KRS § 18A.255 — KY Code / Title III / Chapter 18A / Section 18A.255
18A.255 Investments -- Limitation of liability -- Standards of conduct
Status: in_force

18A.255 Investments -- Limitation of liability -- Standards of conduct.

(1) Subject to subsections (3) and (4) of this section but notwithstanding any other

provision of KRS 18A.230 to 18A.275, funds held for the state public employees

deferred compensation trust fund pursuant to agreement between the state and

participating employees may be invested in such investments as are deemed

appropriate by the trustees, including but not limited to annuity contracts.

Agreements may be made in writing or by electronic record, signature, or contract

as determined by the authority in accordance with the provisions of KRS 369.101 to

369.120 and shall not be denied legal effect or enforceability if made electronically

to the extent permitted by the authority.

(2) Funds deposited to the credit of the trust fund from payroll deductions made

pursuant to KRS 18A.250 shall be temporarily invested as provided in KRS 42.500

until such funds are invested pursuant to the deferred compensation agreements

between the state and participating employees and actually credited to accounts for

plan participants. Notwithstanding KRS 42.500, interest earned from such

temporary investments and by the trust fund and the corpus of the trust fund shall

be used to defray the expenses of administering the deferred compensation plans,

including but not limited to all business and operational expenses, premiums for

general and fiduciary liability insurance and deductible costs, and costs to settle

claims against the authority, its plans, and trustees, as determined by the board in

the best interest of plan participants.

(3) Neither the authority nor the board shall be liable for any losses or claims due to a

participant's actions in connection with the investment advice or financial planning

provided to the participant by operation of KRS 18A.245(7)(f) or other statute or

administrative regulation. The authority and board shall have no duty or obligation

to monitor, review, or assess the specific investment advice or financial planning

provided to a participant.

(4) (a) The participant shall have sole responsibility for evaluation, selection, and

monitoring of investments held in his or her self-directed brokerage account,

and shall at all times be and remain responsible and liable for any losses in his

or her self-directed brokerage account. Expenses charged for use of a self-

directed brokerage account shall be paid solely by the participant.

(b) Neither the authority nor the board shall be liable for any losses, expenses,

liabilities, or claims due to a participant's actions in connection with a self-

directed brokerage account provided to the participant by operation of KRS

18A.245(7)(g) or other statute or administrative regulation. The authority and

board shall have no duty or obligation to monitor, review, or assess the

investments held in a participant's self-directed brokerage account or the self-

directed brokerage account's investment performance. Neither the authority

nor the board shall be responsible for review or evaluation of fees of a self-

directed brokerage account, including but not limited to fees of a self-directed

brokerage account's custodian or broker. The board's selection of a restricted

asset list for self-directed brokerage accounts creates no presumption that the

board has any obligation or duty to select, monitor, or deem prudent assets

which may be invested in a self-directed brokerage account.

(5) (a) A trustee shall discharge his or her duties as a trustee, including his or her

duties as a member of a committee:

1. In good faith;

2. On an informed basis; and

3. In a manner he or she honestly believes to be in the best interest of the

authority and its plans and trusts.

(b) A trustee discharges his or her duties on an informed basis if, when he or she

makes an inquiry into the business affairs of the board or authority or into a

particular action to be taken or decision to be made, he or she exercises the

care an ordinary prudent person in a like position would exercise under

similar circumstances.

(c) In discharging his or her duties, a trustee may rely on information, opinions,

reports, or statements, including financial statements and other financial data,

if prepared or presented by:

1. One (1) or more officers or employees of the board whom the trustee

honestly believes to be reliable and competent in the matters presented;

2. Legal counsel, public accountants, or other persons as to matters the

trustee honestly believes are within the person's professional or expert

competence; or

3. A committee of the board of trustees of which he or she is not a member

if the trustee honestly believes the committee merits confidence.

(d) A trustee shall not be considered as acting in good faith if he or she has

knowledge concerning the matter in question that makes reliance otherwise

permitted by paragraph (c) of this subsection unwarranted.

(e) Any action taken as a trustee, or any failure to take any action as a trustee,

shall not be the basis for monetary damages or injunctive relief unless:

1. The trustee has breached or failed to perform the duties of the trustee's

office in compliance with this section; and

2. In the case of an action for monetary damages, the breach or failure to

perform constitutes willful misconduct or wanton or reckless disregard

for human rights, safety, or property.

(f) A person bringing an action for monetary damages under this section shall

have the burden of proving by clear and convincing evidence the provisions of

paragraph (e)1. and 2. of this subsection, and the burden of proving that the

breach or failure to perform was the legal cause of damages suffered by the

authority or its plans or trusts.