§ 3-13d — Trust funds: Investment, restrictions, sale of call options. Consideration of political implications of particular investments in relation to U.S. foreign policy and national interests. Connecticut mortgage pass-through certificates. Certain contracts with life insurance companies.

Connecticut § 3-13d

• Jurisdiction: Connecticut
• Title 3: State Elective Officers
• Ch. 32: Treasurer

Text

(a) Notwithstanding any other provision in the general statutes, the Treasurer shall invest as much of the state's trust funds as are not required for current disbursements in accordance with the provisions of section 45a-203 or the provisions of this part. Notwithstanding the provisions of this section or any other provision in the general statutes, the Treasurer shall not invest more than sixty per cent of the market value of each such trust fund in common stock, except in the event of a stock market fluctuation that causes the common stock percentage to increase and the Treasurer deems it in the best interest of such trust fund to maintain a higher percentage of equities, provided the Treasurer shall not allow the market value of each such trust fund in common stock to exceed sixty-five per cent for more than six months after such fluctuation occurs. On and after January 1, 2001, or on and after the first adoption of an investment policy statement under section 3-13b, whichever is later, all trust fund investments shall be made in accordance with the investment policy statement adopted under section 3-13b. In order to increase the income for each such combined investment fund established pursuant to section 3-31b, the Treasurer may enter into repurchase agreements or lend securities from each such fund, provided that at the time of the execution of the repurchase agreement or the loan at least one hundred per cent of the market value of the security sold or lent shall be received as consideration in the form of cash or securities guaranteed by (1) the United States government or any agency of the United States government, or (2) a sovereign country that is a participant in the General Arrangements to Borrow, known generally as the Group of Ten, or G10, and is rated “AA” or better by at least one nationally recognized statistical rating organization. At all times during the term of each such repurchase agreement or the term of each such loan the consideration received or the collateral shall be equal to not less than ninety-five per cent of the full market value of the security and said consideration received or said collateral shall not be more than one hundred thousand dollars less than the full market value of the security. The Treasurer may sell call options which would give the holders of such options the right to purchase securities held by the Treasurer at the date the call is sold for investment purposes, under such terms and conditions as the Treasurer may determine. Among the factors to be considered by the Treasurer with respect to all securities may be the social, economic and environmental implications of investments of trust funds in particular securities or types of securities. In the investment of the state's trust funds the Treasurer shall consider the implications of any particular investment in relation to the foreign policy and national interests of the United States. (b) Notwithstanding any other provision in the general statutes or elsewhere to the contrary, the Treasurer may invest as much of the state's trust funds as are not required for current disbursements in Connecticut mortgage pass-through certificates. As used in this section, “Connecticut mortgage pass-through certificate” means (1) a certificate evidencing ownership of an undivided interest in a pool of mortgage loans, each of which is secured by a first mortgage on real property located in this state improved by one-to-four-family residential dwellings or units, where such mortgage loans are assigned to a trust company or bank having the powers of a trust company within or without the state, as trustee for the benefit of the holders of such certificates, or (2) any Federal Home Loan Mortgage Corporation pass-through certificate or Federal National Mortgage Association securities backed by mortgage loans, each of which is secured by a first mortgage on real property located in this state improved by one-to-four-family residential dwellings or units; provided such mortgage loans are originated by any bank, trust company, national banking association, savings bank, federal mutual savings bank, savings and loan association, federal savings and loan association, credit union, or federal credit union authorized to do business in this state or by any lender authorized to do business in this state and approved by the federal Secretary of Housing and Urban Development for participation in any mortgage insurance program under the National Housing Act. In exercising his discretion to invest the state's trust funds in Connecticut mortgage pass-through certificates and in considering the yield on such investments, the Treasurer shall give preference to pools of mortgage loans which contain loans to persons who at the time of mortgage application are contributors to state pension and retirement funds included among the trust funds defined in section 3-13c or who have been past contributors to such funds and who continue to maintain a financial interest therein, and may consider furtherance of the public policy of increasing the amount of reasonably priced mortgage loans available to state residents. Nothing in this section shall prevent the Treasurer from investing state trust funds in mortgage pass-through certificates other than Connecticut mortgage pass-through certificates. (c) Except in the event of an express repeal of this subsection, no pool of mortgage loans, the ownership of which is evidenced by Connecticut mortgage pass-through certificates, shall be subject to any tax imposed by the state if all of the outstanding Connecticut mortgage pass-through certificates respecting such pool were at any time owned by or on behalf of any one or more of the state's trust funds. (d) Notwithstanding any other provision in the general statutes or elsewhere to the contrary, the Treasurer may enter into contracts with any life insurance company authorized to do business in Connecticut under which any amounts held in the state's trust funds may be used to purchase pension funding contracts and contracts providing for participation in separate accounts or under which funds become a part of the general account of any such life insurance company. (e) Notwithstanding any provision of the general statutes, neither the Treasurer, the Deputy Treasurer nor any acting Treasurer shall make a private equity or real estate investment without the approval of the Investment Advisory Council, for the balance of the Treasurer's term of office, on or after any of the following events: (1) The defeat of the Treasurer (A) in a ballot for the party nomination for Treasurer at a convention where said Treasurer was a candidate for nomination, (B) in a primary for nomination for said office where said Treasurer was a candidate for nomination, or (C) upon the completion of a recanvass of the returns from such primary under section 9-445 or 9-446 , whichever is later, (2) the defeat of the Treasurer (A) in the election for said office or (B) upon the completion of a recanvass of the returns from such election under section 9-311 , 9-311a or 9-311b , or (3) the resignation of the Treasurer. See Sec. 3-13g re investment policies re corporations doing business in Iran. See Sec. 3-13h re state funds invested in certain companies doing business in Northern Ireland. See Sec. 3-13i re contracts for services related to investment of trust funds.

