Published: Thursday, Dec. 17, 2009 – 12:00 am | Page 8B
The CalPERS board on Wednesday formally endorsed new legislation that would limit the activities of placement agents and require them to register as lobbyists.
Placement agents are marketing middlemen hired by private-equity firms and others to solicit investment dollars from public pension funds such as CalPERS.
CalPERS has launched an investigation into placement agents after disclosing that one agent, former CalPERS board member Alfred Villalobos, had earned more than $60 million in commissions from CalPERS deals.
The legislation first surfaced several weeks ago, and it was clear from the outset that the CalPERS board would back the bill.
One board member declined to support it. George Diehr, chairman of the investment committee, warned that a provision banning contingency payments would prevent some small investment firms from hiring placement agents because they’d be unable to put the agents on salary.
But board member Bill Lockyer, the state treasurer, said contingency payments in the public sector “create corrupting incentives.”