Senate Bill S7152

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7152--A

                            I N  S E N A T E

                             March 17, 2010
                               ___________

Introduced  by Sens. KRUGER, C. JOHNSON, ADAMS -- read twice and ordered
  printed, and when printed to be committed to the Committee on  Finance
  --  committee  discharged,  bill amended, ordered reprinted as amended
  and recommitted to said committee

AN ACT to amend the executive law, in relation to establishing  the  New
  York  state  public  pension fund security act; and to amend the penal
  law, in relation to the definition of defrauding the government

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  This act shall be known and may be cited as the "New York
state public pension fund security act".
  S 2. The executive law is amended by adding a new section 41-b to read
as follows:
  S 41-B. PUBLIC PENSION FUND SECURITY  ACT.  1.  DEFINITIONS.  FOR  THE
PURPOSES OF THIS SECTION:
  (A)  "INVESTMENT  MANAGER"  MEANS  ANY PERSON OR ENTITY, OTHER THAN AN
EMPLOYEE OF THE STATE COMPTROLLER, THAT IS RETAINED BY A PUBLIC  PENSION
FUND  TO MANAGE A PORTFOLIO OF ASSETS, DIRECTLY OR THROUGH AN INVESTMENT
VEHICLE, INCLUDING SECURITIES, FOR A FEE.
  (B) "INTERMEDIARY" MEANS  ANY  PERSON  OR  ENTITY  HIRED,  ENGAGED  OR
RETAINED  BY, OR ACTING ON BEHALF OF AN INVESTMENT MANAGER, OR ON BEHALF
OF ANOTHER INTERMEDIARY AS A FINDER,  SOLICITOR,  MARKETER,  CONSULTANT,
BROKER  OR  OTHER  INTERMEDIARY  TO  RAISE MONEY OR OBTAIN AN INVESTMENT
COMMITMENT FROM, OR TO OBTAIN ACCESS TO A PUBLIC PENSION FUND,  DIRECTLY
OR  INDIRECTLY,  INCLUDING,  WITHOUT  LIMITATION,  THROUGH AN INVESTMENT
VEHICLE. WHERE SUCH INTERMEDIARY IS A  FINANCIAL  INSTITUTION,  INTERME-
DIARY SHALL MEAN THE DEPARTMENT OR UNIT PERFORMING SUCH SERVICES.
  (C)  "PUBLIC  PENSION  FUND"  MEANS ANY RETIREMENT PLAN ESTABLISHED OR
MAINTAINED FOR ITS CURRENT OR FORMER EMPLOYEES BY THE STATE OF NEW  YORK
OR  POLITICAL SUBDIVISION THEREOF, OR BY AN AGENCY OR INSTRUMENTALITY OF
THE FOREGOING.
  2. DISCLOSURE OF PAYMENTS. THE COMPTROLLER, IN  CONJUNCTION  WITH  THE
SUPERINTENDENT OF INSURANCE AND THE STATE ATTORNEY GENERAL SHALL DEVELOP
AND  IMPLEMENT  A POLICY REQUIRING THE DISCLOSURE OF PAYMENTS TO INVEST-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD16249-03-0

