CalPERS' president today endorsed legislation designed to curb abuses by placement agents, middlemen hired by investment firms to get deals from CalPERS and other public pension funds.
Rob Feckner, the CalPERS board president, called on fellow board members to rally around legislation being drafted by Controller John Chiang and Treasurer Bill Lockyer, who also sit on the board.
The legislation would require placement agents to register as lobbyists. It would also ban the payment of agents on a contingency basis. Agents generally are paid 1 percent to 2 percent commission of any deal they procure, but get paid nothing if the pension fund doesn't go along with the investment.
"Just as lobbyists attempt to influence legislative or administrative decisions, placement agents attempt to influence the investment of state pension funds," Feckner wrote in a letter to the board.
The board is expected to discuss the legislation at its Nov. 19 meeting.
The legislation is being drafted following disclosures that placement agent Alfred Villalobos, a former CalPERS board member, has earned commissions totalling at least $60 million on CalPERS investments.
The big pension fund has hired a Washington law firm to run a "special review" of Villalobos and other agents' activities.
Villalobos hosted the 2004 wedding of then-CalPERS Chief Executive Fred Buenrostro, although Buenrostro said he reimbursed him. Buenrostro now works for Villalobos.
Villalobos also paid for a round-the-world 2006 trip by CalPERS board member Charles Valdes, although Valdes said he, too, reimbursed him.
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