GLEN RAUCH SECURITIES, INC.
GLEN RAUCH FUNDS
CODE OF ETHICS
The federal securities laws and various rules adopted by the Securities
and Exchange Commission require investment companies and investment advisers to
adopt a written code of ethics designed to deal with confidentiality, insider
trading and the potential "conflicts of interests" that might arise with regard
to personal trading. Accordingly, Glen Rauch Securities, Inc., the investment
adviser (the "Adviser") and Glen Rauch Funds, behalf of all its series, as may
be amended from time to time (the "Trust") have adopted this Code of Ethics, and
such adoption has been approved by the Board of Trustees of the Trust.
A. SCOPE OF THIS CODE OF ETHICS
1. COVERED SECURITIES. Covered securities include stocks, options,
bonds, municipal bonds, warrants, rights, and convertible
securities, among others. See definition of "security" below.
2. COVERED PERSONS. This Code of Ethics applies to all directors,
officers, employees and all access persons (as defined below) of
the Adviser. In addition to such covered persons, the concept of
"beneficial ownership" includes accounts of a spouse, minor
children and relatives resident in the access person's home, as
well as accounts of another person if by reason of any contract,
understanding, relationship, agreement or other arrangement the
access person obtains therefrom benefits substantially equivalent
to those of ownership. This Code of Ethics also applies to all
proprietary accounts managed by the Adviser and maintained for
the benefit of the Adviser, its directors, officers or employees,
including any employee benefit accounts and any treasury
accounts.
3. PLACE THE INTERESTS OF CLIENTS FIRST. Access Persons must
scrupulously avoid serving their own personal interests ahead
of the interests of the Adviser's clients, including any
investment companies and/or managed accounts for which the
Advisers serves as an investment adviser and/or sub-adviser,
renders investment advice or makes investment decisions. An
Access Person may not induce or cause a client of the Adviser
to take action, or not to take action, for the personal
benefit of an Access Person, rather than for the benefit of
such client of the Adviser.
4. AVOID TAKING INAPPROPIATE ADVANTAGE OF THEIR POSITION. The
receipt of investment opportunities, perquisites or gifts from
persons seeking business with the Trust or Adviser could call
into question the exercise of an Access Person's independent
judgment. Access Persons may not, for example, use their
knowledge of portfolio transactions to profit by the market
effect of such transactions or accept gifts of such value as
to potentially impair their judgment in selecting brokers or
other vendors on behalf of clients of the Adviser.
5. CONDUCT ALL PERSONAL SECURITIES TRANSACTIONS IN FULL
COMPLIANCE WITH THIS CODE OF ETHICS. Doubtful situations
should be resolved in favor of clients of the Adviser.
Technical compliance with the Code of Ethics' procedures will
not automatically insulate from scrutiny any trades that
indicate an abuse of fiduciary duties.
B. CONFIDENTIALITY OF TRUST AND CLIENT TRANSACTIONS
1. Information relating to the portfolio and research activities
of the Trust and other clients of the Adviser is confidential.
Whenever statistical information or research is supplied to or
requested by the Trust or the Adviser, such information shall
not be disclosed to any persons other than authorized persons.
Consideration of a particular purchase or sale for the account
of the Trust of other clients of the Adviser shall not be
disclosed except to authorized persons.
2. All brokerage orders for the purchase and sale of securities
for the account of the Trust or other clients of the Adviser
will be so executed as to assure that the nature of the
transactions shall be kept confidential and disclosed only on
a need to know basis until the information is publicly
released in the normal course of business.
3. If any trustee, officer, employee or director of the Trust or
of the Adviser should obtain non-public information concerning
portfolios of the Trust, such person shall respect the
confidential nature of this information and shall not divulge
it unless specifically authorized to do so by an officer of
the Adviser.
4. In order to assure maximum confidentiality:
(a) All orders for the purchase or sale of securities for
the account of the Trust shall be placed for execution by
one or more employees of the Adviser specifically designated
to do so.
(b) All records of the Trust's transactions shall be kept
in a secure manner and shall not be released to anyone other
than authorized persons.
C. POLICY PROHIBITING INSIDER TRADING
1. ADVISER'S POLICY ON INSIDER TRADING. 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 Adviser expects that each of its directors, officers and
employees will obey the law and not trade on the basis of
material, nonpublic information. In addition, the Adviser
discourages its directors, officers and employees from seeking
or knowingly obtaining material nonpublic information about
publicly traded companies.
The laws concerning insider trading generally prohibit:
(a) The purchase or sale of securities by an insider, on the
basis of material, nonpublic information;
(b) 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
(c) The communication of material, nonpublic information in
violation of a confidentiality obligation where the
information leads to a purchase or sale of securities.
2. 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. 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.
3. 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; extraordinary management
developments; and analysts reports on a company's prospects.
4. 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 on the internet or in
DOW JONES, REUTERS ECONOMIC SERVICES, THE WALL STREET JOURNAL
or another publication of general circulation is considered
public. Market rumors, unless they are accessible (E.G.,
through an open "chat room") are NOT considered public
information.
5. 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 Adviser's Compliance Officer.
6. 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; fines;
jail sentences; and disciplinary measures imposed by the Adviser.
7. SERVING AS A DIRECTOR. Because officers and directors of a
publicly traded company have special information about that
company, the Adviser requires the compliance officer's
approval before any of its directors, officers or employees
may agree to serve as an officer or director of a publicly
traded company. The compliance officer will design appropriate
procedures to mitigate any conflicts of interests and any
potential insider trading issue depending upon the
requirements of each individual situation.
D. PERSONAL TRADING RULES (SECTIONS E-I BELOW): DEFINITIONS
1. ACCESS PERSON. As used in these Sections, the term "access
person" shall mean any director, officer or advisory person of
the Trust or the Adviser. The compliance officer will maintain a
list of employees considered access persons.
