HOUSE BILL 548
50th legislature - STATE OF NEW MEXICO - first session, 2011
INTRODUCED BY
Donald E. Bratton
AN ACT
RELATING TO THE INVESTMENT OF PUBLIC MONEY; PROHIBITING CERTAIN STATE INVESTMENTS OR CONTRACTS IF THE RECIPIENT OF THE INVESTMENT OR THE CONTRACTOR IS REPRESENTED BY A THIRD-PARTY SALES AGENT WHO IS COMPENSATED AS A RESULT OF THE INVESTMENT OR CONTRACT AWARD; REQUIRING THE DISCLOSURE OF THIRD-PARTY SALES AGENTS; REQUIRING A CERTAIN CERTIFICATION BY THIRD-PARTY SALES AGENTS; PROVIDING A PENALTY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of Chapter 6, Article 8 NMSA 1978 is enacted to read:
"[NEW MATERIAL] THIRD-PARTY SALES AGENTS--CERTAIN INVESTMENTS OR CONTRACTS PROHIBITED--DISCLOSURE REQUIRED--PENALTY.--
A. The state investment office, the state investment officer or the council shall not make or continue an investment or enter into or continue a contract if the potential recipient of the investment or the potential contractor is represented by a third-party sales agent and:
(1) the third-party sales agent was hired, engaged or retained for the primary purpose of securing or continuing the investment or contract from the state investment office, the state investment officer or the council; or
(2) the compensation paid or agreed to be paid to the third-party sales agent is contingent upon, or will be increased as a result of, the securing or continuation of the investment or the contract.
B. Upon the knowledge that an investment has been made or continued in violation of Subsection A of this section, the state investment office shall demand that the investment be terminated. Upon the demand, the person securing the investment shall terminate the investment and pay to the state investment office the greater of:
(1) the current market value of the investment plus all fees paid; or
(2) the amount of the original investment plus interest compounded at a rate of the London interbank offered rate plus five percent.
C. Upon the knowledge that a contract has been entered into or continued in violation of Subsection A of this section, the state investment office shall demand that the contract be terminated. Upon the demand, the contract shall be terminated with no additional payments due and the contractor shall return all money paid pursuant to the contract during the preceding twenty-four months.
D. Upon the first contact with the state investment office, the state investment officer or the council by a third-party sales agent who represents a principal seeking to secure or continue an investment or contract, the third-party sales agent shall:
(1) disclose that the agent is a third-party sales agent and shall also disclose the identity of the principal seeking the investment or contract; and
(2) certify that:
(a) the agent was not hired, engaged or retained for the primary purpose of securing or continuing the investment or contract; and
(b) the agent's compensation from the principal is not contingent upon, or will not be increased as a result of, the securing or continuation of the investment or the contract.
E. Any person who knowingly violates the disclosure requirement of Subsection D of this section or falsely certifies pursuant to that subsection is guilty of a fourth degree felony and shall be punished by a fine of not more than twenty thousand dollars ($20,000) or by imprisonment for a definite term not to exceed eighteen months, or both.
F. As used in this section, "third-party sales agent" means a person who:
(1) represents a principal seeking to secure or continue an investment or contract with the state investment office, the state investment officer or the council; and
(2) contacts the state investment office, the state investment officer or the council on behalf of the principal."
SECTION 2. A new section of Chapter 6, Article 10 NMSA 1978 is enacted to read:
"[NEW MATERIAL] THIRD-PARTY SALES AGENTS--CERTAIN INVESTMENTS OR CONTRACTS PROHIBITED--DISCLOSURE REQUIRED--PENALTY.--
A. Neither the state treasurer nor the state treasurer's office shall make or continue an investment or enter into or continue a contract if the potential recipient of the investment or the potential contractor is represented by a third-party sales agent and:
(1) the third-party sales agent was hired, engaged or retained for the primary purpose of securing or continuing the investment or contract from the state treasurer or the state treasurer's office; or
(2) the compensation paid or agreed to be paid to the third-party sales agent is contingent upon, or will be increased as a result of, the securing or continuation of the investment or the contract.
B. Upon the knowledge that an investment has been made or continued in violation of Subsection A of this section, the state treasurer shall demand that the investment be terminated. Upon the demand, the person securing the investment shall terminate the investment and pay to the state treasurer the greater of:
(1) the current market value of the investment plus all fees paid; or
(2) the amount of the original investment plus interest compounded at a rate of the London interbank offered rate plus five percent.
C. Upon the knowledge that a contract has been entered into or continued in violation of Subsection A of this section, the state treasurer shall demand that the contract be terminated. Upon the demand, the contract shall be terminated with no additional payments due and the contractor shall return all money paid pursuant to the contract during the preceding twenty-four months.
D. Upon the first contact with the state treasurer or the state treasurer's office by a third-party sales agent who represents a principal seeking to secure or continue an investment or contract, the third-party sales agent shall:
(1) disclose that the agent is a third-party sales agent and shall also disclose the identity of the principal seeking the investment or contract; and
(2) certify that:
(a) the agent was not hired, engaged or retained for the primary purpose of securing or continuing the investment or contract; and
(b) the agent's compensation from the principal is not contingent upon, or will not be increased as a result of, the securing or continuation of the investment or the contract.
E. Any person who knowingly violates the disclosure requirement of Subsection D of this section or falsely certifies pursuant to that subsection is guilty of a fourth degree felony and shall be punished by a fine of not more than twenty thousand dollars ($20,000) or by imprisonment for a definite term not to exceed eighteen months, or both.
