PERAC Memo #42 - 1999: Tobacco Company List

Tobacco Company List

Summary

This memo transmits the updated Tobacco Company List (dated July 1, 1999), which supersedes prior lists and, under Chapter 119 of the Acts of 1997, identifies companies deriving more than 15% of revenue from tobacco sales in which retirement boards may not make new investments. Boards must distribute this list to their investment advisors (or notify them it is on PERAC's website), ensure no new prohibited investments are made effective immediately upon receipt, and, since PERAC will audit portfolios for compliance, consult with PERAC before divesting if any non-compliant holdings (including in pooled funds, assessed at the fund level) are found.

Full Text

PERAC MEMO #42/1999 M E M O R A N D U M TO: All Retirement Boards FROM: Joseph I. Martin, Deputy Executive Director RE: Tobacco Company List DATE: November 3, 1999 On October 22, 1997 PERAC Memo #37/1997 informed you of the adoption of Chapter 119 of the Acts of 1997. That statute prohibits retirement systems from making any new investments in stocks, securities, or other obligations of any company which derives more than 15% of its revenue from the sale of tobacco products. On December 18, 1997 PERAC sent Memo #48 regarding the implementation of Chapter 119 and the first Tobacco Company List. Enclosed please find a Tobacco Company List dated July 1, 1999. This list replaces any other Tobacco Company List previously sent to your board and is effective upon receipt by the retirement boards. After that, no new investments may be made in stocks, securities, or other obligations of these companies. Please forward a copy to your investment advisors or inform them that this list is available on the PERAC Home Page. As part of its audit process, PERAC will assess the portfolio of each board to determine compliance. That review will determine if the board, after January 13, 1998, has purchased stock, securities, or other obligations of any company which derives more than 15% of its revenue from the sale of tobacco products. In the event a portfolio is not in compliance, the board must bring the portfolio into compliance by divesting in a prudent manner. Prior to taking any action, the board shall consult with PERAC. In applying the statute to pooled funds, PERAC will assess the 15% rule against the entire pool as the board is purchasing shares in the pool not the individual holdings of the pool. Thus a pooled fund, if in violation of this standard, will be included on the list. If you have any questions, please call Robert Dennis, Investment Unit Director at 617-666-4446 ext. 922.