PROVIDENT INVESTMENT COUNSEL
CODE OF ETHICS
PERSONAL TRADING/CONFIDENTIAL INFORMATION
POLICY STATEMENT AND COMPLIANCE PROCEDURES
REVISED MARCH, 2000
Federal and state laws prohibit Provident Investment Counsel (the
"Company") and each of its employees from purchasing or selling any
publicly-traded stock, bond, option or other security on the basis of material,
nonpublic information (I.E., insider trading). In addition, the Company and each
employee has a fiduciary obligation to its clients to protect the
confidentiality of all proprietary, sensitive or other confidential information
communicated to the Company or its employees by its clients. Finally, because
the Company and each of its employees is a fiduciary to the Company's clients,
the Company and its employees must also maintain the highest ethical standards
and refrain from engaging in activities that may create actual or apparent
conflicts of interest between the interests of the Company or its employees and
the interests of the Company's clients. To ensure that insider trading laws are
not violated, that client confidences are maintained, and that conflicts of
interest are avoided, the Company has adopted the policies and procedures set
forth herein. The policies and procedures set forth herein are intended to
articulate the Company's policies, educate its employees about the issues and
the Company's policies, establish procedures for complying with those policies,
monitor compliance with such policies and procedures, and ensure, to the extent
feasible, that the Company satisfies its obligations in this area. By doing so,
the Company hopes that the highest ethical standards are maintained and that the
reputation of the Company is sustained.
I. BACKGROUND
A. INSIDER TRADING.
It is unlawful to engage in "insider trading." This means, in general,
that no "insider" may (i) purchase or sell a security on the basis of
material, nonpublic information, or (ii) communicate material,
nonpublic information to another where the communication leads to, or
is intended to lead to, a purchase or sale of securities. Insider
trading prohibitions extend to the activities of each employee of the
Company. Because the Company does not have an investment banking
division or affiliate it is anticipated that such employees will not
routinely receive "inside information" except insofar as they may have
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material nonpublic information about the Company which could affect
the market price for the Company's publicly traded parent holding
company, United Asset Management Corp. ("UAM") or a publicly traded
closed-end investment company for which the Company serves as
investment advisor. However, to educate the Company's employees, more
information describing "insider trading" and the penalties for such
trading are set forth below. Compliance procedures regarding the use
of inside information by the Company's employees are also described
just in case an employee of the Company receives inside information.
B. OTHER CONFIDENTIAL INFORMATION.
Certain information obtained by the Company that does not constitute
"inside" information still constitutes confidential information that
must be protected by the Company and its employees. Compliance
procedures regarding the use and treatment of that confidential
information are set forth below.
C. CONFLICTS OF INTEREST.
As a fiduciary to the Company's clients, each employee of the Company
must avoid actual and apparent conflicts of interest with the
Company's clients. Such conflicts of interest could arise if
securities are bought or sold for personal accounts in a manner that
would significantly compete with the purchase or sale of securities
for clients or if securities are bought or sold for client accounts in
a manner that is advantageous to such personal accounts. More
information describing such conflicts of interest and the compliance
procedures for avoiding such conflicts of interest are set forth
below.
II. INSIDER TRADING
A. INSIDER TRADING DEFINED.
The term "insider trading" is generally used to refer to (i) a
person's use of material, nonpublic information in connection with
transactions in securities, and (ii) certain communications of
material, nonpublic information. The laws concerning insider trading
generally prohibit:
* The purchase or sale of securities by an insider, on the basis of
material, nonpublic information;
* The purchase or sale of securities by a non-insider, on the basis
of material, nonpublic information where the information was
disclosed to the non-insider in violation of an insider's duty to
keep the information confidential or was misappropriated; or
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* The communication of material, nonpublic information in violation
of a confidentiality obligation where the information leads to a
purchase or sale of securities.
