California Assembly Bill No. 1743 Amends California ‘‘Pay to Play’’ Laws: A Detailed Summary

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I. High Level Summary

California Assembly Bill No. 1743 (Bill) passed the California Senate on August 30, 2010, and the California Assembly on August 31, 2010. The Bill was enacted by the California Governor on September 30, 2010. The Bill will take effect on January 1, 2011. The Bill amends the California Government Code (Government Code) in several important respects. Broadly speaking, the amendments to the Government Code fall into two categories: (1) amendments to the provisions of the Government Code that relate to ‘‘placement agents;’’ and (2) amendments to the lobbyist provisions of the Government Code that relate to the Political Reform Act of 1974 (Lobbyist Act). California’s amendments to the Government Code are important because they are part of a series of nationwide responses to allegations of improper ‘‘pay to play’’ tactics by certain placement agents.

We note that most of the amendments focus on a placement agent’s relationships with state public retirement systems, not local public retirement systems. However, the Bill will add Section 7513.87, which will provide that ‘‘placement agents’’ in connection with any potential system investment made by a local public retirement system must (1) file applicable reports with a local government agency that requires ‘‘lobbyists’’ to register and file reports, and (2) comply with applicable requirements imposed by a local government agency pursuant to Section 81013.1 Unlike for ‘‘placement agents’’ with respect to state public retirement systems, ‘‘placement agents’’ with respect to local public retirement systems will be subject to applicable requirements imposed by the local government agency. Thus, placement agents may need to undertake special efforts to understand these requirements.

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