Resolution No. SI-R17-035: Investment Funds Management Act of 2017

At a duly called meeting of the Council of San Ildefonso Pueblo on the 31st day of October, 2017, the following Resolution was adopted:

WHEREAS, the Pueblo de San Ildefonso ("Pueblo") is a sovereign and self-governing Tribe, recognized as such by the United States of America, with the authority to govern its people, lands and other resources; and

WHEREAS, the Pueblo has operated its government in a fiscally prudent manner and has, over the years, developed an sizeable investment fund ("Investment Fund"), currently about $24,000,000.00, for the benefit of the People and the Pueblo's long-term financial health; and,

WHEREAS, the Pueblo's Investment Fund is currently invested 100% in stocks, thereby exposing the Pueblo to a high level of risk due to the volatility of the stock market; and,

WHEREAS, the Pueblo recently hired a highly-qualified, independent expert, Dr. Cohen of Portfolio Monitoring, LLC, to review and analyze the Investment Fund, and Dr. Cohen has concluded that in a typical down-turn in the stock market (based on historical and other factors) the Pueblo could reasonably expect to lose about one-third of the value of the Investment Fund; and,

WHEREAS, Dr. Cohen recently conducted an in-depth review of the Investment Fund and the practices of the current investment advisor, San Francisco Sentry, and has discovered several weaknesses in the advisor's investment practices including underperforming the benchmark and improper reporting; and,

WHEREAS, the Tribe recently hired a well-qualified and experienced Controller who has also reviewed and analyzed the Pueblo's Investment Fund and investment practices, and concurs with the Dr. Cohen's conclusions and findings; and,

WHEREAS, the Council has determined that the Pueblo's current investment practices expose the Investment Fund to unnecessary risk based on the volatility of the stock market and the lack of diversification, which could result in a significant loss to the Pueblo; and,

WHEREAS, based on the recommendations of the Tribe's expert advisors, the Council and Governor have concluded that the Investment Fund should be separated into three different accounts with one account invested in bonds, a safer investment, one account invested for long-term growth, and one account of managed investments, thereby lowering the risk of loss, but still generating a reasonable income; and,

WHEREAS, the Council and Governor have also determined that transferring the Investment Fund assets to two highly qualified and sophisticated investment companies, Morgan Stanley ("Morgan Stanley") and Rockefeller Asset Management ("Rockefeller"), that charge reasonable fees, will establish further safeguards for the Pueblo's Investment Fund; and,

WHEREAS, the Pueblo will also continue to utilize the services of Portfolio Monitoring, LLC, as a cost-effective, extra level of protection of the Investment Fund and will utilize such services until expiration of their contract and/or renewal of the contract; and,

WHEREAS, the Council has also determined that the Pueblo's current investment guidelines ("Investment Guidelines") that dictate the permissible investment practices are inadequate; and,

WHEREAS, based on the advice of the Pueblo's experts, the Council and Governor have determined that the Investment Guidelines should be revised to reflect a more realistic approach towards reaching the investment goals of the Pueblo.

WHEREAS, the Governor and Council have reviewed the status of the reserve fund, with the assistance of an independent expert, and have determined that it is in the best interest of the Pueblo to diversify the investments of the Pueblo into safer investments to minimize the risk of loss of the Pueblo's funds.

NOW THEREFORE BE IT RESOLVED ; that the Council hereby enacts the attached law entitled, "INVESTMENT FUNDS MANAGEMENT ACT OF 2017."

BE IT FINALLY RESOLVED, that the Pueblo de San Ildefonso Council hereby approves and adopts this resolution in accordance with the requirements of the Agreement, according to Council procedures, and authorizes and directs the Governor, or his designee, to take such actions as deemed necessary to carry out the intent of this resolution.

CERTIFICATION

The foregoing resolution was duly voted upon by the Council on October 31, 2017, at a meeting with a vote of 8 in favor, 0 opposed, 0 abstaining and 2 absent (Governor presiding and not voting) pursuant to the authority vested in the Council by the Agreement of the Pueblo de San Ildefonso.