(1) WHO IS AN INSIDER? The concept of "insider" is broad. It includes
the officers, directors, employees and majority shareholders of a
company. In addition, a person can be considered a "temporary insider"
of a company if he or she enters into a confidential relationship in
the conduct of the company's affairs and, as a result, is given access
to company information that is intended to be used solely for company
purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, investment bankers, commercial
bankers and the employees of such organizations. In order for a person
to be considered a temporary insider of a particular company, the
company must expect that the person receiving the information keep the
information confidential and the relationship between the company and
the person must at least imply such a duty. Analysts are usually not
considered insiders of the companies that they follow, although if an
analyst is given confidential information by a company's
representative in a manner in which the analyst knows or should know
to be a breach of that representative's duties to the company, the
analyst may become a temporary insider.
(2) WHAT IS MATERIAL INFORMATION? Trading on inside information is not
a basis for liability unless the information is "material." "Material"
information is generally defined as information that a reasonable
investor would likely consider important in making his or her
investment decision, or information that is reasonably certain to have
a substantial effect on the price of a company's securities.
Information that should be considered material includes, but is not
limited to: dividend changes, earnings estimates, changes in
previously released earnings estimates, significant merger or
acquisition proposals or agreements, major litigation, liquidity
problems and extraordinary management developments. Material
information does not have to relate to a company's business; it can be
significant (but as yet not widely known) market information. For
example, a reporter for The Wall Street Journal was found criminally
liable for disclosing to others the dates on which reports on various
companies would appear in The Wall Street Journal and whether or not
those reports would be favorable.
(3) WHAT IS NONPUBLIC INFORMATION? Information is nonpublic unless it
has been effectively communicated to the market place. For information
to be considered public, one must be able to point to some fact to
show that the information has been generally disseminated to the
public. For example, information found in a report filed with the SEC
or appearing in Dow Jones, Reuters Economic Services, The Wall Street
Journal or another publication of general circulation is considered
public. Market rumors are not considered public information.
(4) NOT CERTAIN IF YOU HAVE INSIDE INFORMATION? If you have any doubts
about whether you are in possession of material nonpublic information,
consult with the Companys Compliance Officer.
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A. PENALTIES FOR INSIDER TRADING.
Penalties for trading on or communicating material, nonpublic
information are severe, both for the individuals involved in the
unlawful conduct and for their employers. A person can be subject to
some or all of the penalties set forth below even if he or she does
not personally benefit from the violation. Penalties include:
* Administrative penalties;
* Civil injunctions;
* Disgorgement of profits;
* Jail sentences;
Fines for the person who committed the violation of up to three times
the profit gained or loss avoided (per violation, or illegal trade),
whether or not the person actually benefited from the violation; and
Fines for the employer or other controlling person of the person who
committed the violation of up to the greater of $1,000,000 or three
times the amount of the profit gained or loss avoided (per violation,
or illegal trade).
In addition, any violation of the procedures set forth in this
Compliance Manual can be expected to result in serious sanctions by
the Company, including dismissal of the persons involved.
A. POLICY STATEMENT REGARDING INSIDER TRADING.
The Company expects that each of its employees will obey the law and
not trade on the basis of material, nonpublic information. In
addition, the Company discourages its employees from seeking or
knowingly obtaining material nonpublic information. The Company
requires approval for each of its Managing Directors, officers and
employees to serve as an officer or director of a company having
Publicly-Traded Securities.
