Enrolled Bill Summary

House Bill 3480	House Author:  Truitt et al.
Effective:  9-1-09	Senate Sponsor:  Van de Putte

            House Bill 3480 amends the law relating to annuities and investments for public school employees to further regulate the practices of companies offering qualified investment products  under Section 403(b), Internal Revenue Code of 1986.  The bill authorizes a company that offers 403(b) custodial accounts that hold only investment products registered with the Teacher Retirement System (TRS) to certify to the TRS based on rules adopted by the TRS board of trustees, and it requires the TRS to consult with the Texas Department of Banking as well as with the Texas Department of Insurance and the State Securities Board before adopting any such rules.

            House Bill 3480 prohibits a school district or open-enrollment charter school from entering into or continuing a salary reduction agreement with an employee if the subject of the agreement is not an eligible qualified investment unless the district or school provides the employee written notice stating why the investment is no longer an eligible qualified investment and stating that by signing the notice the employee is agreeing to enter into or continue the salary reduction agreement.

            House Bill 3480 prohibits a person, other than a district or charter school employee, or the person's affiliate from entering into or renewing a contract to provide services for or administer a 403(b) plan offered by the district or school unless the person is licensed or certified by the Texas Department of Insurance, is registered with the State Securities Board, or is a financial institution authorized by law to exercise fiduciary powers and has its main office or a branch or trust office in Texas.  If an entity that enters into a contract to administer a 403(b) plan offered by a school district or open-enrollment charter school holds a meeting at which qualified investment products will be marketed to district or school employees, the entity must provide representatives of other companies certified to the TRS an opportunity to attend and market their qualified investment products at the meeting.

            House Bill 3480 requires the TRS to refer all complaints about qualified investment products, including complaints that allege violations of the law by companies certifying to the TRS that they offer qualified investment products, to the appropriate division of the Texas Department of Insurance, the Texas Department of Banking, or the State Securities Board, and it requires those agencies to investigate the complaints and to forward the results of such investigation to the attorney general.  The bill requires those agencies to report to the TRS at the beginning of each fiscal year quarter on the status of any enforcement action taken or investigation or referral made regarding a company against which a complaint was made, and it authorizes the TRS to deny, suspend, or revoke the certification of a company determined to be in violation of the law in any judicial or administrative proceeding.  The bill establishes a civil penalty for a violation of the applicable law and authorizes the attorney general to institute an action for injunctive relief to collect the penalty and to recover reasonable expenses incurred in obtaining the relief.