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BILL: CS/SB 1178
<br />Page 23
<br />• Requires the investment committee to recommend investment advisers to the board.
<br />• Requires such investment advisers to be registered or have a notice filed under s. 517.12, F.S,
<br />which requires investment advisers to file a notice required under s. 517.120 1, F.S., with the
<br />OFR, and to not be related by affinity or consanguinity to, or under common ownership with,
<br />any board member, community management company, reserve study provider, or unit owner;
<br />• Requires the investment adviser to comply with the prudent'investor rule in s. 518.11, F.S.,"
<br />to act as a fiduciary to the association in compliance with the standards set forth in the
<br />Employee Retirement Income Security Act of 1974;
<br />• Requires that the association, at least once each calendar year, or sooner if a substantial
<br />financial obligation of the association becomes known to the board, to provide the investment
<br />adviser with the association's investment policy statement, the most recent reserve study
<br />report, the association's structural integrity report, if available, and the financial reports
<br />prepared pursuant to subsection s. 718.111(13), F.S.;
<br />• Requires the investment adviser to:
<br />o Annually review these documents and provide the association with a portfolio allocation
<br />model that is suitably structured and prudently designed to match projected annual
<br />reserve fund requirements and liability, assets, and liquidity requirements;
<br />o Prepare a funding projection for each reserve component, including any of the
<br />component's redundancies;
<br />o Annually provide the association with a written certification of compliance with this
<br />section and a list of stocks, securities, and other obligations that are prohibited from being
<br />in association portfolio; and
<br />o Submit monthly, quarterly, and annual reports to the association which are prepared in
<br />accordance with established financial industry standards and in accordance with ch. 517,
<br />F.S, relating to the regulation of investment advisers.
<br />• Require that there be a minimum of 24 months of projected reserves in cash or cash
<br />equivalents available to the association at all times;
<br />• Prohibit investment in stocks, securities, or other obligations that the State Board of
<br />Administration or state agencies are prohibited from investing in under ss. 215.471,
<br />215.4725, 215.472, and 215.473, F.S., as determined by the investment adviser; 61
<br />• Permit the investment adviser to withdraw investment fees, expenses, and commissions from
<br />invested funds;
<br />• Require that any principal, earnings, or interest must be available at no cost or charge to the
<br />association within 15 business days after delivery of the association's written or electronic
<br />request; and
<br />• Require unallocated income earned on reserve fund investments to be spent only on capital
<br />expenditures, planned maintenance, structural repairs, or other items for which the reserve
<br />accounts have been established.
<br />61 Section 518.11, F.S., sets forth the prudent investor rule. Generally, a fiduciary has a duty to invest and manage investment
<br />assets as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the
<br />trust.
<br />61 These provisions deal with investments in stocks, securities, or other obligations of companies doing business with Cuba or
<br />Venezuela, that boycott Israel or engage in a boycott of Israel, or that conduct certain business operations with [North] Sudan
<br />and Iran.
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