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Exhibit 99(p)(vi)
CODE OF ETHICS
of
SANFORD C. BERNSTEIN & Co., INC.
Effective April, 2000
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Exhibit 99(p)(vi)
Our revised Code continues to reflect these core personal trading rules:
- All staff members generally must keep their brokerage accounts at
Bernstein;
- All staff members must obtain appropriate pre-approval before each
trade;
- Insider trading is prohibited;
- Staff members may not trade in a security with knowledge that our firm
is considering buying or selling the security for client accounts;
- Certain staff members may not make any trades that are contrary to the
action our firm is taking, or is contemplating soon taking, for client
accounts. These staff members include IPG members, other PMG staff,
research personnel for securities they cover, and Fixed Income staff
members for Fixed Income securities;
- Research analysts face additional restrictions with respect to
securities they cover.
- All staff members must seek pre-approval to participate in private
placements; and
- All staff members are prohibited from participating in IPOs.
Our revised Code reflects the following significant changes:
1. Ban on Short-Term Trading. No staff member may buy a security if he or she
has sold the same or equivalent security within the prior thirty (30) days,
or sell a security if he or she has bought the same or equivalent security
within the prior thirty (30) days. The only exception is for Treasuries or
derivatives on Treasuries (which may not be traded intra-day). This policy
will go into effect on May 15, 2000.
2. Staff Trading Restrictions During Major Buy or Sell Program for Clients.
All staff members are prohibited from buying a security that is part of a
major buy program for clients, and from selling such a security that is
part of a major sell program for clients. These rules apply even if no
client orders are pending.
3. Staff Trading Blocked Because of Poison Pill Limitations on Client Trades.
From time to time, we are prevented from purchasing a security for clients
because of regulatory or policy restrictions limiting the ownership
interest in an issuer that we can acquire for ourselves or our clients. Our
revised Code prohibits all staff members from purchasing the security in
such instance.
4. Additional Special Restrictions for Research Analysts. Our revised Code
provides that our research analysts and research associates (in the
investment management area and in the institutional services area) may not
"short" securities they cover, and may not trade options of any kind in
securities they cover.
5. Exceed Securities. You are now permitted to set up a Treasuries account
directly with the Federal Reserve (but not with a broker), and you may
buy/sell Treasuries directly to/from the Federal Reserve without our
permission.
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TABLE OF CONTENTS
GENERAL PRINCIPLES
PERSONAL TRADING RULES
You May Trade Only at Bernstein
General Statement-of Policy
Outside Accounts Must Be Transferred To Bernstein
Initial Disclosure Upon Commencing Employment
Outside Trades Permitted Only in Very Limited Circumstances
Heightened Disclosure Requirements For Outside Accounts
Pre-Approval Required For All Trades By All Staff Members
General Statement of Policy
Steps in the Pre-Approval Process
Step One: Order Ticket / Memo Request
Step Two: Approval by Your Supervisor or Other Authorized
Person
Step Three: Approval of Trading Desk
Exception: Trades in Authorized Outside Accounts
Our Trading Desk Will Not Permit You to Trade Ahead of Clients
General Statement of Policy
Limited Exception
Other Reasons For Trading Desk Disapproval
Prohibition Against Insider Trading
Restrictions On Participating In:
IPOs
Private Securities Transactions and Other Investment
Opportunities of Limited Availability
No Short-Term Trading
Special Restrictions For:
Decisionmakers
Others with Access to Decisions
Contrary Trading Restrictions For Members of:
Investment Policy Groups
Global Equity Portfolio Management Department
(Including All Domestic and International Equity Portfolio
Management Groups and Investment Management Trading)
Investment Management Research Department
(Including All Domestic and International Equity Research
Departments)
Fixed Income Department
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Other Special Restrictions For:
Investment Management Research Analysts
Investment Management Research Associates
Fixed Income Staff Performing Research
Special Restrictions For:
Institutional Research Analysts
Institutional Research Associates
Other Special Restrictions Imposed By Your Department
OTHER CONDUCT RULES
Gifts
Gifts Received By Staff Members
Entertaining Clients
Gifts Given By Staff Members
Compensation to Certain Employees of Others
Financial Interest
Awarding Contracts
Outside Directorships & Officerships and Other Outside Activities
No Recommendation or Sale of Products Other Than Bernstein Products
Proprietary Information
Identity of Companies on Our Restricted Lists
Clients' Proprietary Information
Our Research
Other
Rumors
Communication With Clients & the Public
Reportable Events Involving Staff Members
ADMINISTRATION
Annual Report and Certification
Ongoing Supervisory Oversight
Education & Training
Reporting of Violations
SANCTIONS
OVERSIGHT BY BOARD OF DIRECTORS
Establishment and Oversight of This Code
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Our Annual Report and Certification to the Board
RECORD-KEEPING
The Legal Department is Responsible For:
The Brokerage Operations Department is Responsible For:
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GENERAL PRINCIPLES
This Code of Ethics is based on the following general principles that
will govern your conduct while a member of the Bernstein staff
- You must place the interests of our clients first;
- You must conduct your personal securities and commodities
transactions and perform your job duties In keeping with this
Code of Ethics and in a manner so as to avoid any actual or
potential conflicts of interest or any abuse of your position
of trust and responsibility;
- You must not take inappropriate advantage of your position
with our firm;
- You must comply with all applicable laws, rules and
regulations, and make a good faith effort to comply with the
spirit and intent of all such laws, rules and regulations; and
- You must comply with all other policies and procedures of our
firm, such as those in our Compliance Manual and in Bernstein
& You, our employee handbook.
For purposes of this Code, we use the term "client" to include all
institutional brokerage, investment advisory and investment management clients
of Bernstein, including each portfolio of the Sanford C. Bernstein Fund, Inc.
and any other investment company for which we provide investment management
services.
When we refer to "you" in this Code and "your" obligations to abide by
this Code's personal trading restrictions, we also mean any other person,
including your spouse or other family member, whose investment decisions you
control or influence.
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PERSONAL TRADING RULES
You May Trade Only at Bernstein
General Statement of Policy
In order to monitor adherence to the trading rules described in this
Code of Ethics, we require you to maintain at Bernstein all of your securities
accounts and the accounts that you control, and we restrict you from controlling
or influencing any securities or commodities trades outside Bernstein without
our special permission. This means, for example:
- Your securities (including options) accounts must be here;
- The securities accounts of your spouse and other immediate
family members sharing your household must be here if you
control the selection of investments for those accounts;
- You must obtain approval from the firm to maintain a
commodities account with a futures commission merchant;
- You may not control or influence any securities or commodities
trade outside Bernstein without our permission;
- Your IRA or 401(k) account must be here if you can control the
selection of particular stocks for the account;
- You may not trade securities "online;"
- You may not participate directly or indirectly in any
investment club in which members pool their funds and invest;
- If you have a financial interest in a trust, and you control
the selection of securities for the trust, the trust account
must be here; and
- The accounts of charities must be here if you control the
selection of investments for those accounts.
Outside Accounts Must Be Transferred To Bernstein
Beginning on your first day as our staff member, you may not control or
influence the trading of securities or commodities in any outside account. You
must transfer to us all outside accounts as soon as possible unless we give you
permission to maintain the accounts outside Bernstein (as explained on the next
page). You can obtain from the Legal Department the forms for transferring
accounts and for opening accounts at Bernstein.
Initial Disclosure Upon Commencing Employment
In order for us to monitor and facilitate your transfer of accounts to
us and to otherwise help us to implement this Code, you must report to us within
10 days of joining our firm the information described below. The Personnel
Department will provide you with the forms for making this report.
- Information about all securities and commodities accounts you
control or influence (including accounts with brokers,
dealers, banks or mutual fund companies). You will need to
attach the most recent account statements.
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- Information about stock certificates you hold.
- Information about all private placements, limited partnership
interests and other private investments that you control or
influence.
- Information about all positions you hold as an employee,
officer or director of any business organization outside
Bernstein.
Outside Trades Permitted Only in Very Limited Circumstances
We may, in our sole discretion, approve the following requests to
execute trades outside Bernstein:
- You want to trade commodities (such as futures). Since we do
not provide those services, we might allow you to maintain an
outside account for this type of trading, but you will need to
obtain our permission before each trade in accordance with
procedures established by the Legal Department.
- You want to maintain elsewhere a managed account (also known
as a discretionary account) in which an investment manager or
other fiduciary has the authority to make trading decisions on
your behalf. In reviewing your request to maintain an outside
managed account, we might ask for written confirmation that
you have no power to choose or recommend securities to trade
for the account. Requests of this type from principals or
shareholders of Bernstein are generally denied.
- You want to hold or trade mutual funds outside Bernstein. If
you hold the mutual fund account directly with a mutual fund
company and without utilizing the services of a broker, you
will simply need to report the account to our Legal Department
on a form that we will supply to you. If you hold the mutual
funds in a brokerage account, we may approve your request if
you agree not to trade anything other than mutual funds in the
account.
- You have stock options granted to you by a former employer
under an employee stock option plan. The employer may have a
program in place to facilitate your exercise of options
through a broker other than Bernstein, and you want to
participate in that program.
- You have a dividend reinvestment plan that you opened directly
with an issuer and not through a brokerage account. You want
to maintain that plan. You may simply need to report the plan
to our Legal Department on a form that we will supply to you.
