CalPERS Lets A Little Sun Shine In

CalPERS, one of the leading advocates for good corporate governance over the past few years, is facing some questions of its own governance.  A brewing scandal of sorts is brewing with so-called placement agents. These are basically middlemen who help CalPERS find investments.  Under the old system, they got rather large chunks of money as they were paid on a commission system.  Add into that the agents weren’t required to disclose much of anything, and you had a recipe for some political headaches.  The CalPERS board is now trying to find some political ibuprofen:

Board members at California’s huge state pension fund offered support Thursday for a plan to register as lobbyists the controversial middlemen hired by private investment funds to help get lucrative business from public pension plans.

Reacting to continuing questions about possible influence peddling by these representatives for outside investment managers, several members said they backed the idea proposed by the board president of the California Public Employees’ Retirement System, known as CalPERS.

No opposition was expressed, and board President Rob Feckner directed staff members to draft legislation that would make the middlemen, known as placement agents, subject to the same rules as the professional lobbyists who attempt to influence the Legislature, governor’s office and state agencies. The CalPERS board is expected to formally endorse the plan at its December meeting. (LAT)

Given that we already have a system for lobbyists, implementation should be fairly straightforward.  The question is whether this really goes far enough in actually regulating how these middle men do business, and whether we need them at all. After all CalPERS has its own staff of investment people, and given solid information could probably do this a lot cheaper than bringing outsiders.

As it stands now, this seems to be the track most likely to make it into law. And at the very least, it is a good start.