HomeMy WebLinkAbout2003-09-24 IFC Regular Meeting Agenda PacketCITY OF PALM DESERT
OFFICE OF THE CITY TREASURER
STAFF REPORT
REQUEST: Approval of Revisions to Palm Desert Treasury Policies and
Procedures for 2003
APPLICANT: N/A
CASE NOS. N/A
DATE: September 5, 2003
CONTENTS: Palm Desert Treasury Policies and Procedures
Recommendation:
By minute motion: That the Finance Committee recommend that the City
Council adopt the revised Palm Desert Treasury Policies and
Procedures for 2003, as amended.
Background:
City policy requires that this manual be updated annually. This is the update for
calendar year 2003.
Please review these policies so that the Finance Committee. at its September meetino.
may recommend them to the City Council for approval. Policy No. 2 (Investment Policy)
is included, separately, in the September Finance Committee meeting packet.
Most of the changes this year are minor (e.g., updated job titles). Policy deletions are
highlighted with striker; policy additions are highlighted with redlining.
• •
Staff Report
Annual Treasury Policy Review
September 5, 2003
Page 2 of 2
Significant policy changes are listed below.
Policy No. 7:
Two new grounds for broker dismissal have been added: (1)
excessive account officer turnover; and (2) a failure to notify the
City in a timely manner of significant events that affect the broker -
client relationship (e.g., bankruptcy, change of account officers,
etc).
Policy No. 15: Complete rewrite of interest allocation procedures in order to
tighten the focus.
Submitted By:
rrit47ridad JA/
Thomas W. Jeffreity Treasurer
Approved By:
Paul S. Gibson, City Treasurer
City of Palm Desert
Treasury Policies and Procedures
Revision No. 2
Adopted:
POLICY NO.: 1
SUBJECT: "TREASURY POLICY DEVELOPMENT"
POLICY
The purpose of this document is to outline the policy and procedure on
treasury policy development.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that treasury operations shall
be governed by policies and procedures that have been approved by the Palm
Desert City Council ("City Council"), the Palm Desert Redevelopment Agency
Board ("Redevelopment Agency Board of Directors"), and the Palm Desert
Housing Authority Commission ("Housing Authority Commission"), the Palm
Desert Financing Authority Commission ("Financing Authority Commission"),
and the Palm Desert Recreational Facilities Corporation Board of Directors
("Golf Course Facilities Corporation Board of Directors").
Policy may be defined as a written statement of administrative principle that is
developed in very broad terms. It is meant to guide employee behavior and
constitutes the standard against which the propriety of such behavior is
measured. Policy must be followed; deviation from it will not be allowed.
Policy should always precede procedure so that employees will understand
what procedure is meant to accomplish.
Procedure may be defined as a written series of steps that are the accepted
way to implement policy. Procedure should be written in the active tense and
should answer "who, what, when, where, and how." A procedure for wire
transfers, for example, would describe how the policy would be implemented,
as opposed to stating the policy itself.
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Palm Desert Treasury Po•s and Procedures • Revision No. 2
No. 1: "Treasury Policy Development" Adopted:
1.0 Policy Drafting Requests
Treasury policies and procedures, or any amendments thereto, may be
drafted at the request of:
1.1
A majority of City Council, Redevelopment Agency Board,
Housing Authority Commission, Financing Authority Commission,
or Recreational Facilities Corporation Board members at a duly
convened meeting of their respective bodies;
1.2 A majority of Finance and Investment Committee members at a
duly convened Committee meeting;
1.3 The City Attorney;
1.4 The City Treasurer; or
1.5 The Deputy City Treasurer.
2.0 Changes in Text
The text of an approved treasury policy and procedure cannot be
changed unless the City Council, the Redevelopment Agency Board, the
Housing Authority Commission, the Financing Authority Commission,
and the Recreational Facilities Corporation Board have approved a
subsequent amendment. Treasury policies and procedures shall have
full force and effect as of their date of adoption.
3.0 Annual Review
The City Treasurer shall review all treasury policies and procedures
annually in order to ensure that they are still current and accurate. The
City Treasurer shall notify the City Council when the annual review has
been completed.
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Palm Desert Treasury Po• s and Procedures Revision No. 2
No. 1: "Treasury Policy Development" Adopted:
PROCEDURE
1. Drafting. The Deputy City Treasurer shall have the
primary responsibility for drafting all treasury policies and procedures, and
any amendments thereto.
2. City Treasurer Review. The Deputy City Treasurer
shall present a draft of the proposed treasury policy and procedure to the
City Treasurer for review. The Deputy City Treasurer shall revise the draft
in accordance with the City Treasurer's recommendations, if any.
3. Finance Committee Review. The Investment Manager Deputy City
Treasurer shall then present the proposed treasury policy and procedure to
the Finance and Investment Committee for review and approval. The
Deputy 'City:Tr'easdrer shall revise the draft in
accordance with the Committee's recommendations, if any. The City
Attorney must have reviewed the policy draft before it can proceed to the
next step in the review process.
4. City Council Review. The City Treasurer shall then present the proposed
treasury policy and procedure to the City Council for review and approval.
The policy draft shall be deemed to be approved if a majority of the City
Council votes to adopt it at a duly convened City Council meeting.
Otherwise, the invcaimcnt Manager Deputy City Treasurer shall revise the
policy draft in accordance with the City Council's recommendations, and
the City Treasurer shall then resubmit it to the City Council for approval.
5. Commission and Board Review. The City Treasurer shall then present the
proposed treasury policy and procedure to the Redevelopment Agency
Board of Directors, the Housing Authority Commission, the Financing
Authority Commission, and the Golf Course Facilities Corporation Board of
Directors for review and approval.
6. Publication. The trivestaef Deputy City Treasurer shall be
responsible for publishing, numbering, reproducing, disseminating, and
filing all approved treasury policies and procedures. All documents relating
to an approved treasury policy and procedure, including revised drafts, shall
be filed in chronological order in a Presstex classification folder. All policy
and procedure folders shall be stored in a file cabinet in the Investment
Manager Deputy City Treasurer's office.
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City of Palm Desert
Treasury Policies and Procedures
• •
POLICY NO.: 3
SUBJECT: "INTERNAL CONTROLS"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy on internal controls.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that the City Treasurer shall
establish and maintain an internal control structure that minimizes the risk of
the theft, loss, or misuse of public monies. This internal control structure shall
be embodied in treasury policies and procedures.
The internal control structure shall be designed to provide a "reasonable
assurance" that the aforementioned objectives are met. The concept of
reasonable assurance recognizes that: (1) the cost of a control should not
exceed the benefits that are likely to be derived; and (2) the valuation of costs
and benefits requires management to make judgements and estimates.
The internal control structure for the City treasury function City Treasurer's
Office shall be premised upon the following three elements:
1.0 Segregation of Duties
If two parts of a transaction are done by different employees, then
embezzlement, fraud, or concealment of errors can only occur through
collusion. Consequently, the following four duties shall be segregated
from one another in order to create a system of dual controls:
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City of Palm Desert
Treasury Policies and Procedures
Revision No. 2
Adopted:
1.1 Approving the purchase and sale of securities.
1.2 Buying and selling securities, including the execution of wire
transfers.
1.3 Having custody of cash and investments.
1.4 Making general ledger entries, and receiving and reconciling
monthly bank statements.
2.0 Procedure Controls
Internal controls in the form of procedures are intended to ensure that:
2.1 The City only acquires investments that are permitted by law.
2.2 The City investment program is integrated with City cash
management and expenditure requirements.
2.3 The level and nature of approvals that are required to purchase or
sell investments are specified.
2.4 The treasury -stuff City Treasurer's Office seeks competitive
quotes for investment purchases.
2.5 Access to bank accounts, wire transfers, and cash and
investments are limited only to specified public employees.
Outside investment advisors and broker -dealers shall not be
authorized to initiate wire transfers on the City's behalf.
2.6 Public employees who are in treasury operations are insured or
bonded.
2.7 Yields on investments are maximized, after safety and liquidity
have been considered.
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City of Palm Desert
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Revision No. 1
Treasury Policies and Procedures Adopted: 12/13/01
3.0 Custody Controls
These internal controls, which relate to the possession and transfer of
securities that the City has bought or sold, are intended to ensure that:
3.1 All of the City's securities purchases are done on a receipt -
versus -payment ("RVP") basis.
3.2. All of the City's securities sales are done on a delivery -versus -
payment ("DVP") basis.
3.3 All of the securities that the City owns are registered in its name.
3.4 Two signatures (passwords) are required for log -in access to City
electronic banking and investment systems.
3.5 Two signatures are required for a release from safekeeping or for
access to City safe deposit boxes.
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City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 4
SUBJECT: "TRADING"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy and procedure on
securities trading.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that sufficient internal
controls shall be integrated into securities trading on behalf of the City so that
the risk of costly trade errors or of theft, loss, or misuse of public monies,
shall be minimized.
The City shall hold competitive offerings whenever it must invest the gross
proceeds of tax-exempt bonds. This is due to the severe financial penalties
that could result if the City were perceived to be involved in "yield burning".
In all other cases, the City may purchase securities on a non-competitive
basis.
The key difference between a competitive offering and a non-competitive
offering, is the role of price. In a competitive offering, acceptance of an offer
must be based solely upon price. In a non-competitive offering, acceptance of
an offer may be based upon both price and a desire to "spread the business".
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Palm Desert Treasury Pols and Procedures Revision No. 2
No. 4: "Trading" Adopted:
1.0 Authority to Trade
The only City employees who shall be authorized to buy and sell
securities on behalf of the City shall be:
1.1 The City Treasurer.
1.2 The Deputy City Treasurer.
The City Treasurer and the Inveatmc�.t Manager Deputy City Treasurer
shall engage in collective decisionmaking and consultation on all trades
in order to make the best possible investment decisions.
Each trade shall be done in conformance with all applicable policies and
procedures, and shall be defensible in its own right.
2.0 Location of Trading
All securities trading on behalf of the City shall be done in the
Ineterageris Deputy City Treasurer's office. It shall serve as a
dedicated trading site since all of the information resources (e.g.,
banking and investment computer systems, trade files, public finance
manuals) that are needed to support trading operations are located
there.
Trading shall not be done from off -site locations unless a disaster or
circumstance has rendered the Investment Manager's Deputy City
Treasurer's office unusable or a trading advantage can be gained, in
which case the City Treasurer must expressly authorize trading from an
off -site location in advance.
3.0 Development of Trading Strategies
The City Treasurer and the Deputy City Treasurer
shall consider the following five factors while developing the City's
trading strategies:
3.1 The Daily Cash Sheet that provides cash balance information.
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Palm Desert Treasury Pois •and Procedures • Revision No. 1
No. 4: "Trading" Adopted: 12/13/01
3.2 The "Statement of Investment Policy" that identifies approved
transactions, instruments, issuers, maturity limits, and
concentration limits.
3.3 The Five -Year Cash Expenditure Forecast.
3.4 The present City portfolio structure.
3.5 The interest rate outlook.
These factors should be evaluated within the overall context of passive
portfolio management, although selective active management may
occasionally be required.
4.0 Segregation of Duties
The cornerstone of the internal control structure for trading shall be a
separation of the transaction and the recordkeeping functions. The
duties of executing trades; approving trades; and confirming and
recording trades, shall not be concentrated in a single employee. A
system of checks and balances shall be established by separating the
functions of treasury from those of accounting. To that end, the
following five public employees shall have separate and distinct duties
with respect to securities trading:
4.1 Investment Manager. The tnvestrflager Deputy City
Treasurer shall be responsible for:
4.1.1 Soliciting, negotiating, executing, and documenting
trades.
4.1.2 Receiving Trade Tickets.
4.1.3 Verifying Trade Terms.
4.1.4 Interfacing with the City custodian and with the City
trustee on trades.
4.1.5 Entering trades into the SymPro investment portfolio
program.
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4.1.6 Storing trade documentation.
4.2 City Treasurer. The City Treasurer shall be responsible for:
4.2.1 Reviewing and approving trades.
4.3 Accountant Senior Financial Analyst. The Accountant Senior
Financial Analyst shall be responsible for:
4.3.1 Entering trades into the accounting system.
4.4 Accounting Technician. The Accounting Technician shall be
responsible for:
4.4.1 Receiving, filing, and verifying custodial safekeeping
statements.
4.4.2 Reconciling monthly bank, trustee, and custodial
statements with cash -based SymPro investment portfolio
reports.
If one of the above employees is not available, then Finance Department
management may substitute another employee so long as it does not
violate policy restrictions on trading authority.
5.0 Trade Documentation
All executed trades shall be supported by the following four documents:
5.1 Bloomberg Trade Ticket. The Bloomberg Trade Ticket is a
confirmation of trade execution and trade terms. The broker that
is buying or selling a security generates the related Trade Ticket
from Bloomberg Services. The City's custodian or trustee cannot
settle a security transaction on behalf of the City until it has
received a related Bloomberg Trade Ticket which has been signed
by either the City Treasurer or the
Assistant Finance Director.
5.2 Bloomberg Security Description. The Bloomberg Security
Description is generated from Bloomberg Services, and describes
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the features and history of a security. This is necessary for data
input in the SymPro investment portfolio program.
5.3 Broker Trade Confirmation. The Broker Trade Confirmation is a
formal statement from the broker confirming both the trade and
the terms of the trade. The City requires this statement for
internal control purposes.
6.0 Trade and Settlement Dates
"Trade date" is the date of trade execution.
"Settlement date" is the date of a receipt -versus -payment ("RVP") or
delivery -versus -payment ("DVP") transaction (the simultaneous
exchange of money for securities through an electronic funds transfer
system).
Settlement date is usually represented in one of five ways:
6.1 "Cash" (trade day)
6.2 "Regular" (trade day + one business day)
6.3 "Skip" (trade day + two business days)
6.4 "T + 3" (trading day + three business days).
6.5 'Delayed (beyond T + 3)
"T + 3" is used primarily for corporate securities (commercial paper and
medium -term notes) since they are electronically transferred through the
DTC.
United States Treasury and Government Agency securities are
electronically transferred through the Federal Reserve Communications
System ("Fedwire").
Corporate securities are electronically transferred through the
Depository Trust Company System ("DTC").
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7.0 Trading Losses
It is the policy of the City to avoid realizing trading losses on securities
transactions. Should it become necessary to realize a trading loss, then
the City Treasurer must specifically approve the loss, in writing, prior to
trade execution. If the City Treasurer is not available, then the Finance
Assistant Finance Director shall perform that task.
PROCEDURE
1. Solicitation of Offers. The procedure for competitive and non-competitive
offerings shall be the same. The trtventgef Deputy City
Treasurer shall send a solicitation that includes a preformatted Offering
Sheet, to the City's eligible brokers in advance of the trade date. The
brokers shall use this Offering Sheet to submit their bids to the lnvestfnent
Manger Deputy City -Treasurer by a certain time on the trade date.
a. Avoidance of Collusion. In a competitive offering, the brokers shall also
complete and return to the Deputy City Treasurer a
certification that collusion has not occurred, in order for the broker to be
eligible to bid. Regardless of whether the offering is competitive or non-
competitive, the Deputy.City Treasurer shall not
disclose to any eligible broker: (1) the identity of other eligible brokers
or brokerage firms that are involved in the offering; or (2) any of the
other offers. The ittvestaflaget Deputy City Treasurer shall
address all solicitations to a single individual at a brokerage firm; not to
all of the brokers involved in the offering.
2. Verification of Available Cash. In the case of securities purchases, the
Investment Manager shall ensure that sufficient public monies are in the
City's bank account to pay for the securities. If there will be a significant
time lag between trade and settlement dates, then the
Deputy City Treasurer shall ensure that the public monies which are
intended for payment, are invested in the highest -yielding instrument that
is authorized under Treasury Policy No. 2, "Statement of Investment
Policy".
3. Submission of Offers. After the Deputy City
Treasurer has received the brokers's Offering Sheets on the trade date, the
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Deputy City Treasurer shall compare them, based on
price, yield -to -maturity, lot size, and portfolio objectives. If information on
an Offering Sheet is unclear, then the Deputy City
Treasurer shall contact the submitting broker, and request clarification.
a. Details of Offer. All offer prices should be in decimals in order to
facilitate comparison. In the case of a competitive offering, the broker's
commission for each security offering must disclosed on the Offering
Sheet, in dollars, in order to assure compliance with IRS guidelines on
yield -burning. If a broker fails to disclose a commission, then that
broker shall be automatically disqualified from the offering.
4. Review of Offers. The Deputy City Treasurer shall
review the offers, and shall evaluate their reasonableness against the
market prices reported by Bloomberg Services. The
Deputy:.CitV Treasurer shall then show all of the offers to the City
Treasurer, and shall recommend the best ones for acceptance. The City
Treasurer shall review and approve the offers that are in the best interests
of the City.
5. Acceptance of Offers. After the City Treasurer has approved the offer(s),
the Irtvestanneger Deputy City Treasurer shall promptly contact the
successful broker(s) by telephone to reconfirm the trade terms, in case
market prices have significantly increased since the time of the initial offer.
In order to minimize such risk; the ifivestfftentaneger Deputy City
Treasurer should strive to accept all offers within one hour of submission.
6. Renegotiation of Offers. If market prices have significantly increased
between the time of initial offer and trade execution, then the Investmcnt
Manager Deputy City Treasurer shall attempt to renegotiate a compromise
price with the affected broker. If a compromise cannot be agreed upon,
then the Deputy City Treasurer , in the case of a
competitive offering, must reject the offer, and accept the next lowest cost
offer from another broker. In the case of a non-competitive offering, the
Deputy City Treasurer may either (a) reject the offer,
and accept the next lowest offer from another broker (even if this means
denying the first broker any business); or (b) accept the higher price.
7. Completion of Trade. The successful broker(s) shall forward each
Bloomberg Trade Ticket to the Deputy City Treasurer
in order to verify the security transaction(s). The
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Deputy City Treasurer shall compare the terms on each Trade Ticket with
those on the corresponding Offering Sheet in order to ensure uniformity. If
there is a discrepancy, then the Deputy City Treasurer
shall resolve the difference with the affected broker. Once all differences
have been resolved, the levestranegef Deputy City Treasurer shall
present the Bloomberg Trade Ticket(s) to the City Treasurer for an approval
signature. If the City Treasurer is unavailable, then the Finance Operationa
Manager Assistant Finance Director shall perform that task.
8. Custodial Interface. The Deputy City Treasurer shall
then fax to the City's custodian or trustee, a signed Bloomberg Trade
Ticket with delivery instructions for each security purchased. The
Deputy'CityTreasUrer shall telephone the City trustee
or custodian to confirm receipt of these documents, as well as payment
terms.
9. Treasury Accounting. The Deputy City Treasurer shall
then create a new investment file in SymPro, and shall enter the data from
the Trade Sheet. On the next business day after settlement, the
Investment Manager DeputyCity Treasurer shall print the TEAM Balance
Report that shows the cash being wired out for settlement. The
levestnientManeger Deputy City Treasurer shall give the Accountant
Senior Financial Analyst: (a) a printout of the SymPro file on the new
security; and (b) a copy of the related Balance Report. The Accountant
Senior Financial Analyst shall enter this data into the City accounting
system.
10. Retention of Trade Documents. The Irmo.,imc Manager Deputy City
Treasurer shall retain and file the following trade documents:
a. Solicitation (competitive offering only).
b. All Offering Sheets (competitive offering only).
c. Certificate of Absence of Collusion (competitive offering only).
d. Certificate of Third -Party Administrative Costs (competitive offering
only).
e. Certificate of Competitive Offering (competitive offering only).
f. Most efficient portfolio of SLGSs (competitive offering only).
g. Broker Trade Confirmation.
h. Bloomberg Trade Ticket.
i. Bloomberg Security Description.
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All trade documents that are connected with to a competitive offering,
shall be retained for at least three years after the last outstanding bond
is redeemed, pursuant to Internal Revenue Service regulations.
11. Monthly Reconciliation. The Accounting Technician shall reconcile
monthly bank, custodial, and trustee statements with cash -based
SymPro investment portfolio reports, at month -end.
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City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 5
SUBJECT: "COMPETITIVE OFFERINGS"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy and procedure on
competitive offerings.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that the gross proceeds of tax-
exempt bonds shall be invested in fixed -income securities which are obtained
through competitive offerings. Such an approach is needed in order to ensure
that the City buys securities that are priced at market, thereby avoiding any
appearance of "yield burning".
1.0 Yield Burning
Yield burning occurs when the price of securities that are purchased for
yield -restricted defeasance escrows is artificially inflated in order to
lower the investment yield below the bond yield, thereby avoiding
impermissible arbitrage. If this happens, then the Internal Revenue
Service ("IRS") may: (1) compel the municipal issuer to reimburse the
United States Treasury for excessive underwriter profits; or (2) eliminate
the municipal issuer's tax exemption for the defeasance bonds.
2.0 Safe Harbor
Under current IRS regulations, municipal issuers are guaranteed a "safe
harbor" from allegations of yield burning if certain requirements are met.
The IRS will assume that the purchase price of securities for yield-
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Revision No. 2
Adopted:
restricted defeasance escrows approximates their fair market value on
the purchase date if:
2.1 Reasonably Competitive Providers. The municipal issuer solicits,
in good faith and in writing, offers from at least three reasonably
competitive providers" that have no material financial interest in
the bond issuance, and receives at least one offer from such a
provider. IRS regulations define a reasonably competitive
provider as a provider that has an established industry reputation
as a competitive provider of the type of investment that is being
purchased.
2.2 No Material Finance Interest. Bond underwriters, financial
advisors, and their related providers are excluded from the
competitive offering since they are deemed to have a material
financial interest in the bond issuance.
2.3 Certification of Absence of Collusion. Each provider that submits
an offer includes an executed certification stating that by
submitting the offer, the provider is representing that: (1) it did
not consult with any other providers about their offer; and (2) the
offer is not being submitted solely as a courtesy to the issuer or
to any third party in order to satisfy the IRS requirement of at
least one offer from a reasonably competitive provider.
2.4 Commercially Reasonable Terms. The terms of the competitive
offering solicitation are "commercially reasonable". A term
should be included in the competitive offering for a legitimate
business purpose, other than to lower the yield or increase the
cost of the offer.
2.5 No Last Look. No provider is permitted to review other offers
before making an offer, in order to ensure that all providers have
an equal opportunity to bid.
2.6 Comparison to SLGSs. If the investment is a guaranteed
investment contract, then the municipal issuer must accept the
offer with the highest yield (excluding broker's fees). For all
other investments, the issuer must accept the lowest cost offer
(including broker's fees). The lowest cost offer should not
exceed the cost of the most efficient portfolio of State and Local
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Revision No. 2
Adopted:
Government Series ("SLGS") securities with the same maturity
that are available on the day that the offers are submitted:
provided, however, that such SLGSs are available for purchase on
that day.
2.7 Certification of Third -Party Administrative Costs. The fee that a
municipal issuer pays to a provider (broker) is a qualified
administrative cost only if the fee is comparable to one that
would be charged for a reasonably comparable investment that is
acquired with money other than tax-exempt bond proceeds, and
the fee is reasonable.
A broker's fee will meet the reasonableness and comparability
tests if it does not exceed the lesser of $10,000 or 0.1 percent
of the initial principal amount of investments that are purchased
for the defeasible escrow. In order to comply with this
requirement, all providers shall be required to execute a
certification that the fee is a qualified administrative cost. If they
fail to provide this information, then they shall be automatically
disqualified from the competitive offering.
2.8 Retention of Records. The municipal issuer retains, until three
years after the last outstanding bond is redeemed: (1) all bond
documents; (2) purchase confirmations; (3) records of the
amount actually paid by the issuer; (4) date- and time -stamped
offers that were received; (5) competitive offering documents;
and (6) working papers on the cost of the most efficient portfolio
of SLGSs (if a guaranteed investment contract is not involved).
2.9 Certification of Competitive Offering. The municipal issuer
certifies that: (1) offers were solicited from at least three
uninterested, reasonably competitive providers; (2) all offerors
had an equal opportunity to bid; (3) an offer was received from at
least one reasonably competitive provider; and (4) if an agent
conducted the offering, then that agent did not offer to provide
the investments.
3.0 Exceptions
There is a major exception to restricted yields in defeasible escrows. A
municipal issuer is permitted a three-year temporary period during which
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No. 5: "Competitive Offerings"
Revision No. 2
Adopted:
it may invest bond proceeds at a yield higher than the bond yield:
provided, however, that on the issue date, the issuer had a reasonable
expectation that 85 percent of the bond's "net sale proceeds" would be
spent within three years. Bond proceeds that are deposited into a
special escrow fund could be so invested.
There are numerous other exceptions that are set forth in the Internal
Revenue Code arbitrage regulations that are not discussed in this policy.
PROCEDURE
1. Competitive Offering. The Deputy -City Treasurer shall
solicit competitive offerings from at least three of the City's authorized
brokers, in advance of the trade date. This solicitation shall consist of the
following:
a. A cover memorandum individually addressed to each broker, explaining
the details of the offering, and the delivery instructions.
b. A Broker Registration Form.
c. A Certificate of the Absence of Collusion.
d. A Certificate of Third -Party Administrative Costs.
e. A preformatted Offering Sheet with which each broker can prepare and
submit an offer.
Under no circumstances shall the cover memorandum include the names of
the other brokers or brokerage firms that will be involved in the competitive
offering. Likewise, under no circumstances shall the ittvesfleger
Deputy City Treasurer disclose to a broker the details of offers that the City
has received from other competing brokers.
2. Calculation of Lowest Cost Portfolio. On the trade date, the Investment
Manager shall determine the lowest cost of the most efficient portfolio of
SLGSs with the same maturity, if such securities are available. The cost of
the winning offers should not exceed the cost of this portfolio.
3. Deadline for Offers. Each broker shall submit an offer by a specified time
on the trade date. In order to qualify for consideration, the offer must
consist of:
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Adopted:
a. A completed Broker Registration Form.
b. An executed Certificate of the Absence of Collusion.
c. An executed Certificate of Third -Party Administrative Costs.
d. A completed Offering Sheet.
Any broker that fails to include these three documents in an offer, shall be
automatically disqualified from the competitive offering.
4. Evaluation of Offers. The Invcaimoni Manager Deputy City Treasurer shall
review all offers and shall recommend the most favorable ones, based
strictly upon the lowest cost, to the City Treasurer for review and
approval. If the City Treasurer is unavailable, then the Finance Operations
Manager Assistant: Finance Director shall perform that task.
5. Acceptance of Offers. After receiving the City Treasurer's approval, the
Deputy", City'Treasurer shall immediately notify the
successful offeror(s), by telephone, that the City has accepted its offer. At
that time, trade terms should be reconfirmed, in the event that market
prices have increased since the time of the initial offer. In order to manage
such risk, the Deputy City Treasurer should strive to
accept all offers within one hour of submission.
6. Renegotiation of Offers. If there has been a significant increase in market
prices during the interim, then the fri aatmcnt F.lanager Deputy City
Treasurer shall renegotiate with the successful offeror for the lowest
possible cost for the City. If, however, the cost of the investment has
risen above other offers, then the Deputy City
Treasurer shall accept the next lowest offer from another offeror instead.
7. Remaining Closina Procedures. The Deputy City
Treasurer shall follow the remaining procedural closing steps (e.g., faxing a
signed Bloomberg Ticket to the City's custodian or trustee) that are
detailed in Treasury Policy No. 4, "Trading".
8. Retention of Records. The Deputy City Treasurer shall
retain and file, together with all of the bond documents:
a. A copy of the guaranteed investment contract (if applicable).
b. The purchase confirmations (e.g., Bloomberg Trade Ticket, broker trade
confirmation).
