HomeMy WebLinkAbout159-06 RESOLUTIONRESOLUTION NO. 159-06
A RESOLUTION APPROVING A FIVE-YEAR CONTRACT WITH
FIRST SECURITY BANCORP AND ITS WHOLLY-OWNED
SUBSIDIARY, CREWS AND ASSOCIATES, INC. TO PROVIDE
INVESTMENT MANAGEMENT SERVICES TO THE CITY OF
FAYETTEVILLE
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of the City of Fayetteville, Arkansas
hereby approves the annual contract renewal with a five-year contract with First
Security Bancorp and its wholly-owned subsidiary, Crews and Associates, Inc. to
provide investment management services to the City of Fayetteville. A copy of
the contract for services marked Exhibit "A" is attached hereto, and made a part
hereof.
PASSED and APPROVED this 19th day of September, 2006.
APPROVED:
By:
ATTEST:
By-*%
DAN COODY, Mayor U SONDRA SMITH City Clerk
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INVESTMENT MANAGEMENT AGENCY AGREEMENT
THIS INVESTMENT MANAGEMENT AGENCY AGREEMENT ("Agreement") is made
and entered into by and between the CITY OF FAYETTEVILLE, ARKANSAS, an Arkansas
municipal corporation, by its Mayor and City Clerk, duly authorized by action of its City
Council (the "City") and FIRST SECURITY BANK, an Arkansas banking corporation, by its
Sr. Vice President and Trust Officer, duly authorized by its Board of Directors ("FSB").
WHEREAS, the City solicited Requests for Proposals for Investment Management
Services pursuant to its RFP No. 06-07; and
WHEREAS, FSB submitted a response to the Request for Proposal which was, after
examination of responses received from other qualified persons, accepted by proper
action of the City Council of the City.
Now THEREFORE, in consideration of the mutual promises and obligations of the
parties hereto, for other good and valuable consideration, and Intending to be bound, the
parties agree as follows:
1. Appointment of Investment Manager. The City hereby appoints
FSB to act as investment manager with respect to those financial assets of the City (the
"Account Assets") which will hereafter be transferred to the custody of FSB, to be held
as custodian pursuant hereto. The Account Assets shall include the financial assets
initially transferred to FSB, financial assets hereafter transferred to FSB by the City, and
income, increment, proceeds and accretions to all of the foregoing. FSB will furnish an
investment program to maximize the financial returns on the Account Assets while
adhering to the City's Investment Policy (as hereinafter defined).
2. Custody of Account Assets. FSB will act as custodian for all of the
Account Assets acting through its Trust Division. All Account Assets shall remain in the
physical possession of FSB as custodian. FSB shall, during the effectiveness hereof,
maintain fiduciary liability insurance with limits of liability not less than $2,000,000.
3. Management Authority. The City hereby authorizes FSB to place
orders or otherwise give instructions for the purchase, sale, or exchange of securities on
behalf of the City which are included in the Account Assets without prior consultation or
ratification by the City, givingand granting to FSB, complete discretion as to the nature,
amount and timing of all securities transactions, subject only to those restrictions,
limitations and guidelines which are set out in the City of Fayetteville, Arkansas,
Investment Management Policy which is attached hereto as Exhibit A and made a part
hereof by this reference, which is incorporated in Resolution No. 169-99, duly adopted by
the City Council of the City on December 21, 1999 (the "Investment Policy"). The City
reserves the right to revise or modify the Investment Policy at any time, and from time to
time, provided that, no such revision or modification shall be binding upon FSB until
written notice thereof is received by FSB. All purchases of securities which will become
a part of the Account Assets shall be on a delivery versus payment basis.
4. Fees. As compensation for its services pursuant hereto, FSB will be paid
a fee equal to 14 basis points of the average Account Assets if the average market value
of the Account Assets are less than $25 million during a calendar month; and a fee equal
to 10 basis points of the average market value of the Account Assets if the average
market value of the Account Assets are greater than $25 million during a calendar month.
The foregoing fees of FSB do not include fees for brokerage services in connection with
the purchase or sale of any security which is or is to become a part of the Account Assets.
All fees of FSB and all brokerage fees payable with respect to the Account Assets shall
be paid from the Account Assets and shall be separately accounted for in all reports
provided to the City.
5. Brokerage.
5.1. Selection of Broker. The City authorizes FSB to place orders for
purchases and sales of securities and financial assets through any broker or dealer it
chooses, including a broker or dealer which is affiliated with or under common control
with FSB. In selecting a broker or dealer for any transaction or series of transactions,
FSB will consider such factors as net price, execution, availability of research, and other
factors which FSB reasonably believes to be appropriate for purposes of making that
decision. The fact that the fees paid for brokerage services for the broker or dealer
selected by FSB are greater than fees for which similar services could be obtained, shall
not be a basis for liability to FSB.
5.2. Aggregation of Purchases. The City agrees that FSB may
aggregate sale and purchase orders of securities with similar orders being made
simultaneously for other accounts managed by FSB, or for accounts of affiliates of FSB
if, in the judgment of FSB, aggregation of such orders will result in a net savings to the
City with respect to the purchase or sale order for the particular security.
6. Monthly Reports. The Custodian shall provide the City with monthly
reports of the Account Assets in a format consistent with the reporting requirements of
the Governmental Accounting Standards Board, and otherwise reasonably acceptable to
the City. The Custodian and FSB shall provide such other and further information as the
City may reasonably require in connection with the Account Assets.
7. Voting of Equity Securities. Unless otherwise directed by the City, FSB
is authorized, in its discretion, to take such action as it deems appropriate with respect to
any proxy received with respect to any equity securities which may be or become a part
of the Account Assets from time to time.
8. Investment Risks. The City acknowledges that there are risks inherent
in all investments, and that some investments will result in profits and some investments
will result in loss. FSB shall not be liable to the City for any error of judgment or
mistake of law in the execution of its responsibilities hereunder, or for any loss suffered
with respect to the Account Assets, or any other matter arising out of this Agreement,
excepting only losses suffered `Ls a result of the negligence, bad faith or willful
misconduct of FSB.
•
9. Term and Termination. This Agreement shall be effective upon
execution by both parties and shall continue in force until modified by mutual agreement
of the parties in writing, or until terminated on thirty (30) days prior written notice by
either party to the other. Upon notice to the Custodian of any such termination, the
Custodian shall deliver the Account Assets to, or as directed in writing by, the City.
10. Miscellaneous Provisions.
10.1. Other Activities of FSB. Nothing in this Agreement shall be
deemed to restrict FSB or its affiliates from engaging in any other business or in
rendering any other investment agency services to any other person.
10.2. No Assignment. FSB shall not assign this Agreement, or
delegate its duties hereunder to any non-affiliated third party without the prior written
consent of the City.
10.3 Notices. All notices required or permitted hereunder shall be
in writing, and shall be delivered by U.S. Mail, retum receipt requested, or via confirmed
facsimile, and addressed as follows:
If to the City: " City of Fayetteville, Arkansas
113 W. Mountain St.
Fayetteville, Arkansas 72701
Attn: Mayor
If to FSB:
Facsimile: 479-575-8257
First Security Bank
314 N. Spring
Searcy, AR 72145-1006
Attn: Frank Faust
Sr. Vice President & Trust Officer
Facsimile: 501-278-2175
With copy to: First Security Bank
1219 E Joyce Blvd
Fayetteville, Arkansas 72703
Attn: John Rutledge
Facsimile: 479-527-7001
All notices shall be deemed delivered when received, or the first day that delivery is
refused.
10.4. Entire Agreement. This Agreement, together with the Exhibit
hereto, is the entire agreement of the parties and may be modified only by a writing
executed by all parties, except that the City may modify the Investment Policy at any
time, from time to time, without the consent of FSB.
10.5. Governing Law. This Agreement has been executed in and
shall be construed under the laws of the state of Arkansas.
10.6. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which, together, shall
be one and the same instrument.
10.7. Severability. If any one or more of the provisions hereof are
determined to be invalid, illegal or otherwise unenforceable, such determination shall
have no effect upon the remaining provisions hereof, which shall remain valid and
enforceable in accordance with their terms.
DATED AND EFFECTIVE this
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day of Se .0411 kyr , 2006.
CITY OF FAYETTEVILLE, ARKANSAS
Attest:9sy :QNANS: \?,
#idt YG TONiiiiIICP0
ity Clerk
Mayor
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FIRST SECURITY BANK
By:
ank Faust dm
Sr. Vice President & Trust Officer
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AC -02
Page 1 of 6
CITY OF FAYETTEVILLE, ARKANSAS
POLICY AND PROCEDURE
Subject:
City Investments
Policy Number:
AC -02
Original Policy Date:
December 21, 1999
Effective Date of New/Revised Policy:
December 21, 1999
Revision Dates:
Replaces ACCT -2 issued July 2, 1996
Custodian: (Division)
Accounting
Mayor's Signature and Date
AC -2.0 PURPOSE:
The purpose of this policy is to provide guidelines for investment of City of Fayetteville
operating funds to preserve the safety of principal, to maintain adequate cash flow, and to
maximize interest earnings.
AC -2.1 SCOPE:
This policy applies to the investment of City of Fayetteville operating funds not needed
for immediate expenditures. This policy does not govern the investment of employee
retirement or pension funds or proceeds of bond issues.
AC -2.2 STANDARDS/OBJECTIVES:
Investments will be made within the constraints of applicable State laws and this policy,
taking into consideration liquidity needs of the City.
Investment decisions will be made with judgment and care, under circumstances then
prevailing, which persons of prudence, discretion and •intelligence exercise in the
management of their own affairs, not for speculation, but for investment, considering the
probable safety of their capital as well as the probable income to be derived.
Investment of the funds of the City of Fayetteville shall be directed to the primary
objective of safety of principal; the secondary objective shall be maintaining adequate
cash flow; and the final objective shall be maximizing investment yield.
AC -02
Page 2of6
Except for cash in certain restricted and special funds, the City may consolidate moneys
from individual funds to maximize interest earnings Investment income will be
allocated to the various funds based on each fund's participation.
AC -2.3 DELEGATION OF AUTHORITY/RESPONSIBILITY:
Management of the investment of City funds regulated by this policy shall be the
responsibility of the Mayor and the Finance & Internal Services Director. The Mayor
and the Finance & Internal Services Director may delegate authority for investment
transactions. The Mayor and the Finance & Internal Services Director may, by proper
procurement procedures, contract for the services of an asset manager, an investment
advisor, or other expert advisor(s) to invest all or a portion of City funds regulated by this
policy. Selection of an independent asset manager or investment advisor will be limited
to those candidates who have an office within the City of Fayetteville.
The Mayor and the Finance & Internal Services Director and their designees are
authorized to: open and close accounts with financial institutions in the name of the City;
make wire transfers of funds for the City; make deposits of funds for the City; execute
collateral, depository and investment agreements for the City; and take any other such
actions needed to carry out their responsibilities for the depositing and investing of the
City's funds as authorized by State Statues and this policy.
The Mayor, the Finance & Internal Services Director, and other City employees assigned
to manage the investment portfolio, acting within the intent and scope of this Investment
Policy, shall be relieved of personal responsibility for an individual security's credit risk
or market risk Officers and employees involved in the investment process shall refrain
from personal business activities that conflict with proper execution of the investment
program or impair their ability to make impartial investment decisions.
The Mayor and the Finance & Internal Services Director shall establish operating
procedures to implement this investment policy.
AC -2.4 AUTHORIZED INVESTMENTS:
A. The City will invest only in book entry securities.
B. The City may, without limitation, invest in the following instruments, provided,
• however, that at no time shall assets of the City be invested in any instrument or
security not authorized for investment by Arkansas Code Annotated §§ 14-58-309
(Act 1341 of 1999), and further defined in Section 23-47-401 (Investment Powers and
Limitations), or by the Local Government Joint Investment Trust Act, Arkansas Code
Annotated §§ 19-8-301 et seq., (Local Government Trusts) as they may from time to
time be amended:
1. Direct obligations of the United States Government;
AC -02
Page 3 of 6
2. Obligations of agencies and instrumentalities created by act of the United States
Congress and authorized thereby to issue securities or evidences of indebtedness,
regardless of guarantee of repayment by the United States Government;
3. Obligations the principal and interest of which are fully guaranteed by the United
States Government or an agency or an instrumentality created by an act of the
United States Congress and authorized thereby to issue such guarantee.
4. Obligations the principal and interest of which are fully secured, insured, or
covered by commitments or agreements to purchase by the United States
Government or an agency or instrumentality created by an act of the United States
Congress and authorized thereby to issue such commitments or agreements.
5. General obligations of the states of the United States and of the political
subdivisions, municipalities, commonwealths, territories or insular possessions
thereof (general obligation bonds);
6. Obligations issued by the Arkansas State Board of Education under authority of
the State Constitution or applicable statues;
7. Prerefunded municipal bonds, the principal and interest of which are fully secured
by the principal and interest of a direct obligation of the United States
Government;
8. Certificates of deposit with banks authorized by State law to receive deposits of
public funds, that have branches or main offices within the Fayetteville City
limits, with which the City has both a depository agreement and a collateral
agreement.
