Employer Services Bulletin
Maryland Legislation Promotes Use of MWBE Brokerage and Investment Firms
By Weldon H. Latham, Michael R. Hatcher, and Jennifer K. Scheessele
[June 2008]
On May 22, 2008, Maryland Governor Martin O'Malley signed into law Senate Bill 606 (SB 606) requiring certain state entities to use Minority Business Enterprises (MBEs) for brokerage and investment management services. In Maryland, the definition of MBE includes woman-owned businesses. The legislation expands business opportunities for minority- and woman-owned brokerage and investment firms in the management of state funds totaling $50.8 billion.
Specifically, as enacted, SB 606 applies to state entities that are responsible for the management of state funds, including the State Treasurer ($9.5 billion portfolio), the State Retirement and Pension System ($39.4 billion), the Injured Workers' Insurance Fund ($1.5 billion), and the Maryland Automobile Insurance Fund ($375 million). Effective Oct. 1, 2008, SB 606 requires these entities to use MBEs to the “greatest extent feasible” to provide brokerage and investment management services. The state entities must work with the Governor's Office of Minority Affairs (GOMA) to develop guidelines for implementing the legislation and submit annual reports to GOMA on their use of MBE brokerage and investment firms.
In Maryland, an MBE is a legal entity, other than a joint venture, that is: (i) at least 51 percent owned and controlled by one or more individuals who are socially and economically disadvantaged; and (ii) managed by, and daily business operations controlled by, the disadvantaged individuals who own it. Maryland defines a “socially and economically disadvantaged individual” as a citizen or legal resident who is African American, Native American, Asian, Hispanic, physically or mentally disabled, or a woman.
MBE investment firms currently manage less than 1 percent of the $50.8 billion funds impacted by SB 606. Thus, the legislation presents a tremendous opportunity for MBEs to enter a previously untapped marketplace for minority- and woman-owned firms. As Governor O'Malley explained, “[T]he doors of opportunity should be open to all, and this legislation helps to open those doors even wider.”
For further information, please contact:
This advisory is a publication of the Corporate Diversity Counseling Group of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.
Copyright © 2008, Davis Wright Tremaine LLP.
return to Advisory Bulletins main page |
