Governor CV’s Leg Requiring Private Money Manager Reporting

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Governor Chris Christie conditionally vetoed legislation, S-2430 / A-3772 (Turner, Barnes, Mazzeo, Schaer), that would require private money managers' report fee information and require regulations addressing political contributions apply to federal or national committees and non-State political committees.

The Legislation

The legislation, as passed by the Senate (25-8) and Assembly (53-15-4), would require the State Investment Council to issue a report by February 1, May 1, August 1, and October 1 of each year listing for the prior calendar quarter, in the aggregate and segregated by asset class, the returns of investments achieved for the funds under the council’s supervision by external managers.  In the report, the council would disclose the rate, and amount, of fees charged by each external manager for the investment of funds in commodities, hedge funds, private equity, real estate, bonds, equities, or any other asset class.  The council would also be required to submit the report to the Governor, the Legislature, and the State Treasurer, and shall make it available to the public through the official Internet site of the State.

In addition, the bill would provide that regulations adopted by the council that address political contributions apply equally to contributions to any federal or national committee or a non-State political committee as to any other committee covered thereby.  The purpose of this provision is to negate an exception to the Council’s regulations addressing political contributions adopted on February 3, 2014.

Conditional Veto

The Governor, in his CV, recommended the Council issue a unified annual report that would detail the fees the State paid allocated to certain asset classes.  According to the CV, the change would prevent the chilling effect the original bill would have had on New Jersey's ability to select the best fund managers.

In addition, the Governor noted that external managers that are hired by the State to manage its investments are subjected to stringent disclosure requirements regarding their political activity, including Federal and State restrictions that prohibit or limit the types of donations they can make to State and Federal campaigns and candidates. External Managers are already required to submit annual certifications of their political contributions and are not permitted to donate to State political entities or campaigns

Next Steps

The Legislature now has the option of attempting a veto override of the conditional veto or choosing to accept the changes proposed by the Governor.