Earlier this year, Assemblymember Edward Hernandez introduced AB 1743 to require placement agents who assist in obtaining business from California public retirement systems, such as CalPERS and CalSTRS, to register as lobbyists. Although there are a number of consequences to being classified as a lobbyist, the one that has attracted the most attention is the ban on contingency fees.
The bill is set to be heard today by the Senate Appropriations Committee. The bill is sponsored by CalPERS, State Treasurer Bill Lockyer and Controller John Chiang and is being opposed by the Investment Company Institute and the Securities Industry and Financial Markets Association.
Beyond the substantive question of whether placement agents should receive contingency fees, there are a number of technical and drafting problems with the bill. I have communicated my comments to CalPERS and I expect that the author will propose "author's amendments" at the hearing.