereafter,
on the ethnicity and gender of the investment managers
with whom they have contracted in the immediately preceding fiscal
year, and who participate in managing their portfolios of
external fund management contracts, as specified. The bill would also
require these boards to report to the Legislature, on or before
August 1, 2012, and annually each August 1 thereafter, on the
ethnicity and gender of the brokerage firms with which they have
contracted in the immediately preceding fiscal year, and that
provide brokerage services to their fund's internally and externally
managed investment management firms, as specified. The bill would
also require these boards to develop and include in the
report plans and strategies to increase the and report
to the Legislature, on or before August 1, 2012, and annually each
August 1 thereafter, a plan and strategy for participation of
emerging investment managers , as defined, and
emerging brokerage firms , as defined . The
bill would provide for the repeal of these provisions on
January 1, 2018 . The bill would also make related findings and
declarations.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) The California Public Employees' Retirement System, the nation'
s largest pension fund, and the California State Teachers' Retirement
System, together, have approximately $328 billion in assets under
their management.
(b) As the nation's leader in attracting private equity capital
and advancing innovation, California should also be the leader in
encouraging equal opportunity in our state pension fund utilization
of emerging investment managers and emerging brokerage firms.
SEC. 2. Section 22204.5 is added to the Education Code, to read:
22204.5. (a) (1) Notwithstanding Section 10231.5 of the
Government Code, on or before August 1, 2012, and annually each
August 1 thereafter, the board shall annually
report to the Legislature, comprehensively and aggregately,
on the ethnicity and gender of the investment managers with
whom it has contracted in the immediately preceding fiscal year, and
who participate in managing its portfolio of external fund
management contracts, including all asset classes in which the fund
has assets allocated. The report shall identify the
investment firm ownership composition ownership
composition of any privately owned investment firm , including
ethnic and gender breakdowns as well as the portfolio value amount
and asset class managed, in addition to fees paid to each investment
manager. The report shall separately include a percentage breakdown
by ethnicity and gender of investment officer composition of
contracted portfolio management firms. The board shall report and
testify before the Legislature regarding strategic plans of promoting
existing underlying emerging managers from manager of manager
structures to direct mandates.
(2) The Notwithstanding Section
10231.5 of the Government Code, on or before August 1, 2012, and
annually each August 1 thereafter, the board shall also
annually report, comprehensively and aggregately,
on the ethnicity and gender of the brokerage firms who
with which it has contracted in the immediately
preceding fiscal year, and which provide brokerage services to
the fund's internally and externally managed investment management
firms in addition to the commissions paid for trading equity
securities and par value traded for fixed income by product
, to each brokerage firm utilized by the fund.
The board shall be required to highlight within the reports submitted
firms that are at least 51 percent minority owned or women owned, or
both. Annually, the board shall testify at hearings before
the Legislature to discuss the reports required to be submitted by
this section.
(3) The reports required to be submitted by this section shall be
submitted in compliance with Section 9795 of the Government Code.
(b) The board shall develop and include in the annual report to
the Legislature a detailed and verifiable plan and strategy to
increase the participation of emerging investment managers and
emerging brokerage firms, in each asset class, that are internally
and externally managed by investment managers that manage publicly
traded securities.
(b) Notwithstanding Section 10231.5 of
the Government Code, on or before August 1, 2012, and annually each
August 1 thereafter, the board shall develop and report to the
Legislature a plan and strategy for participation of emerging
investment managers who manage internally and externally
managed assets in each asset class, and emerging b
rokerage firms that execute securities on organized exchanges as
selected agents. Any percentages provided by the board shall be
used as a reporting threshold only, and not as a basis upon which to
contract with any given emerging investment manager or emerging
brokerage firm.
(c) "Emerging investment manager" means an investment firm that is
at least 51 percent minority or women owned that manages an
investment portfolio of less than ten billion dollars
($10,000,000,000) in publicly traded assets, less than two billion
dollars ($2,000,000,000) in a private equity fund of funds and real
estate partnerships, less than five hundred million dollars
($500,000,000) in REITs, hedge funds, and private equity, and less
than one billion dollars ($1,000,000,000) in a hedge fund of funds.