However, you will need to seek our permission before selling
the securities.
- You have a 401(k) plan through your former employer. You have
the ability to choose certain funds for investment, for
example a "balanced fund," or a "growth fund." You do not have
the ability to choose a "self-directed" option or otherwise to
choose particular securities in which to invest.
- You want to purchase Treasury Notes, Treasury Bonds or
Treasury Bills directly from (or sell directly to) the Federal
Reserve Bank, or you want to hold certificates of deposit
("CDs") at a bank. These do not fall within the definition of
"securities" for purposes of this Code.
- You want to participate in a private placement. You will need
to seek our approval in accordance with the policy described
on page 12 of this Code. If and when the issuer later becomes
a public company, you will need to transfer your investment to
a brokerage account at Bernstein if you wish to sell it.
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Heightened Disclosure Requirements for Outside Accounts
For any securities or commodities accounts we give you permission to
maintain, control or influence outside of Bernstein, you must arrange for a copy
of the confirmation of each transaction and a copy of each monthly statement to
be provided promptly to our Legal Department. (The only exception is for mutual
funds held directly with a mutual fund company and not purchased utilizing the
services of a broker). Whenever possible, you must arrange for these copies to
be sent directly by the other firm where the account is held.
Pre-Approval Required For All Trades By All Staff Members
General Statement of Policy
Each time you want to place a securities or commodities trade in an account
you control or influence (whether at Bernstein or outside of Bernstein as
permitted by the Legal Department), you will first need to obtain our permission
in accordance with the three-step set of procedures described below. These
procedures do not apply to:
- trades in open-end mutual fund shares;
- non-volitional trading (for example: stocks splits or dividend
reinvestment plans); or
- trades in managed accounts in which Bernstein or another
investment manager is selecting securities or commodities to
trade.
We will disapprove your trade in our sole discretion if we believe that it
would violate this Code, that the frequency or nature of your trading activity
may distract you from your job responsibilities, or that the trade may otherwise
be inappropriate or may raise the appearance of a possible conflict of interest.
Steps in the Pre-Approval Process
You will need to take three steps in order to place a typical trade. The
three steps are summarized in the chart below, and each step is explained on the
following pages. Other pre-approval requirements will apply if you are seeking
to trade options or if you are seeking to participate in an investment
opportunity of limited availability.
<TABLE>
<S> <C> <C>
Step One: Stop Two: Step Three:
Complete Order Ticket/Memo Request Obtain Approval by Obtain Approval of
Supervisor or Other Trading Desk
Authorized Person
</TABLE>
Step One: Order Ticket / Memo Request
Before placing a securities trade at Bernstein, you will need to fill
out a trade order ticket. You can obtain these tickets from the Legal Department
or the trading desk. From time to time, we will distribute instructions for
filling out the trade order ticket.
Before placing a securities or commodities trade outside Bernstein (in
the limited circumstances where outside trading is permitted), you will need to
describe the proposed trade in a written memo. You can obtain a form of
memoranda from the Legal Department.
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Step Two: Approval by Your Supervisor or Other Authorized Person
You must take your trade order ticket (or your memo, in the case of
trades in authorized outside accounts) to your supervisor or other person
authorized to approve trades. The Legal Department will maintain and distribute
periodically a current list of supervisors and ether persons who have authority
to approve personal trades. That person must place his or her initials and the
date on the order ticket (or memo) to document the appropriate approval.
Approval to conduct a personal trade will remain effective only for the
day in which it is granted. If you fail or decline to complete the trade that
day for any reason (including that the trading desk holds your order pending a
client transaction), you must obtain a new approval to place the trade on
another day.
Step Three: Approval of Trading Desk
After you have obtained approval from your supervisor or other
authorized person to place a trade, you will still need to obtain the approval
of our trading desk. From time to time, we will distribute procedures for
obtaining trading desk approval. The trading desk, if it approves your proposed
transaction, will place the trade for you, and we will send you a confirmation
in the mail.
Exception: Trades in Authorized Outside Accounts
The only exception is for trades in authorized outside
accounts such as commodities accounts.. For these outside trades, you will need
to bring your memo (reflecting the approval of your supervisor or other
authorized person) to the Legal Department before you place the trade outside.
The Legal Department will obtain any additional approvals required and will
retain a copy of your memorandum.
Our Trading Desk Will Not Permit You to Trade Ahead of Clients
General Statement of Policy
In order to minimize the potential for conflicts of interest
between you and our clients, our trading desks will not permit you to trade
under the following circumstances:
- Related client orders are pending; or
- A large volume of client orders is forthcoming (e.g., the
security is listed as a "Priority purchase," "priority sale,"
"trim" or "established tax trade".
Under certain circumstances, your trade might be delayed for several days or
even weeks until the pending or anticipated client orders are completed.
Limited Exception
Our trading desk may grant you an exception under the
circumstances set forth below. This exception will not be available to you if
you are a member of the Fixed Income Department (with respect to fixed income
trades), or if you are a member of an equity IPG or any Equity Portfolio
Management Department, including Investment Management Trading (with respect to
equity trades).
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- Your trade involves a relatively insignificant number of
shares, typically less than 500 shares or securities
convertible into less than 500 shares, or less than 25
bonds or securities convertible into less than 25 bonds;
AND
- The security you are seeking to buy is not part of a large
buy program for client accounts, or the security you are
seeking to sell is not part of a large sell a program for
client accounts;
AND
- Clients are waiting for a better price before trading. For
equities, pending client orders typically must be awaiting
prices that differ from the market price by at least a %
point. For fixed income securities, pending client orders
typically must be awaiting prices that differ from the
market price by at least 10 basis points in yield.
Other Reasons for Trading Desk Disapproval
In addition, our trading desks will not permit you to trade if, for
example:
- Our firm has agreed to participate in the underwriting for new
securities of an issuer and your order is for securities of
that issuer.
- Our Institutional Research Department is initiating research
coverage of a company or has reached a research recommendation
about the company that has not yet been disseminated, and you
want to trade securities related to that company.
- Our Institutional Research Department has just disseminated a
research report initiating coverage of a company or changing a
recommendation regarding a company, and you want to trade
securities related to that company. Our trading desks will not
execute for you any personal trades relating to that company
until 48 hours following the dissemination of our research.
- You want to buy a security that our firm has purchased for
clients. It is a security that our firm still would want to
purchase for clients but cannot do so because of regulatory or
policy restrictions limiting the ownership interest in an
issuer that we can acquire for ourselves or our clients.
Moreover, our trading desks may from time to time establish rules for
employee personal trading designed to ensure that we do not divert to our
employees the resources needed to serve our clients. For example; our trading
desk may' prohibit personal trading by staff members during certain times of the
day during which the desk tends to be particularly busy with client trades.
Prohibition Against Insider Trading
The securities laws and our policies prohibit persons or entities from
acting on inside information, in other words information that is "material" and
"nonpublic." Information may be material and nonpublic if there is a substantial
likelihood that a reasonable investor would consider the information important
in making his or her investment decision and the information is not generally
available to ordinary investors in the marketplace. The information may come
from the company itself, or may come from other sources such as investment
bankers.
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- You may not trade while in possession of inside information.
This is true regardless of how you learned about the
information.
- If you believe that you have received inside information, you
must immediately cease contact with the source and consult an
attorney in the Legal Department. You must not communicate the
inside information to your supervisor, to anyone in the
Portfolio Management Department, or to anyone other than
attorneys in the Legal Department. The Legal Department will
determine whether and to what extent we should impose trading
restrictions on you and/or us. Also, you should speak with the
Legal Department if you believe that other staff members have
communicated or traded upon inside information. The Legal
Department, to the extent practicable, will keep your identity
confidential in any resulting investigation.
- While in possession of inside information, you may not
recommend the purchase or sale of a security to our firm or to
any other individual or entity. You also may not make any
comment that could be construed as a recommendation to
purchase or sell the security, or take any other action with
respect to that security.
- In the course of our syndicate activities, meaning where the
Firm has agreed to participate in an underwriting, we may come
into possession of inside information regarding a company
issuing or planning to issue securities. On those occasions,
the Syndicate Department must establish a "Chinese Wall,"
which is the name given to procedures designed to prevent the
disclosure of such information to other departments of our.
Firm. Our Compliance Manual sets forth our Chinese Wall
procedures. If you are a member of the Syndicate Department or
are otherwise instructed by the Legal Department to create a
Chinese Wall, you must familiarize yourself with these
procedures.
Restrictions On Participating In:
* IPOS
* Private Securities Transactions and Other Investment Opportunities
of Limited Availability
You must obtain the approval of your supervisor and the Legal
Department before you directly or indirectly participate in either of the
following activities:
- Initial Public Offerings. In order to ensure our firm's
compliance with NASD rules, we prohibit our staff members from
directly or indirectly acquiring an interest in an IPO except
under very limited circumstances. For example, if you hold a
passbook savings account at a savings & loan, our Legal
Department might permit you (subject to certain conditions) to
participate as an account holder in a conversion of the
savings & loan to a public company, so long as our firm is not
participating in the conversion.
- Limited Offerings. This includes any private securities
transaction or other investment opportunity of limited
availability, including new offerings or other investments not
registered with the SEC (for example private real estate
limited partnerships, investments in family-owned businesses
and hedge fund investments). In responding to these requests,
we will consider, among other things, whether your investment
is passive, whether the investment opportunity should be
reserved for our clients, and whether the opportunity is being
offered to you by virtue of your position here.
