IA HSB633

Political subdivisions may invest up to 25% of their aggregate public funds in joint investment trusts organized under Chapter 28E, calculated based on the average of public funds over the previous two fiscal years.

Joint investment trusts are prohibited from paying individuals, associations, or entities that do not provide direct investment management, administrative, custodial, or other bona fide operational services to the trust.

Before investing public funds in a joint investment trust, governing bodies must execute a written acknowledgment confirming they understand the funds are not FDIC-insured, not collateralized or guaranteed by the state, and are subject to potential loss of principal.

Violations constitute a breach of fiduciary duty and may subject the trust, public entity, and its officers and elected officials to criminal and civil remedies, including penalties under sections 12B.14 and 12B.15.

The bill also authorizes securities broker-dealers registered with the Financial Industry Regulatory Authority (FINRA) as approved custodians for pledged collateral securing public fund deposits.