SECTIONS 6930-6934 - California Statutes

GOVERNMENT CODE

SECTION 6930-6934

6930. As used in this chapter:
(a) "Governmental investor" means the Treasurer, the Teachers'
Retirement Board, and the Board of Administration of the Public
Employees' Retirement System. "Governmental investor" also means each
county treasurer, each city treasurer, each public governing or
investing body or public investing officer, who exercises investment
discretion over public funds in excess of ten million dollars
($10,000,000) or over public pension or retirement funds in excess of
ten million dollars ($10,000,000).
(b) "Soft dollar and directed brokerage arrangements" means the
brokerage and research services described by Section 28 (e) of the
Securities Exchange Act of 1934 (15 U.S.C. Sec. 78bb(e)).
(c) "Transaction cost" means the overall cost of the transaction,
including, but not limited to, commissions, services, and the price
of the securities.
(d) "Responsible" means with the due diligence required of a
fiduciary to examine a presented transaction for: necessity of soft
dollar services provided and for commission cost; quality of the
trade; quality of the broker-dealer's research; the broker-dealer's
execution capabilities; and the broker-dealer's quality of service.

6931. Each securities transaction or brokerage agreement carried
out for a governmental investor pursuant to a soft dollar and
directed brokerage arrangement, as defined in subdivision (b) of
Section 6930, shall be executed at the lowest responsible transaction
cost available.

6932. Any written contract entered into between a governmental
investor and an investment manager on or after January 1, 1991, for
the management of assets of a public fund or a public pension or
retirement fund, which includes a soft dollar and directed brokerage
arrangement, shall contain the following requirements:
(a) The investment manager shall maintain complete and detailed
records of all billed services provided pursuant to soft dollar and
directed brokerage arrangements.
(b) The services which may be provided by a broker-dealer pursuant
to soft dollar and directed brokerage arrangements shall be clearly
defined.
(c) The investment manager shall, in the customer agreement
letters with governmental investors, disclose:
(1) A list of all billed services provided pursuant to soft dollar
and directed brokerage arrangements with respect to investment
transactions for the governmental investor.
(2) The justification for providing each of those services.
(3) The maximum percentage of the investment transactions of the
governmental investor planned for use in soft dollar and directed
brokerage arrangements.
(4) An annual statement of all billed services provided during the
previous year under soft dollar and directed brokerage arrangements
with respect to investment transactions for the governmental
investor.
(5) A determination of whether each service provided under soft
dollar and directed brokerage arrangements with respect to investment
transactions for the governmental investor is proprietary or is
being shared by other clients of the investment manager.

6933. Soft dollar and directed brokerage arrangements are not
subject to any statutory competitive bidding requirements.
This section does not constitute a change in, but is declaratory
of, existing law.

6934. This chapter shall apply to contracts entered into, renewed,
or extended on and after January 1, 1991.