Using blunt language to address a growing scandal, CalPERS' president Wednesday urged his board to support legislation designed to curb the role of placement agents – marketing representatives who seek investment dollars from CalPERS and other public pension funds.
Rob Feckner, the board president, endorsed legislation being drafted by state Controller John Chiang and state Treasurer Bill Lockyer, who also sit on the board of the California Public Employees' Retirement System.
"If there is one inescapable conclusion from all we have seen this year regarding placement agents, their firms and employers, it is this: 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 his board.
The legislation would require agents to register as lobbyists. It also would prohibit investment firms from paying agents on commission or contingency. Agents generally get paid 1 percent to 2 percent of whatever investment deal they can obtain for their clients.
Feckner is reacting to disclosures about the activities of placement agent Alfred Villalobos, who served on the CalPERS board in the 1990s. Villalobos has earned more than $60 million in commissions off CalPERS deals in the past decade, prompting CalPERS to hire a law firm to run a "special review" of placement agent activities.
Villalobos hosted the 2004 wedding of then-CalPERS Chief Executive Fred Buenrostro at his Lake Tahoe mansion, although Buenrostro said he reimbursed him for the costs. Buenrostro joined Villalobos' firm over the summer.
In addition, Villalobos paid for a round-the-world trip in 2006 by CalPERS board member Charles Valdes. Valdes said he, too, reimbursed Villalobos.
The CalPERS board will discuss the legislation at its meeting Nov. 19.
The fund announced that the bill will be carried by Assemblyman Ed Hernandez, D-West Covina. Hernandez was the author of AB 1584, which imposed stronger disclosure requirements on placement agents. It was signed last month by Gov. Arnold Schwarzenegger.
Separate investigations into the activities of placement agents are being conducted by California Attorney General Jerry Brown, the Securities and Exchange Commission and New York Attorney General Andrew Cuomo. Cuomo already has filed criminal charges relating to alleged abuses in New York's public pension fund.
Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.
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