O'Brien v. South Carolina ORBIT, 380 S.C. 38

Summary

The Supreme Court of South Carolina held that the City of Charleston could not invest public funds for other post-employment benefits in the ORBIT trust because the trust invested in equity securities, violating Article X, § 11 of the South Carolina Constitution. The court also concluded that applicable statutes did not authorize the investment and ordered ORBIT dissolved with invested funds returned to its members. Justice Pleicones agreed that municipalities could not participate in ORBIT but dissented from the majority's reasoning regarding the trust's validity and the remedy.

Holdings

1. Article X, section 11 prohibits a municipality from investing public funds in equity securities, and the municipality may not evade that prohibition by transferring the funds to a trust that invests in equity securities.
2. South Carolina statutes do not authorize a political subdivision to invest public funds in a private investment trust whose portfolio includes equity securities; the statutory list of authorized investments is exhaustive in this context.
3. Because ORBIT's obvious purpose was to invest public funds in equity securities in an attempt to circumvent constitutional restrictions, the majority deemed the trust illegal, ordered it dissolved, and required the return of invested funds to its members.

Questions Presented

1. Whether Article X, section 11 of the South Carolina Constitution prohibits a municipality from investing public funds in a trust that invests in equity securities.
2. Whether South Carolina statutes authorizing investments by political subdivisions permit the City to invest public funds in ORBIT or in a trust whose portfolio includes equity securities.
3. Whether ORBIT should be dissolved and the funds invested in it returned to its participating members.

Disposition

other