STATE OF NEW YORK ________________________________________________________________________ 631 2023-2024 Regular Sessions IN SENATE January 5, 2023 ___________ Introduced by Sens. COMRIE, JACKSON, PARKER -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions AN ACT to amend the retirement and social security law, the state finance law, the education law, and the workers' compensation law, in relation to the use of MWBE investments for New York state funds The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The retirement and social security law is amended by adding 2 a new section 177-b to read as follows: 3 § 177-b. Use of MWBE asset management and financial institutions. 1. 4 In addition to the powers contained in any other provision of law, 5 including the provisions of the administrative code of the city of New 6 York, it shall be the goal of public officials with investment making 7 discretion and duties, including, but not limited to elected officials 8 such as the state comptroller and the comptroller of the city of New 9 York, appointed officials, the trustee or trustees of a fund, and state 10 authority officials that, to the greatest extent feasible within the 11 bounds of financial and fiduciary prudence, such public officials, trus- 12 tee or trustees shall aspire to utilize MWBE asset managers, MWBE finan- 13 cial institutions, and MWBE financial or professional service firms for 14 the investment of no less than twenty percent of the total dollar amount 15 of such fund under management, which shall include, but not be limited 16 to, the following: 17 (a) investing assets of such fund with MWBE asset managers; 18 (b) subject to best execution: (i) conducting trades of public equity 19 securities with MWBE financial institutions; and (ii) conducting trades 20 of fixed-income securities through MWBE institutions; 21 (c) allocating investments of assets of such fund either through: (i) 22 direct investments in the equities and debt securities of MWBEs; or (ii) 23 indirectly through special programs involving MWBE asset managers; or EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02760-01-3
S. 631 2 1 (d) awarding contracts for accounting, banking, financial advisory, 2 insurance, legal, research, valuation, and other financial and profes- 3 sional services to MWBE financial institutions and other MWBE profes- 4 sional service firms. 5 2. The trustee or trustees of a fund shall be authorized to establish 6 additional aspirational goals to the goals directed by subdivision one 7 of this section. 8 3. Within sixty days of the end of each fiscal year following the 9 effective date of this section, the trustee or trustees of a fund shall 10 report to the governor, legislature, and chief diversity officer of the 11 state of New York on the participation of MWBE asset managers, MWBE 12 financial institutions, and MWBE professional service providers in 13 investment and brokerage transactions with or as providers of services 14 for such fund, including a comparative analysis of such activity rela- 15 tive to such activity with all asset managers, financial institutions, 16 and professional service providers for the relevant period, and on the 17 progress and success of the efforts undertaken during such period to 18 achieve the aspirational goals under subdivision one of this section to 19 the greatest extent feasible within the bounds of financial and fiduci- 20 ary prudence. Each report shall be simultaneously published on the 21 website of such fund for not less than sixty days following its release 22 to the governor and the other recipients named in this subdivision. 23 § 2. The retirement and social security law is amended by adding a new 24 section 177-e to read as follows: 25 § 177-e. Required disclosures from consultants; MWBEs and businesses 26 owned by persons with disabilities. 1. As used in this section, the term 27 "disability" shall have the same meaning as defined by section two 28 hundred ten of the economic development law. 29 2. No later than January first, two thousand twenty-four, and each 30 January first thereafter, each consultant retained by the trustee or 31 trustees of a fund shall disclose to the trustee or trustees of such 32 fund the total number of searches for investment services made by such 33 consultant in the previous calendar year including all such searches: 34 (a) that included (i) MWBE asset managers, (ii) MWBE financial 35 institutions, (iii) MWBE financial or professional service firms, or 36 (iv) any business enterprise at least fifty-one percent owned by indi- 37 viduals with disabilities; 38 (b) in which the consultant recommended for selection (i) MWBE asset 39 managers, (ii) MWBE financial institutions, (iii) MWBE financial or 40 professional service firms, or (iv) any business enterprise at least 41 fifty-one percent owned by individuals with disabilities; and 42 (c) that resulted in the selection of (i) MWBE asset managers, (ii) 43 MWBE financial institutions, (iii) MWBE financial or professional 44 service firms, or (iv) any business enterprise at least fifty-one 45 percent owned by individuals with disabilities, including the total 46 dollar amounts invested pursuant to such selection. 47 3. Beginning January first, two thousand twenty-four, no contract, 48 oral or written, for consulting services shall be awarded by the trustee 49 or trustees of a fund without first requiring the consultant to make the 50 disclosures required under subdivision two of this section. 51 4. Such disclosure shall be considered by the trustee or trustees of a 52 fund, within the bounds of financial and fiduciary prudence, prior to 53 the awarding of an oral or written contract for consulting services. 54 § 3. The retirement and social security law is amended by adding a new 55 section 177-f to read as follows:
