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Senate Co-Sponsorship Memoranda
Senate of Pennsylvania
Session of 2023 - 2024
Regular Session
MEMORANDUM
| Posted: | January 11, 2023 06:29 PM |
|---|---|
| From: | Senator Katie J. Muth |
| To: | All Senate members |
| Subject: | Requiring Transparent Contracts in Pennsylvania Public Pension Systems |
| In the near future, I will be introducing legislation that would require the Commonwealth’s public pension systems to only work with external investment managers who will make investment contracts publicly available with no redactions and with full disclosure of all contract details, including investment fees, terms of agreements with all involved parties, such as limited partners (LPs) and/or co-investor contracts and side deals. The goal of this legislation is to increase transparency and eliminate any grounds when trade secrets can lead to the documents being withheld or redacted. Further, private investment funds commonly provide “side letters” to chosen investors containing preferential treatment, including terms on cashing out or getting information about portfolio holdings or exposures. The Securities and Exchange Commission (SEC) recently took aim at these secret deals when it announced a proposed rule to ban certain preferential terms and require disclosure of others. Further, the proposed SEC rules also require managers to at least disclose the terms of agreements to all involved parties in a fund. Pennsylvania’s public pension systems should not blindly enter into investment agreements without full information, including the preferential terms being offered to other investors. This legislation will ensure transparency, increase fair investment contracts, and reduce the use of public pension dollars wasted on overpaying or getting ripped off at the expense of larger investors. Cosponsor this legislation to promote fairness in our state’s public pension systems by requiring the funds to contract with external investment managers who are willing to be fully transparent. |