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c. A record of the amount actually paid by the City, including a record of
any administrative costs paid by the City, and the certification of the
provider as to administrative costs;
d. Each offer that is submitted, in terms of the name of the submitting
broker; the time and date of the bid; and the bid results.
e. The competitive offering solicitation.
f. The cost of the most efficient portfolio of SLGSs, if used to benchmark
competitive offers.
9. Certificate of Competitive Offering. The City Treasurer shall certify, in
writing, on the City's behalf, that:
a. Offers were solicited from at least three uninterested, reasonably
competitive providers.
b. All offerors had equal opportunity to bid.
c. An offer was received from at least one reasonably competitive
provider.
d. If an agent conducted the offering, then that agent did not make an
offer to provide the investments.
The Deputy City Treasurer shall file this certification
with the other bond documents.
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POLICY NO.: 6
SUBJECT: "CUSTODY AND SAFEKEEPING"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy and procedure on the
custody and safekeeping of securities.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that the City shall retain third -
party bank trust companies as clearinghouses for the payment, delivery,
receipt, and safekeeping of securities that the City buys or sells.
1.0 Selection of Custodian and of Trustee
A third -party bank trust company shall serve as the City's custodian
("Custodian") for the purpose of settling all of the City's securities
transactions that do not involve the investment of the gross proceeds of
tax-exempt bonds.
A third -party bank trust company shall serve as the City's trustee
("Trustee") for the purpose of settling all of the City's securities
transactions that involve the investment of the gross proceeds of tax-
exempt bonds.
The City shall select both the Custodian and the Trustee through a
Request for Proposals ("RFP") process. The City shall initiate an RFP
process every five years, unless there is an immediate need to fill a
vacancy or to replace a trust company.
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Revision No. 2
Adopted:
The City shall subsequently execute separate custody agreements with
the selected Custodian and the selected Trustee in order to confirm all
legal rights and obligations.
The City shall only use safekeeping or custodial agents that are located
within the State of California.
2.0 Qualifications of Custodian and of Trustee
The Custodian and the Trustee shall, at a minimum, possess the
following qualifications:
2.1 Safekeeping. The ability to clear and safekeep all securities that
are authorized by California Government Code Section 53601.
2.2 Fiduciary Duty. The ability to hold all of the City's investments
on a fiduciary basis and to segregate them from the trust
company's other assets.
2.3 Bank Charter. Membership in the Federal Reserve System and
status as a State of California- or federally -chartered commercial
bank, with its accounts insured by the Federal Deposit Insurance
Corporation.
3.0 Methods of Delivering Securities
All of the City's securities transactions shall be done either on a receipt -
versus -payment ("DVP") basis. Both the Custodian and the Trustee
shall disburse City monies or deliver City -owned securities to an
approved broker only after that broker has delivered to the Custodian or
to the Trustee either the securities to be sold or the money to purchase
the securities. Both the Custodian and the Trustee shall only process a
security transaction after they have received a Bloomberg Trade Ticket
from the City which either the City Treasurer or the
Manager Assistant Finance Director has signed.
The only exceptions to RVP or DVP shall be the purchase or sale of
securities that are connected with: (1) local government investment
pools; (2) money market mutual funds; or (3) Federal Reserve Banks
("Treasury Direct Program"), since those securities are not deliverable.
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No. 6: "Custody and Safekeeping" Adopted: 12/13/01
When the City enters into a new custodial relationship, then the
securities that the City already owns shall be delivered into safekeeping
on a free -delivery basis. The countersignature of either the City
Treasurer or the Assistant Finance Director
shall be required for the free delivery of securities.
Separate custodial accounts shall be maintained for the City of Palm
Desert and for the Palm Desert Redevelopment Authority.
4.0 Credit Risk
All of the securities that the City owns shall be registered in the City's
name. The ownership of the securities is thus safeguarded by limiting
their negotiability.
Governmental Accounting Standards Board Statement No. 3, Paragraph
68 requires that all investments, excluding local government investment
pools and mutual funds, be classified into one of three categories of
credit risk, and disclosed on a governmental entity's balance sheet. The
three categories are as follows:
4.1 "Category 1". This applies to investments that are: (1) insured
by the Securities Investors Protection Corporation ("SIPC"); (2)
physically held by the City or by the City's agent in the City's
name; or (3) acquired through the Federal Reserve book -entry
system where the broker is separate from the custodian, and the
investments are recorded on the broker's book in the City's
name. These transactions have the lowest degree of credit risk;
they are preferred by the City.
4.2 "Category 2". This applies to uninsured investments that are
acquired through a financial institution's trading department and
held for safekeeping by the trust department of the same
financial institution, and the investments are recorded on the
trust department's books in the City's name. These transactions
have a higher degree of credit risk.
4.3 "Category 3". This applies to uninsured investments that are:
(1) acquired through a financial institution's trading department
and held for safekeeping by the custodial department of the same
financial institution; (2) acquired through a financial institution's
trust department and held for safekeeping by the same trust
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department; (3) acquired through and held for safekeeping by the
same broker; or (4) not recorded on the financial institution's or
on the broker's books in the City's name. These transactions
have the highest degree. of credit risk.
5.0 Authorized Access
The following City employees shall be authorized to interface with both
the Custodian and the Trustee:
5.1 The City Treasurer.
5.2 The Deputy City Treasurer.
5.3 The Financc Gperoinona Fenger Assistant Finance Director.
When an authorized employee is no longer employed by the City, then
the City shall immediately notify both the Custodian and the Trustee, by
telephone, of the expected date and time of the separation, and of the
subsequent revocation of the employee's authority to interface with
both the Custodian and the Trustee on the City's behalf. The City shall
also confirm this, in writing, with both the Custodian and the Trustee
within two business days. The written confirmation should be sent to
both the Custodian and the Trustee by return receipt, certified mail.
No broker or investment advisor shall have access to City monies,
accounts, or investments. Any transfer of monies to or through an
outside broker must have the City Treasurer's prior written approval. If
the City Treasurer is not available, then the
Assistant Finance Director shall perform that task.
6.0 Liability of City Treasurer
The City Treasurer shall not be liable for securities that are delivered to
and received by the Custodian and/or the Trustee, until the City
Treasurer has withdrawn them from the Custodian and/or the Trustee
pursuant to California Government Code Section 53608.
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Revision No. 1
No. 6: "Custody and Safekeeping" Adopted: 12/13/01
7.0 Monthly Audit
The City Treasurer shall receive monthly account statements from both
the Custodian and the Trustee that list all of the securities that the
Custodian and the Trustee are safekeeping for the City. An Accounting
Technician shall complete, prior to each month -end, an audit of the prior
month's inventory to ensure that both the Custodian and the Trustee
can properly account for all of the City's securities that they should be
holding. The Accounting Technician shall retain the monthly account
statements in her files.
8.0 Annual Confirmation of Instructions
The City Treasurer shall send to both the Custodian and the Trustee
annually, by 30 June, the following documents: (1) the current City
"Statement of Investment Policy"; (2) delivery instructions for security
purchases; and (3) a list of public employees who are authorized to
initiate investment transactions. The cover letter shall specify that only
the City Treasurer shall be authorized to modify the delivery
instructions, in writing.
9.0 Annual Review
The City Treasurer shall review all custodial and electronic funds
transfer agreements, as needed, in order to ensure that all controls,
security provisions, and the responsibilities are being properly followed,
and are in compliance with current law.
10.0 Segregation of Broker and Custodial Functions
The City shall seek to segregate the provision of brokerage services
from the provision of custodial services. If the City, however, uses the
same bank or brokerage firm to provide both brokerage and custodial
services, then that bank or brokerage firm shall be required to carry
liability insurance with the City named as a loss payee, up to the dollar
amount of the securities that are held in safekeeping plus an allowance
for legal costs in the event of a Toss.
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PROCEDURE
1. Receipt -Versus -Payment ("RVP"). The following steps shall be taken when
the City buys a security:
a. The broker shall have a current set of delivery instructions for the City
on file, in advance.
b. After closing the trade, the Deputy City Treasurer
shall fax a copy of the associated Bloomberg Trade Ticket that has been
signed by either the City Treasurer or the financc Dperatc.-,3 14.1-aneger
Assistant.Finance Director, to the Custodian or the Trustee, with City
delivery instructions affixed to the Ticket.
•
c. The Deputy City:Treasurer shall then telephone the
Custodian or the Trustee to confirm receipt of the facsimile transmission
and settlement terms.
d. The Custodian or the Trustee shall then debit the City's cash account in
order to deliver cash to the broker in exchange for the underlying
security that the broker simultaneously delivered by electronic funds
transfer, to the Custodian or the Trustee.
e. An Accounting Technician shall then review the next monthly account
statement that the City receives from the Custodian or the Trustee for
confirmation of the transaction, and shall retain and file that statement.
2. Delivery -Versus -Payment ("DVP"). The following steps shall be taken
when the City sells a security:
a. The broker shall have a current set of delivery instructions for the City
on file, in advance.
b. After closing a trade, the Deputy City Treasurer
shall fax a copy of the associated Bloomberg Trade Ticket that has been
signed by either the City Treasurer or the Finar.cc Ope, at;cns Menegef
Assistant Finance Director, to the Custodian or the Trustee, with City
payment instructions affixed to the Ticket.
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c. The Deputy City Treasurer shall then telephone the
Custodian or the Trustee to confirm receipt of the facsimile transmission
and payment terms.
d. The Custodian or the Trustee shall then debit the City's securities
account in order to deliver the underlying security to the broker in
exchange for cash that the broker simultaneously delivers by electronic
funds transfer, to the Custodian or to the Trustee.
e. An Accounting Technician shall then review the next monthly account
statement that the City receives from the Custodian or the Trustee for
confirmation of the transaction, and shall retain and file that statement.
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POLICY NO.: 7
SUBJECT: "DISMISSAL OF BROKERS"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy and procedure on the
dismissal of approved brokers.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that approved brokers are
expected to maintain a certain level of financial stability, industry knowledge,
and professionalism in their dealings with the City.
The City may discontinue its relationship with a broker if it fails to maintain its
qualifications to do business with the City or if it fails to execute securities
transactions in an acceptable manner.
1.0 Reasons for Dismissal
The City Treasurer may dismiss a broker for any one of a variety of
reasons including, but not limited to, the following:
1.1 Trade Fails. An excessive number of trade fails (a failure to
deliver securities on time).
1.2 Trade Errors. An excessive number of trade errors.
1.3 Account Officer Turnover. An excessive number of account
officer changes.
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No. 7: "Dismissal of Brokers"
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Revision No. 2
Adopted:
1.4 Failure to Notify.. A -failure to"'notify the City Treasurer's Office in
a timely manner of,siignificant events that affect the broker -client
relationship (e.g:, ;adverse clange:in financial condition, change
of account officers, regulatory infractions, relevant litigation).
1.5 Inflated Pricing. An excessive number of offers that are
substantially above market prices.
1.6 Adverse Change. An adverse change in the broker's financial
condition.
1.7 Failure to Comply. A repeated failure to comply with solicitation
instructions.
1.8 Legal Action. Pending legal action by the City against the broker.
1.9 Gift Ban Violation. A violation of the gift ban in the City's
"Statement of Investment Policy".
1.10 Inappropriate Investments. A consistent inability to offer
appropriate investments to the City.
1.11 Failure to Participate. A repeated failure to participate in
competitive offerings.
1.12 Failure to Submit Documents. A failure to submit required
documents for annual requalification.
1.13 Collusion on Pricing. Collusion on pricing with other brokers
during competitive offerings.
1.14 Yield Burning. The inflation of bond prices in order to lower
yields ("yield burning").
PROCEDURE
1. Disciplinary Documentation. The Investment Manogcr Deputy City
Treasurer shall be responsible for maintaining written documentation on an
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approved broker's failure to perform at an acceptable level; comply with
City policy; or maintain its qualifications.
2. Letter of Dismissal. If there are sufficient grounds to dismiss the broker,
then the ifiva Deputy City Treasurer shall recommend such
action to the City Treasurer. If the City Treasurer concurs, then the
iebcaimcni Manager Deputy City Treasurer shall prepare a letter for the
City Treasurer's signature that notifies the broker of the dismissal, and of
the reasons) for the dismissal. This letter shall be promptly sent to the
broker.
3. Finance Committee Notification. The City Treasurer shall then notify the
Finance and Investment Committee, at its next regularly scheduled
meeting, of the dismissal and provide a copy of the dismissal letter to each
committee member.
4. Request for Information. If the City Treasurer deems it necessary to fill a
broker vacancy, then the City Treasurer may send a Request for
Information ("RFI") to each broker that would like to replace the dismissed
broker and provide financial services to the City. The Finance and
Investment Committee and the City Council shall review the completed
RFIs and select a replacement broker.
5. Updating City Approved List. The Eligible List that is attached to the City
"Statement of Investment Policy" shall be amended annually, if needed, in
order to update the broker list.
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City of Palm Desert • • Revision No. 2
Treasury Policies and Procedures Adopted:
POLICY NO.: 8
SUBJECT: "REQUESTS FOR PROPOSALS"
POLICY
The purpose of this document is to outline the policy and procedure on
Requests for Proposals ("RFP").
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that the City Treasurer shall
periodically issue RFPs for banking, custodial, and trustee services to any firms
that wish to provide financial services to the City.
The City shall issue such RFPs every five years unless there is an immediate
need to fill a vacancy or to replace an existing financial services provider. The
RFP process should normally begin in January. The
Deputy City Treasurer shall be responsible for the development of these RFPs.
Firms that wish to bid for the City's banking, custodial, and trustee business,
may bid for that business in its entirety, or as separate product lines.
PROCEDURE
1. Proposal Process. The Deputy City Treasurer shall
maintain an active file on all prospects that wish to bid for the City's
banking, trustee, and/or custodial service contracts. In January of every
fifth year, the Iftvestifteflartager Deputy City Treasurer shall begin the
RFP process. It should consist of the following steps:
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a. Distribution of RFP
b. Pre -Proposal Conference
c. Proposal Submission
d. Proposal Review
e. Interview with Top Bidders
f. Proposals Accepted by City Council
g. Notification to Bidders
h. Implementation
Revision No. 2
Adopted:
2. Technical Evaluation. The Deputy City Treasurer shall
be responsible for doing a comparative technical evaluation of all RFPs that
the City receives.
3. Finance Committee Review. The Deputy City
Treasurer shall present the results of the technical evaluation, along with
recommendations, to the Finance and Investment Committee for review
and approval.
4. City Council Review. The City Treasurer shall present the Finance and
Investment Committee's recommendations to the City Council for review
and approval.
5. Updating City Approved List. If the City Council approves the retention of
a new banker, custodian, or trustee, then the Eligible List in the City's
"Statement of Investment Policy" shall be amended annually in order to
reflect any such changes.
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POLICY NO.: 9
SUBJECT: "BANK ACCOUNTS"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy and procedure on bank
accounts.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") to establish bank accounts for
the deposit and disbursement of public monies, and to maintain a complete
set of bank contracts, including signature cards, for purposes of control,
accountability, limitation, and authorization.
The City shall establish as few bank accounts as possible in order to minimize
banking costs. All monthly bank statements shall be mailed directly to and
processed by the City accounting function. Two signatures shall be required
for each bank account.
1.0 Authorized Signers
Only the City Treasurer or, in the City Treasurer's absence, the Finance
Assistant Finance Director, shall be authorized to
sign as the "Signer of Contract" on bank documents.
Certain City Council members, public employees, and employees of
private management companies that contract with the City, shall be
authorized as signers on various City bank accounts. The current
account signers are as follows:
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No. 9: "Bank Accounts"
•
Revision No. 2
Adopted:
1.1 City Council
1.1.1 The Mayor.
1.1.2 The Mayor Pro-Tempore.
1.2 City Employees
1.2.1 The City Treasurer.
1.2.2 The Assistant Finance
Director.
1.3 Kemper Sports Management, Inc.
1.3.1 J. Rodney Young
1.3.2 Brian Miller
1.3.3 fiichard CCsanc Michael Osgood
1.4 RPM Company
1.4.1 David W. Fisher
1.4.2 Barton R. Robertson
1.4.3 Donnie Garibaldi
1.4.4 Robert Pfeil
2.0 Annual Review
The City Treasurer shall review all bank contracts and signature cards,
as needed.
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Palm Desert Treasury Pits and Procedures
Revision No. 1
No. 9: "Bank Accounts" Adopted: 12/13/01
PROCEDURE
1. Opening A Bank Account. The City Treasurer shall determine whether or
not a new City bank account is required, and who shall be authorized as an
account signer. If a new City account is to be opened, then:
a. The Deputy City Treasurer shall request signature
cards from the bank; prepare them; and send them to the authorized
signers for completion.
b. After the authorized signers have completed the signature cards, they
shall return them to the City Treasurer for the "Signer of Contract"
authorization.
c. The Deputy City Treasurer shall then return the
original signature cards to the bank, along with the account contract(s).
d. The Invc3tmcnt Manager Deputy City Treasurer shall retain and file a
photocopy of each account contract and each signature card.
2. Adding Or Deleting A Signer. When an authorized signer is hired,
terminated, or transferred, then the Ineszt ,icrr< Manager Deputy City
Treasurer or, in the Deputy City Treasurer's
absence, the City Treasurer, shall immediately review all bank signature
cards, account contracts, and Funds Transfer Agreements to determine if
they require modification. If a modification is necessary, then the
Deputy City Treasurer or, in the lnv-a:t-ant Manager's
Deputy City Treasurer's absence, the City Treasurer, shall do the following:
a. Prepare a letter instructing the bank to add or delete a signer. This
letter shall be signed by the City Treasurer and countersigned by the
affected signer, whenever possible.
(1) In the case of a terminating employee, the letter shall be sent to the
bank by facsimile machine on the same date that notice is received
of the employee's forthcoming termination. The original letter shall
also be sent to the bank in the mail.
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(2) In the case of a new employee, the fnV‘,airnonc Manager Deputy
City Treasurer shall request a new bank signature card or an
addendum card from the bank; obtain the necessary signatures; and
return the card to the bank.
b. In all cases, the Deputy City Treasurer shall retain
and file a photocopy of the bank documentation.
3. Closina A Bank Account. Only the City Treasurer or, in the City's
Treasurer's absence, the Finoncc Operae:1s Moneget Assistant Finance
Director, shall be authorized to close a City bank account.
a. The Deputy City Treasurer shall draft a letter to the
bank for signature by the City Treasurer or, in the City's Treasurer's
absence, by the Assistant -Finance
Director, approving the closure of the account on an effective date.
b. The Deputy City Treasurer shall send the original,
signed letter to the bank, and retain and file a photocopy of the letter.
c. The City accounting function shall confirm the closing of the bank
account, and the termination of all related services, upon receipt of the
next monthly bank statement.
d. The City accounting function shall then notify the City Treasurer that
the bank account has been closed; remove the bank account from the
general ledger; and retain a file on the closed bank account for the
annual financial audit.
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POLICY NO.: 11
SUBJECT: "CHECKS"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy and procedure on
checks.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") to use checks as its principal
means of disbursement. Checks minimize the amount of cash on hand;
require expenditure preauthorization and justification; and are easier to record
than credit transactions. Weak or nonexistent internal controls, however,
could result in check fraud losses for the City since the Uniform Commercial
Code has shifted a greater proportion of such losses to the check issuer.
1.0 Scope
The provisions of this policy shall apply to all checks that the City
originates or receives.
2.0 Objectives
The City's objectives shall be to minimize the risk of:
2.1 Theft by third parties after checks have been ordered or mailed in
payment of bills.
2.2 Forgery of check signatures by public officials or employees, or
by third parties who have intercepted checks in the mail.
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No. 11: "Checks"
Revision No. 2
Adopted:
2.3 Embezzlement by public officials or employees through the
improper use of checks.
2.4 Fraud by public officials or employees through the
misrepresentation or omission of a material fact concerning
checks.
3.0 Segregation of Duties
The duties of public officials and employees with respect to check
custody, preparation, and execution shall be segregated so that
embezzlement will not be facilitated by a concentration of
responsibilities in one person (e.g., cash handling and financial
statement preparation). Individuals, independent of one other, shall
therefore discharge the following duties:
3.1 Check Stock Custody. The City Treasurer shall have exclusive
custody of the key to the locked unit in which the check stock is
kept. Only the Accounting Technician (accounts payable) and the
Accounting Technician (payroll) shall be allowed to use the key.
3.2 Check Preparation. The Accounting Technician (accounts
payable) and the Accounting Technician (payroll) shall have
exclusive responsibility for preparing all checks.
3.3 Check Signing. The Mayor or the Mayor Pro-Tempore; and the
City Treasurer or the Assistant
Finance Director, shall have exclusive responsibility for signing all
checks.
3.4 Batches Reviewed and Posted. Either the City Treasurer or the
Assistant Finance Director shall
review and post all accounting batches.
3.5 Bank Statement Reconciliation. The Accounting Technician
(purchasing and bank reconciliation) shall have exclusive
responsibility for reconciling the City's bank statements to its
general ledger on a monthly basis.
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Revision No. 2
Adopted:
3.6 Mail. The Finance Department Administrative Secretary shall
have exclusive responsibility for receiving, opening, and reviewing
all incoming mail; and for preparing all outgoing mail.
3.7 Stop Payments. The Deputy City Treasurer
shall have exclusive responsibility for placing stop payments on
outstanding checks.
3.8 Check Register. The City Treasurer, the City Manager, or the
Executive Director of the Palm Desert Redevelopment Agency;
and the Mayor or the Mayor Pro-Tempore, shall have exclusive
responsibility for approving all check registers.
3.9 Facsimile Signature Stamps. The City Clerk or the Deputy City
Clerk shall have exclusive custody of the City's facsimile
signature stamps.
If any of the above -referenced Finance Department employees are
unavailable, then Finance Department management may assign those
responsibilities to other Finance Department employees.
4.0 Control Reports
A criminal typically attempts to conceal embezzlement by increasing or
decreasing reported monthly expenditures, or by doing both. The City
shall address this risk by requiring that the City Treasurer or the Finance
Assistant Finance Director prepare and review the
City's monthly statements of financial position; statements of revenues
and expenditures; check registers; and bank reconciliations. The City
Council shall receive a copy of each check register and each statement
of revenues and expenditures, on a monthly basis.
5.0 Procurement
The City's check stock shall be pre -numbered, and shall have the
following security features:
5.1 Artificial watermarks on both sides of the check that cannot be
scanned or photocopied.
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Palm Desert Treasury Pas and Procedures
No. 11: "Checks"
Revision No. 2
Adopted:
5.2 The word "VOID" will appear on the check if it is scanned or
photocopied.
5.3 Chemical -reactive paper that voids the check if an ink eradicator
is applied.
5.4 Microprinting that prevents details from being matched if the
check is scanned or photocopied.
5.5 Warning banners that advise tellers to inspect a check before
accepting it, and that may deter criminal experimenting.
The City Treasurer or the Assistant
Finance Director shall be responsible, upon receipt of new check stock,
for its immediate review in order to verify consecutive check numbering,
and the accuracy of account information. If either individual is
unavailable, then the Finance Department Administrative Secretary shall
perform these duties.
6.0 Custody
The City Treasurer shall designate a locked unit for the storage of all
check stock. The City Treasurer shall have exclusive custody of the
key to that unit, and shall release it only to authorized Accounting
Technicians, or to their authorized replacements.
The Accounting Technician (accounts payable) and the Accounting
Technician (payroll) who prepare the checks shall maintain a log that
lists the checks that have been issued. Another Accounting Technician
(purchasing and bank reconciliation) shall review the log on a quarterly
basis in order to verify that all checks have been properly accounted for.
7.0 Request for Payment
The Accounting Technician (accounts payable) shall prepare and submit
to the City Treasurer or to the finance Operations Manager Assistant
Finance Director, a transaction report that lists all check payees, prior to
requesting the key to the locked unit in which the check stock is kept.
The transaction report shall also itemize, describe, and justify all
proposed expenditures by check.
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Palm Desert Treasury Po .,ds and Procedures
No. 11: "Checks"
Revision No. 2
Adopted:
All check payments shall be supported by purchase orders; sales
receipts; time cards; personal action forms; and any other necessary
supporting documentation. Only original invoices (no photocopies
unless unable to receive original) totaling the amount of the
disbursement shall be attached to the request for payment prior to
execution.
All requests for payment, and all attached invoices shall be stamped
"PAID" in order to avoid duplicate payments.
8.0 Signature Authority
Only the City Treasurer; the Assistant
Finance Director; the Mayor; and the Mayor Pro-Tempore shall have
check -signing authority on the City's behalf. A dual -signature
requirement shall be in effect at all times. Blank checks are never to be
signed.
Only the Mayor and the Mayor Pro-Tempore shall be allowed to use
facsimile signatures. All checks in excess of $ 100, 000, however, shall
require two original signatures. All other government officials and
employees are prohibited from having check -signing authority.
9.0 Mailing
Checks should always be mailed directly to the vendor or payee. They
shall not be returned to the requesting department, division, or
individual, in order to minimize the likelihood that such checks will be
altered, and negotiated by someone other than the intended payee.
10.0 Manually -Issued Checks
The City periodically must issue manual checks that are subsequently
entered into the City's computerized accounting system. In order to
minimize the potential for forgery, all manual checks shall prepared on a
typewriter with a single -strike cloth ribbon. The dollar amount of the
check shall be imprinted with an embossing machine.
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No. 11: "Checks"
11.0 Positive Pay
Revision No. 2
Adopted:
The City shall use "Positive Pay", or an equivalent program, in order to
minimize check losses due to fraud or forgery. Under Positive Pay, the
City provides its commercial bank with a daily list of the payees,
numbers, dates, and dollar amounts of any checks that the City has
issued. The bank responds by providing the City with a daily list of any
checks that do not correspond with the City's previously submitted
information. The City must then confirm that such checks are eligible
for payment before the bank will process them.
12.0 Cancelled Checks
The City shall request that its commercial bank return all of the City's
cancelled checks, or a disk with a copy of each check on both sides, on
a monthly basis, by mail, so that the City will possess the requisite
financial records for its annual financial audit.
13.0 Reconciled Bank Accounts
The Accounting Technician (purchasing and bank reconciliation) shall
promptly reconcile all bank statements within 30 days of statement
mailing. That technician shall immediately report any discrepancy to the
City Treasurer or to the finance Oporaiicager Assistant Finance
Director, and shall provide both with a supporting reconciliation report.
The Assistant Finance Director shall
perform a final review of the bank reconciliation, and shall approve the
bank reconciliation by initialing it.
14.0 Stale Checks
Financial institutions classify checks that are presented for payment as
"stale" if they are dated 12 or more months earlier. Even so, the banks
cannot guarantee that such checks will not clear. The City accounting
staff shall place stop payments on any checks that are over 18 months
old, and shall void them in the City's financial records.
15.0 Voided Checks
All checks that are spoiled or mutilated or that have been defectively
prepared, shall be voided by:
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Palm Desert Treasury Poi.es and Procedures
No. 11: "Checks"
Revision No. 2
Adopted:
15.1 Stamping or by writing, in ink, the word "VOID" in the check
amount field, and in the vendor name/address field; and
15.2 Excising the signature blocks from the check.
The check shall also be voided on the City's computerized accounting
system.
16.0 Stop Payments
When one of the City's checks is lost in the mail or otherwise cannot be
accounted for, then the City shall immediately contact the bank upon
which the check is drawn, and place a stop payment on the check for
at least one year. The check shall also be voided on the City's
computerized accounting system.
In order to place a stop payment on a check for one year, the City must
renew the stop payment every six months. Even this does not
guarantee that that bank will not clear the check, however. The only
sure way to stop a check is to dose the bank account upon which the
check is drawn.
17.0 Destruction of Obsolete Check Stock
Obsolete check stock shall always be destroyed, never discarded intact.
