S5632-2011 Actions

• Jan 4, 2012: REFERRED TO CIVIL SERVICE AND PENSIONS
• Jun 8, 2011: REFERRED TO RULES

S5632-2011 Memo

BILL NUMBER:S5632

TITLE OF BILL:
An act
to amend the retirement and social security law, in relation to
prohibiting the use of placement
agents by managers doing business with the common retirement fund

PURPOSE:
For the purpose of maintaining the integrity of the New York
State and Local Retirement System ("System") and the Common
Retirement Fund ("CRF" or "Fund"), as well as to increase
transparency, this bill would codify the State Comptroller's policy
prohibiting the use of placement agents or intermediaries by the
Common Retirement Fund.

SUMMARY OF PROVISIONS:
Section 1 of this bill renumbers Section 425 of
the Retirement and Social Security Law as Section 426 of such Law and
adds a new Section 425 to the Retirement and Social Security Law
which prohibits the CRf from engaging, hiring, investing with or
committing to an investment manager that is using the services of a
placement agent or intermediary to assist such investment manager in
obtaining investments by the CRF nor shall the CRF engage, hire,
invest with or commit to an investment manager without obtaining from
such investment manager a certification in the form and manner
prescribed by the CRF stating that such investment manager has not
used the services of a placement agent or other intermediary to
assist such investment manager in obtaining investments by the CRF.

This Section defines an "investment manager" as any person or entity,
other than an employee of the State Comptroller, engaged by the CRF
in the management of an investment portfolio of the CRF.

Additionally, this Section defines a "placement agent or intermediary"
as any person or entity, including a registered lobbyist, that is
directly or indirectly engaged and compensated by an investment
manager to promote investments to or solicit investment by the CRF,
whether compensated on a flat fee, a contingent fee, or any other
basis. A placement agent or intermediary is not a regular employee
of the investment manager.

Section 2 of this bill provides for an immediate effective date.

PRIOR LEGISLATIVE HISTORY:
New bill.

JUSTIFICATION:
Restoring confidence in the integrity of the Fund's
investment decision making process and in the operations of the
System has been the top priority of State Comptroller Thomas P.
DiNapoli since he took Office. In conducting a top to bottom review
of the way the Fund does business, reforming Fund operations and
restoring the credibility of the operation, Comptroller DiNapoli
determined a placement agent ban was appropriate as part of his
commitment to reforming the operations of the Fund.


In order to preserve the independence and integrity of the Fund, to
preclude potential conflicts of interest, and to assist the State
Comptroller in fulfilling his or her duties as a fiduciary to the
Fund, this bill codifies the policy that Comptroller DiNapoli adopted
on April 21, 2009, which prohibits the Fund from engaging, hiring,
investing with or committing to an outside investment manager who is
using the services of a placement agent or intermediary to assist the
investment manager in obtaining investments by the Fund. By codifying
his policy, Comptroller DiNapoli is ensuring that the Fund will
always be protected.

The State Comptroller urges approval of this legislation.

BUDGET IMPLICATIONS:
This bill has no significant fiscal impact.

EFFECTIVE DATE:
Immediately.

S5632-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         5632
 2011-2012 Regular Sessions
 I N  SENATE
 June 8, 2011
 
 Introduced  by  COMMITTEE  ON  RULES  --  (at request of the State Comp
 troller) -- read twice and ordered printed, and  when  printed  to  be
 committed to the Committee on Rules
 AN  ACT  to amend the retirement and social security law, in relation to
 prohibiting the use of placement agents  by  managers  doing  business
 with the common retirement fund
 

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section 1.

Section 425 of the retirement and social  security  law  is
 renumbered  section  426  and  a  new  section  425  is added to read as
 follows:

 

S 425. USE OF PLACEMENT AGENTS OR INTERMEDIARIES PROHIBITED.   1.  THE
 FUND  SHALL  NOT  ENGAGE,  HIRE,  INVEST WITH OR COMMIT TO AN INVESTMENT
 MANAGER THAT IS USING THE SERVICES OF A PLACEMENT AGENT OR  INTERMEDIARY
 TO  ASSIST  SUCH INVESTMENT MANAGER IN OBTAINING INVESTMENTS BY THE FUND
 NOR SHALL THE FUND ENGAGE, HIRE, INVEST WITH OR COMMIT TO AN  INVESTMENT
 MANAGER  WITHOUT  OBTAINING FROM SUCH INVESTMENT MANAGER A CERTIFICATION
 IN THE FORM AND MANNER PRESCRIBED BY THE FUND STATING THAT SUCH  INVEST
 MENT  MANAGER  HAS  NOT  USED THE SERVICES OF A PLACEMENT AGENT OR OTHER
 INTERMEDIARY TO ASSIST SUCH INVESTMENT MANAGER IN OBTAINING  INVESTMENTS
 BY THE FUND.
 2. FOR THE PURPOSES OF THIS SECTION:

 (A) "INVESTMENT MANAGER" SHALL MEAN ANY PERSON, OTHER THAN AN EMPLOYEE
 OF  THE  COMPTROLLER, OR ENTITY ENGAGED BY THE COMMON RETIREMENT FUND TO
 MANAGE A PART OR ALL OF AN INVESTMENT PORTFOLIO OF  THE  FUND.  "MANAGE"
 SHALL  INCLUDE,  BUT  IS NOT LIMITED TO, THE ANALYSIS OF PORTFOLIO HOLD
 INGS, AND THE PURCHASE, SALE, AND LENDING THEREOF. ANY  INVESTMENT  MADE
 BY  THE FUND PURSUANT TO SUBDIVISION SEVEN OF SECTION ONE HUNDRED SEVEN
 TY-SEVEN OF THIS CHAPTER SHALL BE DEEMED TO BE  THE  INVESTMENT  OF  THE
 FUND IN SUCH INVESTMENT ENTITY RATHER THAN IN THE ASSETS OF SUCH INVEST
 MENT ENTITY.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD11511-04-1
 
       S. 5632                             2
 (B) "PLACEMENT AGENT OR INTERMEDIARY" SHALL MEAN ANY PERSON OR ENTITY,
 INCLUDING  REGISTERED  LOBBYISTS,  DIRECTLY  OR  INDIRECTLY  ENGAGED AND
 COMPENSATED BY AN INVESTMENT MANAGER, OTHER  THAN  AN  EMPLOYEE  OF  THE
 INVESTMENT  MANAGER,  TO  ASSIST  THE  INVESTMENT  MANAGER  IN OBTAINING
 INVESTMENTS  BY THE FUND WHETHER COMPENSATED ON A FLAT FEE, A CONTINGENT
 FEE, OR ANY OTHER BASIS. EMPLOYEES OF  AN  INVESTMENT  MANAGER  AND  ITS
 AFFILIATES  ARE  EXCLUDED  FROM THIS DEFINITION UNLESS THEY ARE EMPLOYED
 PRINCIPALLY FOR THE PURPOSE OF SECURING OR INFLUENCING THE  DECISION  TO
 SECURE A PARTICULAR INVESTMENT TRANSACTION OR INVESTMENT BY THE FUND.
 

S 2. This act shall take effect immediately.

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