Placement Agent Alert: New Rule May Require Investment Firm Employees to be Disclosed by Name on Quarterly California Lobbying Reports (July 2016)
Beginning in the third quarter 2016, investment firms which are registered California lobbying entities will need to itemize all payments of $2,500 or more for “other payments to influence” on their quarterly reports. “Other payments to influence” is a catch-all provision requiring the disclosure of payments which are not listed in other portions of the report, but which would not have been made “but for” the firm’s efforts to obtain investments from California state public pension funds. These include, most notably, the salaries of employees who are not registered California lobbyists’ placement agents and spend 10 percent or more of their time in any given month seeking investments from CalPERS, CalSTRS or the UC Retirement System.
The “bad news” is that if a firm’s marketing, investor relations or other employee who is not a registered California lobbyist/placement agent hits this 10 percent threshold, then his or her name and portion of his or her salary will be disclosed on the firm’s quarterly reports. The “good news” is that the public will not learn the employee’s salary because the report does not ask for the actual percentage of time spent by the employee on California activities.
For the time being, itemized “other payments” must be disclosed on a separate Form 640 and attached to the quarterly report. If we file your lobbyist employer reports, then we will ask for this information when we prepare your 3rd quarter 2016 reports in October. If we do not prepare your reports, then please be aware that you may need to prepare and attach a Form 640 to your 3rd quarter filing.
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Feel free to contact a Sutton Law Firm attorney or Political Compliance Specialist if you have any questions regarding this new itemization rule, or any other placement agent reporting obligation.
THIS ALERT IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE.