# Trustee Fiduciary Duty and Conflict Rules ATRS Board Policy 1 Section IV (Code of Conduct) and Board Policy 3 Section II.B (Code of Ethics) together establish the fiduciary duty and conflict-of-interest framework that governs trustees and ATRS staff. Both incorporate by reference Arkansas Ethics Commission gift definitions and codify the prudent investor and exclusive benefit doctrines. ## Trustee Code of Conduct (BP1 Section IV) The Code of Conduct contains seven provisions binding all fifteen trustees: (a) "The Board expects of itself and its members ethical and business-like conduct." (b)(1) "All trustees, as fiduciaries, shall discharge their duties solely in the best interest of ATRS members and for the exclusive purpose of providing optimum benefits." (b)(2)(A) "Trustees should avoid any conflict of interest with respect to their fiduciary responsibility." (b)(2)(B) "Trustees shall not use their positions to obtain favorable treatment for themselves, family members, or close employees." (c) "Trustees who desire specific information from firms employed by ATRS should make the request through the Executive Director." (d) "Trustees shall not, directly or indirectly, solicit or accept any gift of value as defined by the Arkansas Ethics Commission." (e) "Trustees shall decline any offer and shall not have any contact with an individual or anyone associated with a firm that the Board is considering employing through a competitive procurement until after the procurement process has concluded." (f)(1) "Trustees shall not attempt to exercise individual authority over the operation of the System or ATRS staff except as provided by law, rule, or policy applicable to the System." (g) "All trustees shall report violations of any of these policies of conduct in writing to the Chair." ## Executive Director and Staff Code of Ethics (BP3 Section II.B) BP3 makes the Executive Director responsible for ensuring that ATRS staff comply with an analogous code of ethics: > "The Executive Director may not fail to require employees of the System to adhere to an appropriate code of ethics that will assure: 1. Confidentiality of member records. 2. No conflict of interest, or appearance thereof, with respect to their fiduciary responsibilities. 3. Adherence to applicable professional codes of ethics and standards of professional conduct. 4. No solicitation or acceptance of gifts, favors, or other items of value as defined by the Arkansas Ethics Commission. 5. No ATRS associate shall participate in any activities regarding the candidacy of any person for a position as a Board member or officer of the Board." The "appearance thereof" language extends the conflict standard beyond actual conflict to perception of conflict. This is a more demanding standard than actual-conflict-only and matters in evaluating fact patterns where the actor may believe they are acting properly but the appearance to a reasonable observer is otherwise. ## Application to the Israel Bonds fact pattern The materials in the ingested batches (the staff email production and the Board Rules production) document several interactions between named trustees and ATRS staff with the Development Corporation for Israel and with the manager subsequently selected to run the Israel bond mandate. The 4/15/2025 in-person meeting at the State Capitol with Lawrence Berman and Brad Young of DCI was hosted by Auditor Dennis Milligan in his official Capitol office and attended by ATRS executive director Mark White. The 5/22/2025 Board preview email frames the Israel Bonds proposal as coming from "Our Board colleague, State Auditor Dennis Milligan." Milligan is a sitting trustee whose office initiated the proposal that the Board would later vote on. The relevant BP1 Section IV provisions for evaluating this pattern are: - (b)(2)(A) the conflict-of-interest avoidance duty - (b)(2)(B) the prohibition on using one's position to obtain favorable treatment - (e) the no-contact rule during competitive procurement The application of subsection (e) depends on whether DCI was a "firm that the Board is considering employing through a competitive procurement" at the time of the 4/15 meeting. DCI is the issuer of the Israel Bonds the System would purchase; the manager hired through procurement was Reams Asset Management. The bonds being purchased come from DCI, not Reams; DCI is not the entity providing investment management services. Whether DCI counts as "a firm the Board is considering employing" through the Reams contract depends on a substantive interpretation of the relationship between issuer and manager. The materials in the ingested batches do not document Milligan's recusal from any vote on the Israel Bonds action, his disclosure to fellow trustees of his role in originating the proposal beyond what is captured in the 5/22 White Board preview, or any evaluation of Milligan's conduct against the BP1 Section IV provisions. The companion concept page [[board-colleague-conflict]] addresses the structural feature of Milligan being both originator and voter. ## Reporting violations BP1 Section IV(g) requires trustees to report violations "in writing to the Chair." Per the seed-list ATRS Board Chair Danny Knight cast the sole dissenting vote on the Israel Bonds action. Whether any written report under Section IV(g) was made to or by the Chair regarding the Israel Bonds action is not established in the staff email batch or the Board Rules batch. This is a follow-up FOIA target. ## Relationship to Investment Policy The fiduciary duty language in BP1 Section IV ("solely in the best interest of ATRS members and for the exclusive purpose of providing optimum benefits") sits alongside the BP4 Section D.3 pecuniary standard ("solely in the pecuniary interest of the participants and beneficiaries... only pecuniary factors"). The two provisions are complementary: BP1 names the duty (best interest, exclusive purpose), BP4 names what may and may not be considered in evaluating an investment (only pecuniary factors). The companion concept page [[pecuniary-frame-act-498]] addresses the pecuniary standard. The companion concept page [[atrs-investment-policy-bp4]] addresses BP4 in detail. ## Evidence > [!evidence] BoardPolicy_01.pdf p.3, Section IV(b)(1) > "All trustees, as fiduciaries, shall discharge their duties solely in the best interest of ATRS members and for the exclusive purpose of providing optimum benefits." > [!evidence] BoardPolicy_01.pdf p.3, Section IV(b)(2)(A) > "Trustees should avoid any conflict of interest with respect to their fiduciary responsibility." > [!evidence] BoardPolicy_01.pdf p.3, Section IV(b)(2)(B) > "Trustees shall not use their positions to obtain favorable treatment for themselves, family members, or close employees." > [!evidence] BoardPolicy_01.pdf p.3, Section IV(d) > "Trustees shall not, directly or indirectly, solicit or accept any gift of value as defined by the Arkansas Ethics Commission." > [!evidence] BoardPolicy_01.pdf p.3, Section IV(e) > "Trustees shall decline any offer and shall not have any contact with an individual or anyone associated with a firm that the Board is considering employing through a competitive procurement until after the procurement process has concluded." > [!evidence] BoardPolicy_01.pdf p.3, Section IV(g) > "All trustees shall report violations of any of these policies of conduct in writing to the Chair." > [!evidence] BoardPolicy_03.pdf p.7, Section II.B(2) > "No conflict of interest, or appearance thereof, with respect to their fiduciary responsibilities." ## Tensions This concept page is the documentary surface for one open tension: - [[T031 - Milligan Dual-Role Conflict Under BP1 Section IV]] — does Milligan's dual role as Auditor-office Israel Bonds originator-advocate and statutory ATRS trustee voting on the resulting Board action constitute a documented conflict of interest under BP1 Section IV that the record does not show was disclosed or addressed, or does the statutory ex-officio structure of his trusteeship contemplate this kind of inter-office policy advocacy as ordinary ex-officio cross-membership activity. Status: open. The tension is documented at [[board-colleague-conflict]] in parallel and is load-bearing for both concept pages. ## Cross-References [[dennis-milligan]] [[mark-white]] [[rod-graves]] entities subject to these provisions [[board-colleague-conflict]] companion concept page on Milligan's dual role [[pecuniary-frame-act-498]] [[atrs-investment-policy-bp4]] companion concept pages on the pecuniary standard [[atrs-board-governance-structure]] concept page on Board composition [[atrs-board-rules-r1]] source page