Full Text of SB0437 99th General Assembly
SB0437sam001 99TH GENERAL ASSEMBLY | Sen. Iris Y. Martinez Filed: 4/17/2015
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| 1 | | AMENDMENT TO SENATE BILL 437
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 437 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Pension Code is amended by | 5 | | changing Section 1-113.14 as follows: | 6 | | (40 ILCS 5/1-113.14)
| 7 | | Sec. 1-113.14. Investment services for retirement systems, | 8 | | pension funds, and investment boards, except those funds | 9 | | established under Articles 3 and 4. | 10 | | (a) For the purposes of this Section, "investment services" | 11 | | means services provided by an investment adviser or a | 12 | | consultant other than qualified fund-of-fund management | 13 | | services as defined in Section 1-113.15. | 14 | | (b) The selection and appointment of an investment adviser | 15 | | or consultant for investment services by the board of a | 16 | | retirement system, pension fund, or investment board subject to |
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| 1 | | this Code, except those whose investments are restricted by | 2 | | Section 1-113.2, shall be made and awarded in accordance with | 3 | | this Section. All contracts for investment services shall be | 4 | | awarded by the board using a competitive process that is | 5 | | substantially similar to the process required for the | 6 | | procurement of professional and artistic services under | 7 | | Article 35 of the Illinois Procurement Code. Each board of | 8 | | trustees shall adopt a policy in accordance with this | 9 | | subsection (b) within 60 days after the effective date of this | 10 | | amendatory Act of the 96th General Assembly. The policy shall | 11 | | be posted on its web site and filed with the Illinois | 12 | | Procurement Policy Board. Exceptions to this Section are | 13 | | allowed for (i) sole source procurements, (ii) emergency | 14 | | procurements, (iii) at the discretion of the pension fund, | 15 | | retirement system, or board of investment, contracts that are | 16 | | nonrenewable and one year or less in duration, so long as the | 17 | | contract has a value of less than $20,000, and (iv) in the | 18 | | discretion of the pension fund, retirement system, or | 19 | | investment board, contracts for follow-on funds with the same | 20 | | fund sponsor through closed-end funds , and (v) at the | 21 | | discretion of the pension fund, retirement system, or | 22 | | investment board, contracts for the direct services of an | 23 | | emerging investment manager that has indirectly handled | 24 | | investment of assets of the pension fund, retirement system, or | 25 | | investment board under a manager of managers program in a | 26 | | successful manner satisfactory to the pension fund, retirement |
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| 1 | | system, or investment board .
All exceptions granted under this | 2 | | Section must be published on the system's, fund's, or board's | 3 | | web site, shall name the person authorizing the procurement, | 4 | | and shall include a brief explanation of the reason for the | 5 | | exception. | 6 | | A person, other than a trustee or an employee of a | 7 | | retirement system, pension fund, or investment board, may not | 8 | | act as a consultant or investment adviser under this Section | 9 | | unless that person is registered as an investment adviser under | 10 | | the federal Investment Advisers Act of 1940 (15 U.S.C. 80b-1, | 11 | | et seq.) or a bank, as defined in the federal Investment | 12 | | Advisers Act of 1940 (15 U.S.C. 80b-1, et seq.). | 13 | | (c) Investment services provided by an investment adviser | 14 | | or a consultant appointed under this Section shall be rendered | 15 | | pursuant to a written contract between the investment adviser | 16 | | or consultant and the board. | 17 | | The contract shall include all of the following: | 18 | | (1) Acknowledgement in writing by the investment | 19 | | adviser or consultant that he or she is a fiduciary with | 20 | | respect to the pension fund or retirement system. | 21 | | (2) The description of the board's investment policy | 22 | | and notice that the policy is subject to change. | 23 | | (3) (i) Full disclosure of direct and indirect fees, | 24 | | commissions, penalties, and other compensation, including | 25 | | reimbursement for expenses, that may be paid by or on | 26 | | behalf of the consultant in connection with the provision |
