Board Resolution 2013-10-05(a)

Board Ethics Policy

Preamble

IMRF is administered by a Board of Trustees comprised of representatives of sponsoring employers, participants and annuitants. The members of the Board of Trustees and IMRF staff hold the highest positions of trust because they are stewards of retirement assets. They are also persons who by their mere position are required to exercise diligence and prudence. Their duties require attention to fiduciary standards. Those fiduciary standards extend to consultants and financial advisors who serve in the administration of the goals and objectives of IMRF.

Mission Statement

(40 ILCS 5/7-102)

It is the mission of this Fund to efficiently and impartially develop, implement and administer programs that provide income protection to members and their beneficiaries on behalf of participating employers in a prudent manner. (Adopted January 28, 1997)

Guiding Principles

1. Service to the beneficiaries of IMRF is the primary function of the Board of Trustees and IMRF staff.
2. The Board of Trustees and IMRF staff is ultimately responsible to the beneficiaries of IMRF.
3. In those situations where the law is not clear, the best interests of IMRF beneficiaries must be served.
4. Efficient and effective administration and investment management is basic to IMRF.
5. Safeguarding the trust of fund participants is paramount.
6. Service to IMRF participants demands fulfilling fiduciary responsibilities.
7. Timely and energetic execution of fiduciary responsibilities is to be pursued at all times by the IMRF Trustees and staff.

IMRF Trustees and staff shall not:

1. accept a gift having a value over $25 or solicit any gift, favor, or service from any third party which has, is or may do business with the Illinois Municipal Retirement Fund;
2. accept other employment or engage in a business or professional activity that they reasonably expect would require or induce them to disclose confidential information acquired by reason of their official position;
3. accept other employment or compensation that could reasonably be expected to impair their independence of judgment in the performance of their official duties;
4. make personal investments that could reasonably be expected to create a substantial conflict between their private interests and the interests of the plan participants and beneficiaries; provided, however, no trustee or staff member is precluded from making any personal investment that will not create a substantial conflict.
5. intentionally or knowingly solicit, accept, or agree to accept any benefit for having exercised their official powers or for having performed their official duties in favor of another;
6. transact any business in their official capacity with any entity or person in which they have an economic interest;
7. appear before the body of which they are a member while acting as an advocate for himself or any other person, group, or entity;
8. represent any business entity before the Board of Trustees, for pay;
9. represent, directly or indirectly, any business entity in any action or proceeding against the interest of the Board of Trustees, or in any litigation in which the Fund is a party;
10. use their official position to secure a special privilege or exemption for themselves or others or to secure confidential information for any purpose other than official duties; on
11. intentionally or knowingly disclose any confidential information gained by reason of their position concerning the property, operations, policies or affairs of the Board of Trustees, or use such confidential information for pecuniary gain;
12. represent a firm or solicit business on behalf of a firm (including affiliates) for whom he or she previously voted in favor of entering into a business relationship or negotiated or signed a contract binding IMRF for a period of two (2) years following the term of office or employment;
13. solicit donations for charities, not for-profit organizations and other causes from any person, organization or entity which does, has done or may do business with IMRF, including but not limited to, investment advisors and managers;
14. solicit or accept political contributions or donations for himself or herself or others from any person, organization or entity which does, has done, or may do business with IMRF, including but not limited to, investment advisors and managers; nor may he/she solicit or accept political contributions or donations from employees or IMRF;
15. profess or imply that he/she has the endorsement of IMRF with respect to any candidacy for which he or she is running;
16. accept free travel or accommodations from any third party which has, is or may do business with the Illinois Municipal Retirement Fund; or
17. accept free attendance at any educational conference or business-related function, the cost for which has been paid directly or indirectly by any third party which has, is or may do business with the Illinois Municipal Retirement Fund; or
18. accept food or refreshments exceeding $75 per person per day in value from any third party which has, is or may do business with the Illinois Municipal Retirement Fund; or
19. accept meals on an individual basis from any third party which has, is or may do business with the Illinois Municipal Retirement Fund unless such meal arises out of independent activities not related to the person’s role with the Illinois Municipal Retirement Fund or unless it is a staff member on Fund business under the $75 limit set forth above.

Interpretation of Policy (Determination of Substantial Interest)

An individual has a substantial interest in a business entity if he or she or his or her spouse:

1. has a controlling interest in the business;
2. owns more than 10 percent of the voting interest in the business entity;
3. owns more than $25,000 of the fair market value of the business entity;
4. has a direct or indirect participating interest by shares, stock, or otherwise, regardless of whether voting rights are included, in more than 10 percent of the profits, proceeds, or capital gains of the business entity;
5. is a member of the board of directors or other governing board of the business entity;
6. serves as an elected officer of the business entity; or,
7. is an employee of the business entity.