You can obtain from the Legal Department forms for requesting approval.
The Legal Department and your supervisor will approve or disapprove your request
in their discretion.
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Bernstein Principals and Shareholders should consult their Principals' Agreement
and Shareholders' Agreement respectively for additional restrictions.
No Short-Term Trading
- You may not buy a security if you have sold the same or
equivalent security within the prior thirty (30) calendar
days.
- You may not sell a security if you have bought the same or
equivalent security within the prior thirty (30) calendar
days.
- This rule does not apply to Treasuries or derivatives on
Treasuries, although even for this limited category of
securities you may not trade on an intra-day basis.
- Exemptions from this rule will be granted only in rare
instances, such as in cases of financial, hardship. To obtain
an exemption, you must make a written request for approval
from your supervisor and the Legal Department.
- If you profit from a short-term trade in violation of this
section, you will be required to disgorge your profits to
charity.
- Special Restrictions For:
* Decisionmakers
* Others with Access to Decisions
- Investment Management. You may not trade in a
security if you participate in, or have reason to
know about, our firm's consideration of the security
for the accounts of our investment management
clients. This restriction will continue throughout
the implementation of any resulting major buy or sell
program. The following examples illustrate this
policy:
You are seriously considering recommending a
security to our applicable investment policy
group ("IPG") for purchase or sale for
clients' accounts, or you are a member of an
IPG where discussions of such a
recommendation are taking place. You may not
trade in the security. You may trade, if
otherwise consistent with this Code, only
after the IPG has considered and rejected
your recommendation, or after the IPG has
accepted your recommendation and client
orders have been completed.
You know (for example, because you overheard
a conversation) that our firm intends in the
reasonably foreseeable future to place
orders to purchase a security for our
clients' accounts. You may not purchase the
security. You may trade, if otherwise
consistent with this Code, only after we
have decided not to purchase the security
for clients, or after all client orders have
been filled.
Moreover, you must disclose to the chairperson of the
applicable IPG any of your direct or indirect
holdings in a security when you are participating in
our firm's determination of whether to buy or sell
the security for our clients.
- Institutional Services. You may not trade in a
security if you have reason to know that our firm is
intending to recommend the security to clients of our
institutional services business, or that any of those
clients are intending in the reasonably foreseeable
future to place orders in the security. The following
examples illustrate this policy:
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You become aware of a forthcoming research
recommendation of an institutional research analyst
prior to its dissemination (whether with respect to
initiating coverage or to changing a
previously-issued recommendation). You may not trade
in that security until 48 hours after the research
report has been disseminated.
You learn that a client of our institutional services
business intends to place an order to purchase a
security. You may not trade in the security until the
client's orders have been filled.
Contrary Trading Restrictions For Members Of:
* Investment Policy Groups
* Global Equity Portfolio Management Department
Including All Domestic and International Equity Portfolio Management
Groups and Investment Management Trading)
* Investment Management Research Department
(Including All Domestic and International Equity Research Departments)
* Fixed Income Department
- General Statement of Policy. If you work in one of these areas, you may not
make any trades that are contrary to the action our firm is taking, or is
contemplating taking in the reasonably foreseeable future, for our managed
accounts in that area. There is only one exception - if we are holding a
stock for clients solely for purposes of diversification to control the
portfolio's tracking error versus its benchmark index, then the contrary
trading policy would not restrict you from selling the stock.
- Illustrations of Policy. For example, if our firm is buying or holding a
fixed income security for clients' accounts, then you may not sell the
security if you are a member of. the fixed income department or you serve
as a member of an investment policy group that encompasses fixed income
securities. Similarly, if our firm has just completed a sell program for an
equity security, you may not buy the security if you are a member of the
Global Equity Portfolio Management Department or Investment Management
Research Department, or if you serve as a member of an investment policy
group that encompasses equity securities. Generally, staff member purchases
more than seven (7) days after we have completed our sell program for
clients will not be considered contrary trading under this policy.
- Exemptions. To obtain an exemption from this policy, you will need the
written approval of your supervisor and the Legal Department, which may
consider such factors as the length of your holding period, the size of
your holding in absolute terms and relative to your other holdings, and the
reasons for the proposed trade.
Other Special Restrictions For:
* Investment Management Research Analysts
* Investment Management Research Associates
* Fixed Income Staff Performing Research
- If you are a staff member in one of these positions, you must sell all
holdings in a security upon your initiation of research coverage of that
security or before otherwise recommending the security for purchase for
managed accounts. The Director of Investment Management Research, or the
Chief Investment Officer or Director of Global Fixed Income Investments (as
applicable), may grant discretionary exceptions to this policy (in
consultation with the Legal Department) based on factors including:
the length of time since your last purchase of the security,
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your intent regarding future holding of the security,
reasons for your original purchase,
the liquidity, capitalization and volatility of the security, and
the size of your holding (in both absolute terms and relative to your
overall portfolio).
We might condition an exception on your agreement to hold the security until our
clients have sold it.
- You may not trade options of any kind in securities you cover.
- You may not "short" securities you cover.
Special Restrictions For:
* Institutional Research Analysts
* Institutional Research Associates
- You must sell all holdings in a security upon your initiation of research
coverage of that security. In other words, you may not recommend purchase
of a security that you hold. The applicable Director of institutional
Research may grant discretionary exceptions to this policy (in consultation
with the Legal Department) based on factors including:
the length of time since your last purchase of the security, your
intent regarding future holding of the security, reasons for your
original purchase, the liquidity, capitalization and volatility of the
security, and the size of your holding (in both absolute terms and
relative to your overall portfolio).
The Director might condition an exception on your agreement to hold the security
until we have disseminated to our institutional clients a recommendation that
the security is rated "underperform." The Director also might grant limited
exceptions for new employees with respect to securities purchased before joining
us.
- With respect to securities you cover, you may purchase only securities that
you rate "outperform," and you may sell only securities that you rate
"underperform." You may neither buy nor sell securities that you rate
"marketperform." "To obtain an exemption from this policy, you will need
the written approval of your supervisor and the Legal Department, which
might consider such factors as the length of your holding period, the size
of your holding in absolute terms and relative to your other holdings, and
the reasons for the proposed trade.
- You may not trade options of any kind in securities you cover.
- You may not "short" securities you cover.
Other Special Restrictions Imposed By Your Department
From time to time, any department in our firm may establish rules for
personal trading that cover staff members in that department and that take into
consideration the particular functions and duties of those staff members. Any
personal trading rules issued by your department managers will be in addition to
the rules in this Code.
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OTHER CONDUCT RULES
Gifts
The following policies do not apply to personal gifts between staff
members, or to personal gifts between a staff member and a family member or
personal friend that are given or received outside of a business related
setting.
Gifts Received By Staff Members
You may not accept any gift (including gifts of tickets to sporting events
or theatre where the person providing the entertainment is not present) other
than gifts of nominal value (under $100) from any one person in any one year.
Under no circumstances may you accept a gift of cash.
Entertaining Clients.
You may engage in normal and customary business entertainment (such as
business meals, sporting events and shows) provided that you are present for the
event.
Gifts Given By Staff Members
You may not give or permit to be given anything of value, including
gratuities, in excess of $100 per individual per year to any person where such
payment or gratuity is in relation to the business of the recipient's employer.
This limit applies, for example, to a gift of tickets to an event if you will
not be accompanying the recipient to the event. The maximum is $50 if the
recipient is a principal, officer or employee of the NYSE or its subsidiaries.
You may give gifts of securities to charity, and we permit you to choose
the securities you wish to give from any type of securities account. Please note
the following regarding the charity's subsequent sale of those securities. If
the charity's account is a managed account held at Bernstein, and the charity
wishes to sell the gifted security, then the charity's account will compete
equally (for allocation purposes) with the managed accounts of our other
clients. If the charity's account is one for which you have the power to control
the choice of securities to trade (and thus the charity's account is a brokerage
account held at Bernstein), then the charity will be required to wait for client
orders to be completed before selling the securities that it received from you.
Compensation to Certain Employees of Others
Bernstein is permitted by applicable regulations to pay for services of up
to $200 per person per year to certain specified operations persons with the
prior written consent of a Senior Vice President or Vice President of
Operations. Such permitted recipients include a telephone clerk on the New York
Stock Exchange floor who provides courtesy telephone relief to the Firm's floor
clerk or handles orders for the Firm. Please refer to the Firm's Compliance
Manual for detailed procedures regarding compensation of this type.
Financial Interest
You may not act on the firm's behalf in any transaction involving
persons or entities with whom you or your family has any significant connection
or financial interest without prior written approval from our Board of
Directors. You should direct to the office of the General Counsel any requests
for approval from the Board of Directors. For purposes of this policy, your
family includes parents, parents-in-law, spouse, siblings, siblings-in-law,
children, children-in-law, or a person to whom you provide material support.
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Awarding Contracts
We must award orders, contracts and commitments to suppliers strictly
based on merit and without favoritism. The Legal Department must review and
approve all contracts for goods or services before execution, and an authorized
Firm officer must sign each contract. The officer signing the contract must
provide a copy of the final, signed version to the Legal Department for
retention.
