Serving on Private School Investment Committees Following Adoption of New Code

September 10, 2003

CJE Opinion No. 2003-11

You have requested an advisory opinion concerning your service as a trustee for two affiliated nonprofit private schools. On one school's board of trustees, you serve as secretary of the board, as a member of its executive committee, and as a member of its investment committee. On the other school's board of trustees, you serve as secretary of the board and as a member of its investment committee. The business of the investment committees is to select outside investment advisors to manage the school's endowment funds. The investment committees also set investment guidelines for the advisors, review the advisors' investment decisions, and monitor the advisors' performance. Your specific question is whether the new Code of Judicial Conduct that becomes effective October 1, 2003, prohibits your continued service on the investment committees.

The Code of Judicial Conduct as it is presently written states, in Canon 5 (B) (3), that a judge may not give investment advice to an organization but may serve on the organization's board of trustees even though the board has the responsibility for approving investment decisions. Section 4 C (3) (b) (i) of the new Code states that "[a] judge as an officer, director, trustee, non-legal advisor, or member of an organization . . . shall not participate in the management and investment of the organization's funds." As you note in your letter, the language of the new Code is "broader" and, therefore, more restrictive than the relevant provision in the current Code.

The new Code, with its broader language, precludes not only the giving of advice, but also any participation in the management and investment of funds. The business of the investment committees on which you serve clearly involves participation in the management and investment of endowment funds. It is the committee's opinion, therefore, that you should refrain from continuing to serve on the investment committees of the boards of these nonprofit private schools.