CHAPTER 2263. ETHICS AND DISCLOSURE REQUIREMENTS FOR OUTSIDE FINANCIAL ADVISORS AND SERVICE PROVIDERS - Texas Statutes

GOVERNMENT CODE

TITLE 10. GENERAL GOVERNMENT

SUBTITLE F. STATE AND LOCAL CONTRACTS AND FUND MANAGEMENT

CHAPTER 2263. ETHICS AND DISCLOSURE REQUIREMENTS FOR OUTSIDE

FINANCIAL ADVISORS AND SERVICE PROVIDERS

Sec. 2263.001. APPLICABILITY. (a) This chapter applies in

connection with the management or investment of any state funds

managed or invested:

(1) under the Texas Constitution or other law, including

Chapters 404 and 2256; and

(2) by or for:

(A) a public retirement system as defined by Section 802.001

that provides service retirement, disability retirement, or death

benefits for officers or employees of the state;

(B) an institution of higher education as defined by Section

61.003, Education Code; or

(C) another entity that is part of state government and that

manages or invests state funds or for which state funds are

managed or invested.

(b) This chapter applies in connection with the management or

investment of state funds without regard to whether the funds are

held in the state treasury.

(c) This chapter does not apply to or in connection with a state

governmental entity that does not manage or invest state funds

and for which state funds are managed or invested only by the

comptroller.

Added by Acts 2003, 78th Leg., ch. 932, Sec. 2, eff. Sept. 1,

2003.

Sec. 2263.002. DEFINITION. In this chapter, "financial advisor

or service provider" includes a person or business entity who

acts as a financial advisor, financial consultant, money or

investment manager, or broker.

Added by Acts 2003, 78th Leg., ch. 932, Sec. 2, eff. Sept. 1,

2003.

Sec. 2263.003. CONSTRUCTION WITH OTHER LAW. To the extent of a

conflict between this chapter and another law, the law that

imposes a stricter ethics or disclosure requirement controls.

Added by Acts 2003, 78th Leg., ch. 932, Sec. 2, eff. Sept. 1,

2003.

Sec. 2263.004. ETHICS REQUIREMENTS FOR OUTSIDE FINANCIAL

ADVISORS OR SERVICE PROVIDERS. (a) The governing body of a

state governmental entity by rule shall adopt standards of

conduct applicable to financial advisors or service providers who

are not employees of the state governmental entity, who provide

financial services to the state governmental entity or advise the

state governmental entity or a member of the governing body of

the state governmental entity in connection with the management

or investment of state funds, and who:

(1) may reasonably be expected to receive, directly or

indirectly, more than $10,000 in compensation from the entity

during a fiscal year; or

(2) render important investment or funds management advice to

the entity or a member of the governing body of the entity, as

determined by the governing body.

(b) A contract under which a financial advisor or service

provider renders financial services or advice to a state

governmental entity or other person as described by Subsection

(a) is voidable by the state governmental entity if the financial

advisor or service provider violates a standard of conduct

adopted under this section.

Added by Acts 2003, 78th Leg., ch. 932, Sec. 2, eff. Sept. 1,

2003.

Sec. 2263.005. DISCLOSURE REQUIREMENTS FOR OUTSIDE FINANCIAL

ADVISOR OR SERVICE PROVIDER. (a) A financial advisor or service

provider described by Section 2263.004 shall disclose in writing

to the administrative head of the applicable state governmental

entity and to the state auditor:

(1) any relationship the financial advisor or service provider

has with any party to a transaction with the state governmental

entity, other than a relationship necessary to the investment or

funds management services that the financial advisor or service

provider performs for the state governmental entity, if a

reasonable person could expect the relationship to diminish the

financial advisor's or service provider's independence of

judgment in the performance of the person's responsibilities to

the state governmental entity; and

(2) all direct or indirect pecuniary interests the financial

advisor or service provider has in any party to a transaction

with the state governmental entity, if the transaction is

connected with any financial advice or service the financial

advisor or service provider provides to the state governmental

entity or to a member of the governing body in connection with

the management or investment of state funds.

(b) The financial advisor or service provider shall disclose a

relationship described by Subsection (a) without regard to

whether the relationship is a direct, indirect, personal,

private, commercial, or business relationship.

(c) A financial advisor or service provider described by Section

2263.004 shall file annually a statement with the administrative

head of the applicable state governmental entity and with the

state auditor. The statement must disclose each relationship and

pecuniary interest described by Subsection (a) or, if no

relationship or pecuniary interest described by that subsection

existed during the disclosure period, the statement must

affirmatively state that fact.

(d) The annual statement must be filed not later than April 15

on a form prescribed by the governmental entity, other than the

state auditor, receiving the form. The statement must cover the

reporting period of the previous calendar year. The state auditor

shall develop and recommend a uniform form that other

governmental entities receiving the form may prescribe.

(e) The financial advisor or service provider shall promptly

file a new or amended statement with the administrative head of

the applicable state governmental entity and with the state

auditor whenever there is new information to report under

Subsection (a).

Added by Acts 2003, 78th Leg., ch. 932, Sec. 2, eff. Sept. 1,

2003.

Sec. 2263.006. PUBLIC INFORMATION. Chapter 552 controls the

extent to which information contained in a statement filed under

this chapter is subject to required public disclosure or excepted

from required public disclosure.

Added by Acts 2003, 78th Leg., ch. 932, Sec. 2, eff. Sept. 1,

2003.