Policy on Business and Educational Functions

The Board of Trustees acknowledges it is responsible for the administration and operation of a specialized business involving great sums of money for the exclusive benefit of the plan participants and beneficiaries of the trust (Fund), and are responsible for defraying reasonable expenses which arise from the performance of duties and responsibilities under applicable trust law and universal tenets of fiduciary responsibility.

Trustees cannot rely solely on others to execute their fiduciary functions. While authority can be delegated, fiduciary responsibility rests ultimately with the trustees.

The Board of Trustees strongly encourages attendance and participation in business and educational functions which will further the performance of duties and responsibilities under applicable trust law. At a minimum, the trustees are required to attend at least 8 hours of ethics and fiduciary training per year. Trustees shall annually certify to the Board compliance with this training requirement.

Examples of Categories and Definitions

I. Business Operations:

Business Meetings:

• gatherings for discussions or negotiations on potential investments.
• formal litigation procedures.
• internal retreats of Board with or without advisors or consultants.
• instructional gatherings to develop business acumen.

Due Diligence:

• personal investigatory appearances by board members to the actual site(s) of a prospective venture, which could include the operational office of a prospective new advisor, consultant or business venture.
• this function should be repeated with existing relationships particularly when a material change has occurred, such as a change in personnel.

Site Inspections:

• primarily reserved for real estate investments in order to “kick the tires”, meet the tenants and the property management teams, check out the condition of the building(s) and other data relating to any proforma items of the investment.

II. Educational Operations:

Conferences:

• usually week long events of an annual nature dealing with a multitude of topics and current trends and developments in the pension industry.
• one of the best forums within which to interact with peers from other jurisdictions (networking).

Workshops and Symposiums:

• events of two to three days of sessions involving discussions surrounding a single theme- or a specific topic or subject matter.

Trustee Ethics and Fiduciary Training:

• Trustees are required to attend at least 8 hours of ethics and fiduciary training annually. Each trustee is expected to maintain adequate documentation of such training, received in increments of no less than one-half hour of actual instruction.
• training may be conducted during Board and Board Committee meetings and Board Roundtables, provided the topic is clearly delineated as trustee ethics and fiduciary training.
• training may be undertaken at independent conferences, seminars and symposiums.
• Trustee ethics and fiduciary training includes presentations by staff or consultants or training at outside seminars and conferences on topics of:
  1. IMRF ethics and travel policies and best practices in the industry;
  2. Fiduciary duties;
  3. Investment issues including asset allocation, training on potential investment vehicles, investment procedures, and best practices;
  4. Illinois pension Code;
  5. Actuarial issues, including presentations concerning the annual actuarial report, gain/loss analysis, and triennial experience analysis;
  6. Medical matters to assist in hearing disability claims;
  7. New trustee orientation; and
  8. Other issues of pension fund administration, as determined by the Board.
• Not included are presentations covering:
  1. IMRF processes and procedures;
  2. Board agenda items unless specifically delineated as a training program.

Policy Against Harassment

It is the desire of the Board of Trustees that employees work in an atmosphere free from all forms of harassment. Therefore, this policy prohibits all types of harassment, including, but not limited to, harassment based on: sex, race, color, religion, national origin, age, marital status, disability, handicap, or any other classification protected under applicable law. This policy extends to each and every level of IMRF. Accordingly, harassment, whether by an employee, a Trustee, an IMRF member or annuitant, a customer, a member of management, or a visitor will not be tolerated. Activities of this nature are unlawful and serve no legitimate purpose; they have a disruptive effect on an individual’s ability to perform his/her job, and they undermine the integrity of the employment relationship.

Harassment is verbal or physical conduct relating to an individual’s sex, race, color, religion, national origin, age, marital status, disability, handicap, or any other classification protected under applicable law when this conduct:

1. Has the purpose or effect of creating an intimidating, hostile, or offensive working environment;
2. Has the purpose or effect of unreasonably interfering with an individual’s work performance; or
3. Otherwise adversely affects an individual’s employment opportunities.

