ABOUT LACERA

BOARD OF RETIREMENT MINUTES 11-5-09

PRESENT

• Simon S. Russin, Vice Chair
• Yves Chery, Secretary
• Sadonya Antebi
• Edward L. Blecksmith
• James P. Harris (Alternate Member)
• Ed C. Morris (Alternate Retired)
• Les Robbins
• Mark J. Saladino

ABSENT

• William de la Garza, Chair
• William R. Pryor

STAFF ADVISORS AND PARTICIPANTS

• Gregg Rademacher, Chief Executive Officer
• Robert Hill, Assistant Executive Officer
• Janice Golden, Assistant Executive Officer
• Robb Van Der Volgen, Chief Counsel
• Richard Bendall, Manager, Internal Audit
• Sarah Marks, Principal Auditor, Internal Audit
• Ted Granger, Senior Auditor, Internal Audit
• Nai-Len Ishikawa, Acting Manager, Financial & Accounting Services
• Johanna Fontenot, Senior Staff Counsel

1. CALL TO ORDER

   Vice Chair Russin, presiding in the absence of Chair de la Garza, called the meeting to order at 9:00 a.m., in the Board Room of Gateway Plaza.

2. PLEDGE OF ALLEGIANCE

   Mr. Robbins led the Board Members and staff in reciting the Pledge of Allegiance.

3. BOARD MEMBER ANNOUNCEMENTS (For Information Only)

   Acting Chair Russin announced that Messrs. de la Garza, and Pryor would not be present at today’s meeting.

4. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF OCTOBER 15, 2009

   A motion was made by Mr. Morris, seconded by Mr. Chery, to approve the minutes of the regular meeting of October 15, 2009.

   The motion passed unanimously.

5. OTHER COMMUNICATIONS
   1. For Information
      1. October 2009 All Stars

         Mr. Hill announced the eight winners for the month of October, (Jovita Billups, Melissa Mooc, LaTonya Robinson, Jan Tran, Trina Sanders, Darla Fletcher, Angela Ward, and Sharon Carter) of the Employee Recognition Program. Karla Sarni was the winner of LACERA’s Web Watcher Award. Melvin Baquiran, Frances McCash, James Beasley, and Tionna Fredericks were the winners of LACERA’s RideShare Program.

      2. Chief Executive Officer’s Report (Memo dated October 29, 2009)

         Mr. Van Der Volgen gave a brief update on the Lexin case. The California Supreme Court heard oral argument on November 4, 2009. The Lexin case deals with the state’s conflict of interest laws and public employee participation on public retirement system boards.

         The outcome of the hearing is not yet known but it does appear that the Supreme Court is concerned with the Court of Appeal’s decision on the salary and public services exceptions. The California Supreme Court has 90 days to issue an opinion. The Board will be apprised of any development in the case.

         Mr. Rademacher read a thank you letter addressed to the Board from Mrs. Quinones, widow of Fire Fighter Specialist Arnaldo Quinones who was killed in the line of duty while battling the Station Fire.

         LACERA held its fifth Human Resources (HR) Conference. The HR Conference provides Los Angels County HR professionals an in depth training opportunity to understand LACERA benefits and payroll processing.

         Ms. Vilma Thomas was presented a 30 year service award. In recognition of her dedicated service to LACERA for over 30 years, Ms. Thomas will have her name included on LACERA’s honor roll plaque.

6. NON-CONSENT AGENDA
   1. Recommendation as submitted by Gregg Rademacher, Chief Executive Officer: Approve attendance of Board Members and staff, as designated by the Chief Executive Officer, at the State and Local Government Benefits Association Regional Conference to be held in Charleston, West Virginia, from November 15-16, 2009; and approve reimbursement of all travel costs incurred in accordance with LACERA’s Education and Travel Policy. (Memo dated October 29, 2009.)

      A motion was made by Mr. Saladino, seconded by Ms. Antebi, to approve the recommendation.

      The motion passed unanimously.

   2. Recommendation as submitted by Insurance, Benefits and Legislative Committee: That the Board direct LACERA’s voting delegate to support inclusion in the SACRS 2010, Legislative Platform the legislative proposal titled Tulare CERA #1 relating to reciprocity. (Memo dated October 23, 2009.)

      A motion was made by Mr. Saladino, seconded by Mr. Morris, to support inclusion in the SACRS 2010, Legislative Platform the legislative proposal titled Tulare CERA #1 relating to reciprocity.

      The motion passed unanimously.

   3. Information only as submitted by Robert Van Der Volgen Jr., Chief Counsel and Cynthia Lau, Legislative Affairs Officer, regarding AB 1584 – Revolving Door and Placement Agents. (Memo dated October 27, 2009.)

