Exhibit (p)(2): Code of Ethics for Shanklin Capital Management, Inc.
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SHANKLIN CAPITAL MANAGEMENT
ADVISOR'S CODE OF ETHICS
Dated June 23, 2000
Pursuant to Rule 17j-1 under the Investment Company Act of 1940
("Act"), the following Code of Ethics is adopted by Shanklin Capital Management,
a registered investment adviser and a Tennessee Corporation. Shanklin Capital
Management provides investment advisory services for SCM Strategic Growth Fund
(the "Fund"), a series of SCM Investment Trust.
This Code of Ethics is intended to ensure that all acts, practices and courses
of business engaged in by access persons (as defined) of Shanklin Capital
Management reflect high standards and comply with the requirements of Section
17(j) of the Act and Rule 17j-1 thereunder.
I. Definitions
A. "Access Person" means any director, trustee, officer, general partner,
managing member, or advisory person (as defined) of Shanklin Capital Management.
B. "Advisory Person" means (1) any employee of Shanklin Capital Management
(or of any company in a control relationship to Shanklin Capital Management)
who, in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale of a
security (as defined in this Code of Ethics) by the Fund, or whose functions
relate to the making of any recommendations with respect to such purchases or
sales; and (2) any natural person in a control relationship to Shanklin Capital
Management who obtains information concerning recommendations made to the Fund
with regard to the purchase or sale of a security by the Fund.
C. "Beneficial Ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) in determining whether a person subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and the rules
and regulations thereunder.
D. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act. Section 2(a)(9) provides that "control" generally means the
power to exercise a controlling influence over the management or policies of a
company, unless such power is solely the result of an official position with
such company.
E. A "security held or to be acquired" means: (1) any security which,
within the most recent 15 days: (a) is or has been held by the Fund; or (b) is
being considered by Shanklin Capital Management or the Fund for purchase by the
Fund; and (2) any option to purchase or sell, and any security convertible onto
or exchangeable for, a security described in clause (1) above.
F. An "initial public offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately before the
registration, was not subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934.
G. "Investment personnel" means: (1) any employee of Shanklin Capital
Management (or any company in a control relationship to Shanklin Capital
Management) who, in connection with his or her regular functions or duties,
makes or participates in making recommendations regarding the purchase or sale
of securities by the Fund; and (2) any natural person who controls Shanklin
Capital Management or the Fund and who obtains information concerning
recommendations made to the Fund regarding the purchase or sale of securities by
the Fund.
H. A "limited offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) or
pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act of 1933.
I. "Portfolio manager" means an employee of Shanklin Capital Management who
is authorized to make investment decisions on behalf of the Fund.
J. "Purchase or sale" for purposes of this Code of Ethics and each Appendix
thereto includes, among other things, the writing of an option to purchase or
sell a security.
K. "Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include direct obligations of the Government of
the United States, bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt instruments, including
repurchase agreements, and shares of registered open-end investment companies,
or such other securities as may be excepted under the provisions of Rule 17j-1.
II. Legal Requirement
Rule 17j-l under the Investment Company Act of 1940 makes it unlawful
for Shanklin Capital Management, as investment adviser of the Fund, or any
affiliated person of Shanklin Capital Management in connection with the purchase
and sale by such person of a security held or to be acquired by the Fund:
(1) To employ any device, scheme or artifice to defraud the Fund;
(2) To make to the Fund any untrue statement of a material fact or omit to
state to the Fund a material fact necessary in order to make the statements
made, in light of the circumstances under which they are made, not misleading;
(3) To engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon the Fund; or
(4) To engage in any manipulative practice with respect to the Fund.
To assure compliance with these restrictions, Shanklin Capital
Management adopts and agrees to be governed by the provisions contained in this
Code of Ethics.