Outside Directorships & Officerships and Other Outside Activities
Whether or not in connection with your duties and responsibilities at
Bernstein, you may not accept the following without prior written approval from
the Board of Directors:
- A directorship or officership of any company or organization
(other than a charitable organization), regardless of whether
you receive compensation, or
- Outside employment or remuneration from any source for any
services performed (for example, consulting fees or finder's
fees).
You must submit any requests for such approval in writing to the General
Counsel. In a rare instance in which we grant your request to serve as a board
member of a public company, we may require that you be isolated from making any
decisions for our clients with respect to investing in that company.
You may not use the firm's name in connection with any outside activity
without prior written approval from our Board of Directors. You must submit any
request for, approval in writing to the General Counsel.
No Recommendation or Sale of Products Other. Than Bernstein Products
You may not recommend to clients that they participate in any
securities transaction (including any private transaction) other than a
Bernstein product. And, you may not receive "selling" or other compensation in
connection with any securities transaction (including any private transaction)
other than a Bernstein product.
Proprietary Information
Identity of Companies on Our Restricted Lists
Our firm maintains lists of securities relating to companies for which
we have agreed to participate in an underwriting, or about which we intend to
publish a research recommendation. You may not disclose outside our Firm the
identity of securities on these lists, since the fact that we have listed a
security may signal the market that we know of a significant development which
may affect the price of the security.
Clients' Proprietary Information
You must never disclose confidential business or personal information,
including names of clients, client account balances, financial information
obtained from a client, or anticipated changes in the management or financial
condition of a client, outside the normal and necessary course of the firm's
business. This policy does not preclude you from sharing information about a
client with his or her lawyers, accountants or other advisors upon the client's
request.
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Our Research
Our firm gathers and develops information that we use to service our
clients. For example, our Institutional Research Analysts publish "Black Book"
reports. You may not disclose this information outside the firm except as
required to perform your job duties. Also, any material marked "Not for External
Distribution," including research prepared by investment management research
analysts, should not be distributed outside the firm.
Other
During the course of your employment, you may have access to
information relating to our business, including information that provides our
firm with a competitive advantage. This confidential information may include,
for example, information relating to our investment strategies, our investment
management processes or systems, our existing or anticipated corporate activity,
our financial condition or performance, or compensation paid to our staff. You
may not disclose confidential information to anyone outside Bernstein except in
the course of the proper exercise of your job duties.
Rumors
New York Stock Exchange rules, as well as our policy, prohibit the
circulation of rumors concerning the affairs of any company, as well as the
affairs of other NYSE member organizations, since rumors can influence
securities prices. If a rumor comes to your attention, you must contact the
Legal Department immediately and refrain from spreading the rumor.
Communication With Clients & The Public
Our Compliance Manual sets forth our policies and procedures regarding
our communications with clients or other members of the public, with which you
must comply. Also, you must comply with sections of our Compliance Manual
governing our review of incoming and outgoing correspondence of certain staff
members. In addition, when communicating with clients or the public,
truthfulness and good taste are always required.
Reportable Events Involving Staff Members
We are required to notify regulatory authorities in the event that a
staff member is involved in or is the subject of a "reportable event," for the
most part when a staff member faces actual or potential disciplinary action or
finds him or herself in some other kind of legal or regulatory trouble. While we
are likely to become aware of certain types of reportable events in the course
of our supervision of staff members, we may not necessarily be aware of all
reportable events without your disclosure. In order to facilitate our firm's
compliance with these requirements, you are required to notify the Legal
Department immediately in the event you, or a person under your supervision,
comes under scrutiny by our firm or any outside person or entity or engages in
conduct warranting a higher level of supervisory oversight by our firm. For
example, you must notify the our Legal Department if you, or a person under your
supervision:
- violates a law or regulation, or any agreement with or rule or
standard of any government agency, self-regulatory
organization or business or professional organization;
- is the subject of any customer complaint;
- is named as a defendant or respondent in any proceeding;
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<PAGE> 19
- is denied registration or membership or is disciplined by any
regulatory or self-regulatory organization;
- makes any false or misleading statement, or omits a fact
required to be disclosed, in connection with any matter
involving a regulatory agency, whether in connection with an
application, report, proceeding or otherwise;
- is arrested, or is charged with, convicted of, pleads guilty
to, or pleads no contest to, any criminal offense (other than
minor traffic violations);
- has any association with an entity or person which was
disciplined, suspended, expelled or had its registration
denied or revoked by any agency, jurisdiction or organization,
or which was convicted of, or pleaded no contest to, any
criminal offense;
- makes a compromise with creditors, files a bankruptcy petition
or is the subject of an involuntary bankruptcy petition;
- is or may become the subject of any internal disciplinary
action;
- violates rules of our firm including this Code.
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<PAGE> 20
ADMINISTRATION
Annual Report and Certification
Annually, we will require you to certify on a form provided by the
Legal Department that you have read and understand this Code and have complied
with all applicable requirements. On the same form, we will require you to
certify the accuracy of our records regarding any accounts or investments you
control or influence outside of Bernstein and any outside business activities.
Ongoing Supervisory Oversight
The Legal Department and your department manager will receive
information about your personal trading and will investigate any aberrational
trading activity, trades that appear to violate this Code, or trades that
otherwise raise the appearance of impropriety. In addition to our procedures for
monitoring securities and commodities transactions and holdings, we also will,
in connection with our supervisory responsibilities, endeavor to monitor your
conduct to ensure compliance with other conduct rules in this Code.
Education & Training
We will periodically hold education and training programs in order to,
among other things, highlight the requirements of this Code. You are required to
attend the programs that we hold for you. In addition, if you are a "registered"
staff member, you are responsible for your compliance with continuing education
requirements of the regulatory authorities.
Reporting of Violations
All departments must promptly report to the Legal Department any
violations of this Code. All departments should consult with the Legal
Department before imposing any sanctions for violations.
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SANCTIONS
To ensure compliance with the letter and spirit of this Code and with
all applicable laws, we reserve the right in our sole and absolute discretion
to:
- Cancel any trade with or without notice to you at your
expense;
- Require you to forfeit any profit you have made;
- In the case of an approved outside account, instruct you to
cancel the trade at your expense; and/or
- Suspend or revoke your trading privileges at any time for
violations of the letter or spirit of this Code or any
applicable law, in addition to any other disciplinary action
or sanction.
If we discover a violation of this Code, we will respond appropriately,
which may include sanctions such as a letter of censure and/or a fine, or
suspension or termination of employment: Certain violations of this Code may
also expose a staff member (as well as the Firm) to regulatory disclosure
requirements, criminal prosecution and claims for damages.
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OVERSIGHT BY BOARD OF DIRECTORS
Establishment and Oversight of This Code
The Board of Directors has approved this Code of Ethics and is
responsible for overseeing its operation, including but not limited to approving
any amendments to this Code as may be necessary or appropriate in light of any
violations of this Code and changing circumstances. In approving this Code of
Ethics, our Board of Directors has determined that:
- Personal investing by our staff members does not conflict with
the interests of our clients provided that our staff members
comply with the policies, procedures and restrictions set
forth in this Code; and
- In light of the nature of our business, this Code contains
provisions reasonably necessary to prevent conflicts of
interest between our staff members and our clients.
Our Annual Report and Certification to the Board
At least once a year, we will provide the Boards of Directors of the
Sanford C. Bernstein Fund, Inc. and any other registered investment companies
for which we provide investment management services with a written report
describing any issues arising under this Code of Ethics or related procedures
since the last report, including, but not limited to:
- Information about material violations of the Code or
procedures, or violations that, are material in the aggregate;
- Sanctions imposed in response to those violations;
- Information about any other significant conflicts of interest
that arose involving our personal investment policies;
- Procedures initiated or changes made to this Code since the
last report; and
- Amendments and modifications to the Code that we propose to
make.
In connection with the annual report, we will also certify to each investment
company's Board of Directors that we have adopted and implemented such
procedures as we believe are reasonably necessary to prevent violations of this
Code of Ethics.
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RECORDKEEPING
The Legal Department Is Responsible For:
- Maintaining (or causing another department to maintain) copies
of the initial holdings reports and annual certifications for
at least five years after the end of the calendar year in
which the report is made, the first two years in an easily
accessible place.
- Maintaining the original of each staff member memorandum
requesting permission to conduct a trade in an outside
account, each of which reflects the initials of the supervisor
or other authorized person who approved the trade and the date
of that approval, for at least five years after the end of the
calendar year in which the memorandum was approved, the first
two in an easily accessible place.
- Maintaining copies of each broker trade confirmation for each
transaction in approved outside accounts, if any, and a copy
of each monthly or quarterly statement for those accounts, for
at least five years after the end of the calendar year in
which the information is provided, the first two years in an
easily accessible place.
- Maintaining (or causing another department to maintain)
records of all persons, currently or within the past five
years, required to make reports of holdings and/or account
activity, and of the persons responsible for reviewing those
reports, in an easily accessible place.
- Maintaining records of all approvals of, and the rationale
supporting, participations in IPOs, private placements and
other investment opportunities of limited availability, for at
least five years after the end of the calendar year in which
the approval is granted.
- Maintaining in an easily accessible place a current copy of
this Code of Ethics and a copy of each Code of Ethics
effective for the preceding five-year period.
- Maintaining records of any violations of this Code and
sanctions for such violations in an easily accessible place
for at least five years after the end of the calendar year in
which the violations occurred.
