Sec. 6.04. INVESTMENT POWERS OF BOARD.    (a)  The board shall invest the reserve funds in a manner that a prudent investor would invest the funds, considering the purposes, terms, distribution requirements, and other circumstances of an enterprise with a similar character and similar aims.
(b) The board shall diversify the investment of the reserve funds to minimize the risk of large losses unless under the circumstances it is clearly prudent not to do so.  In determining whether the board has exercised prudence concerning an investment decision, the investment of all assets of the funds, rather than the prudence of a single investment of the funds, shall be considered.
(c)  The board may directly manage investments of the reserve funds or may choose to contract for professional management services.  If the funds own real estate, the board may, at its discretion, establish an organization described by Section 501(c)(2) or 501(c)(25), Internal Revenue Code of 1986, as amended, to hold title to the real estate.
(d) The board has final responsibility for the investment of the reserve funds.  The board may purchase securities or engage in limited partnerships or make other investments not specifically provided by this Act and has the authority to exercise discretion in determining the nature, type, quality, and size of any investment consistent with the investment policies it establishes.
Sec. 6.05. PROFESSIONAL CONSULTANTS.    (a)  The board may contract for professional investment management services, financial consultants, independent auditors, third-party administrators, preferred providers, health maintenance organizations, attorneys, and actuaries.  Only the board may enter into those contracts.  The board may establish a reasonable fee for compensation under those contracts.
(b) The board may designate its own custodian or master custodian to perform the customary duties involving the safekeeping of the assets and the execution of transactions of either domestic or foreign securities.  The board may engage in a securities lending program consistent with the benefits payable to beneficiaries.
Sec. 6.06.  INVESTMENT CONSULTANT QUALIFICATIONS.  In appointing investment consultants, the board shall require that the investment consultant be:
(1)  registered under the Investment Advisors Act of 1940 (15 U.S.C. Section 80b-1 et seq.), as amended;
(2)  a bank as defined by that Act; or
(3)  an insurance company qualified to perform investment services under the law of more than one state.
ARTICLE 7. STANDARDS OF CONDUCT AND FINANCIAL DISCLOSURE REQUIREMENTS

Sec. 7.01. ETHICS POLICY.    (a)  A trustee, the executive director, or any employee of the fund may not:
(1) buy, sell, or exchange any property to or from the fund;
(2) deal with the assets of the fund in the person's own interest or for the person's own account;  or
(3) receive any consideration from any person dealing with the fund.
(b) To implement Subsection (a) of this section and to strengthen the faith and confidence of the members and beneficiaries of the fund, the board shall develop standards of conduct and financial disclosure requirements to be observed by each trustee and by the executive director in the performance of the board's and executive director's official duties.
ARTICLE 8. TRANSITION;  EFFECTIVE DATE;  EMERGENCY [REPEALED]

Secs. 8.01, 8.02. Repealed by Acts 1999, 76th Leg., ch. 52, Sec. 24(a), eff. Oct. 1, 1999.