Check stock shall be deemed to be obsolete when an address change
occurs or a bank account is closed. The City Treasurer or the Finonee
Assistant Finance Director shall, in the presence of
another public employee, either burn or shred all obsolete check stock.
Alternatively, in the case of used check stock, the City Treasurer may
retain a commercial shred company with bonded employees for that
purpose.
18.0 Disciplinary Action
Public employees who violate the provisions of this policy shall be
subject to disciplinary action, up to and including termination of
employment.
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No. 11: "Checks"
PROCEDURE
Revision No. 2
Adopted:
1. Cashier's Checks. Checks that are exchanged for cashier's checks shall be
made payable to the City's bank with a notation under the name stating,
"Cashier Check: (name of recipient/escrow number etc.)".
2. Petty Cash Checks. Checks that are used to refund petty cash shall be
made payable to "(name of petty cash handler/employee)/Petty Cash". It
shall be noted on the check stub that the purpose of the transaction will be
to "Refund Petty Cash".
3. Inter -Account Transfer. Checks that are used to transfer money between
the City's bank accounts shall be made payable to the title and to the
account number to which they are being deposited. The inter -account
transfer shall be noted on the check stub description.
4. Bank Checks. Checks that are used to pay obligations (principal and
interest payments) that are owed to the City's bank, shall be made payable
to that bank. The obligation to be met shall be noted on the check stub.
5. Sianature Cards. Either the City Treasurer or the
Deputy City Treasurer shall be responsible for periodically reviewing the
City's bank signature cards; fund transfer agreements; and bank access
codes in order to ensure that they are still in force. The Investment
der Deputy City Treasurer shall keep copies of these documents in a
locked unit.
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City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 12
SUBJECT: "STOP PAYMENTS"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy and procedure on stop
payments.
It is the policy of the:
City of Palm Desert;
Palm Desert Redevelopment Agency;
Palm Desert Housing Authority;
Palm Desert Financing Authority; and the
City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that stop payments should be
placed upon lost or stolen checks as quickly as possible in order to avoid
financial losses. The City accounting function shall be responsible for
initiating all stop payment requests.
1.0 Authorization to Place Stop Payments
The following three City employees shall be authorized to use the Union
Bank of California TEAM Stop Payment Service ("SPS") to place stop
payments:
1.1 The City Treasurer.
1.2 The Deputy City Treasurer.
1.3 The Assistant Finance Director.
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Palm Desert Treasury Piles and Procedures • Revision No. 2
No. 12: "Stop Payments" Adopted:
2.0 Placement of Stop Payments
The Investiriienteger Deputy City. Treasurer shall have the primary
responsibility for placing all stop payments. If the trwesta
Deputy City Treasurer is not available, then the (1)
Mefteger Assistant Finance Director, or (2) the City Treasurer, in that
order, shall be responsible for placing the stop payment.
3.0 Retention of Stop Payment Documentation
The Deputy City Treasurer shall retain a copy of all
stop payment documentation.
PROCEDURE
1. Reauest Oriaination. The City accounting function shall request that the
(maatrrne 1t Manger Deputy City Treasurer place a stop payment on a
check. The City employee making the request must complete the Stop
Payment Form (white) and obtain the necessary pre -approval, in writing. A
copy of the following documents must be attached to the Stop Payment
Form in order for it to be processed:
a. The check.
b. The original invoice.
Alternatively, the Invast n&P. Manager Deputy City Treasurer may initiate a
stop payment request if a fraudulent check is detected through Union
Bank's Positive Pay Program.
2. Internet Loq-On. The Deputy City Treasurer shall then
log -on to the Union Bank Team website.
3. Check Status. In order to verify that the check has not cleared, the
Ifivestifleger Deputy City Treasurer shall:
a. Select "Stops" ("Check Inquiry" will be the automatic default).
b. Select the bank account number.
c. Enter the check number.
d. Select "Submit".
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No. 12: "Stop Payments"
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Revision No. 2
Adopted:
The status of the check will be shown as of the end of business of the
prior day.
4. Stop Payment. If the check has not cleared, then the liwestrflnstger
Deputy City Treasurer shall:
a. Select "Place Stop".
b. Select the appropriate bank account.
c. Enter the check number.
d. Enter the check amount.
e. Select "Lost", "Stolen", "Destroyed", or "Other".
f. Select "Submit".
5. Stop Payment Report. After placing the stop payment, the 1nvestmcnt
Manager Deputy City Treasurer shall then produce a Stop Payment Report.
a. Select "Stops History".
b. Select Print.
6. Report Distribution. The Deputy City Treasurer shall
then return the original paperwork to the Accounting Technician (accounts
payable), with a copy of the Stop History Report attached. The Investment
Manager shall retain a copy of that paperwork
7. Stop Payment Order Confirmation. When the Deputy
City,Treasurer receives this confirmation from the bank, the 4.i„0o-cn,ont
Manager Deputy City Treasurer shall retain the original and provide the
Accounting Technician (accounts payable) with a copy.
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City of Palm Desert
Treasury Policies and Procedures
POLICY NO.: 13
SUBJECT: "WIRE TRANSFERS"
POLICY
Revision No. 2
Adopted:
The purpose of this document is to outline the policy and procedure on wire
transfers.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") to receive and disburse
investment monies electronically through bank wire systems.
A "wire transfer" is a form of electronic fund transfer that is commonly used
for securities transactions. Once money is transferred by wire, the underlying
investment transaction is final and irrevocable. A wire transfer may be
initiated either through the Internet or by telephone.
1.0 Wire Limits
Wire transfers may not be initiated on behalf of the City for more than:
1.1 S5 million on non -repetitive wires.
1.2 $5,000 on Repetitive Wire No. 1010 (Desert Willow Checking
Account) unless the City Treasurer has given prior approval.
The only exception to the foregoing shall be the wire transfer of tax-
exempt bond proceeds; Local Government Investment Fund ("LAIF")
monies; property taxes; and tax increment revenues, upon which there
shall be no limit.
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Palm Desert Treasury Pol s and Procedures
No. 13: "Bank Wires"
2.0 Wire Deadlines
In order to assure same -day processing:
Revision No. 2
Adopted:
2.1 Union Bank of California. All wires with Union Bank of California
("UBOC") must be initiated by 1:00 p.m. Pacific Daylight Time.
2.2 LAIF. All wires with LAIF must be initiated by 10:00 a.m. Pacific
Daylight Time.
3.0 Funds Transfer Agreements
The City Treasurer shall execute a Funds Transfer Agreement with each
approved financial institution, prior to conducting any wire transfers
with that institution. The Deputy City -Treasurer
shall retain and file a photocopy of each Funds Transfer Agreement.
The City Treasurer shall designate three City employees in each Funds
Transfer Agreement who shall serve as "Authorized Representatives", in
terms of initiating or verifying wire transfers. Each Authorized
Representative shall receive a separate personal identification number
("PIN") that shall be kept confidential.
4.0 Authorized Representatives
The following City employees shall be designated as Authorized
Representatives:
4.1 The City Treasurer.
4.2 The Deputy City Treasurer.
4.3 The Assistant Finance Director.
4.4 The Information Systems Manager.
No broker or investment advisor shall be authorized to initiate or to
verify wire transfers on behalf of the City.
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Palm Desert Treasury Pits and Procedures
No. 13: "Bank Wires"
5.0 Wire Verification
Revision No. 2
Adopted:
An Authorized Representative cannot initiate and verify the same wire
transfer; another Authorized Representative must perform one of these
tasks.
Internet -initiated wires, both repetitive and non -repetitive, must be
verified by a second -level approval on-line, in order to release the
payment instructions. Telephone callbacks are required on all
telephone -initiated wires, whether repetitive or non -repetitive.
No account numbers shall be released over the telephone, other than to
initiate or verify a wire transfer.
PROCEDURE
1 Repetitive Wire Transfers. These are wires that are sent on a recurring
basis, in which the destination and beneficiary information remain the
same, but the transfer amount and the release date vary. The process is
as follows:
a. The City employee who is requesting the wire transfer shall prepare a
Wire Transfer Form (red) and obtain the necessary pre -approval, in
writing.
b. The Investncreager Deputy City Treasurer shall then review the
paperwork and enter the necessary particulars into the Wire Log.
c. The Deputy City Treasurer shall then initiate the
wire transfer with Union Bank over the telephone. If the liwestme„ -t
Manager Deputy City Treasurer is absent, then another Authorized
Representative shall do so.
d. An Authorized Representative other than the one who initiated the wire
shall verify the wire when Union Bank does a telephone callback. The
wire verifier shall then sign the Wire Log as such.
e. The Deputy City Treasurer shall then confirm the
wire on a next -day basis by printing a TEAM Daily Statement Report.
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No. 13: "Bank Wires"
Revision No. 2
Adopted:
The Deputy City Treasurer shall then enter the wire
transaction number into the Wire Log.
f. The Deputy City Treasurer shall then distribute the
Wire Transfer Form with a confirming TEAM Daily Statement page to
the appropriate City accounting personnel for general ledger entry.
2. Non -Repetitive Wire Transfers. These are domestic transfers that allow the
wire desk to enter the transfer amount, release date, destination, and
beneficiary information. The process is as follows:
a. The City employee who is requesting the wire transfer shall prepare a
Wire Transfer Form (red) and obtain the necessary pre -approval, in
writing.
b. The Deputy City. Treasurer shall then review the
paperwork and enter the necessary particulars into the Wire Log.
c. The Deputy City.Treasurei shall then initiate the
wire transfer with Union Bank over the telephone. If the Invcatmcnt
Manager Deputy City Treasurer is absent, then another Authorized
Representative shall do so.
d. An Authorized Representative other than the one who initiated the wire
shall verify the wire when Union Bank does a telephone callback. The
wire verifier shall then sign the Wire Log as such.
e. The Deputy City Treasurer shall then confirm the
wire on a next -day basis by printing a TEAM Daily Statement Report.
The Deputy City Treasurer shall then enter the wire
transaction number into the Wire Log.
f. The Deputy City Treasurer shall then distribute the
Wire Transfer Form with a confirming TEAM Daily Statement page to
the appropriate City accounting personnel for general ledger entry.
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City of Palm Desert
• •
Treasury Policies and Procedures
Revision No. 2
Adopted:
POLICY NO.: 14
SUBJECT: "ACCESS TO TREASURY SYSTEMS"
POLICY
The purpose of this document is to outline the policy on treasury systems
access.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") to ensure that treasury
systems for banking and investments are secure, in order to protect against
the theft, loss, or misuse of public monies.
1.0 Local Agency Investment Fund ("LAIF")
The City invests public monies in LAIF, based upon its liquidity and
relatively high yield. Any transactions that are undertaken on behalf of
the City must be initiated using a Personal Identification Number ("PIN")
for each LAIF account.
1.1 Authorization. The following City employees shall be authorized
to initiate transactions on the City's behalf with LAIF:
1.1.1 The City Treasurer.
1.1.2 The Deputy City Treasurer.
1.1.3 The Assistant Finance
Director.
1.1.4 The Information Systems Manager.
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Palm Desert Treasury PAO s and Procedures
No. 14: "Access to Treasury Systems"
•
Revision No. 2
Adopted:
1.2 Security. The Deputy City Treasurer shall
be responsible for maintaining PIN numbers.
2.0 SymPro Investment Program
This software program is used to record, calculate, and report the City's
investments.
2.1 Password Levels. In order to ensure that there exists an
appropriate separation of duties regarding SymPro, there are three
separate sets of functional capability, based upon password
security level:
2.1.1 Level One. This user is authorized to edit, add, and
delete portfolios and files, and to change passwords.
2.1.2 Level Two. This user is authorized to edit, add, and
delete files.
2.1.3 Level Three. This user is authorized to view only
portfolios and files (there are no editing capabilities).
2.2 Authorization. The following City employees shall be authorized
to operate at various security levels:
2.2.1 Level One.
2.2.1.1 The City Treasurer.
2.4.1.2 The Deputy City Treasurer.
2.2.2 Level Two.
2.2.2.1 None.
2.2.3 Level Three.
2.2.3.1 None.
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Palm Desert Treasury ! *es and Procedures
No. 14: "Access to Treasury Systems"
Revision No. 2
Adopted:
2.3 Security. The Deputy City Treasurer shall
be responsible for maintaining, installing, and recommending
changes to the SymPro software program. The Investment
Manager Deputy City Treasurer shall be responsible for changing
the system passwords as needed.
3.0 Bank of New York Information Network
This software program is used to download data from the City's
trustee, Bank of New York, on the investment of tax-exempt bond
proceeds.
3.1 Authorization. The following City employees shall be authorized
to access this program:
3.1.1 The City Treasurer.
3.1.2 The Invcat ant Manager Depiity:.City Treasurer•.
3.1.3 The Assistant Finance
Director.
3.2 Security. The Assistant Finance Director
shall be responsible for changing the system passwords as
needed.
4.0 Union Bank TEAM Information Reporting, Stop Payment & Money
Transfer Services
These software modules are used to download the City's bank account
and cash management information; to place stop payments; and to
transfer public monies electronically.
4.1 Authorization. The following City employees shall be authorized
to access this program:
4.1.1 The City Treasurer.
4.1.2 The Inv:stmsnt Manager Deputy City Treasurer.
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Palm Desert Treasury t- ies and Procedures
No. 14: "Access to Treasury Systems"
Revision No. 2
Adopted:
4.1.3 The Assistant Finance
Director.
4.2 Security. Each authorized employee shall be responsible for
changing the system password as needed.
5.0 Union Bank Positive Pay System
This software program is used to download images of "exception"
checks that the City of Palm Desert has purportedly issued and that
have been presented to Union Bank for payment. The purpose of the
program is to detect fraudulent checks.
5.1 Authorization. The following City employees shall be authorized
to access this program:
5.1.1 The City Treasurer.
5.1.2 The fin Manager Deputy.City Treasurer.
5.1.3 The Assistant Finance
Director.
6.0 Storage of Passwords
The frwestnflager Deputy City; Treasurer shall document the
quarterly Treasury systems passwords, and shall keep this
documentation stored in a locked box within the
Deputy City Treasurer's office. The :rr: sstmar•1t Managee Deputy City
Treasurer, the City Treasurer, and the Finance Operations Manager
Assistant Finance Director shall retain exclusive possession of the keys
for the locked box.
4 of 4
City of Palm Desert
Treasury Policies and Procedures
Revision No. 2
Adopted:
POLICY NO.: 15
SUBJECT: "INTEREST ALLOCATION"
POLICY
The purpose of this document is to outline the policy and procedure on
interest allocation.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
that all interest income which the aforementioned entities have accrued and
received within a fiscal year should be allocated to individual accounting funds
in the City of Palm Desert ("City") and the Palm Desert Redevelopment
Agency ("RDA") investment portfolios, so that annual audited financial
statements may be prepared.
1.0 Deduction of Management Fee
The Deputy City Treasurer's salary and fringe benefits shall be deducted
from each accounting fund in order to reflect the cost of investment
portfolio management. If any portion of the Deputy City Treasurer's
compensation is allocated to the assessment districts as a cost, then it
shall be deducted from the amount that is charged to the accounting
funds.
2.0 Retention of Work Papers
The Assistant Finance Director shall be responsible for retaining and
filing all work papers pertaining to interest allocation so that the City's
external auditor will have the requisite documentation for the City's
annual financial audit.
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Palm Desert Treasury kits and Procedures
Revision No. 2
No. 15: "Interest Allocation" Adopted:
PROCEDURE
1. Start of Fiscal Year. At the beginning of each new fiscal year, the Deputy
City Treasurer should begin the process of allocating interest income.
a. Interest Allocation Workbook. Retrieve the Interest Allocation
Workbook of the prior fiscal year from the Excel>Investments>
Interest Allocation subdirectory in the Deputy City Treasurer's personal
network directory, and access the "Cash Adjustment Worksheet" (see
Exhibit "A").
b. Cash Adjustment Worksheet. Update the "Cash Adjustment
Worksheet" by changing column dates; deleting individual monthly
balances; reviewing adjustment formulas; and renaming and saving the
workbook for the target fiscal year.
1) For each account, take the interest rate for the prior June, and copy
it as the interest rate for July 1 of the subsequent fiscal year.
Otherwise, SymPro will not allow data to be entered for each month of
the target fiscal year.
c. Pooled Fund Portfolios. Retrieve the City and the RDA Pooled Fund
Portfolios of the prior fiscal year, and copy and rename them for the
target fiscal year. The SymPro commands would be: Utility>Portfolio
Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., PC01 and
PR01) > Name (e.g., 2001 CITY POOLED FUNDS and 2001 RDA
POOLED FUNDS)> Path (C:ISYMPRO\DATA\POOLED).
d. Prior -Year June SymPro Cash Balances. Print the June 30 SymPro cash
balances for the prior fiscal year for the unedited City and RDA Pooled
Fund Portfolios. The SymPro commands would be: Fixed Income>
Reports>Investment Listings>Investments by Fund (FI)>Ending Date
(6/30/(prior fiscal year)►>Select All.
e. Fiscal Year -End Close. Perform a fiscal year-end close on the new
Pooled Fund Portfolios. The SymPro commands would be: Utility>
Setup> Fiscal Year End Close> (check box that data has been archived
and back-up)> (enter prior fiscal year-end). This will clear all prior fiscal
year transactions; create a beginning balance for the target fiscal year;
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•
Revision No. 2
No. 15: "Interest Allocation" Adopted:
and reset the portfolio for the target fiscal year. Check "yes" when
asked if the year-end of each portfolio should be processed.
f. Data Entry of Prior -Near June SymPro Cash Balances. Enter the June
30 book value cash balances, as calculated in Procedure 1.d. of this
policy, by fund number, into Column C of the "Cash Adjustment
Worksheet."
g. Data Entry of June Audited Cash Balances 115"' Period). Enter the
audited cash balances, by fund number, from the June Bank
Reconciliation (Period 15) of the prior fiscal year into Column D of the
"Cash Adjustment Worksheet."
1) All cash that is listed, by fund number, for Activity Code Number
101-0000 under the "Active Cash Cumulative" column of each Cash
Work Sheet, should be entered.
2) All 110-0000-101 sub -accounts should be added together and
entered.
3) The preliminary total in the "Cash Adjustment Worksheet" should
match the preliminary total in the Cash Work Sheet.
4) The "Active RDA" cash balance in the Statement of Cash
Transactions should be entered into the RDA 110 line item in the
"Cash Adjustment Worksheet."
h. Data Entry of Other Monthly Cash Balances. Enter the cash balances,
by fund number, from the Cash Work Sheets for the months of the
target fiscal year into the appropriate monthly columns of the "Cash
Adjustment Worksheet." The ending month of June will be 12tb Period.
1) All cash that is listed, by fund number, for Activity Code Number
101-0000 under the "Active Cash Cumulative" column of each Cash
Work Sheet, should be entered for each month.
2) All 110-0000-101 sub -accounts should be added together and
entered.
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•
Revision No. 2
No. 15: "Interest Allocation" Adopted:
3) The preliminary total in the Cash Adjustment Worksheet should
reconcile to the preliminary total in the Cash Work Sheet for that
month.
4) The "Active RDA" cash balance in the Statement of Cash
Transactions should be entered into the RDA 110 line item in the
Cash Adjustment Worksheet.
After cash balances have been entered into the "Cash Adjustment
Worksheet," the "Adjustment to SymPro" column that is adjacent to
each month, will automatically calculate an adjustment.
i. Backup of Interest Allocation Workbook. Backup the "Interest
Allocation Workbook" by using the following Excel commands:
c:\backup\(target fiscal year) INTEREST ALLOCATION.
Data Entry into Pooled Fund Portfolios. Enter each cash adjustment, by
month, as a deposit or a withdrawal in the Transactions Field of the
appropriate Participant Fund in the City and the RDA Pooled Fund
Portfolios. The resulting cash balance in the Participant Fund should
match the corresponding cash balance in the "Cash Adjustment
Worksheet." The monthly interest rates will be calculated automatically
later in the process.
1) No Cash Adjustment. If the cash adjustment is zero, then no data
for that month should be entered into the Participant Fund.
2) RDA Cash Balance. In the case of RDA 110 (Active), the opposite
sign convention (e.g., a positive for a negative in the "Cash
Adjustment Worksheet" should be used when entering data into the
Transactions Field of the Participant Fund.
k. Backup of Pooled Fund Portfolios. Backup the City and the RDA Pooled
Fund Portfolios by using the following SymPro commands: Utility>
Portfolio Copy/Deletion > Copy (Archive) Portfolio > Code (e.g., 01 PC
and 1PR)>Name (e.g., BACKUP-2001 CITY POOLED FUND and
BACKUP-2001 RDA POOLED FUND►> Path (H:\(personal
directory)\SYMPRO\DATA\BACKUP).
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Palm Desert Treasury Files and Procedures
•
Revision No. 2
No. 15: "Interest Allocation" Adopted:
I. Report Production. The Deputy City Treasurer should then print the
City and the RDA Pooled Funds Reports for the City Treasurer. All
reports should be produced on both a cash basis ("CP") and an accrual
basis ("AP").
1) Portfolio Summary and Portfolio Details Reports. The SymPro
commands are: Fixed Income> Report>Portfolio Management>
Portfolio (PM). These reports should be printed, by month. for the
target fiscal year (Exhibit "B").
m. Creation of Non -Restricted Funds Reports. The Deputy City Treasurer
should then retrieve the current "CITY" and "RDA" investment
portfolios, and copy and rename them for the target fiscal year. The
SymPro commands are: Utility>Portfolio Copy/Deletion>Copy (Archive)
Portfolio>Code (e.g., NC01 and NR01)>Name (e.g., 2001 CITY NON-
RESTRICTED FUNDS and 2001 RDA NON -RESTRICTED FUNDS)>Path
(C:\SYMPRO\DATA\NON-RES).
n. Report Production. The Deputy City Treasurer should then provide the
City Treasurer with the following reports from the unedited City and
RDA Non -Restricted Funds Portfolios.
1) Portfolio Reports. The SymPro commands are: Fixed Income>
Report>Portfolio Management>Portfolio (PM). Print the "Portfolio
Summary" and "Portfolio Details -Investments" reports, by month, for
the target fiscal year (see Exhibit "C"). Place a tick mark next to
each individual security that is listed, avoiding duplication.
2) Investment Position Reports. The SymPro commands are: Fixed
Income> Report> Reference>Investment Position Report (SP). Print
the "Investment Position Reports" for all individual securities, except
for State and Local Government Series; mutual funds; and local
agency investment pools (see Exhibit "D"). The purpose of this
report is to identify trustee securities that should be deleted from the
City and the RDA Non -Restricted Funds Portfolios.
3) Delete Trustee Records. "Forward" through the SymPro investment
records (using Search>Investment Number), and delete all records
of trustee -held ("Restricted") securities, except for the following:
5 of 10
Palm Desert Treasury Po1Cres and Procedures
•
Revision No. 2
No. 15: "Interest Allocation" Adopted:
a) City: Main Checking Account; Main Sweep Account; all
custodian -held securities; CAMP; and LAIF.
b) RDA: All custodian -held securities and LAIF.
Also delete "City" SymPro Nos. 18040 and 18041 (Retiree Health
investments); all individual securities that have matured prior to the
target fiscal year; LAIF (Housing); LAIF (Bond Proceeds); City loan to
RDA; and all State and Local Government Series.
All interest income for the deleted records should have been previously
booked las trustee transactions) by the Senior Financial Analyst.
4) Reprint Portfolio Reports. The SymPro commands are: Fixed
Income> Report >Portfolio Management > Portfolio (PM). Print the
"Portfolio Summary" and the "Portfolio Details -Investments" reports,
by month, for the targeted fiscal year (see Exhibit "C"). The Deputy
City Treasurer should give them to the Finance Operations Manager
for review and verification.
n. Backup of Non -Restricted Funds Portfolios. Backup the City and the
RDA Non -Restricted Funds Portfolios by using the following SymPro
commands: Utility> Portfolio Copy/Deletion> Copy (Archive)
Portfolio>Code (e.g., 01NC and 01NR)>Name (e.g., BACKUP-2001
CITY NONRESTRICTED and BACKUP-2001 RDA NONRESTRICTED)>
Path (H:\(personal directory)\SYMPRO\DATA\BACKUP).
1) Accrued Interest Report. Print the "Accrued Interest (Al) Report" by
using the following SymPro commands: Fixed Income > Report >
Interest. The reporting period should be from 7/01 /(target fiscal
year) through 6/30/(target fiscal year).
o. Report Production. The Deputy City Treasurer should then provide the
City Treasurer with the following reports from the edited City and RDA
Non -Restricted Funds Portfolios. All reports should be on both a cash
basis ("CP") and an accrual basis ("AP").
1) Portfolio Summary and Portfolio Details Reports. The SymPro
commands are: Fixed Income> Report> Portfolio Management>
Portfolio (PM). Print these reports, by month, for the target fiscal
year (see Exhibit "E").
6 of 10
Palm Desert Treasury Pees and Procedures
Revision No. 2
No. 15: "Interest Allocation" Adopted:
p.
2) lnterest Earnings Reports. The SymPro commands are: Fixed
Income> Report> Interest> Interest Earnings (IE) > Issuer > Average
Value/Annualized Yield. Print these reports for a 12-month period,
from July 1 through June 30 of the target fiscal year (see Exhibit
„F„).
3) Allocation Account Activity Reports. The SymPro commands are:
Earnings Allocation>Report>Allocation Account Activity. Print the
Allocation Accounts Activity Reports for a 12-month period, from
the 2nd calendar day at the beginning of the target fiscal year
through the 2nd calendar day after the end of the target fiscal year,
in order to exclude June interest income on the front end and to add
it on the back end (see Exhibit "G").
Preparatory Work Prior to Interest Allocation. Prior to allocating interest
earnings, either the City Treasurer or the Assistant Finance Director
should take the following steps:
1) Accrual Worksheet. Prepare an Excel worksheet which calculates
the amount of interest income that was earned in the prior fiscal
period but received in the target fiscal period. Since debt securities
with interest coupons typically pay interest every six months,
interest received up to 31 December might include some accrued
interest.
2) Calculation of Accrued Interest Earnings. Review the "Interest
Earnings Report" in order to determine what portion of interest
earnings that were received in the target fiscal period should be
allocated as accrued interest from the prior fiscal period. Then
prepare and post all accrued interest to the general ledgers of the
edited City and RDA Pooled Fund Portfolios.
3) Calculation of Total Interest Earnings. Then add this accrued interest
to interest received during the target fiscal period, in order to
calculate the amount of total interest earnings that will be allocated
to all accounting funds in the edited City and RDA Pooled Fund
Portfolios.
4) Final Allocation Activity Report. The Deputy City Treasurer should
then print "Allocation Account Activity Reports" for the edited City
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Palm Desert Treasury Pon les and Procedures
Revision No. 2
No, 15: "Interest Allocation" Adopted:
q•
and RDA Pooled Fund Portfolios. The time period would be from
7/1/(target fiscal year) thorough 7/2/(subsequent fiscal year)).
Allocation of Total Interest Earnings. The Deputy City Treasurer should
then allocate total interest earnings to the accounting funds in the
edited Pooled Fund Portfolios. All reports should be on a cash basis
("CP"). The SymPro commands are:
1) Select the Earnings Allocation> Utility> Select Investment Types For
Allocation Pool menu options. Type "Y" in the "Include in Pool?"
and "Active" columns for "Participant Accounts."
2) Select the Utility>Setup Account Properties menu options if
management fees are to be allocated through interest earned.