- Maintaining copies of our reports to Boards of Directors
regarding this Code for at least five years after the end of
the calendar year in which they are made, the first two. years
in an easily accessible place.
The Brokerage Operations Department Is Responsible For:
- Maintaining records of all trade order tickets for the trades
at Bernstein in accounts controlled by staff members, each of
which reflects the initials of the supervisor or other
authorized officer who approved the trade and the date of that
approval, for at least five years after the end of the
calendar year in which the trade was effected, the first two
years in an easily accessible place.
- Maintaining copies of all brokerage statements for accounts at
Bernstein controlled by staff members for at least five years
after the end of the calendar month to which they pertain, the
first two years in an easily accessible place.
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Section Two: Other Conduct Rules & Employee and EmployeeRelated Accounts
2.1 Contacts with Governmental Agencies - As a registered investment
advisor and broker dealer and as a member of the exchanges and
self-regulatory organizations ("SROs"), we are subject to regular
examinations, inspections, and inquiries regarding our business
activities by various governmental and regulatory agencies. Any staff
member who is contacted by any governmental or regulatory agency shall
immediately refer the matter to Legal (if contacted by telephone, the
staff member shall either refer the call to Legal or add a member of
Legal to the call). (Rev. 9/91).
2.2 Compensation to Certain Employees of Others - The firm may give
compensation for services rendered of up to $200 per person per year
with the prior written consent of the Senior Vice President or Vice
President of Operations, to operations employees of the following
types:
A. A telephone clerk on the NYSE floor who provides courtesy
telephone relief to a the firm floor clerk or handles orders
for the firm.
B. Employees who make out commission bills or prepare Exchange
reports for the firm.
C. A specialist's floor clerk who maintains records for a
specialist other than his employer, or provides courtesy
relief to another specialist's clerk.
D. When the service rendered by the employee exceeds that which
the primary employer is obligated to furnish.
1. A telephone clerk who handles the firms orders
transmitted over the wire of the clerk's employer.
2. A telephone clerk who handles orders directed by the
clerk's employer to the member who receives them.
The Operations Department shall retain records of all such gratuities for at
least three years and make them available for inspection by NYSE examiners (NYSE
Rule 350(b)). (Rev. 3/93).
2.3 Certain Syndicate Procedures - In the course of our syndicate
activities the firm may come into possession of material non-public
information regarding an issuer. On those occasions when we are in
possession of such information the Syndicate Department must establish
a "Chinese Wall" which is the name given to procedures designed to
prevent the disclosure of such information to other departments of the
firm. The head of the Syndicate Department shall take the following
steps to control the flow of information:
- Syndicate projects shall be identified by code words to
protect the issuer's identity.
- Documents containing confidential information shall be kept in
sealed envelopes marked "EYES ONLY" and shall be stored in a
secure area.
- Any confidential information stored on a computer system shall
be secured with passwords to limit access to such information.
- Materials containing confidential information should not be
left unsecured in work areas, such as word processing, mail
room or at fax machines.
- Support staff hired in the Syndicate Department must be
carefully screened and shall be trained in the handling of
sensitive information.
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- The Syndicate Department shall not disclose information
regarding any ongoing or potential transaction except on a
"need-to-know" basis in compliance with the procedures
contained in the following section.
The internal transmission of material non-public information obtained by our
syndicate department to persons outside of that department shall only be
permitted with the prior approval of Legal. This is vitally important since
communication prior to contacting Legal may , cause other, departments to be
precluded from taking some action because of their receipt of the information.
Legal can assist you in maintaining the integrity of the Chinese Wall and
thereby avoid subjecting the firm to unnecessary restrictions or potential legal
exposure.
If the transmission of inside information is approved, this transmission should
be on a "need-to-know" basis and should be limited whenever possible to
department heads. Legal shall be provided with a list of all firm personnel who
have been given the inside information. The persons receiving the internal
communication should be advised that they are the recipients of inside
information and must adhere to Chinese Wall procedures. (Rev. 4/94).
In addition to this section, please refer to Section 15.2 of the Compliance
Manual. (Rev. 4/00).
2.4 Software Policy - In connection with their duties, staff members may be
permitted to use, or be provided access to, computer hardware,
software, data bases, programs or confidential firm data (collectively,
"Software"). Software constitutes confidential, proprietary information
of substantial value to the firm or to a third party vendor (i.e., a
company that licenses software to our firm). All Software provided by
the firm is the property of the firm, including upgrades. Both the firm
and staff members are subject to licensing restrictions relating to use
of the Software.
Staff members may not disseminate or transfer Software, either directly
or indirectly, to any person inside or outside the firm or make
personal use of any Software at home or at work, either during or after
their employment with the firm.
The firm may provide staff members with Software to be used for
business purposes on a home or portable computer. Such use is permitted
under the following conditions (staff members who wish to use Software
for business purposes on a home or personal computer will be required
to sign a Software Acknowledgment in the form of Exhibit 2-A):
A. The staff member is currently licensed for the
requested software on their PC at the firm.
B. The licensing agreement for the specific package
permits dual, non-current use.
C. The staff member has written approval from their
Department Manager.
D. The staff member has subsequent approval from the MIS
Department.
E. Duplicate copies of Software can only be made by MIS.
Because of licensing restrictions and the risks associated with computer
"viruses", the copying or transfer of Software from outside sources (whether
personal or business) to the firm is prohibited - regardless of whether the
staff member owns the Software - unless MIS approves the transfer and handles
the installation.
Periodically, the MIS Department will make, random audits of PC's to check
compliance with this policy. (Rev. 3/93).
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2.5 Electronic Communication Policy - The firm recognizes that e-mail is
becoming widely recognized as an effective means of communication, both
within the firm and externally. To keep pace with this trend, all staff
members have access to internal e-mail and we plan to develop a Website
which will bring us to a new level of communication with clients,
referral sources and vendors. Given various legal and regulatory
concerns, however, the firm must limit external e-mail access in
certain instances. We are particularly concerned with timeliness and
security issues surrounding e-mail communication with our money
management clients as it relates to the acceptance of asset allocation
instructions and cash flows. We continue to explore means through which
we can provide broader e-mail access, and will revisit our policy as
technological advancements are developed to assist us in satisfying the
varying business and legal considerations involved.
In the interim, set forth below is the firm's current policy with
regard to proper use of, access to, and disclosure of electronic
communications sent or received through any of the firm's internal or
external on-line electronic communications systems, including email.
Every staff member is responsible for using the electronic
communications system properly and in accordance with this policy. Use
of the firm's electronic communications system constitutes consent to
all the provisions of this policy. Any questions about this policy
should be addressed to Legal.
A. The electronic communication system is intended for
the firm's business purposes, and is the property of
the firm. The firm recognizes that it may be
expedient to place or receive personal e-mail
correspondence, however, such communications should
be kept to a minimum level.
B. Staff members will be permitted access to external
e-mail use only with prior written supervisory
approval which will be granted on the basis of
business need. Staff members may not access external
e-mail using the firm's computer systems, at any time
or for any reason without such approval.
C. Investment Management sales and support staff members
may use e-mail to communicate with clients only, with
managerial approval. Such permission may be granted
to facilitate international communications,
communication with consultants, and for other
specific reasons. In no event should staff accept or
give instructions over e-mail.
D. E-mail is subject to regulations promulgated by
various regulatory bodies concerning record retention
and review of incoming and outgoing correspondence.
Copies of all e-mail correspondence sent by
Investment Management sales and support staff members
must be provided to Legal at the time they are being
sent and in the same manner as correspondence sent by
fax, messenger, or the mail. Institutional Services
sales and supervisory staff should send a copy of all
incoming e-mail correspondence to Legal for review
when it is received and a copy of all outgoing e-mail
correspondence to their appropriate manager at the
time it is sent.
E. No institutional brokerage order-related data may be
sent or received via Internet e-mail. Use of any
other electronic system for the communication of
order-related data requires managerial approval.
F. Firm procedural rules relating to pre-approval of
written communications, including job postings, apply
fully to electronic communications.
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G. All communications and information transmitted by,
received from, or stored in this system are the
firm's records. The firm reserves the right to
review, audit, access and disclose all messages sent
or received over its system. The firm reserves the
right to intercept and read e-mail and other
electronic messages. Authorized firm representatives
will periodically review the e-mail and other
electronic communications of all firm personnel to
determine, among other reasons, whether there have
been any breaches of security, violations of policy,
or other misuse. There should be no expectation that
any e-mail message sent or received will be private.
H. Use of passwords or other security measures does not
diminish the firm's rights to access materials on its
system, or create any privacy rights of staff members
in the messages and files on the system. Any
passwords or other data-encryption keys used by staff
members must be revealed to the MIS Department as
e-mail and files may need to be accessed by the firm.
I. The firm reserves the right to use any electronic
message for its own purposes, or disclose any e-mail
message to any regulatory bodies or third parties,
without any prior notice to any sender or recipient
of the message.
J. Erasing a message from the e-mailbox assigned to you
does not necessarily erase all copies of the message
on the network. Archived copies may be stored for
substantial periods of time and are subject to the
provisions of this policy regarding content, review,
access, and disclosure. As a business record, e-mail
is subject to court inspection and review by
regulatory bodies. Nothing should be said by e-mail
that might reflect adversely on you, someone else or
the firm.
