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Emerging Manager RFP Exemption

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As it passed the Senate, SB 1671 amends the General Provisions article of the Illinois Pension Code to facilitate contracts with emerging investment managers.

Specifically, SB 1671 establishes that an “emerging investment manager” means a qualified investment adviser that manages an investment portfolio of at least $10 million but less than $20 billion at the time of the initial contract with the retirement system, pension fund, or investment board and is a minority-owned business, women-owned business, or business owned by a person with a disability. (Currently, an “emerging investment manager” means a qualified investment adviser that manages an investment portfolio of at least $10 million but less than $10 billion and is a minority-owned business, women-owned business, or business owned by a person with a disability.)

Additionally, SB 1671 exempts contracts for investment services with an emerging investment manager and contracts for investment services with an emerging investment manager provided through a qualified manager of emerging investment managers services from the competitive bidding requirements of the Illinois Pension Code. (Currently, exemptions from the competitive bidding requirements of the Illinois Pension Code are provided for: sole source procurement; emergency procurements; contracts that are nonrenewable, one year or less in duration, and valued at less than $20,000; and contracts for follow-on funds with the same fund sponsor through closed-end funds.) Instead, SB 1671 provides that, based upon a written recommendation from an investment adviser providing qualified manager of emerging investment managers services for the selection or appointment of an emerging investment manager that has been providing investment services in the multimanager portfolio for at least 24 months, the board of a retirement system, pension fund or investment board may select or appoint such emerging investment manager based upon such recommendation.

Finally, SB 1671 provides that qualified managers of emerging investment managers services are not considered subcontractors for the purposes of disclosure pursuant to a written contract between the investment adviser or consultant and the board. (Currently, subcontractors do not include non-investment related professionals or professionals offering services that are not directly related to the investment of assets, such as legal counsel, actuary, proxy-voting services, services used to track compliance with legal standards, and investment fund of funds where the board has no direct contractual relationship with the investment advisers or partnerships.)

SB 1671 defines a “qualified manager of emerging investment managers services” as the services of an investment adviser acting in its capacity as an investment manager of a multimanager portfolio made up of emerging investment managers.

SB 1671 takes effect immediately upon becoming law.

Sponsor: 
Senator Iris Y. Martinez