10.03 - Presentation of Investment Policy

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considering the probable safety of the plan capital as well as the probable investment return to be derived from the assets." The investment officer, acting in accordance with this policy and with Minnesota Statute 118A and exercising due diligence shall be relieved of personal liability for an individual security's credit risk or market price changes,provided that reasonable action is taken to control adverse developments and unexpected deviations are reported in a timely manner. I SECTION 6. CONFLICT OF INTEREST Any City official (elected or appointed) involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program or which could impair his/her ability to make impartial investment decisions. SECTION 7. INTERNAL CONTROLS Internal controls shall be designed to prevent loss of public funds due to fraud, error,misrepresentation, unanticipated market changes,or imprudent actions. Internal controls shall be reviewed annually by an independent auditor. SECTION 8. AUTHORIZED FINANCIAL INSTITUTE AND DEALER The responsibility for conducting investment transactions resides with the City Council of the City of Pequot Lakes. Also, the Council shall authorize the investment officer to exercise the powers of the Council in designating a depository of the Funds. In accordance with Minnesota Statute 118A.02, only approved security broker/dealers selected by creditworthiness shall be utilized. SECTION 9. BROKER REPRESENTATIONS Before engaging in investment transactions with the City of Pequot Lakes,brokers shall submit a certification annually according to Minnesota Statutes, Section I I8A.04. The document will state that the officer has reviewed the investment policies and objectives, as well applicable state law, and agrees to disclose potential conflicts of interest or risk to public funds that might arise out of business transactions between the firm and the City of Pequot Lakes. All financial institutions shall agree to undertake reasonable efforts to preclude imprudent transactions involving the City's funds. SECTION 10. SUITABLE AND AUTHORIZED INVESTMENT INSTRUMENTS Minnesota Statutes, Section 118A.04, lists all permissible investments for municipalities. This list establishes the maximum investment risk permitted for a Minnesota municipality. Even though MN Statutes 118A.04 provides for more instruments to be used for investing purposes; the following is a listing of investments the City will be authorized to invest in. 1. Government Securities: Instruments such as bonds, notes, bills, mortgages and other securities which are direct obligations of the federal government or its agencies, with the principal fully guaranteed by the U.S. Government or its agencies. 2. Certificate of Deposit: A negotiable or nonnegotiable instrument issued by commercial banks and insured up to $100,000 by the Federal Deposit Insurance Corporation (FDIC). The City may Page 2