9. Repurchase agreements that are fully collateralized by direct obligations of the
United States Government, provided that any such repurchase agreement shall
provide for the taking of delivery of such collateral directly or through an
authorized custodian;
10. Securities of, or other interest in, any open-end type investment company or
investment trust registered under the Investment Company Act of 1940, and
which is defined as a "money market fund" under 17 CFR § 270.2a-7, provided
that the portfolio of such investment company or investment trust is limited
principally to United States Government obligations and to repurchase
agreements fully collateralized by United States Government obligations, and,
provided further that any such investment company or investment trust shall take
delivery of such collateral either directly or through an authorized custodian.
11. Local Government Trusts.
AC -02
Page 4 of 6
C. The City may invest no more than twenty percent (20%) of the pooled investments in
the following investment types and in accord with certain limitations described in
Section VII Investing Parameters:
1. Corporate debt obligations (including commercial paper) of any corporation, with
the following credit ratings: investment of City funds in Corporate Bonds will be
limited to those rated as Single A minus or better by both Moody's Investor
Service and Standard and Poor's; investment of City funds in Commercial Paper
will be rated A -1/P-1,
2. Securities of, or other interests in, an open-end or closed-end management type
investment company or investment trust registered under the Investment
Company Act of 1940, provided that the portfolio of such investment company or
investment trust is limited to United States Government obligations and to
repurchase agreements collateralized by the same type of collateral used to
collateralize other City deposits, and provided further that any such investment
company or investment trust shall take the delivery of such collateral either
directly or through an authorized custodian;
D. Other Provisions
1. The Finance & Internal Services Director may establish an account with the
Federal Reserve Bank to purchase U.S. Government Securities directly from the
U.S. Treasury.
2. Any Arkansas state legislative action that provides for additional investment
vehicles or further restricts investment vehicles will be incorporated into the
City's investment policy and will supersede any previous language.
3. The City will be allowed to hold to matunty any investments existing at the time
of enactment of this policy. Reinvestment of such funds will be in accordance
with this policy.
4. The Mayor and the Finance & Internal Services Director may set additional
limitations on the parameters for various types and concentration of investments.
Operating procedures will define requirements to implement this policy.
AC -2.5 INVESTMENTS NOT AUTHORIZED:
The following investmeht vehicles, authorized by Act 1341 of 1999, are not considered
suitable investments for City of Fayetteville funds:
A. Warrants of political subdivision of the State of Arkansas and municipalities
thereof having maturities not exceeding one (1) year.
B. The sale of federal funds with a maturity of not more than one (1) business day.
C. Industrial development bonds for corporate obligors issued through any state of
the United States or any political subdivision thereof.
•
AC -02
Page 5 of 6
D. Revenue bond issues of any state of the United States or any municipality or any
political subdivision thereof.
E. Securities or other interests issued, assumed or guaranteed by the International
Bank for Reconstruction and Development, the Inter -American Development
Bank, the European Bank for Reconstruction and Development, the Asian
Development Bank, or the African Development Bank.
F. Uninsured demand, savings, or time deposits or accounts of any depository
institution chartered by the United States, any state of the United States, or the
District of Columbia.
AC -2.6 INVESTING PARAMETERS:
A. Diversification
The City investments regulated by this policy shall be diversified by:
• limiting investments to avoid over concentration in securities from a
specific issuer to five percent (5%) of the cost basis of the City's
portfolio at the time of purchase, a limit of fifteen percent (15%) of the
cost basis of the City's portfolio will apply to each business sector as
defined by any recognized rating agency (excluding U.S. Treasury
securities and collateralized certificates of deposit),
• investing in securities with varying maturities, and
• continuously investing a portion of the portfolio in readily available
funds to ensure that appropriate liquidity is maintained.
B. Maximum Maturities
The City will attempt to match investment maturities with cash flow
requirements and will utilize investments in readily available funds, when
needed, to meet ongoing obligations. The City anticipates a range of
maturities of ninety (90) days to five (5) years The City will invest in
securities maturing more than five (5) years from the date of purchase only
when the funds are easily defined to be used after five (5) years.
AC -2.7 ALLOWED INSTITUTIONS:
Security transactions on behalf of the City by an asset manager, or the City itself, will be
conducted only with financial institutions and broker/dealers who have offices within
Washington County unless otherwise authorized in writing by the Mayor and Finance &
Internal Services Director.
A list of authorized financial institutions and broker/dealers to be used by an asset
manager, an investment advisor, or the City itself, will be maintained by the City and
provided to such asset manager or investment advisor on a mutually agreed upon basis.
Security broker/dealers on the list will meet or exceed the capital adequacy standards set
AC -02
Page 6 of 6
by the Federal Reserve Bank of New York and may include dealers designated as
primary dealers by the Federal Reserve Bank of New York or regional dealers that
qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (Uniform Net
Capital Rule).
AC -2.8 SAFEKEEPING/COLLATERALIZATION:
A. Investment of City funds, including cash held for investment, managed under
contract of services by an asset manager, investment advisor, or other expert
advisor(s) will be placed with a third party custodian approved by the City. All
trades, where applicable, will be executed by Delivery vs. Payment (DVP) to
ensure that securities are deposited in an eligible financial institution prior to the
release of funds.
B. The custodian will make reports as requested by the City or advisor(s) and will be
accountable for the assets held by the custodian for the City's account. The
custodian will be required to maintain an office in Washington County, Arkansas.
C. Collateralization will be maintained as required by State law and procedures
established by the City. Demand deposits, time deposits, repurchase agreements,
and any other investments requiring collateralization shall be collateralized at a
level of 102 percent of the market value of principal and accrued interest, less the
amount insured by the FDIC.
Marsha Farthing
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
9/5/2006
City Council Meeting Date
Accounting and Audit
Division
Action Required:
FISD
2.&5
4/1/i(0‘
/59
tore
Department
Approval of a five year contract with First Security Bancorp and its wholly-owned subsidiary Crews and Associates,
Inc. for investment management services.
10 basis points for $25 million or
more of assets. (approx. $69,000)
Cost of this request
Allocated to all funds with investments
Account Number
Project Number
Budgeted Item
Category / Project Budget
Funds Used to Date
Remaining Balance
Budget Adjustment Attached
Program Category / Project Name
Program / Project Category Name
Fund Name
Department Director
City Attorney
-V CJS Ct -
Finance and Internal Service Director
Mayor
Comments:
Date
Date
g - 2t-6
Date
Date
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
T h/cd 4 34e-/,' /91 a' *4e or& 9 /54o4
THE CITY OF FAYETTEVILLE, ARKANSAS
To: Mayor and City Council
Thru: Paul Becker, Finance Director
From: Marsha Farthing, Accounting Manager
Date: August 16, 2006
Recommendation
Staff recommends approval of a five year contract with First Security Bancorp and its
wholly-owned investment banking subsidiary Crews & Associates, Inc for investment
management services.
Background
In 1999 the State approved Act 1341 which provided for expanded investment
opportunities for local municipalities. At that time the City's Investment Policy was
amended to reflect these changes. Because of the restrictive nature of the state law prior
to that time, the City managed the investments internally. After the changes, City staff
felt it was prudent to solicit investment management services and in 2000 a five year
contract was awarded to Garner Asset Management Company, LLC. Garner Asset was
acquired by Garrison Financial Corporation in 2005. The investment of the City's funds
is governed by the City's Investment Policy and City staff works closely with the
investment manager to ensure prudent care over the City's assets. The City currently has
approximately 69 million dollars in the investment portfolio with Garrison Financial.
Discussion
In April 2006 the City formed a selection committee and solicited proposals for
investment services. Following the applicable rules and regulations of the procurement
process, First Security Bancorp was selected by the committee to provide these services
and a contract is being presented at this time for investment management services.
113 WEST MOUNTAIN 72701 479-521-7700
FAX 479-575-8257
RESOLUTION NO.
A RESOLUTION APPROVING A FIVE-YEAR CONTRACT WITH
FIRST SECURITY BANCORP AND ITS WHOLLY-OWNED
SUBSIDIARY, CREWS AND ASSOCIATES, INC. TO PROVIDE
INVESTMENT MANAGEMENT SERVICES TO THE CITY OF
FAYETTEVILLE.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of the City of Fayetteville, Arkansas
hereby approves the annual contract renewal with a five-year contract withrF4t
Security Bancorp and its wholly-owned subsidiary, Crews and As�c *lnc.►b
provide investment management services to the City of Fayetl�. A1eopy of
the contract for services marked Exhibit "A" is attached htev leeretoSd made a part
hereof.
A
By
PASSED and APPROVED this 5w • a of Septembi-r,(20Q6.
hYDRA SMITH, City Clerk
AN COODY, Mayor
I
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•
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Respectfully submitted by:
Crews&Associates
Member First Security Bancorp
City of Fayetteville, Arkansas
RFP 06-07 Investment Management Services
May 18, 2006
Proposal for Investment Management
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P.O. Box 17770
Little Rock, AR 72222
(501) 217-4500
FAX (501) 217-4502
fsbank.com
Member FDIC
May 18, 2006
Ms: Andrea Foren
City of Fayetteville, Arkansas
113 West Mountain Street
Fayetteville, Alt 72701
RE: Request for Proposal
RFP 06-07, Investment Management Services
Dear Ms. Foren:
First Security Bancorp and its wholly-owned investment banking subsidiary, Crews
& Associates, Inc. are pleased to present our qualifications in response to the City of
Fayetteville's Request for Proposals for investment management services. Our
proposal is designed to be concise, informative and demonstrative of our broad
range of experience and expertise, our specific experience in the management,
trading and underwriting of fixed income securities, and our service to similar
governmental entities in the State of Arkansas.
As described in our Joint proposal, First Security Bancorp is a $2.0 billion financial
services holding company with a substantial presence in the City of Fayetteville and
throughout Northwest Arkansas. First Security serves the communities of Arkansas
with more than 850 employees and over 50 locations. Crews & Associates is a full
service investment banking fimi with more than 170 professionals specializing in the
area of fixed income securities. Crews & Associates has over 125 registered
representatives operating from nine offices around the State including the City of
Fayetteville. As described in our proposal, our local presence provides many
relevant benefits in our service to the City of Fayetteville.
We appreciate the opportunity to submit our qualifications. If we can provide
additional information, please contact us at (800) 766-2000.
Sincerely,
Bill Scholl
President•
First Security Bancorp
Rush F. Harding, III
Chief Executive Officer
Crews & Associates, Inc.
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Crews reside In the First Security Center
Located In Little Rocks River Market District,
Contents
e
Crews & Associates, Inc.
Response to Request for Proposal RFP# 06-07
Investment Management Services for
City of Fayetteville, Arkansas
113 W. Mountain Street
Fayetteville, AR 72701
QUALIFICATIONS PAGE
Organization 2
Professional Staff 3
Experience 5
Client Base 6
Procedures 6
Resources 7
Performance 7
REQUIREMENTS PAGE
Litigation
Proposed Fee
Crews&Associates
Member First Security Bancorp
8
9
City of Fayetteville —I
l
Organization Overview
11-11 Provide a general description of your organization including the ownership, subsidiaries and
any affiliations relevant to the city.
OUR ORGANIZATION
Crews & Associates, Inc. is an Arkansas -based, full-service investment banking firm headquartered in Little Rock,
Arkansas. The firm operates additional offices in Fayetteville, Searcy, Cabot, Clarksville, Conway, Heber Springs,
Mountain Home and Springdale.
Crews & Associates is a wholly-owned subsidiary of First Security Bancorp, an Arkansas -based financial services
holding company with more than $2 billion in assets. Our affiliation with First Security Bancorp and its management
team, led by Chairman Reynie Rutledge, enhances our company's management team, our access to capital, and our
access to the most advanced technology. This alliance provides Crews with the resources to be an even more valuable
partner to our Arkansas -based clients.
Stockholders Reynie Rutledge, J. Lindsey
First Security Bancorp has affiliate offices in Fayetteville, Springdale, Rogers, Searcy,
Little Rock and several other Arkansas communities. It is a privately -owned firm with a
limited number of shareholders; two of its majority stockholders — Reynie Rutledge and
Jim Lindsey — have strong ties to Northwest Arkansas.
Crews & Associates is headquartered in Little Rock with approximately 170 employees
working from this location. The day-to-day business activities are managed by Rush
Harding, chief executive officer, and Jim Jones, president. In addition to our investment
management services, Crews is also an active underwriter of municipal securities in
Arkansas and around the nation. Our firm maintains underwriting offices in Little Rock, Arkansas, Fayetteville,
Arkansas; Searcy, Arkansas; Baton Rouge, Louisiana; Montgomery, Alabama; Jackson, Mississippi; Charleston, West
Virginia; Morgantown, West Virginia; and Columbia, Maryland. In 2005, Crews & Associates ranked second in the
State of Arkansas in terms of new municipal securities issues and in the top 50 for new issues around the nation.
s Crews has recently underwritten bond issues that included a variety of improvements for the Fayetteville area including:
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;$109,380,000
R ional Medical Center
rovem'tiittr&-Re k ding
testtt005 A'and'.2005s
Crews&Associates
Member First Security Bancorp
City of Fayetteville 2
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•
Investment Management Team
11-2. Provide information identifying the number and type of Investment professionals employed by
your organization and indicate the average number and type of accounts handles by a
portfolio manager. Please provide resumes of the principals who will be responsible for the
management of the City's investments.