B. PROCEDURES TO PREVENT INSIDER TRADING.
As indicated above, because the Company does not have an investment
banking division or affiliate and because the Company prohibits its
Managing Directors, officers and employees from serving as an officer
or director of a company having Publicly-Traded Securities, the
Company does not anticipate its Managing Directors, officers,
portfolio managers and employees routinely being in receipt of
material, nonpublic information EXCEPT with respect to UAM and
closed-end investment companies advised by the Company. However,
Company employees may from time to time receive such information. If
any such person receives any information which may constitute such
material, nonpublic information, such person (i) should not buy or
sell any securities (including options or other securities convertible
into or exchangeable for such securities) for a personal account or a
client account, (ii) should not communicate such information to any
other person (other than the Compliance Department), and (iii) should
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discuss promptly such information with the Compliance Department. The
Compliance Department is defined as the Compliance Officer, the
Compliance Manager, and any other person specifically assigned to
undertake Compliance Department tasks by the Compliance Officer. Under
no circumstances should such information be shared with any persons
not employed by the Company, including family members and friends. It
is recommended that each employee contacting an issuer or analyst (i)
identify himself as associated with the Company, (ii) identify the
Company as an investment management firm, and, (iii) after the
conversation, make a memorandum memorializing the conversation with
the issuer or analyst (including the beginning of the conversation
where the employee identified himself as associated with the Company).
III. OTHER CONFIDENTIAL INFORMATION
A. CONFIDENTIAL INFORMATION DEFINED.
As noted above, even if the Company and its employees do not receive
material, nonpublic information (I.E., "inside" information), the
Company or its employees may receive other confidential or sensitive
information from or about the Company's parent holding company and the
Company's clients, and the Company's employees may receive
confidential or sensitive information about the Company's affairs.
Such confidential or sensitive information may include, among other
things:
* The name of the client. The Company is obligated by law not to
divulge or use its clients' names without their consent.
* Financial or other information about the client, such as the
client's financial condition or the specific securities held in a
specific client's portfolio.
* The names of the securities on the Company's various buy and sell
lists.
* The name of any security under consideration for placement on any
buy or sell list.
* Any information privately given to an employee, that if publicly
known, would be likely to (i) affect the price of any security in
the portfolio of any client of the Company, and/or (ii) embarrass
or harm the client or the Company, the Company's parent holding
company (UAM) or any of the Company's affiliates.
Given the breadth of the above, all information that an employee
obtains through his or her association with the Company should be
considered confidential unless that information is specifically
available to the public.
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A. POLICY STATEMENT REGARDING USE AND TREATMENT OF CONFIDENTIAL INFORMATION.
All confidential information, whatever the source, may be used only in the
discharge of the employee's duties with the Company. Confidential
information may not be used for any personal purpose, including the
purchase or sale of securities for a personal account.
B. PROCEDURES REGARDING USE AND TREATMENT OF CONFIDENTIAL INFORMATION.
The Company encourages each of its employees to be aware of, and sensitive
to, such employee's treatment of confidential information. Each employee is
encouraged not to discuss such information unless necessary as part of his
or her duties and responsibilities with the Company, not to store
confidential information in plain view in public areas of the Company's
facilities where anyone entering the room may see it, and to remove
confidential information from conference rooms, reception areas or other
areas where third parties may inadvertently see it. Particular care should
be exercised if confidential information must be discussed in public
places, such as elevators, taxicabs, trains or airplanes, where such
information may be overheard. Under no circumstances may confidential
information be shared with any person, including any spouse or other family
member, who is not an employee of the Company.
IV. CONFLICTS OF INTEREST INVOLVING PERSONAL SECURITIES ACCOUNTS
A. FIDUCIARY DUTY TO AVOID CONFLICTS OF INTEREST BETWEEN CLIENT ACCOUNTS
AND PERSONAL ACCOUNTS.
As noted above, because the Company and each of its officers,
directors, and employees is a fiduciary to the Company's clients, the
Company and such persons must avoid actual and apparent conflicts of
interest with the Company's clients. In any situation where the
potential for conflict exists, the client's interest must take
precedence over personal interests. This includes situations where a
client may be eligible for a "limited availability" investment
opportunity offered to an employee. Employees are not to make a trade
if the employee has reason to believe that the trade should first be
offered to the Company's clients. If there is any doubt, resolve the
matter in the client's favor and confer with the Compliance
Department.
