Text of OK SB 1004 (2023)
Public retirement systems; creating the Oklahoma Pension Fiduciary Duty Act. Effective date.
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As introduced
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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
SENATE BILL 1004
By: Jett
AS INTRODUCED
An Act relating to public retirement systems;
creating the Oklahoma Pension Fiduciary Duty Act;
providing short title; defining terms; requiring the
discharge of duties solely in the financial interest
of certain participants and beneficiaries; requiring
certain fiduciary to be subject to certain duties;
limiting consideration upon discharge of certain
duties; requiring certain shares to be held solely
for certain financial interest; prohibiting the
granting of proxy voter status except under certain
circumstance; prohibiting adoption of certain
practice except under certain circumstance; requiring
the recording and publication of certain proxy votes;
authorizing Attorney General to investigate
violations of the Oklahoma Pension Fiduciary Duty
Act; providing for penalty for violation; providing
for noncodification; providing for codification; and
providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law not to be
codified in the Oklahoma Statutes reads as follows:
This act shall be known and may be cited as the “Oklahoma
Pension Fiduciary Duty Act”.
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SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3600 of Title 62, unless there
is created a duplication in numbering, reads as follows:
A. As used in the Oklahoma Pension Fiduciary Duty Act:
1. “Fiduciary” means any person acting on behalf of a public
retirement system;
2. “Fiduciary commitment” means any evidence of a fiduciary's
purpose in managing assets as a fiduciary, including but not limited
to, any of the following in a fiduciary's capacity as a fiduciary:
a.
advertising, statements, explanations, reports,
letters to clients, communications with portfolio
companies, statements of principles, or commitments,
or
b.
participation in, affiliation with, or status as a
signatory to, any coalition, initiative, joint
statement of principles, or agreement;
3. “Financial” means having been prudently determined by a
fiduciary to have a material effect on the financial risk or the
financial return of an investment. Financial shall not mean any
action taken, or factor considered, by a fiduciary with any purpose
whatsoever to further social, political, or ideological interests.
A fiduciary shall have taken an action, or considered a factor, with
a purpose to further social, political, or ideological interests
based upon evidence indicating such a purpose, including but not
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limited to, any fiduciary commitment to further, through portfolio
company engagement, board or shareholder votes, or otherwise as a
fiduciary, any of the following beyond the fiduciary's duties as
provided in the Oklahoma Statutes:
a.
eliminating, reducing, offsetting, or disclosing
greenhouse gas emissions,
b.
instituting board or employment composition,
compensation, or disclosure criteria that incorporates
characteristics based on race, sex, religion, or
ideology,
c.
divesting from, limiting investment in, or limiting
the activities or investments of any company, for
failing or not committing, to meet standards or
disclosures relating to:
(1) the environment,
(2) abortion access, or
(3) access to gender reassignment therapy or surgery,
or
d.
divesting from, limiting investment in, or limiting
the activities or investments of any company that
engages in, facilitates, or supports the manufacture,
import, distribution, marketing or advertising, sale,
or lawful use of firearms, ammunition, or components
parts and accessories of firearms or ammunition;
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4. "Proxy vote" means a ballot cast by a person or entity on
behalf of a public retirement system as a shareholder of a publicly
traded company; and
5. "Public retirement system" means the following:
a.
the Oklahoma Firefighters Pension and Retirement
System,
b.
the Oklahoma Police Pension and Retirement System
c.
the Uniform Retirement System for Justices and Judges
d.
the Oklahoma Law Enforcement Retirement System
e.
the Teachers' Retirement System of Oklahoma
f.
the Oklahoma Public Employees Retirement System, and
g.
any retirement or pension system or plan maintained,
provided, or offered by any political subdivision of
this state.
B. In making and supervising investments of the reserve fund of
a public retirement system, a fiduciary or board of a public
retirement system shall discharge its duties solely in the financial
interest of the participants and beneficiaries for the exclusive
purposes of:
1. Providing financial benefits to participants and their
beneficiaries; and
2. Defraying reasonable expenses of administering the system.
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C. An investment manager appointed by a public retirement
system shall be subject to the same fiduciary duties as provided in
this act.
D. A fiduciary shall take into account only financial factors
when discharging its duties with respect to a plan.
E. All shares held directly or indirectly by or on behalf of a
public retirement system and/or the participants and their
beneficiaries shall be held solely in the financial interest of plan
participants and their beneficiaries.
F. A public retirement system shall not grant proxy voting
authority to any person who is not an employee of the system, unless
that person has a practice of, and in writing commits to, the
adherence to the provisions of this act.
G. A public retirement system's assets shall not be entrusted
to a fiduciary, unless that fiduciary has a practice of, and in
writing commits to, adherence to the provisions of this act when
engaging with portfolio companies and voting shares or proxies.
H. A public retirement system shall not adopt a practice of
following the recommendations of a proxy advisor or other service
provider, unless such advisor or service provider has a practice of,
and in writing commits to, adherence to the provisions of this act.
I. All proxy votes shall be tabulated and reported annually to
the governing board of every public retirement system. For each
vote, the report shall contain a vote caption, the plan's vote, the
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recommendation of company management, and, if applicable, the proxy
advisor's recommendation. These reports shall be posted on a
publicly available webpage on the governing board's website.
J. Violations of this act may be investigated by the Attorney
General who shall, upon finding reasonable cause after
investigation, require a fiduciary to file on such forms as he or
she prescribes a statement or report in writing, under oath, as to
all the facts and circumstances concerning the violation and to
provide other data or information the Attorney General deems
necessary.
K. Any company who contracts with a public retirement system
that violates the provisions of this act shall be obligated to pay a
penalty to the public retirement system an amount equal to three (3)
times the required annual payments for services rendered pursuant to
the contract.
SECTION 3. This act shall become effective November 1, 2023.
59-1-250
QD
1/19/2023 12:16:22 PM