Sen. Ira I. Silverstein

Filed: 4/21/2015





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2    AMENDMENT NO. ______. Amend Senate Bill 1761, AS AMENDED,
3by replacing everything after the enacting clause with the
5    "Section 5. The Illinois Pension Code is amended by adding
6Section 1-110.16 as follows:
7    (40 ILCS 5/1-110.16 new)
8    Sec. 1-110.16. Transactions prohibited by retirement
9systems; companies that boycott Israel, Iran-restricted
10companies, and Sudan-restricted companies.
11    (a) As used in this Section:
12        "Boycott Israel" means engaging in actions that are
13    politically motivated and are intended to penalize,
14    inflict economic harm on, or otherwise limit commercial
15    relations with the State of Israel or companies based in
16    the State of Israel or in territories controlled by the



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1    State of Israel.
2        "Company" means any sole proprietorship, organization,
3    association, corporation, partnership, joint venture,
4    limited partnership, limited liability partnership,
5    limited liability company, or other entity or business
6    association, including all wholly owned subsidiaries,
7    majority-owned subsidiaries, parent companies, or
8    affiliates of those entities or business associations,
9    that exist for the purpose of making profit.
10        "Illinois Investment Policy Board" means the board
11    established under subsection (b) of this Section.
12        "Direct holdings" in a company means all publicly
13    traded securities of that company that are held directly by
14    the retirement system in an actively managed account or
15    fund in which the retirement system owns all shares or
16    interests.
17        "Indirect holdings" in a company means all securities
18    of that company that are held in an account or fund, such
19    as a mutual fund, managed by one or more persons not
20    employed by the retirement system, in which the retirement
21    system owns shares or interests together with other
22    investors not subject to the provisions of this Section or
23    that are held in an index fund.
24        "Iran-restricted company" means a company that meets
25    the qualifications under Section 1-110.15 of this Code.
26        "Private market fund" means any private equity fund,



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1    private equity funds of funds, venture capital fund, hedge
2    fund, hedge fund of funds, real estate fund, or other
3    investment vehicle that is not publicly traded.
4        "Restricted companies" means companies that boycott
5    Israel, Iran-restricted companies, and Sudan-restricted
6    companies.
7        "Retirement system" means a retirement system
8    established under Article 2, 14, 15, 16, or 18 of this Code
9    or the Illinois State Board of Investment.
10        "Sudan-restricted company" means a company that meets
11    the qualifications under Section 1-110.6 of this Code.
12    (b) There shall be established an Illinois Investment
13Policy Board. The Illinois Investment Policy Board shall
14consist of 7 members. Each board of a pension fund or
15investment board created under Article 15, 16, or 22A of this
16Code shall appoint one member, and the Governor shall appoint 4
18    (c) Notwithstanding any provision of law to the contrary,
19beginning January 1, 2016, Sections 110.15 and 1-110.6 of this
20Code shall be administered in accordance with this Section.
21    (d) By April 1, 2016, the Illinois Investment Policy Board
22shall make its best efforts to identify all Iran-restricted
23companies, Sudan-restricted companies, and companies that
24boycott Israel and assemble those identified companies into a
25list of restricted companies, to be distributed to each
26retirement system.



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1    These efforts shall include the following, as appropriate
2in the Illinois Investment Policy Board's judgment:
3        (1) reviewing and relying on publicly available
4    information regarding Iran-restricted companies,
5    Sudan-restricted companies, and companies that boycott
6    Israel, including information provided by nonprofit
7    organizations, research firms, and government entities;
8        (2) contacting asset managers contracted by the
9    retirement systems that invest in Iran-restricted
10    companies, Sudan-restricted companies, and companies that
11    boycott Israel;
12        (3) contacting other institutional investors that have
13    divested from or engaged with Iran-restricted companies,
14    Sudan-restricted companies, and companies that boycott
15    Israel; and
16        (4) retaining an independent research firm to identify
17    Iran-restricted companies, Sudan-restricted companies, and
18    companies that boycott Israel.
19    The Illinois Investment Policy Board shall review the list
20of restricted companies on a quarterly basis based on evolving
21information from, among other sources, those listed in this
22subsection (d) and distribute any updates to the list of
23restricted companies to the retirement systems.
24    (e) The Illinois Investment Policy Board shall adhere to
25the following procedures for companies on the list of
26restricted companies:



