AZ SB1340

Prohibits publicly managed funds (state treasurer and retirement systems) from investing in foreign adversaries, state-owned enterprises of foreign adversaries, companies domiciled in foreign adversaries, or banks domiciled in foreign adversaries.

Requires complete divestment of prohibited holdings within two years of the effective date, with immediate divestment to begin upon enactment.

Directs the state board of investment within six months to review publicly available information on restricted companies, contact asset managers, consult with other institutional investors, hire an independent research firm, and compile a list of prohibited entities.

Defines "foreign adversary" as a country determined to be a foreign adversary under 15 Code of Federal Regulations section 7.4.

Clarifies that divestment requirements do not conflict with fiduciary obligations or other sound investment criteria applicable to publicly managed funds.