S. 631 3 1 § 177-f. Required disclosures from consultants; compensation and 2 economic opportunity received. 1. For the purposes of this section, the 3 following terms shall have the following meanings: 4 (a) "compensation" means any money, thing of value, or economic bene- 5 fit conferred on, or received by, a consultant in return for services 6 rendered, or to be rendered. 7 (b) "economic opportunity" means any purchase, sale, lease, contract, 8 option, or other transaction or arrangement involving property or 9 services wherein a consultant may gain an economic benefit. 10 2. No later than January first, two thousand twenty-four, and each 11 January first succeeding such date, a consultant retained by the trustee 12 or trustees of a fund shall disclose to the trustee or trustees of such 13 fund all compensation and economic opportunity received in the prior 14 twenty-four months from investment advisors retained by such trustee or 15 trustees. 16 3. Beginning January first, two thousand twenty-four, a consultant 17 shall disclose to the trustee or trustees of a fund any compensation or 18 economic opportunity received in the prior twenty-four months from an 19 investment advisor that is recommended for selection by such consultant. 20 A consultant shall make this disclosure prior to the trustee or trustees 21 of a fund selecting an investment advisor for appointment. 22 4. Beginning January first, two thousand twenty-four, no contract, 23 oral or written, for consulting services shall be awarded by a trustee 24 or trustees of a fund without first requiring the consultant to make the 25 disclosures required by subdivision three of this section. 26 § 4. Section 8 of the state finance law is amended by adding two new 27 subdivisions 21 and 22 to read as follows: 28 21. a. When procuring or authorizing the procurement of any goods and 29 services, whether through a request for proposal or otherwise, be 30 authorized to incorporate preferences in the scoring process for busi- 31 nesses that: 32 (1) are a minority-owned business enterprise or a woman-owned business 33 enterprise, as such terms are defined by section two hundred ten of the 34 economic development law; 35 (2) are at least fifty-one percent owned by a veteran or veterans or a 36 person or persons with a disability, as such terms are defined by 37 section two hundred ten of the economic development law; or 38 (3) have a record of support for increasing diversity and inclusion in 39 board membership, management, employment, philanthropy, and supplier 40 diversity, including investment professionals and investment sourcing. 41 b. Beginning with the fiscal year two thousand twenty-four, and at 42 least annually thereafter, report on his or her utilization of the busi- 43 nesses described in paragraph a of this subdivision. Such report shall 44 be published on the official website of the comptroller. 45 22. Review a financial institution's federal Community Reinvestment 46 Act rating, record, and current level of financial commitment to the 47 community when determining the eligibility of such financial institution 48 to participate in a banking contract, investment contract, investment 49 activity, or other financial program under the control or supervision of 50 the comptroller. 51 § 5. Subdivision 1 of section 423-c of the retirement and social secu- 52 rity law, as added by chapter 171 of the laws of 2010, is amended to 53 read as follows: 54 1. Within the discretion of the state comptroller and in accordance 55 with and subject to his or her fiduciary duties and obligations as trus- 56 tee of the common retirement fund and to the members, retirees and bene-
S. 631 4 1 ficiaries of such fund and such other investment limitations as may be 2 prescribed by this chapter, the comptroller is authorized to establish 3 an MWBE asset management and financial institution strategy [including] 4 consistent with and in addition to his or her obligations under section 5 one hundred seventy-seven-b of this chapter, which shall include reason- 6 able goals for utilization of MWBE asset managers, MWBE financial insti- 7 tutions and MWBE financial and professional service firms, which strate- 8 gy shall include, but shall not be limited to, the following objectives: 9 (a) investing assets of the common retirement fund with MWBE asset 10 managers; 11 (b) subject to best execution: (i) conducting trades of public equity 12 securities with MWBE financial institutions; and (ii) conducting trades 13 of fixed-income securities through MWBE financial institutions; 14 (c) allocating investments of assets of the common retirement fund 15 either through: (i) direct investments in the equities and debt securi- 16 ties of MWBEs; or (ii) indirectly through special programs involving 17 MWBE asset managers; and 18 (d) awarding contracts for accounting, banking, financial advisory, 19 insurance, legal, research, valuation and other financial and profes- 20 sional services to MWBE financial institutions and other MWBE profes- 21 sional service firms. 22 § 6. Subdivision 1 of section 508-a of the education law, as added by 23 chapter 171 of the laws of 2010, is amended to read as follows: 24 1. Within the discretion of the retirement board and in accordance 25 with and subject to its fiduciary duties and obligations as trustees of 26 the [teachers] teachers' retirement system and to the members, retirees 27 and beneficiaries of such system and such other investment limitations 28 as may be prescribed by this chapter, the retirement board is authorized 29 to establish [on] an MWBE asset management and financial institution 30 strategy pursuant to section four hundred twenty-three-c of the retire- 31 ment and social security law [including] consistent with and in addition 32 to his or her obligations under section one hundred seventy-seven-b of 33 the retirement and social security law, which shall include reasonable 34 goals for utilization of MWBE asset managers, MWBE financial insti- 35 tutions and MWBE financial and professional services firms, as such 36 terms are defined in section one hundred seventy-six of the retirement 37 and social security law which strategy shall include, but shall not be 38 limited to, the following objectives: 39 a. investing assets of the teachers' retirement system with MWBE asset 40 managers; 41 b. subject to best execution, (1) conducting trades of public equity 42 securities with MWBE financial institutions and (2) conducting trades of 43 fixed-income securities through MWBE financial institutions; 44 c. allocating investments of assets of the [teacher's] teachers' 45 retirement system either through (1) direct investments in the equities 46 and debt securities of MWBEs or (2) indirectly through special programs 47 involving MWBE asset managers; and 48 d. awarding contracts for accounting, banking, financial advisory, 49 insurance, legal, research, valuation and other financial and profes- 50 sional services to MWBE financial institutions and other MWBE profes- 51 sional services firms. 