The Superintendent of Insurance of the State of New York promulgated the Second amendment to Part 136 of Chapter IX of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York (Regulation No. 85) (.pdf) in October 0f 2008. The regulation is intended to have the business of the state retirement systems comply with these principles:
- the retirement system and the fund shall operate under a strong governance framework with a rigorous system of internal controls;
- the retirement system and the fund shall maintain a high level of operational transparency;
- the Comptroller shall adhere to and manage the retirement system and the fund with the highest ethical, professional and conflict of interest standards;
- the Comptroller shall have a fiduciary responsibility to act for the sole benefit of the retirement system’s members and beneficiaries; and
- the retirement system and the fund shall be managed in the most efficient and effective manner possible.
The regulation requires investment managers to promptly disclose any conflict of interest that “reasonably be expected to impair the investment manager’s, or consultant or advisor’s ability to render unbiased and objective advice”. [11 NYCRR 136-2.4(c)(1)(i)].
The regulation also requires investment advisers to file an annual statement with the following language:
“ALL INVESTMENT MANAGERS, AND CONSULTANTS OR ADVISORS OWE THE COMPTROLLER A FIDUCIARY DUTY. THIS MEANS THAT INVESTMENT MANAGERS, OR CONSULTANTS OR ADVISORS MUST DISCLOSE TO THE COMPTROLLER INFORMATION ABOUT MATERIAL CONFLICTS OF INTEREST. FAILURE TO TRUTHFULLY COMPLETE THIS STATEMENT MAY RESULT IN CRIMINAL OR CIVIL LIABILITIES”. [11 NYCRR 136-2.4(c)(1)(ii)]
The regulation also requires an investment manager to disclose the payments made to any placement agent or intermediary that assists the investment manager in obtaining investments by the Fund.[11 NYCRR 136-2.4(d)]
The New York State Comptroller, Thomas P. DiNapoli, also releases monthly reports that disclose in detail investments and transactions, hiring of fund managers, and the involvement of placement agents: Disclosure of Investments & Transactions.