BILL NUMBER:S4238

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.

              

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 fiat 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.

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.

The State Comptroller urges approval of this legislation.

BUDGET IMPLICATIONS: This bill has no significant fiscal impact.

EFFECTIVE DATE: Immediately.