Hoping to avoid the kind of pay-to-play allegations dogging the state pension funds in California, New York and New Mexico, the Cabinet this morning directed SBA inspector general Bruce Meeks to draft a new ethics policy requiring greater disclosure of the "placement agent" marketing firms used by investment firms that do business with Florida's $130 billion pension fund.

Investment firms will have to disclose when they use placement agents -- and disclose exactly what the agents' fees are, Meeks said.

"I would argue it might behoove the state of Florida as the foruth largest pension fund, to put a stake in the ground that says if you are hiring a marketing firm, we should know about it and you should disclose what your fees are," said CFO Alex Sink. "We should be a leader. Fortunately, we haven't been caught up in this yet. But if anyone wants to do business with us, they ought to disclose what their fee arrangement is."

Gov. Charlie Crist echoed: "The arrangements that exist for some of these marketing firms is only an appropriate question to ask. We should take this kind of action before the fact rather than after the fact, and therefore prevent the kind of occurrences that damage the public trust."

The SEC and FBI are looking into allegations in California, New York and New Mexico that entities masquerading as placement agents for investment firms were really political "fixers" and access peddlers. The deal was basically, if an investment firm didn't hire the "agents," the firm didn't even get a chance to work with those states' pension funds. And that meant they lost out on lots of business.

"Placement agents aren't in inherently evil," Meeks said. And only a third of Florida's investments in private equity came to the state's attention through placement agents, he said.

But after hearing from the Cabinet this morning, he will draft a change for SBA director Ash Williams to sign off on that requires firms to not just disclose when they use placement agents -- but to disclose exactly what the agents' fees are.

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