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6.A. -Page 7 of 22 <br />CITY OF REDWOOD CITY <br />INVESTMENT POLICY <br />in order to prevent fraud, theft, loss of principal, loss of control over funds, inaccurate reporting, <br />negligence, and over -reliance on a single employee for investment decisions. <br />B. Internal controls should include but are not limited to: <br />1. Segregation of duties (e.g., the purchaser of investments is different than the person <br />recording the transaction) <br />2. Reconciliation of investment report and cash balances <br />3. Authorization of transactions <br />C. The external City auditor will review the investment program annually in order to provide <br />reasonable assurance that the policy and procedures are complied with. <br />VIII. Authorized Financial Dealers and Institutions <br />A. The City Treasurer or designee will obtain financial information from qualified institutions to <br />determine if the institution markets in securities appropriate to the City's needs, can assign <br />qualified sales representatives, and can provide written agreement to abide by the conditions <br />set forth in the this Policy. <br />B. The City Treasurer will maintain a list of financial institutions and broker/dealers authorized to <br />provide investment services to the City. An eligible designation does not guarantee that the City <br />will do business with the firm or institution. <br />C. If the City utilizes an external investment manager/advisor, the manager will perform due diligence and <br />maintain their own list of approved broker/dealers. The manager is authorized to transact with its own <br />approved broker/dealer list on behalf of the City. Such managers must be registered under the Investment <br />Advisers Act of 1940. <br />D. The following criteria will be used in determining investment providers: <br />1. Broker/Dealers: The purchase by the City of any investment other than those purchased <br />directly from the issuer shall be purchased from a broker/dealer firm designated as a Primary <br />Government Dealer by the Federal Reserve Bank of New York or a regional dealer that <br />qualifies under SEC Rule 150-1 (uniform net capital rule). <br />2. Banks: The City shall purchase securities from banks which meet all of the following criteria: <br />a. Nationally or State chartered banks <br />b. Registered as investment securities dealers with the Securities and Exchange Commission <br />c. Independently rated "A" or higher by two nationally recognized statistical rating <br />organizations <br />3. Investment Bankers, Underwriters and Financial Advisors: The purchase by the City of any <br />investments from these providers in the course of completing a bond transaction must <br />be expressly authorized by the City Council after such a provider discloses their <br />commission, spread or fee in approximate dollar amount. Otherwise, the acquisition of such <br />investments must be procured from the broker/dealers customarily used by the City. <br />4. The Federal Reserve Bank: Direct purchases of Treasury bills, notes and bonds from the U.S. <br />Federal Reserve Banks branches are allowed and are exempt from quality requirements of <br />section VIII of this policy. <br />Approved update: °% 4 <br />25 <br />