If both an officer, director or employee of the Company and a client
of the Company are engaging in transactions involving a
Publicly-Traded Security (defined below) or a "Company Name" (defined
below), an actual or apparent conflict of interest could arise. In
those cases, transactions for client accounts must take precedence
over transactions for Personal Accounts (as hereinafter defined) and
personal transactions that create an actual or apparent conflict must
be avoided.
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B. KEY DEFINITIONS.
(1) PERSONAL ACCOUNT. The "Personal Account" of an employee of the
Company shall include each and every account (other than an
account for the benefit of any of the Company's clients) for
which such employee influences or controls investment decisions.
Personal Account includes self-directed retirement and employer
benefit accounts. An account for the benefit of any of the
following will be presumed to be a "personal account" unless the
Company agrees in writing with the employee otherwise:
* An employee (including long-term temporaries and on-site
consultants).
* The spouse or domestic partner of an employee.
* Any child under the age of 22 of an employee, whether or not
residing with the employee.
* Any other dependent of an employee residing in the same
household with the employee.
* Any other account in which an employee has a beneficial
interest. For example, an account for a trust, estate,
partnership or closely held corporation in which the
employee has a beneficial interest.
EXEMPTION. If an employee certifies in writing to the Compliance
Officer (or, in the case of the Compliance Officer, to a Managing
Director) that (i) the certifying employee does not influence the
investment decisions for any specified account of such spouse,
domestic partners, child or dependent person, and (ii) the person
or persons making the investment decisions for such account do
not make such decisions, in whole or in part, upon information
that the certifying employee has provided, the Compliance Officer
(or Managing Director) may, in his or her discretion, determine
that such an account is not an employee's "personal account."
(2) EMPLOYEE. The term "employee" as used in these Procedures
includes all officers, directors and employees of the Company as
well as spouses, domestic partners and dependents. "Employee"
also includes long-term temporaries and on-site consultants.
(3) REPORTABLE SECURITIES. Reportable Securities are those securities
for which quarterly transactions reports must be filed.
Reportable Securities include any (a) equity or debt instrument
traded on an exchange, through NASDAQ or through the "pink
sheets," over-the-counter or on any public market, (b) options to
purchase or sell such equity or debt instrument, (c) warrants and
rights with respect to such securities, (d) municipal bonds, (e)
index stock or bond group options that include such equity or
debt instrument, (f) futures contracts on stock or bond groups
that include such equity or debt instrument, and (g) any option
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on such futures contracts; provided that Reportable Securities
shall not include (1) equity securities issued by mutual funds
(note: mutual funds include PIC-advised mutual funds, but do not
include closed end funds), and (2) certificates of deposit, U.S.
treasury bills and other U.S. government-issued debt instruments.
(4) PRE-CLEARANCE SECURITIES. Pre-Clearance Securities are those
securities -- chiefly equity securities -- which must be
pre-approved by the Trading Desk prior to being traded.
Pre-Clearance Securities include all publicly traded equity
securities (including options, warrants, rights and unregistered
interests in publicly traded securities index options and market
derivatives); all fixed income securities of the type eligible
for investment by PIC clients. Pre-Clearance Securities do not
include mutual fund shares (including PIC-advised mutual funds),
U.S. government securities, or municipal securities. [But note,
municipal securities transactions must still be reported on a
quarterly basis.] All employees who have self-directed PIC 401k
plans must follow the procedure for obtaining pre-authorization
for all trading done in their accounts. It is not necessary for
the Compliance Department to receive duplicate statements for
these accounts. It is not necessary to seek pre-approval from the
Trading department for Commodities Trading.