3) Select the following Activity>Allocate Earnings menu options:
a) Amount to Allocate. Enter the beginning and ending dates for
each month of the target fiscal year for the appropriate edited
Pooled Fund Portfolio. Then enter total earnings for the month in
"Amount To Allocate." Total earnings is taken from the
"Portfolio Summary" report for the related edited Non -Restricted
Funds Portfolio for each month of the target fiscal year, except
for June.
b) June Total Earnings. Total earnings for the month of June for
both the City and the RDA may be calculated as follows:
(1)Adjusted Annual Total Earnings. Reconcile the annual total
earnings figure that SymPro has calculated in June with the
annual total earnings figure that the Assistant Finance Director
has calculated for the same time period.
(2) Adjusted June Total Earnings. Add or subtract the difference
from the total earnings figure that SymPro has calculated for
the month of June.
(3) Amount to Allocate. Enter the adjusted total earnings figure
into "Amount to Allocation" for the month of June.
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Palm Desert Treasury Puu' es and Procedures
Revision No. 2
No. 15: "Interest Allocation" Adopted:
c) Imputed Interest Rate. SymPro will impute an interest rate for
each month of the target fiscal year, based upon the total
earnings that have been entered.
r. Report Production. The Deputy City Treasurer should then provide the
City Treasurer with the following report from the edited City and the
RDA Pooled Funds Portfo/ios. All reports should be on a cash basis
("CP") only.
1) Allocation Account Activity Report. The SymPro commands are:
Earnings Allocation>Report>Allocation Account Activity. Print the
Allocation Account Activity Reports for a 12-month period, from the
2nd calendar day at the beginning of the target fiscal year through
the 2nd calendar day after the end of the target fiscal year. Interest
is posted on the first day of each subsequent month. These reports
are needed in order to verify the final interest earnings allocation for
each month.
s. Allocation of Management Fee. The Deputy City Treasurer's services
should be charged as a monthly fee to each accounting fund in the City
and RDA Pooled Fund Portfolios. This fee shall be defined as the
Deputy City Treasurer's salary plus fringe benefits (equivalent to 29.63
percent of salary). The basis for allocating the management fee should
be the dollar amount of each accounting fund as a percentage of the
dollar amount of all accounting funds within the Pooled Fund Portfolios.
The management fee should be allocated to: (1) assessment district
trust funds; (2) RDA trust funds; (3) all other City funds; and (4) all
other RDA funds. The allocation of the management fee to all RDA
funds shall be done concurrently with the allocation of City staff time
that has been devoted to RDA projects.
t. Posting of Interest Allocation. The City Treasurer or the Assistant
Finance Director shall then post the interest earned to all accounting
funds in the City and the RDA Pooled Fund Portfolios. The RDA Trust
Fund shall be subdivided in order to subdivide individual pass -through
accounts.
3. Fiscal Year -End Close. After monthly data has been entered for June, (the
end of the target fiscal year), the Deputy City Treasurer should begin the
fiscal year-end close for the "City" and the "RDA" SymPro portfolios by
doing the following:
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Palm Desert Treasury Poi es and Procedures
Revision No. 2
No. 15: "Interest Allocation" Adopted:
a.
Verify Updated Interest Schedule. The SymPro commands are: Fixed
Income>Activity>Update Interest Schedule by Due Date. Verify that
all interest payments have been posted for the target fiscal year.
b. Data Backup. Backup SymPro data for the City and the RDA by using
the procedures listed in the yellow Monthly Investment Report -
Instructions manual. This only needs to be done once.
c. Archive Portfolios. The SymPro commands are: Utility>Portfolio
Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., FC03 and
FR03)>Name (e.g., 2003 CITY PORTFOLIO FYEC and 2003 RDA
PORTFOLIO FVEC)>Path (C:\SYMPRO\DATA\FYEC). This will archive
the City and the RDA portfolios for the target fiscal year.
d. Backup Archive Portfolios. The SymPro commands are: Utility>
Portfolio Copy/Deletion>Copy(Archive) Portfolio>Code (e.g., 03FC and
03FR)>Name (e.g., BACKUP-2003 CITY FYEC and BACKUP-2003 RDA
FYEC)> Path (H:\(personal directory)\SYMPRO\BACKUP►. This will
create an archive copy of the City and the RDA portfolios for the target
fiscal year.
e. Reindex Portfolio Fi/es. The SymPro commands are: Fixed Income>
Utility>Reindex Files. Reindex to remove any deleted records before
proceeding with the close.
f. The Close. The SymPro commands are: Fixed Income> Utility>
Setup>Fiscal Year End Close. Non-amortizina discount instruments -
should not be converted to amortizing ones.
1) Check box that questions whether data files have been archived and
backed up.
2) Enter the last day of the target fiscal year as the "close date".
3) Hit "OK."
4) Confirm the new fiscal year-end date. The SymPro commands are:
Fixed Income> Utility > Setup> Portfolio Setup/Preferences.
10 of 10
City of Palm Desert
• •
Revision No. 2
Adopted:
Treasury Policies and Procedures
POLICY NO.: 16
SUBJECT: "CASH AND INVESTMENTS AUDIT"
POLICY
The purpose of this document is to outline the policy and procedure on the
audit responsibilities of the Treasury function.
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") that the City shall engage an
external auditor to conduct a cash and investments audit every three years,
unless there have been significant prior audit findings or a change in Treasury
personnel. If either of the foregoing conditions occurs, then the City Treasurer
or the Finance and Investment Committee may increase the frequency of the
audits, as needed.
A cash and investments audit shall include among its objectives, a review of:
➢ The effectiveness of the internal controls for the City's investment
program.
➢ Staff compliance with treasury policies and procedures.
➢ The description and classification of investments, by fund type, on the
City's balance sheet, as well as related disclosures, including
restrictions and commitments.
➢ Custody and safekeeping arrangements.
The City Treasurer and the Deputy City Treasurer shall
cooperate fully with the external auditor, in terms of willingly producing all
1 of 2
Palm Desert Treasury Pores and Procedures
No. 16: "Cash and Investments Audit"
Revision No. 2
Adopted:
information and documents requested, as well as responding honestly to all
inquiries.
The City's annual audit includes certain audit procedures that are related to
cash and investments, such as the confirmation of the year-end balances. It is
the City's policy, however, to have the external auditor perform additional
procedures related to cash and investments. Consequently, the Finance and
Investment Committee shall identify and communicate to the external auditor
what additional testing procedures will be required. The external auditor shall
submit its report on these additional procedures to the Finance and Investment
Committee by 31 December of that year.
PROCEDURE
1. Reauired Audit Documentation. The Deputy City
Ttasurer shall provide the external auditor with the following documents
for the fiscal year being audited:
a. "Statement of Investment Policy".
b. Treasury Policies and Procedures Manual.
c. Trade Book.
d. Wire Log.
e. All bank account signature cards.
f. All monthly investment reports and schedules.
g. All competitive offering documents.
h. All broker qualification and requalification documents.
i. All trustee, custodian, and bank administrative fee documents.
j. All money market fund qualification documents.
2. Confirmation Letters. The fftvcaicmcnc Manager Deputy City.Treasurer shall
ensure that "Confirmation of Marketable Securities Held By A Third Party"
letters are prepared for the external auditor to send to the City's custodian
and to the City's trustee.
2 of 2
CITY OF PALM DESERT
OFFICE OF THE CITY TREASURER
STAFF REPORT
REQUEST: Approval of Revisions to Palm Desert "Statement of Investment
Policy 2004"
APPLICANT: N/A
CASE NOS. N/A
DATE: September 9, 2003
CONTENTS: Palm Desert "Statement of Investment Policy 2004"
Recommendation:
By minute motion: That the Investment and Finance Committee recommend
that the City Council adopt the revised Palm Desert
"Statement of Investment Policy 2004", as amended.
Background:
State law requires the City to review and update its investment policy annually. This is
the update for 2004. In the policy text, deletions are highlighted with ctrikcr; additions
are highlighted with redliriing.
Significant policy changes are listed below:
Page 10, #8:
The maximum maturity for medium -term notes ("MTNs") would be
increased from three to five years. The maximum concentration
limit for a MTN issuer would be increased from 10% to 15%. State
law currently limits the maximum maturity of MTNs to five years; it
does not. however. contain anv concentration limits for MTNs.
Staff Report • •
Annual Investment Policy Review
September 5, 2003
Page 2 of 2
Page 15, 13.0:
Submitted By:
O 1n
Thomas W. Jeffrey,
Approved By:
Staff is recommending these changes due to problems that they
recently encountered when purchasing MTNs for the City's Retiree
Health Program. The City Treasurer's Office had to seek the
approval of the City Council when five-year notes were needed,
because the City's investment policy limited MTNs to a maximum
maturity of three years. This delay caused the City to get a much
lower yield than would have been the case had it been able to react
more quickly to market conditions.
When the City finally purchased the MTNs, it had to stop buying
Ford MTNs because staff had reached the 10% limit. General
Motors' MTNs were the only other issue with a decent yield; staff,
however, did not want to buy them due to perceived higher risk.
Staff wants greater flexibility to concentrate in a single issuer,
should unusual market conditions prevail.
City policy currently requires that portfolio investments be laddered
over three years (20% must mature in one year; 30% in two years;
and 50% in three years). This rather mechanical approach was
adopted eight years ago, in the wake of Orange County's liquidity
crisis, when the City did not have a cash model. Staff is
recommending that it be replaced with a maximum portfolio
weighted -average maturity requirement of 540 days (LAIF's limit),
reflecting the reality that the City portfolio, like LAIF's, is managed
as a local agency investment pool. This would allow investment
officers sufficient flexibility to invest to meet the City's changing
cash needs.
Treasurer
Paul S. Gibson, C.C.M.T., City Treasurer
CITY OF PALM DESERT
PREPARED BY THE CITY TREASURER'S OFFICE
Thomas W. Jeffrey, J.D., M.B.A.
Deputy City Treasurer
REVIEWED AND APPROVED BY
Paul S. Gibson, C.C.M.T.
City Treasurer
Adopted by the City Council on
Palm Desert Treasury Podia/and Procedures
•
Revision No. 11
No. 2: "Statement of Investment Policy" Adopted: 3/13/03
TABLE OF CONTENTS
OVERVIEW PAGE
1.0 Policy 1
2.0 Scope 1
3.0 Prudence 2
4.0 Objectives 2
INVESTMENT AUTHORITY
5.0 Delegation of Authority 3
5.1 Investment Procedures 4
6.0 Ethics and Conflicts of Interest 4
INVESTMENTS
7.0 Authorized Financial Dealers and Institutions 4
8.0 Authorized and Suitable Investments 7
8.1 Prohibited Investments 13
9.0 Investment Pools/Mutual Funds 13
PORTFOLIO MANAGEMENT
10.0 Collateralization 14
11.0 Safekeeping and Custody 14
12.0 Diversification 15
13.0 Maximum Maturities 15
13.1 Portfolio Rebalancing 15
13.2 Credit Downgrading 16
13.3 Bond Proceeds 16
14.0 Interna► Controls 17
PERFORMANCE MEASUREMENT
15.0 Performance Standards 17
15.1 Market Yield (Benchmark) 18
16.0 Reporting 18
LEGAL REQUIREMENTS
17.0 Investment Policy Adoption 18
18.0 Regulatory Submission 19
APPENDICES
A: List of Authorized Financial Institutions 20
B: Glossary 21
Palm Desert Treasury Policcand Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
1.0 Policy
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") to predicate their investment policies,
procedures, and practices upon the following three principles: (1) compliance with
federal, state, and local laws governing the investment of public monies under the
City Treasurer's control; (2) protection of the principal monies entrusted to the
City; and (3) maximization of profit within the parameters of prudent risk
management, as defined by this Statement of Investment Policy.
For the purposes of this policy, "Investment Officers" shall be defined as the City
Treasurer and the Deputy City Treasurer.
2.0 Scope
This policy shall apply to all funds that are under the City Treasurer's control
including, but not limited to, the general fund; special revenue funds; debt
service funds; capital project funds; enterprise funds; and trust and agency
funds. These funds are accounted for in the City's Comprehensive Annual
Financial Report.
The City's Deferred Compensation Plan ("Plan") shall be excluded from the
scope of this policy if the following three conditions exist:
2.0.1 A third -party administrator manages the Plan.
2,0.2 Individual plan participants have control over the selection of
investments.
2.0.3 The City has no fiduciary responsibility to act as a "trustee" for the
Plan.
The only exception to the foregoing shall be that if the City retains the
fiduciary responsibility to act as a trustee for the Plan, then the Plan shall be
deemed to be within the scope of this policy.
Page 1 of 26
Palm Desert Treasury Pail and Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
Under all circumstances, the City Treasurer shall provide the Investment and
Finance Committee and the Palm Desert City Council ("City Council") with a
quarterly report on the investment of Plan assets.
3.0 Prudence
Pursuant to California Government Code Section 53600.3, Investment
Officers, as trustees of public monies, shall adhere to the "prudent investor"
standard when managing the City's investment portfolios. They shall invest
".,.with care, skill, prudence, and diligence under the circumstances then
prevailing, including, but not limited to, the general economic conditions and
the anticipated needs of the agency, that a prudent person acting in a like
capacity and familiarity with those matters would use in the conduct of
funds of a like character and with like aims, to safeguard the principal and
maintain the liquidity needs of the agency."
Investment Officers who follow the provisions of this policy and who
exercise due diligence shall be relieved of personal responsibility for a
security's credit risk or market price risk: provided that they report
substantial deviations from expectations to the City Manager and to the
Investment and Finance Committee in a timely manner, and that they take
appropriate action to control adverse developments.
"Substantial deviations" shall be defined as either a decline of 10 percent or
more in the market value of a security due to issuer default or a credit risk
downgrade; or the sale of a security prior to maturity at 10 percent or more
below its acquisition cost.
4.0 Objectives
The City's investment objectives, in order of priority, shall be:
4.0.1 Safety. Safety of principal shall be the foremost objective.
Investments shall be made with the aim of avoiding capital losses due
to issuer default; broker default; or market value erosion. Principal
shall be preserved by mitigating:
Credit Risk, the risk of loss due to the failure of the issuer of the
security, shall be mitigated by investing in only the highest quality
securities; by diversifying investments; and by pre -qualifying broker -
dealers and public depositories; and
Page 2 of 26
Palm Desert Treasury Polic•and Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
Market Risk, the risk of loss due to a decline in bond prices because of
rising market interest rates, shall be mitigated by structuring the
portfolios so that issues mature concurrently with the City's
anticipated cash requirements, thereby eliminating the need to sell
securities prematurely on the open market.
It is recognized, however, that in a diversified portfolio, occasional
measured losses are inevitable, and must be considered within the
context of overall investment return.
4.0.2 Liquidity. An adequate percentage of the portfolios shall be
maintained in liquid, short-term securities that can be converted to
cash, if necessary, to meet disbursement requirements. Since all cash
requirements cannot be anticipated, the portfolios should consist
largely of securities with active secondary markets. These securities
should have a relatively low sensitivity to market risk. Maximum
overall portfolio maturities are referenced on page 15, section 13.0 of
this policy.
4.0.3 Yield. Yield shall be considered only after the basic requirements of
safety and liquidity have been met. Whenever possible and in a
manner consistent with the objectives of safety and liquidity, a yield
higher than the market rate of return shall be sought.
5.0 Delegation of Authority
California Government Code Sections 53607 and 53608 authorize the
legislative body of a local agency to invest, deposit, and provide for the
safekeeping of the local agency's funds or to delegate those responsibilities
to the treasurer of the local agency.
City of Palm Desert Municipal Code Section 3.08.010 delegates the
authority to invest, deposit, and provide for the safekeeping of City public
monies to the City Treasurer.
City of Palm Desert Municipal Code Section 2.16.010 authorizes the City
Director of Finance to serve ex officio as City Treasurer. The City Treasurer
shall be responsible for all investment transactions that are executed on
behalf of the City.
The City Treasurer and the Deputy City Treasurer shall have exclusive
authority to buy and sell securities on behalf of the City.
Page 3 of 26
Palm Desert Treasury PoAland Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
The Deputy City Treasurer may execute investment transactions on behalf of
the City only if the City Treasurer has previously authorized the transactions.
If the City Treasurer is unavailable, then the
rtaSi"st'antAPfnan'ce<Director must authorize the investment transactions prior
to execution.
5.1 Investment Procedures
The City Treasurer shall establish written procedures for the operation of the
City's investment program that are consistent with the provisions of this
policy. The procedures shall include reference to: safekeeping, PSA
repurchase agreements, banking service contracts, and collateral/depository
agreements. Such procedures shall include explicit delegation of authority to
persons responsible for investment transactions. No person may engage in
an investment transaction except as provided under the terms of this policy
and under the procedures that the City Treasurer establishes.
6.0 Ethics and Conflicts of Interest
Investment Officers shall refrain from personal business activity that could
conflict with the proper execution of the City's investment program or impair
their ability to make impartial investment decisions. They shall disclose to
the City Council any material financial interest in financial institutions that
conduct business within the City's jurisdiction. They shall also disclose any
personal investment positions that could be related to the performance of the
City's investment portfolios.
Investment Officers shall subordinate their personal investment transactions
to those of the City, particularly with regard to the timing of securities
purchases and sales, and shall avoid transactions that might impair public
confidence.
Investment Officers and their immediate relatives shall not accept or solicit
any gifts, gratuities, honorariums, or favors from persons or entities who
provide or who are seeking to provide financial services to the City.
7.0 Authorized Financial Dealers and Institutions
The City Treasurer shall maintain an authorized list (see page 20) of all
securities brokers that the Investment and Finance Committee and the City
Council have authorized to transact securities business with the City. This
Page 4 of 26
•
es
Palm Desert Treasury Policiand •Procedures • Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
list shall be provided to all members of the City Council and the Investment
and Finance Committee.
Any broker -dealer that has made a political contribution within any
consecutive four-year period following 1 January 1996 in an amount that
exceeds the limits in Municipal Securities Rulemaking Board ("MSRB") Rule
G-37, to any member of or candidate for the City Council, the
Redevelopment Agency Board, the Housing Authority Commission, or the
Investment and Finance Committee shall not be eligible to transact business
with the City.
Only primary government securities dealers ("primary dealers') that regularly
report to the Federal Reserve Bank of New York shall be eligible for inclusion
on the City's authorized list.
The only exception to the foregoing requirement shall be that the Investment
and Finance Committee and the City Council may, at their discretion, accept,
review, and approve applications from secondary brokers that: (1) have
been in existence for more than five years; (2) have a net capital position in
excess of $100 million; (3) are licensed as brokers by the State of California;
and (4) are headquartered or have a branch office in California.
The number of primary dealers and secondary brokers on the authorized list
shall not exceed a combined total of five f u at any single time. The City
shall accept and review new broker applications only when there is an
immediate need to fill a vacancy on the authorized list. In all cases, the City
shall only accept applications from and transact business with the
institutional securities sales departments of primary dealers and secondary
brokers.
All brokers that wish to apply for inclusion on the authorized list must, at a
minimum, provide the City Treasurer with a copy of the following
documents, unless otherwise noted:
7.0.1 Completed Broker Questionnaire and Certification (sianed original
only).
7.0.2 Most recent Annual Report and most recent Securities and Exchange
Commission ("SEC") Form 10-K.
Page 5 of 26
Palm Desert Treasury Polio' and Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
7.0.4 Current NASD Form BD Status Report.
7.0.5 NASD Form U-4 -- Uniform Application for Securities Industry
Registration or Transfer for each employee with whom the City would
be trading.
7.0.6 Current NASD Form U-4 Status Report on each employee with whom
the City would be trading.
7.0.7 A resume from each employee with whom the City would be trading.
7.0.8 Delivery instructions.
7.0.9 A resolution that identifies employees who are authorized to trade.
In addition to the above documents, secondary brokers must also submit:
7.0.10 Most recent SEC Form X-17 A-5 or, in the case of an investment
department within a commercial bank, most recent SEC Consolidated
Reports of Condition and Income for A Bank With Domestic and
Foreign Offices — FFIEC 031.
Investment Officers shall investigate all broker applicants in order to
determine if they: (1) are adequately capitalized; (2) are subject to pending
legal action (either the firm or the trader); (3) make markets in securities that
are appropriate for the City's needs; (4) are licensed as a broker by the State
of California Department of Corporations; and (5) are a member of the
NASD. Broker applicants may be requested to provide local government or
other client references from within California.
The Investment and Finance Committee and the City Council shall review the
submitted documents, along with the Investment Officers' recommendations,
and shall decide if any broker applicants should be added to the authorized
list. If a broker applicant fails to complete and submit the required
documents on time, then its application shall be deemed to have been
automatically rejected.
The City Treasurer shall provide all authorized brokers annually, in March,
with a copy of the City's current investment policy and a certification form.
Each broker shall be required to complete and submit the certification form
as proof that it has received the City's investment policy, read it, and intends
Page 6 of 26
Palm Desert Treasury Polic•and Procedures • Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
to comply with it. Each broker shall also submit its annual financial
statements to the City Treasurer for review and filing.
The City Treasurer shall maintain an authorized list (see page 20) of all
commercial banks, savings associations, and federal associations (as defined
by California Financial Code Section 5102) and trust companies that the
Finance Committee and the City Council have authorized as public
depositories of City monies. This List shall be provided to all members of the
City Council and the Investment and Finance Committee.
The City shall only deposit public monies in financial institutions that have:
7.0.11 At least $5 billion in total assets.
7.0.12 A core capital -to -total assets ratio of at least five percent.
7.0.13 Favorable statistical ratings from a nationally recognized rating
service, as determined by the City Treasurer.
7.0.14 A federal or a state charter.
7.0.15 A branch office within Riverside County.
7.0.16 A "satisfactory" overall rating in their most recent evaluation by
the appropriate federal financial supervisory agency, in terms of
meeting the credit needs of California communities, pursuant to
federal law.
Under no circumstances shall the City's deposits in a financial institution
exceed the total shareholders's equity of that institution.
8.0 Authorized and Suitable Investments
The City Treasurer shall be authorized to invest in the following financial
instruments pursuant to California Government Code Section 53600 et seq.
The City's investment policy is more conservative than state law.
Page 7 of 26
Palm Desert Treasury Pali/land Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
No. Type of Investment
1. United States Treasury bills, notes, bonds,
or certificates of indebtedness, or those for
which the full faith and credit of the United
States are pledged for the payment
of principal and interest.
2. Federal Agency or United States
government -sponsored enterprise ("GSE")
obligations, participations, or other
instruments, including those issued by or
fully guaranteed as to principal and
interest by Federal Agencies or by
GSE.
3. Banker's Acceptances ("BA") issued by
commercial banks.
4. Commercial Paper ("CP") issued by general
corporations organized and operating in
the United States with assets exceeding
$500 million.
% of Portfolio
Authorized
100%
100%
Other Restrictions
Maximum maturity: 5 years
Maximum maturity: 5 years
No more than 30% of the
portfolio may be invested in any
one issuer (excluding the
proceeds of tax-exempt bonds).
40% Rated "A-1" or higher by S&P or
"P-1 " by Moody's.
Maximum maturity: 180 days
No more than 30% of the
portfolio may be invested in any
one BA issuer.
25% Rated "A-1 +" by S&P or
"P-1" by Moody's.
Maximum maturity: 270 days
No more than 10% of the
outstanding CP of any one
issuer may be purchased.
Page 8 of 26
Palm Desert Treasury Pole and Procedures
No. 2: "Statement of Investment Policy"
Revision No. 12
Adopted:
No. Type of Investment
5. Negotiable Certificates of Deposit ("NCD")
issued by a nationally- or state -chartered
bank, a savings association, a federal
association, or by a state -licensed branch
of a foreign bank.
6. Time Certificates of Deposit ("TCD")
issued by qualified public depositories.
7. Repurchase Agreements ("RP") sold by
authorized brokers.
% of Portfolio
Authorized
Other Restrictions
30% Long-term debt rated "AA-"
higher by S&P or by Moody's.
Maximum maturity: 5 years
15% TCDs exceeding $100,000 must
be collateralized.
TCDs must be centralized at one
location for each bank or S&L.
Maximum maturity: 1 year
If TCD is uncollateralized, then
no more than $90,000 may be
invested.
Issuing public depository must
meet qualifying criteria on page
7, section 1.7 of this SOIP.
20% Maximum maturity: 30 days
Collateral must be United States
Treasury, Federal Agency, or
GSE obligations.
Zero coupon and stripped
coupon instruments are not
acceptable as collateral.
Page 9 of 26
Palm Desert Treasury Poli and Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
No. Type of Investment
7. Repurchase Agreements (continued)
8. Medium -Term Notes issued by
corporations organized and operating in the
United States, or by depository institutions
operating in the United States and licensed
by the United States or by any state.
% of Portfolio
Authorized
Other Restrictions
20% Collateral must be valued at
102% of cost and adjusted
weekly.
City must have first lien and
security interest in all collateral.
City's custodian must hold
collateral.
An authorized broker must file a
Public Securities Association
(PSA) Master Repurchase
Agreement with the City
Treasurer, and the City Attorney
must review the agreement,
prior to the transaction of RP
business with that broker.
30% Rated "A" or higher by S&P or
by Moody's.
Maximum maturity: 31 Years
No more than 4-0 1 % of the
portfolio may be invested in any
one issuer.
Page 10 of 26
Palm Desert Treasury Polic•and Procedures
No. 2: "Statement of Investment Policy"
•
Revision No. 12
Adopted: 9/25/03
No. Type of Investment
9. Money Market Mutual Funds ("MMF") that
are registered with the SEC under the
Investment Act of 1940.
10. State of California Local Agency
Investment Fund ("LAIF") that is managed
by the State Treasurer's Office.
% of Portfolio
Authorized
20%
(excluding
bond
proceeds)
Other Restrictions
Either rated "AAA" by S&P,
"Aaa" by Moody's, or "AAA-V-
1 +" by Fitch (2 of 3), or retains
an investment advisor registered
or exempt from registration with
SEC, with at least 5 years of
experience managing a MMF
with $500 million or more in
assets.
MMF must have dollar -weighted
average maturity of 90 days or
less.
MMF must buy securities that
mature in 13 months or less.
No commission may be charged.
See note 4 $40 million limit per account
with LAIF, except for bond
trustee accounts (no limit).
City Council and Redevelopment
Agency approved participation
in LAIF on 12/12/81 in
Resolution No. 81-161.
Page 11 of 26
Palm Desert Treasury Palle/and Procedures
No. 2: "Statement of Investment Policy"
No. Type of Investment
11. Structured Notes in the form of callable
securities or "STRIPS" issued by the
United States Treasury or by Federal
Agencies or government -sponsored
enterprises ("GSE").
12. Asset -Backed Commercial Paper ("ABCP")
issued by special purpose corporations
("SPC"), trusts, or limited liability
companies ("LLC") organized and operating
in the United States with assets exceeding
$500 million, that is supported by credit
enhancement facilities (e.g., over-
collateralization, letters of credit, surety
bonds, etc.).
13. Local Government Investment Pools
("LGIPS")
% of Portfolio
Authorized
Revision No. 12
Adopted:
Other Restrictions
20% Maximum maturity: 5 years
25% Rated "Al +" by S&P or
"P1 " by Moody's.
Restricted to programs
sponsored by commercial banks
or finance companies.
Foreign banks limited to those
of Canada, United Kingdom,
Australia, France, Belgium,
Netherlands, Switzerland, and
Germany.
Program must have credit
facilities that provide at least
100% liquidity.
Serialized ABCP programs are
not eligible.
Maximum maturity: 270 days
Unsecured commercial paper
holdings must be included when
calculating the 25% maximum
concentration limit.
20% Must meet above criteria for
(excluding MMFs (except for LAIF).
bond
proceeds)
Page 12 of 26
Palm Desert Treasury Polialand Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
8.1 Prohibited Investments
Investment Officers shall not invest public monies in financial instruments
that are not authorized under this policy.
Prohibited investments shall include, but shall not be limited to, equity
securities, bond mutual funds, reverse repurchase agreements, and derivative
contracts (forwards, futures, and options). The purchase of derivative
securities shall be prohibited, unless specifically authorized in this policy.
