Last year, the California legislature enacted AB 1584 as an urgency measure. That legislation required the retirement boards of each public pension or retirement system to develop and implement, on or before June 30, 2010, a policy requiring the disclosure of payments to placement agents. CalPERS had previously adopted a disclosure policy but had not followed the public notice and comment requirements of the California Administrative Procedure Act (APA). I had therefore requested a determination by the Office of Administrative Law (OAL) that the policy was an illegal "underground" regulation. In December 2009, the OAL accepted my petition. CalPERS then certified to the OAL that it would not enforce its policy. I also petitioned CalPERS to adopt a regulation implementing AB 1584 pursuant to the APA. CalPERS has proposed regulations and the comment period expired on June 14. I understand that in addition to my own comments on the rule, other comments were received and the proposed rule will likely be amended. Under the APA, changes to the proposed text of the rule will need to be published for comment.

So who should care about CalPERS' proposed rule? CalPERS and placement agent activity has received a lot of press attention, including this suit by the Attorney General.   Generally, a placement agent may be used by two different types of businesses. Investment advisers may us a placement agent to solicit investment management business. Private equity and other funds may use solicitors to obtain investments. California is not alone in its interest in placement agent activity. Last year, the SEC proposed this rule.  In a later blog, I plan to discuss pending legislation that targets placement agent activity.