K. The e-mail system must not be used for any form of
harassment or any communications that could be
offensive or derogatory. No person is permitted to
use the e-mail system to deliver a message that is
harassing or offensive on the basis of race, color,
religious belief, sex, sexual orientation, national
origin, ancestry, age, marital status, disability,
veteran status, or any other characteristic protected
by law. The firm's equal employment opportunity and
harassment policies apply to all uses of the email
system.
L. The e-mail system shall not be used to send or
receive, trade secrets, proprietary financial
information, or similar materials without prior
authorization from the firm, nor may it be used for
the unauthorized copying of copyrighted materials.
Staff members, if uncertain about whether certain
information is copyrighted, proprietary, or otherwise
inappropriate for transfer, should resolve all doubts
in favor of not transferring the information and
consult Legal.
M. The e-mail system may not be used to solicit for
religious or political causes, commercial
enterprises, outside organizations, or other non job
related solicitations.
N. Staff members are reminded to be courteous to other
users of the systems and always to conduct themselves
in a professional manner. Users should write
electronic communications with no less care,
judgement and responsibility than they would use for
letters written on behalf of the firm or internal
firm memoranda.
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O. Staff members are prohibited from reading messages
delivered to someone else's mailbox with proper firm
authorization.
P. Any staff member who discovers misuse of the e-mail
system should immediately contact Legal.
Any person who violates any part of this policy will be subject to discipline,
up to and including termination. The firm reserves the right to modify this
policy at any time, with or without notice. (Rev. 6/99).
2.6 Employee and Employee-Related Non-Discretionary Firm Accounts
Employees who wish to trade through the firm on a non-discretionary
basis must sign and date a Non-Discretionary Cash or Margin Account
Agreement and must provide the firm with a signed W-9. Employees who
wish to open a joint account must also sign a joint account agreement.
IRA accounts are opened by completing a State Street Prototype IRA or
Roth IRA agreement.
All Non-Discretionary Accounts must be approved by the New Account
Team, (a designated Manager of Financial Advisor Associates or the New
Account Team) and Legal. Fees and transaction charges for Employee
accounts are implemented in accordance with Exhibit 2-B.
A staff member shall not use his non-discretionary account to execute
transactions for any person who is not a named party on the account.
(Rev. 4/00).
2.7 Accounts Approved for Options Transactions
A. Standards and Supervision for Accounts
1. General - Options trading is permitted only for
accounts which have been specifically approved for
options trading by the Senior Registered Options
Principal ("SROP") or a Registered Options Principal
("ROP") in accordance with the procedures outlined
below. (NYSE Rule 721(b).) (See Section 3.7 of this
Manual for explanation of SROP and ROP qualifications
and responsibilities.) The SROP or Compliance
Registered Options Principal (CROP) exercise
appropriate supervision over all delegated tasks.1
These procedures apply primarily to employee and
employee-related accounts. Generally the firm's
policies do not permit non-employee customers to
trade options. However, these procedures would also
apply to any non-employee customer accounts approved
to trade options on an unsolicited non-discretionary
basis.
2. Option Questionnaire: The account owner must
complete, sign and date an Option Client Confidential
Questionnaire ("Option Questionnaire"), which shall
be considered part of the account owner's account
agreement, and which Option Questionnaire shall
request the following information for natural persons
(NYSE Rule 721.10, AMEX Rule 921.01):
- Investment objectives (e.g., safety of
principal, income, growth, trading profits,
speculation);
------------------
(1) Pursuant to NYSE Rule 722(b) and AMEX Rule 922(a) the CROP and SROP may be
the same person.
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- Employment status;
- Estimated annual income from all sources;
- Estimated net worth (exclusive of family
residence);
- Estimated liquid net worth;
- Marital status;
- Number of dependents;
- Age;
- Investment experience and knowledge
(AMEX Rule 921.01).
Refusal of the account owner to provide any of the information listed
above shall be so noted by the CROP on the Option Questionnaire at the
time the account is approved for options trading (NYSE Rule 721.20,
AMEX Rule 921.02). The account owner must disclose his investment
objectives before an account will be approved by a ROP for options
trading.
3. ROP Determination of Suitability - All options accounts must
be - approved in writing by the SROP or a ROP. The SROP or ROP
approving the account must have a reasonable basis for
believing that, taking into account the factors set forth in
2, above, the account owner has such knowledge and experience
in financial matters that he may reasonably be expected to be
capable of evaluating, and be financially able to bear, the
risks of options trading (NYSE Rule 723; AMEX Rule 923). The
SROP or ROP shall evidence his or her approval by signing and
dating the Option Questionnaire. The SROP or ROP shall also
indicate on the Option Questionnaire which of the following
strategies the account may engage in:
- purchasing options;
- writing covered options (including covered
combinations such as spreads and straddles);
- writing uncovered options (which shall include
uncovered combinations such as spreads and straddles
and any other transactions which involve naked
writing)(NYSE Rule 721.40, AMEX Rule 921.04).
4. Approval to Write Uncovered Options - No account will be
approved to write uncovered options unless the account owner
has an annual income of at least $50,000, liquid net worth of
at least $100,000, previous experience trading options and
they include speculation as part of their investment
objective. Any exception to the approval criteria for
uncovered call and put writing may only be made by SROP or
CROP, and the reason for this exception must be evidenced in
writing. A copy of the written exception shall be maintained
by the CROP (NYSE Rule 721(e)(3); AMEX Rule 921(g)(3)). Any
account other than an employee/employee related account (a
"Non-Employee Account") that would like to trade uncovered
options must be specifically approved by the SROP or CROP, and
a copy of the written approval shall be maintained by the SROP
or CROP. In the event a Non-Employee Account requests approval
to write uncovered options, the firm may, in its discretion,
raise the minimum annual income, liquid net worth and Required
Equity (defined in 5, below).
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5. Required Equity to Trade Uncovered Options - No account will
be permitted to write uncovered calls or puts unless the
account has enough Regulation T Excess (2) ("Required
Equity"). Required Equity shall be determined both on a per
account basis and on a per contract basis, as follows:
(a) Per Account - the account must have Required Equity
of at least $50,000.
(b) Per Contract
(i) If the market value of the underlying
security is equal to or less than $75 per
share, Required Equity shall mean the
greater of a) $2,000 per uncovered contract,
or b) 20% of the value of the underlying
security plus the option premium; or
(ii) if the market value of the underlying
security is greater than $75 per share,
Required Equity shall mean the greater of a)
$5,000 per uncovered contract, or b) 20% of
the value of the underlying security plus
the option premium.(3)
Accounts with outstanding short option positions must maintain
Required Equity throughout the period a short option position
is outstanding. Any deficiency must be satisfied in accordance
with Regulation T.
B. Other Documentation
1. Agreements - In addition to the Options
Questionnaire, all account owners must have on file
other documentation, as described below.
(a) Option Agreement - Account owners approved
to trade covered options may sign and date
the "Options Agreement Covered Transactions"
(the "Covered Agreement") or the "Options
Agreement - Covered and Uncovered
Transactions" (the "Uncovered Agreement");
account owners approved to write uncovered
options must sign the Uncovered Agreement.
Execution of the Uncovered Agreement does
not in and of itself authorize the account
owner to sell uncovered options.
(b) Account Agreement - A signed
Non-Discretionary Cash Agreement or
Non-Discretionary Margin Agreement, as
appropriate (accounts approved to trade
uncovered options must have on file a signed
Non-Discretionary Margin Agreement); and
(c) Tax I.D. - A signed W-9.
------------------
(2) Regulation T Excess shall be defined as the amount of equity in an account
that is greater than the amount required under Regulation T. This will not
include either long or short options value. Regulation T margin equity is
computed by deducting from an account's net liquidating equity the value of
long and short options and adjusting the value of stock and warrant positions
that underlie "covered" puts and calls.
(3) The Per Account Required Equity and Per Contact Required Equity must both be
satisfied but shall not be considered in an additive manner - an account with
$50,000 in Regulation T Excess Equity may satisfy Required Equity (depending
upon the number of contracts, their market value and the option premium).
7
<PAGE> 31
2. Disclosure Document(s) - A designated ROP or his or
her designee shall provide a current option
disclosure document to each account owner who is
authorized to trade options at least one day before
an order is entered for the account (NYSE Rule
726(a); AMEX Rule 926(a)). Any account approved to
write uncovered options shall also be provided with
the Special Statement for Uncovered Option Writers
(NYSE Rule 721(e); AMEX Rule 921(g)). The designated
ROP or his or her designee shall record on the
account records the date the disclosure document(s)
was (were) furnished to the Employee/Approved Client
(NYSE Rule 721.10; AMEX Rule 921.01).
The designated ROP or his or her designee shall also send amendments or
revisions of each applicable current Options Disclosure Document to all
affected account owners when such amendments or revisions become
available (NYSE Rule 726(a); AMEX Rule 926(a)).
3. Prospectus - The designated ROP or his or her
designee shall send a current prospectus of the
Options Clearing Corporation to any account owner
authorized to trade options who requests one (NYSE
Rule 726(b); AMEX Rule 926(b)).
C. Supervisory Procedures
1. Report of Accounts Approved to Trade Options - Client
Services shall provide the designated ROP with a list
of accounts approved to trade options by name and
number, and the report shall indicate what strategies
the account may engage in. The report will be updated
as revisions are made and monthly, with a copy to
Legal.