First Security Bancorp, through investment affiliate Crews & Associates, employs more than 125 registered investment
professionals in Arkansas. Our typical investment professionals manage a multitude of fixed income accounts of varying
sizes. Large institutional accounts, such as the City of Fayetteville's account, will be assigned to a seasoned, proven
manager whose skills and expertise have been proven over decades.
We anticipate that activity related to this account will be managed by the following team of experienced professionals
(resumes follow):
Investment Management Team
Mr. Frank Faust
Trust Department Manager, First Security Bancorp
Mr. Rush Harding
Chief Executive Officer, Crews & Associates
Mr. John Rutledge
Vice President, First Security Bancorp
Mr. Jim Jones
President, Crews & Associates
r
Frank Faust
(501)279-3408
ffaust@fsbancorp.com
Frank Faust is Senior Vice President and Trust Officer at First Security Bank. Mr. Faust has been
with the Trust Division for more than 10 years and has extensive experience in managing fixed-
income securities.
After practicing law in Little Rock, Arkansas, for six years, Mr. Faust joined First Security as head
of its Trust Department. He received his Bachelors in Finance Degree from the University of
Arkansas at Fayetteville in 1987. He received his Juris Doctor degree, with honors, from the University of Arkansas,
Fayetteville, in 1990.
Resumes continued on page 4...
Crews&Associates
Member First Security Bancorp
City of Fayetteville —3
7
1 He currently lives and works in Northwest Arkansas. He is an active member of Central United Methodist Church in
Fayetteville and Springdale's Rotary club. He also serves on the board of Arkansas Sports Hall of Fame, the Advisory
Committee for Soaring Wings Ranch, and the Business Alumni Advisory Council for the Walton College of Business at the
University of Arkansas.
Investment Management Team
Rush Harding
(501) 978-7903
rharding@crewsfs.com
Rush Harding, with six other business professionals, founded Crews & Associates in 1979. Rush is
now the chief executive officer and oversees the affairs of the company, directly managing all of its
sales and marketing efforts.
Rush has been active in the sale and trading of bonds since 1976. The municipal bond industry
recognizes him as a leading authority on municipal bonds. Rush has been the key individual in
determining the structure of every financing that Crews has brought to the market. Rush attended
West Point and graduated with honors from the University of Central Arkansas. He continues to serve the University of
Central Arkansas as a member of its Board of Trustees. Rush participates in the activities of various local organizations. He
also serves on the boards of Pulaski Academy and the Arkansas Sports Hall of Fame.
John Rutledge
(479) 750-7060
jrutledge@fsbancorp.com
John Rutledge has worked for First Security Bancorp and its affiliates since 2001. He now serves as a
Vice President of First Security while also continuing his investment banking career with Crews &
Associates, Inc.
John was born and raised in Searcy, Arkansas. He attended the University of Arkansas where he
lettered in football and eamed his BSBA in Finance Management from the Walton College. After
graduating in May 2001, he joined Crews & Associates, Inc. Following two years of investment
banking for Crews' Public Finance Group, John returned to the University and earned his Masters of Business
Administration. Upon graduating in 2004, he Joined First Security and continues his service to Crews and Associates.
•
r
1.
Jim Jones
(501) 978-7907
bones@crewsfs.com
Jim Jones is president and chief compliance officer of Crews & Associates, Inc. In addition, he is a
prominent salesman for the firm. Jim directed the general market underwriting department until May
1996, when he was elected chief executive officer. Jim served in that capacity until the firm's merger
with First Security Bancorp.
Jim is recognized in the municipal finance industry for his commitment to ethics and maintenance of
high standards of conduct. He has served on the NASD Small Firm Advisory Committee and has held the position of
Chairman of the NASD District 115 Business Conduct Committee and the National Advisory Council. Jim has a B.A. degree
in Communications from the University of Arkansas and a Masters degree in Communications from the University of
Oklahoma.
•
Crews&Associates
Member First Socudty Bancorp
City of Fayetteville — 4
Experience
11-3. Provide a general description of investment experience with public and/or private sector
customers in managing assets utilizing the same or similar type investment policy. Please list
a minimum of three such customers that may be contacted for references.
EXPERIEINCE AND INSTITUTIONAL REFERENCES
The investment management team responsible. for the -activity in the proposed account possess 70+ years of combined
experience in fixed income investing. Mr. Harding specializes in fixed income investing while Mr. Jones has been an
investment banking specialist since 1976. Together, these men have focused their entire careers on fixed income. As the
Manager of First Security's Trust operations, Mr. Faust has a broad range of experience working with large institutional
accounts including presently managing over $100 million for the State of Arkansas. As a result of his experience with our
fixed income underwriting group, Mr. Rutledge has extensive knowledge of the credit markets. He is committed to the
Fayetteville area, having graduated from the University's Fayetteville campus in 2001 and having worked in investment
banking for the Crews & Associates Public Finance Group in both the Fayetteville and Little Rock offices. We are
confident that no other respondent to this RFP can provide the City of Fayetteville with the depth of experience and
I knowledge that this team of professionals can provide or the accessibility.
I.
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Mr. Allen Smith
Mr. Gus Wingfield
Harry Hedges
Mr. Larry Dickerson
Chief Financial Officer
State Treasurer
Treasury Manager
Chief Financial Officer (Highway
Senior Vice President
Dept.); Executive Secretary Ret. Fund)
Arkansas Baptist Health
State of Arkansas
Polk County, Florida
Arkansas Highway Retirement System
Exit 71-630
1401 West Capitol, Ste 275
P.O. Box 988
102341-30
Little Rock, AR 72205
Little Rock, AR 72201
Barto, Florida
Lithe Rock, AR 72209
(501) 202.2000
(501)682.1408
(863) 682.1408
(501) 569-2411
fr
Crews&Associates
Member First Security Bancorp
City of Fayetteville —5
Client Base
0
11-4. Describe your institutional investment management asset portfolio and fixed income portfolio
totals separately for Governmental and other institutional entities and identify such assets as
•
operating or pension funds.
Crews & Associates has more than 6,000 active accounts in 35+ states across .the Country. A full range of investment
services are offered; these include custodial, safekeeping, principal and agency accounts. In the past 12 months, our
volume of fixed income trading has been in excess of $5 billion. Approximately ninety-five percent of the firm's
business is in the area of fixed income investing and approximately 80% of this business is for the benefit of
institutional accounts. Our clients are among the largest in the world and are diverse — ranging from customers like All
State Insurance to Grambling University to the State of Arkansas.
Procedures
O
11-5. Describe the process you would recommend for establishing the investment objectives and
for this account Describe reporting procedures. Include a proposed action plan to phase in
investing of available cash. The City has a current portfolio of approximately $69,000,000 held
with an asset manager.
Strict guidelines would be imposed to insure proper compliance with applicable state statutes and the city's adopted in-
vestment policy. The goals and objectives of the City are relatively simple: preserve principal and employ appropriate
strategies to maximize returns. With the relatively short investment term (5 years), we would anticipate a fairly aggres-
sive investment schedule to take advantage of the recent dramatic rise in short-term interest rates.
Crews&Associates City ofFayettevilie —6
Member First Security Bancorp
Resources
0
11-6. Describe your organization's research capabilities and credit review process. Describe efforts
your firm makes to keep portfolio managers informed of developments relevant to government
investment managers.
The professionals assigned to the account along with our underwriting group of approximately 30 professionals are
constantly reviewing credit ratings and performing proper due diligence on accounts to which they are assigned. In
addition, we are focused exclusively on fixed income, which means that all of our time and attention is directed to this
area. Considering the conservative investment policy of the City, the vast majority of these funds would be invested in
United States Government Securities or Agencies of the U.S. Government. Any corporate bonds sold to this account in
accordance with the written guidelines would be reviewed monthly.
Performance
I sJ
The firm is providing specific performance of two Portfolios, managed by Mr. Jones and Mr. Harding, with goals
similar to those stated by the City of Fayetteville. The first account, managed by Mr. Jones, is for a major health care
company based in Little Rock. This account has a duration of 5 years +/-, and is invested in U.S. Government Bonds or
Government Agency Securities. The par value of securities in the account is approximately $40 million. The second
• account, managed by Mr. Harding, has a slightly longer duration — 7 to 10 years — and is more aggressive in its
objectives. Approximately. 80% of the fund's assets are in investment grade securities. This fund's performance is
actually measured against the Lehman Aggregate Bond Index. For purposes of this discussion, and for comparison
purposes, we will measure it against the indexes requested as well as with the Lehman Index . This second fund has a
principal balance of approximately $25 million.
2003 2004
2005
AAA U.S. Treasury 1-5 Years
1.447%
1.452%
2.145%
AAA U.S. Agency 1-3 Years
1.767%
1.183%
2.184%
Lehman Aggregate Bond Index
4.620%
3.780%
2.450%
* Source: Bloomberg
2003
2004
2005
Reference Account #1
3.28%
4.93%
2.18%
Reference Account #2
11.69%
7.21%
5.42%
Crews&Associates City of Fayetteville —7
Member First Security Bancorp
Litigation
•
111-3. Provide history of any complaints, censure of litigation by the Securities and Exchange
Commission and/or other regulatory agencies involving your organization within the last three
(3) years.
II
None
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Crews&Associates
Member First Security Bancorp
City ofFayetteville —8
Fee Schedule
I
111-4. Include a schedule of incremental and/or fixed fees, including custodial fees on a monthly or
annual basis. This may be stated as a percentage of amounts managed. If stated as a
percentage, describe how the fees will be computed. Identify the services and expenses that
will be covered by the fees.
Our proposed fee schedule is negotiable. Based on the information available to us, First Security Bank's Trust services
group proposes an all inclusive (custodial, safekeeping, wire etc..) annual fee of 10 basis points for $25 million or more
in managed assets. If less than $25 million in managed assets, the trust services group proposes an all inclusive annual
r fee of 14 basis points. All purchases for the benefit of the City of Fayetteville will be accomplished by First Security
Bancorp in accordance with the terms and condition of the City's Investment Policy.
T
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Crews&Associates City ofFayetteville —9
Member First Security Bancorp
DAVIDJ. WHITAKER
Assistant CityAttorney
• Judy Housley
Office Manager
• Phone '.(479) 575-8313
FAX. (479) 575-8315
KIT WILLIAMS.
FAYETTEVILLE CITY ATTORNEY
August 31; 2006
THE CITY:OF FAYETTEVILLE. ARKANSAS
1113W. Mountain, Suite 302 - -
Fayetteville, AR 72701-6083
Ms. Rebecca H. Gamer By Fax: 587-1257
Mr. John R. Rutledge By Fax: 527-7001
Dear Rebecca and John:
Attached for Rebecca please find First Security Bank's letter of August 31,
2006 responding to -your. earlier letter. Attached for. First Security Bank is
Garrison's latest letter. The City wants both parties to know all allegations and
statements of the other party so both of you can be prepared for your presentation
to the City Council on Tuesday.
After staff -makes a brief presentationS about, the RFP procedure and -what
the selection committee recommended,, it will be Garrison's turn to- present any
information Garrison believes may be important for the City Council to consider.
This presentation should not last more than 15.minutes.
First -Security Bank will then have 15 minutes to, respond. The City
Council may then askquestions of either side before closing all public comment.
This is. the first item of New Business.
With kindest regards,
KIT WILLIAMS
Fayetteville City Attorney
KW/jh
Mayor Dan Coody
Sondra Smith, City Clerk
THE CITY OF FAYETTEVILLE, ARKANSAS
CITY COUNCIL AGENDA MEMO
To: Mayor and City Council
Thru: Paul Becker, Finance & Internal Services �Director P A b
From: Peggy Vice, Purchasing Manger Ppte
Date: Sept. 1, 2006
Subj: Investment Management Services
Background
The City entered into an Investment Manager contract with Gamer Asset Management on
March 131h, 2000. The contract with Gamer Asset Management Company was acquired
by Garrison Financial in March of 2005. Before this contract, investments were made by
staff. Staff recommends that City Council approve a contract with First Security Bancorp
and Crews Associates for Investment Management Services. This contract will replace
the contract with Garrison Financial.
