Res 2025-180 adopting a revised Investment Policy for Operating and Reserve Funds

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VIII. ETHICS AND CONFLICTS OF INTEREST Investment Officers, investment advisers and employees involved in the investment process shall refrain from any personal business relationships with business organizations that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Such employees shall disclose in writing to the City Manager any material financial interests in financial institutions that conduct business with the City, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the City's portfolio. For purposes of this section, an investment officer or employee has a personal business relationship with a business organization if: 1. The Investment Officer or employee owns 10 percent or more of the voting stock or shares of the business organization or owns$5,000 or more of the fair market value of the business organization. 2. The Investment Officer or employee received funds from the business organization that exceed 10 percent of the Investment Officer's or employee's gross income for the previous year. 3. The Investment Officer or employee has acquired from the business organization during the previous year investments with a book value of $2,500 or more for the personal account of the Investment Officer or employee. Investment Officers or employees involved in the investment process with personal business relationships or relatives within the second degree of affinity or consanguinity seeking to sell investments/securities to the City shall disclose the relationship and file a statement with the Texas Ethics Commission and the City Council. Personal business relationships are defined in the PFIA. IX. AUTHORIZED BROKER/DEALERS AND FINANCIAL INSTITUTIONS The objective of safety requires that the City transact business with financially strong broker/dealers and financial institutions. Therefore, financial broker/dealers and institutions shall be subject to a screening process by the Investment Officers and/or City contracted Investment Advisor to eliminate those dealers and institutions that lack economic viability or whose past practices put the safety of public capital at risk. The Investment Advisor under contract will observe the instructions of the City with respect to broker/dealers who are approved to execute transactions involving the City's Managed Funds These broker/dealers may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule). Authorized dealers and institutions shall provide proof of Financial Institutions Regulatory Authority (FINRA) certification, SEC registration, an annual audited financial statement, and a completed broker/dealer questionnaire. Additional financial institutions may be used for time or demand deposits designed for investment purposes (i.e. not as the primary depository of the City). These institutions may be utilized by the Investment Officer(s) on an ongoing basis to accommodate the need for timely action. Action by the Investment Committee is not required before use of such institutions. Each financial institution will provide policy certification and execute a depository agreement if funds exceed the FDIC insurance limits. The City may utilize third-party rating agencies in order to assess the overall financial strength of potential depositories. The depository, or its brokerage subsidiary, from which the City obtains banking services including safe- keeping, will not be used for brokerage services in order to perfect ownership on delivery versus payment settlement. The bank may be used for time deposits but these deposits will be bid competitively. X. AUTHORIZED AND SUITABLE INVESTMENTS Authorized investments shall be limited to the instruments listed below as authorized and further City of San Marcos Investment Policy 4 Rev 05.2025