What's happening
This bill requires New York state funds to invest at least 20% with minority- and women-owned (MWBE) financial firms and mandates related reporting and disclosures.
Why it matters
Expands access and opportunity for MWBE firms. By mandating that at least 20% of state-managed investment funds be managed by minority- and women-owned financial firms (MWBEs), the bill aims to materially increase the share of state assets and contracts handled by these historically underrepresented groups, potentially leading to growth and capacity-building for MWBE firms in the financial sector.
Imposes new transparency and accountability requirements. The bill requires annual public reporting on MWBE participation in state fund investments, as well as disclosures from consultants regarding their inclusion and recommendation of MWBE and disability-owned firms. This increased transparency is designed to hold state officials and consultants accountable for meeting diversity goals.
Broadens diversity and inclusion considerations beyond MWBE. The legislation not only focuses on MWBEs but also incorporates preferences and reporting for veteran- and disability-owned businesses and requires consideration of a company’s overall diversity practices—including board membership, management, and supplier diversity—in state procurement decisions.
Links financial decisions to community impact. By requiring the state comptroller to consider a financial institution’s federal Community Reinvestment Act (CRA) rating and community investment record when awarding state banking and investment contracts, the bill ties public funds management to broader goals of economic equity and community development.
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Who cares
Minority- and women-owned investment and financial services firms
The bill would set an aspirational goal to use MWBE firms for at least 20% of fund dollars under management, subject to financial and fiduciary prudence.
State and New York City comptrollers and public fund trustees
The bill would establish MWBE investment goals and require fund trustees to report annually on participation and progress.
Public fund investment consultants
The bill would require disclosures about searches involving MWBEs and disability-owned businesses, as well as compensation and economic opportunities received from investment advisers.
Veteran- and disability-owned businesses
The bill would authorize the state comptroller to give procurement scoring preferences to businesses at least 51% owned by veterans or people with disabilities.
Headline styles
Boost MWBE State Investments
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 14
1 Co-sponsor
History
- Referred to rules
Full text
6 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
8524
IN SENATE
June 8, 2020
Introduced by Sen. COMRIE -- read twice and ordered printed, and when printed to be committed to the Committee on Rules
AN ACT to amend the retirement and social security law, the state finance law, the education law, and the workers' compensation law, in relation to the use of MWBE investments for New York state funds
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The retirement and social security law is amended by adding a new section 177-b to read as follows:
§ 177-b. Use of MWBE asset management and financial institutions. 1. In addition to the powers contained in any other provision of law, including the provisions of the administrative code of the city of New York, it shall be the goal of public officials with investment making discretion and duties, including, but not limited to elected officials such as the state comptroller and the comptroller of the city of New York, appointed officials, the trustee or trustees of a fund, and state authority officials that, to the greatest extent feasible within the bounds of financial and fiduciary prudence, such public officials, trustee or trustees shall aspire to utilize MWBE asset managers, MWBE financial institutions, and MWBE financial or professional service firms for the investment of no less than twenty percent of the total dollar amount of such fund under management, which shall include, but not be limited to, the following:
(a) investing assets of such fund with MWBE asset managers;
(b) subject to best execution: (i) conducting trades of public equity securities with MWBE financial institutions; and (ii) conducting trades of fixed-income securities through MWBE institutions;
(c) allocating investments of assets of such fund either through: (i) direct investments in the equities and debt securities of MWBEs; or (ii) indirectly through special programs involving MWBE asset managers; or
(d) awarding contracts for accounting, banking, financial advisory, insurance, legal, research, valuation, and other financial and professional services to MWBE financial institutions and other MWBE professional service firms.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD14527-03-0
S. 8524 2
2. The trustee or trustees of a fund shall be authorized to establish additional aspirational goals to the goals directed by subdivision one of this section.
3. Within sixty days of the end of each fiscal year following the effective date of this section, the trustee or trustees of a fund shall report to the governor, legislature, and chief diversity officer of the state of New York on the participation of MWBE asset managers, MWBE financial institutions, and MWBE professional service providers in investment and brokerage transactions with or as providers of services for such fund, including a comparative analysis of such activity relative to such activity with all asset managers, financial institutions, and professional service providers for the relevant period, and on the progress and success of the efforts undertaken during such period to achieve the aspirational goals under subdivision one of this section to the greatest extent feasible within the bounds of financial and fiduciary prudence. Each report shall be simultaneously published on the website of such fund for not less than sixty days following its release to the governor and the other recipients named in this subdivision.