III. General Principles
Shanklin Capital Management and each of its access persons shall be
governed by the following principles:
A. No access person shall engage in any act, practice or course of conduct
that would violate the provisions of Rule 17j-l set forth above;
B. The interests of the Fund and its shareholders are paramount and come
before the interests of any access person or employee;
C. Personal investing activities of all access persons shall be conducted
in a manner that shall avoid actual or potential conflicts of interest with the
Fund and its shareholders; and
D. Access persons shall not use such positions, or any investment
opportunities presented by virtue of such positions, to the detriment of the
Fund and its shareholders.
IV. Substantive Restrictions
A. Blackout Periods. The price paid or received by the Fund for any
investment should not be affected by a buying or selling interest on the part of
an access person, or otherwise result in an inappropriate advantage to the
access person. To that end:
(1) No access person shall enter an order for the purchase or sale of
an investment which the Fund is, or is considering, purchasing or selling
until the day after the Fund's transactions in that investment have been
completed, unless the Compliance Officer determines that it is clear that,
in view of the nature of the investment and the market for such investment,
the order of the access person will not affect the price paid or received
by the Fund; and
(2) A portfolio manager of Shanklin Capital Management may not buy or
sell a security within seven days before or after the Fund trades in the
security.
B. Initial Public Offerings and Limited Offerings.
(1) No investment personnel may acquire any direct or indirect
Beneficial Ownership in any securities in an initial public offering or in
a limited offering unless the Compliance Officer of Shanklin Capital
Management has authorized the transaction in advance.
(2) Investment personnel who have been authorized to acquire
securities in a limited offering must disclose his or her interest if he or
she is involved in the Fund's consideration of an investment in such
issuer. Any decision to acquire such issuer's securities on behalf of the
Fund shall be subject to review by investment personnel with no personal
interest in the issuer.
C. Acceptance of Gifts. Investment personnel must not accept gifts in
excess of limits contained in the Conduct Rules of the National Association of
Securities Dealers, Inc. from any entity doing business with or on behalf of
Shanklin Capital Management or the Fund.
D. Service on Boards. Investment personnel shall not serve on the boards of
directors of publicly traded companies, or in any similar capacity, absent the
prior approval of such service by the Compliance Officer following the receipt
of a written request for such approval. In the event such a request is approved,
procedures shall be developed to avoid potential conflicts of interest.
E. Disgorgement. Any profits derived from securities transactions in
violation of paragraphs IV.A-IV.B, above, shall be forfeited and paid to the
Fund for the benefit of its or their shareholders. Gifts accepted in violation
of paragraph IV.C shall be forfeited, if practicable, and/or dealt with in any
manner determined appropriate and in the best interests of the Fund and its
shareholders.
F. Exemptions. The restrictions of this Section IV shall not apply to the
following transactions unless the Compliance Officer determines that such
transactions violate the provisions of Section III of this Code of Ethics:
(1) Reinvestments of dividends pursuant to a plan;
(2) Transactions in instruments which are excepted from the definition
of security in this Code of Ethics.
(3) Transactions in which direct or indirect Beneficial Ownership is
not acquired or disposed of;
(4) Transactions in accounts as to which an access person has no
investment control;
(5) Transactions that are non-volitional on the part of the access
person.
V. Procedures
A. Reporting. In order to provide Shanklin Capital Management with
information to enable it to determine with reasonable assurance whether the
provisions of Rule 17j-1 are being observed by its access persons, each access
person of Shanklin Capital Management shall submit the following reports in the
forms attached hereto as Exhibits A-D to Shanklin Capital Managements'
Compliance Officer (or his or her delegate) showing all transactions in
securities in which the person has, or by reason of such transaction acquires,
any direct or indirect Beneficial Ownership:
(1) Initial Holding Report. Exhibit A shall initially be filed no
later than 10 days after that person becomes an access person.
(2) Quarterly Reports. Exhibits B and C shall be filed no later than
10 days after the end of each calendar quarter, but transactions over which
such person had no direct or indirect influence or control need not be
reported. No such periodic report needs to be made if the report would
duplicate information required to be recorded under Rule 204-2(a)(12) or
Rule 204-2(a)(13) under the Investment Advisers Act of 1940, or information
contained in broker trade confirmations or account statements received by
Shanklin Capital Management no later than 10 days after the end of each
calendar quarter and/or information contained in Shanklin Capital
Managements' records.
