NEW MEXICO
STATE INVESTMENT COUNCIL
CODE OF CONDUCT
ADOPTED OCTOBER 25, 2011
The members of the New Mexico State Investment Council (“NMSIC” or “Council”), are
fiduciaries to New Mexico’s Permanent Endowment Funds (“Permanent Funds” or “Funds”) and
subject to the statutory and common law duties of a fiduciary. Members pledge to enhance
NMSIC efficiency and transparency, including a commitment to open meetings, as well as to
adhere to the highest standards of ethical conduct and care.
This Code of Conduct (“Code”) summarizes fiduciary and related conduct requirements for the
Council as well as key delegates.1 By adhering to these standards, the Council shall facilitate the
effective and efficient exercise of NMSIC operations.
The Code sets forth: (1) Council responsibilities and duties; (2) a discussion of NMSIC meetings
and participation; and (3) compliance guidelines.
COUNCIL RESPONSIBILITIES AND DUTIES
The Council acknowledges a duty to the State of New Mexico and its citizens to exercise NMSIC
authority and responsibility for the exclusive benefit of the Permanent Funds.
I.
FIDUCIARY DUTIES
Council members are fiduciaries to the Permanent Funds. Fiduciaries must exercise the care, skill
and diligence that a prudent person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of like character and with like aims.
Non-delegable fiduciary responsibilities include a duty of loyalty. The Council must be impartial
in exercising undivided loyalty to the Permanent Funds. All assets must be invested for the
exclusive benefit of the Funds. Members may not engage in self dealing.
II.
PRUDENT INVESTOR DUTIES
Council members should have a cogent understanding of the NMSIC and the public fund sector
generally. Responsibilities with respect to the Funds include satisfying the duties below as a
prudent investor: 2
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Optimize total risk-adjusted returns of the Permanent Funds;
Attend and participate in Council and committee meetings;
Regularly evaluate the Funds' performance(s); and
Study issues affecting the investment of the Funds and make fully informed decisions.3
The Council recognizes that NMSIC ethics and integrity are essential for both successful
execution of prudent investor duties and effective administration of the State Investment Office
(“SIO”).
1
Delegates representing, or given the authority to act on behalf of, the Council include NMSIC committee members
and State Investment Office personnel.
2
Members acknowledge and disclose the existence of a conflict of interest between duties to NMSIC Funds and
legislative duties, specifically in executing the wishes of the State for the SIC to participate in economically targeted
investments (“ETIs”) while being mindful of the Council’s responsibility to adhere to the prudent investor standard.
3
Members are encouraged to participate in more than a statutory minimum hours of continuing education.
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III.
RESPONSIBILITIES AND RULES REGARDING CONFLICTS
Council members shall not have undisclosed private or outside interests that conflict with the
interests of the NMSIC or the Funds. Each member agrees to act in a manner consistent with this
Code and in such a manner as to avoid any actual or potential conflict of interest.
Permanent Fund transactions and contract selections are to be based solely on prudence, integrity
and competence. Council members agree either to inform the NMSIC and to recuse themselves
from decisions where an actual or potential conflict of interest exists, or to remove the source of
the conflict prior to participating in such decisions. Members are encouraged to disclose the
reason for any such recusal. Members are required to disclose generally the existence of an
actual conflict.
A conflict of interest is understood to be present in a situation where a relationship exists which
could reasonably be expected to diminish independence or judgment in performance of official
responsibilities. Conflicts also arise when a Council member (or a member of that individual’s
family), friend or associate receives undisclosed benefits as a result of the individual’s position on
the Council.
V.
ADDITIONAL DISCLOSURE REQUIREMENTS
Council members shall disclose any material interest in an entity in which an investment has been
made with monies of the Funds or in any entity considered for a contract with the Council or the
SIO. Council members also must disclose any known business relationship with parties serving
or considered for service to the Funds. Council members shall be prepared to disclose generally
the name of interests held personally, but not how much of any particular interest is owned.4
COUNCIL MEETINGS AND PARTICIPATION
NMSIC participation is an important element of a member’s fiduciary responsibility. The
Council shall maintain a commitment to open meetings, and approve and communicate to the
public a regular meeting schedule. The NMSIC shall keep a record of Council proceedings.
Additional meetings may be scheduled, if necessary, with appropriate notice to the public.
Confidential Executive Sessions may be held pursuant to NMSA 10-15-1, et seq.
The NMSIC currently maintains four standing committees: the Investment, Audit, Governance,
and Litigation Committees. Committee members who do not serve as Council members are also
subject to this Code.
ADDITIONAL LEGAL AUTHORITY
Council members have access to confidential information pertaining to specific Permanent Fund
investments, NMSIC executive session matters, SIO employees, member financial disclosures
and privileged legal matters. Council members should not divulge or communicate any such
information to third-parties (persons or organizations) except as required by law. The obligation
to preserve confidentiality continues after Council membership ends.
4
While a Council member may be required to identify investments or holdings in conjunction with the provisions of
this Code, that individual is not required to disclose personal wealth details such as the numbers of shares, the value of
a particular investment, or comparable private information.
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The SIO’s structure as an investment organization housed within state government subjects the
NMSIC to regulation under certain federal securities laws and under state statutes and rules.
I.
TRADING
Council members must comply with the trading restrictions of Rule 10b-5 under the Securities
Exchange Act of 1934 and the Insider Trading and Securities Fraud Enforcement Act of 1988
when buying and selling securities. This obligation to avoid inappropriate trading continues after
Council membership ends.
Each Council member agrees to conduct personal investing and trading activities in a manner so
as to avoid conflicts of interest. Members are required to be alert to potential conflicts that may
arise in conducting affairs for personal reasons and on behalf of the Permanent Funds. Members
may not allow personal interests to interfere with obligations to the Funds.
II.
SELECT STATUTORY AUTHORITY
The following is a description of two additional, applicable statutes. The items are illustrative
and not a complete list of relevant authority.
The New Mexico Government Conduct Act requires Council members to treat their position as a
public trust. Council members are required to use the powers and resources of public office only
to advance the public interest and not to obtain personal benefits or pursue private interests
incompatible with the public interest. See NMSA 10-16-3.
New Mexico law also makes it a felony to act in an official capacity for the primary purpose of
directly enhancing a personal financial interest or financial position. Any Council member who
has a financial interest that the member believes, or has reason to believe, may be affected by an
NMSIC official act must disclose to the Governance Committee the nature and extent of that
interest. See NMSA 10-16-4.
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