Press Release
Senator Joe Pennacchio Senator Joe Pennacchio (R-26)
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Contact: Emily Everson / (609) 847-3600
November 10, 2016
Pennacchio Bill to Stop Corruption on the State Investment Council Passes Senate Panel

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Legislation sponsored by Senator Joe Pennacchio (R-Essex, Morris, Passaic) that forbids State Investment Council members from voting on investments that present a financial or familial conflict of interest passed the Senate State Government, Wagering Tourism & Historic Preservation Committee.

Sen. Joe Pennacchio’s bill would forbid members of the State Investment Council from voting on matters that present a conflict of interest. A conflict of interest on the council regarding Lehman Brothers cost the state $115 million in 2008. (Wikimedia Commons)

“In 2008, the State Investment Council invested in Lehman Brothers right before the firm went bankrupt,” Senator Pennacchio recalled. “The Lehman Brothers managers who sat on the council should have been forced to recuse themselves. Instead, they cost the pension system $115 million. This kind of blatant conflict of interest would not be tolerated under my legislation.”

Senator Pennacchio’s bill, S-110, would require members of the State Investment Council to recuse themselves from a vote if the matter before the council involves one of the following conflicts of interest:

  • The member or their spouse is or was employed by the entity in which the investment is being made
  • The member or their spouse has a direct investment exceeding $1,000 in the entity in which the investment is being made

Under the bill, any member who breaks this law would be removed from the council, and must be immediately reported to the Governor and the Legislature.

The State Investment Council was created by the New Jersey Legislature in 1950 to develop policies governing the investment of funds by the Director of the Division of Investment.

“State Investment Council members should serve the public, not themselves,” Senator Pennacchio said. “Any member who casts a vote despite a conflict of interest is working against the people of New Jersey and does not deserve to sit on the Investment Council.”

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