Irene Tse-Pe, Council Secretary

COUNCIL REPRESENTATIVE SPONSOR(S): Council Representative Irene Tse-Pe

DELIVERY OF THE RESOLUTION TO THE GOVERNOR:

Resolution No. SI-R17-035 was presented to the Governor of the Pueblo de San Ildefonso on the 31st day of October, 2017, pursuant to the Governing document of the Pueblo de San Ildefonso ("Agreement"), GOVERNOR, Sec. 4(c), and will become effective after signature by the Governor or veto override by the Council.

Irene Tse-Pe, Council Secretary

GOVERNOR'S ACTION:

{ } APPROVED

{ } VETO - RETURNED TO COUNCIL WITH EXPLANATION:

On this __________ day of ________________________, 2017.

James R. Mountain, Governor

Presented by the Governor to the Council on the ____ day of ____________, 2017.

COUNCIL'S ACTION:

Override of Governor's veto:

{ } YES

{ } NO

CERTIFICATION

The foregoing resolution was duly voted upon by the Council on _________________, 2017, at a meeting with a vote of ______ in favor, _____ opposed, _____ abstaining and _____ absent (Governor presiding and not voting) pursuant to the authority vested in the Council by the Agreement of the Pueblo de San Ildefonso.

Irene Tse-Pe, Council Secretary

INVESTMENT FUNDS MANAGEMENT ACT OF 2017

Section 1.1. Short Title

This enactment shall be known as, "INVESTMENT FUNDS MANAGEMENT ACT OF 2017 ("Act")."

Section 1.2. Purpose

The purpose of this Act is to authorize the Governor to transfer the Pueblo's reserve funds into new investments accounts, and to authorize the Governor, in consultation with the Controller and other experts, to develop and adopt new investment policies for the new accounts.

Section 1.3. Findings

The Council hereby finds and declares that:

(a) The Pueblo has operated its government in a fiscally prudent manner and has, over the years, developed a sizeable investment fund for the benefit of the Pueblo's long-term financial health.

(b) The Pueblo recently conducted an in-depth review of the investment fund and the practices of the current investment advisor, San Francisco Sentry, and has discovered several weaknesses in the investment practices of the Pueblo.

(c) The current investment practices expose the Pueblo's reserve fund to unnecessary risks based on the volatility of the stock market and the lack of diversification.

(d) The transfer of Pueblo's reserve funds into different investment accounts, each bearing a different level of risk, will reduce the level of risk of loss of the Pueblo's funds.

(e) Based on the advice of an independent expert, the investment policies that guide the practices of the investment advisors should be revised to reflect a more realistic approach towards reaching the investment goals of the Pueblo.

Section 1.4. Authorization of Transfer of Funds and the Adoption of New Investment Policies

(a) The Council hereby authorizes the Governor to negotiate and execute contracts with new investment companies for the purpose of opening new accounts for the investment of the Pueblo's funds ("New Investment Accounts").

(b) The Council hereby authorizes the Governor to grant a limited waiver of the Pueblo's sovereign immunity to the new investment companies for sole purpose of enforcing the contract to allow the company or companies to be paid any amount due for their services under the contract, but for no other purposes.

(c) The Council hereby authorizes and directs the Governor to transfer all funds currently maintained by San Francisco Sentry to the New Investment Accounts.

(d) The Council hereby authorizes and directs the Governor to transfer all uninsured funds maintained at the Los Alamos National Bank to the New Investment Accounts.

(e) The Council hereby repeals Section 6.3 (Long-term Investment Policy) and Section 6.4 (Short-term Investment Policy) of Title VI, Chapter 1 of the Code.

(f) The Council hereby authorizes and directs the Governor to develop and adopt new investment policies, based on the recommendations of the Controller and other experts provided, that the Governor shall provide the Council with a copy of the new policies within thirty days of adoption.