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Financial Management Policies Page 15 4 <br />7.Maintaining the Public’s Trust <br />8.4.- All officials and employees who are part of the investment process shall seek to act responsibly as <br />custodians of the public trust. Investment officials shall avoid any transaction that might impair <br />public confidence in the municipality’s ability to govern effectively. <br />Authority to manage the City of Elk River’s investment program is derived from Minnesota Statutes §118A. <br />Management responsibility for the investment program is hereby delegated to the Finance DirectorManager. <br />No person may engage in an investment transaction except as provided under the terms of this policy and the <br />procedures established by the Finance DirectorManager. The Finance Director Manager shall be responsible <br />for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate <br />officials. <br />Officers and employees involved in the investment process shall refrain from personal business activity that <br />could conflict with the investment program, or which could reasonably cause others to question or doubt <br />their ability to make impartial investment decisions. Employees and investment officials shall disclose to the <br />Finance Director Manager any material financial interests in financial institutions that conduct business within <br />this jurisdiction, and they shall further disclose any large personal financial/investment positions that could be <br />related to the performance of the City of Elk River’s portfolio. <br />The Finance Director Manager will maintain a list of financial institutions authorized to provide investment <br />services. In addition, and a list will be maintained of approved security brokerbrokers/dealers selected by <br />credit worthiness, who maintain an office in the State of Minnesota. These may include “primary dealers” or <br />regional dealers that qualify under Securities & Exchange Commission Rule 15c3-1 (uniform net capital rule). <br />All brokers doing business with the city shall have a Broker Certification fForm on file with the Finance <br />Director Division in accordance with Minnesota Statutes §118A.04, Subd 9. All investments must be placed <br />with brokers whose office is in the State of Minnesota. No investments may be made with out of state <br />brokers. <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 />B. United States Securities <br />Governmental bonds, notes, bills, mortgages (excluding high-risk mortgage-backed securities), and <br />other securities, which are direct obligations or are guaranteed or insured issues of the United States, <br />its agencies, its instrumentalities, or organizations created by an act of Congress. <br />High risk mortgage-backed securities are as follows: <br />1. interest-only or principal-only mortgage-backed securities; or, <br />2. any mortgage derivative security that: <br />a. has an expected average life greater than ten 10 years; <br />b. has an expected average life that: <br />i. will extend by more than four years as the result of an immediate and sustained <br />parallel shift in the yield curve of plus 300 basis points; or <br />ii. will shorten by more than six years as the result of an immediate and sustained <br />parallel shift in the yield curve of minus 300 basis points; or <br />iii. will have an estimated change in price of more than 17 percent% as the result of <br />Page 84 of 294