Discussion
It has been a long time management practice to request new proposals for services that
have been under long term contracts. This allows the City to:
• review new technology and services available
• compare new market developments to our current practice and contracted
services
• allows for possible improvement in pricing and services provided
• allows the ability to take advantage of new technologies
Duties of the selection committee are to:
• meet and discuss draft request for proposal, make any needed changes and
approve points for criteria established .in request for proposal; -
• read and review all proposals received;
• attend meeting to discuss proposals received and vote to select a firm based
on proposals received or short list firms to interview;
• attend meeting to interview short listed firms;
• after interviews, discuss each interviewed firm's strengths and weaknesses;
• after discussion, each committee member individually and anonymously fills
out an evaluation form for the firm of their choice;
• the evaluation forms are tabulated by Purchasing Official and the firm with
the most first place votes is contacted;
• a contract is negotiated by the Project Manager based on the firm's proposal
and items the selection committee and Project Manager feel are advantageous
and beneficial to the contract;
• the resulting contract is recommended to City Council.
The selection committee for this project is:
Bobby Ferrell - Alderman, City Council
Kevin Springer - Budget Director
Trish Leach - Accounting
Peggy Bell - Accounting
John Nelson — Financial Analyst (Transportation)
Elizabeth Mann - Financial Analyst (Fire Department)
Marsha Farthing - Non -Voting (Accounting Director)
Shelly Turberville - Non -Voting - Accounting
Andrea Foren — Non -Voting - Purchasing
The request for proposal was advertised requesting proposals from qualified firms. There
were eight proposals received. Four firms were short listed to interview. They were:
Garrison Asset Management
Arvest Asset Management
Stephens Inc.
First Security Bancorp and Crews and Associates
First Security Bancorp and Crews and Associates were selected unanimously by the
selection committee.
City of Fayetteville
RFP 06-07, Investment Management Services
Project Timeline
Date
Event
4/20/2006
RFP
06-07
was issued - Original Deadline of 5/12/06
4/21/2006
RFP
06-07
Advertised & sent on mailing list
5/3/2006
RFP
06-07,
Addendum 1 Issued* Extended until 5/19/06
5/9/2006
RFP
06-07,
Addendum 2 Issued*
5/18/2006
RFP
06-07,
Addendum 3 Issued* Extended until 6/1/06
5/22/2006
RFP
06-07,
Re -Advertised
5/23/2006
RFP
06-07,
Addendum 4 Issued*
5/26/2006
RFP
06-07,
Addendum 5 Issued*
6/1/2006
RFP
06-07
- DEADLINE
7/6/2006
Interviews held with shortlisted firms
7/6/2006
Selection Committee Meeting held - vote on recommendation to council
Notes
Entire project
During this project, we received over 25 request from firms requesting the RFP
for investment management services. This was in addition to the firms that were
notified through our mailing list.
5/06/06 through 5/111/06
Marsha Farthing (Project Manager) out of town - not able to provide information
requested by proposers.
Addendum 1: 5/3/06
Issued to delete requirement of custodian to have an office located in
Fayetteville, AR.
Addendum 2: 5/9/06
Issued for clarification regarding the benchmarks having different
maturity/duration characteristics. Time extended due to such clarification being
complex - time extended to 5/19/06.
Addendum 3: 5/18/06
Clarified index for comparison to use in providing performance statistics. Time
extended due to clarification being complex - time extended to 6/1/06.
Addendum 4: 5/23/06
Provided current statement from Charles Schwab, as requested by at least one
firm. Note: Information requested by one firm is provided to all in order to
maintain an equal playing field.
Addendum 5: 5/26/06
Clarified the statement presented in Addendum 4, informing all participants the
figures presented were quarterly.
August 31, 2006
VIA HAND DELIVERY
The Honorable Mayor Dan Coody
City of Fayetteville
113 West Mountain
Fayetteville, AR 72701
Re: Investment Management Services Provided by
First Security Bank
fr
FirstSecurity
Bank
Dear Mayor Coody:
I would like to begin by offering my sincere apologies for taking your time
and resources to address the matters raised by the Garrison Asset Management letter
dated August 29, 2006. (copy attached). I will address the matters raised by
Garrison as quickly and efficiently as I can in order not to further compromise your
time.
Contrary to the suggestion of Garrison, First Security Bank, as an Arkansas
state chartered bank, does not have to be registered with the Securities & Exchange
Commission or the Arkansas Securities Department as an investment advisor, in
order to provide investment advisory services to the City of Fayetteville, nor does
Section 275.202(a)(1 1)-I (the so-called `Merrill Rule') apply to banks. (See attached
letter of Friday, Eldredge and Clark).
Both our presentation to the Finance Committee and the Investment
Management Agency Agreement (copy attached) which we submitted, envision First
Security Bank and the City of Fayetteville as the parties who will be entering into
this contractual relationship. Indeed, as the information we provided to the Finance
Committee indicates, employees of Crews and Associates, Inc., an affiliate of First
Security Bank, may be called upon by the Bank to assist it in managing the portfolio.
We at First Security Bank feel that we should use all of the resources at our disposal
in order to preserve the principal entrusted to us, and to generate as much income for
the City as is possible in light of the investment guidelines provided. This
arrangement is not special to this relationship only, but is provided to countless other
relationships that we have.
As an aside, Crews and Associates, Inc. recently registered with the State of
Arkansas, as an investment advisor. The timing of that filing has nothing to do with
the relationship of First Security Bank with the City. That filing was made for the
sole purpose of allowing crews to better serve its customers.
CityofFaycticwille.083006. FimSceuritynank
One matter raised by the Garrison letter suggests that First Security Bank
would not obtain the. best price and best execution for the City when selecting a
broker/dealer to purchase or sell assets. That letter cites language from our proposed
Investment Management Agency Agreement with the City that states. "The fact that
the tees paid for brokerage services for the broker or dealer selected by FSB are
greater than fees for which similar services could be obtained, shall not be a basis for
liability to FSB". It is not uncommon for languageof that nature to be in a financial
contract. We assure you that all transactions effected by First Security Bank on the
City's behalf will be at prices which are fair and reasonable and representative of the
market. You should be aware that your current agreement with Garrison has
virtually identical language in Paragraph 6(a). (See attached page).
Finally, please allow me to describe the First Security Bank team approach to
customer relations. First Security Bank is a multifaceted organization with affiliates
engaged in a variety of lines of business in the financial world. In the provision of
services to our customers, we make every effort to call upon expertise from all of our
financial affiliates as we believe that offers our customers the best possible service:
In the case of our proposal to the city, although 'we intended to clearly convey that
the contractual relation would be with First Security Bank, we, likewise, intended to
provide to the City information. regarding the expertise that was available through
First Security's affiliation with Crews: First:Security Bank stands ready to enter into
any mutually agreeable contract with the City of Fayetteville to provide outstanding
investment management services. Likewise, First Security Bank, plans to use any
and all resources at its disposal to provide asset management services to the City's
.portfolio of assets.
I sincerely hope that my letter addresses all of the issues raised recently by
Garrison. We look forward to serving the City with the diligence and respect it
deserves.
Very truly yours,
t / John utledgei
JRR/sej
Enclosures
• c.c. Mr. Kit Williams, City Attorney
Ms. Peggy Vice, Purchasing Manager
The Honorable Robert Reynolds, Ward 1, Position I
The Honorable Brenda Thiel, Ward 1, Position 2
The Honorable Kyle B. Cook, Ward 2, Position 1
Cityofl aycltcvi11c.083006.FirstSccuritynank
The Honorable Robert K. Rhoads, Ward 3, Position 1
The Honorable Bobby Ferrell, Ward 3, Position 2
The Honorable Shirley Lucas, Ward 4, Position I
The Honorable Lioneld Jordan Ward 4, Position 2
CityofFayettevll Ie.083006.FirstSecurityBank
Crews&Associates
Mr. Jim Jones is President and Chief Compliance Officer of Crews &
Associates, Inc. Since the firm's inception, he has been involved in
numerous trading, sales, and management functions. Jones directed
the general market underwriting department until May 1996, when he
was elected Chief Executive Officer. Jones served in that capacity
until the firm's merger with First Security Bancorp.
Mr. Jones is recognized in the municipal finance industry for his
commitment to ethics and maintenance of high standards of conduct.
He is a NASD arbitrator and has served on the NASD Small Firm
Advisory Committee and has held the Chairman positions of the
NASD District #5 Business Conduct Committee and its National
Advisory Council. Jones recently completed the rigorous
requirements to obtain the NASD Institute at Wharton's Certified
Regulatory and Compliance Professional Designation (CRCP). He
has a B.A. degree in Communications from the University of
Arkansas and a Masters degree in Communications from the
University of Oklahoma. Jones is currently serving as the Chairman
of the Baptist Health Board of Trustees in Little Rock.
Mr. Don Winton, Chief Operating Officer, has more than 27 years of
experience in the financial industry and currently serves on the NASD
District 5 Committee, the New Orleans District 5 Focus Group, and
actively serves as an as a NASD securities industry arbitrator. Don is
registered as the Financial & Operations Principal, Municipal and
General Securities Principal, and also as the Registered Options
Principal with Crews & Associates, Inc. His current responsibilities
include managing the Client Services Group for Clearing &
Operations. Don has direct responsibility for personnel, training,
branch broker activity and the communication/network systems. As a
member of the Crews management team, he has daily
responsibilities for overall firm banking and clearing activity. He is
involved in the Firm's regulatory compliance agenda with the
governing agencies during their examinations.
Don is one of only 2 Arkansans that completed the NASD Institute's
three year program at Wharton to qualify as a Certified Registered
Compliance Professional. A lifelong resident of Arkansas, Don holds
a B.A. in Business Administration from Arkansas State University and
currently is serving his second term on that university's Foundation
Board.
FRIDAY ELDREDGE & CLARK
IIEILYCIIEL U. FRIDAY I IYU.19w1
WALTER M. EDEL III, V.A.
ATTORNEYS AT LAW
MARVIN L. CHILDEUS
IMIIE HERE MAN JONES
BY11ON M. EISCAMAN, ]R..➢ A.
KEVIN A, CRASS. P.A.
X. COLEMAN WESTDROOK. In.. PA.
KIMBERLY D. YOUNG
JAMA.IIULBt. P.A.
WILLIAM A. WAODE LL. In.. P.A.
A LIMITED LIABILITY PARTNERSHIP
ALLISON). CORNWELL. P.A.
JASON N. DF\MLCIT
FIIEDI:IIICK S. YRSERY. P.A.
SCOTT I. LANCASYElk. P.A.
www.lrlthyllrrn.com aylllm.[Om
SLLI:N OWENS SMITH, P.A.
BRIAN C SMITH
JARILS C. CIA RK. IN., I',A.
POHLRT B. REAC11. JR.. PA.
JASON Y. IIENDREN, P.A.
U. NICHAF;MLFIT M5
'IltOMA51'. LEC.GETT.P.A.
I. LET BROWN. PA.
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BRUCE IS. TIDWfLL. PA.
Still M. IIAINTS
ryIIN IlEWEY WAtYON. P.A.
JAMES C. O,KEn.IN.. Y.A.
400 WEST CAPITOL AVENUE. SUITE 2000
JOSEI'II P. NCNAT, P.A.
ERIN F. CUILU}I
PAUL II. IILNIIALI II. "A.
HARRY A. LIRE'. I.A.
ALEXANDRA A. IFRAH. P.A.
KNISTOPIILR H. KM )X
LANKY W.RUIINS. PA.
SCOTT H. l UCK41L PA.
LITTLE ROCK, ARKANSAS 72201.3522
JAY T.TAYWIL P.A,
KATHRYN A.KIRKPA I hNA
A, WYLT0.1rNbHF I. I n.. P.A.
GUY ALI ON WADE. P.A.
TELEPHONE 501.376-2011
SunTIN A. KASTEN. E.A.
1. AUA3IWLu.S
JAMI NFWMID I IAIIRIS. P.A.
PRICE C. GARDNER. P.A.
' FAX 501-316-2147
,RYAN W. OUKE
LAURA I. ASBUID
IAMKS A. SIMPSOµ P.A.
[ONIA P. WNYS. P.A.
JOSEPH C. NMIIOIS
RACENEAT.IIWtI
JANE$ M. SAXTON. P.A.
DAVID 0, WII SON. I' A.
ROBERT T. SMITH
REBECCA O. RAWbLI12E1
1. (IILPIIEILU RUSSELL III. VA.
IF T"FY N. MOOR` I'A
RYAN A. BOWMAN
LYRIIAM E. POSTER
OORAM) It. BACON, P.A.
DAVID M. GRAF. 1'.A
3425 NORTH FUT BALL DRIVE. SUITE 10}
TIMOTHY C. STEEL
WI,LIAM LIWIAS BAXTER. P.A.
CARLA GUNNELS 5PAINHOUlI.
7.4 FAYETIEVILLE. ARKANSAS tt105NK11
T. MICHELLE ATOR, LA.
RISRPII U. 11VNTF.IH, P.A.
R. ONRISroP11EN LAWSON. P.A.
TELEPHONE OTK-0B521S
SARAH M. COTTON
Of COapR
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FAR SFP.BE5.2107
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CIIIIIITOPIIEII HELLER, PA.
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WILLIAM L TERRY
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KIIAYTAM M. EDDINCS
WILLIAM L. PATTON, I II.
BOBER'I S. SHAKY R. P.A.
CtIFfOItD W. PLURAE'CT, V.A.
SS9 MOflSEBARN RDAD, suit in
AMANDA CAERE ROSE
6T. tARCL EER0.V.A.
