Populist playthings

26 February 2008 By Una Galani Follow @ugalani

A proposed law in California would stop the state s two pension funds investing in private equity groups with ties to undesirable sovereign funds. Such populist attacks risk undermining attempts by international policy makers to integrate SWFs in the global financial system.

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A proposed law in California would prevent the state's two large pension funds investing in private equity groups with ties to sovereign funds from countries considered to be in violation of basic human rights accords.

Introduced by Democrat Alberto Torrico, law AB 1967 seeks to stop the California Public Employees Retirement System (Calpers) and the California State Teacher's Retirement System (Calstrs) investing in private equity groups which are owned in whole or part by sovereign wealth funds or in the funds managed by these groups. Hearings on the law are due on March 16.

Existing laws already prohibit Calpers and Calstrs investing in companies with active business operations in Sudan and in Iran.

Separately, the US and Europe are supporting efforts by the International Monetary Fund to assemble and implement an international voluntary code of conduct for sovereign funds. The code of best practice is expected to be inplace by the end of the year.

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