Following the lead of states such as New York, Illinois and New Mexico, California has stipulated that hedge fund marketers who solicit money from the state’s two largest pension plans must register as lobbyists. What’s more, they can no longer be paid an incentive fee for a successful placement.

The new law affects the California Public Employees Retirement System, or Calpers, which manages more than $200 billion in retiree money, and the $140 billion California State Teachers Retirement System, according to a story in the New York Times online.

The move targets placement agents, third-party hedge fund marketing professionals who match up money managers at America’s biggest pension funds with private equity and hedge fund managers seeking capital. Three quarters of hedge funds use placement agents, according to research from Prequin. The new law comes in the wake of a 2009 scandal at Calpers, when a former employee became a placement agent and was accused of sending pension officials lavish gifts in return for their selecting certain money managers for Calper’s alternative investments.

But the new law could also snare in-house marketers at hedge funds, too. Employees who spend more than a third of their time actually managing money are exempt. But it’s unclear which of the other professionals within a hedge fund, particularly those involved with marketing, will have to register as lobbyists. While the registration process is simple, as a lobbyist, they would have to limit and disclose gifts, report certain expenses, take an ethics course annually, and be forced to reveal much more information about themselves. Not to mention dealing with the distaste of being called a lobbyist, which some hedge fund marketing employees view as unprofessional. “We’re not going to be lobbyists because we’re not lobbyists,” according to Charles Eaton, founder of C.P. Eaton Partners, a placement agency.

The trend toward labeling placement agents as lobbyists could also mean that both pension funds and hedge funds miss opportunities. The new law (and lack of compensation for placements) could potentially thin the ranks of professional placement agents. Smaller hedge funds that lack the resources to staff a marketing department would find it harder to attract institutional money. And pension funds themselves rarely have the time and staff to research all the promising new hedge fund managers out there.

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