Legislative History

(P.A. 73-594, S. 7, 12; P.A. 74-49, S. 1, 2; P.A. 80-431, S. 2, 4; P.A. 81-343, S. 2, 7; P.A. 86-29, S. 1, 3; P.A. 92-69, S. 4, 5; P.A. 95-120, S. 1, 2; June 18 Sp. Sess. P.A. 97-4, S. 8, 11; June 18 Sp. Sess. P.A. 97-11, S. 63, 65; P.A. 98-86; P.A. 00-43, S. 2, 4, 19; P.A. 02-34, S. 1; P.A. 10-150, S. 1.) History: P.A. 74-49 provided that market value of loans from investment funds could be guaranteed by U.S. government or its agencies; P.A. 80-431 required treasurer to consider foreign policy and national interest in making investments of state trust funds; P.A. 81-343 added Subsecs. (b) to (d) re mortgage pass-through certificates and contracts with life insurance companies to purchase pension funding contracts; P.A. 86-29 amended Subsec. (a) to provide specifically that the treasurer may enter into repurchase agreements for purposes of investing the trust funds of the state; P.A. 92-69 amended Subsec. (b) to include certain Federal Home Loan Mortgage Corporation pass-through certificates and Federal National Mortgage Association securities backed by mortgage loans in the definition of “Connecticut mortgage pass-through certificate”; P.A. 95-120 amended Subsec. (a) to permit Treasurer to invest no more than 55%, instead of 50% of a trust fund in common stock, except under specified conditions, for a six-month period of time, effective July 1, 1995; (Revisor's note: Section 8 of June 18 Sp. Sess. P.A. 97-4 is void and was therefore not codified because it attempts to amend section 1 of vetoed public act 97-260 by restoring language which was deleted in the vetoed act and leaving in place new language added in the vetoed act, effective June 30, 1997. June 18 Sp. Sess. 97-11 changed the effective date of June 18 Sp. Sess. P.A. 97-4 but without affecting section 8 of the act); P.A. 98-86 amended Subsec. (a) to replace book value with market value and add REITS as alternative investments; P.A. 00-43 amended Subsec. (a) to increase the limit on investment in common stock and to provide that all investments be made in accordance with the investment policy statement adopted under Sec. 3-13b, effective January 1, 2001, and added Subsec. (e) re restrictions on investment of trust funds in private equity or real estate during “lame duck” phase of Treasurer's term, effective May 3, 2000; P.A. 02-34 amended Subsec. (a) to delete provision which designated real estate investment trusts as alternative investments and not common stock investments, effective May 6, 2002; P.A. 10-150 amended Subsec. (a) by deleting “or elsewhere to the contrary”, adding Subdiv. (1) designator, making a conforming change and adding Subdiv. (2) allowing Group of Ten securities as collateral for securities lending, effective July 1, 2010.