S.B. No. 1059
AN ACT
relating to corporate ethics and integrity.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 402, Government Code, is
amended by adding Section 402.0231 to read as follows:
Sec. 402.0231. CORPORATE INTEGRITY UNIT. (a) In this
section, "corporate fraud" means a violation of state or federal
law or rules relating to fraud committed by a corporation, limited
liability company, or registered limited liability partnership or
an officer, director, or partner of those entities while acting in a
representative capacity.
(b) A corporate integrity unit is created within the office
of the attorney general to assist in the enforcement of the laws
relating to corporate fraud or other similar illegal activities.
The unit shall:
(1) assist district attorneys and county attorneys in
the investigation and prosecution of corporate fraud or other
similar illegal activities allegedly committed by corporations,
limited liability companies, and registered limited liability
partnerships;
(2) assist state agencies with investigation of
complaints and administrative enforcement actions for corporate
fraud violations, including the assessment of an administrative
penalty or other administrative sanction; and
(3) serve as a clearinghouse for information relating
to the investigation and prosecution of corporate fraud and other
similar illegal activities in this state.
(c) To the extent allowed by law, a state agency or local law
enforcement agency shall cooperate with the corporate integrity
unit by providing information requested by the unit as necessary to
carry out the purposes of this section. Information disclosed
under this subsection is confidential and not subject to disclosure
under Chapter 552.
SECTION 2. 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 person or business entity
who acts as 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. (a) 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.
(b) A contract under which a financial advisor or service
provider renders financial services or advice to a state
governmental entity or other person as described by Subsection (a)
is voidable by the state governmental entity if the financial
advisor or service provider violates a standard of conduct adopted
under this section.
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
a reasonable person could expect the relationship to diminish the
financial advisor's or service provider'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) or,
if no relationship or pecuniary interest described by that
subsection existed during the disclosure period, the statement must
affirmatively state that fact.
(d) The annual statement must be filed not later than April
15 on a form prescribed by the governmental entity, other than the
state auditor, receiving the form. The statement must cover the
reporting period of the previous calendar year. The state auditor
shall develop and recommend a uniform form that other governmental
entities receiving the form may prescribe.
(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 3. The office of the attorney general is not
required to implement Section 402.0231, Government Code, as added
by this Act, unless a specific appropriation for the implementation
is provided in the General Appropriations Act, Acts of the 78th
Legislature, Regular Session, 2003.
SECTION 4. 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 5. This Act takes effect September 1, 2003.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1059 passed the Senate on
April 10, 2003, by a viva-voce vote; May 29, 2003, Senate refused
to concur in House amendment and requested appointment of
Conference Committee; May 30, 2003, House granted request of the
Senate; June 1, 2003, Senate adopted Conference Committee Report
by a viva-voce vote.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1059 passed the House, with
amendment, on May 25, 2003, by a non-record vote; May 30, 2003,
House granted request of the Senate for appointment of Conference
Committee; June 1, 2003, House adopted Conference Committee Report
by a non-record vote.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor