HomeMy WebLinkAbout35 Code of Conduct TAB 35
CODE OF CONDUCT
March 151 2 011
LANSING POLICEMEN'S AND FIREMEN'S RETIREMENT SYSTEM
LANSING EMPLOYEES' RETIREMENT SYSTEM
BOARD OF TRUSTEES
CODE OF CONDUCT
The Board of Trustees of the Lansing Policemen's and Firemen's Retirement System and the Board of
Trustees of the Lansing Employees' Retirement System (collectively, the "Board") serve as fiduciaries to
the retirement systems of the City of Lansing and must prudently administer the systems for the sole and
exclusive benefit of members,retirees and beneficiaries.
Accordingly, Board members are expected to comply with all applicable laws governing their conduct.
This Code of Conduct is intended (to the extent possible) to reduce the likelihood of any vague or
ambiguous principal or standard of conduct expected of the Board or its staff.
I. Definitions.
For purposes of this policy,the following words shall have the meanings respectively ascribed to them by
this section:
Agent means a person performing duties on behalf of the Board other than staff or Board member.
Act 314 means Michigan Public Act 314 of 1965 (1965 PA 314, as amended,MCL 38.1132 et seq).
Anything of value includes anything of monetary value, including, but not limited to, money, loans, gifts,
food or beverages, social event tickets and expenses, travel expenses, golf outings, consulting fees,
compensation, or employment.
Board shall mean the Boards of Trustees of the Lansing Policemen's and Firemen's Retirement System
and the Lansing Employees' Retirement System.
Conflict of Interest includes the prohibited transactions and interests described in this Policy, the gifts
prohibited under this Policy, and any other personal or private transaction, interest, or relationship that,
under the circumstances, creates an appearance of impropriety that could reasonably be expected to
diminish public confidence in the independent and impartial administration of the Board in the best
interests of the System and its members,retirees and beneficiaries.
Fiduciary means (a) a Board member; or(b) such other person, including but not limited to staff, service
providers, and agents, who are fiduciaries because they have been identified as such by contract, or
because of the nature of the relationship with the Board or the System.
Gift means any rendering of value for which legal consideration of equal value is not given and received.
The term gift also includes the rendering of a personal benefit or favor that results in an economic benefit
or financial gain by a Board member, staff member, or a related party.
Party in interest means, as it relates to the System, any of the following:
1. An investment fiduciary, counsel,or employee of the Board or the System;
2. A person providing services to the Board or the System;
3, The City of Lansing or any of its political subdivisions;
4. An organization, any of whose members are covered by the System;
5. A spouse, domestic partner, ancestor, lineal descendant, or spouse of a lineal descendant of an
individual described in subsections(1)or(2)above; or
6. An entity controlled by an individual or organization described in subsections (1) through (5)
above.
Policy means this Code of Conduct.
Related Party means a person who is:
1. The spouse, domestic partner or child of a Board member;
2. A brother, sister or child or other descendant of a Board member or the spouse or domestic
partner of any of them;
3. A parent of a Board member;
4. An entity in which a person referred to in any of subsections (1)through(3)has an investment
or interest; or
5. A corporation or other business entity that is directly or indirectly controlled by a Board
member.
Service Provider includes, but is not limited to, any person, corporation, or other party that is doing or
seeking to do business with, regulated by, or has interests before the Board or the System, including
anyone who is known or should be known to be an agent or acting on behalf of such a party, including
any partnership of which the System is a partner, any person or entity that has a contract related to
investment of the System's assets and any other person marketing or otherwise attempting to secure
business involving the System's assets.
System means the Lansing Policemen's and Firemen's Retirement System and the Lansing Employees'
Retirement System.
Staff shall mean the Retirement Secretary, and all other employees of the System including contractual
employees.