2. Options Trading - The Vice President of the
Operations Department or his or her designee will
generate a weekly report which will be sent to the
designated ROP. The report will confirm whether
options transactions occurred in accounts that have
been approved for the specific type of options
transaction executed, i&., the report will verify if
an account has been approved to sell uncovered
options.
3. Uncovered Options Transactions - Prior Approval By
Designated SROP or ROP - The designated SROP or ROP
shall initial the order ticket prior to the sale of
any uncovered option (the appropriate trading desk
will monitor the order tickets to ensure such
initials appear before execution). Prior to approving
the order ticket, the ROP shall confirm that the
account meats the Required Equity requirements set
forth above (confirmed by telephone or email with the
Vice President of Operations Department or his or her
designee).
4. Margin - The Vice President of Operations or his or
her designee shall monitor all uncovered short option
positions to make sure the account meets Required
Equity. The Vice President of Operations or his or
her designee shall send a weekly report evidencing
such review to the designated ROP.
5. Trading Report - The appropriate trading desk shall
provide a daily list of options trades to Legal, and
shall provide other reports to Legal and senior
management, as necessary (NYSE Rule 722(b); AMEX Rule
922(b)(ii)).
8
<PAGE> 32
6. Review - All options trades are reviewed daily by
Legal. The SROP has delegated to Legal the
responsibility to review accounts. The Vice President
of the Operations Department or his or her designee
shall review position limits for any customer's
account and any account for which the firm acts as
clearing broker in accordance with NYSE Rules 704 and
705, and file such reports as may be required with
respect to NYSE Rule 706. (The SROP has delegated
this responsibility to the Operations Department.)
7. Record Retention - Copies of the appropriate
agreements and applications of any account that is
authorized to trade options shall be maintained by a
designated ROP at 767 Fifth Avenue or maintained at
the White Plains office or other location provided
such documents are readily accessible and promptly
retrievable. The designated ROP must have access to
electronically stored copies of account statements
for the most recent six-month period for these
accounts at 767 Fifth Avenue (NYSE Rule 722(c); AMEX
Rule 922(b)).
8. Material Change in Customer Financial Situation - The
SROP or his or her designee shall send a copy of the
customer's Option Questionnaire to the customer
requesting updated information within fifteen days
after the firm becomes aware of any material change
in the customer's financial situation (other than a
change in compensation for firm employees because
such information is documented and maintained
elsewhere within the firm's books and records.) (NYSE
Rule 721(c); AMEX Rule 921(d)).
9. Monthly Account Statements - Exercise notices for
option contracts are allocated among all of the
firm's clients short positions in accordance with the
date of the transaction which established the short
position. Positions which were established earliest
will be assigned first ("first-in, first-out"). (NYSE
Rule 781). See additional client disclosures on the
monthly account statement in Section 18.2 of this
Manual.
D. Checklist - Exhibit 2-C is a checklist for use by the
designated SROP or ROP when approving accounts for options
trading.
2.8 Supervisors Authorized to Approve Trades - Exhibit 2-D is a current
list of supervisors authorized to approve staff member personal trades.
(Rev. 4/00).
2.9 Policies and Procedures for Staff Member Personal Trading - The Code of
Ethics (Section 1 of the Compliance Manual) describes the general
policies governing staff member personal trading. Specific procedures
for staff member trading at Bernstein are set forth in Exhibit 2-E to
this section. (Rev. 4/00).
2.10 Accounts of Employees Who Leave the Firm - Disposition of employee and
employee-related accounts at the time the employee leaves the firm
shall be handled in the following manner.
A. Employee and Employee Related Non-Discretionary Accounts -
When there are no discretionary accounts maintained by the
employee or related parties, the Operations - Client Services
Department will send the Employee (which term includes
employee-related accounts) a letter advising them that they
must move their account(s) within four weeks from the date of
the letter. The letter will advise the Employee that he has
the following options: (1) liquidate their positions at their
discounted transaction charge rate and receive the proceeds,
(2) transfer the positions to another firm (via the broker
transfer
9
<PAGE> 33
process), or (3) have the securities delivered to them. If the
employee does not advise us regarding the disposition of the
account within four weeks, we will deliver the securities and
any cash balance to him. A copy of the letter to be sent by
Client Services is attached as Exhibit 2-F.
B. Employee and Employee Related Discretionary Accounts - We
maintain a number of Employee discretionary accounts. When an
employee leaves the firm, the appropriate Managing Director of
Financial Advisors or Stanley Bogen as appropriate, will
assign a Financial Advisor to handle any Employee
discretionary accounts. Client Services will then contact the
respective Financial Advisor who will send a letter indicating
the Financial Advisor who will be servicing the account. The
individual will also be advised of the new account number(s)
for the account(s) (this is necessary since Employee accounts
are maintained in their own office ranges to facilitate
compliance review of Employee trading activity). Finally, the
individual will be provided with a new Fee and Transaction
Charge schedule. It should be noted that where we have an
Employee discretionary account we will not require the parties
to close their non-discretionary accounts, since we generally
permit our discretionary clients to open nondiscretionary
accounts as an accommodation (although they will no longer
receive the fee and/or transaction charge discount on these
accounts).
In order to ensure that these letters go to employees and related
parties, the Financial Department will provide the Client Services
Department with the monthly Departmental Personnel Report, which
contains the names of all employees who left the firm for the preceding
month. Client Services will compare this list with lists of employee
and employee-related discretionary and non-discretionary accounts and
send out the appropriate letter(s) after providing the appropriate
Managing Director or Stanley Bogen with a list of Employee
discretionary accounts affected by the transfer. Copies of the monthly
Departmental Personnel Report and all letters sent out by Client
Services shall be provided to the Legal Department.
C. Mutual Fund Accounts - Any investments in the Sanford C.
Bernstein Fund, Inc. may be maintained after the employee
leaves the firm, provided that the account is maintained in
accordance with applicable fund prospectus requirements. (Rev.
4/00).
10
<PAGE> 34
EXHIBIT 2-A
SOFTWARE ACKNOWLEDGMENT
The undersigned acknowledges receipt from Sanford C. Bernstein & Co.,
Inc. ("SCB") of the following (the "Software")
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
which SCB has provided in connection with my employment with SCB.
I further acknowledge that the Software and any upgrades remain the
property of SCB, that SCB is subject to certain licensing restrictions on the
use of the Software (including restrictions on malting duplicate copies thereof)
and that I am aware of the nature of such restrictions. In consideration of the
provision of the Software to me, I agree to be bound by the restrictions
applicable to SCB. I further agree not to make any copies of the Software, and
upon termination of my employment with SCB to delete the Software I have been
provided with for use on a home or personal portable computer.
Department Manager: ___________________________
MIS Department: ___________________________
Employee: ___________________________
Date: ___________________________
Rev. 6/93
<PAGE> 35
EXHIBIT 2-B
EMPLOYEE AND EMPLOYEE-RELATED
MANAGEMENT FEES AND TRANSACTION COSTS
DISCRETIONARY ACCOUNTS
Employee Accounts: This includes employees and their spouses, their children,
their grandchildren, and custodial and trust accounts for their children and
grandchildren:
- No management fee
- $12.50 transaction charge
Employee-Related Accounts: This includes parents of the employee, parents of
spouse, employees' siblings and sibling-in-laws.
- 50% of normal management fee*
- 50% of transaction charges (minimum $25 per transaction)
- current fee schedules am available from your Financial
Advisor.
NON-DISCRETIONARY ACCOUNTS
Employee Accounts:
Equities:
- If the security trades at $5.00 or above per share, the
employee is charged $0.05/share (minimum $12.50 per
transaction)
- If the security trades below $1.00/share, the employee is
charged $0.0150/share
- If the security trades between $1.00 and-$5.00/gmr, the
employee is charged $0.0325/share.
- Option contracts are $5.00/contract (minimum $12.50 per
transaction)
Fixed Income: $1250 per transaction
Employee-Related Accounts
Equities:
- 50% of full transaction charges ($25 minimum per transaction)
- 25% of full transaction charges for options
- transaction schedules available from the Legal Department
Fixed Income:
- 50% of the following schedule:
Treasuries, Agencies, and Strips:
Less than 1 year. $35 + $.03125 per bond
More than 1 year. $50 + $.25 per bond
Commercial Paper. $50 + $.03125 per bond
All Other. $75 + $1.25 per bond
* All employee-related discretionary accounts created prior to. October 1, 1998,
will be grandfathered on their current fee schedule. All other employee-related
discretionary accounts will be subject to the fee schedule effective October 1,
1998.
<PAGE> 36
Section Two
EXHIBIT 2-C
OPTIONS CHECKLIST
1) Has the employee signed the appropriate options agreement
("Agreement")? (Accounts approved to trade uncovered options
must sign an Uncovered Agreement)
2) Has the employee dated the Agreement?
3) Has a ROP signed the Agreement?
4) Has a ROP dated the Agreement?
5) Has the employee completed a Confidential Options
Questionnaire ("Option Questionnaire")?
* Refusal of the employee to provide any of the following
information should be noted by the ROP on the Options
Questionnaire
- Investment Objective
- Employment Status
- Estimated annual income
- Estimated net worth
- Estimated liquid net worth
- Marital status, number of dependents - Age - Investment experience and
knowledge
6) Has the employee signed an Option Questionnaire?
