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161.430 Investment of funds.
(1)
(2)
The board of trustees shall be the trustee of the funds of the retirement system
and shall have full power and responsibility for the purchase, sale, exchange,
transfer, or other disposition of the investments and moneys of the retirement
system. The board shall, by administrative regulation, establish investment
policies and procedures to carry out their responsibilities. The board shall
employ experienced competent investment counselors to advise it on all
matters pertaining to investment, except the board may employ qualified
investment personnel to advise it on investment matters not to exceed fifty
percent (50%) of the book value of the system's assets. All individuals
associated with the investment and management of retirement system assets,
whether contracted investment advisors or staff employees, shall adhere to
"The Code of Ethics" and "The Standards of Professional Conduct"
promulgated by the Association for Investment Management and Research.
Effective July 1, 1991, no investment counselor shall manage more than forty
percent (40%) of the funds of the retirement system. The board may appoint an
investment committee consisting of the executive secretary and two (2)
trustees to act for the board in all matters of investment, subject to the approval
of the board of trustees. The board of trustees, in keeping with their
responsibilities as trustees and wherever consistent with their fiduciary
responsibilities, shall give priority to the investment of funds in obligations
calculated to improve the industrial development and enhance the economic
welfare of the Commonwealth. Toward this end, the board shall develop
procedures for informing the business community of the potential for in-state
investments by the retirement fund, accepting and evaluating applications for
the in-state investment of funds, and working with members of the business
community in executing in-state investments which are consistent with the
board's fiduciary responsibilities. The board shall include in the criteria it uses
to evaluate in-state investments their potential for creating new employment
opportunities and adding to the total job pool in Kentucky. The board may
cooperate with the board of trustees of Kentucky Retirement Systems in
developing its program and procedures, and shall report to the Legislative
Research Commission annually on its progress in placing in-state investments.
The first report shall be submitted by October 1, 1991, and subsequent reports
shall be submitted by October 1 of each year thereafter. The report shall
include the number of applications for in-state investment received, the nature
of the investments proposed, the amount requested, the amount invested, and
the percentage of applications which resulted in investments.
The board members and investment counselor shall discharge their duties with
respect to the assets of the system solely in the interests of the active
contributing members and annuitants and:
(a) For the exclusive purpose of providing benefits to members and
annuitants and defraying reasonable expenses of administering the
system;
(b) With the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and familiar
with these matters would use in the conduct of an enterprise of a like
(3)
(4)
(5)
(6)
character and with like aims;
(c) By diversifying the investments of the plan so as to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not to do
so; and
(d) In accordance with the laws, administrative regulations, and other
instruments governing the system.
(a) In choosing and contracting for professional investment management
services the board must do so prudently and in the interest of the
members and annuitants. Any contract that the board makes with an
investment counselor shall set forth policies and guidelines of the board
with reference to standard rating services and specific criteria for
determining the quality of investments. Expenses directly related to
investment management services shall be financed from the guarantee
fund in amounts approved by the board.
(b) An investment counselor appointed under this section shall acknowledge
in writing his fiduciary responsibilities to the fund. To be eligible for
appointment, an investment counselor must be:
1.
Registered under the Federal Investment Advisors Act of 1940; or
2.
A bank as defined by that Act; or
3.
An insurance company qualified to perform investment services
under the laws of more than one (1) state.
No investment or disbursement of funds shall be made unless authorized by
the board of trustees, except that the board, in order to ensure timely market
transactions, shall establish investment guidelines, by administrative regulation,
and may permit its staff and investment counselors employed pursuant to this
section to execute purchases and sales of investment instruments within those
guidelines without prior board approval.
In discharging his or her administrative duties under this section, a trustee shall
strive to administer the retirement system in an efficient and cost-effective
manner for the taxpayers of the Commonwealth of Kentucky.
Notwithstanding any other provision of KRS 161.220 to 161.716, no funds of
the Kentucky Teachers' Retirement System, including fees and commissions
paid to an investment manager, private fund, or company issuing securities,
who manages systems assets, shall be used to pay fees and commissions to
unregulated placement agents. For purposes of this subsection, an
"unregulated placement agent" means an individual or firm who solicits
investments on behalf of an investment manager, private fund, or company
issuing securities, who is prohibited by federal securities laws and regulations
promulgated thereunder from receiving compensation for soliciting a
government agency.
Effective:April 11, 2012
History: Amended 2012 Ky. Acts ch. 75, sec. 13, effective April 11, 2012. -Amended 2008 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 32, effective June 27,
2008. -- Amended 2004 Ky. Acts ch. 121, sec. 5, effective July 1, 2004. -Amended 2002 Ky. Acts ch. 275, sec. 9, effective July 1, 2002. -- Amended
1994 Ky. Acts ch. 369, sec. 5, effective July 1, 1994. Amended 1992 Ky. Acts
ch. 192, sec. 4, effective July 1, 1992. -- Amended 1990 Ky. Acts ch. 442,
sec. 18, effective July 1, 1990; and ch. 476, Pt. V, sec. 499, effective July 13,
1990. -- Amended 1988 Ky. Acts ch. 363, sec. 4, effective July 1, 1988. -Amended 1984 Ky. Acts ch. 253, sec. 7, effective July 1, 1984. -- Amended
1980 Ky. Acts ch. 246, sec. 10, effective July 15, 1980. -- Amended 1978 Ky.
Acts ch. 152, sec. 4, effective March 28, 1978. -- Amended 1972 Ky. Acts
ch. 82, sec. 8. -- Amended 1968 Ky. Acts ch. 136, sec. 3. -- Amended 1966 Ky.
Acts ch. 16, sec. 2. -- Amended 1964 Ky. Acts ch. 43, sec. 5. -- Amended 1962
Ky. Acts ch. 64, sec. 4. -- Amended 1960 Ky. Acts ch. 44, sec. 7. -- Amended
1958 Ky. Acts ch. 8, sec. 2. -- Amended 1954 Ky. Acts ch. 215, sec. 1. -Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky.
Stat. sec. 4506b-21.
Legislative Research Commission Note (4/11/2012). 2012 Ky. Acts ch. 75, sec.
18, provides that the amendments made to subsection (6) of this statute
regarding unregulated placement agents by 2012 Ky. Acts ch. 75, sec. 13, "shall
apply to contracts established or contracts renewed on or after July 1, 2012."
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