52 As used in this section, the terms "MWBE asset manager", "MWBE finan- 53 cial institutions", "MWBE", "[fidiuciary-controlled] fiduciary-cont- 54 rolled entities", and "best execution" shall have the meanings specified 55 in section one hundred seventy-six of the retirement and social security 56 law, and shall be certified in a manner consistent with the provisions
S. 631 5 1 of subdivision three of section four hundred twenty-three-c of the 2 retirement and social security law. 3 § 7. Paragraph c of subdivision 2 of section 5 of the state finance 4 law, as added by chapter 171 of the laws of 2010, is amended to read as 5 follows: 6 c. Within the discretion of the deferred compensation board and in 7 accordance with and subject to its fiduciary duty and obligations to the 8 deferred compensation plan for state employees and to the members and 9 beneficiaries of such plan and such other investment limitations as may 10 be prescribed by this chapter, the deferred compensation board is 11 authorized to establish an MWBE asset management and financial institu- 12 tion strategy [including] consistent with and in addition to his or her 13 obligations under section one hundred seventy-seven-b of the retirement 14 and social security law, which shall include reasonable goals for utili- 15 zation of MWBE asset managers, MWBE financial institutions and MWBE 16 professional service firms, which shall include, but shall not be limit- 17 ed to, the following objectives: 18 (i) conducting procurement procedures in a manner that will assure the 19 inclusion of MWBE asset managers in any request for proposal or search 20 process for asset management services undertaken in accordance with the 21 rules and regulations [and] of the board; 22 (ii) subject to best execution policies, developing a strategy to (1) 23 conduct trades of public equity securities with MWBE financial insti- 24 tutions and (2) conduct trades of fixed-income securities through MWBE 25 financial institutions; 26 (iii) conducting procurement procedures in a manner that will assure 27 the inclusion of MWBE financial institutions and other MWBE professional 28 service firms in procurements for services that include accounting, 29 banking, financial advisory, insurance, legal, research, valuation and 30 other financial and professional services that are undertaken in accord- 31 ance with the rules and regulations of the board; 32 (iv) cooperating with other fiduciary controlled entities and state 33 agencies and offices to identify MWBE asset managers, MWBE financial 34 institutions and MWBE professional service firms. 35 As used in this section, the terms "MWBE asset manager", "MWBE finan- 36 cial institutions", "MWBE", "fiduciary-controlled entities" and "best 37 execution" shall have the meanings specified in section one hundred 38 seventy-six of the retirement and social security law. 39 § 8. Subdivision 1 of section 87-i of the workers' compensation law, 40 as added by chapter 171 of the laws of 2010, is amended to read as 41 follows: 42 1. Within the discretion of the commissioners of the state insurance 43 fund and in accordance with and subject to their fiduciary duty and 44 obligations as trustees of the state insurance fund and to the benefici- 45 aries of such fund and such other investment limitations as may be 46 prescribed by this chapter, the commissioners are authorized to estab- 47 lish an MWBE asset management and financial institution strategy 48 [including] consistent with and in addition to their obligations under 49 section one hundred seventy-seven-b of the retirement and social securi- 50 ty law, which shall include reasonable goals for utilization of MWBE 51 asset managers, MWBE financial institutions and MWBE financial and 52 professional service firms, which strategy shall include, but shall not 53 be limited to, the following objectives: 54 (a) investing assets of the state insurance fund with MWBE asset 55 managers;
S. 631 6 1 (b) subject to best execution, (1) conducting trades of public equity 2 securities with MWBE financial institutions; and (2) conducting trades 3 of fixed-income securities through MWBE financial institutions; 4 (c) allocating investments of assets of the state insurance fund 5 either through (1) direct investments in the equities and debt securi- 6 ties of MWBEs; or (2) indirectly through special programs involving MWBE 7 asset managers; and 8 (d) awarding contracts for accounting, banking, financial advisory, 9 insurance, legal, research, valuation and other financial and profes- 10 sional services to MWBE financial institutions and other MWBE profes- 11 sional service firms. 12 As used in this section, the terms "MWBE asset manager", "MWBE finan- 13 cial institutions", "MWBE", "fiduciary-controlled entities" and "best 14 execution" shall have the meanings specified in section one hundred 15 seventy-six of the retirement and social security law and shall be 16 certified in a manner consistent with the provisions of subdivision 17 three of section four hundred twenty-three-c of the retirement and 18 social security law. 19 § 9. This act shall take effect on the first of January next succeed- 20 ing the date on which it shall have become a law.