California FPPC Issues New Interpretive Guidance On Placement Agent Legislation


A recently published letter from the California Fair Political Practices Commission (the "Commission") offers additional guidance on the scope and application of California's new placement agent law, Assembly Bill No. 1743 ("AB 1743"). While the letter does not constitute formal guidance from the Commission, it can offer assistance in interpreting AB 1743.

As previously described in a Ropes & Gray alert, under AB 1743, any placement agent who solicits funds from a California public pension or retirement system on behalf of an external manager is required to register as a lobbyist. AB 1743 broadly defines "placement agent" to include any employee of an external manager who acts as a finder, solicitor, marketer, consultant, broker or other intermediary for compensation in connection with the offer or sale of securities, assets or services of the external manager, subject to an exception for employees who spend one-third or more of their time during a calendar year managing securities or assets. As a result, AB 1743 may require marketing, investor relations and other personnel of an investment firm who participate in solicitation of California public plan investors, whether in connection with separately managed accounts or investments in collective investment vehicles, to register as lobbyists in California. AB 1743 also restricts the types of compensation that placement agents can receive for soliciting investments from a California public pension or retirement system and imposes registration and disclosure requirements and gift and contribution limits.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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