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1        (1) For each company newly identified in subsection
2    (d), the Illinois Investment Policy Board shall send a
3    written notice informing the company of its status and that
4    it may become subject to divestment by the retirement
5    systems.
6        (2) If, following the Illinois Investment Policy
7    Board's engagement pursuant to this subsection (e) with a
8    restricted company, that company ceases activity that
9    designates the company to be an Iran-restricted company, a
10    Sudan-restricted company, or a company that boycotts
11    Israel, the company shall be removed from the list of
12    restricted companies and the provisions of this Section
13    shall cease to apply to it unless it resumes such
14    activities.
15    (f) The retirement system shall adhere to the following
16procedures for companies on the list of restricted companies:
17        (1) The retirement system shall identify those
18    companies on the list of restricted companies in which the
19    retirement system owns direct holdings and indirect
20    holdings.
21        (2) The retirement system shall instruct its
22    investment advisors to sell, redeem, divest, or withdraw
23    all direct holdings of restricted companies from the
24    retirement system's assets under management in an orderly
25    and fiduciarily responsible manner within 12 months after
26    the company's most recent appearance on the list of



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1    restricted companies.
2        (3) The retirement system may not acquire securities of
3    restricted companies.
4        (4) The provisions of this subsection (f) do not apply
5    to the retirement system's indirect holdings or private
6    market funds. The Illinois Investment Policy Board shall
7    submit letters to the managers of those investment funds
8    containing restricted companies requesting that they
9    consider removing the companies from the fund or create a
10    similar actively managed fund having indirect holdings
11    devoid of the companies. If the manager creates a similar
12    fund, the retirement system shall replace all applicable
13    investments with investments in the similar fund in an
14    expedited timeframe consistent with prudent investing
15    standards.
16    (g) Upon request, and at least annually, each retirement
17system shall provide the Illinois Investment Policy Board with
18information regarding investments sold, redeemed, divested, or
19withdrawn in compliance with this Section.
20    (h) Notwithstanding any provision of this Section to the
21contrary, a retirement system may cease divesting from
22companies pursuant to subsection (f) if clear and convincing
23evidence shows that the value of investments in such companies
24becomes equal to or less than 0.5% of the market value of all
25assets under management by the retirement system. For any
26cessation of divestment authorized by this subsection (h), the



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1retirement system shall provide a written notice to the
2Illinois Investment Policy Board in advance of the cessation of
3divestment, setting forth the reasons and justification,
4supported by clear and convincing evidence, for its decision to
5cease divestment under subsection (f).
6    (i) The cost associated with the activities of the Illinois
7Investment Policy Board shall be borne by the boards of each
8pension fund or investment board created under Article 15, 16,
9or 22A of this Code.
10    (j) With respect to actions taken in compliance with this
11Section, including all good-faith determinations regarding
12companies as required by this Section, the retirement system
13and Illinois Investment Policy Board are exempt from any
14conflicting statutory or common law obligations, including any
15fiduciary duties under this Article and any obligations with
16respect to choice of asset managers, investment funds, or
17investments for the retirement system's securities portfolios.
18    (k) It is not the intent of the General Assembly in
19enacting this amendatory Act of the 99th General Assembly to
20cause divestiture from any company based in the United States
21of America. The Illinois Investment Policy Board shall consider
22this intent when developing or reviewing the list of restricted
24    (l) If any provision of this amendatory Act of the 99th
25General Assembly or its application to any person or
26circumstance is held invalid, the invalidity of that provision



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1or application does not affect other provisions or applications
2of this amendatory Act of the 99th General Assembly that can be
3given effect without the invalid provision or application.
4    Section 99. Effective date. This Act takes effect upon
5becoming law.".