| 4 | 6 | | AN ACT |
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| 5 | 7 | | relating to the investment authority of the Teacher Retirement |
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| 6 | 8 | | System of Texas. |
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| 7 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 8 | 10 | | SECTION 1. Sections 825.301(a), (b), and (b-1), Government |
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| 9 | 11 | | Code, are amended to read as follows: |
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| 10 | 12 | | (a) The board of trustees shall invest and reinvest assets |
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| 11 | 13 | | of the retirement system without distinction as to their source in |
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| 12 | 14 | | accordance with Section 67, Article XVI, Texas Constitution. For |
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| 13 | 15 | | purposes of the investment authority of the board of trustees under |
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| 14 | 16 | | Section 67, Article XVI, Texas Constitution, "securities" includes |
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| 15 | 17 | | [means] any investment instrument within the meaning of the term as |
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| 16 | 18 | | defined by Section 4, The Securities Act (Article 581-4, Vernon's |
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| 17 | 19 | | Texas Civil Statutes), 15 U.S.C. Section 77b(a)(1), or 15 U.S.C. |
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| 18 | 20 | | Section 78c(a)(10), any derivative instrument, and any other |
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| 19 | 21 | | instrument commonly used by institutional investors to manage |
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| 20 | 22 | | institutional investment portfolios. An interest in a limited |
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| 21 | 23 | | partnership or investment contract is considered a security without |
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| 22 | 24 | | regard to the number of investors or the control, access to |
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| 23 | 25 | | information, or rights granted to or retained by the retirement |
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| 24 | 26 | | system. Any instrument or contract intended to manage transaction |
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| 25 | 27 | | or currency exchange risk in purchasing, selling, or holding |
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| 26 | 28 | | securities is considered to be a security. Investment decisions |
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| 27 | 29 | | are subject to the standard provided in the Texas Trust Code by |
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| 28 | 30 | | Section 117.004(b), Property Code. |
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| 29 | 31 | | (b) The [In addition to the board's authority under |
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| 30 | 32 | | Subsection (a-2), the] board of trustees may delegate discretionary |
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| 31 | 33 | | investment authority to external investment managers to invest and |
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| 32 | 34 | | manage not more than 30 percent of the total assets held in trust by |
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| 33 | 35 | | the retirement system and may contract with external [private |
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| 34 | 36 | | professional] investment [managers,] advisors[,] and consultants |
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| 35 | 37 | | to assist and advise the board and the staff of the retirement |
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| 36 | 38 | | system [in investing the assets of the retirement system]. |
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| 37 | 39 | | (b-1) By accepting a delegation of discretionary investment |
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| 38 | 40 | | authority [under Subsection (a-2)] or an engagement to assist or |
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| 39 | 41 | | advise the board or the staff of the retirement system under |
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| 40 | 42 | | Subsection (b), an external [a professional] investment manager, |
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| 41 | 43 | | advisor, or consultant submits to the jurisdiction of the courts of |
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| 42 | 44 | | this state in all proceedings arising from or related to |
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| 43 | 45 | | performance of the delegated authority or engagement. An action |
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| 44 | 46 | | relating to services rendered under this section shall be brought |
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| 45 | 47 | | only in a state district court sitting in Travis County, Texas. |
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| 46 | 48 | | Chapter 2260 does not apply to a contract under this section |
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| 47 | 49 | | [Subsection (a-2) or (b)]. This subsection does not waive any |
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| 48 | 50 | | immunity of the retirement system. |
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| 49 | 51 | | SECTION 2. Sections 825.301(a-1) and (a-2), Government |
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| 50 | 52 | | Code, are repealed. |
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| 51 | 53 | | SECTION 3. This Act takes effect immediately if it receives |
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| 52 | 54 | | a vote of two-thirds of all the members elected to each house, as |
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| 53 | 55 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 54 | 56 | | Act does not receive the vote necessary for immediate effect, this |
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| 55 | 57 | | Act takes effect September 1, 2017. |
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