New Mexico Governor Richardson & State Investment Council Pass Full Ban on All Investments Involving Placement Agents

New Transparency & Disclosure Policy Among Strongest in the Country; Bans Campaign Contributions from any Parties Seeking Investment

May 26, 2009 -- (Santa Fe) – New Mexico Governor Bill Richardson and the State Investment Council voted unanimously today to ban any future investments with money managers who employ third-party placement agents, as well as requiring sweeping disclosure of any and all payments made in relation to Permanent Fund investments.

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“The ban is the strongest in the nation and appropriately so,” Governor Bill Richardson said.

“With this ban, and the more stringent transparency and disclosure policies in place, I want the public to be confident that we are acting as responsible managers of the state’s Permanent Funds."

The State Investment Council policy will preclude any investments being made with money managers who use outside placement agents to market their fund or services. This is a complete ban of third-party marketers, not just “targeted” placement agents, whose practices have come under increasing scrutiny both in New Mexico and nationally in recent weeks.

Money managers who use internal marketing teams will have to disclose details of their relationships to be considered for SIC investments. Details of these and all other third-party fees connected with an SIC investment will be made public for review prior to investment finalization. Fees paid to attorneys, consultants, brokers, administrators and others related to SIC investments will also require disclosure under the new SIC rules.

The wide ranging policy also prohibits any SIC investment managers or contract holders from making campaign contributions to any elected or appointed officials who may have influence over the State Investment Office or its advisory and oversight boards. The prohibition spans the full term of the investment as well as the two years prior.

Penalties outlined in the new policy will allow the SIC to recoup damages and repayment of management fees from any investment partner who fails to fully disclose a financial benefit to individuals related to a state investment. These penalties help bolster the law signed by Governor Richardson last month, making failure to disclose third party marketers a felony in New Mexico.

The complete NMSIC transparency and disclosure policy is available on its website: http://www.sic.state.nm.us/

Source: New Mexico Governor