Florida Senate - 2011                                    SB 1182
       By Senator Ring
       32-01234-11                                           20111182__
    1                        A bill to be entitled                      
    2         An act relating to the State Board of Administration;
    3         amending s. 215.44, F.S.; authorizing the board to
    4         invest the assets of a governmental entity in the
    5         Local Government Surplus Funds Trust Fund without a
    6         trust agreement with that governmental entity;
    7         providing that certain investments made by the board
    8         under a trust agreement are subject only to the
    9         restrictions and limitations contained in the trust
   10         agreement; amending s. 215.4755, F.S.; correcting
   11         cross-references; clarifying provisions prohibiting
   12         certain conflicts of interest by investment advisers
   13         and managers retained by the board; providing an
   14         effective date.
   16  Be It Enacted by the Legislature of the State of Florida:
   18         Section 1. Subsections (1) and (3) of section 215.44,
   19  Florida Statutes, are amended to read:
   20         215.44 Board of Administration; powers and duties in
   21  relation to investment of trust funds.—
   22         (1) Except when otherwise specifically provided by the
   23  State Constitution and subject to any limitations of the trust
   24  agreement relating to a trust fund, the Board of Administration,
   25  sometimes referred to in this chapter as “board” or “Trustees of
   26  the State Board of Administration,” composed of the Governor as
   27  chair, the Chief Financial Officer, and the Attorney General,
   28  shall invest all the funds in the System Trust Fund, as defined
   29  in s. 121.021(36), and all other funds specifically required by
   30  law to be invested by the board pursuant to ss. 215.44-215.53 to
   31  the fullest extent that is consistent with the cash
   32  requirements, trust agreement, and investment objectives of the
   33  fund. Notwithstanding any other law to the contrary, the State
   34  Board of Administration may invest any funds of any state
   35  agency, any state university or college, any unit of local
   36  government, or any direct-support organization thereof pursuant
   37  to the terms of a trust agreement with the head of the state
   38  agency or the governing body of the state university or college,
   39  unit of local government, or direct-support organization
   40  thereof, or pursuant to the enrollment requirements stated in s.
   41  218.407, and may invest such funds in the Local Government
   42  Surplus Funds Trust Fund created by s. 218.405, without a trust
   43  agreement, upon completion of enrollment materials provided by
   44  the board. The board shall approve the undertaking of
   45  investments subject to a trust agreement before execution of
   46  such trust agreement by the State Board of Administration. The
   47  funds and the earnings therefrom are exempt from the service
   48  charge imposed by s. 215.20. As used in this subsection, the
   49  term “state agency” has the same meaning as that provided in s.
   50  216.011, and the terms “governing body” and “unit of local
   51  government” have the same meaning as that provided in s.
   52  218.403.
   53         (3) Notwithstanding any law to the contrary, all
   54  investments made by the State Board of Administration pursuant
   55  to ss. 215.44-215.53 shall be subject to the restrictions and
   56  limitations contained in s. 215.47, except that investments made
   57  by the board under a trust agreement pursuant to subsection (1)
   58  are subject only to the restrictions and limitations contained
   59  in that trust agreement.
   60         Section 2. Subsections (1) and (2) of section 215.4755,
   61  Florida Statutes, are amended to read:
   62         215.4755 Certification and disclosure requirements for
   63  investment advisers and managers.—
   64         (1) An investment adviser or manager who has discretionary
   65  investment authority for direct holdings and who is retained as
   66  provided in s. 215.44(2)(b) 215.44(2)(c) shall agree pursuant to
   67  contract to annually certify in writing to the board that:
   68         (a) All investment decisions made on behalf of the trust
   69  funds and the board are made in the best interests of the trust
   70  funds and the board and not made in a manner to the advantage of
   71  such investment adviser or manager, other persons, or clients to
   72  the detriment of the trust funds and the board.
   73         (b) Appropriate policies, procedures, or other safeguards
   74  have been adopted and implemented to ensure that relationships
   75  with any affiliated persons or entities do not adversely
   76  influence the investment decisions made on behalf of the trust
   77  funds and the board.
   78         (c) A written code of ethics, conduct, or other set of
   79  standards, which governs the professional behavior and
   80  expectations of owners, general partners, directors or managers,
   81  officers, and employees of the investment adviser or manager,
   82  has been adopted and implemented and is effectively monitored
   83  and enforced. The investment advisers’ and managers’ code of
   84  ethics shall require that:
   85         1. Officers and employees involved in the investment
   86  process refrain from personal business activity that could
   87  conflict with the proper execution and management of the
   88  investment program over which the investment adviser or manager
   89  has discretionary investment authority or that could impair
   90  their ability to make impartial decisions with respect to such
   91  investment program; and
   92         2. Officers and employees refrain from undertaking personal
   93  investment transactions with the same employee at a broker
   94  dealer firm individual with whom business is conducted on behalf
   95  of the board.
   96         (d) The investment adviser or manager has proactively and
   97  promptly disclosed to the board, notwithstanding subsection (2),
   98  any known circumstances or situations that a prudent person
   99  could expect to create an actual or, potential, or perceived
  100  conflict of interest, including specifically:
  101         1. Any material interests in or with financial institutions
  102  with which officers and employees conduct business on behalf of
  103  the trust funds and the board; and
  104         2. Any personal financial or investment positions of the
  105  investment adviser or manager that could be related to the
  106  performance of an investment program over which the investment
  107  adviser or manager has discretionary investment authority on
  108  behalf of the board.
  109         (2) At the board’s request, an investment adviser or
  110  manager who has discretionary investment authority over direct
  111  holdings and who is retained as provided in s. 215.44(2)(b)
  112  215.44(2)(c) shall disclose in writing to the board:
  113         (a) Any nonconfidential, nonproprietary information or
  114  reports to substantiate the certifications required under
  115  subsection (1).
  116         (b) All direct or indirect pecuniary interests that the
  117  investment adviser or manager has in or with any party to a
  118  transaction with the board, if the transaction is related to any
  119  discretionary investment authority that the investment adviser
  120  or manager exercises on behalf of the board.
  121         Section 3. This act shall take effect July 1, 2011.