Amendment ID: S2776-2-R1
Redraft Amendment 2
Pension Divestment from Russia
Messrs. Timilty, Montigny, Tarr, Feeney and O'Connor, Ms. Moran, Ms. Gobi, Messrs. Moore, Brady, Lesser, Pacheco, DiDomenico and Fattman move that the proposed new text be amended by inserting after section 52 the following section:-
“SECTION 52A. (a) As used in this section, the following words shall have the following meanings:-
“Board”, the pension reserves investment management board established pursuant to section 23 of chapter 32 of the General Laws.
“Company”, any sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company or other entity or business association, including all wholly-owned subsidiaries, majority-owned subsidiaries, parent companies or affiliates of such entities or business associations that exist for profit-making purposes.
“Direct holdings”, all securities of a company held directly by the public fund or in an account or fund in which the public fund owns all shares or interests.
“Indirect holdings”, all securities of a company held in an account or fund, such as a mutual fund, managed by 1 or more persons not employed by the public fund, in which the public fund owns shares or interests together with other investors not subject to this section.
“Public fund”, the Pension Reserves Investment Trust or the Pension Reserves Investment Management Board in charge of managing the pooled investment fund consisting of the assets of the State Employees’ and Teachers’ Retirement Systems as well as the assets of local retirement systems under the control of the board.
“Scrutinized company”, any company that: (i) has been sanctioned by the United States Government as a result of Russia’s invasion of Ukraine; or (ii) is incorporated in the country of Russia.
(b) Notwithstanding any general or special law to the contrary, within 90 days of the effective date of this section, the public fund shall make its best efforts to facilitate the identification of all scrutinized companies in which the public fund has direct or indirect holdings. The identification of scrutinized companies shall be the responsibility of an independent, third-party research firm identified by the public fund and based on the criteria set forth in this section. By the first meeting of the public fund following the 90-day period, the public fund shall assemble all scrutinized companies in which it has direct or indirect holdings into a scrutinized companies list. The public fund shall update the scrutinized companies list on a quarterly basis based on evolving information from the independent, third-party research firm.
(c)(1) Notwithstanding any general or special law to the contrary, the public fund shall adhere to the procedure in paragraphs (2) to (4), inclusive, for companies on the scrutinized companies list.
(2) The public fund shall determine the companies on the scrutinized companies list, created under subsection (b), in which the public fund owns direct or indirect holdings.
(3) The public fund shall sell, redeem, divest or withdraw all publicly-traded securities of a company identified in paragraph (2), except as provided in paragraph (6) and subsection (e), according to the following schedule: (i) at least 50 per cent of such assets shall be removed from the public fund’s assets under management within 6 months after the company’s most recent appearance on the scrutinized companies list, subject to market availability; and (ii) 100 per cent of such assets shall be removed from the public fund’s assets under management within 12 months after the company’s most recent appearance on the scrutinized companies list, subject to market availability; provided, however, that this paragraph shall only apply until such company is removed from the scrutinized companies list.
(4) During the time period outlined in paragraph (3), the public fund may sign onto engagement letters or participate in shareholder resolutions regarding the scrutinized business operations of companies identified in paragraph (2) in which the public fund still owns direct or indirect holdings.
(5) At no time shall the public fund acquire securities of companies on the scrutinized companies list, except as provided in paragraphs (6) and (7).
(6) No company that the United States government affirmatively declares to be excluded from its present or future federal sanctions regime relating to the government of Russia shall be subject to divestment or an investment prohibition under paragraphs (2) to (5), inclusive.
(7) Notwithstanding any provision of this section to the contrary, paragraphs (2) to (5), inclusive, shall not apply to indirect holdings in actively managed investment funds; provided, however, that the public fund shall submit letters to the managers of such investment funds containing scrutinized companies requesting that they consider removing such companies from the investment fund or create a similar actively managed fund with indirect holdings devoid of such companies. If the manager creates a similar fund, the public fund shall replace all applicable investments with investments in the similar fund in an expedited timeframe consistent with prudent investing standards. For the purposes of this section, private equity funds shall be deemed to be actively managed investment funds.
(d) Notwithstanding any general or special law to the contrary, with respect to actions taken in compliance with this section, the public fund shall be exempt from any conflicting statutory or common law obligations, including any such obligation with respect to the choice of asset managers, investment funds or investments for the public fund’s securities portfolios and all good faith determinations regarding companies as required by this section.
(e) Notwithstanding any general or special law to the contrary, the public fund may cease divesting from certain scrutinized companies under paragraphs (2) to (4), inclusive, of subsection (c), reinvest in certain scrutinized companies from which it divested under said paragraphs (2) to (4), inclusive, of said subsection (c) or continue to invest in certain scrutinized companies from which it has not yet divested upon clear and convincing evidence showing that the total and aggregate value of all assets under management by, or on behalf of, the public fund becomes: (i) equal to or less than 99.5 per cent; or (ii) 100 per cent less 50 basis points of the hypothetical value of all assets under management by, or on behalf of, the public fund assuming no divestment for any company had occurred under said paragraphs (2) to (4), inclusive, of said subsection (c). Cessation of divestment, reinvestment or any subsequent ongoing investment authorized by this subsection shall be strictly limited to the minimum steps necessary to avoid the contingency set forth in the preceding sentence.
For any cessation of divestment, and in advance of such cessation, authorized by this subsection, the public fund shall provide a written report to the attorney general, the senate and house committees on ways and means and the joint committee on public service, updated semi-annually thereafter as applicable, setting forth the reasons and justification, supported by clear and convincing evidence, for its decisions to cease divestment of holdings in companies on the scrutinized companies list or to reinvest or remain invested in companies on the scrutinized companies list.
(f) The public fund shall file a copy of the scrutinized companies list with the clerks of the senate and the house of representatives and the attorney general within 30 days after the list is created. Annually thereafter, the public fund shall file a report with the clerks of the senate and the house of representatives and the attorney general that includes: (i) the most recent scrutinized companies list; (ii) all investments sold, redeemed, divested or withdrawn in compliance with paragraphs (2) to (4), inclusive, of subsection (c); (iii) all prohibited investments from which the public fund has not yet divested under paragraph (5) of said subsection (c); and (iv) any progress made under paragraph (7) of said subsection (c).”; and
by inserting after section 62 the following section:-
“SECTION 62A. Section 52A shall expire upon: (i) the removal of United States federal government sanctions against Russia; (ii) the President of the United States declaring that said section 52A interferes with the conduct of United States foreign policy; or (iii) January 1, 2028; whichever occurs first.”.