II. Statutory Guidelines.
In accordance with Section 13 of Act 314, the Board shall have the authority and fiduciary responsibility
for the administration of the System and the investment of its assets subject to all of the following:
1. Board members shall discharge their duties solely in the interest of the System and its
members,retirees and the beneficiaries;
2. Board members shall act with the same care, skill, prudence, and diligence tinder the
circumstances then prevailing that a prudent person acting in a similar capacity and familiar with
those matters would use in the conduct of a similar enterprise with similar aims;
3. Board members shall act with due regard for the management, reputation, and stability of the
issuer and the character of the particular investments being considered;
4. Board members shall make investments for the exclusive purposes of providing benefits to
System members, retirees and beneficiaries, and of defraying reasonable expenses of investing
the assets of the System;
5. Board members shall give appropriate consideration to those facts and circumstances that the
Board member knows or should know are relevant to the particular investment or investment
course of action involved, including the role the investment or investment course of action plays
in the System's investments, and act accordingly. Appropriate consideration includes, but is not
limited to, a determination by the Board that a particular investment or investment course of
action is reasonably designed, as part of the investments of the System,to further the purposes of
the System, taking into consideration the risk of loss and the opportunity for gain or other return
associated with the investment or investment course of action, and consideration of the following
factors as they relate to the investment course of action:
a. the diversification of the investments of the System;
b. the liquidity and current return of the investments of the System relative to the
anticipated cash flow requirements of the System; and
c. the projected return of the investments of the System relative to the funding objectives
of the System.
6. Board members shall give appropriate consideration to investments that would enhance the
general welfare of the City of Lansing and its citizens if those investments offer the safety and
rate of return comparable to other investments permitted under Act 314 and available to the
Board at the time the investment decision is made;
7. Board members may use a portion of the income of the System to defray the costs of
investing, managing, and protecting the assets of the System; may retain investment and all other
services necessary for the conduct of the affairs of the System; and may pay reasonable
compensation for those services.
I11. Prohibited Transactions.
In accordance with Section 13, subsections (5) and(6)of Act 314, the Board shall not cause the System to
engage in a transaction if the Board knows, or should know, that the transaction is any of the following,
either directly or indirectly:
1. A sale or exchange or a leasing of any property from the System to a party in interest for less
than the fair market value, or from a party in interest to the System for more than the fair market
value.
2. A lending of money or other extension or credit from the System to a party in interest without
the receipt of adequate security and a reasonable rate of interest, or from a party in interest to the
System with the provision of excessive security or at an unreasonably high rate of interest.
3. A transfer to, or use by or for the benefit of, the City of Lansing of any assets of the System
for less than adequate consideration.
4. The furnishing of goods, services, or facilities from the System to a party in interest for less
than adequate consideration, or from a party in interest to the System for more than adequate
consideration. Board members shall not do any of the following:
a. Deal with the assets of the System in his or her own interest for his or her own
account;
b. In his or her individual or any other capacity act in any transaction involving the
System on behalf of a party whose interests are adverse to the interests of the System or
the interest of the System members,retirees or beneficiaries; or
c. Receive any consideration for his or her own personal account from any party dealing
with the System in connection with a transaction involving System assets.
1V. General Ethical Standards.
A. Fiduciary Duties.
1. Duty of Loyalty. Board members shall act solely for the benefit of the present and future
System members, retirees and beneficiaries. Good faith does not excuse disloyalty.
2, Duty to Deal Impartially. Board members shall deal impartially with all System members,
retirees and beneficiaries.
3. Duty to be Educated. The complexities of sound management of the assets and liabilities of
the System impose a continuing responsibility for all Board members to attend educational
conferences, seminars, and other events that will better prepare them to perform their fiduciary
duties. Consistent with this duty,the Board has adopted a Conference and Travel Policy.
4. Duty as a Board member. Board members have a duty to use reasonable care to prevent other
Board members from committing a breach of this Policy, and have a duty to compel performance
or redress of a breach.
B. Ethical Principles.
1. This Policy cannot address all of the circumstances in which Board members could benefit
themselves or parties in interest, rather than the System's participants and beneficiaries. This
Policy must therefore consist of general principles that will provide Board members with
guidelines for managing the many complicated situations that arise in administering a public
employee retirement system.
2. In situations where the law or this policy are not clear, any doubt shall be resolved in a manner
that abates or mitigates any actual conflict of interest and furthers the members sense of faith in
the integrity of the administration of the System by the Board,
3. Board members must be aware that the mere appearance of a conflict of interest, or conduct
that may be legal but appears to conflict with the interest of the members, retirees and
beneficiaries of the System, can erode confidence in the Board and its administration, and should
be avoided.