Investment Officers shall not engage in securities lending, short selling, or
other hedging strategies.
LAIF and MMFs shall be exempt from the prohibitions on derivative
contracts, derivative securities, reverse repurchase agreements, securities
lending, short selling, and other hedging strategies.
9.0 Investment Pools/Mutual Funds
A thorough investigation of the pool/fund is required prior to investing, and
on a continual basis. There shall be a questionnaire developed which will
answer the following general questions:
9.0.1 A description of eligible investment securities, and a written statement
of investment policy and objectives.
9.0.2 A description of interest calculations and how it is distributed, and
how gains and losses are treated.
9.0.3 A description of how the securities are safeguarded (including the
settlement processes), and how often the securities are priced and the
program audited.
9.0.4 A description of who may invest in the program, how often, what size
deposit and withdrawal are allowed.
9.0.5 A schedule for receiving statements and portfolio listings.
9.0.6 A verification on whether or not reserves or retain earnings are utilized
by the pool/fund.
9.0.7 A fee schedule, and when and how it is assessed.
Page 13 of 26
Palm Desert Treasury Poli and Procedures • Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
9.0.8 The eligibility of the pool/fund for bond proceeds and whether it will
accept such proceeds.
10.0 Collateralization
Investment Officers shall ensure that all demand deposits and all non-
negotiable certificates of deposit that exceed $100,000 shall be fully
collateralized with securities authorized under state law and under this SOIP.
Collateral may be waived for the first $100,000 since this will be insured by
the Federal Deposit Insurance Corporation. Any amount on deposit over
$100,000 plus accrued interest, however, shall be collateralized with United
States Treasury or federal agency securities at a constant margin ratio of
110 percent or with mortgage -backed collateral at a constant margin ratio of
150 percent.
Collateralized investments and demand deposits may require substitution of
collateral. The City Treasurer must approve all requests from financial
institutions for substitution of collateral that involve interchanging classes of
security.
An independent third party with which the City has a current custodial
agreement shall always hold the collateral. The independent third party shall
provide the City Treasurer with a safekeeping receipt that he shall retain.
11.0 Safekeeping and Custody
Investment Officers shall conduct all security transactions on a delivery -
versus -payment ("DVP") or on a receipt -versus -payment ("RVP") basis. A
third -party bank trust department ("Custodian") that acts as an agent for the
City under the terms of a custody agreement executed between both parties
shall hold the securities. The City's Custodian shall be represented on the
authorized list (see page 20).
The only exception to the foregoing shall be securities purchases made with:
11.0.1 Local government investment pools.
11.0.1 Money market mutual funds.
11.0.2 Federal Reserve Banks ("Treasury Direct Program") since the
purchased securities are not deliverable.
Page 14 of 26
Palm Desert Treasury Polic•and Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
No securities broker or investment advisor shall have access to City monies,
accounts, or investments. Any transfer of monies to or through a securities
broker must have the City Treasurer's prior written approval. If the City
Treasurer is unavailable, then the IP;ssistdn t
Fii"aricehbkectdr:' must authorize the transfer, in writing.
The City shall require Broker Trade Confirmations for all trades. Investment
Officers shall review these confirmations immediately upon receipt, for
conformity with the terms of the City's Trade Sheets.
12.0 Diversification
Investment Officers shall diversify the City's investment portfolios by
security type and by issuer, except for bond reserve monies; bond escrow
monies; and any other monies that the City Council or the Investment and
Finance Committee designates.
13.0 Maximum Maturities
Investment Officers shall not invest in securities with maturities exceeding
five years. The Investment and Finance Committee and the City Council,
however, may approve longer maturities for the investment of bond reserve,
bond escrow, and other funds if the maturities of such investments are
expected to coincide with the expected use of the funds.
At /cost 50 perccnt of the City portfolio shall mature in that yscrs c, ,cas,
}The iveie`tedsa %eraq"e ma fit zofthe City
portfolio"es"hallino tititebedii540ida vs
13.1 Portfolio Rebalancing
If portfolio percentage constraints are violated due to a temporary imbalance
in the portfolio, then Investment Officers shall hold the affected securities to
maturity in order to avoid capital losses.
If no capital losses would be realized upon sale, however, then Investment
Officers shall consider rebalancing the portfolio after evaluating the expected
length of time that it will be imbalanced.
Page 15 of 26
Palm Desert Treasury PoiiAland Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
Portfolio percentage limits are in place in order to ensure diversification of
the City investment portfolio; a small, temporary imbalance will not
significantly impair that strategy.
13.2 Credit Downgrading
This policy sets forth minimum credit risk criteria for each type of security.
This credit risk criteria applies to the initial purchase of a security; it does not
automatically force the sale of a security if its credit risk ratings fall below
policy limits.
If a security is downgraded below the minimum credit risk criteria specified
in this policy, then Investment Officers shall evaluate the downgrade on a
case -by -case basis in order to determine the security should be held or sold.
The City Treasurer shall inform the Investment and Finance Committee at its
next monthly meeting of the credit downgrade and of the Investment
Officers's decision to hold or sell the downgraded security.
Investment Officers shall review the credit standing of all securities in the
City's investment portfolios annually, at a minimum.
13.3 Bond Proceeds
The City Treasurer shall segregate the gross proceeds of tax-exempt bonds
from the City general pool and shall keep them in a separate pool. They shall
be invested pursuant to the instructions in the respective bond indentures of
trust. If the bond indenture authorizes investments that conflict with this
policy, then such investments shall be made only with the Investment and
Finance Committee's prior approval. All securities shall be held in third -party
safekeeping with the bond trustee ("Trustee") and all DVP and RVP rules
shall apply. The Trustee shall be represented on the authorized list (see page
20).
Investment Officers shall use competitive offerings, whenever practical, for
all investment transactions that involve the gross proceeds of tax-exempt
bonds. The City shall obtain a minimum of three competitive offers. Any
exceptions to this policy shall be documented and shall be reported to the
Investment and Finance Committee at its next monthly meeting.
The City is required under the "U.S. Tax Reform Act of 1986" to perform
annual arbitrage calculations and to rebate excess earnings to the United
Page 16 of 26
Palm Desert Treasury Polic•and Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
States Treasury from the investment of the gross proceeds of tax-exempt
bonds that were sold after the effective date of that law. The City Treasurer
may contract with qualified outside financial consultants to provide the
necessary technical expertise that is required to comply with this law.
14.0 Internal Controls
The City Treasurer shall ensure that all investment transactions comply with
the City's policy, and shall establish internal controls that are designed to
prevent losses due to fraud, negligence, and third -party misrepresentation.
Internal controls deemed most important shall include: avoidance of
collusion; separation of duties and administrative controls; separating
transaction authority from accounting and record keeping; custodial
safekeeping; clear delegation of authority; management approval and review
of investment transactions; specific limitations regarding securities losses
and remedial action; written confirmation of telephone transactions;
documentation of investment transactions and strategies; and monitoring of
results.
The City Treasurer shall establish a process of independent review by an
external audit firm of the City's investment program every three years. The
external auditor shall review the program's management in terms of
compliance with the internal controls that are specified in the City's Treasury
Policies and Procedures Manual.
An Investment and Finance Committee consisting of City officials and
community representatives shall be responsible for reviewing the City
investment reports, transactions, policies and procedures, and strategies, on
a monthly basis. The Mayor; the Mayor Pro Tempore; the City Manager; the
City Attorney; the Redevelopment Agency Executive Director; the City
Treasurer; the DeputyilCiuslfTreasufer; and various
citizens who are appointed by the City Council pursuant to City ordinance,
shall sit on this committee.
15.0 Performance Standards
The investment portfolio shall be designed with the objective of obtaining a
rate of return throughout budgetary and economic cycles, commensurate
with investment risk constraints and cash flow needs.
Page 17 of 26
Palm Desert Treasury Policeand Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
15.1 Market Yield (Benchmark)
The City's investment portfolios, shall be passively managed with portfolio
securities being held to maturity. On selected occasions, however, the
City's portfolios may be actively managed for purposes of improving portfolio
risk structure, liquidity, or yield in response to market conditions or to meet
City requirements. Profit-taking may only be done if the capital gains would:
15.1.1 Exceed the return that would be realized by holding the security to
maturity; and
15.1.2 More than offset any income reduction due to reinvestment rate
risk.
The City shall adopt a benchmark that approximates the composition and
weighted -average maturity of each City portfolio, in order to measure
whether or not the City's portfolio yields are matching or surpassing the
market yield.
16.0 Reporting
The City Treasurer shall provide the Investment and Finance Committee and
the City Council with a monthly investment report within 30 days of each
month -end or at the next scheduled City Council meeting following an
Finance Committee meeting.
This report shall include a complete portfolio inventory with details on issue,
par value, book value, coupon/rate, original settlement date of purchase,
final maturity date, CUSIP number, average weighted yield, average days to
maturity, and market value (including source of market valuation). The
report will include a statement on compliance or noncompliance with the
City's SOIP and a statement on whether there are or are not sufficient funds
to meet the City's anticipated cash requirements for the next six months.
17.0 Investment Policy Adoption
The City Treasurer shall submit a Statement of Investment Policy to the
Investment and Finance Committee; the City Council; the Redevelopment
Agency Board; the Housing Authority Commission; the Financing Authority
Commission; and the Recreational Facilities Corporation Board of Directors
annually for their review and adoption.
Page 18 of 26
Palm Desert Treasury Policband Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
18.0 Regulatory Submission
The City Treasurer shall provide the California Debt and Investment Advisory
Commission ("CDIAC") with:
18.0.1 Second- and fourth-quarter fiscal year investment reports within 60
days of those quarter -ends.
18.0.2 The City's Statement of Investment Policy within 60 days of
calendar year-end or within 60 days of any amendment thereto.
All submissions to CDIAC shall be sent return receipt, certified mail.
Page 19 of 26
Palm Desert Treasury Poli and Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
Appendix A: List of Authorized Financial Institutions
The City Treasurer's Office is authorized to transact investment and depository
business with the following financial institutions. Investment and depository
transactions with firms other than those appearing on this list are prohibited.
UNITED STATES GOVERNMENT
1. Federal Reserve Bank
PRIMARY DEALERS
1. Bone of Amcrico Securities, LLC
2. Merrill Lynch & Company, Inc.
3. Morgan Stanley & Company, inc.
4. &stemer. €-rtith Sarney Clti cabal Mar1l ets
SECONDARY BROKERS
1. Wells Fargo Institutional Securities, LLC
PUBLIC DEPOSITORIES
1. Bank of America
2. California Federal Bank
3. Downey Savings & Loan
4. Northern Trust Bank
5. Union Bank of California
6. Washington Mutual Bank
7. Wells Fargo Bank
CUSTODIAN
1. Union Bank of California
TRUSTEE
1. Bank of New York
Page 20 of 26
Palm Desert Treasury Polilland Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
Appendix B: Glossary
AGENCIES. Federal agency and instrumentality securities.
ASKED. The price at which securities are offered.
BANKERS'S ACCEPTANCE ("BA"). A draft, bill, or exchange accepted by a bank
or a trust company. Both the issuer and the accepting institution guarantee
payment of the bill.
BID. The price offered by a buyer of securities (when one sells securities, one asks
for a bid). See "Offer".
BROKER. A broker brings buyers and sellers together so that he can earn a
commission.
CERTIFICATE OF DEPOSIT ("CD"). A time deposit with a specific maturity, as
evidenced by a certificate. Large -denomination CDs are typically negotiable.
COLLATERAL. Securities, evidence of deposit, or other property which a borrower
pledges to secure repayment of a loan. Also refers to securities pledged by a bank
to secure deposits of public monies.
COMPREHENSIVE ANNUAL FINANCIAL REPORT ("CAFR"). The official annual
report for the City of Palm Desert. It includes five combined statements for each
individual fund and account group, that are prepared in conformity with GAAP. It
also includes supporting schedules that are necessary to demonstrate compliance
with finance -related legal and contractual provisions, extensive introductory
material, and a detailed statistical section.
COUPON. (a) The annual rate of interest that a bond's issuer promises to pay the
bondholder on the bond's face value. (b) A certificate attached to a bond, that
evidences interest due on a payment date.
DEALER. A dealer, as opposed to a broker, acts as a principal in all transactions,
buying and selling for his own account.
DEBENTURE. A bond secured only by the general credit of the issuer.
Page 21 of 26
Palm Desert Treasury Polic•and Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
DELIVERY VERSUS PAYMENT. There are two methods of delivery of securities:
(1) delivery versus payment (DVP); and (2) delivery versus receipt (DVR). DVP is
delivery of securities with an exchange of money for the securities. DVR is
delivery of securities with an exchange of a signed receipt for the securities.
DERIVATIVES. (1) Financial instruments that are linked to, or derived from, the
movement of one or more underlying indexes or securities, and may include a
leveraging factor; or (2) financial contracts based upon a notional amount whose
value is derived from an underlying index or security (e.g., interest rates, foreign
exchange rates, equities, or commodities).
DISCOUNT. The difference between the acquisition cost of a security and its value
at maturity, when quoted at lower than face value. A security that sells below
original offering price shortly after sale, is also is considered to be at a discount.
DISCOUNT SECURITIES. Non -interest bearing money market instruments that are
issued a discount and that are redeemed at maturity for full face value (e.g., U.S.
Treasury Bills).
DIVERSIFICATION. Dividing investment funds among a variety of securities that
offer independent returns.
FEDERAL CREDIT AGENCIES. Agencies of the Federal Government that were
established to supply credit to various classes of institutions and individuals (e.g.,
S&Ls, small business firms, students, farmers, farm cooperatives, and exporters).
FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"). A federal agency that
insures bank deposits, currently up to $ 100,000 per deposit.
FEDERAL FUNDS RATE. The rate of interest at which Fed funds are traded. This
rate is currently pegged by the Federal Reserve through open -market operations.
FEDERAL HOME LOAN BANKS ("FHLB"). Government -sponsored wholesale banks
(currently 12 regional banks) which lend funds and provide correspondent banking
services to member commercial banks, thrift institutions, credit unions, and
insurance companies. The mission of the FHLBs is to liquefy the housing -related
assets of its members, who must purchase stock in their District Bank.
Page 22 of 26
Palm Desert Treasury Polic•and Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA"). FNMA, like GNMA,
was chartered under the Federal National Mortgage Association Act in 1938.
FNMA is a federal corporation working under the auspices of the Department of
Housing and Urban Development (HUD). It is the largest single provider of
residential mortgage funds in the United States. Fannie Mae, as the corporation is
called, is a private stockholder -owned corporation. The corporation's purchases
include a variety of adjustable mortgages and second loans, in addition to fixed-rate
mortgages. FNMA's securities are also highly liquid and are widely accepted.
FNMA assumes and guarantees that all security holders will receive timely payment
of principal and interest.
FEDERAL OPEN MARKET COMMITTEE ("FOMC"). The FOMC consists of seven
members of the Federal Reserve Board and five of the 12 Federal Reserve Bank
Presidents. The President of the New York Federal Reserve Bank is a permanent
member, while the other Presidents serve on a rotating basis. The Committee
periodically meets to set Federal Reserve guidelines regarding purchases and sales
of government securities in the open market, as a means of influencing the volume
of bank credit and money.
FEDERAL RESERVE SYSTEM. The central bank of the United States created by
Congress and consisting of a seven -member Board of Governors in Washington,
D.C., 12 regional banks, and about 5,700 commercial banks that are members of
the system.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA" or "Ginnie Mae").
Securities that influence the volume of bank credit that is guaranteed by GNMA
and issued by mortgage bankers, commercial banks, savings and loan associations,
and other institutions. A security holder is protected by the full faith and credit of
the U.S. Government. Ginnie Mae securities are backed by the FHA, VA, or FMHM
mortgages. The term "pass-throughs" is often used to describe Ginnie Maes.
LIQUIDITY. A liquid asset is one that can be converted easily and rapidly into cash
without a substantial loss of value. In the money market, a security is said to be
liquid if the spread between bid and asked prices is narrow, and reasonable size
can be done at those quotes.
LOCAL GOVERNMENT INVESTMENT FUND ("LAIF"). Monies from local
governmental units may be remitted to the California State Treasurer for deposit in
this special fund for the purpose of investment.
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Palm Desert Treasury Polic•and Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
MARKET VALUE. The price at which a security is trading and could presumably be
purchased or sold.
MASTER REPURCHASE AGREEMENT. A written contract covering all future
transactions between the parties to repurchase -reverse repurchase agreements,
that establishes each party's rights in the transactions. A master agreement will
often specify, among other things, the right of the buyer (lender) to liquidate the
underlying securities in the event of default by the seller (borrower).
MATURITY. The date upon which the principal or stated value of an investment
becomes due and payable.
MONEY MARKET. The market in which short-term debt instruments (e.g., bills,
commercial paper, bankers's acceptances) are issued and traded.
OFFER. The price asked by a seller of securities (when one buys securities, one
asks for an offer). See `Asked" and "Bid".
OPEN MARKET OPERATIONS. Purchases and sales of government and certain
other securities in the open market by the New York Federal Reserve Bank, as
directed by the FOMC in order to influence the volume of money and credit in the
economy. Purchases inject reserves into the bank system and stimulate growth of
money and credit; sales have the opposite effect. Open market operations are the
Federal Reserve's most important and most flexible monetary policy tool.
PORTFOLIO. A collection of securities that an investor holds.
PRIMARY DEALER. A group of government securities dealers that submit daily
reports of market activity and positions, and monthly financial statements to the
Federal Reserve Bank of New York, and are subject to its informal oversight.
Primary dealers include Securities and Exchange Commission (SEC) -- registered
securities broker -dealers, banks, and a few unregulated firms.
PRUDENT INVESTOR RULE. An investment standard. A fiduciary, such as a
trustee, may invest in a security if it is one that would be bought by a prudent
investor acting in like capacity, who is seeking reasonable income and preservation
of capital.
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Palm Desert Treasury Pohl/land Procedures
•
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
QUALIFIED PUBLIC DEPOSITORIES. A financial institution that: (1) does not claim
exemption from the payment of any sales, compensating use, or ad valorem taxes
under the laws of this state; (2) has segregated for the benefit of the commission
eligible collateral having a value of not less than its maximum liability; and (3) has
been approved by the Public Deposit Protection Commission to hold public
deposits.
RATE OF RETURN. The yield obtainable on a security based on its purchase price
or its current market price.
REPURCHASE AGREEMENT ("RP" OR "REPO"). A holder of securities sells them to
an investor with an agreement to repurchase the securities at a fixed price on a
fixed date. The security "buyer", in effect, lends the "seller" money for the period
of the agreement, and the terms of the agreement are structured to compensate
him for this. Dealers use RP extensively to finance their positions. Exception:
when the Fed is said to be doing RP, it is lending money (increasing bank reserves).
SAFEKEEPING. A service to customers rendered by banks for a fee whereby
securities and valuables of all types and descriptions are held in the bank's vaults
for protection.
SECONDARY MARKET. A market made for the purchase and sale of outstanding
issues following the initial distribution.
SECURITIES AND EXCHANGE COMMISSION. An agency created by Congress to
administer securities legislation for the purpose of protecting investors in securities
transactions.
SEC RULE 15c3-1. See "Uniform Net Capital Rule".
STRUCTURED NOTES. Notes issued by instrumentalities (e.g., FHLB, FNMA,
SLMA) and by corporations, that have imbedded options (e.g., call features, step-
up coupons, floating rate coupons, derivative -based returns) in their debt structure.
The market performance of structured notes is affected by fluctuating interest
rates; the volatility of imbedded options; and shifts in the yield curve.
TREASURY BILLS. A non -interest bearing discount security that is issued by the
U.S. Treasury to finance the national debt. Most T-bills are issued to mature in
three months, six months, or one year.
Page 25 of 26
Palm Desert Treasury Poli.and Procedures
Revision No. 12
No. 2: "Statement of Investment Policy" Adopted:
TREASURY BONDS. Long-term, coupon -bearing U.S. Treasury securities that are
issued as direct obligations of the U.S. Government, and having initial maturities of
more than 10 years.
TREASURY NOTES. Medium -term, coupon -bearing U.S. Treasury securities that
are issued as direct obligations of the U.S. Government, and having initial
maturities of two to 10 years.
UNIFORM NET CAPITAL RULE. SEC requirement that member firms, as well as
non-member broker -dealers in securities, maintain a maximum ratio of
indebtedness -to -liquid capital of 15 to one. Also called net capita/ rule and net
capita ratio. Indebtedness covers all money that is owed to a firm, including
margin loans and commitments to purchase securities (one reason that new public
issues are spread among members of underwriting syndicates). Liquid capital
includes cash and assets easily converted into cash.
YIELD. The rate of annual income return on an investment, expressed as a
percentage. (a) INCOME YIELD is obtained by dividing the current dollar income
by the current market price for the security. (b) NET YIELD or YIELD TO
MATURITY is the current income yield minus any premium above par or plus any
discount from par in purchase price, with the adjustment spread over the period
from the date of purchase to the date of maturity of the bond.
Page 26 of 26
•
SEPTEMBER 17, 2003
THE CITY HAS NOT YET RECEIVED ALL OF THE
TRUSTEE STATEMENTS FROM THE BANK OF NEW
YORK. WHEN IT DOES RECEIVE THEM, STAFF
WILL FINISH AND MAIL OUT THE AUGUST 2003
INVESTMENT REPORTS TO THE MEMBERS OF THE
INVESTMENT AND FINANCE COMMITTEE.
• •
CITY OF PALM DESERT
OFFICE OF THE CITY TREASURER
STAFF REPORT
REQUEST: Rejection of all "Primary Dealer Requests for Information" that the
City has received for a primary securities dealer vacancy.
DATE: September 12, 2003
CONTENTS: "Primary Dealer Requests for Information" (8)
Recommendation:
By minute motion: That the Investment and Finance Committee reject all of the
"Primary Dealer Requests for Information" that the City has
received for a primary securities dealer vacancy.
Background:
Pursuant to City policy, the City Treasurer's Office recently sent a "Primary Dealer
Request for Information" ("RFI") to 10 securities firms that had expressed an interest in
doing business with the City. Most of this interest was unsolicited by the City; many of
the brokers who have contacted the City are not known to us, in terms of professional
reputation. The recent termination of the City's relationship with Banc of America
Securities created a vacancy for a primary securities dealer.
The following firms have submitted RFIs to the City for the purpose of filling that
vacancy:
1. Finance 500 Financial and Investment Services
2. Securities America, Inc.
3. FTN Financial Capital Markets
4. Banc One Capital Markets, Inc.
5. Wachovia Securities Financial Network
6. UBS Financial Services, Inc. *
7. Morgan Keegan and Company
* Two separate offices from this firm have submitted RFIs.
Staff Report
RFI for a Primary Dealer
September 12, 2003
Page 2of2
Unfortunately, all seven firms have failed to meet the City's RFI documentation
requirements. The firms have either failed to answer all of the questions on the
Primary Dealer Questionnaire or have failed to submit the required documents.
Consequently. pursuant to the terms and conditions of the RFI, the City must
reiect all of the RFIs that it has received.
Additional reasons exist, however, to reject these RFIs: (1) not a primary securities
dealer (six of seven firms); (2) local office not dedicated to institutional sales; (3)
insufficient capital position; (4) prior unsatisfactory trading history with the firm's local
representatives; (5) failure to provide client references; (6) failure to disclose relevant
information concerning past and present litigation and regulatory proceedings; and (7)
submission of non-RFI documents for City signature that would effectively undermine
the City's legal position in the event of litigation (per the City Attorney).
The City has been using four brokers (Merrill Lynch, Morgan Stanley, Citigroup, and
Wells Fargo) for the last year -and -a -half without any difficulties. Given the size and
reputation of these institutions, we believe that they are sufficient for purposes of
transacting the City's investment business, and that a fifth broker is not needed.
If the Investment and Finance Committee accepts this recommendation, then no further
action will need to be taken by the City Council.
Submitted By:
Thomas W. JeffreCity Treasurer
Approved By:
62
Paul S. Gibson, C.C.M.T., City Treasurer
City of Palm Desert •
2003 Primary Dealer RFI
Page 4 of 8
•
CI I Y ✓:- F,'\LM LESERT
FHN. Nrr
2`.tJi r7
SECTION III: REQUEST FOR GENERAL INFORMATION
1.
Firm Name: Banc One Capital Markets, Inc.
2. Contact Address: 201 N. Central Ave., AZ1-1244, Phoenix, AZ 85004
3. Contact Personnel: Gary J. Sauerman
Sales Representative Supervising Manager
Name: Gary J. Sauerman Name: Jack J. Turner
Title: Managing Director - Phoenix
TEL: (602)221-1266 TEL: (312)732-8353
TEL: (888)804-2055 TEL: (800)732-8739
4. Please describe any formal program of supervision that your firm has established for
the sales representative who is listed in Question 3.
See attached
5. Please identify all personnel who would be trading with or quoting securities prices
to the City.
;`:.1 11 : 214
Name
Gary Sauerman
John Kearney
Cathleen Sillies
Tom Palmer
Title
Managing Director
Director
Director
Managing Director
Title: Managing Dir/Nat'l Sales Mgr.
# of Years in
Institutional Sales
33
28
3
4
# of Years
with Firm
10
10
10
1
Telephone
(602)221-1266
Same
Same
Same
Please provide information on the history, details, and status or disposition of any
disciplinary actions or complaints, arbitration, or litigation involving the above
personnel.
There is no history of disciplinary actions, complaints, arbitration or litigation
involving the above personnel since being employed by Banc One Capital
Markets, Inc.
City of Palm Desert •
2003 Primary Dealer RFI
Page 5 of 8
6. Do the personnel who are listed in Question 5 work exclusively with institutional
clients in a department that is exclusively dedicated to institutional sales?
XX Yes ❑ No
7. Which of the personnel who are listed in Question 5 have read the City's "Statement
of Investment Policy", as amended March 13, 2003?
All personnel listed above
8. Please provide four references from public sector clients (preferably in California)
that have established relationships with the sales representative who is listed in
Question 3. Indicate: (a) name of governmental agency; (b) contact person; (c)
address; (d) telephone number; and (e) length of relationship.
Client: City of Santee
Contact Person: Rene Franken
Address: 10601 Magnolia Ave., Santee, CA 92071
Phone #: 619-258-4100
Length of Relationship: 7 years
Client: Orange County
Contact Person: Judy Jacobson, Paul Cocking
Address: 12 Civic Center Plaza, Santa Ana, CA 92702
Phone #: 714-834-6701
Length of Relationship: 2 years
Client: City of Los Angeles
Contact Person: Richard Davis, Tony Mason
Address: 360 E. Second Street, Los Angeles, CA 90012
Phone #: 213-974-2191
Length of Relationship: 6 years
Client: City of San Jose
Contact Person: Bonnie Kobayashi
Address: 801 N. First St., Room #140, San Jose, CA 95110-1708
Phone #: 408-277-4181
Length of Relationship: 3 years
9. Does your firm regularly report to the Market Reports Division of the Federal
Reserve Bank of New York as a "primary dealer"? (check one)
XX Yes ❑ No
If yes, how long has your firm been a primary dealer? 13 years
10. Please answer the following questions only if your firm IS NOT a primary dealer.
City of Palm Desert `s
2003 Primary Dealer RFI
Page 6 of 8
a. Does your firm have a net capital position in excess of $100 million? (check
one)
❑ Yes ❑ No
b. Has your firm been in existence for more than five years? (check one)
❑ Yes ❑ No
c. Is your firm currently licensed as a broker by the State of California? (check
one)
❑ Yes ❑ No
d. Is your firm headquartered or does it have a branch office in the State of
California? (check one)
❑ Yes ❑ No
11. Is your firm a member of the National Association of Securities Dealers? (check
one)
XX Yes
❑ No If "no", why not?