S. 7152--A                          2

MENT ADVISORS BY INVESTMENT MANAGERS IN CONNECTION WITH  PUBLIC  PENSION
FUND  INVESTMENTS  IN  OR THROUGH INVESTMENT MANAGERS. THIS POLICY SHALL
INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING REQUIREMENTS:
  (A)  DISCLOSURE  OF RELATIONSHIPS BETWEEN AN INVESTMENT MANAGER AND AN
INTERMEDIARY; AND
  (B) A RESUME FOR EACH OFFICER, PARTNER OR PRINCIPAL  OF  THE  INTERME-
DIARY DETAILING THE PERSON'S EDUCATION, PROFESSIONAL DESIGNATIONS, REGU-
LATORY  LICENSES  OR  CERTIFICATIONS AND INVESTMENT AND WORK EXPERIENCE;
AND
  (C) DISCLOSURE OF ANY AND ALL COMPENSATION PROVIDED, OR AGREED  TO  BE
PROVIDED TO THE INTERMEDIARY; AND
  (D)  A DESCRIPTION OF THE SERVICES TO BE PERFORMED BY THE INTERMEDIARY
FOR THE INVESTMENT MANAGER; AND
  (E) A STATEMENT WHETHER THE INTERMEDIARY OR ANY OF ITS AFFILIATES  ARE
REGISTERED  WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE FINANCIAL
INDUSTRY REGULATORY ASSOCIATION OR ANY SIMILAR REGULATORY  AGENCY  IN  A
COUNTRY  OTHER THAN THE UNITED STATES, AND THE DETAILS OF THAT REGISTRA-
TION OR EXPLANATION AS TO WHY NO REGISTRATION IS REQUIRED; AND
  (F) A SIGNED ATTESTATION THAT THE INTERMEDIARY HAS NOT ENGAGED, HIRED,
UTILIZED OR RETAINED A LOBBYIST OR ANY OTHER INDIVIDUAL OR  ORGANIZATION
FOR  THE  PURPOSES  OF  SECURING OR INFLUENCING THE DECISION TO SECURE A
PARTICULAR TRANSACTION OR INVESTMENT BY A  PUBLIC  PENSION  FUND,  OTHER
THAN ANOTHER INTERMEDIARY SUBJECT TO THE PROVISIONS OF THIS SECTION; AND
  (G) A SIGNED ATTESTATION THAT NO EMPLOYEE OR SPOUSE OF ANY EMPLOYEE OF
ANY  INTERMEDIARY  HAS  MADE  ANY POLITICAL CONTRIBUTIONS TO ANY ELECTED
STATE OR LOCAL OFFICIAL, EMPLOYEE OF A PUBLIC PENSION  FUND,  OR  FAMILY
MEMBER  OF  ANY  ELECTED STATE OR LOCAL OFFICIAL OR EMPLOYEE OF A PUBLIC
PENSION FUND DURING THE PRIOR TWENTY-FOUR MONTH PERIOD. FOR PURPOSES  OF
THIS PARAGRAPH:
  (I)  FAMILY MEMBER SHALL MEAN ANY PERSON LIVING IN THE SAME HOUSEHOLD,
AND ANY PERSON RELATED WITHIN  THE  THIRD  DEGREE  OF  CONSANGUINITY  OR
AFFINITY.
  (II)  OFFICIAL  SHALL  MEAN A PERSON (INCLUDING ANY ELECTION COMMITTEE
FOR SUCH PERSON) WHO WAS AT THE TIME OF THE CONTRIBUTION  AN  INCUMBENT,
CANDIDATE  OR  SUCCESSFUL CANDIDATE FOR ELECTIVE NEW YORK STATE OR LOCAL
OFFICE, IF THE OFFICE: (A) IS DIRECTLY OR INDIRECTLY RESPONSIBLE FOR  OR
CAN  INFLUENCE THE OUTCOME OF THE HIRING OF AN INVESTMENT MANAGER BY THE
PUBLIC PENSION FUND; OR (B) HAS AUTHORITY TO APPOINT ANY PERSON  WHO  IS
DIRECTLY OR INDIRECTLY RESPONSIBLE FOR, OR CAN INFLUENCE THE OUTCOME OF,
THE HIRING OF AN INVESTMENT MANAGER BY A PUBLIC PENSION FUND.
  3.  WRITTEN DECLARATION. ALL INTERMEDIARIES GIVEN ACCESS TO THE PUBLIC
PENSION FUND UNDER THE PROVISIONS OF THIS SECTION MUST  SIGN  A  WRITTEN
DECLARATION  THAT THEIR ACTION WILL BE IN CONFORMANCE WITH STATE LAW AND
POLICY AS DETERMINED BY THE COMPTROLLER.
  4. PROHIBITIONS. A PUBLIC PENSION FUND SHALL NOT ENTER INTO ANY AGREE-
MENT WITH AN INVESTMENT MANAGER THAT DOES  NOT  AGREE,  IN  WRITING,  TO
COMPLY  WITH  THE POLICY DESCRIBED IN SUBDIVISION TWO OF THIS SECTION. A
PUBLIC PENSION FUND SHALL NOT ENTER INTO ANY AGREEMENT WITH  AN  INVEST-
MENT  MANAGER  THAT ENGAGED AN INTERMEDIARY THAT HAS (OR HAS AN EMPLOYEE
OR  SPOUSE  OF  EMPLOYEE  THAT  HAS)  MADE  ANY  POLITICAL  CONTRIBUTION
DESCRIBED  IN  PARAGRAPH (G) OF SUBDIVISION TWO OF THIS SECTION FOR FIVE
YEARS FROM THE DATE OF SUCH CONTRIBUTION.
  5. THE COMPTROLLER, IN CONJUNCTION WITH THE SUPERINTENDENT  OF  INSUR-
ANCE  AND  THE STATE ATTORNEY GENERAL MAY PROHIBIT AN INVESTMENT MANAGER
WHO VIOLATES THE PROVISIONS OF THIS  SECTION  FROM  CONDUCTING  BUSINESS
WITH  A PUBLIC PENSION FUND OF THE STATE OF NEW YORK FOR FIVE YEARS. THE