§ 2. The retirement and social security law is amended by adding a new section 177-e to read as follows:
§ 177-e. Required disclosures from consultants; MWBEs and businesses owned by persons with disabilities. 1. As used in this section, the term "disability" shall have the same meaning as defined by section two hundred ten of the economic development law.
2. No later than January first, two thousand twenty-one, and each January first thereafter, each consultant retained by the trustee or trustees of a fund shall disclose to the trustee or trustees of such fund the total number of searches for investment services made by such consultant in the previous calendar year including all such searches:
(a) that included (i) MWBE asset managers, (ii) MWBE financial institutions, (iii) MWBE financial or professional service firms, or (iv) any business enterprise at least fifty-one percent owned by individuals with disabilities;
(b) in which the consultant recommended for selection (i) MWBE asset managers, (ii) MWBE financial institutions, (iii) MWBE financial or professional service firms, or (iv) any business enterprise at least fifty-one percent owned by individuals with disabilities; and
(c) that resulted in the selection of (i) MWBE asset managers, (ii) MWBE financial institutions, (iii) MWBE financial or professional service firms, or (iv) any business enterprise at least fifty-one percent owned by individuals with disabilities, including the total dollar amounts invested pursuant to such selection.
3. Beginning January first, two thousand twenty-one, no contract, oral or written, for consulting services shall be awarded by the trustee or trustees of a fund without first requiring the consultant to make the disclosures required under subdivision two of this section.
4. Such disclosure shall be considered by the trustee or trustees of a fund, within the bounds of financial and fiduciary prudence, prior to the awarding of an oral or written contract for consulting services.
§ 3. The retirement and social security law is amended by adding a new section 177-f to read as follows:
§ 177-f. Required disclosures from consultants; compensation and economic opportunity received. 1. For the purposes of this section, the following terms shall have the following meanings:
S. 8524 3
(a) "compensation" means any money, thing of value, or economic benefit conferred on, or received by, a consultant in return for services rendered, or to be rendered.
(b) "economic opportunity" means any purchase, sale, lease, contract, option, or other transaction or arrangement involving property or services wherein a consultant may gain an economic benefit.
2. No later than January first, two thousand twenty-one, and each January first succeeding such date, a consultant retained by the trustee or trustees of a fund shall disclose to the trustee or trustees of such fund all compensation and economic opportunity received in the prior twenty-four months from investment advisors retained by such trustee or trustees.
3. Beginning January first, two thousand twenty-one, a consultant shall disclose to the trustee or trustees of a fund any compensation or economic opportunity received in the prior twenty-four months from an investment advisor that is recommended for selection by such consultant. A consultant shall make this disclosure prior to the trustee or trustees of a fund selecting an investment advisor for appointment.
4. Beginning January first, two thousand twenty-one, no contract, oral or written, for consulting services shall be awarded by a trustee or trustees of a fund without first requiring the consultant to make the disclosures required by subdivision three of this section.
§ 4. Section 8 of the state finance law is amended by adding two new subdivisions 21 and 22 to read as follows:
21. a. When procuring or authorizing the procurement of any goods and services, whether through a request for proposal or otherwise, be authorized to incorporate preferences in the scoring process for businesses that:
(1) are a minority business enterprise or a woman-owned business enterprise, as such terms are defined by section two hundred ten of the economic development law;
(2) are at least fifty-one percent owned by a veteran or veterans or a person or persons with a disability, as such terms are defined by section two hundred ten of the economic development law; or
(3) have a record of support for increasing diversity and inclusion in board membership, management, employment, philanthropy, and supplier diversity, including investment professionals and investment sourcing.
b. Beginning with the fiscal year two thousand twenty-one, and at least annually thereafter, report on his or her utilization of the businesses described in paragraph a of this subdivision. Such report shall be published on the official website of the comptroller.
22. Review a financial institution's federal Community Reinvestment Act rating, record, and current level of financial commitment to the community when determining the eligibility of such financial institution to participate in a banking contract, investment contract, investment activity, or other financial program under the control or supervision of the comptroller.
