Indicates Matter Stricken s18

1 Indicates Matter Stricken 2 Indicates New Matter 3 4 COMMITTEE REPORT 5 March 29, 2006 6 7 S. 1094 8 9 Introduced by Senators Leatherman, Alexander and Ryberg 10 11 S. Printed 3/29/06--S. 12 Read the first time January 31, 2006. 13 14 15 THE COMMITTEE ON FINANCE 16 To whom was referred a Bill (S. 1094) to amend the Code of 17 Laws of South Carolina, 1976, by adding Section 9-16-370 so as to 18 provide that the state shall defend the members of the, etc., 19 respectfully 20 REPORT: 21 That they have duly and carefully considered the same and 22 recommend that the same do pass with amendment: 23 24 Amend the bill, as and if amended, page 4, by striking lines 5 25 through 8 and inserting: 26 / “The provisions of this subsection do not apply to an 27 employee or affiliate of a fiduciary described in Section 9-16-10(4) 28 (a) and (b) if the commission elects specifically to waive this 29 application by written contract with such a fiduciary. The 30 Commission shall disclose any such waivers in its quarterly 31 report.” / 32 Renumber sections to conform. 33 Amend title to conform. 34 35 HUGH K. LEATHERMAN, SR. for Committee. 36 37

1 [1094-1] 1 STATEMENT OF ESTIMATED FISCAL IMPACT 2 ESTIMATED FISCAL IMPACT ON GENERAL FUND 3 EXPENDITURES: 4 $0 (No additional expenditures or savings are expected) 5 ESTIMATED FISCAL IMPACT ON FEDERAL & OTHER 6 FUND EXPENDITURES: 7 $0 (No additional expenditures or savings are expected) 8 EXPLANATION OF IMPACT: 9 A review of this bill by staff of the Retirement Systems 10 Investment Commission indicates there will be no impact on the 11 General Fund of the State or on federal and/or other funds or the 12 several retirement systems. 13 14 Approved By: 15 Don Addy 16 Office of State Budget 17

1 [1094-2] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 12 1976, BY ADDING SECTION 9-16-370 SO AS TO PROVIDE 13 THAT THE STATE SHALL DEFEND THE MEMBERS OF THE 14 RETIREMENT SYSTEM INVESTMENT COMMISSION AND 15 COMMISSION OFFICERS AND MANAGEMENT 16 EMPLOYEES AGAINST A CLAIM OR SUIT BASED ON THE 17 PERFORMANCE OF THEIR OFFICIAL DUTIES, TO 18 REQUIRE THE STATE TO INDEMNIFY THEM FOR A LOSS 19 OR JUDGMENT INCURRED BY THEM FOR A CLAIM OR 20 SUIT BROUGHT AGAINST THEM IN THEIR OFFICIAL OR 21 INDIVIDUAL CAPACITIES, OR BOTH, AND TO PROVIDE 22 FOR THEIR DEFENSE AND INDEMNIFICATION AFTER 23 THEY LEAVE MEMBERSHIP ON OR EMPLOYMENT BY 24 THE COMMISSION IF THE CLAIM OR SUIT ARISES BASED 25 ON THE PERFORMANCE OF THEIR OFFICIAL DUTIES; TO 26 AMEND SECTION 9-1-1310, AS AMENDED, RELATING TO 27 THE DUTIES OF THE STATE BUDGET AND CONTROL 28 BOARD AND THE RETIREMENT SYSTEM INVESTMENT 29 COMMISSION WITH RESPECT TO THE VARIOUS STATE 30 RETIREMENT SYSTEMS AND INVESTMENTS ALLOWED 31 FOR THE FUNDS OF THESE SYSTEMS, SO AS TO PROVIDE 32 FOR ADDITIONAL INVESTMENTS; TO AMEND SECTION 33 9-1-1340, AS AMENDED, RELATING TO CONFLICT OF 34 INTEREST PROVISIONS WITH RESPECT TO THE 35 RETIREMENT SYSTEM INVESTMENT COMMISSION, SO 36 AS TO CONFORM THE PROVISIONS TO THE NATIONAL 37 GUARD RETIREMENT SYSTEM; TO AMEND SECTION 38 9-10-60, RELATING TO STATE BUDGET AND CONTROL 39 BOARD’S RESPONSIBILITIES WITH RESPECT TO THE 40 NATIONAL GUARD RETIREMENT SYSTEM AND 41 CONFLICT OF INTEREST PROVISIONS FOR THAT 42 SYSTEM, SO AS TO CONFORM THESE RESPONSIBILITIES