We recognize examples of conduct that may constitute prohibited harassment include: slurs, jokes, cartoons, stereotypes, statements, etc., based upon sex, race, color, religion, national origin, age, marital status, disability, handicap, any other classification protected under applicable law, and unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when:

1. Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment;
2. An individual’s submission to or rejection of such conduct is used as a basis for an employment decision affecting that individual; or
3. The purpose or the effect of such conduct is to substantially interfere with the affected individual’s work performance or to create an intimidating, hostile, or offensive work environment.

Although the above defines “unlawful” harassment, it is also a violation of this policy to commit or engage in any unprofessional or inappropriate conduct based on any protected classification, whether or not such conduct rises to the level of “unlawful” harassment.

Retaliation against any individual who has complained about harassment, filed a charge of harassment, or who otherwise participated in an investigation of harassment will not be tolerated.

IMRF intends to resolve any complaints of harassment within our organization, but will also advise employees of their right to contact State and Federal agencies charged with enforcing anti-harassment laws.

Policy Against Prohibited Political Activities

The Board of Trustees recognizes that the IMRF staff is ultimately employed by the members of IMRF, the participating units of local government, and the taxpayers of those local governments. It is appropriate therefore that the restrictions against prohibited political activity found in the State Officials and Employees Ethics Act and applicable to units of local governments and school districts are applicable to IMRF staff and trustees.

The following definitions apply to this policy against prohibited political activities:

"Campaign for elective office" means any activity in furtherance of an effort to influence the selection, nomination, election, or appointment of any individual to any federal, State, or local public office or office in a political organization, or the selection, nomination, or election of Presidential or Vice-Presidential electors.

"Candidate" means a person who has filed nominating papers or petitions for nomination or election to an elected public office, or who has been appointed to fill a vacancy in nomination, and who remains eligible for placement on the ballot at a regular election, as defined in section 1-3 of the Election Code.

"Compensated time" means, with respect to an employee, any time worked by or credited to the employee that counts toward any minimum work time requirement imposed as a condition of employment, but, does not include any designated holidays, vacation periods, personal time, or compensatory time off.

"Contribution" has the same meaning as that term is defined in section 9-1.4 of the Election Code.

"Employee" means a person employed by the Illinois Municipal Retirement Fund, whether on a full-time or part-time basis or pursuant to a contract, whose duties are subject to the direction and control of IMRF with regard to the material details of how the work is to be performed, but does not include an independent contractor.

"Employer" means the Illinois Municipal Retirement Fund.

"Political activity" means any activity in support of or in connection with any campaign for elective public office or any political organization, but does not include activities (i) relating to the support or opposition of any executive, legislative, or administrative action; (ii) relating to collective bargaining; or (iii) that are otherwise in furtherance of the person's official duties.

"Political organization" means a party, committee, association, fund, or other organization (whether or not incorporated) that is required to file a statement of organization with the State Board of Elections or a county clerk under Section 9-3 of the Election Code.

"Prohibited political activity" means:

• Preparing for, organizing, or participating in any political meeting, political rally, political demonstration, or other political event.
• Soliciting contributions, including but not limited to the purchase of, selling, distributing, or receiving payment for tickets for any political fundraiser, political meeting, or other political event.
• Soliciting, planning the solicitation of, or preparing any document or report regarding anything of value intended as a campaign contribution.
• Planning, conducting, or participating in a public opinion poll in connection with a campaign for elective public office or on behalf of a political organization for political purposes or for or against any referendum question.
• Surveying or gathering information from potential or actual voters in an election to determine probable vote outcome in connection with a campaign for elective public office or on behalf of a political organization for political purposes or for or against any referendum question.
• Assisting at the polls on election day on behalf of any political organization or candidate for public office or for or against any referendum question.
• Soliciting votes on behalf of a candidate for elective public office or a political organization or for or against any referendum question or helping in an effort to get voters to the polls.
• Initiating for circulation, preparing, circulating, reviewing, or filing any petition on behalf of a candidate for elective public office or for or against any referendum question.
• Making contributions on behalf of any candidate for elective public office in that capacity or in connection with a campaign for elective public office.
• Preparing or reviewing responses to candidate questionnaires.
• Distributing, preparing for distribution, or mailing campaign literature, campaign signs, or other campaign material on behalf of any candidate for elective public office or for or against any referendum question.
• Campaigning for any elective public office or for or against any referendum or against any referendum question.
• Managing or working on a campaign for elective public office or for or against a referendum question.
• Serving as a delegate, alternate, or proxy to a political party convention.
• Participating in any recount or challenge to the outcome of any public office election.

"Trustee" means a member of the Board of Trustees of the Illinois Municipal Retirement Fund.