12. Which of the following entities has the authority to oversee the operation of your
firm, in terms of examinations, rules, and regulations? (check appropriate
choices)
❑ FDIC
XX SEC ❑ NYSE
❑ Comptroller of Currency ❑ Federal Reserve System XX NASD
CRD #23065
❑ Other (example: state regulatory agency) (specify) Multistate firms
please note: It is not necessary to include regulatory agencies that do
not have jurisdiction over the your firm's activities in California.
City of Palm Desert •
2003 Primary Dealer RFI
Page 7 of 8
13. Is your firm owned by a holding company? (check one)
XX Yes ❑ No If "yes", what is the holding company's name and
its net capitalization?
Banc One Capital Markets, Inc. is owned by Banc One Financial Corporation,
which in turn is owned by Bank One Corporation.
Net Capitalization-
1998
*
1999
$801,435
2000
$723,212
2001
$718,207
2002
$657,290
In 1998, Bank One Corporation acquired and merged with First Chicago and NBD
Corporation. Historical Capitalization for 1998 is not meaningful.
14. Has your firm consistently complied with the Federal Reserve Bank's capital
adequacy guidelines? (check one)
❑ Yes ❑ No If "no", please explain.
BOCM is not required to comply with the Fed's requirements for capital adequacy, rather It is
required to comply with the SEC's capital adequacy guidelines which require BOCM's net capital
to be the greater of $250,000 or 2 percent of the aggregate debit balances arising from customer
transactions, as defined. BOCM is also subject to the CFTC's minimum financial requirements
(Regulation 1.17 of the Commodity Exchange Act) which require that BOCM maintain net capital,
as defined, equal to 4 percent of customer funds required to be segregated pursuant to the
Commodity Exchange Act, less the market value of certain commodity options. All as defined.
At December 31, 2002, BOCM had total equity capital of $647,292k, net capital of $307,953k, which
was 476. % of aggregate debit balances and $303,438k in excess of required net capital.,
Additionally, At December 31, 2001 BOCM had total capital of $718,207 Total equity capital of
$567,516k, net capital of $485,851k, which was 1605.% of aggregate debit balances and $428,419k
in excess of required net capital.
15. What was your firm's total trading volume in Federal Agency securities, corporate
medium -term notes, and commercial paper last year?
Firm -Wide: $4,453 billion (for 2002) # of Transactions: 17,132,000
Your Office: $ ** # of Transactions:
** Data is not available for individual branches.
City of Palm Desert •
2003 Primary Dealer RFI
Page 8 of 8
16. Which of the following instruments are regularly offered by your trading desk?
(check appropriate choices)
XX T-Bills ❑ Bankers's Acceptances (Domestic)
XX T-Notes ❑ Bankers's Acceptances (Foreign)
XX T-Strips ❑ Certificates of Deposit
XX Repurchase Agreements XX Unsecured Commercial Paper
XX Money Market Funds XX Corporate Medium -Term Notes
XX Asset -Backed Commercial Paper
XX Federal Agencies (specify) FHLMC, FNMA, SLMA, GNMA, FFCB
17. Which of the financial instruments that are described in Question 16 does your
firm specialize in marketing?
All
18. Is your firm a member of the Securities Investor Protection Corporation ("SIPC")?
(check one)
XX Yes ❑ No
19. If "No" to Question 18, does your firm participate in any program that provides
securities insurance coverage for a public sector client which buys the financial
instruments that are listed in Question 16, on a delivery -versus -payment ("DVP")
basis? (check one)
❑ Yes ❑ No If "yes", please explain.
20. If "no" to Question 19, please explain why your firm does not carry any securities
insurance coverage for its customers.
21. Please indicate a percentage breakdown of your firm's client base by portfolio
size.
We do not maintain that type of data.
22, How many and what percentage of your securities transactions failed last month?
Last year?
Fails last month: less than 1%; Fails for 2002: 3,929; less than 1%
City of Palm Desert •
2003 Primary Dealer RFI
Page 9 of 8
23. What precautions does your firm take to protect the interests of the public when
dealing with public sector clients as investors?
Please refer to the enclosed Policy No. 504; Sales Supervision; Page 1,
"Exception Reports". In addition, all registered representatives are
required to attend annual compliance meetings plus two hours of
continuing education per year.
24. What makes your firm the best broker/dealer for the City? What advantage
would the City gain by trading with your firm?
We are a Primary Dealer. With 68 years of experience in the securities
industry among the 4 sales people listed above we have the expertise and
experience to provide exceptional coverage for the Palm Desert portfolio.
SECTION IV: REQUEST FOR DISCLOSURE
25. Have any of your firm's public sector clients sustained a loss on a securities
transaction within the last five years, arising from a misunderstanding or
misrepresentation of the risk characteristics of a financial instrument that was
recommended by and purchased through your firm? (check one)
❑ Yes
XX No If "yes", please describe each matter briefly.
26. Have any of your firm's public sector clients claimed, in writing, within the last five
years, that your firm was responsible for any investment losses? (check one)
❑ Yes XX No If "yes", please describe each matter briefly.
City of Palm Desert •
2003 Primary Dealer RFI
Page 10 of 8
27. Has your firm been subject to any litigation, arbitration, or regulatory
Proceedings, either pending, adjudicated, or settled, within the last five years,
that involved allegations of improper, fraudulent, disreputable or unfair activities
related to the sale of securities to or the purchase of securities from institutional
clients? (check one)
❑ Yes ❑ No If "yes", please describe each matter briefly.
From time -to -time Banc One Capital Markets, Inc. has been named as a defendant
in various legal actions arising from its normal business activities in which
damages in various amounts are claimed. Although the amount of any ultimate
liability with respect to such matters cannot be determined, in the opinion of
management, based on the opinions of counsel, any such liability will not have a
material impact on BOCM's financial position.
In 1995, an individual named Michael Lissack filed a civil suit against a number of
broker -dealer firms, including First Chicago Capital Markets, Inc. ("FCCM"), a
predecessor of Banc One Capital Markets, Inc. ("BOCM"), alleging "yield burning"
activity in connection with certain tax-exempt bond offerings since 1990. In 2000,
along with many other broker -dealer firms, BOCM entered into a settlement of
that suit along with a settlement of a corresponding "yield burning" inquiry by the
Department of Justice, the Internal Revenue Service and the National Association
of Securities Dealers, Inc. (the "NASD") covering deals from 1990 through 1996.
The NASD has previously raised issues regarding the adequacy of BOCM's net
capital and customer deposits during part of 1999. Issues were also raised
regarding the maintenance of BOCM's books and records during this time period.
In April 2001, the disciplinary action concerning the alleged rule violations was
concluded by way of a settlement with the NASD.
28. Has your firm been subject to a regulatory, state, or federal agency investiaation,
within the last five years, for alleged improper, fraudulent, disreputable, or unfair
activities related to the purchase or sale of securities? (check one)
❑ Yes
❑ No If "yes", please describe each matter briefly.
Please refer to answer to question #27
PUG-27-2003 12:41 BO M PHOENIX
City of Palm Desert 110
2003 Primary Dealer RFI
Page 11 of 8
•
602 221 1266 P.12/12
SECTION V: CERTIFICATION
! hereby certify that I have read and that I understand the investment policies and
objectives of the City of Palm Desert, the Pam Desert Redevelopment Agency, and the
Palm Desert Housing Authority, the Palm Desert Financing Authority, and the City of
Palm Desert Golf Course Facilities Corporation (hereafter referred to collectively as the
"City"), as represented in the City's "Statement of Investment Policy", as amended
March 13, 2003. My firm will ensure that all ,affected sales personnel will be routinely
informed of the City's investment objectives, horizon, outlook, strategies, and risk
constraints, as the City provides such information.
My firm will notify the City Treasurer immedieitely, by telephone, and, in writing, in the
event of a material adverse change in its financial condition, or of any violation of
Municipal Securities Rulemaking Board Rule G-37.
My firm pledges to exercise due diligence in Informing the City Treasurer of all
foreseeable risks associated with any financial transactions that my firm undertakes with
the City. I attest to the accuracy of my firm's response to the City's Request For
Information.
NOTE: Completion of this Request For Information is only part of the City of Palm
Desert's review process, and DQES NOT guarantee that the applicant will
be authorized to provide financial services to the City.
This section must be signed by the sales representative who is listed in Question 3.
Firm: Ba c One Capitalarkets, Inv.
Signed: r /
Title: snag Director — BOCM, Phoenix
Date: 08/27/(
This section must be countersigned by the Managing Director or by the most senior
person in charge of the government securitiee: operations section.
Firm: Banc One Capital Markets, Inc!.
Signed:
Title:
Date:
Jac Turner Managing Director/Senior Sales Executive
�� 3
City of Palm Desert •
2003 Primary Dealer RFI
Page 3 of 8
SECTION II: APPLICATION DEADLINE AND REQUIRED DOCUMENTS
The City must receive the following documents from each interested applicant by no
later than 4:30 p.m. on Wednesday, September 3, 2003:
✓
✓
✓
✓
✓
✓
✓
✓
A completed "Primary Dealer Request For Information".
A copy of the firm's most recent Annual Report and Form 10-K.
We have enclosed the current Statement of Financial Condition. We do not publish a
'OK.
A copy of the firm's Form BD — Uniform Application for Broker -Dealer
Reaistration.
A copy of the firm's most recent Form BD Status Report.
A copy of the Form U-4 — Uniform Application for Securities Industry Reaistration
or Transfer for each employee with whom the City would be trading.
Banc One Capital Markets, Inc. policy prohibits providing this document. Please see
the Form U-4 Status Reports attached.
A copy of the most recent Form U-4 Status Report on each firm employee with
whom the City would be trading.
A copy of the firm's most recent SEC Form X-17 A-5 filing or, in the case of a
trading department within a commercial bank, its most recent Consolidated
Reports of Condition and Income for A Bank With Domestic and Foreign Offices
— FFIEC 031 filing.
A resume on each firm employee with whom the City would be trading.
A trading resolution from the firm.
A copy of the firm's wiring and delivery instructions.
Samples of the firm's trade documentation (trade confirmations, monthly account
statements, etc).
These documents may be delivered in person, by post, or by courier to:
City of Palm Desert
Attention: Thomas W. Jeffrey
Deputy City Treasurer
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
RN "': _;E c:fl 1 s 'ALNT
SECTION III: REQUEST FOR GENERAL INFORMATION
%fl3 SEP -2 HI 12: 117
1. Firm Name: Morgan Keegan & Company. Inc.
2. Contact Address: 50 Front Street, Memphis, TN 38103
3. Contact Personnel:
Sales Representatives
Name: John Hirt
Title: Managing Director
TEL: (901) 579-3569
TEL:
Supervising Manager
Name: Jamie Augustine
Title: Managing Director
TEL: (901) 579-4258
TEL: (800) 366-7426
Name: Ben Blackmon
Title: Managing Director
TEL: (901) 579-3570
TEL:
4. Please describe any formal program of supervision that your firm has established for the
sales representative who is listed in Question 3.
Morgan Keegan & Co., Inc. is required to maintain and effectively maintain a
system of internal supervision for each of its registered representatives (Brokers)
serving institutional and individual accounts. This includes. but is by no means
limited to, daily review of account transactions, including commissions, mark-ups.
mark-downs and all other compensation to be received by the firm and its brokers.
Brokers supervision is accomplished in the first instance by the broker's immediate
supervisor, who is located the office where the particular broker works.
Additionally, procedures are in place to limit commissions. mark-ups. mark-downs
and all other compensation to be received by the firm and its brokers throughout
the firm's trading desks. It's internal compliance policies and procedures also
include the maintenance of an active compliance effort in its home office in
Memphis, Tennessee.
• •
5. Please identify all personnel who would be trading with or quoting securities prices to the
City.
Name Title
# of Years in # of Years
Institutional Sales with Firm Telephone
John Hirt Managing Director
Ben Blackmon Managing Director
Teressa Currier Vice President
Financial Advisor:
Rosa Schulte Vice President
10 6 (800) 564-3581
10 3 (800)742-2617
19 19 (901) 579-4425
2
2 (949) 365-5850
Please provide information on the history, details, and status or disposition of any
disciplinary actions or complaints, arbitration, or litigation involving the above personnel.
See enclosed NASD information.
6. Do the personnel who are listed in Question 5 work exclusively with institutional clients
in a department that is exclusively dedicated to institutional sales?
Yes.
7. Which of the personnel who are listed in Question 5 have read the City's "Statement of
Investment Policy", as amended March 13, 2003?
All.
8. Please provide four references from public sector clients (preferably in California) that
have established relationships with the sales representative who is listed in Question 3.
Indicate: (a) Name of governmental agency; (b) contact person; (c) address; (d)
telephone number; and (e) length of relationship.
Name: City of' Moreno Valley
Contact: Mr. Borrke McKinney
Address: 14177 Frederick St., Moreno Valley. CA 92552
Telephone: 909-413-3075
Length of Relationship: 1 year
Name:
Contact:
Address:
Telephone:
Length of Relationship: 2.5 years
Name:
Contact:
Address:
City of Costa Mesa
Mr. Marc Puckett
77 Fair Drive. Costa Mesa. CA 92628
714-754-5064
City of Santa Ana
Ms. Christine Calderon
20 Civic Center Plaza. Santa Ana. CA 92702
Telephone: 714-647-5440
Length of Relationship: 2 years
• •
Name: Eastern Municipal Water District
Contact: Ms. Pat Elliot
Address: P.O. Box 8300, Perris, CA 92572
Telephone: 909-928-6154
Length of Relationship: 1 year
9. Does your firm regularly report to the Market Reports Division of the Federal Reserve
Bank of New York as a "primary dealer"? (check one)
❑ Yes ✓ No
If yes, how long has your firm been a primary dealer? N/A
10. Please answer the following questions only if your firm IS NOT a primary dealer.
a. Does your firm have a net capital position in excess of $100 million?
❑ Yes ✓ No
b. Has your firm been in existence for more than 5 years?
✓ Yes ❑ No
c. Is your firm currently licensed as a broker by the State of California?
✓ Yes ❑ No
d. Is your firm headquartered or does it have a branch office in the State of
California?
✓ Yes, Office 0 No
11. Is your firm a member of the National Association of Securities Dealers?
✓ Yes ❑ No
12. Which of the following entities has the authority to oversee the operation of your firm, in
terms of examinations, rules and regulations?
/ FDIC
/ SEC / NYSE
O Comptroller of Currency 0 Federal Reserve System / NASD
Other (example: state regulatory agency) (specify) Multistate firms please note:
It is not necessary to include regulatory agencies that do not have jurisdiction over
your firm's activities in California.
• •
13. Is your firm owned by a holding company? (check one)
✓ Yes ❑ No
If "yes", what is the holding company's name and net capitalization?
Morgan Keegan is a wholly owned subsidiary of Regions Financial Corp.
See enclosed annual report.
14. Has your firm consistently complied with the Federal Reserve Bank's capital adequacy
guidelines? (check one)
✓ Yes ❑ No
If "no", please explain.
15. What was your firm's total trading volume in Federal Agency securities, corporate
medium -term notes, and commercial paper last year?
Firm -Wide $85,000,000.000.00 Number of Transactions 105,000
Your Local Office N/A Number of Transactions N/A
16. Which of the following instruments are regularly offered by your trading desk?
(check appropriate choices)
VT -Bills
VT -Notes
VT -Strips
"Repurchase Agreements
"Money Market Funds
"Asset -Backed Commercial Paper
"Federal Agencies (specify) FHLB, FHLMC, FFBC. FNMA. SLMA
"Banker's Acceptances (Domestic)
"Banker's Acceptances (Foreign)
"Certificates of Deposit
"Unsecured Commercial Paper
"Corporate Medium -Term Notes
17. Which of the financial instruments that are described in Question 16 does your firm
specialize in marketing?
All Fixed Income products.
18. Is your firm a member of the Securities Investor Protection Corporation ("SIPC")?
(check one)
✓ Yes ❑ No
19. If "No" to Question 18, does your firm participate in any program that provides securities
insurance coverage for a public sector client which buys the financial instruments that are
listed in Question 16, on a delivery -versus -payment ("DVP") basis? (check one)
N/A.
If "yes", please explain.
• •
20. If "no" to Question 19, please explain why your firm does not carry any securities
insurance coverage for its customers.
N/A.
21. Please indicate a percentage breakdown of your firm's client base by portfolio size.
N/A.
22. How many and what percentage of your securities transactions failed last month?
Less than 'A of 1%.
Last year?
Less than 'A of 1%.
23. What precautions does your firm take to protect the interests of the public when dealing
with public sector clients as investors?
All transactions are cleared on a delivery versus payment basis.
24. What makes your firm the best broker/dealer for the City? What advantage would the
City gain by trading with your firm?
Morgan Keegan & Company is a major broker/dealer of fixed income securities,
including U.S. Agency bonds. During calendar year 2002, we ranked number 2 out
of 84 underwriters of U.S. Agency bonds, and underwrote 1,497 issues totaling
almost $32 billion. The staff assigned to the Citv of Palm Desert specializes in
serving public sector clients, including special districts. In particular, they are very
familiar with the California Government Code with regard to investments of nublic
funds. We have a proprietary portfolio management software, eFolio, that is free of
charge to our clients. This system is widely used by our clients and many times has
replaced costly accounting software.
SECTION IV: REQUEST FOR DISCLOSURE
25. Have any of your firm's public sector clients sustained a loss on a securities transaction
within the last five years, arising from a misunderstanding or misrepresentation of the
risk characteristics of a financial instrument that was recommended by and purchased
through your firm?
❑ Yes ✓ No
26. Have any of your firm's public sector clients claimed, in writing, within the last five
years, that your firm was responsible for any investment losses? (check one)
❑ Yes ✓ No
27. Has your firm been subject to any litigation, arbitration, or regulatory proceedings, either
pending, adjudicated, or settled, within the last five years, that involved allegations of
improper, fraudulent, disreputable or unfair activities to the sale of securities to or the
purchase of securities from institutional clients? (check one)
✓ Yes ❑ No
April 2002, a jury verdict returned, and subsequently judgment entered, on a case
brought by two mutual fund complexes against Morgan Keegan & Co., Inc. alleging
misrepresentations in the purchase by the funds of Municipal Securities from
Morgan Keegan & Co., Inc. Approximately, twenty million in bonds were involved.
The matter has been appealed to the U.S. Court of Appeals.
28. Has your firm been subject to a regulatory, state, or federal agency investigation, within
the last five years, for alleged improper, fraudulent, disreputable, or unfair activities
related the purchase or sale of securities? (check one)
❑ Yes ✓ No
• •
SECTION V: CERTIFICATION
I hereby certify that I have read and that I understand the investment policies and objectives of
the City of Palm Desert, the Palm Desert Redevelopment Agency, and the Palm Desert Housing
Authority, the Palm Desert Financing Authority, and the City of Palm Desert Golf Course
Facilities corporation (hereafter referred to collectively as the "City"), as represented in the City's
"Statement of Investment Policy", as amended March 13, 2003. My firm will ensure that all
affected sales personnel will be routinely informed of the City's investment objectives, horizon,
outlook, strategies, and risk constraints, as the City provides such information.
My firm will notify the City Treasurer immediately, by telephone, and in writing, in the event of a
material adverse change in its financial condition, or of any violation of Municipal Securities
Rulemaking Board Rule G-37.
My firm pledges to exercise due diligence in informing the City Treasurer of all foreseeable risks
associated with any financial transactions that my firm undertakes with the City. I attest to the
accuracy of my firm's response to the City's Request for Information.
NOTE:
Completion of this Request for Information is only pan of the City of Palm
Desert's review process, and DOES NOT guarantee that the applicant will be
authorized to provide financial services to the City.
This section must be signed by the sales representative who is listed in Question 3.
Firm: Morgan Keegan & Company. Inc.
c; e) 3/dz ern.
Signed:
Title:
Date:
Signed: ��/2.s�„,Al
Title: ////e, r e£'
Date: ,04-8/.3
This section must be countersigned by the Managing Director or by the most senior person in
charge of the government securities operations section.
Signed:
/ �p
Title: /Yt 211/ ' 7,280tat--
Date: 6� ) /3
,/
Finn: M
Signed:
Title:
Date:
eeean & Comnanv. Inc.
/lair 456, U 7re/et/-44-
•
or/ OF PALM aTSER I
FINANCE. DEPARTMENT
2t03 AUG 25 PH 'UN OF PALM DESERT
PRIMARY DEALER
REQUEST FOR INFORMATION
2003
PREPARED BY THE CITY TREASURER'S OFFICE
Thomas W. Jeffrey, J.D., M.B.A.
Deputy City Treasurer
REVIEWED AND APPROVED BY
Paul S. Gibson, C.C.M.T.
City Treasurer
APPLICANT: Securities America, Inc.
1
• •
SECTION I: STATEMENT OF POSITION AND GENERAL REQUIREMENTS
The
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") are local governmental agencies
that operate under the laws of the State of California. The Palm Desert City
Treasurer's Office manages an investment portfolio with a combined book value of
approximately $277 million. The City has adopted a written "Statement of
Investment Policy ("SOIP")" that governs the operation of this investment
program. A copy of the SOIP is enclosed.
When the City wishes to fill a vacant broker position, it will accept Requests for
Information ("RFI") only from the institutional sales departments of primary
securities dealers. The City Finance and Investment Committee and the City
Council will then review and render a final decision on the submitted RFIs. The
City Treasurer's Office will then notify all applicants, in writing, on whether their
RFI has been approved, denied, or rejected.
The only exception to the foregoing shall be that the City Finance and Investment
Committee and the City Council may, at their discretion, accept, review, and
approve, deny, or reject RFIs from secondary brokers that:
1. Have a net capital position in excess of $ 100 million;
2. Have been in existence for more than five years;
3. Are currently licensed as a broker by the State of California; and
4. Are headquartered or have a branch office in the State of California.
If an applicant's RFI is incomplete or late (submitted after the City's specified
deadline), then the City shall reject that RFI, and the applicant shall not be eligible
to submit another RFI to the City for three years.
The City shall not transact business with an approved securities firm until all of the
documentation that both parties require, has been executed and delivered.
City of Palm Desert
2003 Primary Dealer RFI
Page 2 of 8
SECTION II: APPLICATION DEADLINE AND REQUIRED DOCUMENTS
The City must receive the following documents from each interested applicant by
no later than 4:30 p.m. on Wednesday, September 3, 2003:
A completed "Primary Dealer Request For Information".
A copy of the firm's most recent Annual Report and Form 10-K.
A copy of the firm's Form BD — Uniform Application for Broker -Dealer
Registration. •
A copy of the firm's most recent Form BD Status Report.
A copy of the Form U-4 — Uniform Application for Securities Industry
Registration or Transfer for each employee with whom the City would be
trading.
A copy of the most recent Form U-4 Status Report on each firm employee
with whom the City would be trading.
A copy of the firm's most recent SEC Form X-17 A-5 filing or, in the case of
a trading department within a commercial bank, its most recent Consolidated
Reports of Condition and Income for A Bank With Domestic and Foreign
Offices — FFIEC 031 filing.
A resume on each firm employee with whom the City would be trading.
A trading resolution from the firm.
A copy of the firm's wiring and delivery instructions.
Samples of the firm's trade documentation (trade confirmations, monthly
account statements, etc).
These documents may be delivered in person, by post, or by courier to:
City of Palm Desert
Attention: Thomas W. Jeffrey
Deputy City Treasurer
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
City of Palm Desert
2003 Primary Dealer RFI
Page 3 of 8
If you have any questions about this RFI, then please call Mr. Jeffrey at
760.346.0611, extension 383.
SECTION III: REQUEST FOR GENERAL INFORMATION
1. Firm Name: Securities America, Inc.
2. Contact Address: 2001 Union Street, Suite 300, San Francisco, CA 94123
3. Contact Personnel: Douglas C. Robinson
Sales Representative Supervising Manager
Name: Douglas C. Robinson Name: Douglas C. Robinson
Title: Registered Principal Title: Branch Manager
TEL: (415) 771-9421 TEL: (415) 771-9421
TEL: (800) 334-8140 TEL: (800) 334-8140
4. Please describe any formal program of supervision that your firm has established
for the sales representative who is listed in Question 3. Sales rep. operates as
a Office of Supervisory Jurisdiction and is subject to firm and NASD compliance
procedures.
5. Please identify all personnel who would be trading with or quoting securities
prices to the City.
Name
if of Years in if of Years
Title Institutional Sales with Firm Telephone
Douglas C. Robinson
Branch Manager/Registered Principal 22 8 800-334-8140
Please provide information on the history, details, and status or disposition of
any disciplinary actions or complaints, arbitration, or litigation involving the
above personnel. None.
City of Palm Desert
2003 Primary Dealer RFI
Page 4 of 8
6. Do the personnel who are listed in Question 5 work exclusively with institutional
clients in a department that is exclusively dedicated to institutional sales?
X Yes ❑ No
7. Which of the personnel who are listed in Question 5 have read the City's
"Statement of Investment Policy", as amended March 13, 2003?
Douglas C. Robinson
8. Please provide four references from public sector clients (preferably in California)
that have established relationships with the sales representative who is listed in
Question 3. Indicate: (a) name of governmental agency; (b) contact person; (c)
address; (d) telephone number; and (e) length of relationship.
9. Does your firm regularly report to the Market Reports Division of the Federal
Reserve Bank of New York as a "primary dealer"? (check one)
❑ Yes X No
If yes, how long has your firm been a primary dealer?
10. Please answer the following questions only if your firm IS NOT a primary
dealer.
a. Does your firm have a net capital position in excess of $100 million?
(check one)
❑ Yes
included►.
*X No *(yes, if parent company American Express is
b. Has your firm been in existence for more than five years? (check one)
X Yes ❑ No
c. Is your firm currently licensed as a broker by the State of California?
(check one)
X Yes ❑ No
d. Is your firm headquartered or does it have a branch office in the State of
California? (check one)
City of Palm Desert
2003 Primary Dealer RFI
Page 5 of 8
X Yes ❑ No
11. Is your firm a member of the National Association of Securities Dealers?
(check one)
X Yes
❑ No If "no", why not?
12. Which of the following entities has the authority to oversee the operation of
your firm, in terms of examinations, rules, and regulations? (check
appropriate choices)
X FDIC
❑ Comptroller of Currency
X SEC X NYSE
❑ Federal Reserve System X NASD
❑ Other (example: state regulatory agency) (specify) Multistate firms
please note: It is not necessary to include regulatory agencies that do
not have jurisdiction over the your firm's activities in California.
13. Is your firm owned by a holding company? (check one)
X Yes
❑ No If "yes", what is the holding company's name and
its net capitalization? American Express Company,
$100m+
14. Has your firm consistently complied with the Federal Reserve Bank's capital
adequacy guidelines? (check one)
X Yes
❑ No If "no", please explain.
15. What was your firm's total trading volume in Federal Agency securities,
corporate medium -term notes, and commercial paper last year?
Firm -Wide: $1 bil + # of Transactions: 1000+
Your Office: $500m # of Transactions: 200+
16. Which of the following instruments are regularly offered by your trading
desk? (check appropriate choices)
X T-Bills X Bankers's Acceptances (Domestic)
City of Palm Desert
2003 Primary Dealer RFI
Page 6 of 8
X T-Notes
X T-Strips
❑ Repurchase Agreements
X Money Market Funds
• •
❑ Bankers's Acceptances (Foreign)
X Certificates of Deposit
X Unsecured Commercial Paper
X Corporate Medium -Term Notes
X Asset -Backed Commercial Paper
X Federal Agencies (specify) FHLB,FHLMC,FFCB,FNMA,GNMA,TVA,etc.
17. Which of the financial instruments that are described in Question 16 does
your firm specialize in marketing? Agencies and corporates.
