HomeMy WebLinkAboutResolution No. 358-16 - InvestmentPolicy.AcceptAgentComplianceRESOLUTION
CITY OF ROCHESTER INVESTMENT POLICY
WHEREAS, Minnesota Statutes Chapter 118A controls local government investments
and sets requirements for the City of Rochester's interaction with the Broker/Dealers who sell
investments to the City by requiring such Broker/Dealers to sign a statement holding their firm
to a suitability standard; and
WHEREAS, the City has fewer national brokers willing to sign the annual statement of
investment restrictions. Currently, of the 25 national brokers' main desks the City's investment
advisor utilizes, only six are willing to sign. This limited pool of brokers means that the City is
in a less competitive pool for buying securities. In addition, it is likely that the remaining pool
of six may be further reduced as brokerage legal departments deny assuming this liability;
and,
WHEREAS, in order to increase the competitive pool of investment brokers for the City,
it is necessary for the City to interpret Minn. Stat. §118A.04, subd. 9's definition of agent as
our contracted registered investment advisor, currently Insight Investments; and,
WHEREAS, Minn. Stat. §118A.04, subd. 9 defines "broker" as a broker -dealer, broker,
or agent of a government entity, who transfers, purchases, sells, or obtains securities for, or on
behalf of, a government entity. As our contracted advisor, Insight is responsible for obtaining
securities for our portfolio consideration that are consistent with our Investment Policy
guidelines; and,
WHEREAS, in accordance with Minnesota law, a government entity provides to the
broker a statement of investment restrictions with the provision that all future investments are
to be made in accordance with Minnesota Statutes governing the investment of public funds.
A broker must acknowledge annually receipt of the statement of investment restrictions in
writing and agree to handle the government entity's account in accordance with these
restrictions; and,
WHEREAS, Insight Investments has provided the City with the signed investment
restriction form stating they will comply with these restrictions as stipulated by Minnesota law;
and,
WHEREAS, Insight Investment offers more stringent compliance via their software and
staff, with pre -trade and post -trade guideline testing. Rather than police compliance at the
broker/dealer level, our investment advisor will verify that the investments they obtain are in
compliance. Additionally, as potential trades are presented, our internal staff verify that our
investments stay within compliance; and,
WHEREAS, having broker/dealers track this in addition to Insight Investments is an
overlap which, for the City, has become outdated and restrictive without added benefit. As our
contracted investment advisor "obtains" these securities for the City and acts as our agent, our
attorney's opinion is that statute continues to be followed; and,
WHEREAS, in accordance with Minn. Stat. §118A.02, subd. 2, the neither treasurer,
finance director, government entity, nor any other official responsible for the custody of such
funds, shall be personally liable for any loss sustained from the deposit or investment of funds
in accordance with the provisions of sections 118A.04 and 118A.05 and while using the
investment advisor as the defined broker as stipulated in this resolution; and,
WHEREAS, this resolution has been reviewed and approved by the Rochester City
Attorney.
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of
Rochester that the City take the following action-
1. Authorization on Broker Interpretation within Minn. Stat. $118A.04, subd.
9. The Rochester City Council interprets Minn. Stat. §118A.04, subd. 9's
definition of broker as our contracted investment advisor, currently Insight
Investments. City staff is authorized to accept the contracted investment
advisor's annual investment restriction form.
2. Authorization of Immunity within Minn. Stat. $118A.02, subd. 2. The
Rochester City Council indemnifies City staff so as to not hold the
treasurer, finance director, government entity, nor any other official
responsible for the custody of such funds, personally liable for any loss
sustained from the deposit or investment of funds in accordance with the
provisions of sections 118A.04 and 118A.05 and while using the
investment advisor as the defined broker as stipulated in this resolution.
PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF
ROCHESTER, MINNESOTA, THIS DAY OF , 2016.
ATTEST:
CITY CLERK
PRESIDENT OF SAID COMMON COUNCIL
APPROVED THIS DAY OF , 2016.
MAYOR OF SAID CITY
(Seal of the City of
Rochester, Minnesota)
Res 1 5/Adopt/InvestPolicy