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ROGERS. ARKANSAS 72751
N. WAYNE YOUNG.IR.
TELEPHONE 079.6952011
FAX a5.lu-ua
TIMOTHY C. LULL
LISTED ROCK
TEL S03 -MO -1414
FAX 501.24451 ii
11:11IN119 nx
August 31, 2006
Via Regular United States Mail
Mr. John R. Rutledge
First Security Bank
1219 E. Joyce Blvd.
Fayetteville, Arkansas 72703
Re: Investment 'Adviser Requirements
Dear Mr. Rutledge:
The purpose of this letter is to express to you our opinion that Arkansas state chartered banks are
not required to register under the Investment Advisers Act of 1940 or the Arkansas Securities
Act in order to provide investment advisory services. Section 202 of the Investment Advisers
Act of 1940 excludes from the definition of "Investment Adviser" the following:
"... a bank, or any bank holding company as defined in the Bank Holding
Company Act of 1956 which is not an investment company ,,
The Investment Advisers Act of 1940. defines a "bank" as follows:
"... (i) a banking institution organized under the laws of the United States; (ii) a
member bank of the Federal Reserve System; (iii) any other banking institution or
trust company, whether incorporated or not, doing business under the laws of any
State or the United States, a substantial portion of the business of which consists
of receiving deposits or exercising fiduciary powers similar to those permitted to
national banks under the authority of the Comptroller of the Currency, and which
is supervised and examined by State or Federal authority having supervision over
banks
•r.
August 31, 2006
Page 2
Similarly, the Arkansas Securities Act exempts from the definition of "Investment Adviser' "a
bank, savings and loan association, credit union, or trust company."
You have also asked us to advise you with respect to the applicability of Securities and Exchange
Commission regulation 17 CFR 275.202(a)(1l)-I ("Regulation") to a state chartered bank, The
Regulation concerns certain instances when a broker -dealer will or will not be deemed an
investment adviser. The Regulation is inapplicable to a state chartered bank, because a state
chartered bank will not be considered a broker -dealer for purposes of the Regulation.
The Investment Advisers Act of 1940 excludes a "bank" from both the definition of "broker" and
the definition of "dealer." What constitutes a "bank" under the Investment Advisers Act of 1940
is set forth above, The Arkansas Securities Act also excepts from the definition of "Broker -
dealer" a "bank." Under (his analysis, the Regulation will not be applicable to a state chartered
bank.
If you have any comments or questions regarding these matters, please do not hesitate to contact
us.
Very truly yours,
Timothy C. Ezell
TCE/bb
Cc: Mr. Frank Faust (via email)
'a,,
GARRISON
ASSET MANAGEMENT
August 31, 2006
Dear Mayor Coody:
We have worked with the City of Fayetteville as an advisor in many areas during the last
six years. The following document is a continuation of this advice.
We not only feel strongly about giving you the very best advice we know how to give but
also feel strongly about the role we have in policing our own industry. I have worked in
this industry for 39 years and look forward to the future as I have a very large personal
investment in Garrison Asset Management and will be here for many years to come. To
that end we are submitting further concerns over the RFP submitted by Crew &
Associates.
Sincerely,
Rebecca H. Gamer
President and Chief itivestl3Aent Officer
Garrison Asset Manage nt
and
Board Member
Garrison Financial Corporation
TWO NORTH COLLEGE' FAYETTEVILLE, AR 72701 - 479.251.7035 • WWW.GARRISONFINANCIAL.COM
GARRISON
ASSET MANAGEMENT
VIA HAND DELIVERY
August 31, 2006
The Honorable. Mayor Dan Coody
City of Fayetteville
113W. Mountain
Fayetteville;
AR 72701
Cc: Mr.
Paul Becker, Director of Finance
Mr.
Kit Williams, City Attorney
Ms:
Peggy Vice, Purchasing Manager
The
Honorable Robert Reynolds, Ward 1, Position 1
The
Honorable Brenda Thiel, Ward 1, Position 2
The
Honorable Kyle B. Cook, Ward 2, Position I
The
Honorable Robert K. Rhoads, Ward 3, Position 1
The
Honorable Bobby Ferrell, Ward 3, Position 2
The
Honorable Shirley Lucas, Ward 4, Position 1
The
Honorable Lioneld Jordan Ward 4, Position 2
Dear Mayor Coody:
Thank you for the opportunity to submit our previous documentation to members of the
City Council regarding our concerns related to the awarding of the investment
management contract with the City.
As we mentioned in our letter dated August
29, 2006
(our Previous Letter) we only
received,
a copy of the Crews & Associates
(Crews)
response to the Request For
Proposal
(RFP) on that day at approximately
11:30am
under a verbal request under
FOIA for
the documents after having our initial
written FOIA request denied on July 14f°,
2006.
As you
know, we submitted
as
part of our Previous Letter several potential concerns
related
to the bid process and
the
prospective award of the contract.
Given the limited amount of time we had to review the documents prior to us submitting
our Previous Letter (literally just a couple of hours) and upon further review by us, we
have additional potential concerns that we would like to draw your attention to today. We
will use the same naming convention as in our Previous Letter and will begin our
discussion today with Concern 9. Please incorporate our Previous Letter and all
supporting, documentation from August 29, 2006 into this document by reference. This,
document should be read in conjunction with or Previous Letter and included
documentation.
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1
GARRISON
ASSET MANAGEMENT
Concern. 9
We would note that on page 2 of the RFP, Paragraph 2, it states "A non -responsive or
incomplete proposal will not be.considered."
Based on our more thorough review of Crews' RFP, it is our opinion that it is incomplete
and non -responsive on at least nine separate occasions.
In summary we would note:
RFP Question 11-4
"Describe your institutional
No direct answer to the
Concern 10
investment management asset
question asked.
portfolio and fixed income
portfolio totals..."
RFP Question II-7
Please provide the "Merrill Lynch
Wrong Indexes provided.
Concern 14
1 to 5 Years
Incomplete and non-
Government/Corporate Index
responsive.
and the Merrill Lynch AAA
Agency Master Index for the
years 2003, 2004, and 2005."
RFP Question II -7
In relation to providing
Provided 2 portfolios rather
Concern 15
investment performance:
than a composite of
performance. One portfolio
has 20% non -investment
grade assets. Not
comparable to the City.
Incomplete, non -responsive
and potentially misleading.
RFP Question 11-3
"Provide a general description of
Appears to be bond -
Concern 18
investment experience with
underwriting and bank rate -
public and/or private sector
differentiae type clients and
customers in managing
not investment
assets..."
advisory/asset management
type client references.
Incomplete and non-
responsive.
RFP Question II -6
Describe credit review process.
Crews' complete response
Concern 19
to this part of the question is
that they "review credit
ratings."
RFP Question 11-5
"Describe Reporting
Not answered at all.
Concern 20
Procedures."
Incomplete and non-
resonsive.
RFP Question 111-3
"Provide history of any
None disclosed in the RFP.
Concern 21
complaints, censure or
Several disclosed in the
litigation..."
ADV filed on 8/2/06, one that
was both initiated and
resolved on the same day,
6/23/06 (after the RFP
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ASSET MANAGEMENT
response). Potentially
misleading and unlikely to
have been brought and
settled on the same day.
RFP Question 111-4
Related to the question about
No mention of an asset
Concerns 19 & 22
fees.
management fee, only
custody, safekeeping, and
wire fees. No mention of
commissions to Crews from
FSB. Potentially misleading.
Incomplete and non-
responsive.
Addendums
"Please acknowledge receipt of
None of the 5 addendums
Concern 23
this addendum...by signing
provided in Crews' RFP.
below and submitting this
Incomplete and non -
document as part of your
responsive.
roposaL"
See specifically Concerns 10, 13; 14, 15, 18, 20, 21, 22, and 23, below for a more
detailed analysis.
Concern 10
Section II, Question 4 of the RFP states in its entirety:
"Describe your institutional investment management asset portfolio and fixed income
portfolio totals separately for Governmental and. other institutional entities and identify
such assets as operating or pension funds."
Crews' response to this question states in its entirety:
"Crews& Associates has more that 6,000.active accounts in 35+ states across the
Country. A full range of investment services are offered; these include custodial,
safekeeping, principal and agency accounts. In the past 12 months, our volume of fixed
income trading has been in excess of $5 billion. Approximately ninety-five percent of the
firm's business is in the area of fixed. income investing and approximately 80% of this
business is for the benefit of institutional accounts. Our clients are among the largest in
the world and are diverse - ranging from customers like All State Insurance to Grambling
University to the State of Arkansas."
It appears, given the context in which is written, that the reference to "6,000 active
accounts in 35+ states across the Country" refers to brokerage accounts and not
discretionary, investment management accounts. This would be consistent with their
disclosure in the recently filed advisor registration with the State of Arkansas that they
have no clients and no advisory assets under management.
The reference to "in the past 12 months, our volume of fixed income trading has been in
excess of $5 billion" is unmistakably related to brokerage and likely has absolutely
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nothing to do with and no r&ation.whatsoever to fixed income portfolio management or
advisory services as they would relate to.the City of Fayetteville.
Why Were All State Insurance and Granibling: University not included in Crews' client
references in response to Section I1, Question 3 related .to references when the were
referred to in this`question?'
Are these clients brokerage clients or investment advisory clients?
Why were none of All State Insurance, Grambling University and the State of Arkansas
included in the performance information provide by Crews for comparison to the City?
Do these accounts not have performance that the City might be interested in?
In our opinion their entire answer to this question is non -responsive and bears little to no
relationship to the question asked in the RFP.
On page 2 of the RFP, ,Paragraph 2, it states 'A non -responsive or incomplete proposal
will not be considered.
Concern 11.
On page 2 of the Crews'response to the RFP under Our Organization it.states "Crews &
Associates is a wholly -owned subsidiary of First Security Bancorp..."
Clearly the RFP was from Crews and yet the proposed contract as outlined in the
Investment. Management Agency Agreement is to be With First Security Bank (FSB).
Throughout the R FP it is our opinion that many questions were not directly answered or
were not answered at all. in the context within which they were asked. It appears that
when 'Crews was attempting to :show "some level of 'fixed income institutional investment
advisory experience 'they invoked the "Crews" moniker and yet when they were
potentially attempting to skirt the Securities & Exchange (SEC) registration requirements,
they invoked the "FSB" moniker.
Concern 12
Throughout Crews' response to the RFP there
are multiple references to "managed" and
"manages"
(see for example the: 4'" paragraph
on page
2 which states "In addition to our
investment
management services, Crews...').
Yet on
Crews' initial registration as an
investment
advisor with the State of Arkansas
(not the
SEC) filed on or about August 2,
2006, they
state that they have no clients and no assets
under management.
This seems to be completely contradictory information - investment management
experience on the one hand, and no clients or assets on the other.
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Concern 13
The deadline for RFP submissions was originally scheduled for May 12th.., 2006 and was
extended twice —once on May 9, 2006 to May 19, 2006 (Addendum 2 to the' RFP) and
then again on May 18, 2006 to June 1, 2006 (Addendum 3 to the RFP).
Crews' cover letter submitted as part of their RFP was dated May 18, 2006 and was likely
sent via overnight mail for delivery on the first extended deadline of May 19, 2006. It
appears Crews' response- was sent prior to .the second extension on May 18, 2006.
There was also a reference. in Addendum 3 to the RFP relating tovery specific
comparative performance indexes that the Citywanted to receive from each respondent.
Was the delay on May 18, 2006, by all appearances after Crews had mailed their initial
response in anticipation of a. May 19, 2006 deadline, done in an effort to afford any bidder
an unfair competitive advantage? Could it be that Crews was unable to obtain the
requested comparative performance indexes, thus making their RFP "non responsive"
and subject to rejection?
On page 2 of the IRFP, Paragraph,2, it states "A non -responsive or incomplete proposal
will not be considered."
Concern 14
In Part II, Question 7, Performance, of the RFP the City asks for two comparative
indexes: 1) the Merrill Lynch 1. to 5. Year US Treasury Index and 2) The Merrill Lynch
AAA Agency Master Index.
During the RFP.process Garrison Asset. Management, LLC (Garrison Asset) called the
City's attention to the fact that the Merrill Lynch 1 to 5 Year US Treasury Index does not
exist. Apparently the City had made a typographical error:
In Addendum 3 to the RFP On May 18, 2006 mentioned above the City clarified the
required indexes to be the "Merrill Lynch 1 to 5 Years Government/Corporate Index and
the Merrill Lynch AAA Agency Master Index for the years 2003, 2004, and 2005."
On page 7 of Crews` response -to the RFP none of the comparative indexes they provided
appear to match either of the two required indexes despite Crews' assertion that "For
purposes of this discussion, and for comparison 'purposes, we will measure it (their
performance) against the indexes requested as well as with the Lehman Index."
Please compare the response submitted by Garrison Asset for the correct indexes as
opposed to the apparently incorrect indexes submitted by Crews.
On page 2 of the RFP,
Paragraph
2, it states "A non -responsive or incomplete
proposal
• will not be considered."
