What's happening
This bill prohibits investment managers working with New York's common retirement fund from using placement agents or intermediaries.
Why it matters
Aims to reduce conflicts of interest and potential corruption. by eliminating the use of paid intermediaries (placement agents) who might otherwise exert undue influence on investment decisions affecting New York’s public pension fund.
Requires direct accountability from investment managers. by mandating a formal certification that no placement agent or intermediary was used, increasing transparency in how fund investments are sourced and negotiated.
Broadens the definition of “placement agent”. to include not just outside firms and lobbyists but also employees whose primary role is to influence investment decisions, closing loopholes that could allow indirect influence.
May impact how investment managers compete for fund business,. potentially favoring firms with established reputations and direct relationships over those reliant on third-party intermediaries, and could shift industry practices towards more transparent and merit-based selection processes.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Ban Investment Middlemen
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Substituted by A3137
- Advanced to third reading
- 2nd report cal.
- 1st report cal.895
- Referred to civil service and pensions
- Referred to civil service and pensions
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Ban Retirement Fund Middlemen
Signed by Governor · Sponsor Peter Abbate
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4761
2017-2018 Regular Sessions
IN SENATE
February 27, 2017
Introduced by Sen. GOLDEN -- (at request of the State Comptroller) -read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions
AN ACT to amend the retirement and social security law, in relation to prohibiting the use of placement agents by managers doing business with the common retirement fund
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The retirement and social security law is amended by adding a new section 424-a to read as follows:
§ 424-a. Use of placement agents or intermediaries prohibited. 1. The fund shall not engage, hire, invest with or commit to an investment manager that is using the services of a placement agent or intermediary to assist such investment manager in obtaining investments by the fund nor shall the fund engage, hire, invest with or commit to an investment manager without obtaining from such investment manager a certification in the form and manner prescribed by the fund stating that such investment manager has not used the services of a placement agent or other intermediary to assist such investment manager in obtaining investments by the fund.
2. For the purposes of this section:
(a) "investment manager" shall mean any person, other than an employee of the comptroller, or entity engaged by the common retirement fund to manage a part or all of an investment portfolio of the fund. "Manage" shall include, but is not limited to, the analysis of portfolio holdings, and the purchase, sale, and lending thereof. Any investment made by the fund pursuant to subdivision seven of section one hundred seventy-seven of this chapter shall be deemed to be the investment of the fund in such investment entity rather than in the assets of such investment entity.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06993-01-7
S. 4761 2
(b) "placement agent or intermediary" shall mean any person or entity, including registered lobbyists, directly or indirectly engaged and compensated by an investment manager, other than an employee of the investment manager, to assist the investment manager in obtaining investments by the fund whether compensated on a flat fee, a contingent fee, or any other basis. Employees of an investment manager and its affiliates are excluded from this definition unless they are employed principally for the purpose of securing or influencing the decision to secure a particular investment transaction or investment by the fund.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the retirement and social security law, in relation to prohibiting the use of placement agents by managers doing business with the common retirement fund
Purpose
For the purpose of maintaining the integrity of the New York State and Local Retirement System ("System") and the New York State Common Retirement Fund ("CRF" or "Fund"), as well as to increase transparency, this bill would codify the State Comptroller's policy prohibiting the use of placement agents or intermediaries by the Common Retirement Fund.
Summary of provisions
Section 1 of this bill renumbers Section 425 of the Retirement and Social Security Law as Section 426 of such Law and adds a new Section 425 to the Retirement and Social Security Law which prohibits the CRF from engaging, hiring, investing with or committing to an investment manager that is using the services of a placement agent or intermediary to assist such investment manager in obtaining investments by the CRF, and further prohibits the CRF from engaging, hiring, investing with or commit to an investment manager without obtaining from such investment manager a certification in the form and manner prescribed by the CRF stating that such investment manager has not used the services of a placement agent or other intermediary to assist such investment manager in obtaining investments by the CRF.
Read the full memo (637 words)
This Section defines an "investment manager" as any person or entity, other than an employee of the State Comptroller, engaged by the CRF in the management of an investment portfolio of the CRF.
Additionally, this Section defines a "placement agent or intermediary" as any person or entity, including a registered lobbyist, that is directly or indirectly engaged and compensated by an investment manager to promote investments to or solicit investment by the CRF, whether compensated on a flat fee, a contingent fee, or any other basis. A placement agent or intermediary is not a regular employee of the investment manager.
Section 2 of this bill provides for an immediate effective date.
Prior legislative history
S.5632 and A.7909 of 2011-2012 S.4238 and A.3635 of 2013-2014 S.4927 and A.5054 of 2015-2016
Justification
Restoring confidence in the integrity of the Fund's investment decision-making process and in the operations of the System has been a top priority of State Comptroller Thomas P. DiNapoli since he took Office. In conducting a top-to-bottom review of the way the Fund does business, reforming Fund operations and restoring the credibility of the operation, Comptroller DiNapoli determined a placement agent ban was appropriate as part of his commitment to reforming the operations of the Fund.
In order to preserve the independence and integrity of the Fund, to preclude potential conflicts of interest, and to assist the State Comptroller in fulfilling his or her duties as a fiduciary to the Fund, this bill codifies the policy that Comptroller DiNapoli adopted on April 21, 2009, which prohibits the Fund from engaging, hiring, investing with or committing to an outside investment manager who is using the services of a placement agent or intermediary to assist the investment manager in obtaining investments by the Fund. By codifying his policy, Comptroller DiNapoli is ensuring that the Fund will always be protected.
It should be noted that the enactment of this legislation would render the Emergency Regulation (DFS-14-17-00002-E, as such regulation relates to a ban on the use of placement agents) first promulgated by the Department of Insurance on June 18, 2009 and subsequently renewed by the department and its successor, the Department of Financial Serves, every 90 days thereafter moot. To date, this emergency regulation has been published 35 times in the New York State Register. The State Comptroller urges approval of this legislation.
Budget implications
This bill has no significant fiscal impact.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.