PERAC Memo #4 - 2007: Tobacco Company List
Tobacco Company List
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This memo transmits PERAC's updated Tobacco Company List (January 2007), which supersedes all prior lists and identifies companies deriving more than 15% of revenue from tobacco sales—investments in which are prohibited under Chapter 119 of the Acts of 1997. Boards must distribute the list to their investment advisors (or direct them to it on PERAC's website), ensure new purchases comply with the list (including pooled funds assessed at the pool level), and, if a compliance audit reveals prohibited holdings, divest prudently only after consulting with PERAC first.
Full Text
Memorandum # 4/2007
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: January 9, 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 January 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.
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