April 27, 2009
Office of Public Affairs
Pat Macht, Assistant Executive Officer
CalPERS President Calls For Policy Discussion on Placement Agents - Disclosure of Placement Agents and Fees to Be Discussed
SACRAMENTO, CA – CalPERS President Rob Feckner today announced that he has asked the system's staff to draft a proposed policy to ensure complete disclosure of investment “placement agents” and their fees. Placement agents work for money managers seeking to do business with investors, including public pension funds such as CalPERS.
External managers sometimes retain these agents to arrange meetings, prepare presentation materials, identify potential limited partners, and otherwise facilitate communication between the external manager and CalPERS regarding the potential investment of a portion of CalPERS assets. CalPERS hires the external managers to manage assets, but is not involved in the payment of fees to external managers’ agents.
Fees are paid by external managers to the placement agents, but recently issues of possible improper influence were revealed. One person in New York was recently identified and indicted for allegedly providing kickbacks to a pension official there.
“At our upcoming Board meetings in May, we will discuss the issue with the goal of CalPERS adding to the appropriate standards of transparency, accountability and integrity of our investment processes,” he said.
Currently, CalPERS is governed by a series of statutes, regulations and policies designed to enhance ethics and transparency in decision making. “I believe the addition of a policy specifically requiring disclosure of placement agents and the fees they are paid by outside investment firms will enhance the integrity, trust and confidence in our investment decision making process.”
Joe Dear, Chief Investment Officer, said staff has had the issue of placement agents on its radar screen, and will be ready to brief the Board at its public meetings.
“We believe an analysis of how best to require disclosure of the use of placement agents, and the fees they receive, can be developed to maintain trust in how we invest our beneficiaries’ assets,” Dear said. The staff analysis and recommendations for possible final Board action will be presented in mid May.