7.1444 Investment of reserves exceeding current requirements.

Cite as [A.S.C.A. § 7.1444 ]

(a) The reserves of the Fund in excess of requirements for current operations shall be invested and reinvested by or under authority of the Board of Trustees. At its discretion, the Board may designate one or more of its members to supervise this function; in either case, references to the Board in this section are considered to refer to the individual or committee exercising the function.

(b) The Board of Trustees has full power and authority to direct the investment and reinvestment of the fund without distinction between principal and income, in property (defined in (c) below) it considers advisable. The Board may invest and reinvest the fund in property in which a prudent man familiar with those matters and using care, skill, prudence, and diligence enterprise would invest in the conduct of like character and with like aims, insuring that the investments of the fund are diversified so as to minimize the risk of large losses unless to do so would clearly not be prudent. The power to manage investments includes, but is not limited to, the power to hold, purchase, sell, convey, assign, transfer, dispose of, lease, subdivide, or partition any assets held or proceeds thereof, to execute or cause to be executed relevant documents; to enter into protective agreements, execute proxies, grant consent; and to do all other things necessary or appropriate to its position as an owner or creditor.

(c) The word “property” means and includes real, personal, and mixed property of any and every kind and nature, including but not limited to, bonds, preferred or common stocks, mortgages, interests in any kind of investment trust or common trust fund, notes, leases, oil or gas royalties, or other evidences of rights, interests or obligations, secured or unsecured, and whether or not they are of a wasting asset nature.

(d) All proceeds and income from investments, of whatever nature, must be credited to the account of the Fund. Transactions in marketable securities are carried out at prevailing market prices.

(e) Investments may be held in bearer form, or may be registered either in the name of the fund or the nominee of the custodian.

(f) Due bills may be accepted from brokers against payment for securities purchased, pending delivery within a reasonable period of time of certificates representing the investments.

(g) Investments may not be made if, after the investment, the fund would own:

(1) any combination of obligations of any one political subdivision, corporation or other single issuing entity in excess of 5 percent of Fund assets at cost. This paragraph does not apply to general obligations of the United States or the Dominion of Canada or of the government; or

(2) obligations of the Dominion of Canada, together with its political subdivisions and corporations organized under its law or the law of its provinces in excess of 10 percent of fund assets at cost; or

(3) obligations or other investments issued or guaranteed by the government in excess of 17.5 percent of Fund assets at cost; provided, however, that this limitation does not apply to the obligations or other investments that are unconditionally guaranteed as to principal and interest by, or supported by lease assignment from, another entity whose principal business is outside of American Samoa.

(h) The Board may engage one or more financial institutions as custodians to assume responsibility for the physical’ possession of Fund assets or evidences of assets. The custodian submits reports, accountings, and other information in a form and at such times as requested by the Board. All costs incurred for custodial services are paid by the Fund. The custodian holds all assets for the account of the Fund and acts only upon instructions of the board. Custodians may not be engaged unless they:

(1) have been continuously engaged in rendering pension trust investment services for a period of 10 or more years; and

(2) are organized under the laws of the United States, a state, or a Territory; and

(3) are custodians for not less than 20 corporate, municipal or governmental retirement funds with total assets of not less than $30,000,000.

(i) In order to secure expert advice and counsel, the Board may engage an investment agent who is an investment counselor as qualified by this subsection. The custodian may be engaged as the investment agent. All costs incurred in this connection are paid by the fund. Persons, firms, or corporations may not be eligible for employment as investment agent which acts as principal for its own account or as broker for a client other than the fund in connection with the sale of any security to or the purchase of any security from the Fund. Investment agents may not be engaged unless:

(1) the principal business of the person, firm, or corporation selected by the Board consists of rendering investment supervisory services; i.e., the giving of continuing advice concerning investment of funds on the basis of the individual needs of each client;

(2) the principal control of the person, firm, or corporation rests with individuals who are actively engaged in the business;

(3) the person, firm, or corporation and its predecessors have been continuously engaged in the business for a period of 10 or more years;

(4) the person, firm, or corporation is registered as an investment advisor under United States law;

(5) the contract between the Board and the investment agent is of no specific duration and is voidable at any time by either party; and

(6) the person, firm, or corporation certifies, in writing, to the Board, that the assets under its direct investment supervision are in excess of $30,000.000. The Board establishes and may from time to time change operating arrangements with the investment agent in order to facilitate efficient management and timely -investment action. Investment may not be made unless in the opinion of the investment agent it is an appropriate investment for the Fund and is an authorized investment, or in the absence of that opinion, unless preceded by a resolution of the Board directing the investment.

History: 1971, PL 12-29 § 20; 1971, PL 17-28 § 10;amd, 1985, PL 19-35 § 1; amd 1986, PL 19-37 § 15.

Amendments: 1985 Subsection (g)(2): replaced the numeral “10” with the word “ten”.

Subsection (h): deleted “government” and added, “fund”.

Subsection (i): deleted “government” and added, “fund”.

1986 Subsection (c): deleted “commodities”.

Subsection (g)(2): substituted word “ten” with numeral "10”.

Subsection (h): deleted ‘its ex officio director, or a member, committee or agent so authorized by the board.”.

Subsection (h)(2): deleted’ ownership and”.