Wall St. firm stops fighting CalPERS-backed measure
Wall Street powerhouse Blackstone Group withdrew its objections to a bill to regulate so-called placement agents and their fees for directing public pension money to investment firms, and the measure passed a state legislative committee unanimously Tuesday.
Blackstone and its placement agent subsidiary, Park Hill Group, had mounted a campaign to block a key provision in the bill that would ban huge contingent commissions for the agents, the middlemen in persuading pension funds to place their funds with investment managers.
But on Tuesday, a lobbyist for the New York private equity firm told members of the Elections Committee that it would now support the bill by Assemblyman Edward Hernandez (D-West Covina).
Shortly afterward, the bill, AB 1743, was approved on a 7-0 vote and was sent to the full Assembly, which is expected to take up the piece of legislation next month.
“Based on conversations with the author subsequent to the last policy hearing, we are confident enough of the progress the bill is making that we’re supportive of the bill moving,” said Terry McGann, a lobbyist for Blackstone.
Blackstone previously said that the ban on commissions based on the success in getting funds placed would make it hard for small investment funds to get the attention of pension fund investment staff.
The proposal, backed by the California Public Employees’ Retirement System, the country’s largest public pension fund, still could run into difficulties on the Assembly floor, where it needs the approval of two-thirds of the 80 members to be sent to the Senate.
It still is opposed by the Securities Industry and Financial Markets Assn., a Washington trade group, and the California Bankers Assn.
CalPERS asked Hernandez to carry the bill after it was embarrassed by revelations last fall that sales intermediaries had been paid more than $125 million in fees by investment firms for opening doors at the pension agency.
CalPERS spokeswoman Pat Macht said she hoped the bipartisan vote by the Elections Committee would be a positive sign for the bill getting through the Legislature and to the governor’s desk.
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