C. Policy Guidelines.
Board members shall not:
1. Solicit or accept employment from anyone doing business with the Board or the System,
unless the Board member completely withdraws from any discretionary or decision-making
activity regarding the party offering employment, and the Board approves the withdrawal;
2. Use his or her public position to obtain benefits or a special privilege.for the Board member or
a related party;
3. Be paid or accept any form of compensation for personal services rendered on a matter before,
or sell goods or services to, the Board or the System;
4, Hold or benefit from a contract with, authorized by, or approved by, the Board or the System;
5. Vote, authorize, recommend, or in any other way use his or her position to secure approval of
a Board or System contract (including employment or personal services) in which the Board
member or a related party has an interest;
6. Use or authorize the use of, his or her title, the name of the Board or the System, or the
Board's or System's logo in a manner that suggests impropriety, favoritism, or bias by the Board,
or the System;
7. Solicit or accept any compensation, except as allowed by law, to perform his or her official
duties or any act of service in his or her official capacity; or
8. Do through third parties that which he or she may not do directly under the foregoing
restrictions.
V. Conflicts of Interest.
The phrase conflict of interest includes prohibited transactions and interests, gifts; and any other personal
or private transactions, interests, or .relationships that, under the circumstances, create an appearance of
impropriety that could reasonably be expected to diminish public confidence in the independent and
impartial administration of the System in the best interests of the System and its members, retirees and
beneficiaries.
A. Existence. A conflict of interest exists for a Board member, staff, or service provider whenever there
exists personal or private, commercial, or business relationship or interest that could reasonably be
expected to diminish the Board members', staff or service provider's independence of judgment in the
performance of the person s responsibilities to the System.
B. Disclosure. Board members, staff, service providers, and any other person(s) or organization(s)
having fiduciary obligations to the System must promptly disclose any actual or potential conflicts of
interest in detail sufficient to be understood by the Board and by the public. Disclosure may be made
orally during Board meetings or by submission of a written statement to the Chair of the Board, with a
copy to all Board members and the Retirement Analyst. Disclosure shall be made immediately prior to
the Board's consideration of a matter, and shall be reflected in the official record of the meeting.
Members of the Board shall be accountable for recognizing a potential or actual conflict of interest and
for disqualifying themselves from making, participating in, or attempting to influence Board decisions
which may affect any of their financial interests. Recusal from acting on any matter in which an actual or
potential conflict exists is required. In addition to the disclosures required above, each Board member
shall disclose his or her and any related parry's financial interest in any business proposing to engage in a
transaction with the System prior to any official act by the Board on such transaction. Such disclosure
shall be set forth in the minutes of the meeting of the Board at which such transaction is considered.
C. Duty to Cure. Persons and organizations who have a duty to disclose a conflict of interest also have a
duty to cure the conflict, if the conflict is their own and a cure is deemed required prior to any action by
the Board. A person normally cures a conflict of interest by promptly eliminating it. Persons who cannot
or do not wish to eliminate the conflict must terminate their relationship with the System as soon as is
reasonably possible. However, if the conflict of interest involves a Board member or employee who may
prudently withdraw from action on a particular matter in which a conflict exists, he or she may cure the
conflict in that manner provided that:
1. The person may be and is effectively separated from influencing the action taken;
2. The action may properly be taken by others; and
3. The nature of the conflict is not such that the person must regularly and consistently withdraw
from decisions which are normally his or her responsibility with respect to the System. Board
members must disclose any conflicts regarding matters which are before the Board, leave the
table during any relevant deliberations, and not vote on the matter.
D. Exceptions. It shall not be considered a conflict, and a disclosure and recusal shall not be required if:
1. A Board member or staff member is a member, retiree; or beneficiary of the System or, with
respect to the matter at issue, has an interest no greater than a large class of its members or
retirees;
2. A Board or staff member or party in interest has an investment in the securities of a publicly or
privately traded corporation which is owned, purchased, sold, or otherwise dealt with by the
System provided that the affected person's interest in the securities is not more than 5% of any
class of securities and the person is not a director or officer of the corporation; or
3. A Board or staff member or party in interest maintains ownership in a mutual fund or
commingled investment fund that holds securities or other assets of a firm that provides or is
being considered to provide services to the System unless the Board, staff member or related
party participates in the management of such funds.