18. Is your firm a member of the Securities Investor Protection Corporation
("SIPC")? (check one)
X Yes ❑ No
19. If "No" to Question 18, does your firm participate in any program that
provides securities insurance coverage for a public sector client which buys
the financial instruments that are listed in Question 16, on a delivery -versus -
payment ("DVP") basis? (check one)
❑ Yes ❑ No If "yes", please explain.
20. If "no" to Question 19, please explain why your firm does not carry any
securities insurance coverage for its customers.
21. Please indicate a percentage breakdown of your firm's client base by
portfolio size. Securities America is a full service broker/dealer offering
investment services to individuals, corporations, trusts and retirement plans.
Douglas C. Robinson specializes in servicing local California government
agencies (please see attached client list for portfolio size).
22. How many and what percentage of your securities transactions failed last
month? Last year? None, none.
City of Palm Desert
1 2003 Primary Dealer RFI
Page 7 of 8
23. What precautions does your firm take to protect the interests of the public
when dealing with public sector clients as investors? Know your client.
Know their Investment Policy Statement.
24. What makes your firm the best broker/dealer for the City? What advantage
would the City gain by trading with your firm? Securities America offers
independent advice and institutional brokerage services. Douglas C. Robinson
specializes in helping local California government agencies in meeting their
investment and reporting goals.
SECTION IV: REQUEST FOR DISCLOSURE
25. Have any of your firm's public sector clients sustained a loss on a securities
transaction within the last five years, arising from a misunderstanding or
misrepresentation of the risk characteristics of a financial instrument that
was recommended by and purchased through your firm? (check one)
❑ Yes X No If "yes", please describe each matter briefly.
26. Have any of your firm's public sector clients claimed, in writing, within the
last five years, that your firm was responsible for any investment losses?
(check one)
❑ Yes X No If "yes", please describe each matter briefly.
27. Has your firm been subject to any litigation, arbitration, or regulatory
proceedings, either pending, adjudicated, or settled, within the last five
years, that involved allegations of improper, fraudulent, disreputable or unfair
activities related to the sale of securities to or the purchase of securities
from institutional clients? (check one)
❑ Yes X No If "yes", please describe each matter briefly.
28. Has your firm been subject to a regulatory, state, or federal agency
investigation, within the last five years, for alleged improper, fraudulent,
disreputable, or unfair activities related to the purchase or sale of securities?
(check one)
Yes X No If "yes", please describe each matter briefly.
City of Palm Desert
1 2003 Primary Dealer RFI
Page 8 of 8
SECTION V: CERTIFICATION
I hereby certify that I have read and that I understand the investment policies and
objectives of the City of Palm Desert, the Palm Desert Redevelopment Agency, and
the Palm Desert Housing Authority, the Palm Desert Financing Authority, and the
City of Palm Desert Golf Course Facilities Corporation (hereafter referred to
collectively as the "City"), as represented in the City's "Statement of Investment
Policy", as amended March 13, 2003. My firm will ensure that all affected sales
personnel will be routinely informed of the City's investment objectives, horizon,
outlook, strategies, and risk constraints, as the City provides such information.
My firm will notify the City Treasurer immediately, by telephone, and, in writing, in
the event of a material adverse change in its financial condition, or of any violation
of Municipal Securities Rulemaking Board Rule G-37.
My firm pledges to exercise due diligence in informing the City Treasurer of all
foreseeable risks associated with any financial transactions that my firm undertakes
with the City. I attest to the accuracy of my firm's response to the City's Request
For Information.
NOTE: Completion of this Request For Information is only part of the City of
Palm Deserts review process, and DOES NOT guarantee that the
applicant will be authorized to provide financial services to the City.
This section must be signed by the sales representative who is listed in Question 3.
Firm: Securities America, Inc.
Signed: --��
Title: Kougias C. Robinson - Registered Principal
Date: 8/20/03
This section must be countersigned by the Managing Director or by the most senior
person in charge of the government securities operations section.
Firm: Securities A erica,Inc.
Sig
Title: Douglas C. Robinson - Branch Manager
Date: 8/20/03
1
Account
City of Alhambra
County of Butte
City of Brisbane
State of California
City of Cathedral City
City of Citrus Heights
Dublin San Ramon Services Dist.
El Dorado Irrigation District
City of Emeryville
City of Folsom
City of Galt
City of Glendale
City of Healdsburg
City of Hercules
City of Indian Wells
City of La Canada Flintridge
City of La Verne
City of Larkspur
City of Lodi
Marin Municipal Water District
City of Monterey
City of Monrovia
City of Palm Springs
City of Palos Verdes Estates
City of Pasadena
City of Placentia
City of Pomona
City of Porterville
City of San Carlos
City of San Rafael
City of Santa Barbara
County of Siskiyou
Institutional Client List of Douglas C. Robinson
Contact
Howard Longballa
Karen White
Stuart Schillinger
Bill Sherwood
Art Knutson
Susan Mahoney
Barry Whitley
Gary Buzby
Pauline Marx
Sharon Grammer
Shaun Farrell
Ron Borucki
Kevin McCarthy
Marie Simons
Kevin McCarthy
Mark Voss
Ron Clark
Ernie Hutchings
Maxine Cadwallader
Terry Stigall
Pam Erlandson
Mark Alvarado
Thomas Kanarr
Edward Ritscher
Vic Erganian
Steven Brisco
Doug Peterson
Susan Slaten
Maureen Lennon
Ken Nordhoff
Cynthia Odell
Susan Reacher
San Diego County Water Authorit) Patricia Cirello
County of Tehama Dana Hollmer
City of Thousand Oaks Candis Hong
City of Visalia
County of Yolo
Town of Yountville
City of Yuba City
Sandra Montoya
Paul Lester
Kevin Plett
Steve Kroeger
Phone Number
626-570-5027
530-538-7443
415-467-1843
916-653-3147
619-770-0340
916-725-2448
925-551-7230
530-642-4109
510-596-4328
916-355-7297
209-745-2961
818-548-2066
707-431-3306
510-799-8225
760-776-0235
818-790-8880
909-596-8720
415-927-5019
209-333-6708
415-924-4600
831-646-3944
626-932-5510
619-323-8221
310-373-6685
818-405-4422
714-993-8237
909-620-2454
209-782-7431
650-802-4118
415-485-3055
805-564-5337
530-842-8343
858-522-6678
530-527-5934
805-449-2241
209-713-4423
530-666-8626
707-944-8851
530-822-4620
Account Opened Portfolio Size in Millions
Jul-94
Aug-00
May-94
Aug-96
Jan-96
Jan-01
Aug-98
Mar-96
Oct-00
Aug-94
May-99
Jul-00
Feb-92
Nov-97
Aug-97
Sep-98
Nov-94
Jan-96
Sep-94
Nov-96
Jan-01
Feb-95
Aug-94
Jun-95
Nov-95
Jan-95
Jul-94
Feb-96
Sep-00
Apr-94
Feb-96
Apr-93
Dec-94
Mar-92
Nov-01
Dec-95
Aug-00
Dec-94
Apr-96
35
200
40
52,000
70
30
75
80
70
75
30
420
35
25
90
12
35
8
30
45
50
35
50
12
280
30
80
25
30
35
130
40
300
50
170
90
140
5
35
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•
CITY !'r r r".(_
FieNt2E D_
91113SEP--2 PM12:39
CITY OF PALM DESERT
Broker/Dealer Questionnaire
Presented by: Michael E. Swan
Howard N. Herring
August 28, 2003
•
v
tt
CITY OF PALM DESERT
BROKER/DEALER QUESTIONNAIRE
1. Firm Name: Wachovia Securities Financial Network, Inc.
2. Contact Address:
Civic Center Plaza
30011 Ivy Glenn Drive, Suite 200
Laguna Niguel, CA 92677 (Local)
3. Contact Personnel:
Riverfront Plaza
901 East Byrd Street
Richmond, VA 23219 (National)
Sales Representative: Supervising Manager:
Michael E. Swan Howard N Herring
Registered Principal/Senior Financial Advisor RegisteredPrincipal/Branch Manager
(949)495-8870 (949)495-8870
(800)553-0660 (800)553-0660
4. Please describe any formal program of supervision that your firm has established for the
sales representative who is listed in Question 3.
Each Branch Manager reports to a Regional Sales Manager on a weekly and monthly
basis. Regional Sales Manager reports to the Compliance department at the home office
in Richmond, Virginia.
5. Please identify all personnel who would be trading with or quoting securities prices
to the City.
Michael E. Swan
Registered Principal / Senior Financial Advisor / Institutional Sales
800-553-0660 / 949-495-8870
No. of Yrs in Institutional Sales 18
Number of Years with Firm 4
Howard N Herring
Registered Principal / Branch Manager
800-553-0660 / 949-495-8870
No. of Yrs. in Institutional Sales 16
Number of Years with Firm 4
• •
Please provide information on the history, details, and status or disposition of any
disciplinary actions or complaints, arbitration, or litigation involving the above
personnel.
Mr. Swan and Mr. Herring have never received any disciplinary actions by any
regulatory agency and currently have no complaints, arbitrations or litigations pending.
Mr. Swan and Mr. Herring are members in good standing with the National Association
of Securities Dealers (NASD), the Securities and Exchange Commission (SEC), the New
York Stock Exchange (NYSE), and the State of California Securities Commission. To
validate, or if you require additional information, please contact the NASD directly.
6. Do the personnel who are listed in Question 5 work exclusively with institutional
clients in a department that is exclusively dedicated to institutional sales? Yes.
7. Which of the personnel who are listed in Question 5 have read the City's
"Statement of Investment Policy", as amended March 13, 2003?
Mr. Michael E. Swan and Mr. Howard N. Herring.
8. Please provide four references from the public sector clients (preferably in
California) that have established relationships with the sales representative who is
listed in Question 3. Indicate (a) name of governmental agency; (b) contact person;
(c) address; (d) telephone number; and (e) length of relationship.
Public entity
Client
San Juan Capistrano
Indian Wells
Huntington Beach
Redondo Beach
Contact Person Telephone Number
Cindy Russell
Kevin McCarthy
Shari Freidenrich
Ernie O'Dell
Please see Exhibit "2 " fox additional references.
949-443-6301
760-346-2489
714-536-5299
310-318-0652
#Years as
6
5+
6
5
9. Does your firm regularly report to the Market Reports Division of the Federal
Reserve Bank of New York as a "primary dealer"? Na
We are not a designated Primary Dealer, but we are the nation's third largest full -
service broker dealer with $532 billion in assets and offices in 48 states. We also
maintain our own inventory in products that appeal to municipalities such as US.
Government Agencies, Corporate Notes and Money Market instruments.
If yes, how long has your firm been a primary dealer?
2
• •
f
10. Please answer the following questions only if your firm IS NOT a primary dealer.
a. Does your firm have a net capital position in excess of $100 million? Yes.
b. Has your firm been in existence for more than five years? Yes.
c. Is your firm currently licensed as a broker -dealer by the State of
California? Yes.
d. Is your firm headquartered or does it have a branch office in California?
Yes.
11. Is your firm a member of the National Association of Securities Dealers? Yes.
12. Which of the following entities has the authority to oversee the operation of your
firm in terms of examinations, rules, and regulations?
FDIC X SEC X NYSE
Comptroller of Currency Federal Reserve System
X Other (example: state regulatory agency) (specify) Multistate firms please
note: It is not necessary to include regulatory agencies that do not have
jurisdiction over the your firm's activities in California. NASD.
13. Is your firm owned by a holding company?
Wachovia Securities Financial Network, LLC Inc. is a wholly owned subsidiary of
Wachovia Corporation (NYSE: WB) created through the September 1, 2001 merger of
First Union and the former Wachovia with assets of$532 billion as of March 31, 2003.
Wachovia Corporation is the nation's fourth largest banking company based. on assets
and operates 3400 brokerage locations with offices in 48 states and the District of
Columbia.
14. Has your firm consistently complied with the Federal Reserve Bank's capital
adequacy guidelines?
Wachovia Securities Financial Network, Inc. is subject to the net capital requirements
pursuant to SEC's Section 15c3-1 and does not calculate its capital under the Federal
Reserve Bank's guidelines. Wachovia Securities Financial Network, Inc. has always
complied with the net capital requirements of SEC Rule 15c3.
3
• •
15. What was your firm's total volume in United State Treasury and Agency securities
trading last year?
Wachovia Securities is the nation's third largestfull-servicebroker dealer and trades in
excess of $500 million face value in U.S. Government and Agency
securities per day.
16. Which of the following instruments are regularly offered by your trading desk?
U.S. Treasuries (Bill, Notes & Bonds), US. Agencies & Instrumentalities (FHLB,
FNMA, FFCB, FHLMC, GNMA, SLMA), Commercial Paper (Domestic, Foreign),
Bankers Acceptances, Certificates of Deposit, Corporate Securities, Asset -backed
Securities, Mortgage -backed securities and Municipals.
17. Which of the financial instruments that are described in Question 16 does your
firm specialize in marketing?
We don't specialize in certain products, but provided full service across all product
lines.
18. Is your firm a member of the Securities Investor Protection Corporation ("SIPC")?
Yes. In addition to the $500,000 of insurance provided by the Securities Investor
Protection Corporation, excess SIPC policies are available for a maximum coverage of
$100 million at no cost to the customer for securities safe kept at our firm.
19. If "NO" to Question 18, does your firm participate in any program that provides
securities insurance coverage for a public sector client which buys the financial
instruments that are listed in Question 16, on a delivery -versus -payment ("DVP")
basis? N/A.
20. If "no" to Question 19, please explain why your firm does not carry any securities
insurance coverage -for its customers. N/A.
21. Please indicate a percentage breakdown of your firm's client base by portfolio size.
Given the size of our firm, this would be difficult to provide. Wachovia Securities
provides financial services to individuals, corporations and institutional accounts in 48
states. Our retail client base is approximately 5.9 million accounts with assets of $570
billion. Wachovia operates 791 retail offices, 2,700 financial centers and 198
correspondent clearing firms. Our institutional customer base includes public and
private institutions, such as municipalities, banks, credit unions, pensions, money
managers, insurance companies, state governments and their agencies, and major
corporations. The representatives assigned to handle your account, Mr. Swan and Mr.
Herring work with public governments exclusively. Please contact us if you require
more specific information.
4
1
• •
22. How many and what percentage of your securities transactions failed last month?
Last year?
Our fail rate for DVP transactions is consistently less than ''/ of one percent.
23. What precautions does your firm take to protect the interests of the public when
dealing with public sector clients as investors?
Wachovia Securities. Financial Network, Inc. makes the appropriate suitability
determination when dealing with a particular government agency. Before dealing with
a governmental agency, we require the following information: 1) Most recent audited
financial statements; 2) trading authorization; 3) customer's investment policy; and 4) a
governmental resolution designating authorized trading personnel. Wachovia Securities
Financial Network, Inc. exercises the following precautions: 1) Trades are reviewed by
a principal in the office for appropriateness; and 2) discretionary trading is not
permitted in accounts for public fund clients.
24. What makes your firm the best broker/dealer for the City? What percentage
would the City gain by trading with your firm?
Mr. Swan and Mr. Herring. specialize in working with public governments exclusively.
They have been working with municipalities their entire career and are actively involved
with many associations such .as the California Municipal Treasurers Association, and
the Association of Public Treasurers of the United States of Canada. They have written
many published articles and conducted several educational seminars on the investment
of public funds. Please see their resumes attached as Exhibit "1 " and some of their
references attached as Exhibit "2".
SECTION IV: REQUEST FOR DISCLOSURE
25. Have any of your firm's public sector clients sustained a loss on a securities
transaction within the last five years, arising from a misunderstanding or
misrepresentation of the risk characteristics of a financial instrument that was
recommended by and purchased through your firm? No.
Given the size of our firm and our lengthy history, this would be hard to determine.
Please see answer the Question #27. If you require more specific information please
contact us.
26. Have any of your firm's public sector clients claimed, in writing, within the last five
years, that your firm was responsible for any investment losses?
See answer above.
5
27. Has your firm been subject to any litigation, arbritation, or regulatory proceedings,
either pending, adjudicated, or settled, within the last five years, that involved
allegations of improper, fraudulent, disreputable or unfair activities related to the
sale of securities to or the purchase of securities from institutional clients?
In order to maintain the attorney -client privilege, the work product privilege and other
privileges Wachovia Securities Financial Network, Inc., like most firms, does not
generally comment on client complaints, investigations or litigations matters. In
addition, as a registered broker dealer and investment advisor, Wachovia Securities
Financial Network, Inc., like other registered firms regularly receives routine inquires
from regulatory bodies, including the securities and Exchange Commission. Those
routine inquires rarely result in any further action by the inquiring regulatory body.
Subject to the foregoing, to the best of our knowledge, information and belief there has
not been any customer complaint, investigation, notice of violation, license revocation
or enforcement action of any kind brought within the last ten years by the SEC or any
state or local regulatory agency against Wachovia Securities Financial Network, Inc.,
or any principal or key individuals of Wachovia Securities Financial Network, Inc.
except as set forth in the current Schedule DP of Wachovia Securities Financial
Network Inc. Form BD (a copy of which has been filed with the Central Registration
Depository).
Wachovia Securities Financial Network, Inc. is subject to the rules, regulations and.
guidelines established by the National Association of Securities Dealers (NASD), the
Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE).
The firm currently is a member in good standing with above regulatory agencies.
28. Has your firm been subject to a regulatory, state, or federal agency investigation.
within the last. five years, for alleged improper fraudulent, disreputable, or unfair
activities related to the purchase or sale of securities?
See answer above.
• •
SECTON V: CERTIFICATION
I hereby certify that I have read and that I understand the investment policies and
objectives of the City of Palm Desert, the Palm Desert Redevelopment Agency, and the
Palm Desert Housing Authority, the Palm Desert Financing Authority, and the
City of Palm Desert Golf Course Facilities Corporation (hereafter referred to
collectively as the "City"), as represented in the City's "Statement of Investment
Policy", as amended March 13, 2003. My firm will ensure that all affected sales
personnel will be routinely informed of the City's investment objectives, horizon,
outlook, strategies, and risk constraints, as the City provides such information.
My firm will notify the City Treasurer immediately, by telephone, and in writing, in
the event of a material adverse change in its financial condition, or of any violation of
Municipal Securities Rulemaking Board Rule G-37.
My firm pledges to exercise due diligence in informing the City Treasurer of all
foreseeable risks associated with any financial transactions that my firm undertakes
with the City. I attest to the accuracy of my firm's response to the City's Request For
Information.
Note: Completion of this Request For Information is only part of the City of Palm
Desert's review process, and DOES NOT'zuarantee that the applicant will be
authorized to provide financial services to the City.
This section must be signed by the sales representative who is listed in Question 3.
Firm: Wachovia i ies Financial Network, LLC
Signed:
Mi
Title: Registered Principal / Senior Financial Advisor
Date: August 29, 2003
This section must be countersigned by the Managing Director or by the most senior
person in charge of the overnment securities operations section.
Firm: W chovigSe rities Financial •etwork, LLC
Signed:
Title:
ing
Registered Principal / Branch Manager
Date: August 29, 2003
'd
SUBS
Section II:
•
'ern c::p ..7 1 i1 ?: 5t1
CITY OF PALM DESERT, CA
Broker/Dealer Request for Information
2003
This information requested is publicly available at www.nasdr.com.
S Financial Services Inc.
4-710 Highway 111
Palm Desert, CA 92260-3806
Tel. 760-568-1831
Fax 760-341-5827
Toll Free 800-669-1775
www.ubs.com
A copy of the firm's Form BD — Uniform Application for Broker -Dealer Registration
A copy of the firm's most recent Form BD Status Report
A copy of the Form U-4 for each employee with whom the City would be trading
A copy of the most recent Form U-4 Status Report on each firm employee...
A copy of the firm's most recent SEC Form X-17 A-5 filing
This information requested is publicly available at www.ubs.com (Investor & Analysts/SEC
Filings)
A copy of the most recent Annual Report & 20F ( This is equivalent to US Form 10K)
Wiring instructions:
UBS AG
ABA #026007993
UBS Financial Services Retail Incoming
A/C: 101WA258641000
F/C: Customer Account Name
A/C: Customer UBS Financial Services Account Number
Delivery instructions:
Via Wire (Fed Reserve):
JPM Chase/Paine
ABA #: 021000021
Ref: Customer Acct. name/number
Via DTC: UBS Financial Services, Inc.
DTC: 0221
For credit to: Customer acct. name/number
Physical: NSCC
55 Water Street
Concourse Level
New York, New York Receive Window
For UBS PaineWebber
With client's account name & account number
UBS Financial Services Inc. is a subsidiary of UBS AG.
� UBS •
*IBS Financial Services Inc.
Section III: REOUEST FOR GENERAL INFORMATION
1. FIRM NAME: UBS Financial Services Inc. (formerly known as UBS PaineWebber Inc.)
2. CONTACT ADDRESS: 74-710 Hwy 111, Palm Desert, CA 92260
3. CONTACT PERSONNEL:
SALES REPRESENTATIVE SUPERVISING MANAGER
Name: Kathleen Valentine
Title: First Vice President — Investments
Telephone: 760-862-4647
800-669-1775
Name: Lawrence Zech
Title: Branch Manager
Telephone: 760-862-4610
800-669-1775
4. PLEASE DESCRIBE ANY FORMAL PROGRAM OF SUSPERVISION THAT YOUR
FIRM HAS ESTABLISHED FOR THE SALES REPRESENTATIVE WHO IS LISTED
IN QUESTION 3.
UBS Financial Services is required to conform with all rules and regulations of all
regulatory and self -regulatory organizations to which UBS Financial Services is subject
or of which UBS Financial Services is a member.
5. PLEASE IDENTIFY ALL PERSONNEL WHO WOULD BE TRADING WITH OR
QUOTING SECURITIES PRICES TO THE CITY.
Name: Kathleen Valentine
Title: First Vice President -Investments
# of Years with Firm: 4
Telephone: 760-862-4647
PLEASE PROVIDE INFORMATION ON THE HISTORY DETAILS, AND STATUS
OR DISPOSTION OF ANY DISCIPLINARY ACTIONS OR COMPLAINTS,
ARBITRATION, OR LITIGATION INVOLVING THE ABOVE PERONNEL.
Please refer to the NASD website www.nasdr.com. the CRD information is publicly
available.
6. DO THE PERSONNEL WHO ARE LISTED IN QUESTION 5 WORK EXCLUSIVELY
WITH INSTITUTIONAL CLIENTS IN A DEPARTMENT THAT IS EXCLUSIVELY
DEDICATED TO INSTITUTIONAL SALES?
( ) YES ( X ) NO
U85 Finanaal Services Inc. is a subsidiary of UBS AG.
BS •
11,B5 Financial Services Inc.
7. WHICH OF THE PERSONNEL WHO ARE LISTED IN QUESTION 5 HAVE READ
THE CITY'S "STATEMENT OF INVESTMENT POLICY", AS AMENDED MARCH
13, 2003?
All.
8. PLEASE PROVIDE FOUR REFERENCES FROM PUBLIC SECTOR CLIENTS
(PREFERABLY IN CALIFORNIA) THAT HAVE ESTABLISHED RELATIONSHIPS
WITH THE SALES REPRESENTATIVE WHO IS LISTED IN QUESTION 3.
INDICATE: (A) NAME OF GOVERNMENTAL AGENCY; (B) CONTACT
PERSON; (C) ADDRESS; (D) TELEPHONE NUMBER; AND (E) LENGTH OF
RELATIONSHIP.
UBS Financial Services treats as confidential information the names of its customers.
9. DOES YOUR FIRM REGULARLY REPORT TO THE MARKET REPORTS
DIVISION OF THE FEDERAL RESERVE BANK OF NEW YORK AS A "PRIMARY
DEALER"?
()YES (X)NO.
As a result of the merger between PaineWebber Group and UBS AG, effective December
4, 2000, UBS Financial Services Inc. is no longer listed with the Federal Reserve as a
primary dealer. UBS Financial Services had been a primary dealer for more than 10
years under the name PaineWebber Incorporated. UBS Financial Services is an affiliate
of UBS Securities LLC (formerly known as UBS Warburg, LLC), which is a primary
dealer in government securities. UBS Financial Services is under 100% common
ownership with UBS Securities LLC and both are wholly owned subsidiaries of UBS
AG.
10. PLEASE ANSWER THE FOLLOWING QUESTIONS ONLY IF YOUR FIRM IS NOT
A PRIMARY DEALER.
a. DOES YOUR FIRM HAVE NET CAPITAL POSITIONS IN EXCESS OF $100
MILLION?
( X) YES () NO
b. HAS YOUR FIRM BEEN IN EXISTENCE FOR MORE THAN FIVE YEARS?
(X) YES () NO
c. IS YOUR FIRM CIRRENTLY LICENSED AS A BROKER BY THE STATE
OF CALIFORNIA?
(X) YES ( ) NO
UBS Financial Services Inc. is a subsidiary of UBS AG.
use •
.UBS Financial Services Inc.
d. IS YOUR FIRM HEADQUARTERED OR DOES IT HAVE A BRANCH
OFFICE IN THE STATE OF CALIFORNIA?
(X)YES ()NO
11. IS YOUR FIRM A MEMBER OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS?
(X) YES ( ) NO IF "NO", WHY NOT?
12. WHICH OF THE FOLLOWING ENTITIES HAS THE AUTHORITY TO OVERSEE
THE OPERATION OF YOUR FIRM, IN TERMS OF EXAMINATIONS, RULES,
AND REGULATIONS?
( ) FDIC (X) SEC (X) NYSE
( ) Controller of Currency ( ) Federal Reserve System (X) NASD
13. IS YOUR FIRM OWNED BY A HOLDING COMPANY?
(X) YES () NO, IF "YES", WHAT IS THE HOLDING COMPANY'S
NAME AND ITS NET CAPITALIZATION?
UBS Financial Services is a wholly owned subsidiary of UBS AG. Please see the
enclosed annual report for additional information.
14. HAS YOUR FIRM CONSISTENTLY COMPLIED WITH THE FEDERAL RESERVE
BANK'S CAPITAL ADEQUACY GUIDELINE?
()YES ( ) NO
As a registered broker -dealer, UBS Financial Services is not required to comply with the
Federal Reserve's capital adequacy guidelines. However, UBS Financial Services is
subject to and complies with the net capital requirements set forth in SEC Rule 15c3-1.
As of this date, UBS Financial Services does comply with the guidelines in SEC Rule
15c3-1. The capital position has not ever fallen short of meeting the guidelines. See
attached annual report.
15. WHAT WAS YOUR FIRM'S TOTAL TRADING VOLUME IN FEDERAL AGENCY
SECURITIES, CORPORATE MEDIUM -TERM NOTES, AND COMMERCIAL
PAPER LAST YEAR?
FIRM -WIDE: $ # OF TRANSACTIONS:
YOUR OFFICE: $ # OF TRANSACTIONS:
UBS financial Services Inc. is a subsidiary of UBS AG.
$LlBS •
1111.IBS Financial Services Inc.
UBS Financial Services views the answer to this question as proprietary information.
However, UBS Financial Services' volume was sufficient to meet the standards of
activity established by the Market Reports Division of the Federal Reserve Bank for
primary government securities dealers
16. WHICH OF THE FOLLOWING INSTRUMENTS ARE REGULARLY OFFERED BY
YOUR TRADING DESK? (check appropriate choices)
(X) T-BILLS (X) BANKERS'S ACCEPTANCES (DOMESTIC)
(X) T-NOTES (X) BANKERS'S ACCEPTANCES (FOREIGN)
(X ) T-STRIPS (X) CERTIFICATES OF DEPOSIT
(X) REPURCHASE AGMTS (X) UNSECURED COMMERCAL PAPER
(X) MONEY MARKET FDS (X) CORPORATE MEDIUM -TERM NOTES
(X) ASSET -BACKED COMMERICIAL PAPER
(X) FEDERAL AGENCIES (specify)
Agencies (FHLB, FHLMC, FFCB, FNMA, SLMA) taxable Municipals, BAs
(foreign), Term mortgage back repurchase agreement, Commercial Paper and
Mortgage -backed PACs.
