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<br /> <br /> <br /> <br />4.Maintaining the Public’s Trust <br />All officials and employees who are part of the investment process shall seek to act <br />responsibly as custodians of the public trust. Investment officials shall avoid any <br />transaction that might impair public confidence in the municipality’s ability to govern <br />effectively. <br /> <br />Authority to manage the City of Elk River’s investment program is derived from Minnesota Statutes <br />§118A. Management responsibility for the investment program is hereby delegated to the Finance <br />Director. No person may engage in an investment transaction except as provided under the terms <br />of this policy and the procedures established by the Finance Director. The Finance Director shall be <br />responsible for all transactions undertaken and shall establish a system of controls to regulate the <br />activities of subordinate officials. <br /> <br />Officers and employees involved in the investment process shall refrain from personal business <br />activity that could conflict with the investment program, or which could reasonably cause others to <br />question or doubt their ability to make impartial investment decisions. Employees and investment <br />officials shall disclose to the Finance Director any material financial interests in financial institutions <br />that conduct business within this jurisdiction, and they shall further disclose any large personal <br />financial/investment positions that could be related to the performance of the City of Elk River’s <br />portfolio. <br /> <br />The Finance Director will maintain a list of financial institutions authorized to provide investment <br />services. In addition, a list will be maintained of approved security broker/dealers selected by credit <br />worthiness, who maintain an office in the State of Minnesota. These may include “primary dealers” <br />or regional dealers that qualify under Securities & Exchange Commission Rule 15c3-1 (uniform net <br />capital rule). All brokers doing business with the city shall have a Broker Certification form on file <br />with the Finance Director in accordance with Minnesota Statutes §118A.04, Subd 9. All investments <br />must be placed with brokers whose office is in the State of Minnesota. No investments may be <br />made with out of state brokers. <br /> <br />Investment instruments authorized and permitted by this policy are as follows: <br />A. Repurchase Agreements <br />Repurchase agreements consisting of collateral allowable in Section 118A.04. <br /> <br />B. United States Securities <br />Governmental bonds, notes, bills, mortgages (excluding high-risk mortgage-backed <br />securities), and other securities, which are direct obligations or are guaranteed or insured <br />issues of the United States, its agencies, its instrumentalities, or organizations created by an <br />act of Congress. <br /> <br />High risk mortgage-backed securities are as follows: <br /> <br />1.interest-only or principal-only mortgage-backed securities; or, <br /> <br />2.any mortgage derivative security that: <br /> <br />a.has an expected average life greater than ten years; <br /> <br />b.has an expected average life that: <br /> <br />i.will extend by more than four years as the result of an immediate and <br />sustained parallel shift in the yield curve of plus 300 basis points; or <br />Financial Management Policies Page 4 <br /> <br />