Shouldn't Crews' response to the RFP be considered "non -responsive" and "incomplete"
due to' their failure to appropriately and directly answer the question related to
performance?
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Concern 15
Crews' response to the Performance question also states that "The firm (Crews) is
providing specific performance of two Portfolios, managed by Mr. Jones and Mr. Harding,
with goals similar to those stated by the City of Fayetteville." Continuing, "Approximately
80% of the fund's assets are in investment grade securities. The fund's performance is
actually measured against the Lehman Aggregate Bond Index."
This again brings up the issue of "managed" and "manages" as it relates to providing
discretionary, fee -based investment advisory services and not being registered with the
SEC as an advisor.
Further, we think the City could safely assume that 20% of one of the portfolios was
invested in non -investment grade securities. In our opinion, a portfolio that contains 20%
of its assets in non -investment grade securities is not an appropriate portfolio to use to
present performance. It is very much dissimilar to the investment requirements of the
City. Further, a portfolio that is normally compared to the Lehman Aggregate Bond Index
is also hot an appropriate comparison to the City in our opinion, nor is the Aggregate
Index itself. Not only is this index's average maturity much longer than that of the City,
but it also contains many securities within its mix that the City is not allowed to invest in
under their investment policy.
Most registered Investment advisors provide what is called "composite" performance,
which is.sirnply a market value weighted average of all similar portfolios over a period of
time. Picking out one or two specific portfolios (cherry -picking) is generally not well
regarded within the industry.
This apparent "apples to oranges" comparison may be. materially misleading and may
also be considered a "ndn-responsive" answer to. what in our opinion is one of the. most
important. questions in the RFP.
On page.2 of the RFP, Paragraph 2, it states "A non -responsive or incomplete proposal
will not be considered."
Concern 16
In Section II, Question 2 of the RFP Crews states that "Our typical investment
professionals manage a multitude of fixed income accounts...
Are they investment managers providing discretionary, fee based investment advisory
services or are they providing .brokerage services on a commission basis for these
accounts, or both? If Crews is acting as an investment advisor and providing fee -based
portfolio management services, it is our opinion that Crews should be registered with the
SEC as an investment advisor.
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Concern 17
Nowhere in either of Mr. Rush Harding's, Mr. John Rutledge's; or Mr. Jim Jones'
biographies does it mention anything `related to investment management, portfolio
management, asset management, or discretionary fee -based investment advisory
services in the context in which those terms -would relate to the services requested by the
City in the RFP. Mr. Frank Faust's biography -is apparently the only one that refers to the
fact that he "has extensiveexperience in managing fixed income securities." Yet the
performance information submitted by Crews is from portfolios managed by Mr.: Harding
and Mr. Jones, and not Mr. Faust.
Please review the professional biographies of all the RFP finalists
'Concern 1$
Section 11, Question 3 of the RFP states:
"Provide a general description of investment experience with public and/or private sector
customers in managing assets utilizing the same or similar type investment policy. Please
list a minimum of three (3) such customers that may be contacted for references."
Crews' response to the question states in part:
"'Mr. Harding specializes in fixed income investing while Mr. Jones has been an
investment banking specialist since 1976." Mr: Harding's resume in the RFP refers to
sales and trading. Mr. Jones resume in the RFP refers to sales and compliance.
Continuing, "Mr. Faust has a broad range of experience working with large institutional
accounts including presently managing over $100 million for the State of Arkansas."
Additionally, We are confident that no other respondent to this RFP can provide the City
of Fayetteville with the depth of experience and knowledge that this team of professionals
can provide or the accessibility."
Additionally, it appears as if 3 of the 4 (Mr. Allen Smith — Arkansas Baptist Health, Mr.
HarryHedges - Polk County; Florida, and Mr. Larry Dickerson - Arkansas Highway
Department) client references provided by Crews have no direct affiliation to their
"investment experience with public and/or private sector customers in managing assets
utilizing the same or similar type investment policy" to that of the City.
Are these references related to fixed income.asset management or bond underwriting?
Does "specializes in fixed income investing" mean as a broker or as an investment
advisor?
Does investment banking experience relate directly to the current RFP requirements?
Wty did Crews not use Mr. Faust's"management" of "over $100 million for the State of
Arkansas" as part of their performance representation?
Does this account not have any performance that would be comparable and of interest to
the City?
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What exactly is Crews' role in "managing" this account?
In our opinion, the answer to this question is largely non -responsive. Again, please
review the comparative experience level of each finalist respondent.
On page 2 of the RFP, Paragraph 2, it states "A non -responsive or incomplete proposal
will not be considered."
Concern 19
In Section 11, Question 6 related to research capabilities Crews states "Any corporate
bonds sold to this account in accordance with the written guidelines..." The emphasis
added'is ours.
Is Crews "selling' bonds to the City's account as a broker or are they investing the assets
of the account on behalf of the City as an investment advisor?
What commission or other mark-up will Crews receive as a broker above and beyond
their fee stated in the RFP?
Crews' response to this question also says their "professionals are. constantly reviewing
credit ratings..."
As far as we can tell, that is the extent of their "organization's research capabilities and
credit review process" as asked for in the question of the RFP.
Please compare the research capabilities of all the finalist respondents
Concern 20
Part of Section II, Question 5 says "Describe reporting procedures."
No where in Crews' response to this question are reporting procedures addressed.
This answer appears to be non -responsive.
On page 2�f the RFP, Paragraph 2, it states 'A non -responsive or incomplete proposal
will not be considered."
Concern 21
Question 3 in Section III of the RFP states:
"Provide history of any complaints, censure or litigation by the Securities and Exchange
Commission and/or other regulatory agencies involving your organization within the last
three (3) years."
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Crews responds "None"to this question.
However, upon closer examination of Crews' initial, recently filed investment advisor
application with the State of Arkansas there is a disclosure under case docket
E052005001801 that was.both initiated and settled on the same day, 6123/06.
This is clearly beyond the date at which the RFP was submitted, but was the complaint
really brought and settled on the same day?
It appears as if Crews' answer to this question is incomplete and non -responsive.
On page 2 of the RFP, Paragraph 2, it states 'A non -responsive or incomplete proposal
will not be considered."
We have included this portion of the ADV for your review.
Concern 22
Crews' response to Section 111, Question 4 related to fees states
"Our proposed fee schedule is negotiable. Based on the information available to us, First
Security Bank's Trust services group proposes an all inclusive (custodial, safekeeping,
wire, etc.) annual fee of 10 basis points for $25 million or more in managed assets. If
less than $25 million in managed assets, the trust services group proposes an all
inclusive annual fee of 14 basis points. All purchases for benefit of the City of
Fayetteville will be accomplished by First Security Bancorp in accordance with the terms
and condition of the City's Investment Policy."
Item 5.1, Selection of Broker, of the propose Investment Management Agency
Agreement states (supplied to you yesterday):
"The City authorizes FSB to place orders for purchases and sales of securities and
financial assets through any broker or dealer it chooses, including a broker or dealer
which is affiliated with or under common control with FSB. In selecting a broker or dealer
for any transaction or series of transactions, FSB will consider such factors as net price,
execution, availability of research, and other factors which FSB reasonably believe to be
appropriate for purposes of making that, decision. The fact that the fees paid for
brokerage services for the broker or dealer selected by FSB are greater than fees
for which similar services could be obtained, shall not be a basis for liability to
FSB.:' Emphasis added.
Investment advisors have a fiduciary duty to obtain the best price and best execution for
their clients (taking into account many considerations), and many independent advisors
do not have affiliated broker dealers.
It appears as if FSB will receive the actual fee from the City (for "custodial, safekeeping,
wire, etc." but not for investment management) and that Crews could be allowed td
charge a commission or other fee for brokerage services as it sees fit. It was not
mentioned in RFP Section III, Question 4, that Crews would receive any brokerage
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commissions nor was a fee specifically for investment management mentioned. The fee
stated in.the RFP does hot appear to be "all inclusive."
No where in Crewsresponse to this question does there appear to be a fee stated for
investment management. services.
Crews' answer to this question appears to be incomplete and non -responsive.
On page 2 of the RFP, Paragraph 2, it states A non -responsive or incomplete proposal
will not be considered."
Concern 23
There were 5 addendums to the RFP. At the end of each Addendum it states:
"Please acknowledge receipt of this addendum (RFP 06-07, Addendum #) by signing
below and submitting this document as part of your proposal."
No where in the Crews RFP are any of the Addendums present.
On page 2 of the RFP, Paragraph 2, it states "A non -responsive or incomplete proposal
will not be considered."
This requirement of acknowledging receipt, singing and submitting the. addendums is
incomplete and non -responsive.
Concern 24
Listed below are other questions for which the City may want to obtain answers
What, specifically, are your assets under management for discretionary, fee -based
investment advisory services?
a) How many fixed income accounts do you manage and what..are your fixed income
assets under management for discretionary, fee -based accounts?
b) Of the fixed income accounts how many of them are municipalities or other regulated
entities similar to the City?
What percent of your total revenue does discretionary, fee -based investment advisory
services represent?
What are the credentials and experience of the direct portfolio manager on the City's
account in managing discretionary, fee -based portfolios under similar styles to that of the
City of Fayetteville?
How many portfolios does the proposed portfolio manager currently manage on a
discretionary, fee -based only basis?
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What are the assets under management for the proposed portfolio manager that are
discretionary and fee -based only?
Thank you very much for your attention to these matters. If you should have any
questions, please feel free to contact us.
We have included the following documents for your review and consideration:
1) An additional portion of Crews' for ADV that we inadvertently omitted from the
documentation we submitted on 8/29/06.
Sincerely,
cc. )•
Rebecca H. Garner
President
Kerr atkins Bradley, CFA �l
Executive Vice President
Encl.
Executive Vice President
w-'
ames B. Bell, CFA
Vice President
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Form ADV, DRPs
Page I of 1S
FORM ADV OMB: 3235-0049
UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION
Primary Business Name: CREWS & ASSOCIATES, INC. IARD/CRD Number: 8052
Rev. 02/2005
II CRIMINAL DISCLOSURE REPORTING PAGE (ADV) II
No Information Filed
II REGULATORY ACTION DISCLOSURE REPORTING PAGE (ADV) II
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an 0 INITIAL OR C AMENDED response used to
report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form
ADV.
Check item(s) being responded to:
Regulatory Action
r
11.0(1)
r
11.C(5)
r
11.D(4)
r
11.E(3) II
r
11.C(2)
r
11.D(1)
r
11.D(5)
r
11.E(4)
r
11.C(3)
®
11.D(2)
r
11.E(1)
r
11.F
IIr
11.C(4)
r
11.D(3)
r
11.E(2)
r
11.G
Use a separate DRP for each event or proceeding. The same event or proceeding may be
reported for more than one person or entity using one DRP. File with a completed Execution
Page.
One event
may result
in more than one affirmative
answer to Items 11.C.,
11.D., 11.E., 11.F.
or 11.G. Use only one
DRP to report
details related
to the same event.
If an event gives rise to
actions by
more than
one regulator,
provide details
to each action on a
separate DRP.
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
You (the advisory firm)
C You and one or more of your advisory affiliates
C One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory
affiliate below (for individuals, Last name, First name, Middle name).
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-
registered" by checking the appropriate box.
-------------------------------------------------
http://www.adviserinfo.sec.gov/IAPD/Content[ViewFotm/ADV/Sections/iapdAdvDrpSe... 8/30/2006
Form ADV, DRPs Page 2 of 18
ADV DRP - ADVISORY AFFILIATE
No Information Filed
This DRP should be removed from the ADV record because the advisory affiliate(s) is
no longer associated with the adviser.
r This DRP should be removed from the ADV record because: (1) the event or
proceeding occurred more than ten years ago or (2) the adviser is registered or applying
for registration with the SEC and the event was resolved in the adviser's or advisory
affiliate's favor.
If you are registered or registering with a state securities authority, you may remove a
DRP for an event you reported only in response to Item 11.D(4), and only if that event
occurred more than ten years ago. If you are registered or registering with the SEC, you
may remove a DRP for any event listed in Item 11 that occurred more than ten years ._.
ago.
B. If the advisory affiliate is registered through the IARD system or CRD system, has the
advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for
the event? If the answer is "Yes," no other information on this DRP must be provided.
r YesONo
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation
to update its IARD or CRD records.