VI. Gifts, Political Contributions and Solicitations,Golf and SnortinOCultural Event Activities.
A. General Policy Statement. Engaging in or condoning bribery is strictly prohibited. Board members
and staff shall not, directly or indirectly, solicit, accept or receive any gift, whether in the form of money,
service,loan,travel, gratuity, favor honoraria, entertainment, hospitality, thing or promise, or in any other
form, under circumstances in which it could reasonably be expected or perceived to compromise, impair
or influence him or her, in the performance of his or her official duties or was intended as a reward for
any official action on his or her part. More simply put, regardless of legality, no gifts of any kind or in
any amount should be accepted if someone might consider that gift as influencing a decision made in
service to the System.
Board members and staff shall not solicit or accept contributions or gifts from current, prospective or
potential service providers if they know, or reasonably should know, that such contributions or gifts are
intended to influence their actions or decisions with respect to the System. All members of the Board and
staff who are responsible for investment decisions or who are involved in the management of the
System's assets shall not solicit, accept, or agree to accept any gifts of more than de minimus value,
personal benefits,or personal favors offered to them because of their positions with the System(examples
of de minimus gifts are educational, promotional, or advertising items of a nominal value which are
defined as items estimated to cost less than $100.00 with minimum resale value). An occasional gift of
less than$20.00 in value shall not be included in the limitations on gifts. De minimus gifts should not be
received on so frequent a basis as to lead a reasonable person to believe that a Board member or staff
member is using his or her office for personal gain. Solicitation or encouragement by a Board member or
staff member of entertainment, including but not limited to meals, refreshment, or entry fees for a cultural
or sporting event from a current, prospective, or potential service provider of the System is prohibited.
No cash,cash equivalents or securities of any value may ever be accepted.
B. Gifts and Gratuities. Board members and staff shall not solicit or accept contributions or gifts
(including meals, lodging, entertainment, transportation, or invitations to social/sporting/cultural events)
from any single current, prospective or potential service provider which exceed a value totaling $200.00
in any calendar year. However,this.limitation on gifts does not apply:
1. to business meals/receptions where a representative of the service provider is present for the
purpose of conducting business or providing education; or
2, to seminar/conferences sponsored by a service provider or prospective service provider where
attendance is approved by the Board pursuant to its Conference and Travel Policy; or
3. to transportation sponsored by a service provider in connection with receptions, business
meals or business meetings when the service provider will be present at such reception, business
meal or business meeting; or
4. to participation in recreational or social events while attending a seminar/conference provided
said events are available to a majority of the seminar/conference attendees;
5. to participation in recreational or social events sponsored by a service provider or prospective
service provider provided the service provider will be present and attendance is expected to
benefit the System.
This prohibition regarding the solicitation or acceptance of gifts or other economic benefits does not
apply to seminar or conference fees when the seminar relates to the.Board members or staff members job
duties and is sponsored by the System's service providers or agents. Business meetings and discussions,
including meetings which include meals, with current service providers may provide useful information
or benefit to the Board member, and are not prohibited by this Ethics Policy. However, the prohibition
does apply during a period in which the seminar or conference sponsor is under consideration as a new or
continued service provider. If a Board member or staff receives an unsolicited,prohibited contribution or
gift, he or she should return such contribution or gift to the source; however, if returning the contribution
or gift is not possible or feasible,the contribution or gift should be donated to a charitable organization.
C. Political Contributions. A person who is a candidate for, or serving on the Board by election of the
System membership shall not accept any political contributions from a service provider.