7) Has the employee dated an Option Questionnaire?
8) Has the employee included their investment objectives on the
Option Questionnaire?
* To be approved to trade uncovered options, the investment
objective of the employee must include speculation
9) Has a ROP signed and dated the Option Questionnaire?
10) Has a ROP specifically noted what types of options
transactions the account is approved for?
Purchases
Writing covered transactions (including covered combinations
such as spreads & straddles)
Uncovered, (including uncovered combinations such as spreads
& straddles)
* To be approved to trade uncovered options, the employee must meet our minimum
liquid net worth, annual income and minimum investment experience standards for
options transactions.
11) Has a ROP specifically noted what date the disclosure document(s) was
(were) sent and that the Employee has refused to supply financial
information (if applicable)?
12) Does the employee also have on file a Non-D account agreement (margin
agreement necessary for uncovered options) and a W-9 (or W-8, as
appropriate)?
<PAGE> 37
EXHIBIT 2E
13) Has the RR (applicable Manager of FAA's) signed the Option
Questionnaire?
(Rev. 4/00)
<PAGE> 38
EXHIBIT 2D
PERSONS AUTHORIZED TO INITIAL ORDER TICKETS FOR EMPLOYEES OR
EMPLOYEE-RELATED ACCOUNTS
<TABLE>
<CAPTION>
DEPARTMENT INITIALED BY
---------- ------------
<S> <C>
ADMINISTRATIVE SERVICES Jerry Lieberman or Denise Burke
BOARD OF DIRECTORS Jean Margo Reid or Cathleen Shine
BROKERAGE OPERATIONS Bob Maione, Pete Tucci or Mike Borgia
CHAIRMAN'S OFFICE Jean Margo Reid or Cathleen Shine
CLIENT ADVISORSNEW YORK CITY Kim Isaacs
DESKTOP PUBLISHING Jim Velgot
FINANCIAL Jerry Lieberman, Neil Kuttner or Gary Kreuger
FA DEPT. - MANAGING DIRECTORS Tom Hexner
FasNEW YORK CITY Tam Hemet, Fred Block, Mike McCarthy, Hans Ziegler,
Kim Isaacs
FAAsNEW YORK CITY Sheila Paloni, Camilla Vriesen, Michele Ramos, Kim
Isaacs
FIXED INCOME Mark Singer, Frank Trainer, Jonathan Reiss or Chuck
Cahn
FLOOR Bill Marsalise or Jon Mann
FAMILY WEALTH GROUP Alan Feld or Claudia Bennett
HUMAN RESOURCES Denise Williams or Jerry Lieberman
INSTITUTIONAL RESEARCH Marc Mayer, Sallie Krawcheck, or Nick Spencer
INSTITUTIONAL SALES Jan Mann, John Mills, Lyle Lunson, Marc Mayer, Randy
Mitchell. Rich Reynolds
INSTITUTIONAL TRADING Jon Mann, Marc Mayer, Shawn Mahoney
INTERNAL AUDIT Larry Bertan
INTERNAL CONSULTING Linda Giuliano or Jerry Lieberman
INVESTMENT MANAGEMENT - EQUITY Domestic Stocks - Greg Sawers Marilyn Fedak, Lew
Buyside Trading Sanders
Global Equity PMG Foreign Stocks (ADRs) - David Ittah, Andy Adelson,
Global IPG Lew Sanders
International IPG
US IPG
Global Research
Small Cap Research
Senior Portfolio Managers
INVESTMENT MANAGEMENT OPERATIONS Bob Maione, Pete Tucci, Mike Borgia, or Riaz Jivraj
INSTITUTIONAL ASSET ADVISORS - NY Kevin Brine or Gary Black
INSTITUTIONAL ASSET ADVISOR ASSOCIATES - NY Jacalyn Windle
</TABLE>
<PAGE> 39
EXHIBIT 2E
<TABLE>
<CAPTION>
DEPARTMENT INITIALED BY
---------- -----------
<S> <C>
LEGAL/COMPLIANCE Jean Margo Reid or Cathleen Shine
MANAGEMENT INFORMATION SYSTEMS (MIS) Paul Ponzo or Jerry Lieberman
* If MIS employee reports to other depts., then those
dept. heads will sign
MANAGEMENT INFORMATION SYSTEMS (FA/IA MIS) Scott Walter
MARKETING - FA Amy Roth
MARKETING - IA (Global Analytics Jennifer Cook or Gail Landis
PRODUCT DEVELOPMENT Mark Gordon
STANLEY M. BOGEN STAFF Stanley Bogen
SYNDICATE Marc Mayer
</TABLE>
<TABLE>
<CAPTION>
REGIONAL OFFICES
----------------
<S> <C>
CHICAGO OFFICE Rich Bindler, Jean Buchband, Valencia Taylor
DALLAS OFFICE Bob Keith or Jason Brandt
LOS ANGELES OFFICE Daryl Deke, Denise Soofer, Michelle Black
SAN FRANCISCO OFFICE David Dossetter or Carin Teitelbaum
WASHINGTON DC OFFICE Mark Yadgaroff or Nicole Burns
WEST PALM BEACH OFFICE Ralph Heckert or Karin Pembroke
WHITE PLAINS OFFICE (FA) Lou Friedrich or Lisa Beddall
</TABLE>
Notes:
If the person authorized to initial order tickets for your department is
unavailable, any other attorney in the Legal Department may initial your order
ticket except for IPG, PMG or Research staff (Legal cannot approve IPG, PMG or
Research members' orders). Uncovered options transactions must also be initialed
by a designated Registered Options Principal (currently Dolores Darcy, Jose
Iglesias, or Jon Mann).
<PAGE> 40
EXHIBIT 2-E
MEMORANDUM
TO: All Staff
FROM: Jean Margo Reid
DATE: February 1, 2000 (as revised March 24, 2000)
RE: Employee Trading
Employee and Employee-Related Trading-Policy and Procedures Review
We have experienced a large increase in the number of employee and
employee-related brokerage accounts as the firm has grown and this has put
pressure on our busy buyside trading desk. We are looking at a couple of
alternatives to make the situation more user friendly for staff. In the
meantime, we are asking that all staff adhere to the following procedures so the
trading desks can fulfill their obligation to our customers and employees.
- No employee or employee-related orders may be entered during
the first half-hour and last half-hour of the trading day.
Trades can only be submitted between 10:00 a.m. and 3:30 p.m.
- All employee and employee-related trades require supervisor
approval (see attached list, which should be placed in your
compliance manual as Exhibit 2-D, Section 2) and transmission
by the employee, for equities, to the buyside trading desk by
fax to (212) 7564353. For fixed income orders, trade tickets
should be faxed to (212) 848-2384. If you are located at 767,
you must walk your order to the appropriate trading desk.
- If a client order is pending in the same stock on the same
side of the market, depending on various factors, the employee
or employee-related order can be delayed for several days or
even weeks until the pending client order has been executed.
There are other reasons your order may not be executed; i.e.
we block employee orders when we have new research pending.
- If the desk is busy with a large volume of client orders,
there may be some delay in execution of the employee or
employee-related orders. In addition, during a volatile or
illiquid market situation, employee and employee-related
orders may be delayed for a significant period of time. Due to
any such delay, the prices of securities may be significantly
different at the time of execution than at the time the order
was submitted. The decision as to the existence of a volatile
or illiquid market condition will be made by the trading room
management.
- **The trading desk will not notify an employee of trade
execution. After 4:30 p.m., employees can call the trading
desk and ask Scott Riskin for a report of their trade since
this is the time the trading desk is reconciling all client
orders for the day. However, employees are encouraged to await
confirmation of their trades by mail.
Further, due to systems limitations on the trading desk, employee and
employee-related account holders are prohibited from entering:
- "Good to cancel" (GTC) orders.
- Intra-day trades (purchase and sale of a position during the
same day).
<PAGE> 41
EXHIBIT 2E
- Stop orders of OTC stock or any odd lot stop orders. However,
daily stop orders in round lots for listed stock are allowed.
- Orders for foreign stock listed on foreign exchanges. This
does not include trading American Depositary Receipts (ADRs)
or foreign stocks listed on a U.S. exchange. ADR trading is
permitted as the shares of these foreign-based corporations
are traded on U.S. exchanges.
Reminder:
Employees who hold mutual funds in brokerage accounts outside the firm are not
permitted to do any trades other than mutual fund transactions in these
accounts. All trades in stocks and bonds must be conducted in your Bernstein
brokerage account.
<PAGE> 42
EXHIBIT 2-F
[Date]
[Employee Address]
Re: [Account No.]
Dear ______________
As you know, we maintain non-discretionary accounts for our
employees and their families. Now that you are no longer employed at Bernstein,
we will be closing your account.
Please provide us with instructions regarding your account as
soon as possible. If you wish to have securities transferred to another firm,
please have the firm provide us (Attn: Shirley Lam) with a broker-to-broker
transfer form. If you wish to sell your securities positions, this can be done
at the transaction schedule applicable to your account by contacting Allison
Krumholtz at (212) 756-4049. If we have not heard from you within four weeks
from the date of this letter we will have the securities registered in your name
and the certificate(s) and a check for any cash balance sent to you.
We thank you for your cooperation. If you have any questions,
please call me at (914) 9932886.
Sincerely,
Vice President
Client Services
cc: [Employee Compliance Officer]