PART II -
1. Regulatory Action initiated b :
r SEC C Other Federal 15 Stater SRO C Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
SECURITIES DIVISION MASSACHUSETTS
2. Principal Sanction:
Other
Other Sanctions:
MONETARY FINE
3. Date Initiated (MM/DD/YYYY):
12/27/19950 Exact r Explanation
If not exact, provide explanation:
4. Docket/Case Number:
R-95-156
5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory
action (if applicable):
6. Principal Product Type:
Debt - Municipal •
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Form'ADV, DRPs Page 3 of 18
'I
Other Product Types: II
7. Describe the allegations related to this regulatory action -(your response must fit within
the space provided): • I
NON ALLOWABLE SALES PRIOR TO REGISTRATION
8. Current status? C Pending C On Appeal 0 Final
9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date
Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved: -
Decision & Order of Offer of Settlement
11. Resolution Date (MM/DD/YYYY):
01/03/19960 Exact r Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
® Monetary/Fine Amount:$ 1700
r Revocation/Expulsion/Denial r Disgorgement/Restitution
r Censure r Cease and Desist/Injunction
r Bar r Suspension
B. Other Sanctions Ordered:
Sanction detail: if suspended, enjoined or barred, provide duration including start
date and capacities affected (General Securities Principal, Financial Operations
Principal, etc.). If requalification by exam/retraining was a condition of the sanction,
provide length of time given to requalify/retrain, type of exam required and whether
condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied
against you or an advisory affiliate, date paid and if any portion of penalty was
waived:
FINE OF $1700.00 WAS LEVIED AGAINST THE APPLICANT NONE WAS WAIVED,
PAID IN FULL ON RESOLUTION.
13. Provide' a brief summary of details related to the action status and (or) disposition and
include relevant terms, conditions and dates (your response must fit within the space
provided.)
ALTHOUGH CREWS, WITH EXCEPTION OF SIX TRANSACTIONS IN EXEMPT SECURITIES
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Form ADV, DRPs Page 4 of 18
WHICH IT BELIEVED PERMITTED BY THE MASSACHUSETTS ACT. BY INTERPRETATION,
THE DIVISION APPLIED NO ALLOWANCE FOR SALES. ON THIS BASE, THE DIVISION
ALLOWED CREWS ITS APPLICATION FOR REGISTRATION. NO ADDITIONAL ACTION
OCCURED EXCEPT MONETARY FINE.
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an 0 INITIAL OR C AMENDED response used to
report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form
Check item(s) being responded to:
Regulatory Action
r
11.C(1)
r
11.C(5)
r
11.D(4)
r
11.E(3)
r
11.C(2)
r'
11.D(1)
r
11.D(5)
r
11.E(4)
r
11.C(3)
r
11.D(2)
r
11.E(1)
r
11.F
r
11.C(4)
r
11.D(3)
O
11.E(21
r
11.G
Use a separate DRP for each event or proceeding. The same event or proceeding may be
reported for more than one person or entity using one DRP. File with a completed Execution
Page.
One event
may result
in more than one affirmative
answer to Items 11.C., 11.0., 11.E., 11.F.
or 11.G. Use only one
DRP to report
details related
to the same event. If an event gives rise to
actions by
more than
one regulator,
provide details
to each action on a separate DRP.
i
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
0 You (the advisory firm)
r You and one or more of your advisory affiliates
r One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory
affiliate below (for individuals, Last name, First name, Middle name).
If the advisory affiliate has a CAD number, provide that number. If not, indicate "non-
registered" by checking the appropriate box.
ADV DRP - ADVISORY AFFILIATE
No Information Filed
r
This DRP should
be removed from the ADV record
because the advisory
affiliate(s) is
no
longer associated
with the adviser.
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Form ADV, DRPs Page 5 of 18
r This DRP should be removed from the ADV record because: (1) the event or
proceeding occurred more than ten years ago or (2) the adviser is registered or applying
for registration with the SEC and the event was resolved in the adviser's or advisory
affiliate's favor.
If you are registered or registering with a state securities authority, you may remove a
DRP for an event you reported only in response to Item 11.D(4), and only if that event
occurred more than ten years ago. If you are registered or registering with the SEC, you
may remove a DRP for any event listed in Item 11 that occurred more than ten years
ago.
B. If the advisory affiliate is registered through the IARD system or CRD system, has the
advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for
the event? If the answer is "Yes," no other information on this DRP must be provided.
r YesfNo
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation
to update its IARD or CRD records.
PART II
1. Regulatory Action initiated by: �q
r SEC C Other Federal C State aSRO C Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
2. Principal Sanction:
Other
Other Sanctions:
MONETARY FINE
3. Date Initiated (MM/DD/YYYY):
06/23/20060 Exact C Explanation
If not exact, provide explanation:
4. Docket/Case Number:
E052005001801
5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory
action (if applicable):
6. Principal Product Type:
No Product
Other Product Types:
7. Describe the allegations related to this regulatory action (your response must fit within
the space provided):
MSRB RULE G-36 - RESPONDENT MEMBER FAILED TO TIMELY REPORT MUNICIPAL
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Form ADV, DRPs Page 6 of 18
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SECURITIES RULEMAKING BOARD FORMS G -36S WITH THE MSRB.
8. Current status? r Pending C On Appeal 0 Final
9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date
Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved:
Acceptance, Waiver & Consent(AWC)
11. Resolution Date (MM/DD/YYYY):
06/23/20060 Exact r^ Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
0 Monetary/Fine Amount:$ 5000
r Revocation/Expulsion/Denial r Disgorgement/Restitution
r Censure r Cease and Desist/Injunction
r Bar r Suspension
B. Other Sanctions Ordered:
Sanction detail: if suspended, enjoined or barred, provide duration including start
date and capacities affected (General Securities Principal, Financial Operations
Principal, etc.). If requalification by exam/retraining was a condition of the sanction,
provide length of time given to requalify/retrain, type of exam required and whether
condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied
against you or an advisory affiliate, date paid and if any portion of penalty was
waived:
WITHOUT ADMITTING OR DENYING THE FINDINGS, CREWS & ASSOCIATES, INC.,
CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS
THEREFORE, THE FIRM IS FINED $5,000
13. Provide a brief summary of details related to the action status and (or) disposition and
include relevant terms, conditions and dates (your response must fit within the space
provided.)
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an 0 INITIAL OR C AMENDED response used to
report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form
Form ADV, DRPs Page 7 of 18
ADV.
Check item(s) being responded to:
Regulatory Action
11.C(1) r 11.C(5) r 11.D(4) r 11.E(3)
r 11.C(2) r 11.D(1) r 11.D(5) r 11.E(4)
r 11.C(3) r 11.D(2) r 11.E(1) r 11.F
r 11.C(4) r 11.D(3) 0 11.E(2) r 11.G
Use a separate DRP for each event or proceeding. The same event or proceeding may be
reported for more than one person or entity using one DRP. File with a completed Execution
Page.
One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F.
or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to
actions by more than one regulator, provide details to each action on a separate DRP.
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
0 You (the advisory firm)
You and one or more of your advisory affiliates
One or more of your advisory affiliates
-- _.-......-........... _......_......__....
--
If this DRP is being filed for an advisory affiliate, give the full name of the advisory
affiliate below (for individuals, Last name, First name, Middle name).
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-
registered" by checking the appropriate box.
ADV DRP - ADVISORY AFFILIATE
No Information Filed
r This DRP should be removed from the ADV record because the advisory affiliate(s) is
no longer associated with the adviser.
r This DRP should be removed from the ADV record because: (1) the event or
proceeding occurred more than ten years ago or (2) the adviser is registered or applying
for registration with the SEC and the event was resolved in the adviser's or advisory
affiliate's favor.
If you are registered or registering with a state securities authority, you may remove a
DRP for an event you reported only in response to Item 11.D(4), and only if that event
occurred more than ten years ago. If you are registered or registering with the SEC, you
may remove a DRP for any event listed in Item 11 that occurred more than ten years
ago.
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Form ADV, DRPs
Page 8 of 18
B. If the advisory affiliate is registered through the IARD system or CRD system, has the
advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for
the event? If the answer is "Yes," no other information on this DRP must be provided.
r YesONo
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation
to update its IARD or CRD records.
PART II
1. Regulatory Action initiated by:
r SEC r Other Federal C State OSRO C Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. MSRB
2. Principal Sanction:
Other
Other Sanctions:
PROCEDURAL CHANGES
3. Date Initiated (MM/DD/YYYY):
04/24/19970 Exact r Explanation
If not exact, provide explanation:
4. Docket/Case Number:
C05970014
5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory
action (if applicable):
6. Principal Product Type:
Debt - Municipal
Other Product Types:
7. Describe the allegations related to this regulatory action (your response must fit within
the space provided):
VIOLATIONS OF MSRB G-37
B. Current status ? C Pending r On Appeal 0 Final
9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date
Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved:
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Form ADV, DRPs Page 9 of 18
Acceptance, Waiver & Consent(AWC)
11. Resolution Date (MM/DD/YYYY):
06/25/19970 Exact CC Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
Monetary/Fine Amount:$ 250
r Revocation/Expulsion/Denial r Disgorgement/Restitution
r Censure
r Bar
B. Other Sanctions Ordered:
r Cease and Desist/Injunction
r Suspension
Sanction detail: if suspended, enjoined or barred, provide duration including start
date and capacities affected (General Securities Principal, Financial Operations
Principal, etc.). If requalification by exam/retraining was a condition of the sanction,
provide length of time given to requalify/retrain, type of exam required and whether
condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied
against you or an advisory affiliate, date paid and if any portion of penalty was
waived:
$250.00 FINED THE APPLICANT, PAID ON RESOLUTION AND NONE WAS WAIVED.
13. Provide a brief summary of details related to the action status and (or) disposition and
include relevant terms, conditions and dates (your response must fit within the space
provided.)
IN FIRTS MSRB REPORTING YR, TWO UNDERWRITINGS QTRLY PERIOD 9/30/95 1. ADFA
SERIES 95 FROM SEQUENTIAL POSITION CO -MANAGER WITH THREE OTHERS AND SR -
NO ADD ACTIVITY INCLUDING CLOSING NOTICE TO CREWS. 2. POCAHANTAS CNTY WV
SERIES 95 A. B. C. WAS AN IN -PROCESS OMISSION. BOTH HAVE BEEN ADDRESSED IN
ADDED CHECK OFF PROCEDURES TO ENSURE ACCURATE REPORTING.
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an r INITIAL ORB AMENDED response used to
report details for affirmative responses to.Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form
ck item(s) being responded to:
Regulatory Action
r 11.C(1) r 11.C(5) r 11.0(4)
r 11.C(2) r 11.0(1) r 11.D(5)
r 11.E(3)
r 11.E(4)
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Form ADV, DRPs
Page 10 of 18
r 11.C(3) r 11.D(2) r 11.E(1) r 11.F
r 11.C(4) r 11.D(3) 0 11.E(2) r 11.G
Use a separate DRP for each event or proceeding. The same event or proceeding may be
reported for more than one person or entity using one DRP. File with a completed Execution
Page.
One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F.
or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to
actions by more than one regulator, provide details to each action on a separate DRP.
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
r You (the advisory firm)
0 You and one or more of your advisory affiliates
r One or more of your advisory affiliates
If this DRP is being filed for an
advisory affiliate, give
the full
name of the advisory
affiliate below (for individuals,
Last name, First name,
Middle
name).
If the advisory affiliate has a CRD number, provide that number. If not, Indicate "non-
registered" by checking the appropriate box.
IADV DRP - ADVISORY AFFILIATE
CRD Number: 45985 This advisory affiliate is r a Firm Man Individual
Registered: UYes C No
Name: CHITWOOD, RICHARD BOYD
(For individuals, Last, First, Middle)
r
This DRP should
be removed from the ADV record
because the advisory affiliate(s) is
no
longer associated
with the adviser.
r
This DRP should
be removed from the ADV record
because: (1) the event or
proceeding occurred more than ten years ago or (2) the adviser is registered or applying
for registration with the SEC and the event was resolved in the adviser's or advisory
affiliate's favor.
If you are registered or registering with a state securities authority, you may remove a
DRP for an event you reported only in response to Item 11.D(4), and only if that event
occurred more than ten years ago. If you are registered or registering with the SEC, you
may remove a DRP for any event listed in Item 11 that occurred more than ten years
ago.
B. If the advisory affiliate is registered through the IARD system or CRD system, has the
advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for
the event? If the answer is "Yes," no other information on this DRP must be provided.
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Fonn ADV, DRPs
Page ii of 18
UYes r No
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation
to update its IARD or CRD records.
PART II
1. Regulatory Action initiated by:
r SEC r Other Federal C State DaSRO C Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
NATIONAL ASSOC OF SECURITIES DEALERS, INC.
2. Principal Sanction:
Censure
Other Sanctions:
MONETARY FINE $5,000 JOINTLY AND SEVERALLY CREWS & ASSOCIATES, INC., L
ADRON CREWS & RICHARD BOYD CHITWOOD.
3. Date Initiated (MM/DD/YYYY):
04/18/19850 Exact r Explanation
If not exact, provide explanation:
4. Docket/Case Number:
NEW-506-AWC
5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory
action (if applicable):
6. Principal Product Type:
Direct Investment(s) - DPP & LP Interest(s)
Other Product Types:
DEBT MUNICIPALS
7. Describe the allegations related to this regulatory action (your response must fit within
the space provided):
VIOLATION OF ARTICLE III SECTION 1, 21 AND 27 "RULES OF FAIR PRACTICE", DURING
PERIOD 06/21/83-08/16/83 PERTAINING TO DISTRIBUTION OF DPP OFFERING;
02/28/85,03/29/85,04/12/85 DEPOSIT RELATING TO RESERVE 15C3-3
COMPUTATIONS; 11/01/84-04/18/85 - POSSESSION & CONTROL
8. Current status? C Pending C On Appeal 0 Final
9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date
Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
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Form ADV, bRPs
Page 12 of 18
10. How was matter resolved:
Acceptance, Waiver & Consent(AWC)
11. Resolution Date (MM/DD/YYYY):
08/29/19860 Exact r Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate, items)?
