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A BILL TO BE ENTITLED
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AN ACT
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relating to the presentation of the investment policy of certain |
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governmental entities to a business organization that conducts |
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investment transactions for the entity. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 2256.005(k) and (l), Government Code, |
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are amended to read as follows: |
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(k) A written copy of the investment policy shall be |
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presented to any business organization [person] offering to engage |
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in an investment transaction with an investing entity [or to an
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investment management firm under contract with an investing entity
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to invest or manage
the entity's investment portfolio]. For |
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purposes of this subsection and Subsection (l), "business |
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organization" means an [a business organization includes] |
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investment pool or [pools and an] investment management firm under |
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contract with an investing entity to invest or manage the entity's |
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investment portfolio that has accepted authority granted by the |
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entity under the contract to exercise investment discretion in |
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regard to the investing entity's funds. Nothing in this subsection |
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relieves the investing entity of the responsibility for monitoring |
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the investments made by the investing entity to determine that they |
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are in compliance with the investment policy. The qualified |
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representative of the business organization offering to engage in |
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an investment transaction with an investing entity shall execute a |
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written instrument in a form acceptable to the investing entity and |
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the business organization substantially to the effect that the |
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business organization has: |
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(1) received and reviewed the investment policy of the |
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entity; and |
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(2) acknowledged that the business organization has |
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implemented reasonable procedures and controls in an effort to |
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preclude investment transactions conducted between the entity and |
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the organization that are not authorized by the entity's investment |
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policy, except to the extent that this authorization: |
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(A) is dependent on an analysis of the makeup of |
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the entity's entire portfolio; |
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(B) [or] requires an interpretation of |
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subjective investment standards; or |
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(C) relates to investment transactions of the |
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entity that are not made through accounts or other contractual |
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arrangements over which the business organization has accepted |
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discretionary investment authority. |
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(l) The investment officer of an entity may not acquire or |
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otherwise obtain any authorized investment described in the |
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investment policy of the investing entity from a business |
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organization that [person who] has not delivered to the entity the |
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instrument required by Subsection (k). |
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SECTION 2. The changes in law made by this Act apply only to |
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a contract for an investment transaction entered into with a |
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business organization under Chapter 2256, Government Code, on or |
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after the effective date of this Act. A contract entered into before |
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the effective date of this Act is subject to the law in effect at the |
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time the contract was entered into, and the former law is continued |
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in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2017. |