S. 7152--A                          3

COMPTROLLER, IN CONJUNCTION WITH THE SUPERINTENDENT OF INSURANCE AND THE
STATE ATTORNEY GENERAL SHALL, BEFORE MAKING  A  FINAL  DETERMINATION  TO
PROHIBIT  AN  INVESTMENT  MANAGER FROM CONDUCTING BUSINESS WITH A PUBLIC
PENSION  FUND, NOTIFY THE INVESTMENT MANAGER AND INTERMEDIARY IN WRITING
OF THE REASONS FOR SUCH PROHIBITION AND  SHALL  AFFORD  SUCH  INVESTMENT
MANAGER  OR  AGENT  AN  OPPORTUNITY  TO BE HEARD IN PERSON OR BY COUNSEL
PRIOR TO MAKING A FINAL DETERMINATION. SUCH NOTIFICATION SHALL BE SERVED
PERSONALLY OR BY CERTIFIED MAIL IN ANY MANNER AUTHORIZED  BY  THE  CIVIL
PRACTICE LAW AND RULES FOR SERVICE OF A SUMMONS. SUCH PROHIBITION MAY BE
REDUCED BY A DECISION OF THE COMPTROLLER, IN CONJUNCTION WITH THE SUPER-
INTENDENT OF INSURANCE, UPON A SHOWING OF GOOD CAUSE.
  S  3.  Section 195.20 of the penal law, as amended by chapter 1 of the
laws of 2010, is amended to read as follows:
S 195.20 Defrauding the government.
  A person is guilty of defrauding the government when, being  a  public
servant  or  party  officer,  OR  WHILE ACTING AS AN INTERMEDIARY FOR AN
INVESTMENT MANAGER THAT IS SEEKING TO BE OR  IS  RETAINED  BY  A  PUBLIC
PENSION FUND, he or she:
  (a)  engages  in  a scheme constituting a systematic ongoing course of
conduct with intent to:
  (i) defraud the state or a political subdivision of  the  state  or  a
governmental  instrumentality  within  the  state or to obtain property,
services or other resources from the state or a political subdivision of
the state or a governmental instrumentality within the state by false or
fraudulent pretenses, representations or promises,  INCLUDING  KNOWINGLY
MAKING ANY MATERIALLY FALSE STATEMENT OR OMISSION IN CONNECTION WITH THE
PROVISION  OF  THE  STATEMENT  REQUIRED UNDER SUBDIVISION TWO OF SECTION
FORTY-ONE-B OF THE EXECUTIVE LAW; or
  (ii) defraud the state or a political subdivision of the  state  or  a
governmental instrumentality within the state by making use of property,
services  or  resources of the state, political subdivision of the state
or a governmental instrumentality within the state for private  business
purposes or other compensated non-governmental purposes; and
  (b)  so  obtains property, services or other resources with a value in
excess of one thousand dollars from such state, political subdivision or
governmental instrumentality.
  Defrauding the government is a class E felony.
  S 4. This act shall take effect immediately; provided,  however,  that
the provisions of section 41-b of the executive law, as added by section
two  of  this  act,  shall apply to investments between a public pension
fund and an investment manager entered into on and after such date.