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Engrossed Version Senate Bill 653 History

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SB653 eng


ENGROSSED

Senate Bill No. 653

(By Senator Plymale)

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[Introduced February 18, 2002; referred to the Committee

on Pensions; and then to the Committee on Finance.]

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A BILL to amend and reenact section twelve, article six, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to further amend said article by adding thereto a new section, designated section eighteen, all relating to defining "international securities"; allowing for a ten percent allocation to "alternative" investments of individual participant plans, consolidated fund or any other endowment or fund managed by the board of investment management; providing that the board's determinations concerning the characterization of the type of a particular investment shall be conclusive; and providing that said article is to be liberally construed.

Be it enacted by the Legislature of West Virginia:
That section twelve, article six, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that said article be further amended by adding thereto a new section, designated section eighteen, all to read as follows:
ARTICLE 6. WEST VIRGINIA INVESTMENT MANAGEMENT BOARD.
§12-6-12. Investment restrictions.
(a) The board shall hold in equity investments no more than sixty percent of the assets managed by the board and no more than sixty percent of the assets of any individual participant plan or the consolidated fund.
(b) The board shall hold in international securities no more than twenty percent of the assets managed by the board and no more than twenty percent of the assets of any individual participant plan or the consolidated fund. "International security" means a security, the trading of which occurs neither in whole nor in part in United States currency.
(c) The board may not at the time of purchase hold more than five percent of the assets managed by the board in the equity securities of any single company or association: Provided, That if a company or association has a market weighting of greater than five percent in the Standard & Poor's 500 index of companies, the board may hold securities of that equity equal to its market weighting.
(d) The board shall at all times limit its asset allocation and types of securities to the following:
(1) The board may not hold more than twenty percent of the aggregate participant plan assets in commercial paper. Any commercial paper at the time of its acquisition shall be in one of the two highest rating categories by an agency nationally known for rating commercial paper;
(2) At no time shall the board hold more than seventy-five percent of the assets managed by the board in corporate debt. Any corporate debt security at the time of its acquisition shall be rated in one of the six highest rating categories by a nationally recognized rating agency; and
(3) No security may be purchased by the board unless the type of security is on a list approved by the board. The board may modify the securities list at any time and shall give notice of that action pursuant to subsection (g), section three of this article and shall review the list at its annual meeting.
(e) Notwithstanding the investment limitations set forth in this section, it is recognized that the assets managed by the board, or the assets of the consolidated fund or participant plans, whether considered in the aggregate or individually, may temporarily exceed the investment limitations in this section due to market appreciation, depreciation and rebalancing limitations. Accordingly, the limitations on investments set forth in this section shall not be considered to have been violated if the board rebalances the assets it manages or the assets of the consolidated fund or participant plans, whichever is applicable, to comply with the limitations set forth in this section at least once every six months based upon the latest available market information and any other reliable market data that the board considers advisable to take into consideration.
(f) The board, at the annual meeting provided for in subsection (h), section three of this article, shall review, establish and modify, if necessary, the investment objectives of the individual participant plans as incorporated in the investment policy statements of the respective trusts so as to provide for the financial security of the trust funds giving consideration to the following:
(1) Preservation of capital;
(2) Diversification;
(3) Risk tolerance;
(4) Rate of return;
(5) Stability;
(6) Turnover;
(7) Liquidity; and
(8) Reasonable cost of fees.
(g) In addition to any and all other investment authority granted to the board by this article, the board is expressly authorized to invest no more than ten percent of the assets managed by the board and no more than ten percent of the assets of any individual participant plan, consolidated fund or any other endowment or other fund managed by the board, in any investment commercially recognized as an alternative investment, as determined by the board from time to time. The investments described in this subsection shall not be subject to any limitations or restrictions set forth in this article or elsewhere in the code except for the ten percent limitation set forth in this subsection, the percentage limitations set forth in subsection (a) of this section and the standard of care set forth in section eleven of this article. The determinations made by the board with respect to the characterization of the type or functional nature of any particular investment made pursuant to this subsection shall be given great weight and, unless clearly erroneous, shall be conclusive.
§12-6-18. Liberal construction; determinations and interpretations by board.
This article, being necessary for and to secure the public health, safety, convenience and welfare of the citizens of this state, shall be liberally construed to effect the public purposes hereof. The determinations and interpretations made by the board with respect to this article, including, without limitation, the determinations and interpretations made by the board with respect to the characterization of the type or functional nature of any particular investment made pursuant to this article, shall be given great weight and, unless clearly erroneous, shall be conclusive.
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