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| 1 | | of services to the pension fund or retirement system and | 2 | | (ii) a requirement that the consultant update the | 3 | | disclosure promptly after a modification of those payments | 4 | | or an additional payment. | 5 | | (4) A requirement that the investment adviser or | 6 | | consultant, in conjunction with the board's staff, submit | 7 | | periodic written reports, on at least a quarterly basis, | 8 | | for the board's review at its regularly scheduled meetings. | 9 | | All returns on investment shall be reported as net returns | 10 | | after payment of all fees, commissions, and any other | 11 | | compensation. | 12 | | (5) Disclosure of the names and addresses of (i) the | 13 | | consultant or investment adviser; (ii) any entity that is a | 14 | | parent of, or owns a controlling interest in, the | 15 | | consultant or investment adviser; (iii) any entity that is | 16 | | a subsidiary of, or in which a controlling interest is | 17 | | owned by, the consultant or investment adviser; (iv) any | 18 | | persons who have an ownership or distributive income share | 19 | | in the consultant or investment adviser that is in excess | 20 | | of 7.5%; or (v) serves as an executive officer of the | 21 | | consultant or investment adviser. | 22 | | (6) A disclosure of the names and addresses of all | 23 | | subcontractors, if applicable, and the expected amount of | 24 | | money each will receive under the contract, including an | 25 | | acknowledgment that the contractor must promptly make | 26 | | notification, in writing, if at any time during the term of |
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| 1 | | the contract a contractor adds or changes any | 2 | | subcontractors. For purposes of this subparagraph (6), | 3 | | "subcontractor" does not include non-investment related | 4 | | professionals or professionals offering services that are | 5 | | not directly related to the investment of assets, such as | 6 | | legal counsel, actuary, proxy-voting services, services | 7 | | used to track compliance with legal standards, and | 8 | | investment fund of funds where the board has no direct | 9 | | contractual relationship with the investment advisers or | 10 | | partnerships. | 11 | | (7) A description of service to be performed. | 12 | | (8) A description of the need for the service. | 13 | | (9) A description of the plan for post-performance | 14 | | review. | 15 | | (10) A description of the qualifications necessary. | 16 | | (11) The duration of the contract. | 17 | | (12) The method for charging and measuring cost. | 18 | | (d) Notwithstanding any other provision of law, a | 19 | | retirement system, pension fund, or investment board subject to | 20 | | this Code, except those whose investments are restricted by | 21 | | Section 1-113.2 of this Code, shall not enter into a contract | 22 | | with a consultant that exceeds 5 years in duration. No contract | 23 | | to provide consulting services may be renewed or extended. At | 24 | | the end of the term of a contract, however, the consultant is | 25 | | eligible to compete for a new contract as provided in this | 26 | | Section. No retirement system, pension fund, or investment |
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| 1 | | board shall attempt to avoid or contravene the restrictions of | 2 | | this subsection (d) by any means. | 3 | | (e) Within 60 days after the effective date of this | 4 | | amendatory Act of the 96th General Assembly, each investment | 5 | | adviser or consultant currently providing services or subject | 6 | | to an existing contract for the provision of services must | 7 | | disclose to the board of trustees all direct and indirect fees, | 8 | | commissions, penalties, and other compensation paid by or on | 9 | | behalf of the investment adviser or consultant in connection | 10 | | with the provision of those services and shall update that | 11 | | disclosure promptly after a modification of those payments or | 12 | | an additional payment. The person shall update the disclosure | 13 | | promptly after a modification of those payments or an | 14 | | additional payment. The disclosures required by this | 15 | | subsection (e) shall be in writing and shall include the date | 16 | | and amount of each payment and the name and address of each | 17 | | recipient of a payment. | 18 | | (f) The retirement system, pension fund, or board of | 19 | | investment shall develop uniform documents that shall be used | 20 | | for the solicitation, review, and acceptance of all investment | 21 | | services. The form shall include the terms contained in | 22 | | subsection (c) of this Section. All such uniform documents | 23 | | shall be posted on the retirement system's, pension fund's, or | 24 | | investment board's web site. | 25 | | (g) A description of every contract for investment services | 26 | | shall be posted in a conspicuous manner on the web site of the |
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| 1 | | retirement system, pension fund, or investment board. The | 2 | | description must include the name of the person or entity | 3 | | awarded a contract, the total amount applicable to the | 4 | | contract, the total fees paid or to be paid, and a disclosure | 5 | | approved by the board describing the factors that contributed | 6 | | to the selection of an investment adviser or consultant.
| 7 | | (Source: P.A. 98-433, eff. 8-16-13.)".
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