PERAC Memo #25 - 2007: Tobacco Company List
Tobacco Company List
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PERAC Memo #25/2007 transmits the updated April 2007 Tobacco Company List, superseding all prior lists, identifying companies (and pooled funds) deriving more than 15% of revenue from tobacco sales in which new investments by retirement systems are prohibited under Chapter 119 of the Acts of 1997. Boards must forward the list to their investment advisors (noting it is restricted to use for Massachusetts public fund clients only) and ensure their portfolios comply, as PERAC will review holdings during audits; any non-compliant holdings must be divested prudently, in consultation with PERAC before any action is taken.
Full Text
MEMORANDUM #25, 2007 M E M O R A N D U M TO: All Retirement Boards FROM: Robert A. Dennis, Investment Director RE: Tobacco Company List DATE: April 11, 2007 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 2007. 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 2007 Memo Index. In communicating with your investment advisors, please inform them that the Tobacco Company List is only for their Massachusetts public fund clients and that any other use of the list is strictly prohibited. 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 me at 617-666-4446 ext. 922. Enclosure
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