(5) COMPANY NAMES. Company Names [or PIC names] include those
securities and options, warrants, rights or other securities
related to such Publicly Traded Securities that are on the
various buy and sell lists. Company Names also include the
following securities specifically: UAM stock and options,
closed-end investment companies advised by the Company. A list of
Company Names is available in the research library. In order to
find out if a stock is a Company Name, the Compliance Department
should be contacted. If an employee of PIC currently owns stock
that is added to the buy list at some point in the future, the
employee must disclose this information in writing to the
Compliance Dept. and to the respective investment committee. This
only applies to employees who are considered Access or Control
persons of the firm. Access or Control persons are those PIC
employees who are Managing Directors, Portfolio Managers,
Portfolio Assistants, Research Analysts, Research Assistants, or
any person who works in the Research Library. The employee is
subject to the 60 day holding period restriction effective the
day the stock is added to the PIC Buy list.
A. POLICY STATEMENT REGARDING TRADING FOR PERSONAL ACCOUNTS.
The Company does not wish to prohibit or even discourage RESPONSIBLE
personal investing by its employees. The Company believes that
personal investing can sharpen the investment acumen of employees to
the ultimate benefit of clients. However, the Company recognizes that
the personal investment transactions of its employees demand the
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application of a strict code of ethics and must be appropriately
circumscribed so as to not create a high level of distraction. The
Company requires that all personal investment transactions be carried
out in a manner that does not endanger the interest of any client or
create any apparent or actual conflict of interest between the Company
or the employee, on the one hand, and the client, on the other hand.
At the same time, the Company believes that if investment goals are
similar for clients and employees, it is logical and even desirable
that there be common ownership of some securities. Therefore, the
Company has adopted the procedures set forth below.
B. PROCEDURES REGARDING TRADING FOR PERSONAL ACCOUNTS.
(1) TRADING PROCEDURES. The following procedures must be followed by
all officers, directors and employees of the Company before
buying or selling securities for a Personal Account.
(i) Confirm That Not in Receipt of Inside Information.
Each officer, director and employee wishing to buy or sell a
security for a Personal Account should first confirm that he
or she is not in receipt of any material, nonpublic
information (I.E., "inside information") that would affect
the price of that security.
(ii) Confirm That the Trade is Not an Opportunity That Should Be
Offered to Company Clients. Employees are not to make a
trade if the employee has reason to believe that the trade
should first be offered to the Company's clients, such as
the situation where a client may be eligible for a "limited
availability" investment opportunity offered to an employee.
If you have any doubt, resolve the matter in the client's
favor and confer with the Compliance Department.
(iii) Seek Pre-Approval of all Trades Made in Pre-Clearance
Securities, including Company Names.
Any officer, director or employee wishing to buy or sell any
publicly traded equity security or fixed income security
that is eligible for client investment (see definition
above) for any Personal Account shall request approval to
buy or sell such Security by completing and submitting to
the Trading Desk an "Intention to Execute Employee Personal
Trades" form (a sample form is attached). Approval for the
trade must be obtained from the Trading Desk in writing
prior to the trade being executed. Persons wishing to obtain
pre-approval while out of the office should make sure that
someone inside the office (such as your assistant) obtains
the necessary pre-approval. Do not rely on the Trading Desk
to complete your paperwork. The Trading Desk cannot provide
verbal authorizations for trades except in the following
circumstances:
If you are traveling and you cannot reach your assistant to
process a pre-approval form, you need to contact any Vice
President in Trading (VPT) to obtain verbal approval. If the
trade is within the guidelines and is approved verbally, the
VPT will time stamp a pre-approval form. Trading will fill
out your name and the name of the stock that was approved,
but will not sign the form. The form will be signed after
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you, or someone acting on your behalf, completes the form.
The form will then be signed by any VPT. Once the traveler
is in receipt of the Intention to Trade form, the traveler
must sign the bottom of the Intention to Trade form as
acknowledgment of approval and execution of the trade.
(iv) No Open Orders for Clients. A request to trade a
Pre-Clearance Security will be approved automatically if the
security is not a Company Name. If the security is a Company
Name, the request will be approved only if there are no open
orders for clients to buy or sell the same security at the
time the request is submitted.
