State of Illinois
2013 and 2014


Introduced , by Rep. Christian L Mitchell


40 ILCS 5/1-110.16 new

    Amends the General Provisions Article of the Illinois Pension Code. Requires each pension fund and retirement system established under the Code to make its best efforts to identify all firearm manufacturing companies in which it has direct or indirect holdings and, under certain circumstances, to divest itself of holdings in those companies. Effective immediately.

LRB098 06860 JDS 36909 b






HB1296LRB098 06860 JDS 36909 b

1    AN ACT concerning public employee benefits.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Pension Code is amended by adding
5Section 1-110.16 as follows:
6    (40 ILCS 5/1-110.16 new)
7    Sec. 1-110.16. Transactions prohibited by retirement
8systems; manufacturers of firearms and ammunition.
9    (a) As used in this Section:
10    "Company" means any sole proprietorship, organization,
11association, corporation, partnership, joint venture, limited
12partnership, limited liability partnership, limited liability
13company, or other entity or business association, including all
14wholly owned subsidiaries, majority-owned subsidiaries, parent
15companies, or affiliates of those entities or business
16associations, that exists for the purpose of making profit.
17    "Direct holdings" in a company means all securities of that
18company that are held directly by the retirement system or in
19an account or fund in which the retirement system owns all
20shares or interests.
21    "Firearm manufacturing company" means a company that is
22licensed pursuant to 27 C.F.R. 478.41 as a manufacturer of
23destructive devices, ammunition for destructive devices, armor



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1piercing ammunition, firearms other than destructive devices,
2or ammunition for firearms other than destructive devices or
3armor piercing ammunition.
4    "Indirect holdings" in a company means all securities of
5that company that are held in an account or fund, such as a
6mutual fund, managed by one or more persons not employed by the
7retirement system, in which the retirement system owns shares
8or interests together with other investors not subject to the
9provisions of this Section.
10    "Private market fund" means any private equity fund,
11private equity fund of funds, venture capital fund, hedge fund,
12hedge fund of funds, real estate fund, or other investment
13vehicle that is not publicly traded.
14    "Retirement system" means any pension fund or retirement
15system established under this Code.
16    (b) Within 90 days after the effective date of this
17Section, each retirement system shall make its best efforts to
18identify all firearm manufacturing companies in which the
19retirement system has direct or indirect holdings.
20    These efforts shall include the following, as appropriate
21in the retirement system's judgment:
22        (1) reviewing and relying on publicly available
23    information regarding firearm manufacturing companies,
24    including information provided by nonprofit organizations,
25    research firms, and government entities;
26        (2) contacting asset managers contracted by the



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1    retirement system that invest in firearm manufacturing
2    companies; and
3        (3) contacting other institutional investors that have
4    divested from or engaged with firearm manufacturing
5    companies.
6    The retirement system may retain an independent research
7firm to identify firearm manufacturing companies in which the
8retirement system has direct or indirect holdings. By the first
9meeting of the retirement system following the 90-day period
10described in this subsection (b), the retirement system shall
11assemble all identified firearm manufacturing companies into a
12firearm manufacturing companies list.
13    The retirement system shall update the firearm
14manufacturing companies list annually based on evolving
15information from, among other sources, those listed in this
16subsection (b).
17    (c) The retirement system shall adhere to the following
18procedures for companies on the firearm manufacturing
19companies list:
20        (1) The retirement system shall determine the firearm
21    manufacturing companies on the firearm manufacturing
22    companies list in which the retirement system owns direct
23    or indirect holdings.
24        (2) For each company newly identified in item (1) of
25    this subsection (c), the retirement system shall send a
26    written notice informing the firearm manufacturing company



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1    of its status and that it may become subject to divestment
2    by the retirement system.
3        (3) If, within 90 days after the retirement system's
4    first engagement with a firearm manufacturing company
5    pursuant to this subsection (c), that company ceases to
6    manufacture firearms, the company shall be removed from the
7    firearm manufacturing companies list and the provisions of
8    this Section shall cease to apply to it unless it resumes
9    manufacturing firearms.
10    (d) If, after 90 days following the retirement system's
11first engagement with a firearm manufacturing company pursuant
12to subsection (c), the company continues to manufacture
13firearms, the retirement system shall sell, redeem, divest, or
14withdraw all publicly traded securities of the company from the
15retirement system's assets under management within 12 months
16after the company's most recent appearance on the firearm
17manufacturing companies list.
18    (e) The retirement system may not acquire securities of
19firearm manufacturing companies on the firearm manufacturing
20companies list.
21    (f) Each retirement system shall file a report with the
22Public Pension Division of the Department of Financial and
23Professional Regulation that includes the firearm
24manufacturing companies list within 30 days after the list is
25created. This report shall be made available to the public.
26    Each retirement system shall file an annual report with the



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1Public Pension Division, which shall be made available to the
2public, that includes all of the following:
3        (1) a summary of correspondence with companies engaged
4    by the retirement system under items (2) and (3) of
5    subsection (c);
6        (2) all investments sold, redeemed, divested, or
7    withdrawn in compliance with subsection (d); and
8        (3) all prohibited investments under subsection (e).
9    (g) With respect to actions taken in compliance with this
10Act, including all good-faith determinations regarding
11companies as required by this Act, the retirement system is
12exempt from any conflicting statutory or common law
13obligations, including any fiduciary duties under this Article
14and any obligations with respect to choice of asset managers,
15investment funds, or investments for the retirement system's
16securities portfolios.
17    (h) If any provision of this Section or its application to
18any person or circumstance is held invalid, the invalidity of
19that provision or application does not affect other provisions
20or applications of this Section that can be given effect
21without the invalid provision or application.
22    Section 99. Effective date. This Act takes effect upon
23becoming law.