D. Sponsored Travel. It is well recognized that Board members of most governmental and private
retirement systems are invited to and attend conferences sponsored by trade associations as well as
service providers to the retirement plan industry (such as consultants, investment managers, and
investment advisors). Further, it is in the best interest of the System and its members, retirees, and
beneficiaries that the Board and staff be as well educated and informed on various matters pertaining to
pension design, investment opportunities, and management of a large governmental retirement system as
reasonably possible. It is thus considered appropriate and desirable for Board members and staff
members to attend various conferences throughout their tenure and employment, including those
sponsored by service providers. Further, it is neither uncommon nor improper in many cases for the
service provider to pay for the cost of travel and related costs of attendees,provided the same is uniformly
done by such service provider. Acceptance of expensive meals, refreshments, or entertainment from a
service provider is discouraged. Of course, application of the rule in the preceding sentence shall take
into account the location and context of the event at which such meal, refreshment, and entertainment
occurs.
VII. Prohibited Conduct.
A. Confidential Information. No Board member or staff shall obtain or use for personal reasons or for
private gain any confidential information acquired as a result of his or her position as a member of the
Board. A Board or staff member shall not use information to which he or she has access by reason of his
or her office to acquire, or aid another to acquire, a pecuniary interest in any property, transaction or
enterprise that may be affected by the information, speculate, or aid another to speculate, on the
information, or coerce another to suppress or fail to report that information to a law enforcement agency.
Board members and staff may not disclose confidential information, except when duly authorized
personnel determine that disclosure is either permitted or required by law.
B. Outside Employment and Other Outside Activity. Board members may not engage in any outside
employment or other activity that is not compatible with the full and proper discharge of their duties and
responsibilities. Activities or actions that are not compatible with Board duties include, but are not
limited to,the following;
1. Engaging in any outside employment, private business activity, or other interest which may
interfere with the Board member's ability to perform his or her duties as a Board member, or
which may impair the efficient operation of the Board;
2. Ordering, directing or requesting Board members or staff to perform during regular working
hours any personal services not related to official Board functions or activities;
3. Engaging in any outside employment, private business activity, or interest, which permits a
Board member or others to capitalize on his or her official title or position; and
4. Serving in a representative capacity or as an agent, consultant, expert witness or attorney for
any outside entity involving any matter before the Board or matter that involves the Board.
C. Use of System Resources for Private Gain. No Board or staff member shall use Board consultants or
staff, or System facilities, equipment, materials or supplies for any purpose other than the discharge of his
or her responsibilities and duties to the retirement system.
D. Use of Position for Private Gain. No Board or staff member shall use or seek to use his or her position
to obtain an economic benefit or financial gain for himself or herself, for any party in interest or for any
for-profit business or not-for profit organization on whose behalf such economic benefit or financial gain
is solicited by a Board member or staff member.
E. Nepotism. On the basis of objective qualifications and competitive cost, the Board is not prohibited
from hiring or retaining the relative of a Board or staff member; however, it will be incumbent upon the
Board or staff member to disclose such a relationship to the Board as early in the evaluation and selection
process as is reasonably possible.
VIII. Ethics Advisory Opinions.
In its sole discretion, the Board from time to time may seek advisory opinions from its legal counsel to
aid in its application of this Policy to particular factual situations presenting an apparent ethical issue.
Such counsel's opinion shall be advisory only, but any Board member or staff member acting in reliance
thereon shall be deemed to be acting in good faith compliance with this Policy. Advisory opinions sought
by the Board pursuant to this section, together with the Board's initial request and that documentation
setting forth the factual circumstances giving rise to the request for advisory opinion, shall not be public
information unless or until so determined by a court of competent jurisdiction.
IX. Compliance and Enforcement.
The Board, with the assistance of its legal counsel, shall enforce this Ethics Policy with respect to Board
members, service providers and agents providing investment and actuarial services. Such enforcement
shall be through resolutions of reprimand, censure, or other appropriate parliamentary measures,
including, but not limited to requests for resignation. The Board may also pursue all available legal
remedies against any Board member, agent, service provider or other offender of this Ethics Policy.
X. Policy Review.
The Board shall review this Policy at least every 5 years to assure its efficacy and relevance. The Board
may amend this Policy,from time to time,by majority vote of the Board.
Policy adopted by the Police and Fire Retirement System Board of Trustees March 15,2011
6836585.2 26005/11 S235