(v) Prompt Execution; No Limit Orders; No Option Writing. All
approved trades must be executed promptly. For Pre-Clearance
Securities that are Company Names, this means before the
close of business on the day the approval is given. For
Pre-Clearance Securities that are not Company Names, this
means before the close of trading on the third business day
after the day approval is given. If the trade is not
executed promptly within these limits, another "Intention To
Execute Employee Personal Trades" form must be submitted. No
Pre-Clearance Security may be the subject of an open limit
order or stop loss order that continues in effect beyond the
limited execution periods specified above. No employee may
write options on a Pre-Clearance Security that is a Company
Name.
(vi) Contrary Positions: Trading in the Opposite Direction from
Clients. Trades for Personal Accounts should be consistent
with recent trades that the Company has placed in the same
security on behalf of clients. Therefore, an employee
generally should not take a position in a Company Name
contrary to the position taken by the Company for its
clients. A trade that is not consistent with client activity
should be based on specific need and should be accomplished
in a manner that will likely have no material impact on the
market price of the Company Name because of the size of the
proposed trade, the daily trading volume of the Company
Name, or other factors. If a trade is a contrary trade, that
fact should be noted on the "Intention To Execute Employee
Personal Trades" form. Contrary positions will be allowed if
they are taken to met a personal financial necessity (please
specify the necessity). Contrary positions will not be
allowed to facilitate an investment strategy decision or
strictly for financial gain. Gains taken for tax benefit
will not be permitted.
(2) PROHIBITION ON NEW ISSUE PURCHASES. Officers, directors and
employees are prohibited from buying new issues (initial or
secondary, hot or not). Note: this prohibition does not apply to
fixed income securities such as municipal bonds. New issues may
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be purchased on the second business day after they begin trading
in the secondary market. Should any person participate in a new
issue through a separate investment vehicle (i.e., the person
owns an interest in a limited partnership that purchases new
issues), the person shall notify the Director of Compliance of
that vehicles purchase of a new issue immediately upon becoming
aware of its purchase.
(3) RESTRICTIONS ON THE ACQUISITION OF PRIVATE PLACEMENTS. Officers,
directors and employees who purchase private placements (i.e.,
restricted or unregistered securities) may do so subject to the
following restrictions. The private placement must be approved in
advance by the Compliance Officer for any person involved in
making investment recommendations for the Company. The investment
will be disallowed if it represents a present or future conflict
for the Company. The private placement must be acquired on terms
that are similar to the terms offered to other private investors.
If the acquiring employee has any specific knowledge of an
imminent public offering or has any other material nonpublic
information about the issuer that is not available to other
similarly situated private investors, the private placement
should not be acquired. Any employee wishing to dispose of a
private placement that has subsequently become registered or
converted into a freely tradable security must also obtain prior
approval from the Compliance Department. Any employee owning a
private placement is prohibited from contributing analysis or
recommendations regarding such security or its issuer to the
Company's Investment Committee. Private placements include
investments in private investment partnerships, but do not
include the portfolio securities of such partnerships (for
example, a distribution from a venture capital partnership of a
stock that has gone public can be sold immediately).
(4) BAN ON SHORT-TERM TRADING PROFITS. All officers, directors and
employees are expected to refrain from trading for short term
profits. To discourage such trading, all profits realized from
Company names, within a period of sixty (60) days from the date
of the employee's most recent opening transaction in that
security (e.g., the most recent acquisition in the case of a
sale, the opening of a short position in the case of a cover
transaction), shall be disgorged to the Company or to a
charitable organization at the Company's direction. Day Trading
(buying and selling in the same security on the same business
day) on PIC names and Non-PIC names is strictly prohibited.
(5) EXCEPTIONS AND WAIVERS.
In appropriate circumstances (E.G., financial need, extreme
market conditions, unexpected corporate developments, discovery
of inadvertent violation), the Compliance Department may grant an
exception or waiver to permit specifically requested trading. A
memorandum describing the scope of circumstances of any such
waiver/exception shall be created and maintained in the
employee's files and part of the Company's books and records.