F. As used in this section, "third-party sales agent" means a person who:
(1) represents a principal seeking to secure or continue an investment or contract with the state treasurer or the state treasurer's office; and
(2) contacts the state treasurer or the state treasurer's office on behalf of the principal."
SECTION 3. A new section of the Public Employees Retirement Act is enacted to read:
"[NEW MATERIAL] THIRD-PARTY SALES AGENTS--CERTAIN INVESTMENTS OR CONTRACTS PROHIBITED--DISCLOSURE REQUIRED--PENALTY.--
A. Neither the retirement board nor an employee of the association shall make or continue an investment or enter into or continue a contract if the potential recipient of the investment or the potential contractor is represented by a third-party sales agent and:
(1) the third-party sales agent was hired, engaged or retained for the primary purpose of securing or continuing the investment or contract from the retirement board or an employee of the association; or
(2) the compensation paid or agreed to be paid to the third-party sales agent is contingent upon, or will be increased as a result of, the securing or continuation of the investment or the contract.
B. Upon the knowledge that an investment has been made or continued in violation of Subsection A of this section, the retirement board shall demand that the investment be terminated. Upon the demand, the person securing or retaining the investment shall terminate the investment and pay to the retirement board the greater of:
(1) the current market value of the investment plus all fees paid; or
(2) the amount of the original investment plus interest compounded at a rate of the London interbank offered rate plus five percent.
C. Upon the knowledge that a contract has been entered into or continued in violation of Subsection A of this section, the retirement board shall demand that the contract be terminated. Upon the demand, the contract shall be terminated with no additional payments due and the contractor shall return all money paid pursuant to the contract during the preceding twenty-four months.
D. Upon the first contact with the retirement board, a board member or an employee of the association by a third-party sales agent who represents a principal seeking to secure or continue an investment or contract, the third-party sales agent shall:
(1) disclose that the agent is a third-party sales agent and shall also disclose the identity of the principal seeking the investment or contract; and
(2) certify that:
(a) the agent was not hired, engaged or retained for the primary purpose of securing or continuing the investment or contract; and
(b) the agent's compensation from the principal is not contingent upon, or will not be increased as a result of, the securing or continuation of the investment or the contract.
E. Any person who knowingly violates the disclosure requirement of Subsection D of this section or falsely certifies pursuant to that subsection is guilty of a fourth degree felony and shall be punished by a fine of not more than twenty thousand dollars ($20,000) or by imprisonment for a definite term not to exceed eighteen months, or both.
F. As used in this section, "third-party sales agent" means a person who:
(1) represents a principal seeking to secure or continue an investment or contract with the retirement board or an employee of the association; and
(2) contacts the retirement board or an employee of the association on behalf of the principal."
SECTION 4. A new section of the Educational Retirement Act is enacted to read:
"[NEW MATERIAL] THIRD-PARTY SALES AGENTS--CERTAIN INVESTMENTS OR CONTRACTS PROHIBITED--DISCLOSURE REQUIRED--PENALTY.--
A. Neither the board nor an employee of the board shall make or continue an investment or enter into or continue a contract if the potential recipient of the investment or the potential contractor is represented by a third-party sales agent and:
(1) the third-party sales agent was hired, engaged or retained for the primary purpose of securing or continuing the investment or contract from the board or an employee of the board; or
(2) the compensation paid or agreed to be paid to the third-party sales agent is contingent upon, or will be increased as a result of, the securing or continuation of the investment or the contract.
B. Upon the knowledge that an investment has been made or continued in violation of Subsection A of this section, the board shall demand that the investment be terminated. Upon the demand, the person securing the investment shall terminate the investment and pay to the board the greater of:
(1) the current market value of the investment plus all fees paid; or
(2) the amount of the original investment plus interest compounded at a rate of the London interbank offered rate plus five percent.
C. Upon the knowledge that a contract has been entered into or continued in violation of Subsection A of this section, the board shall demand that the contract be terminated. Upon the demand, the contract shall be terminated with no additional payments due and the contractor shall return all money paid pursuant to the contract during the preceding twenty-four months.
D. Upon the first contact with the board, a board member or an employee of the board by a third-party sales agent who represents a principal seeking to secure or retain an investment or contract, the third-party sales agent shall:
(1) disclose that the agent is a third-party sales agent and shall also disclose the identity of the principal seeking the investment or contract; and
(2) certify that:
(a) the agent was not hired, engaged or retained for the primary purpose of securing or continuing the investment or contract; and
(b) the agent's compensation from the principal is not contingent upon, or will not be increased as a result of, the securing or continuation of the investment or the contract.
E. Any person who knowingly violates the disclosure requirement of Subsection D of this section or falsely certifies pursuant to that subsection is guilty of a fourth degree felony and shall be punished by a fine of not more than twenty thousand dollars ($20,000) or by imprisonment for a definite term not to exceed eighteen months, or both.
F. As used in this section, "third-party sales agent" means a person who:
(1) represents a principal seeking to secure or continue an investment or contract with the board or an employee of the board; and
(2) contacts the board, a board member or an employee of the board on behalf of the principal."
SECTION 5. REPEAL.--Sections 6-8-22, 10-11-133.1 and 22-11-54 NMSA 1978 (being Laws 2009, Chapter 152, Sections 1 through 3) are repealed.
SECTION 6. APPLICABILITY.--The provisions of this act apply to investments initially made or contracts initially entered into on or after July 1, 2011.
SECTION 7. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.
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