With regard to placement agents, the policy from LACERA says that firms submitting investment proposals must identify all third-party marketers and individuals who referred the firm to the pension fund. Firms seeking commitments from the limited partner must also indicate those that stand to receive fees if an investment contract is secured.
The LP also adopted what it called a “marketing cessation policy,” which seeks to regulate the amount of contact made between the pension fund and firms that are soliciting it for commitments.
Among other stipulations, board members and staff may not accept entertainment or gifts from any firm being considered for a contract. A firm that violates the policy will be disqualified from partnering with the LP.
Meanwhile, LA Fire set policies to cover the disclosure of contributions, gifts and other potential conflicts of interest. The new policy states that placement agents, third-party marketers, lobbyists and other intermediaries, including all providers of goods and services with whom the pension fund does business, must disclose all contributions and gifts to any elected or appointed official or anyone who has filed to run for an elective city office.
The details of the policy also address the use of intermediaries to secure an investment, requiring disclosure of compensation and other information. If they violate the policy, investment managers or intermediaries will be excluded from the solicitation of new investments or business for 24 months.
The LP also added three disclosure categories to its conflict of interest code, dealing with real estate, investment and business relationships.
“The policy deals not only with placement agents but with all of our contractors,” says Michael Perez, general manager of LA Fire. “I’d be surprised if there’s anybody that’s doing as comprehensive a policy as we have. The big thing is disclosure, getting people out in the sunshine.” —Nancy Gordon