SB 436 - This act modifies provisions relating to duties of fiduciaries for public employee retirement systems. Under this act, an investment fiduciary shall discharge his or her duties in the interests of the participants in a public employee retirement system and their beneficiaries for the exclusive purpose of providing financial benefits and paying reasonable expenses for administering the public employee retirement system. Additionally, when discharging fiduciary duties, which shall be the same as a member of the board of trustees of a system, an investment fiduciary shall take into account only financial factors. The term "financial" is defined in the act as a material effect on the financial risk or the financial return of an investment, but does not include any action taken, or factor considered, by an investment fiduciary with a purpose to further social, political, or ideological interests. This act further provides that all shares held by or on behalf of a public employee retirement system, the participants, and their beneficiaries shall be voted solely in the financial interest of participants in the system and their beneficiaries. Unless no economically practicable alternative is available, the following actions shall not be allowed unless there is a practice and commitment to follow guidelines that match the system's obligations to act solely upon financial factors:
(1) The board of a system granting proxy voting authority to persons not on the board;
(2) The system entrusting assets to investment fiduciaries; and
(3) The system adopting a practice of following the recommendations of a proxy advisor or other service provider.
All proxy votes shall be tabulated and provided in an annual report containing certain information described in the act to board of a system and such report shall be posted on the system's website.
The Attorney General may enforce the provisions of this act, or any contract subject to the provisions of this act. If the Attorney General has reasonable cause to believe that a person is engaging in a violation of this act, the Attorney General may require such person to file a written statement or report, under oath, as to all the facts and circumstances concerning the violation, and provide other necessary data and information. Additionally, a system or a participant or beneficiary of a system may bring an action for damages or injunctive relief against any person violating this act. In addition to any other remedies available, a company who serves as an investment fiduciary and who violates this act shall be obligated to pay damages in an amount equal to three times all moneys paid to the company by the system.
This act is similar to HB 1333 (2023).
KATIE O'OBRIEN