Prohibited Political Activities

1. No employee shall intentionally perform any prohibited political activity during any compensated time, as defined herein. No trustee or employee shall intentionally use any property or resources of IMRF in connection with any prohibited political activity.
2. At no time shall any trustee or employee require any employee to perform any prohibited political activity (i) as part of that employee’s duties, (ii) as a condition of employment, or (iii) during any compensated time off (such as holidays, vacation or personal time off).
3. No employee shall be required at any time to participate in any prohibited political activity in consideration for additional compensation or any benefit, nor shall any employee be awarded additional compensation or any benefit in consideration for his or her participation in any prohibited political activity.
4. Nothing in this Policy prohibits activities that are permissible for a trustee or employee to engage in as part of his or her official duties, including duties or activities related to the election of IMRF trustees, or activities that are undertaken by a trustee or employee on a voluntary basis which are not prohibited by this Policy. Nothing in this Policy shall apply to or restrict the rules regarding IMRF Board elections.
5. No person shall be denied or deprived of employment at IMRF solely because he or she is a member or an officer of a political committee, of a political party, or of a political organization or club.

Penalties

An employee who intentionally violates any provision of the IMRF Ethics Policy (including the standard of conduct and conflict of interest provisions, the travel policy, the policy against harassment, and the policy against prohibited political activities) is subject to discipline up to and including discharge.

A trustee who intentionally violates any provision of the IMRF Ethics Policy (including the standards of conduct and conflict of interest provisions, the travel policy, the policy against harassment, and the policy against prohibited political activities) is subject to public censure by the Board of Trustees and/or removal from Board office (i.e. President, Vice-President or Secretary) and/or Board committee membership.

Ethics Advisor and Ethics Commission

An ethics advisor for IMRF shall be designated by the Executive Director, with the advice and consent of the Board of Trustees. The ethics advisor shall provide guidance to the trustees and employees of IMRF concerning the interpretation of and compliance with the provisions of the IMRF Ethics Policy. The ethics advisor shall perform such other duties as may be delegated by the Board of Trustees.

An IMRF Ethics Commission shall be created, comprised of three members: the President of the Board of Trustees, the Vice-President, and the Chief Audit Officer. The Board Secretary shall be the conflict substitute.

The Ethics Commission shall have the following powers and duties:

1. To promulgate procedures and rules governing the performance of its duties and the exercise of its powers.
2. To investigate, conduct hearings and deliberations, issue recommendations for disciplinary actions regarding violations of this Ethics Policy. The Commission shall, however, act only upon the receipt of a written complaint alleging a violation of the Ethics Policy and not upon its own prerogative.
3. To receive information from the public and from trustees and employees pertaining to its investigations and to require additional information and documents from persons who may have violated the provisions of this Policy.
4. It is the obligation of all trustees and employees of IMRF to cooperate with the Commission during the course of its investigations. Failure or refusal to cooperate with requests by the Commission shall constitute grounds for discipline or censure.

Complaints alleging a violation of this Ethics Policy shall be filed with the Ethics Commission.

After receipt of a complaint, the Commission shall notify the respondent that a complaint has been filed against him or her and provide a copy of the complaint. The Commission shall also notify the complainant that the complaint was received. The notices to the respondent and the complainant shall also advise them of the date, time and place of the meeting to determine the sufficiency of the complaint and to establish whether probable cause exists to proceed.

The Commission shall meet to review the sufficiency of the complaint and, if the complaint is deemed sufficient to allege a violation of the Policy, to determine whether there is probable cause, based on the evidence presented by the complainant, to proceed. The Commission shall issue notice to the complainant and the respondent of the Commission’s ruling on the sufficiency of the complaint and, if necessary, on probable cause to proceed within 10 business days after receiving the complaint.

If the complaint is deemed sufficient to allege a violation of the Policy and there is a determination of probable cause, then the Commission’s notice to the parties shall include a hearing date scheduled within 45 business days after the complaint’s receipt. If the complaint is deemed not sufficient to allege a violation or if there is no determination of probable cause, then the Commission shall send a notice to the parties of the decision to dismiss the complaint.

On the scheduled date the Commission shall conduct a hearing on the complaint and shall allow both parties the opportunity to present testimony and evidence.

Within 30 days after the date the hearing or any recessed hearing is concluded, the Commission shall either (i) dismiss the complaint or (ii) issue a recommendation for discipline to the Executive Director and the Board of Trustees. A copy of the recommendation shall be given to the alleged violator.

A complaint alleging a violation of the Ethics Policy must be filed with the Ethics Commission within one year after the alleged violation.