§ 5. Subdivision 1 of section 423-c of the retirement and social security law, as added by chapter 171 of the laws of 2010, is amended to read as follows:
1. Within the discretion of the state comptroller and in accordance with and subject to his or her fiduciary duties and obligations as trustee of the common retirement fund and to the members, retirees and beneficiaries of such fund and such other investment limitations as may be prescribed by this chapter, the comptroller is authorized to establish an MWBE asset management and financial institution strategy [including]
S. 8524 4
consistent with and in addition to his or her obligations under section one hundred seventy-seven-b of this chapter, which shall include reasonable goals for utilization of MWBE asset managers, MWBE financial institutions and MWBE financial and professional service firms, which strategy shall include, but shall not be limited to, the following objectives:
(a) investing assets of the common retirement fund with MWBE asset managers;
(b) subject to best execution: (i) conducting trades of public equity securities with MWBE financial institutions; and (ii) conducting trades of fixed-income securities through MWBE financial institutions;
(c) allocating investments of assets of the common retirement fund either through: (i) direct investments in the equities and debt securities of MWBEs; or (ii) indirectly through special programs involving MWBE asset managers; and
(d) awarding contracts for accounting, banking, financial advisory, insurance, legal, research, valuation and other financial and professional services to MWBE financial institutions and other MWBE professional service firms.
§ 6. Subdivision 1 of section 508-a of the education law, as added by chapter 171 of the laws of 2010, is amended to read as follows:
1. Within the discretion of the retirement board and in accordance with and subject to its fiduciary duties and obligations as trustees of the [teachers] teachers' retirement system and to the members, retirees and beneficiaries of such system and such other investment limitations as may be prescribed by this chapter, the retirement board is authorized to establish [on] an MWBE asset management and financial institution strategy pursuant to section four hundred twenty-three-c of the retirement and social security law [including] consistent with and in addition to his or her obligations under section one hundred seventy-seven-b of the retirement and social security law, which shall include reasonable goals for utilization of MWBE asset managers, MWBE financial institutions and MWBE financial and professional services firms, as such terms are defined in section one hundred seventy-six of the retirement and social security law which strategy shall include, but shall not be limited to, the following objectives:
a. investing assets of the teachers' retirement system with MWBE asset managers;
b. subject to best execution, (1) conducting trades of public equity securities with MWBE financial institutions and (2) conducting trades of fixed-income securities through MWBE financial institutions;
c. allocating investments of assets of the [teacher's] teachers' retirement system either through (1) direct investments in the equities and debt securities of MWBEs or (2) indirectly through special programs involving MWBE asset managers; and
d. awarding contracts for accounting, banking, financial advisory, insurance, legal, research, valuation and other financial and professional services to MWBE financial institutions and other MWBE professional services firms.
As used in this section, the terms "MWBE asset manager", "MWBE financial institutions", "MWBE", "fidiuciary-controlled entities", and "best execution" shall have the meanings specified in section one hundred seventy-six of the retirement and social security law, and shall be certified in a manner consistent with the provisions of subdivision three of section four hundred twenty-three-c of the retirement and social security law.
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§ 7. Paragraph c of subdivision 2 of section 5 of the state finance law, as added by chapter 171 of the laws of 2010, is amended to read as follows:
c. Within the discretion of the deferred compensation board and in accordance with and subject to its fiduciary duty and obligations to the deferred compensation plan for state employees and to the members and beneficiaries of such plan and such other investment limitations as may be prescribed by this chapter, the deferred compensation board is authorized to establish an MWBE asset management and financial institution strategy [including] consistent with and in addition to his or her obligations under section one hundred seventy-seven-b of the retirement and social security law, which shall include reasonable goals for utilization of MWBE asset managers, MWBE financial institutions and MWBE professional service firms, which shall include, but shall not be limited to, the following objectives:
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the retirement and social security law, the state finance law, the education law, and the workers' compensation law, in relation to the use of MWBE investments for New York state funds
Purpose
The purpose of this bill is to expand the participation and contracting of NYS MWBE asset management and investment firms on the New York State pension funds.
Summary of provisions
Section 1 of this bill amends the retirement and social security law by adding a new section, 177-b, which requires public officials with investment making discretion and duties to the greatest extent feasible within the bounds of financial and fiduciary prudence to utilize MWBE asset managers, MWBE financial institutions, and MWBE financial or professional service firms for the investment of no less than twenty percent of the total dollar amount of such fund under management. It also authorizes the trustee or trustees of a fund to establish addi- tional aspirational goals to the goals directed by subdivision one of this section. The trustee or trustees of a fund is required to report to the governor, legislature, and chief diversity officer of the state of New York on the participation of MWBE asset managers, MWBE financial institutions, and MWBE professional service providers in investment and brokerage transactions with or as providers of services for such a fund. The report is required to be given within sixty days of the end of each fiscal year following the effective date of this section and each report sent shall be simultaneously published on the website of such for not less than sixty days following its release to the gover nor and the other recipients named in Subdivision 3.
