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Legislation would rein in pension fund 'placement agents,' sources say
Nov 07, 2009 (The Sacramento Bee - McClatchy-Tribune Information Services via COMTEX) --
Top California officials, responding to media reports about possible outside influence on CalPERS' investment decisions, are formulating legislation to tighten controls on so-called placement agents and restrict their fees.
Sources said the legislation could be unveiled early next week, but declined to comment publicly in advance of the announcement.
The legislation would force placement agents -- middlemen hired by private equity firms to pitch investment deals to CalPERS and other public pension funds -- to register as lobbyists. The legislation would also prohibit contingency fees in which placement agents receive a percentage of whatever investment the client obtains.
Sources said the legislation is being drafted by State Controller John Chiang and Treasurer Bill Lockyer, in consultation with CalPERS President Rob Feckner and CalPERS Chief Executive Anne Stausboll. Chiang and Lockyer serve on the CalPERS board.
The legislation follows stories in The Bee this week detailing the activities of placement agent Alfred Villalobos, who has earned at least $60 million over the past decade representing clients before the California Public Employees' Retirement System. Villalobos is a former CalPERS board member and has had far greater success in obtaining CalPERS investments than any other placement agent.
Villalobos hosted the 2004 wedding of then-CalPERS CEO Fred Buenrostro at his Stateline, Nev., mansion. Buenrostro, who now works for Villalobos, says he reimbursed his hosts for all costs.
Also, Villalobos paid for a round-the-world trip he took with CalPERS board member Charles Valdes in late 2006, which included a stop at a financial conference at a luxury hotel in Dubai.
Valdes says he reimbursed Villalobos. Nonetheless, Feckner issued a statement Thursday asking board members to halt all contact with placement agents pending the completion of a "special review" being conducted by an outside law firm. Feckner also ordered placement agents and investment firms to stop advancing travel expenses to CalPERS board members or employees.
CalPERS and CalSTRS have imposed disclosure requirements on placement agents, and the Legislature passed AB 1584, which also requires disclosure of agents' fees.
But sources say the new legislation is intended to go further. As lobbyists, the agents would be subject to greater disclosure requirements and strict limits on gifts.
Lockyer spokesman Tom Dresslar said the treasurer first raised the idea of requiring agents to register as lobbyists last spring. Lockyer still believes the requirement "is a necessary and appropriate step to help clean up this mess," Dresslar said.
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Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.
To see more of The Sacramento Bee, or to subscribe to the newspaper, go to
http://www.sacbee.com/. Copyright (c) 2009, The Sacramento Bee, Calif.
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