78R500 JRD-D
By: Ellis S.B. No. 231
A BILL TO BE ENTITLED
AN ACT
relating to establishing ethics and disclosure requirements for
certain persons, including financial consultants and advisors,
involved in the management or investment of state funds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 10, Government Code, is
amended by adding Chapter 2263 to read as follows:
CHAPTER 2263. ETHICS AND DISCLOSURE REQUIREMENTS FOR OUTSIDE
FINANCIAL ADVISORS AND SERVICE PROVIDERS
Sec. 2263.001. APPLICABILITY. (a) This chapter applies in
connection with the management or investment of any state funds
managed or invested:
(1) under the Texas Constitution or other law,
including Chapters 404 and 2256; and
(2) by or for:
(A) a public retirement system as defined by
Section 802.001 that provides service retirement, disability
retirement, or death benefits for officers or employees of the
state;
(B) an institution of higher education as defined
by Section 61.003, Education Code; or
(C) another entity that is part of state
government and that manages or invests state funds or for which
state funds are managed or invested.
(b) This chapter applies in connection with the management
or investment of state funds without regard to whether the funds are
held in the state treasury.
(c) This chapter does not apply to or in connection with a
state governmental entity that does not manage or invest state
funds and for which state funds are managed or invested only by the
comptroller.
Sec. 2263.002. DEFINITION. In this chapter, "financial
advisor or service provider" includes a financial advisor,
financial consultant, money or investment manager, or broker.
Sec. 2263.003. CONSTRUCTION WITH OTHER LAW. To the extent
of a conflict between this chapter and another law, the law that
imposes a stricter ethics or disclosure requirement controls.
Sec. 2263.004. ETHICS REQUIREMENTS FOR OUTSIDE FINANCIAL
ADVISORS OR SERVICE PROVIDERS. The governing body of a state
governmental entity by rule shall adopt standards of conduct
applicable to financial advisors or service providers who are not
employees of the state governmental entity, who provide financial
services to the state governmental entity or advise the state
governmental entity or a member of the governing body of the state
governmental entity in connection with the management or investment
of state funds, and who:
(1) may reasonably be expected to receive, directly or
indirectly, more than $10,000 in compensation from the entity
during a fiscal year; or
(2) render important investment or funds management
advice to the entity or a member of the governing body of the
entity, as determined by the governing body.
Sec. 2263.005. DISCLOSURE REQUIREMENTS FOR OUTSIDE
FINANCIAL ADVISOR OR SERVICE PROVIDER. (a) A financial advisor or
service provider described by Section 2263.004 shall disclose in
writing to the administrative head of the applicable state
governmental entity and to the state auditor:
(1) any relationship the financial advisor or service
provider has with any party to a transaction with the state
governmental entity, other than a relationship necessary to the
investment or funds management services that the financial advisor
or service provider performs for the state governmental entity, if
the relationship could reasonably be expected to diminish the
person's independence of judgment in the performance of the
person's responsibilities to the state governmental entity; and
(2) all direct or indirect pecuniary interests the
financial advisor or service provider has in any party to a
transaction with the state governmental entity, if the transaction
is connected with any financial advice or service the financial
advisor or service provider provides to the state governmental
entity or to a member of the governing body in connection with the
management or investment of state funds.
(b) The financial advisor or service provider shall
disclose a relationship described by Subsection (a) without regard
to whether the relationship is a direct, indirect, personal,
private, commercial, or business relationship.
(c) A financial advisor or service provider described by
Section 2263.004 shall file annually a statement with the
administrative head of the applicable state governmental entity and
with the state auditor. The statement must disclose each
relationship and pecuniary interest described by Subsection (a), if
any.
(d) The state auditor by rule shall prescribe the date by
which the annual statement must be filed. The state auditor may
prescribe a uniform date or may prescribe different dates for
statements filed in relation to different state governmental
entities. The state auditor shall prescribe a form for the annual
statement.
(e) The financial advisor or service provider shall
promptly file a new or amended statement with the administrative
head of the applicable state governmental entity and with the state
auditor whenever there is new information to report under
Subsection (a).
Sec. 2263.006. PUBLIC INFORMATION. Chapter 552 controls
the extent to which information contained in a statement filed
under this chapter is subject to required public disclosure or
excepted from required public disclosure.
SECTION 2. Each state governmental entity required to adopt
rules under Chapter 2263, Government Code, as added by this Act,
shall adopt its initial rules in time for the rules to take effect
not later than January 1, 2004.
SECTION 3. This Act takes effect September 1, 2003.