Frequently Asked Questions about Placement Agents under the Political Reform Act

Frequently Asked Questions about Placement Agents under the Political Reform Act By Chris Micheli

            Who are “placement agents”? Under Government Code Section 82047.3(a), a “placement agent” is defined as an individual directly or indirectly hired, engaged, or retained by, or serving for the benefit of or on behalf of, an external manager or an investment fund managed by an external manager, and who acts or has acted for compensation as a finder, solicitor, marketer, consultant, broker, or other intermediary in connection with the offer or sale to a state public retirement system in California or an investment vehicle in specified circumstances.

Who is not a placement agent? Under Government Code Section 82047.3(b), an individual who is an employee, officer, director, equity holder, partner, member, or trustee of an external manager and who spends one-third or more of the individual’s time, during a calendar year, managing the securities or assets owned, controlled, invested, or held by the external manager is not a placement agent. Section 82047.3(c) also creates an exception if three specified conditions are met.

How is an “investment vehicle” defined? Government Code Section 82047.3(e) defines “investment vehicle” to mean “a corporation, partnership, limited partnership, limited liability company, association, or other entity, either domestic or foreign, managed by an external manager in which a state public retirement system in California is the majority investor and that is organized in order to invest with, or retain the investment management services of, other external managers.”

            What is a placement agent required to do? Anyone who is a placement agent is required to register as a lobbyist with the California Secretary of State’s office.

Is there information available for placement agents and the PRA? Yes, the Secretary of State’s Office provides a “Frequently Asked Questions” document for assist placement agents in their filings, and the Secretary of State has all of the forms available needed to comply with the law, including free, online filing forms and instructions.

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