17. WHICH OF THE FINANCIAL INSTRUMENTS THAT ARE DESCRIBED IN
QUESTION 16 DOES YOUR FIRM SPECIALIZE IN MARKETING?
T-bills, T-notes/bonds, Agencies (FHLB, FHLMC, FFCB, FNMA, SLMA) Discount
Notes, BAs, Medium Term Notes, Commercial Paper and NCDs.
18. IS YOUR FIRM A MEMBER OF THE SECURITIES INVESTOR PROTECTION
CORPORATIONS? ("SIPC")?
(X) YES, UBS Financial Services participates in the SPIC insurance program.
19. IF "NO" TO QUESTION 18, DOES YOUR FIRM PARTICIPATE IN ANY
PROGRAM THAT PROVIDES SECURITIES INSURANCE COVERAGE FOR A
PUBLIC SECTOR CLIENT WHICH BUYS THE FINANCIAL INSTRUMENTS THAT
ARE LISTED IN QUESTON 16, ON A DELIVERY -VERSUS -PAYMENT ("DVP")
BASIS? (check one)
(X) YES ( ) NO. If "yes", please explain
20. IF "NO" TO QUESTION 19, PLEASE EXPLAIN WHY YOUR FIRM DOES NOT
CARRY ANY SECURITIES INSURANCE COVERAGE FOR ITS CUSTOMERS.
Not applicable.
21. PLEASE INDICATE A PERCENTAGE BREAKDOWN OF YOUR FIRM'S CLIENT
BASE BY PORTFOLIO SIZE.
UBS Financial Services Inc. is a subsidiary of UBS AG.
4t Ups •
JBS Financial Services Inc.
The firm views the response to this question as confidential information.
22, HOW MANY AND WHAT PERCENTAGE OF YOUR SECURITIES
TRANSACTIONS FAILED LAST MONTH? LAST YEAR?
UBS Financial Services considers this information to be proprietary. UBS Financial
Services makes the appropriate deduction for each failure to deliver contract, if any, in
computing net capital as required by SEC Rule 15c3-1.
23. WHAT PRECAUTIONS DOES YOUR FIRM TAKE TO PROTECT THE INTERESTS
OF THE PUBLIC WHEN DEALING WITH PUBLIC SECTOR CLIENTS AS
INVESTORS?
UBS Financial Services is required to conform with all rules and regulations of all
regulatory and self -regulatory organizations to which UBS Financial Services is subject
or of which UBS Financial Services is a member.
24. WHAT MAKES YOUR FIRM THE BEST BROKER/DEALER FOR THE CITY?
WHAT ADVANTAGE WOULD THE CITY GAIN BY TRADING WITH YOUR
FIRM?
UBS Financial Services is a full -service national securities firm and focuses its
formidable resources on meeting the varied needs of its corporate clients to help them
achieve their financial goals. UBS Financial Services takes the time to understand each
corporate client's unique financial needs, then drawing on the focused skills of some of
the most talented, dedicated professionals in the industry to meet those needs. UBS
Financial Services through its professionals provides the best combination of advice and
technology with the advantage of fresh thinking and innovative ideas.
UBS Financial Services offers access to its highly respected fixed income research group
as well as its municipal research group. The research utilizes a combination of both
fundamental and technical analysis to provide commentary and strategy for the fixed
income markets. In addition, UBS Financial Services also has access to Bloomberg and
other research vehicles to supplement its proprietary research reports and opinions.
Section IV: REOUEST FOR DISCLOSURE
25. HAVE ANY OF YOUR FIRM'S PUBLIC SECTOR CLIENTS SUSTAINED A LOSS
ON A SECURITIES TRANSACTION WITHIN THE LAST FIVE YEARS, ARISING
FROM A MISUNDERSTANDING OR MISREPRESENTATION OF THE RISK
CHARACTERISTICS OF A FINANCIAL INSTRUMENT THAT WAS
RECOMMENEDED BY AND PURCHASED THROUGH YOUR FIRM? (check one)
( ) YES ( ) NO, If "yes", please describe each matter briefly
UBS Financial Services Inc. is a subsidiary of UBS AG.
Lis •
*IBS Financial Services Inc.
Not unlike most securities firms, UBS Financial Services is and has been a defendant in
numerous legal actions relating to its securities and commodities business that allege
various violations of federal and state securities laws including allegations of fraud,
misrepresentation and/or breach of fiduciary duty which have resulted in civil or
monetary liability being assessed against UBS Financial Services and/or its employees.
Our parent, UBS AG ("UBS"), is a public company (UBS stock is listed on the NYSE)
and regularly reports on Forms 10K and 10Q to the Securities and Exchange Commission
("SEC") and the NYSE regarding material litigation, including administrative
proceedings. These reports are publicly available and include information about UBS
Financial Services matters.
UBS Financial Services, like most large, full service investment banks and broker -
dealers, is subject to inquiries by the SEC, NYSE and various other regulatory
organizations. UBS Financial Services fully cooperates with the authorities in all such
requests. UBS Financial Services regularly reports to the National Association of
Securities Dealers, Inc. on Form B-D and to the SEC on Schedule E to Form ADV
investigations that result in orders. These reports are publicly available.
26. HAVE ANY OF YOUR FIRM'S PUBLIC SECTOR CLIENTS CLAIMED, IN
WRITING, WITHIN THE LAST FIVE YEARS, THAT YOUR FIRM WAS
RESPONSIBLE FOR ANY INVESTMENT LOSSES? (check one)
( ) YES ( ) NO, If "Yes", please describe each matter briefly
See response to #25, above.
27. HAS YOUR FIRM BEEN SUBJECT TO ANY LITIGATION, ARBITRATION. OR
REGULATORY PROCEEDINGS. EITHER PENDING, ADJUDICATED, OR
SETTLED, WITHIN THE LAST FIVE YEARS, THAT INVOLVED ALLEGATIONS
OF IMPROPER, FRAUDULENT, DISREPUTABLE OR UNFAIR ACITIVIES
RELATED TO THE SALE OF SECURITIES TO OR THE PURCHASE OF
SECURITIES FROM INSTITUTIONAL CLIENTS? (check one)
( ) YES ( ) NO, If "Yes", please describe each matter briefly
See response to #25, above.
28. HAS YOUR FIRM BEEN SUBJECT TO A REGULATORY, STATE, OR FEDERAL
AGENCY INVESTIGATION. WITHIN THE LAST FIVE YEARS, FOR ALLEGED
IMPRRPER, FRAUDULENT, DISREPUTABLE, OR UNFAIR ACTIVITIES
RELATED TO THE PURCHASE OF SALE OF SECURITIES? (check one)
( ) YES ( ) NO, If "Yes", please describe each matter briefly
See response to #25, above.
UBS Financial Services Inc. is a subsidiary of UBS AG
fuss •
"DUBS Financial Services Inc,
Section V: CERTIFICATION
I hereby certify that I have read and that I understand the investment policies and objectives of
the City of Palm Desert, the Palm Desert Redevelopment Agency, and the Palm Desert Housing
Authority, the Palm Desert Financing Authority, and the City of Palm Desert Golf Course
Facilities Corporation (hereafter referred to collectively as the "City"), as represented in the
City's "Statement of Investment Policy", as amended March 13, 2003. My firm will ensure that
all affected sales personnel will be routinely informed of the City's investment objectives,
horizon, outlook, strategies, and risk constraints, as the City provides such information.
My firm will notify the City Treasurer immediately, by telephone, and, in writing, in the event of
a material adverse change in its financial condition, or of any violation of Municipal securities
Rulemaking Board Rule G-37.
My firm pledges to exercise due diligence in informing the City Treasurer of all foreseeable risks
associated with any financial transactions that my firm undertakes with the City. I attest to the
accuracy of my firms response to the City's Request For Information.
NOTE: Completion of this Request For Information is only part of the City of Palm
Desert's review process, and DOES NOT guarantee that the applicant will be
authorized to provide financial services to the City.
This section must be signed by the sales representative who is listed in Question 3.
Firm: UBS Financial Services, Inc.
Signed:
Kathleen Valentine
First Vice President — Investments
September 2, 2003
This section must be countersigned by the Managing Director or by the most senior person in
charge of the government securities operations section.
Firm: UBS Financial Services, Inc.
Signed
72
Lawrence Zech
Branch Manager
September 2, 2003
UB5 Financial Services Inc. is a subsidiary of UBS AG.
•
CITY OF PALM DESERT, CALIFORNIA
CERTIFICATION ADDENDUM
To the extent that the City of Palm Desert's Certification (Section V of the City of
Palm Desert Broker/Dealer Request for Information 2003) attached hereto defines the
roles and responsibilities of UBS Financial Services Inc. and its employees, this
addendum limits this responsibility to the extent of the following:
In the event UBS Financial Services Inc. files a voluntary petition
under the Federal Bankruptcy laws (or an involuntary petition is filed
against UBS Financial Services Inc.), then, within a reasonable period of
time thereafter, UBS Financial Services Inc. shall give notice of such event
to the City of Palm Desert. Any other material adverse changes in UBS
Financial Services' financial condition (as defined by the Generally
Accepted Accounting Principals.) or any violation of Municipal Securities
Rulemaking Board Rule G-37 shall be referenced in the periodic reports
UBS Financial Services is required to file with Federal and state
regulators, and shall be made available upon request.
UBS Financial Services Inc. agrees to reasonably inform the City
of Palm Desert of the salient risks associated with any recommended
investment in a manner contemplated by Federal law and the regulatory
rules promulgated thereunder. UBS Financial Services shall also make
available to the City of Palm Desert, the prospectus for any such
investment as provided by law or upon request for same.
Read and Agreed to:
City of Palm Desert, CA
Date
Lawrence Zech, Branch Manager
UBS Financial Services Inc.
%/-7
Date
o3
a •
Ci I'( ( i
CITY OF PALM DESERT :._,
PRMARY DEALER
REQUEST OR INFORMATION
2003
PREPARED BY THE CITY TREASURER'S OFFICE
Thomas W. Jeffrey, J.D., M.B.A.
Deputy City Treasurer
REVIEWED AND APPROVED BY
Paul S. Gibson, C.C.M.T.
City Treasurer
APPLICANT: Li a - SACRAI-1Ea1To
City of Palm Desert 4111
2003 Primary Dealer RFI
Page 1 of 9
FIRM NAME:
SECTION I: STATEMENT OF POSITION AND GENERAL REQUIREMENTS
The
> City of Palm Desert;
> Palm Desert Redevelopment Agency;
> Palm Desert Housing Authority;
> Palm Desert Financing Authority; and
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") are local governmental agencies that
operate under the laws of the State of California. The Palm Desert City Treasurer's
Office manages an investment portfolio with a combined book value of approximately
$277 million. The City has adopted a written "Statement of Investment Policy ("SOIP")"
that governs the operation of this investment program. A copy of the SOIP is enclosed.
When the City wishes to fill a vacant broker position, it will accept Requests for
Information ("RFI") onlvfrom the institutional sales departments of primary securities
dealers. The City Finance and Investment Committee and the City Council will then
review and render a final decision on the submitted RFIs. The City Treasurer's Office
will then notify all applicants, in writing, on whether their RFI has been approved,
denied, or rejected.
The only exception to the foregoing shall be that the City Finance and Investment
Committee and the City Council may, at their discretion, accept, review, and approve,
deny, or reject RFIs from secondary brokers that:
1. Have a net capital position in excess of $100 million;
2. Have been in existence for more than five years;
3. Are currently licensed as a broker by the State of California; and
4. Are headquartered or have a branch office in the State of California.
If an applicant's RFI is incomplete or late (submitted after the Citv's specified deadline).
then the City shall reiect that RFI, and the applicant shall not be eliaible to submit
another RFI to the City for three years.
The City shall not transact business with an approved securities firm until all of the
documentation that both parties require, has been executed and delivered.
City of Palm Desert •
2003 Primary Dealer RFI
Page 2 of 9
SECTION II: APPLICATION DEADLINE AND REQUIRED DOCUMENTS
The City must receive the following documents from each interested applicant by no
later than 4:30 p.m. on Wednesday, September 3, 2003:
✓
✓
✓
✓
A completed "Primary Dealer Request For Information".
A copy of the firm's most recent Annual Report and Form 10-K.
A copy of the firm's Form BD — Uniform Application for Broker -Dealer
Reaistration.
A copy of the firm's most recent Form BD Status Report.
A copy of the Form U-4 — Uniform Anolication for Securities Industry Reaistration
or Transfer for each employee with whom the City would be trading.
A copy of the most recent Form U-4 Status Report on each firm employee with
whom the City would be trading.
✓ A copy of the firm's most recent SEC Form X-17 A-5 filing or, in the case of a
trading department within a commercial bank, its most recent Consolidated
Reports of Condition and Income for A Bank With Domestic and Foreign Offices
— FFIEC 031 filing.
✓ A resume on each firm employee with whom the City would be trading.
✓ A trading resolution from the firm.
✓ A copy of the firm's wiring and delivery instructions.
1 Samples of the firm's trade documentation (trade confirmations, monthly account
statements, etc).
✓ This information requested is publicly available at www.nasdr.com
These documents may be delivered in person, by post, or by courier to:
City of Palm Desert
Attention: Thomas W. Jeffrey
Deputy City Treasurer
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
If you have any questions about this RFI, then please call Mr. Jeffrey at 760.346.0611,
extension 383.
City of Palm Desert •
2003 Primary Dealer RFI
Page 3 of 9
SECTION III: REQUEST FOR GENERAL INFORMATION
1. Firm Name: UBS Financial Services, Inc.
(formerly known as UBS PaineWebber Inc.)
2. Contact Address: 1610 Arden Way, Suite 200
Sacramento, CA 95815
3. Contact Personnel: Jodi Pieczynski
(800) 354-3895
Sales Representative Suoervisina Manager
Name: Jodi Pieczynski Name: Ronald W. Tolle, Jr.
Title: Account Vice President Title: Branch Manager
TEL: (916) 648-7293 TEL: (916) 648-7271
TEL: (800) 354-3895 TEL: (800) 678-6783
4. Please describe any formal program of supervision that your firm has established for
the sales representative who is listed in Question 3.
UBS Financial Services is required to conform with all rules and regulations of all
regulatory and self -regulatory organizations to which UBS Financial Services is
subject or of which UBS Financial Services is a member.
5. Please identify all personnel who would be trading with or quoting securities prices
to the City.
Name
# of Years in # of Years
Title Institutional Sales with Firm Telephone
Jodi Pieczynski, Account Vice President (916) 648-7293
Kelly Mahoney, Senior Vice President 20+ 20+ (916) 648-7234
Steven Rutledge, Financial Advisor (916) 648-7275
Please provide information on the history, details, and status or disposition of any
disciplinary actions or complaints, arbitration, or litigation involving the above
personnel. This information requested is publicly available at www.nasdr.com
City of Palm Desert •
2003 Primary Dealer RFI
Page 4 of 9
6. Do the personnel who are listed in Question 5 work exclusively with institutional
clients in a department that is exclusively dedicated to institutional sales?
Yes
7. Which of the personnel who are listed in Question 5 have read the City's "Statement
of Investment Policy", as amended March 13, 2003?
All
8. Please provide four references from public sector clients (preferably in California)
that have established relationships with the sales representative who is listed in
Question 3. Indicate: (a) name of governmental agency; (b) contact person; (c)
address; (d) telephone number; and (e) length of relationship.
UBS Financial Services Inc. treats as confidential information the names of its
customers.
9. Does your firm regularly report to the Market Reports Division of the Federal
Reserve Bank of New York as a "primary dealer"? (check one)
No.
As a result of the merger between PaineWebber Group and UBS AG, effective
December 4, 2000, UBS Financial Services Inc. is no longer listed with the primary
Federal Reserve as a primary dealer. UBS Financial Services had been a primary
dealer for more than 10 years under the name PaineWebber Incorporated. UBS
Financial Services is an affiliate of UBS Securities LLC (formerly known as UBS
Warburg, LLC), which is a primary dealer in government securities. UBS Financial
Services is under 100% common ownership with UBS Secuirites LLC and both are
wholly owned subsidiaries of UBS AG.
If yes, how long has your firm been a primary dealer?
10. Please answer the following questions only if your firm IS NOT a primary dealer.
a. Does your firm have a net capital position in excess of $100 million? (check
one)
As a registered broker -dealer, UBS Financial Services is not required to comply
with the Federal Reserve's capital adequacy guidelines. However, UBS
Financial Services is subject to and complies with the net capital requirements
set forth in SEC Rule 15c3-1. As of this date, UBS Financial Services does
City of Palm Desert
2003 Primary Dealer RFI
Page 5 of 9
comply with the guidelines in SEC Rule 15c3-1. The capital position has not ever
fallen short of meeting the guidelines.
b. Has your firm been in existence for more than five years? (check one)
Yes
c. Is your firm currently licensed as a broker by the State of California? (check
one)
Yes
d. Is your firm headquartered or does it have a branch office in the State of
California? (check one)
Yes
11. Is your firm a member of the National Association of Securities Dealers?
Yes
12. Which of the following entities has the authority to oversee the operation of your
firm, in terms of examinations, rules, and regulations? (check appropriate
choices)
()CBOT
( ) FDIC
(X) NYSE
( ) Comptroller of Currency
() CFTC
() NASD
(X) SEC
( ) Federal Reserve
13. Is your firm owned by a holding company?
UBS Financial Services Inc. is a broker/dealer wholly owned subsidiary of UBS
AG. UBS AG is a public company whose stock is listed on the New York Stock
Exchange. Audited financial statements will be furnished upon request.
14. Has your firm consistently complied with the Federal Reserve Bank's capital
adequacy guidelines?
Yes, see answer to 10a.
15. What was your firm's total trading volume in Federal Agency securities, corporate
medium -term notes, and commercial paper last year?
City of Palm Desert •
2003 Primary Dealer RFI
Page 6 of 9
UBS Financial Services views the answer to this question as proprietary
information. However, UBS Financial Services, Inc. volume was sufficient to
meet the standards of activity established by the Market Reports Division of the
Federal Reserve Bank for primary government securities dealers.
16. Which of the following instruments are regularly offered by your trading desk?
T-bills, Treasury notes/bonds, Agencies (FHLB, FHLMC, FFCB, FNMA, SLMA),
Taxable Municipals, BA's (foreign), Term mortgage back repurchase agreement,
Commercial Paper, Mortgage -backed PACs.
17. Which of the financial instruments that are described in Question 16 does your
firm specialize in marketing?
T-bills, Treasury notes/bonds, Agencies (FHLB, FHLMC, FFCB, FNMA, SLMA),
Discount Notes, BA's, Medium Term Notes, Commercial Paper, NCD's.
18. Is your firm a member of the Securities Investor Protection Corporation ("SIPC")?
UBS Financial Services participates in the SIPC insurance program.
19. If "No" to Question 18, does your firm participate in any program that provides
securities insurance coverage for a public sector client which buys the financial
instruments that are listed in Question 16, on a delivery -versus -payment ("DVP")
basis? (check one)
Yes.
20. If "no" to Question 19, please explain why your firm does not carry any securities
insurance coverage for its customers.
Please see response for #18.
21. Please indicate a percentage breakdown of your firm's client base by portfolio
size.
UBS Financial Services Inc. treats client information as confidential information.
See the enclosed annual report for responsive information.
22. How many and what percentage of your securities transactions failed last month?
Last year?
UBS Financial Services Inc. considers this information to be proprietary. UBS
Financial Services Inc. makes the appropriate deduction for each failure to
City of Palm Desert • •
2003 Primary Dealer RFI
Page 7 of 9
deliver contract, if any, in computing net capital as required as required by SEC
Rule 15c3-1.
23. What precautions does your firm take to protect the interests of the public when
dealing with public sector clients as investors?
UBS Financial Services Inc. is required to conform with all rules and regulations
of all regulatory and self -regulatory organizations to which UBS Financial
Services Inc. is subject or of which UBS Financial Services Inc. is a member.
24. What makes your firm the best broker/dealer for the City? What advantage
would the City gain by trading with your firm?
I believe that starting out as a retail broker and over the years establishing myself
as an institutional sales person has given me a different understanding than most
institutional sales people as to how difficult it is to establish and maintain
productive client relationships. As part of the RIS Group, we have been able to
facilitate and specialize in the needs of institutional investors by developing
important relationships with the agency trading desk and the research analysts.
This approach has enabled us to offer superior service to the institutional
investor.
SECTION IV: REQUEST FOR DISCLOSURE
25. Have any of your firm's public sector clients sustained a loss on a securities
transaction within the last five years, arising from a misunderstanding or
misrepresentation of the risk characteristics of a financial instrument that was
recommended by and purchased through your firm?
Not unlike most securities firms, UBS Financial Services Inc. is and has been a
defendant in numerous legal actions relating to its securities and commodities
business that allege various violations of federal and state securities laws
including allegations of fraud, misrepresentation and/or breach of fiduciary duty
which have resulted in civil or monetary liability being assessed against UBS
Financial Services and/or its employees. Our parent, UBS AG ("UBS"), is a
public company (UBS stock is listed on the NYSE) and regularly reports on
Forms 10K and 10Q to the Securities and Exchange Commission ("SEC") and
NYSE regarding material litigation, including administration proceedings. These
reports are publicly available and include information about UBS matters.
UBS Financial Services Inc., like most large, full service investment banks and
ker-dealers, is subject to inquiries by the SEC, NYSE and various other
tory organizations. UBS fully cooperates with the authorities in all such
MEETING AGENDA WORKSHEET
Meeting Description Outside Agency Funding Comm Meeting Date 9-24-02 l Time 10:00 a.m.
Location ACR
Time
Convene
I (0'OZdM
Members Attending
1 Paul Gibson
2 Jean Benson
3 Bob Spiegel
4 Dave Erwin
5 Carlos Ortega
6 Sheila Gilligan
7
8
9
10
11
12
13
Items To Be Discussed
1 1\1Mltn�
24� . l a)
3
Mailed Agenda 9/18/02
Posted Agenda 9/18/02
Adjournment
[0; 19Q.n2
Yes No Others Attending
1 Diana Leal
2
3
4
5
6
7
8
9
10
11
12
13
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• •
COMMITTEE MEETING WORKSHEET
Meeting Description Investment Committee
Location North Wing Conference Room
Time
Convene
Adjournment
Staff Members Attending
1 Paul Gibson, Chairperson
2 Council Member
3 Council Member
4 Dave Erwin, City Attorney
5 Carlos Ortega, City Mgr.
6 Thomas Jeffrey
Public Members Attending
7 Russ Campbell
8 Murray Magloff
9 Bill Veazie
10 Everett Wood
Meeting Date 9/24/03 Time 2:00 p.m.
Mailed Agenda 9/17/03
Posted Agenda 9/17/03
Others Attending
11 Dennis Coleman
12 Justin McCarthy
13 Rodney Young
14 Recording Secretary
15
16
17
18
19
20
Yes No
17
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Guests Attending
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•
IFIlnanee Department
MEMORANDUM
To: Records Technician
From: Diana Leal, Administrative Secretary
Subject: Investment and Finance Committee Meeting
Date: September 30, 2003
Attached, for your records, is a copy of the September 24, 2003 Investment and Finance Committee
meeting attendance register.
Thank you for your assistance.
Attachments (1)
G'\Financc\Diana Leal \Wpdocs\Investment Committee\2002 Memos\City Clerk \2003\9-24-03attend.wpd
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CITY OF PALM DESERT
INVESTMENT & FINANCE COMMITTEE
AGENDA
September 24, 2003, 2:00 p.m.
North Wing Conference Room
I. CALL TO ORDER
II. ROLL CALL
III. ORAL COMMUNICATIONS
A. Any person wishing to discuss any item not on the agenda may
address the Investment and Finance Committee at this point by
giving his/her name and address for the record. Remarks shall be
limited to a maximum of five minutes, unless the Investment and
Finance Committee authorizes additional time.
B. This is the time and place for any person who wishes to comment
on agenda items. It should be noted that at the Investment and
Finance Committee's discretion, these comments may be deferred
until such time on the agenda as the item is discussed. Remarks
shall be limited to a maximum of five minutes, unless the
Investment and Finance Committee authorizes additional time.
IV. COMMITTEE MEMBER REPORTS
V. CONSENT CALENDAR
ALL MATTERS LISTED ON THE CONSENT CALENDAR ARE
CONSIDERED TO BE ROUTINE AND WILL BE ENACTED BY ONE
ROLL CALL VOTE. THERE WILL BE NO SEPARATE DISCUSSION OF
THESE ITEMS UNLESS MEMBERS OF THE INVESTMENT & FINANCE
COMMITTEE OR AUDIENCE REQUEST ITEMS BE REMOVED FROM
THE CONSENT CALENDAR FOR SEPARATE DISCUSSION AND
ACTION UNDER SECTION V. CONSENT ITEMS HELD OVER, OF THE
AGENDA.
A. Aooroval of Minutes
Rec: Approve minutes of the regular meeting of July 23, 2003, as
submitted.
Action:
92403 wpd
1
INVESTMENT & FINANCE gtMITTEE
AGENDA September 24, 2003
VI. CONSENT ITEMS HELD OVER
None.
VII. NEW BUSINESS
A. City and Redevelopment Aaencv Investment Schedules and
Summary of Cash Reports for July and August 2003
Rec: Review and submit for the next City Council agenda.
Review the presentation on the investment graphs. Review
the investment activity for July and August 2003.
Action:
B. Rejection of all 'Primary Dealer Requests for Information" that the
City has received for a primary securities dealer vacancy
Rec: Review and submit for the next City Council agenda.
Action:
C. Approval of Revisions to Palm Desert Treasury Policies and
Procedures 2003
Rec: Review and submit for the next City Council agenda.
Action:
D. Palm Desert Statement of Investment Policy 2004
Rec: Review and submit for the next City Council agenda.
Action:
E. State of California Local Aoencv Investment Fund Balance for the
month of Auaust 2003
Rec: Informational item for the Committee to review. No action
required
F. California Asset Management Proo_ ram (CAMP) Auaust 2003
Statements
Rec: Informational item for the Committee to review. No action
required
92403 wp0
2
INVESTMENT & FINANCE AMITTEE
•
AGENDA September 24, 2003
G. Enactment of SB 787 (Battinl
Rec: Informational item for the Committee to review. No action
required
H. City and Redevelopment Aaencv Monthly Financial Report for City
Council for August 2003
Rec: Report and submit to City Council
Action:
I. Parkview Professional Office Building s - Financial Report for
July and August 2003
Rec: Review and file report
Action:
J. Palm Desert Golf Course Facilities Corporation Financial
Information for July and Auaust 2003
Rec: Review and file report
Action:
VIII. CONTINUED BUSINESS
None.
IX. OLD BUSINESS
A. Status of Public and Private Partnerships Background Checks
Rec: Status report on background checks
Action:
B. Bond Issuance by Palm Desert Financing Authority
Rec: Status report on issuing new bonds
Action:
3
92403 wpd
INVESTMENT & FINANCE ILMITTEE
AGENDA September 24, 2003
X. NEXT MEETING - Wednesday, October 22, 2003 at 2:00 p.m.
Xl. ADJOURNMENT
I hereby certify under penalty of perjury under the laws of the State of
California, that the foregoing agenda for the Investment and Finance
Committee was posted on the City Hall ulletin board not le s than 72
hours prior to the meeting. Dated this 17 !day '•'�.-ept_ ber, 703.
secretary
4
92403 wpd