1 [1094] 1 1 TO THE MANNER OF OPERATION OF THE OTHER STATE 2 RETIREMENT SYSTEMS AND TO DELETE REDUNDANT 3 PROVISIONS; TO AMEND SECTION 9-16-360, RELATING 4 TO STANDARDS OF CONDUCT FOR FIDUCIARIES WITH 5 RESPECT TO THE STATE RETIREMENT SYSTEMS, SO AS 6 FURTHER TO DEFINE “INDIRECT INTEREST” AND TO 7 ALLOW THE RETIREMENT SYSTEM INVESTMENT 8 COMMISSION TO WAIVE THESE STANDARDS BY 9 CONTRACT WITH CERTAIN FIDUCIARIES. 10 11 Be it enacted by the General Assembly of the State of South 12 Carolina: 13 14 SECTION 1. Article 3, Chapter 16, Title 9 of the 1976 Code is 15 amended by adding: 16 17 “Section 9-16-370. The State shall defend the members of the 18 Retirement System Investment Commission established pursuant 19 to this article against a claim or suit that arises out of or by virtue 20 of their performance of official duties on behalf of the commission 21 and must indemnify these members for a loss or judgment incurred 22 by them as a result of the claim or suit, without regard to whether 23 the claim or suit is brought against them in their individual or 24 official capacities, or both. The State shall defend officers and 25 management employees of the commission against a claim or suit 26 that arises out of or by virtue of performance of official duties 27 unless the officer, or management employee was acting in bad 28 faith and must indemnify these officers, and management 29 employees for a loss or judgment incurred by them as a result of 30 such claim or suit, without regard to whether the claim or suit is 31 brought against them in their individual or official capacities, or 32 both. This commitment to defend and indemnify extends to 33 members, officers, and management employees after they have left 34 their membership on or employment with the commission, as 35 applicable, if the claim or suit arises out of or by virtue of their 36 performance of official duties on behalf of the commission.” 37 38 SECTION 2. Section 9-1-1310(B)(19) of the 1976 Code, as last 39 amended by Act 153 of 2005, is further amended to read: 40 41 “(19)(a) purchase money mortgages received for real estate; 42 (b) real property; 43 (c) exchange traded funds;

1 [1094] 2 1 (d) American Depository Receipts;” 2 3 SECTION 3. Section 9-1-1340 of the 1976 Code, as last amended 4 by Act 153 of 2005, is further amended to read: 5 6 “Section 9-1-1340. Except as otherwise provided in this chapter 7 or in Chapters 8, 9, 10, and 11 of this title, no member of or person 8 employed by the Retirement System Investment Commission shall 9 have any direct interest in the gains or profits of any investment 10 made by the commission. No commission member or employee of 11 the commission shall, directly or indirectly, for himself or as an 12 agent in any manner use the funds of the commission except to 13 make such current and necessary payments as are authorized by 14 the board or commission. Nor shall any member or employee of 15 the commission become an endorser or surety or in any manner an 16 obligor for monies loaned or borrowed from the commission.” 17 18 SECTION 4. Section 9-10-60(C) of the 1976 Code, as added by 19 Act 155 of 2005, is amended to read: 20 21 “(C)(1)The board is the trustee of the National Guard 22 Retirement System and may invest and reinvest its funds in the 23 same manner as funds of the South Carolina Retirement System 24 are invested and reinvested pursuant to Section 9-1-1310. 25 (2) Except as otherwise provided in this chapter, a member 26 of or person employed by the board may not have a direct interest 27 in the gains or profits of any investment made by the board. A 28 member of the board or employee of the board may not, directly or 29 indirectly, for himself or as an agent in any manner use the funds 30 of the system except to make the current and necessary payments 31 authorized by the board; nor shall any member or employee of the 32 board become an endorser or surety, or in any manner an obligor, 33 for monies loaned or borrowed from the board. RESERVED” 34 35 SECTION 5. A.Section 9-16-360(B)(10) of the 1976 Code, as 36 added by Act 153 of 2005, is amended to read: 37 38 “(10) not have any direct or indirect interest in the gains or 39 profits of any system investment other than the indirect interest of 40 a passive investor holding less than five percent of the outstanding 41 equity in a publicly - traded security;” 42

1 [1094] 3 1 B.Section 9-16-360(B) of the 1976 Code, as added by Act 153 of 2 2005, is amended by adding a new paragraph at the end of the 3 subsection to read: 4 5 “The provisions of this subsection do not apply to a fiduciary 6 described in Section 9-16-10(4)(a) and (b) if the commission elects 7 specifically to waive this application by written contract with such 8 a fiduciary.” 9 10 SECTION 6. This act takes effect upon approval by the 11 Governor. 12 ----XX---- 13

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