(3) Annual Report. Exhibit D must be submitted by each access person
within 30 days after the end of each calendar year.
B. Duplicate Copies. Each access person, with respect to each brokerage
account in which such access person has any beneficial interest shall arrange
that the broker shall mail directly to the Compliance Officer at the same time
they are mailed or furnished to such access person (a) duplicate copies of the
broker's trade confirmation covering each transaction in securities in such
account and (b) copies of periodic statements with respect to the account.
C. Notification; Annual Certification. The Compliance Officer (or his or
her delegate) shall notify each access person of Shanklin Capital Management who
may be required to make reports pursuant to this Code of Ethics, that such
person is subject to reporting requirements and shall deliver a copy of this
Code of Ethics to each such person. The Compliance Officer shall annually obtain
written assurances in the form attached hereto from each access person that he
or she is aware of his or her obligations under this Code of Ethics and has
complied with the Code of Ethics and with its reporting requirements.
VI. Review and Enforcement
A. Review.
(1) The Compliance Officer (or his or her delegate) shall from time to
time review the reported personal securities transactions of access persons
for compliance with the requirements of this Code of Ethics.
(2) If the Compliance Officer (or his or her delegate) determines that
a violation of this Code of Ethics may have occurred, before making a final
determination that a material violation has been committed by an
individual, the Compliance Officer (or his or her delegate) may give such
person an opportunity to supply additional information regarding the matter
in question.
B. Enforcement.
(1) If the Compliance Officer (or his or her delegate) determines that
a material violation of this Code of Ethics has occurred, he or she shall
promptly report the violation to the Trustees of the Fund. The Trustees,
with the exception of any person whose transaction is under consideration,
shall take action as they consider appropriate, including imposition of any
sanctions they consider appropriate.
(2) No person shall participate in a determination of whether he or
she has committed a violation of this Code of Ethics or in the imposition
of any sanction against himself or herself.
C. Reporting to Board. No less frequently than annually, Shanklin Capital
Management shall furnish to the Fund's Board of Trustees, and the Board must
consider, a written report that:
(1) Describes any issues arising under the Code of Ethics or
procedures since the last report to the Board of Trustees, including, but
not limited to, information about material violations of the Code of Ethics
or procedures and sanctions imposed in response to the material violations;
and
(2) Certifies that Shanklin Capital Management has adopted procedures
reasonably necessary to prevent access persons from violating this Code of
Ethics.
VII. Records
Shanklin Capital Management shall maintain records in the manner and to
the extent set forth below, which records shall be available for appropriate
examination by representatives of the Securities and Exchange Commission.
o A copy of this Code of Ethics and any other code of ethics which is, or
at any time within the past five years has been, in effect shall be
preserved in an easily accessible place;
o A record of any violation of this Code of Ethics and of any action
taken as a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years following the
end of the fiscal year in which the violation occurs;
o A copy of each report made pursuant to this Code of Ethics by an access
person, including any information provided in lieu of reports, shall be
preserved by Shanklin Capital Management for a period of not less than
five years from the end of the fiscal year in which it is made, the
first two years in an easily accessible place;
o A list of all persons who are, or within the past five years have been,
required to make reports pursuant to this Code of Ethics, or who are or
were responsible for reviewing these reports, shall be maintained in an
easily accessible place;
o A copy of each report to the Board shall be preserved by Shanklin
Capital Management for at least five years after the end of the fiscal
year in which it is made, the first two years in an easily accessible
place; and
o Shanklin Capital Management shall preserve a record of any decision,
and the reasons supporting the decision, to approve the acquisition by
investment personnel of securities under Section IV.B of this Code of
Ethics for at least five years after the end of the fiscal year in
which the approval is granted, the first two years in an easily
accessible place.
