PERAC Memo #15 - 2005: Tobacco Company List
Tobacco Company List
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This memo transmits an updated Tobacco Company List (dated April 1, 2005), which supersedes all prior versions, identifying companies deriving more than 15% of revenue from tobacco sales in which retirement systems are prohibited from making new investments under Chapter 119 of the Acts of 1997. Boards must ensure their portfolios (including pooled fund holdings) comply with this list going forward, distribute it to investment advisors, and—if noncompliance is found during a PERAC audit—consult with PERAC before divesting any prohibited holdings.
Full Text
Memorandum 15 /2005
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: April 14, 2005
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 April 1, 2005. This list replaces any other Tobacco Company List previously sent to your board and is effective upon receipt by the retirement boards. Most of these companies appeared on previous lists and such investments were prohibited from the time the companies first appeared on the list. Please forward a copy to your investment advisors or inform them that this list is available on the PERAC Home Page under the Investment Unit’s 2005 Memo Index.
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 Director at 617-666-4446 ext. 922.
Enclosure