§ 54-54. Fiduciaries and fiduciary responsibility.

Regardless of any other provision in this article, this section and the provisions hereof shall control and take precedence over any other provision in conflict therewith:

(1)

Fiduciary. A "fiduciary" shall be any person or entity who exercises any discretionary authority or control regarding management of the system or system assets; any person or entity who renders or who has authority or responsibility to render investment advice; or any person or entity who has any discretionary authority or responsibility in system administration. Any person or entity may serve in more than one fiduciary capacity.

(2)

General standards of responsibility. All fiduciaries shall discharge their duties with respect to the system solely in the interest of members, former members, and beneficiaries, and more particularly as follows:

a.

For the exclusive purpose of providing benefits to members and their beneficiaries, and defraying reasonable system administrative expenses;

b.

With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

c.

By diversifying the investment of the system so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and

d.

By performing their duties in accordance with this article.

(3)

Allocation of responsibility among fiduciaries. Each fiduciary shall have only those specific powers, duties, responsibilities and obligations as are specifically given them under this article. The city shall have the sole responsibility for making contributions under the article and shall have the responsibility for the establishment and maintenance of the pension board as required under this article, and shall have authority to amend or terminate in whole or in part this article or the system.

The pension board shall have the sole responsibility for the administration of this system as specifically set forth in this article.

The trustee shall have the sole responsibility for the administration of the trust fund and the management of assets held in the trust fund, except as may be delegated by the board to an independent investment manager or insurance company.

It is intended under this retirement system that each fiduciary shall be responsible for the proper exercise of his or its own powers, duties, responsibilities and obligations under this article. No fiduciary guarantees the trust fund in any manner against investment loss or depreciation in asset value.

(4)

Liability for breach by cofiduciary. In addition to any liability which he may have under any other provision of this article, a fiduciary with respect to the system shall be liable for a breach of fiduciary responsibility of another fiduciary of the system but only in the following circumstances:

a.

If he participates knowingly in, or knowingly undertakes to conceal an act or omission of such other fiduciary, knowing such act or omission is a breach;

b.

If, by his failure to comply with the provisions of subsection (2) above, in the administration of his specific responsibilities which give rise to his status as a fiduciary, he has enabled such other fiduciary to commit a breach; or

c.

If he has knowledge of a breach by such other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.

If the trustee is subject to the direction of another fiduciary, the trustee may rely on directions of such fiduciary and shall not be liable for following such instructions.

If authority to manage, acquire, or dispose of system assets is delegated to one or more investment managers, the trustee shall not be liable for the acts or omissions of such investment manager(s).

(5)

Prohibited transactions. A fiduciary shall not cause to take place between the fund and a party in interest, the following types of transactions:

a.

The sale, exchange, or lease of property.

b.

The lending of money or other extension of credit, except as provided herein.

c.

The furnishing of goods, services or facilities.

d.

The transfer to, or use by for the benefit of, a party in interest, of any fund assets.

e.

The acquisition on behalf of the fund of any city real property.

No fiduciary shall deal with assets of the fund in his own interest or for his own account; nor shall he act in any transaction involving the fund on behalf of a party whose interests are adverse to the interests of the system, its members, former members or beneficiaries; nor shall he receive any consideration for his own personal account from any party dealing with a transaction involving assets of the fund.

For purposes of this section, a party in interest shall include any member, or former member, city officials including members of the city council, fiduciaries, members of the pension board, and any person or entity providing services to the system.

(Code 1981, § 15-28)