      AB 1584

      The bill places a 2-yr revolving door restriction on board members and specified staff, requires a placement agent disclosure policy with specific provisions, and prohibits a member or employee of the board from selling or providing any investment product that would be considered an asset of the fund to any public retirement system in California.

      In summary, AB 1584

      • Places restrictions on members of public pension boards and employees concerning the sale of investment products to any public retirement system in California.
      • Places revolving door restrictions on members of public pension boards, administrators and designated staff. For purposes of LACERA, these restrictions preclude former board members, administrators and designated staff from lobbying LACERA, for compensation, on behalf of any entity other than the plan sponsor for a period of two years after leaving LACERA.
      • Defines placement agents and requires public pension boards, consistent with their fiduciary duty, to adopt specified disclosure requirements for transactions involving placement agents
      • As a penalty, would exclude any external manager or placement agent that fails to comply with the disclosure requirements from soliciting new investments from the pension fund for five years. Allows a public pension fund to reduce the exclusion period on a finding of good cause made in open session.
      • Places campaign disclosure requirements on placement agents who make campaign contributions to elected board members.

      As noted above, AB 1584 contains an urgency clause, so all of these provisions became effective on October 11, 2009.

      On August 3, 2009 the Securities and Exchange Commission (SEC) issued proposed rules pertaining to, “Political Contributions by Certain Investment Advisers.” As the SEC explains, the proposed rule, “is designed to protect public pension plans from the consequences of pay to play practices by preventing advisers’ participation in such practices.” The SEC notes its proposed rule accomplishes this objective through three measures.

      “First, the rule would make it unlawful for an adviser to receive compensation for providing advisory services to a government entity for a two-year period after the adviser or any of its covered associates makes a political contribution to a public official of a government entity that is in a position to influence the award of advisory business.” “Second, the rule would prohibit advisers from paying third parties to solicit government entities for advisory business. That is, an adviser would be prohibited from providing or agreeing to provide, directly or indirectly, payment to any person who is not a related person of the adviser for solicitation of government advisory business on behalf of such adviser.” “Third, the rule would also make it unlawful for an adviser itself or through any of its covered associates to solicit or to coordinate contributions for an official of a government entity to which the investment adviser is seeking to provide investment advisory services, or payments to a political party of a state or locality where the investment adviser is providing or seeking to provide investment advisory services to a government entity.” The deadline for submitting comments on the proposed rule making was October 6, 2009. The SEC is currently reviewing the comments, but many observers believe that based on the comments received it is likely the rule will be adopted with little change. If it is adopted, the role of placement agents in the area of public pension fund investment will be radically curtailed.

   4. Information only as submitted by Cynthia Lau, Legislative Affairs Officer, regarding Staff Report – 2009 Enacted Retirement Legislation. (Memo dated October 26, 2009.)

      A copy of this report is filed in the Board Office.

   5. Information only as submitted by Cynthia Lau, Legislative Affairs Officer, regarding Enacted Senate Bill 54 (Out of State Same Sex Marriages). (Memo dated October 27, 2009.)

      SB 54

      Senate Bill 54 was signed by Governor Schwarzenegger on October 11, 2009. It amends Section 308 of the Family Code and addresses how out-of-state marriages will be recognized in California following the passage of Proposition 8 (the voter-approved gay marriage ban) on November 5, 2008, and the subsequent California Supreme Court decision upholding it.

7. PUBLIC COMMENT
8. GOOD OF THE ORDER (For discussion purposes only.)
9. EXECUTIVE SESSION

   1. Pursuant to Government Code Section 54957
      Public Employee Performance Evaluation
      Title: Chief Executive Officer

      Ms. Antebi asked that this item be held over to the next meeting because she is currently in the process of reviewing documents provided.

      A motion was made Ms. Antebi, seconded by Mr. Chery, to postpone the item to the next Board Meeting.

      The motion passed unanimously.

10. ADJOURNMENT

Documents subject to public disclosure that relate to an agenda item for an open session of the Board of Retirement that are distributed to members of the Board of Retirement less than 72 hours prior to the meeting will be available for public inspection at the time they are distributed to a majority of the Board of Retirement Members at LACERA’s offices at 300 N. Lake Avenue, Suite 820, Pasadena, CA 91101, during normal business hours of 9:00 a.m. to 5:00 p.m. Monday through Friday.

Listening Devices are available at days notice before the meeting date. Persons requiring an alternative format of this public notice pursuant to Section 202 of the Americans with Disabilities Act of 1990 may request one by contacting Cynthia Guider at (626) 564-6000, x3327 from 8:30 a.m. to 5:00 p.m. Monday through Friday, but no later than 48 hours prior to the time the meeting is to commence.

12/15/09