Investments
Investment Pools and Investment Management Firms
A state agency may invest its funds and funds under its control through an investment pool with the approval of the agency’s governing body.
The pool can accept the agency’s funds and invest them as long as the pool furnishes the agency’s investment officer (or other authorized representative) an offering circular or similar disclosure instrument that complies with Texas Government Code, Section 2256.016(b). The pool will maintain its eligibility to accept the agency’s funds and invest them as long as it maintains compliance with the Texas Government Code, Section 2256.016(c).
The governing body of a state agency or of an investment pool may purchase, sell and invest its funds as authorized under The Texas Government Code, Chapter 2256. The investments must also comply with the policies approved by the governing body.
The governing body may contract with an investment management firm registered under the Investment Advisers Act of 1940 (or with the State Securities Board) to invest and manage the body’s public funds or other funds under its control. The contract may not be for a term longer than two years — after which, a renewal or extension must be made by order or resolution of the body.
The Public Funds Investment Act (PFIA) does not prohibit the governing body of a state agency or investment officer from using the agency’s employees or the services of a contractor of the agency to aid the officer in the execution of the officer’s duties under the PFIA.
The governing body of a state agency or of an investment pool must adopt a written policy regarding the investment of its funds and the funds under its control. A copy of the investment policy must be presented to:
- Any person offering to engage in an investment transaction with the agency or pool.
–or– - An investment management firm under contract with the body to invest or manage the body’s investment portfolio.
The qualified representative of the business organization offering to engage in an investment transaction with the agency or pool must execute a written contract stating the organization has:
- Received and reviewed the investment policy.
–and– - Acknowledged that the organization implemented reasonable procedures and controls to prohibit investment transactions conducted between the agency or pool and the organization not authorized by the agency’s or pool’s investment policy.