(d) "Emerging brokerage firm" means a brokerage firm that is at
least 51 percent minority or women owned.
(c) The board shall define the terms "emerging investment manager"
and "emerging brokerage firm" by regulation for purposes of this
section.
(e)
(d) Nothing in this section shall require the board to
take action as described in this section unless the board determines,
in good faith, that the action described in this section is
consistent with the fiduciary responsibilities of the board as
described in Section 17 of Article XVI of the California
Constitution.
(e) The reports required to be submitted by this section shall be
submitted in compliance with Section 9795 of the Government Code.
(f) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
SEC. 3. Section 20139 is added to the Government Code, to read:
20139. (a) (1) Notwithstanding Section 10231.5, on or before
August 1, 2012, and annually each August 1 thereafter, the
board shall annually report to the Legislature,
comprehensively and aggregately, on the ethnicity and gender of the
investment managers with whom it has contracted in the
immediately preceding fiscal year, and who
participate in managing its portfolio of external fund management
contracts, including all asset classes in which the fund has assets
allocated. The report shall identify the investment firm
ownership composition ownership composition of any
privately owned investment firm , including ethnic and gender
breakdowns as well as the portfolio value amount and asset class
managed, in addition to fees paid to each investment manager. The
report shall separately include a percentage breakdown by ethnicity
and gender of investment officer composition of contracted portfolio
management firms. The board shall report and testify before the
Legislature regarding strategic plans of promoting existing
underlying emerging managers from manager of manager structures to
direct mandates.
(2) The Notwithstanding Section
10231.5, on or before August 1, 2012, and annually each August 1
thereafter, the board shall also annually
report, comprehensively and aggregately, on the ethnicity and gender
of the brokerage firms who with which it has
contracted in the immediately preceding fiscal year, and which
provide brokerage services to the fund's internally and externally
managed investment management firms in addition to the commissions
paid for trading equity securities and par value traded for fixed
income by product , to each brokerage firm
utilized by the fund. The board shall be required to
highlight within the reports submitted firms that are at least 51
percent minority owned or women owned, or both. Annually,
the board shall testify at hearings before the Legislature to discuss
the reports required to be submitted by this section.
(3) The reports required to be submitted by this section shall be
submitted in compliance with Section 9795 of the Government Code.
(b) The board shall develop and include in the annual report to
the Legislature a detailed and verifiable plan and strategy to
increase the participation of emerging investment managers and
emerging brokerage firms, in each asset class, that are internally
and externally managed by investment managers that manage publicly
traded securities.
(b) Notwithstanding Section 10231.5, on
or before August 1, 2012, and annually each August 1 thereafter, the
board shall develop and report to the Legislature a plan and
strategy for participation of emerging investment managers who manage
internally and externally managed assets in each asset class, and
emerging brokerage firms that execute securities on organized
exchanges as selected agents. Any percentages provided by the
board shall be used as a reporting threshold only, and not as a basis
upon which to contract with any given emerging investment manager or
emerging brokerage firm.
(c) "Emerging investment manager" means a person or investment
firm that manages an investment portfolio of less than ten billion
dollars ($10,000,000,000) in publicly traded assets, less than two
billion dollars ($2,000,000,000) in a private equity fund of funds
and real estate partnerships, less than five hundred million dollars
($500,000,000) in REITs, hedge funds, and private equity, and less
than one billion dollars ($1,000,000,000) in a hedge fund of funds.
(d) "Emerging brokerage firm" means a brokerage that is at least
51 percent minority or women owned.
(c) The board shall define the terms "emerging investment manager"
and "emerging brokerage firm" by regulation for purposes of this
section.
(e)
(d) Nothing in this section shall require the board to
take action as described in this section unless the board determines,
in good faith, that the action described in this section is
consistent with the fiduciary responsibilities of the board as
described in Section 17 of Article XVI of the California
Constitution.
(e) The reports required to be submitted by this section shall be
submitted in compliance with Section 9795.
(f) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.