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ARIZONA HOUSE OF REPRESENTATIVESFifty-sixth Legislature First Regular Session |
Senate: GOV DP 5-3-0-0 | 3rd Read 16-14-0-0
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SB 1500: government investments; fiduciaries; pecuniary benefit
Sponsor: Senator Carroll, LD 28
House Engrossed
Overview
Establishes requirements for the State Treasurer, a fiduciary and other government entities' responsibilities and duties concerning a plan.
History
The Office of the State Treasurer is responsible for the banking and investment management duties for the State of Arizona, provides investment services to local governments and exclusively manages the Permanent Land Endowment.
Currently, statute outlines the State Treasurer is responsible for the safekeeping of all securities acquired by him and those for which he is the lawful custodian. The State Treasurer can also enter into an agreement with investment managers to invest treasury monies or with advisors to recommend investment strategies or tactics for the investment of treasury monies, including legal advisors and software to assist with the analysis, tracking and trading of securities. Investment managers are required to regularly account for, itemize and inventory all securities and report the findings to the State Treasurer at least monthly or on demand (A.R.S. §§ 35-317 and 33-318).
Provisions
State Treasurer
1. Requires the State Treasurer to post a current list, and update any changes within a reasonable time, of state investments by name and investment managers on the State Treasurer's website. (Sec. 1)
2. Stipulates that all state investments are to be made in the sole interest of the taxpayers. (Sec. 1)
3. Asserts an investment evaluation, conducted by the State Treasurer, must be based on pecuniary factors and must not promote nonpecuniary benefits or other nonpecuniary social goals or take unnecessary investment risks. (Sec. 1)
Fiduciary
4. Requires a fiduciary to carry out its duties concerning a plan solely in the interest of the participants and beneficiaries of the plan for the exclusive purpose of providing pecuniary benefits to the participants and their beneficiaries, while defraying reasonable expenses of administering the plan and earning a return on the investment. (Sec. 2)
5. Instructs a fiduciary to only consider pecuniary factors when carrying out its duties or evaluating an investment concerning a plan. (Sec. 2)
6. Restricts the fiduciary from considering nonpecuniary or other factors when evaluating an investment. (Sec. 2)
Government Entities
7. Asserts that shares held by the plan can only be voted on by a governmental entity that establishes or maintains a plan. (Sec. 2)
8. Restricts the governmental entity from granting proxy voting authority to any person who is not a part of the governmental entity unless that person follows established guidelines. (Sec. 2)
9. Stipulates the shares held directly or indirectly by a plan must be voted only in the pecuniary interest of the plan. (Sec. 2)
10. Restricts shares from being voted on to further nonpecuniary, ideological, social, environmental, political or other benefits or goals. (Sec. 2)
11. States the plan must not entrust any assets to a fiduciary who has a practice of:
a) Engaging with, or commits to engage with, a company based on nonpecuniary factors; and
b) Voting shares based on nonpecuniary factors. (Sec. 2)
12. Restricts a fiduciary from following the recommendations of a proxy advisory firm or another service provider unless their voting guidelines are consistent with the fiduciary's obligation to only consider pecuniary factors. (Sec.2)
13. Defines the following terms:
a) Boycott of an energy company;
b) Fiduciary;
c) Nonpecuniary factor;
d) Pecuniary factor; and
e) Plan. (Sec. 2)
14.
Contains a legislative findings clause.
(Sec. 3)
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18. SB 1500
19. Initials FK/BSR Page 0 House Engrossed
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