Read the full memo (1,235 words)
Section 2 of this bill amends the retirement and social security law by adding a new section, 177-e, lays out that the term "disability" shall have the same meaning as defined by section two hundred of the economic development law. The section requires each consultant retained by the trustee or trustees of a fund to disclose to the trustee or trustees of such fund the total number of searches for investment services made by such consultant in the previous calendar year including all such search- es no later than January first, two thousand twenty-one, and each Janu- ary first thereafter. Also, no contract, oral or written, for consulting services shall be awarded by the trustee or trustees of a fund without first requiring the consultant to make the disclosures required under subdivision two of this section beginning January first, two thousand twenty-one.
Section 3 of this bill amends the retirement and social security law by adding a new section, 177-f, and lays out that the term "compensation" shall be defined as any money, thing of value, or economic benefit conferred on, or received by, a consultant in return for services rendered, or to be rendered and the term "economic opportunity" shall be defined as any purchase, sale, lease, contract, option, or other trans- action or arrangement involving property or services wherein a consult- ant may gain an economic benefit. It stipulates that a consultant must disclose to his or her trustees any compensation or economic opportunity received from an investment advisor that they recommend to the trustee, and this must be done prior to the trustee or trustees select and investment advisor for appointment. Finally, no contract for consulting services shall be awarded by a trustee or trustees of a fund without requiring the consultant to make the disclosures required by subdivision three of this section.
Section 4 of this bill amends section 8 of the state finance law by adding two new subdivisions 21 and 22. Subdivision 21 authorizes that preference must be given to MWBE business enterprises, businesses that are at least fifty-one percent by a veteran or veterans or a person or persons with a disability, and businesses that have a record of support for increasing diversity and inclusion in board membership, management, employment, philanthropy, and supplier diversity, including investment professionals and investment sourcing. Section 22 mandates that a finan- cial institution's federal Community Reinvestment Act rating, record, and current level of financial commitment to the community when deter- mining its eligibility to participate in financial programs or activity under the purview of the comptroller.
Section 5 of this bill amends subdivision 1 of section 423-c of the retirement and social security law. It authorizes the comptroller to establish an MWBE asset Management and financial strategy that is consistent with and in addition to goals for the utilization of MWBE asset managers, MWBE financial institutions and MWBE financial and professional service firms.
Section 6 of this bill amends subdivision 1 of section 508-a of the education law. It authorizes that, the retirement board establish an MWBE asset management and financial institution strategy that is consistent with and in addition to goals for the utilization of MWBE asset managers, MWBE financial institutions and MWBE financial and professional service firms.
Section 7 of this bill amends paragraph c of subdivision 2 of section 5 of the state finance law. It authorizes the deferred compensation board to establish an MWBE asset management and financial institution strategy that is consistent with and in addition to goals for the utilization of MWBE asset managers, MWBE financial institutions and MWBE financial and professional service firms.
Section 8 of this bill amends subdivision 1 of section 87-i of workers' compensation law. It authorizes the commissioners of the state insurance fund to establish an MWBE asset management and financial institution strategy that is consistent with and in addition to goals for the utili- zation of MWBE asset managers, MWBE financial institutions and MWBE financial and professional service firms.
Section 9 sets the effective date for this bill.
Justification
This bill will greatly expand opportunities for MWBE asset managers, financial institutions, and financial and professional service firms to participate in New York state pension funds, improving their opportu- nities for investment and encouraging greater economic diversity throughout New York. Section 1 will ensure a sufficient proportion of funds are dedicated to MWBE entities and establish a system of account- ability and transparency among trustees to publicly report on their MWBE participation and utilization. Sections 2 and 3 promote honesty and full disclosure in contracts and investment searches between trustees and MWBE entities to ensure fair and diverse investment practices. Section 4 authorizes preference be given to MWBE entities, further expanding their participation in New York state funds and encouraging economic diversi- ty. The remaining sections will establish strategies in various insti- tutions that strengthen and promote the goals of MWBE utilization.
New York is a place of rich diversity that should be celebrated, supported and prioritized, and this bill will create much-needed oppor- tunities for diverse investment and financial institutions to strengthen the diversity of our economy. A similar bill enacted in Illinois created a 60-fold increase in assets brokered by diverse firms over a 4 year period, and a 25-fold increase in assets managed by diverse firms over a 3 year period. It is crucial that our public funds and economic activity reflect the diversity of our state, especially when diverse institutions are still being held down and underutilized.
Legislative history
New Bill.
Fiscal implications
To be determined.
Effective date
This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.