This website will be unavailable from Friday, April 26, 2024 at 6:00 p.m. through Monday, April 29, 2024 at 7:00 a.m. due to data center maintenance.

                                                                                

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.