SB 398 Signed Into Law, Effective Immediately

Governor Brown Signs SB 398, Amendments to California Placement Agent Disclosures/Lobbyist Registration Laws 

On Sunday, October 9, 2011, the last day of the period in which the governor could sign or veto pending legislation passed by the California Legislature, Gov. Brown signed into law Senate Bill 398 (Hernandez). The bill is the third in an annual series of acts passed by the Legislature, all designed to regulate the activities of investment managers soliciting business from California's public employee pension funds, in the wake of scandals and investigations over "pay-to-play" allegations at public funds nationwide.

The first enactment, in 2009, was AB 1584. That bill imposed disclosure requirements on "placement agents" engaged by "external" investment managers to garner a share of the investible assets of state and local pension funds. Each public employee pension fund in California was required to adopt a disclosure policy by mid-2010, including