Office of the City Clerk Office of the City Clerk
Advisory Opinions

ADVISORY OPINION 2011-2

FACTS
New York City has five pension funds: the New York City Employees’ Retirement System, the New York City Police Pension Fund, the New York Fire Department Pension Fund, the New York City Teachers’ Retirement System, and the New York City Board of Education Retirement System ("Pension Fund(s)").  An investment management firm ("Firm") manages a hedge fund ("Fund").  An employee of the Firm, whose primary duties include investor relations, or marketing the Fund to prospective investors for investment in the Fund, often communicates with the staffs of the Comptroller’s office and the Pension Funds to solicit investments in the Fund. 

ISSUES
Whether the Firm’s employee, as described above, is engaged in "lobbying" or a "lobbying activity" pursuant to the New York City Administrative Code (“Administrative Code”) §3-211(c) et seq. when the employee communicates with the staffs of the Comptroller’s office and the Pension Funds about entering into a limited partnership agreement or a contract for an alternative investment in the Fund?

Whether the response by the Firm’s employees to inquiries and requests for information by the staffs of the Comptroller’s office and/or the Pension Funds  during the communications described above, is deemed "lobbying" or a "lobbying activity" pursuant to Administrative Code §3-211(c) et seq.?

OPINION
The Pension Funds invest in alternative investments such as real estate investment funds, private equity funds, and hedge funds.  For these investments, the Pension Funds typically enter into a limited partnership agreement or a contract with the real estate investment funds, private equity funds, hedge funds, or other investment funds.   When evaluating alternative investments, the staff of the Comptroller’s office and/or the Pension Funds may request information from the staff of the firm offering such alternative investment.

The Administrative Code provides that persons who attempt to influence any determination made by an elected city official or an officer or employee of the city "with respect to the . . . solicitation, award or administration of a grant, loan, or agreement involving the disbursement of public monies" are engaged in lobbying.  See Ad. Code §3-211(c)(1)(iii) (emphasis added).  Thus, because such limited partnership agreements or contracts provide for the payment of public monies–in the form of fees or expenses–to the real estate investment fund, private equity fund, hedge fund or other investment fund, employees of such Firms who attempt to influence the Pension Funds’ decisions to enter into such limited partnership agreements or contracts are engaged in lobbying. 

The Administrative Code does, however, provide that persons "who prepare or submit a response to a request for information . . . by . . . [an] elected city official or an agency" are deemed not to be engaged in "lobbying activities".  Ad. Code §3-211(c)(3)(v).  As a result, if the employees of such Firms are responding to inquiries and requests for information by the staff of the Comptroller’s office and/or the Pension Funds when examining the recommended real estate investment funds, private equity funds, hedge funds or other investment funds such communications would not be considered lobbying.

CONCLUSION
It is the determination of the City Clerk that persons who attempt to influence the Pension Funds’ decisions to enter into limited partnership agreements or contracts for alternative investments such as real estate investment funds, private equity funds, and hedge funds are engaged in "lobbying" or a "lobbying activity" as defined in the Administrative Code.  However, if those persons are responding to a request for information by the staff of the Comptroller’s office or a Pension Fund they would not be engaged in "lobbying" or a "lobbying activity" because such communications are exempt under Administrative Code §3-211(c)(3)(v).


MICHAEL MCSWEENEY, City Clerk of the City of New York
PATRICK SYNMOIE, Counsel to the City Clerk
JAIME LYNN ECKL, Deputy Counsel to the City Clerk

 

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