VIII. Confidentiality
All reports of securities transactions and any other information filed
with Shanklin Capital Management pursuant to this Code of Ethics, shall be
treated as confidential, except as regards appropriate examinations by
representatives of the Securities and Exchange Commission
<PAGE>
ANNUAL CERTIFICATION OF
Shanklin Capital Management
The undersigned hereby certifies on behalf of Shanklin Capital
Management to the Board of Trustees of Shanklin Capital Management pursuant to
Rule 17j-1(c)(2)(B) under the Investment Company Act of 1940, and pursuant to
Section VI.C(2) of Shanklin Capital Management's Code of Ethics, that Shanklin
Capital Management has adopted procedures that are reasonably necessary to
prevent access persons from violating the Code of Ethics.
Date: ______________________ ____________________________________
Compliance Officer
<PAGE>
ANNUAL CERTIFICATE OF COMPLIANCE
_______________________________
Name (please print)
This is to certify that the attached Code of Ethics was distributed to
me on __________, 2000. I have read and understand the Code of Ethics, and I
understand my obligations thereunder. I certify that I have complied with the
Code of Ethics during the course of my association with Shanklin Capital
Management, and that I will continue to do so in the future. Moreover, I agree
to promptly report to the Compliance Officer any violation or possible violation
of the Code of Ethics of which I become aware.
I understand that violation of the Code of Ethics will be grounds for
disciplinary action or dismissal and may also be a violation of federal and/or
state securities laws.
_________________________________
Signature
_________________________________
Date
<PAGE>
EXHIBIT A
Shanklin Capital Management
Initial Holdings Report
To the Compliance Officer:
As of the below date, I held the following position in these securities
in which I may be deemed to have a direct or indirect Beneficial Ownership, and
which are required to be reported pursuant to Shanklin Capital Management's Code
of Ethics:
Broker/Dealer or
No. of Principal Bank Where
Security Shares Amount Account is Held
-------- ------ ------ ---------------
This report (i) excludes holdings with respect to which I had no direct
or indirect influence or control, and (ii) is not an admission that I have or
had any direct or indirect Beneficial Ownership in the securities listed above.
Date: ____________________________ Signature: _________________________
<PAGE>
EXHIBIT B
Shanklin Capital Management
Securities Transaction Report
For the Calendar Quarter Ended _________________
To the Compliance Officer:
During the quarter referred to above, the following transactions were
effected in securities in which I may be deemed to have had, or by reason of
such transaction acquired, direct or indirect Beneficial Ownership, and which
are required to be reported pursuant to Shanklin Capital Management's Code of
Ethics:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Broker/
Nature of Dealer or
Security Principal Transaction Bank Through
(including interest and maturity Date of No. of Amount of (Purchase, Whom
date, if any) Transaction Shares Transaction Sale, Other) Price Effected
------------- ----------- ------ ----------- ------------ ----- --------
</TABLE>
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, and (ii) is not an admission that I
have or had any direct or indirect Beneficial Ownership in the securities listed
above.
Date: ____________________________ Signature: _________________________
<PAGE>
EXHIBIT C
Shanklin Capital Management
Account Establishment Report
For the Calendar Quarter Ended _________________
To the Compliance Officer:
During the quarter referred to above, the following accounts were
established for securities in which I may be deemed to have a direct or indirect
Beneficial Ownership, and is required to be reported pursuant to Shanklin
Capital Management's Code of Ethics:
Broker/Dealer or
Bank Where Date
Account Was Account Was
Established Established
----------- -----------
Date: ____________________________ Signature: _________________________
<PAGE>
EXHIBIT D
Shanklin Capital Management
Annual Holdings Report
To the Compliance Officer:
As of December 31, ___, I held the following positions in securities in
which I may be deemed to have a direct or indirect Beneficial Ownership, and
which are required to be reported pursuant to Shanklin Capital Management's Code
of Ethics:
Broker/Dealer or
No. of Principal Bank Where
Security Shares Amount Account is Held
-------- ------ ------ ---------------
This report is not an admission that I have or had any direct or
indirect Beneficial Ownership in the securities listed above.
Date: ____________________________ Signature: _________________________
