Placement Agents Must Register In Calif.
Placement agents raising money from any of California’s public retirement systems as of Jan. 1 had to register as lobbyists with the California Secretary of State and be in compliance with the California Political Reform Act of 1974.
In legal terms, a placement agent includes any person hired, engaged, retained by or serving on behalf of an external manager, such as a buyout fund manager, who is paid as a finder, solicitor, marketer, consultant, broker, or other intermediary in connection with the offer or sale of the securities, assets or services of an external manager to a state public pension or retirement system, according to the law firm KattenMuchinRosenman LLP.
The new regulation could encourage more firms to establish in-house fundraising teams. The restrictions exclude from the placement agent definition individuals who spend a third or more of their time during a year managing the securities or assets owned, controlled, invested or held by an external manager. It also excludes an employee, officer or director acting on behalf of an external manager who is registered as an investment adviser or broker-dealer with the Securities and Exchange Commission.
Dodd-Frank May Limit Firms’ Say On Pay
One little noticed provision of the Dodd-Frank Act could reduce the ability of a buyout firm to have representation on the compensation committee of a public company.
The financial reform law has an exemption for a “controlled company,” where more than half a public company’s voting power is held by an individual, group or buyout firm, and the rule doesn’t affect board members with less than 10 percent control. The question involves an “affiliate” that owns 10 percent to 50 percent of voting control of a public portfolio company—as in a post-IPO scenario where a buyout shop retains a significant minority stake.
The provision appears to be at odds with other aspects of Dodd-Frank, which seek to expand stockholders’s ability to have a “say on pay,” the law firm Kirkland & Ellis LLP said in a commentary, but it noted that the SEC will have some flexibility in interpreting the provision. “The SEC should carefully consder this provision of the Dodd-Frank Act—especially the ‘affiliate’ requirement—before implementing rules that potentially disenfranchise those stockholders with the greatest interest in ensuring that executive compensation is appropriate and properly balanced.”
Blackstone Joins Twitter Revolution
So far the buyout powerhouse’s tweets have been predictably straight-forward. The firm tweeted a statement on public employee pensions (Shocker: “We at Blackstone are committed to helping public employees retire with confidence in the strength and reliability of their pensions.”), a year-end earnings call, and a new corporate blog, “News & Views,” a forum for the firm’s pros to “provide commentary on the global economy, views from senior Blackstone executives and highlight company news.”
Twitter and the blog offers a venue for Blackstone pros to share their insights on the industry, and it will be interesting to see if other large firms follow suit. But it doesn’t look like we’ll see any tweets any time soon along the lines of “OMG these crab legz R seriously 2-die for, + only $40 per claw!!!”
Follow the firm’s tweets @blackstone.