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(6) REPORTS OF PERSONAL TRANSACTIONS AND SECURITIES OWNERSHIP.
(i) Submission of Reports. In order for the Company to monitor
compliance with its insider trading and conflict of interest
policies and procedures, each employee of the Company shall
submit:
a. signed "Quarterly Personal Transaction Report" (a form
of which is attached) for all trades in Reportable
Securities in each of his or her personal accounts. The
report shall be submitted to the Compliance Department
within ten (10) calendar days following the end of each
calendar quarter regardless of whether any trading
activity took place in that account during the quarter;
b. signed Initial Holdings Report (a form of which is
attached) for ALL securities in each of his or her
personal accounts. The report shall be submitted to the
Compliance Department within ten (10) calendar days
following the first day of employment with the Company;
and
c. signed Annual Holdings Report (a form of which is
attached) for all securities in each of his or her
personal accounts. The report shall be submitted to the
Compliance Department within ten (10) calendar days
following the end of the annual period.
If the tenth day is not a work-day, then the report must be
submitted earlier. The employee should sign and submit the
report certifying the completeness of the information
included therein and certifying certain other matters. The
reports contain important acknowledgments.
(ii) Review and Retention of Reports. The Compliance Department
shall promptly review each Quarterly Initial and Annual
Personal Transaction Reports with respect to the quarterly
report, the Compliance Department will compare the
transactions reported in Pre-Clearance Securities and
Company Names against the lists of Company Names and the
Pre-Clearance Forms that were prepared during the quarter to
determine whether any violations of the Company's policies
or of the applicable securities laws took place. If the
Compliance Department is aware that any employee's Quarterly
Initial and Annual Personal Transaction Report fails to
contain all required information, the Compliance Department
shall promptly contact such employee to obtain the missing
information. The Company shall retain all Quarterly Initial
and Annual Personal Transaction Reports as part of the books
and records required by the Advisers Act and the rules
promulgated thereunder.
(iii) Annual Acknowledgment of Procedures. Each employee shall
submit an annual acknowledgment that the employee has
received a copy of the current version of this Personal
Trading/Confidential Information Policy Statement and
Compliance Procedures of the Company and is familiar with
such Statement and Compliance Procedures. It shall be the
responsibility of the Compliance Department to ensure that a
copy of the current Policy Statement and Compliance
Procedures is circulated to each employee prior to May 31
each year.
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C. ADDITIONAL RESTRICTIONS.
(1) DIRECTORSHIPS REQUIRE APPROVAL. Employees should discuss with the
Compliance Department any invitations to serve on the board of
directors for any private or public operating company
(non-profits, excepted). Care in this area is necessary because
of the potential conflict of interest involved and the potential
impediment created for accounts managed by the Company in
situations where employees serving on boards obtain material
nonpublic information in connection with their directorship,
thereby effectively precluding the investment freedom that
otherwise would be available to clients of the Company. Each
employee should advise the Compliance Department annually of any
operating company directorship held by that employee.
(2) NO SPECIAL FAVORS. No employee may purchase or sell securities
pursuant to any reciprocal arrangement arising from the
allocation of brokerage or any other business dealings with a
third party. Accepting information on or access to personal
investments as an inducement to doing business with a specific
broker on behalf of clients of the Company -- regardless of the
form the favor takes -- is strictly prohibited. Personal
transactions which create the appearance of special favoritism
should be avoided.
(3) RESTRICTIONS ON GIFTS. From time to time the Company and/or
employees of the Company may receive gifts from third parties.
Any gift received that has a value in excess of a de minimis
amount should not be accepted. Generally, a gift of more than
$500 would not considered de minimus. Each employee is
responsible for determining the value of gifts received from
third parties and whether a particular gift has de minimis value
in the circumstances. However, employees are reminded that the
perception of a gift's value by others is as important as the
assessment of the gift's value in the employees- judgment. (Rose
Bowl tickets for employees and their families are considered de
minimis and may be accepted.)