Monetary/Fine Amount:$ 5000
r Revocation/Expulsion/Denial r Disgorgement/Restitution
Censure r Cease and Desist/Injunction
r Bar r Suspension
B. Other Sanctions Ordered:
Sanction detail: if suspended, enjoined or barred, provide duration including start
date and capacities affected (General Securities Principal, Financial Operations
Principal, etc.). If requalification by exam/retraining was a condition of the sanction,
provide length of time given to requalify/retrain, type of exam required and whether
condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied
against you or an advisory affiliate, date paid and if any portion of penalty was
waived:
$5,000.00 WAS FINED THE APPLICANT. THE AMOUNT WAS PAID BY APPLICANT ON
RESOLUTION WITH NO PORTION WAIVED.
13. Provide a brief summary of details related to the action status and (or) disposition and
include relevant terms, conditions and dates (your response must fit within the space
provided.)
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an r INITIAL ORO AMENDED response used to
report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form
Check item(s) being responded to:
Regulatory Action
r 11.C(1) r 11.C(5) r 11.D(4) r 11.E(3)
r 11.C(2) r 11.D(1) r 11.D(5) r 11.E(4)
r 11.C(3) r 11.D(2) r 11.E(1) r 11.F
http://www.adviseiinfo.sec.gov/IAPD/Content/ViewForm/ADV/Sections/iapd_AdvDrpSe... 8/30/2006
r 11.C(4) r 11.D(3) 0 11.E(2) r 11.G
Use a separate DRP for each event or proceeding. The same event or proceeding may be
reported for more than one person or entity using one DRP. File with a completed Execution
Page.
One event
may result
in more than one affirmative
answer to Items 11.C., 11.D., 11.E., 11.F.
or 11.G. Use only one
DRP to report
details related
to the same event. If an event gives rise to
actions by
more than
one regulator,
provide details
to each action on a separate DRP.
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
0 You (the advisory firm)
r You and one or more of your advisory affiliates
r One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory
affiliate below (for Individuals, Last name, First name, Middle name).
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-
registered" by checking the appropriate box.
IIADV DRP - ADVISORY AFFILIATE II
No Information Filed
r This DRP should be removed from the ADV record because the advisory affiliate(s) is
no longer associated with the adviser.
r This DRP should be removed from the ADV record because: (1) the event or
proceeding occurred more than ten years ago or (2) the adviser is registered or applying
for registration with the SEC and the event was resolved in the adviser's or advisory
affiliate's favor.
If you are registered or registering with a state securities authority, you may remove a
DRP for an event you reported only in response to Item 11.D(4), and only if that event
occurred more than ten years ago. If you are registered or registering with the SEC, you
may remove a DRP for any event listed in Item 11 that occurred more than ten years
ago.
B. If the advisory affiliate is registered through the IARD system or CRD system, has the
advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for
the event? If the answer is "Yes," no other information on this DRP must be provided.
r Yes0No
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation
to update its IARD or CRD records.
PART II
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Form ADV, bRPs
Page 14 of 18
1. Regulatory Action initiated by:
C SEC C Other Federal C State OSRO C Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
NASD REGULATION, INC.
2. Principal Sanction:
Other
Other Sanctions:
FINE $1000
3. Date Initiated (MM/DD/YYYY):
11/09/19990 Exact C Explanation
If not exact, provide explanation:
4. Docket/Case Number:
CAF990038
5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory
action (if applicable):
6. Principal Product Type:
Debt - Municipal
Other Product Types:
7. Describe the allegations related to this regulatory action (your response must fit within
the space provided):
ALLEDGED VIOLATION MSRV RULE G12 REQUIRED PROCEDURES IN CLEARING TRADES
NOT FOLLOWED PROVIDING TIMELY AND ACCURATE INFORMATION, RESULTING IN
VIOLATION MSRB RULE G14 REPORTING TO SHOW EQUALITY TO INDUSTRY T -INPUT
PERCENTAGE
8' Current status? C Pending r On Appeal 0 Final
9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date
Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved:
Acceptance, Waiver & Consent(AWC)
11. Resolution Date (MM/DD/YYYY):
12/16/19990 Exact C Explanation
If not exact, provide explanation:
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Form ADV, DRPs Page 15 of 18
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
® Monetary/Fine Amount:$ 1000
IT Revocation/Expulsion/Denial IT Disgorgement/Restitution
IT Censure r Cease and Desist/Injunction
r Bar r Suspension
B. Other Sanctions Ordered:
Sanction detail: if suspended, enjoined or barred, provide duration including start
date and capacities affected (General Securities Principal, Financial Operations
Principal, etc.). If requalification by exam/retraining was a condition of the sanction,
provide length of time given to requalify/retrain, type of exam required and whether
condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied
against you or an advisory affiliate, date paid and if any portion of penalty was
waived:
AWC ACCEPTED NASD REGULATION INC. AND NATIONAL ADJUDICATORY COUNCIL.
$1000.00 FINED APPLICANT, PAID AS BILLED. NONE WAIVED.
13. Provide a brief summary of details related to the action status and (or) disposition and
include relevant terms, conditions and dates (your response must fit within the space
provided.)
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an r INITIAL ORE AMENDED response used to
report details for affirmative responses to Items 11.C., 11.0., 11.E., 11.F. or 11.G. of Form
Check Item(s) being responded to:
Regulatory Action
r
11.C(1)
IT
11.C(5)
IT
11.0(4)
r
11.E(3)
IT
11.C(2)
IT
11.D(1)
r
11.0(5)
IT
11.E(4)
II r
11.C(3)
IT
11.D(2)
r
11.E(1)
r
11.F
r
11.C(4)
r
11.D(3)
C
11.E(21
IT
11.G
Use a separate DRP for each event or proceeding. The same event or proceeding may be
reported for more than one person or entity using one DRP. File with a completed Execution
Page.
One event
may result
in more than one affirmative
answer to Items 11.C., 11.D., 11.E., 11.F.
or 11.G. Use only one
DRP to report
details related
to the same event. If an event gives rise to
actions by
more than
one regulator,
provide details
to each action on a separate DRP.
http://www.adviserinfo.sec.gov/LAPD/Content(ViewFonn/ADV/Sections/iapd_AdvDrpSe... 8/30/2006
----._.._.._ _.._ .. ._... ......... .... .._ _....---....-. .
Form'ADV, DRPs Page 16 of 18
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
You (the advisory firm)
C You and one or more of your advisory affiliates
One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory
affiliate below (for individuals, Last name, First name, Middle name).
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-
registered" by checking the appropriate box.
ADV DRP - ADVISORY AFFILIATE
No Information Filed
r This DRP should be removed from the ADV record because the advisory affiliate(s) is
no longer associated with the adviser.
r This DRP should be removed from the ADV record because: (1) the event or
proceeding occurred more than ten years ago or (2) the adviser is registered or applying
for registration with the SEC and the event was resolved in the adviser's or advisory
affiliate's favor.
If you are registered or registering with a state securities authority, you may remove a
DRP for an event you reported only in response to Item 11.D(4), and only if that event
occurred more than ten years ago. If you are registered or registering with the SEC, you
may remove a DRP for any event listed in Item 11 that occurred more than ten years
ago.
B. If the advisory affiliate is registered through the IARD system or CRD system, has the
advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for
the event? If the answer is "Yes," no other information on this DRP must be provided.
YesflNo
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation
to update its IARD or CRD records.
PART II
1. Regulatory Action initiated by:
O SEC C Other Federal O State DSRO C Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC
2. Principal Sanction:
Censure
Other Sanctions:
MONETARY FINE
http://www.adviserinfo.sec.gov/IAPD/Content/ViewForm/AD V/Sections/iapd_AdvDrpSe... 8/30/2006
• Form ADV, DRPs Page 17 of 18
http://www.adviserinfo.see.gov/IAPD/ContentfViewFonn/ADV/Sections/iapd AdvDrpSe... 8/30/2006
3. Date Initiated (MM/DD/YYYY):
07/17/19960 Exact f Explanation
If not exact, provide explanation:
4. Docket/Case Number:
C05960042
5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory
action (if applicable):
6. Principal Product Type:
Debt - Municipal
Other Product Types:
7. Describe the allegations related to this regulatory action (your response must fit within
the space provided):
PLACEMENT OF SECURITIES IN A CUSTOMER LIEU A SPECIAL HOUSE ACCOUNT
(PROVIDED BY AN AGREEMENT CREWS WITH DISTRICT 5) VIOLATED CONDUCT RULE
2110 FORMERLY ARTICLE III SECTION 1, NASD "RULES OF FAIR PRACTICE'.
8. Current status? C Pending r On Appeal U Final
9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date
Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved:
Acceptance, Waiver & Consent(AWC)
11. Resolution Date (MM/DD/YYYY):
- 10/09/19965 Exact Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
Monetary/Fine Amount:$ 5000
r Revocation/Expulsion/Denial r Disgorgement/Restitution
r Censure r Cease and Desist/Injunction
r Bar Suspension
Fonn ADV, DRPs Page 18 of 18
B. Other Sanctions Ordered:
Sanction detail: if suspended, enjoined or barred, provide duration including start
date and capacities affected (General Securities Principal, Financial Operations
Principal, etc.). If requalification by exam/retraining was a condition of the sanction,
provide length of time given to requalify/retrain, type of exam required and whether
condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied
against you or an advisory affiliate, date paid and if any portion of penalty was
waived:
$5,000.00 WAS FINED APPLICANT AND PAID ON RESOLUTION NO PORTION
WAIVED.
13. Provide a brief summary of details related to the action status and (or) disposition and
include relevant terms, conditions and dates (your response must fit within the space
provided.)
DURING PERIOD 02/25/94-12/20/94, CREWS EXECUTED A SERIES OF TRANSACTIONS
PLACING DEBT SECURITIES INTO AN INDIVIDUAL PUBLIC ACCOUNT RATHER THAN A
SPECIAL HOUSE ACCOUNT TO BE USED PURSUANT TO TERMS OF TRADING
GUIDELINES DATED 6/25/93. THIS PLACEMENT WAS DESIGNED TO REMOVE
PERCEIVED APPEARANCE OF INTERPOSING OR IMPLICATION OF SPECIAL
CONSIDERATION.
CIVIL JUDICIAL ACTION DISCLOSURE REPORTING PAGE (ADV)
No Information Filed
Bond DRPs
No Information Filed
Judgment/Lien DRPs
No Information Filed
Arbitration DRPs
No Information Filed
http://www.adviserinfo.sec.gov/IAPD/Content[ViewForm/ADV/Sections/iapd AdvDrpSe... 8/30/2006
Je1IrIpruIwg1ui,i,n __
From: Clarice Pearman
To: Farthing, Marsha
Date: 9.25.06 3:11 PM
Subject: Marsha,
Attachments: 159-06 First Security Bancorp.pdf
CC: Audit
Marsha,
Attached is a copy of the above resolution passed by City Council, September 19, 2006. I will forward to you via interoffice
mail one of two original agreements with First Security Bancorp. If anything else is needed please let me know.
Thanks. -
Clarice
F,li ✓1l59-0%
hyeevu']e
THE CITY OF FAVETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
TO: Dan Coody, Mayor
City Council Members
Kit Williams, City Attorney
FROM: Paul Becker, Finance Director P, .
DATE: September 15, 2006
RE: Recommendation Regarding the Selection of First Security Bank
Contract for Investment Management Services
Council members were provided a copy of First Security Bank's response to the copy of
Garrison Asset Management's six concerns presented at the September 5, 2006 City
Council meeting. I feel First Security Bank's responses adequately address the concerns.
However, I urge you to personally evaluate the responses given.
I believe the actions of the selection committee were fair, unbiased and done in good
faith. I feel that the proposal submitted by First Security Bank was vague at times but
should not have been considered incomplete or unresponsive and therefore have been
disqualified before being reviewed by the selection committee.
For these reasons I support the recommendation of the selection committee. You may
disagree and the final decision is, of course, yours.
The concern about a potential conflict of interest by using Crews and Associates in the
purchase or sale of portfolio assets could be resolved by instructing First Securities Bank
not to use Crews and Associates in the purchase or sale of portfolio assets. Although this
could cause the City to pay more for an offering of the same security by another dealer, it
would remove any perception of a conflict of interest. I believe the contract should be
amended to reflect this. The City Attorney could be directed to accomplish this.
It should be noted that First Security Bank is required to provide monthly statements to
City staff. A yearly presentation to the City Council will also be made. Their performance
can be evaluated by the Council at that time.
113 WEST MOUNTAIN 72701. 479-675.8330
FAX '479.576-8257