Assessing the Impact of Proposed California Assembly Bill No. 1743 on "Pay to Play"

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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 amends the California Government Code (Government Code) in several important respects. Broadly speaking, the proposed 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 proposed 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.

California's proposed amendments first focus on expanding the existing regulation of placement agents who act as intermediaries with respect to public retirement systems in California. General means of regulating placement agents will include, without limitation, increased transparency, restrictions on contributions, certain prohibitions, and audit requirements. While placement agents were previously regulated under the provisions of the Government Code that specifically applied to "placement agents," they were not regulated under the Lobbyist Act. The framework of the Lobbyist Act was initially designed to regulate lobbyists, and, as a result, application of the Lobbyist Act to placement agents is somewhat convoluted.

This article attempts to provide a concise summary of the Bill's proposed amendments to the Government Code as they relate to placement agents. Note that this article is not an exhaustive discussion of all aspects of the Bill.

Please see full article 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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