V. SANCTIONS
A. PROCEDURAL NONCOMPLIANCE.
Noncompliance with the procedural requirements of this Code of Ethics
(e.g., failure to submit quarterly reports in a timely manner) shall
be noted. Repeated noncompliance (i.e., three similar failures to
comply with procedural requirements within a one year period) will be
considered a violation and may result in disciplinary action.
B. VIOLATIONS AND TRADING NONCOMPLIANCE.
Failure to comply with the preapproval requirements and/or substantive
prohibitions of this Code of Ethics with respect to trading activity
may result in immediate disciplinary action even for first-time
offenses. In this regard, the Company believes that trading activity
which creates an actual or apparent conflict of interest constitutes a
clear violation and will generally always result in disciplinary
action absent highly extenuating circumstances.
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C. EXTENUATING CIRCUMSTANCES.
The Company recognizes that instances of inadvertent noncompliance or
violation may occur or that extenuating circumstances may apply to
specific instances of noncompliance or violation. In such an event,
the employee shall immediately notify the Compliance Department which
shall have discretion to determine appropriate remedial action.
D. DISCIPLINARY ACTIONS.
The Company may take one or more of the following disciplinary
actions: issuing a disciplinary memorandum; issuing a violation
report; issuing a letter of reprimand; requiring disgorgement of
profits; requiring trade to be broken at employee's expense; requiring
corrective action; suspension of trading privileges; requiring
employee to have broker send the Company duplicate account statements;
requiring the consolidation of employee accounts with certain brokers;
monetary fines; and dismissal. Absent special circumstances, the
disciplinary actions set forth on the attached Schedule of
Disciplinary Actions will be applied.
E. TRADING DEPARTMENT SANCTIONS.
If any VP of Trading fails to fully comply with the procedures for
approving personal trades, the VP will be personally subject to the
sanctions as stated in this policy. Where the employee has requested
the approval of a trade that violates these policies, the employee is
also subject to the sanctions as stated in this policy.
VI. RESPONSIBILITIES OF COMPLIANCE DEPARTMENT
A. Making Compliance Manageable
The Compliance Department will do everything it can to make compliance
with the Company's Code of Ethics easy. Among the things that the
Compliance Department will do are the following:
(1) BE AVAILABLE. The Compliance Department will consist of enough
individuals so that there is always access to a representative of
the Compliance Department.
(2) KEEP COMPANY LISTS CURRENT. The Compliance Department will make
sure that employees have access through the research library to
current Company Lists so that Company Names can be readily
identified.
(3) UPDATE FORMS AND ASSIST IN REPORTING. The Compliance Department
will make sure that all employees have access to the forms
necessary to report personal securities transactions. The
Compliance Department will assist employees in making
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arrangements to accommodate vacation and travel schedules that
might interfere with timely pre-clearance, execution and/or
report submission.
(4) KEEP CURRENT EMPLOYEE LIST. The Compliance Department will
maintain a current list of all employees covered by this Code of
Ethics so that employees can easily assure themselves that all
persons covered by the definition of employee (e.g., family
members) are correctly identified. Other information, such as
identification of brokerage accounts, will also be maintained by
the Compliance Department.
(5) RESPECT CONFIDENTIALITY. The Compliance Department understands
the sensitivity of personal financial information and will
maintain all information in a confidential manner that respects
each individual employee's privacy.
VII. SUMMARY
A. IMPORTANCE OF ADHERENCE TO PROCEDURES.
It is very important that all employees adhere strictly to the
Personal Trading/ Confidential Information Compliance Procedures. Any
violations of such policies and procedures may result in serious
sanctions, including dismissal from the Company.
B. QUESTIONS.
Any questions regarding the Company's policies or procedures regarding
insider trading, confidential information and conflicts of interest
should be referred to the Compliance Department.
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