In this subtitle the following words have the meanings indicated. “Fiduciary” means: a member of the Board of Trustees; a member of the Investment Committee; a member of a committee established by the Board of Trustees as authorized under § 21–108 of this title; a member of a committee established under § 21–122(g) of this title; or an employee of the State Retirement Agency who exercises any discretionary authority or control over: the management or administration of the several systems; or the management or disposition of the assets of the several systems. “Several systems” includes the optional retirement program to the extent that the Board of Trustees administers the program under Title 30 of this article.

The Board of Trustees shall hold the assets of each of the several systems for the exclusive purposes of providing: benefits to participants; and for reasonable expenses of administration.

A fiduciary shall discharge the fiduciary's duties with respect to the several systems solely in the interest of the participants and as follows: for the exclusive purposes of providing benefits to the participants and for reasonable expenses of administering the several systems; with the care, skill, prudence, and diligence under the circumstances then prevailing, that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; by diversifying the investments of the several systems so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; in accordance with the laws governing the several systems; and in accordance with the documents and instruments governing the several systems to the extent that the documents and instruments are consistent with this subtitle.

Except as otherwise provided in subsection (c) of this section, in exercising the standards set forth in § 21-203 of this subtitle: the trustees jointly shall manage and control the assets of the several systems; and each trustee of the several systems, when acting as a fiduciary, shall use reasonable care to prevent another trustee from committing a breach. Paragraph (1) of this subsection does not preclude any agreement that allocates specific responsibilities, obligations, or duties among the trustees. The Board of Trustees may: allocate the responsibilities of the fiduciaries among the fiduciaries; and designate any other person to carry out the responsibilities of a fiduciary. If the Board of Trustees makes an allocation or designation to a person under subsection (b) of this section, the Board of Trustees is not liable for an act or omission of that person in carrying out the responsibility, except to the extent that the Board of Trustees violates § 21-203 of this subtitle with respect to: the allocation or designation; the establishment or implementation of a procedure to allocate or designate; or the continuance or review of the allocation or designation. Except as otherwise provided in paragraph (1) of this subsection, a trustee to whom certain responsibilities, obligations, or duties have not been allocated is not liable, either individually or as a trustee, for any loss resulting to the several systems arising from an act or omission of another person to whom the responsibilities, obligations, or duties have been allocated.

In exercising authority, control, or discretion with respect to the several systems, a fiduciary may not: use the assets of the several systems for the fiduciary's own interest or account; act in a transaction involving the several systems on behalf of a person, or represent a person, if the interests of the person are adverse to the interests of the several systems or the interests of participants; receive any consideration for the fiduciary's own account from a person dealing with the several systems in connection with a transaction involving the assets of the several systems; or become an endorser or surety or, in any manner, an obligor, for money lent to or borrowed from the Board of Trustees.

Subject to § 21-207 of this subtitle, a fiduciary who breaches any of the responsibilities, obligations, or duties imposed on a fiduciary by this subtitle: is personally liable to the several systems for any losses to the several systems resulting from a breach; shall restore to the several systems any profits of the fiduciary made through use of assets of the several systems by the fiduciary; and is subject to any equitable or remedial relief, including removal of the fiduciary, that a court considers appropriate. A fiduciary is not liable with respect to a breach of fiduciary duty under this subtitle if the breach was committed: before the fiduciary became a fiduciary; or after the fiduciary ceased to be a fiduciary.

Subject to the provisions of this section, the State shall indemnify a fiduciary who is, or is threatened to be made, a party to an action or proceeding, including an administrative or investigative proceeding, by reason of the fiduciary’s service as a fiduciary. In this subsection, “expenses” include: reasonable attorney’s fees; judgments; fines; and other expenses that were actually and reasonably incurred by the fiduciary in connection with the action or proceeding. With respect to a civil, administrative, or investigative action or proceeding, the State shall indemnify a fiduciary for the expenses of the action or proceeding if the fiduciary acted: in good faith; and in a manner the fiduciary reasonably believed to be in or not opposed to the best interest of the several systems. With respect to a criminal action or proceeding, the State shall indemnify a fiduciary for the expenses of the action or proceeding if the fiduciary: acted in good faith; acted in a manner the fiduciary reasonably believed to be in or not opposed to the best interest of the several systems; and did not have reasonable cause to believe that the fiduciary’s conduct was unlawful. Any termination of an action or proceeding does not, of itself, create a presumption that the fiduciary did not meet the standards for indemnification described in subsection (b)(2) and (3) of this section. The State may not indemnify: a fiduciary with respect to an action or proceeding as to which the fiduciary was held liable for gross negligence or willful misconduct in the performance of the fiduciary’s duty to the several systems; or an independent contractor furnishing services to the several systems. The State shall provide insurance for a fiduciary eligible for indemnification under this section. For the purpose of paragraph (1) of this subsection, the State may provide self–insurance under terms and conditions satisfactory to the State Treasurer. A fiduciary may not be required to pay amounts attributable to liability described in this section because the State does not provide adequate insurance coverage or otherwise fails to indemnify in accordance with this section.

Except as provided in § 21-204(b) and (c) of this subtitle, a provision in an agreement that purports to relieve a fiduciary from a responsibility, obligation, or duty, or liability for a responsibility, obligation, or duty under this subtitle is against public policy and void. This subtitle does not preclude indemnification of a fiduciary in accordance with § 21-207 of this subtitle.

Notwithstanding any other law, a person may not serve as a fiduciary if the person has been convicted of: a felony; a misdemeanor involving moral turpitude; a violation of this subtitle; a conspiracy or attempt to commit a crime described under item (i), (ii), or (iii) of this paragraph; or a crime in which a crime described under item (i), (ii), (iii), or (iv) of this paragraph is an element. A person may not knowingly allow another person to serve as a fiduciary in violation of paragraph (1) of this subsection. Any person who intentionally violates subsection (a) of this section is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $10,000 or imprisonment not exceeding 1 year or both. For the purposes of this section, a person is deemed to be convicted on the later of: the date of judgment of the trial court; or the date of the final sustaining of judgment on appeal. A fiduciary may be removed for a violation of subsection (a) of this section.

Except as provided in subsection (c) of this section, the State shall purchase a bond for each fiduciary in the form and amount determined by the State Treasurer under § 5–108 of the State Government Article, in consultation with the Board of Trustees. Unless a fiduciary is bonded as required by subsection (a) of this section, the fiduciary may not exercise custody or control of any assets of a State system. A fiduciary may not allow another fiduciary to act in violation of paragraph (1) of this subsection. The State may satisfy the requirement for a bond under subsection (a) of this section by purchasing an insurance policy. The State Treasurer, in consultation with the Board of Trustees, shall determine the type and amount of coverage provided by a policy purchased under paragraph (1) of this subsection.