S.B. No. 312 seeks to enhance the fiduciary responsibilities of governing bodies of public retirement systems in Texas, along with the investment managers and proxy advisors they employ. The bill introduces new definitions for "financial factor," "investment manager," and "proxy advisor," emphasizing that investment decisions must focus solely on financial interests and factors that materially impact risk and returns. It prohibits the use of system assets for social, political, or ideological purposes and mandates that contracts with investment managers and proxy advisors adhere to this financial focus. Additionally, the bill establishes new reporting obligations for public retirement systems, requiring annual reports to the State Pension Review Board that detail investment activities and proxy votes, thereby promoting transparency and accountability.

The legislation also amends existing laws by requiring investment managers to report the net value of managed assets and a detailed account of fees and expenses from the previous year. These reports must be made publicly accessible on the State Pension Review Board's website. Furthermore, the bill allows public retirement systems to seek injunctions against investment managers or proxy advisors for breaches of contract, with the potential to recover court costs and attorney's fees. It provides an exemption for public retirement systems from certain requirements if compliance would conflict with their fiduciary responsibilities, necessitating notification to the State Pension Review Board, which will post this determination online. The changes will take effect for contracts entered into after September 1, 2025, ensuring that existing contracts remain under the previous law.

Statutes affected:
Introduced: Government Code 802.001, Government Code 802.002, Government Code 802.203 (Government Code 802)