2007-669
Created By: Gene Dawson on 11/20/2007 at 09:43 AM
Category: Lobbyist Advisory Opinions
Caption: Whether various individuals who do business with retirement systems need to register as Executive Branch Lobbyists.
Dismissed Document:


November 9, 2007

Ms. Maris LeBlanc
Deputy Director
Louisiana State Employees’ Retirement System
P.O. Box 44213
Baton Rouge, LA 70804-4213

Mr. Charles P. Bujol
Director
Louisiana School Employees Retirement System
8660 United Plaza Blvd., 1st Floor
Baton Rouge, LA 70809

Mr. Irwin L. Felps, Jr.
Director
Louisiana State Police Pension & Retirement System
3100 Brentwood Drive, Suite B
Baton Rouge, LA 70809

Mr. Roy A. Mongrue, Jr.
General Counsel
Teachers’ Retirement System of Louisiana
8401 United Plaza Boulevard, 3rd Floor
Baton Rouge, LA 70809-7017

RE: Ethics Board Docket No.: 2007-669

Dear Ladies and Gentlemen:

The Louisiana Board of Ethics, at its November 8, 2007 meeting, considered your request for an advisory opinion as to whether various individuals who seek to do, or do business with your retirement systems need to register as Lobbyists in accordance with the Executive Branch Lobbyist Disclosure Act.

The Board concluded, and instructed me to inform you that “Lobbying" under the Executive Branch Lobbyist Disclosure Act is defined as ANY direct act or communication with an executive branch official, the purpose of which is to AID in influencing an executive branch action.

"Executive branch action" is defined as any act by an executive branch agency or official to effectuate the public powers, functions, and duties of an executive branch official or an executive branch agency, including but not limited to any act in the nature of policymaking, rulemaking, adjudication, licensing, regulation, or enforcement; relative to contracts, requests for proposals, development of specifications, or engaging another person to perform a governmental function; to formulate, adopt, amend, or repeal any rule, as that term is defined in LSA-R.S. 49:951; to adopt, repeal, increase, or decrease any fee imposed on the affairs, actions, or persons regulated by an executive branch agency; or to affect the passage, defeat, or implementation of any legislation.

"Lobbyist" is defined as (a) any person who is employed or engaged for compensation to act in a representative capacity for the purpose of lobbying if lobbying constitutes one of the duties of such employment or engagement; however, any person who is engaged or employed to provide a professional service to a person and incidental to the provision of such professional service such person communicates with an executive branch agency or official or makes an appearance or assists in an appearance with an executive branch agency or official shall not be a lobbyist unless such person or the person who engaged the professional services or employed such person makes an expenditure as defined in this Section. (b) any person who receives compensation of any kind, including reimbursement of expenditures, to act in a representative capacity when one of the functions for which compensation is paid is lobbying and makes expenditures as herein defined of five hundred dollars or more in a calendar year for the purpose of lobbying.

In reference to the specific questions asked of the Board, as modified after discussion during the Board’s September 13, 2007 meeting (the specific modified questions which are the subject matter of this advisory opinion request are enumerated below and italicized), the Board concluded and instructed me to inform you of the following:

1. A retirement system engages a consultant on a contractual basis to assist the system in determining appropriate asset allocation, monitoring the system’s investments, making educational presentations to trustees and staff, preparing documents to solicit responses from managers and custodians seeking to do business with the system, and evaluating those responses. The consultant acts as a fiduciary to the system, performing services in conjunction with system staff. For example, LASERS engages the services of New England Pension Consultants (NEPC). One or more employees of NEPC typically attend monthly board meetings, assist the staff in preparing solicitations for managers, make recommendations to the Board on the selection of managers, and recommend changes to the Board’s asset allocation plan. Most of the NEPC employees who normally service the LASERS account have attained the designation of a Chartered Financial Analyst (CFA). One of the firm’s partners who regularly assists in the representation is a Certified Public Accountant (CPA). Given the close relationship between the consultant and the retirement system, the consultant could be viewed as a “public employee” as defined in LSA-R.S. 42:1102(18).


2. Members of a retirement system board of trustees are required by LSA-R.S. 11:185 to receive certain hours of training and education which may be provided by outside experts. If a system arranges for an expert to provide training to board members and that expert does not otherwise have a contractual relationship with the system, is the expert required to register as a lobbyist if the expert does not make expenditures?

3. A retirement system may engage outside counsel to provide tax advice, litigation services, or general advice and counsel. For example, Randy Zinna, a sole practicioner, is an attorney engaged by Teachers’ Retirement System of Louisiana, Louisiana School Employees Retirement System, and the State Police Pension & Retirement System.

4. A retirement system may be a plaintiff in securities litigation designed to recover losses on investments. Defendants are usually corporations and their accounting and law firms. Are opposing counsel engaged in settlement negotiations and mediations required to register as lobbyists if not making expenditures? If making expenditures of $500 or less? $500 or more?

5. A retirement system is responsible for making investment decisions about funds in the trust managed by the system. Some funds may be managed in-house in the larger retirement systems, but all systems contract with various firms which offer their professional services as “Investment Managers.” Investment Managers handle millions of dollars for retirement systems. They are responsible for making investment decisions as fiduciaries for the systems. They conduct research and use their expertise to make these decisions. Investment Managers are generally registered with and regulated by the Securities and Exchange Commission. Individual employees of the Investment Managers are often Chartered Financial Analysts, a designation provided through the CFA Institute, a global membership organization that sets the highest standards of ethics and professional excellence in the investment industry

B. The system may issue a competitive solicitation for offers to which multiple Investment Managers will respond. Typically firms present written responses to the solicitation and finalists make oral presentations to staff and/or board members. Also, staff and/or board members may conduct due diligence site visits of finalists. Is an employee of an investment manager which responds to such a solicitation required to register as a lobbyist if the employee makes no expenditures? Expenditures less than $500? $500 or more?

6. A retirement system has existing contracts with multiple Investment Managers. Investment Managers receive an allocation of certain dollar amount of retirement system funds and are responsible for investing those funds. Contractual relationships with managers are typically long-term.

A. Is an employee of the Investment Manager required to register as a lobbyist when performing services under the terms of an existing contract?

B. Is an employee of the manager required to register as a lobbyist if the contract under which the manager is engaged is up for renewal?

In the future, if you are in need of a more detailed opinion regarding whether a certain individual needs to register as an Executive Branch Lobbyist, please provide the Board with the particular facts and circumstances surrounding the specific individual.

The Board issues no opinion as to laws other than the Louisiana Code of Governmental Ethics and the Executive Branch Lobbying Act. If you have any questions, please feel free to contact me at (225)763-8777 or 1-800-842-6630.

Sincerely,

LOUISIANA BOARD OF ETHICS


Michael Dupree
For the Board

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