| 1 | A bill to be entitled |
| 2 | An act relating to state financial matters; amending s. |
| 3 | 215.44, F.S.; revising provisions which authorize the |
| 4 | State Board of Administration to invest specified funds |
| 5 | pursuant to the enrollment requirements of a local |
| 6 | government investment authority; authorizing the board to |
| 7 | invest specified funds in the Local Government Surplus |
| 8 | Funds Trust Fund without a trust agreement upon completion |
| 9 | of enrollment materials provided by the board; providing |
| 10 | that investments made by the board under a trust agreement |
| 11 | are subject only to the restrictions and limitations |
| 12 | contained in the trust agreement; amending s. 215.4755, |
| 13 | F.S.; correcting a cross-reference; clarifying provisions |
| 14 | with respect to an investment adviser's or manager's code |
| 15 | of ethics; providing an effective date. |
| 16 |
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| 17 | Be It Enacted by the Legislature of the State of Florida: |
| 18 |
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| 19 | Section 1. Subsections (1) and (3) of section 215.44, |
| 20 | Florida Statutes, are amended to read: |
| 21 | 215.44 Board of Administration; powers and duties in |
| 22 | relation to investment of trust funds.- |
| 23 | (1) Except when otherwise specifically provided by the |
| 24 | State Constitution and subject to any limitations of the trust |
| 25 | agreement relating to a trust fund, the Board of Administration, |
| 26 | sometimes referred to in this chapter as "board" or "Trustees of |
| 27 | the State Board of Administration," composed of the Governor as |
| 28 | chair, the Chief Financial Officer, and the Attorney General, |
| 29 | shall invest all the funds in the System Trust Fund, as defined |
| 30 | in s. 121.021(36), and all other funds specifically required by |
| 31 | law to be invested by the board pursuant to ss. 215.44-215.53 to |
| 32 | the fullest extent that is consistent with the cash |
| 33 | requirements, trust agreement, and investment objectives of the |
| 34 | fund. Notwithstanding any other law to the contrary, the State |
| 35 | Board of Administration may invest any funds of any state |
| 36 | agency, any state university or college, any unit of local |
| 37 | government, or any direct-support organization thereof pursuant |
| 38 | to the terms of a trust agreement with the head of the state |
| 39 | agency or the governing body of the state university or college, |
| 40 | unit of local government, or direct-support organization |
| 41 | thereof, or pursuant to the enrollment requirements stated in s. |
| 42 | 218.407, and may invest such funds in the Local Government |
| 43 | Surplus Funds Trust Fund created by s. 218.405 without a trust |
| 44 | agreement upon completion of enrollment materials provided by |
| 45 | the board. The board shall approve the undertaking of |
| 46 | investments subject to a trust agreement before execution of |
| 47 | such trust agreement by the State Board of Administration. The |
| 48 | funds and the earnings therefrom are exempt from the service |
| 49 | charge imposed by s. 215.20. As used in this subsection, the |
| 50 | term "state agency" has the same meaning as that provided in s. |
| 51 | 216.011, and the terms "governing body" and "unit of local |
| 52 | government" have the same meaning as that provided in s. |
| 53 | 218.403. |
| 54 | (3) Notwithstanding any law to the contrary, all |
| 55 | investments made by the State Board of Administration pursuant |
| 56 | to ss. 215.44-215.53 shall be subject to the restrictions and |
| 57 | limitations contained in s. 215.47, except that investments made |
| 58 | by the State Board of Administration under a trust agreement |
| 59 | pursuant to subsection (1) shall be subject only to the |
| 60 | restrictions and limitations contained in the trust agreement. |
| 61 | Section 2. Subsections (1) and (2) of section 215.4755, |
| 62 | Florida Statutes, are amended to read: |
| 63 | 215.4755 Certification and disclosure requirements for |
| 64 | investment advisers and managers.- |
| 65 | (1) An investment adviser or manager who has discretionary |
| 66 | investment authority for direct holdings and who is retained as |
| 67 | provided in s. 215.44(2)(b)(c) shall agree pursuant to contract |
| 68 | to annually certify in writing to the board that: |
| 69 | (a) All investment decisions made on behalf of the trust |
| 70 | funds and the board are made in the best interests of the trust |
| 71 | funds and the board and not made in a manner to the advantage of |
| 72 | such investment adviser or manager, other persons, or clients to |
| 73 | the detriment of the trust funds and the board. |
| 74 | (b) Appropriate policies, procedures, or other safeguards |
| 75 | have been adopted and implemented to ensure that relationships |
| 76 | with any affiliated persons or entities do not adversely |
| 77 | influence the investment decisions made on behalf of the trust |
| 78 | funds and the board. |
| 79 | (c) A written code of ethics, conduct, or other set of |
| 80 | standards, which governs the professional behavior and |
| 81 | expectations of owners, general partners, directors or managers, |
| 82 | officers, and employees of the investment adviser or manager, |
| 83 | has been adopted and implemented and is effectively monitored |
| 84 | and enforced. The investment advisers' and managers' code of |
| 85 | ethics shall require that: |
| 86 | 1. Officers and employees involved in the investment |
| 87 | process refrain from personal business activity that could |
| 88 | conflict with the proper execution and management of the |
| 89 | investment program over which the investment adviser or manager |
| 90 | has discretionary investment authority or that could impair |
| 91 | their ability to make impartial decisions with respect to such |
| 92 | investment program; and |
| 93 | 2. Officers and employees refrain from undertaking |
| 94 | personal investment transactions with the same individual |
| 95 | employee at a broker-dealer firm with whom business is conducted |
| 96 | on behalf of the board. |
| 97 | (d) The investment adviser or manager has proactively and |
| 98 | promptly disclosed to the board, notwithstanding subsection (2), |
| 99 | any known circumstances or situations that a prudent person |
| 100 | could expect to create an actual or, potential, or perceived |
| 101 | conflict of interest, including specifically: |
| 102 | 1. Any material interests in or with financial |
| 103 | institutions with which officers and employees conduct business |
| 104 | on behalf of the trust funds and the board; and |
| 105 | 2. Any personal financial or investment positions of the |
| 106 | investment adviser or manager that could be related to the |
| 107 | performance of an investment program over which the investment |
| 108 | adviser or manager has discretionary investment authority on |
| 109 | behalf of the board. |
| 110 | (2) At the board's request, an investment adviser or |
| 111 | manager who has discretionary investment authority over direct |
| 112 | holdings and who is retained as provided in s. 215.44(2)(b)(c) |
| 113 | shall disclose in writing to the board: |
| 114 | (a) Any nonconfidential, nonproprietary information or |
| 115 | reports to substantiate the certifications required under |
| 116 | subsection (1). |
| 117 | (b) All direct or indirect pecuniary interests that the |
| 118 | investment adviser or manager has in or with any party to a |
| 119 | transaction with the board, if the transaction is related to any |
| 120 | discretionary investment authority that the investment adviser |
| 121 | or manager exercises on behalf of the board. |
| 122 | Section 3. This act shall take effect July 1, 2011. |