2. ADVISORY PERSON. The term "advisory person" shall mean (a) any
officer or employee of the Adviser or of any company in a control
relationship to the Adviser, who, in connection with his or her
regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a security by the
Trust or any client of the Adviser, or whose functions relate to
making recommendations with respect to such purchases or sales;
and (b) any natural person in a control relationship with the
Trust or the Adviser who obtains information concerning
recommendations made to the Trust with regard to the purchase or
sale of a security. The term "advisory person" is intended to
include any employee of the Adviser who would be considered an
"advisory representative" of the Adviser for purposes of
Investment Advisers Act Rule 204-2. However, the term "advisory
person" shall not include persons who only obtain information
regarding the purchase or sale of a security for a client after
the transaction has been completed. The compliance officer will
maintain a list of employees who are considered advisory persons.
3. BENEFICIAL OWNERSHIP. The term "beneficial ownership" shall be
interpreted in this Code in the same manner as it would be
when determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder except that the
determination of direct or indirect beneficial ownership shall
apply to all securities that an access person has or acquires.
4. COMPLIANCE OFFICER. The term "compliance officer" shall mean an
officer of the Trust or the Adviser who is specifically
designated by the Board of Trustees of the Trust to perform the
functions of the compliance officer pursuant to this Code of
Ethics.
5. DISINTERESTED TRUSTEE. As used in this Code, the term
"disinterested trustee" shall mean a Trustee of the Trust who is
not an "interested person" of the Trust within the meaning of
Section 2(a)(19) of the Investment Company Act.
6. PURCHASE OR SALE OF A SECURITY. As used in this Code, "purchase
or sale of a security" includes, among other things, the writing
of an option to purchase or sell a security.
7. SECURITY. As used in this Code, the term "security" shall have
the same meaning as set forth in Section 2(a)(36) of the
Investment Company Act, except that it shall not include
securities issued by the Government of the United States,
bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, and shares
of registered open-end investment companies.
8. Security "HELD OR TO BE ACQUIRED." As used in the Code, a
security that is "held or to be acquired" shall mean any
security (as defined) which, within the most recent 15 days
(a) is or has been held by the Trust or a client account, or
(b) is being or has been considered for purchase by the Trust
or a client account.
9. A security is "BEING CONSIDERED FOR PURCHASE OR SALE" when a
recommendation to purchase or sell a security has been made or
communicated and, with respect to the person making the
recommendation, when such person seriously considers making
such a recommendation.
E. PROHIBITED ACTIVITIES, PROHIBITED PURCHASES AND SALES; REQUIRED
PERMISSIONS
1. GENERAL ANTI-FRAUD PROHIBITION. No access person or employee of
the Adviser shall engage in any conduct or trading activity with
respect to a security that is "held or to be acquired" by the
Trust or any client of the Adviser if that conduct would operate
as a fraud on the Trust or client or be (or appear to be) a
manipulative practice with respect to the Trust. No access
person shall make an untrue statement of a material fact to the
Trust or any client with respect to a security that is "held or
to be acquired" by the Trust or client or omit to state a
material fact necessary in order to make the statements made to
the Trust or client, in light of the circumstances under
which they are made, not misleading.
2. SAME-DAY BLACKOUT PERIOD. No access person or employee of the
Adviser may purchase any security, which, to his or her
knowledge, is being purchased or sold or is being considered
for purchase or sale by the Trust or a client of the Adviser
until one day after the Trst or such client has completed its
acquisition or sale program. The above prohibition applies to
all employees of the Adviser and all access persons except
disinterested trustees (see paragraph 4 below for other
exceptions).
3. IPOS AND PRIVATE PLACEMENTS. Investment personnel of the Trust
or the Adviser must obtain the prior approval of the compliance
officer in writing before directly or indirectly acquiring
beneficial ownership in any securities in an initial public
offering or in a limited offering (private placement). For
purposes of this paragraph, the term "investment personnel" shall
mean (a) any officer, director or employee of the Trust or the
Adviser (or of any company in a control relationship to the Trust
or the Adviser) who, in connection with his or her regular
functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by
the Trust, or (b) any natural person who controls the Trust or
the Adviser and who obtains information concerning
recommendations made to the Trust regarding the purchase or sale
of securities by the Trust.
4. EXEMPT PURCHASES AND SALES. The prohibitions on purchases and
sales set forth in paragraph 2 of this Section of this Code shall
not apply to:
(a) Purchases or sales effected in any security over which an
access person or employee of the Adviser has no
direct or indirect influence or control;
(b) Purchases or sales of securities that are not eligible for
purchase or sale by the Trust or other clients of the
Adviser;
(c) Purchases or sales of securities that are issued by
the Government of the United States, bankers'
acceptances, bank certificates of deposit, commercial
paper and high-quality short-term debt instruments,
and shares of registered open-end investment
companies;
(d) Purchases and sales in any 5-day period that, in total,
involve fewer than 500 shares of any company that is "held
or to be acquired" by the Trust or other client of the
Adviser;
(e) Purchases or sales that are non-volitional on the part of
the employee or access person;
(f) Purchases that are part of an automatic dividend
reinvestment plan;
(g) Purchases or sales that are made in a bunched
transaction with other clients of the Adviser where
the access person or employee of the Adviser receives
the same price as clients. Bunched transactions are
permissible for all proprietary accounts of the
Adviser.
(h) Purchases effected upon exercise of rights issued by
an issuer PRO RATA to all holders of a class of its
securities, to the extent such rights were acquired
from such issuer, and sales of such rights so
acquired;
(i) Purchases or sales not otherwise exempt that receive
the prior approval of the compliance officer because
they are only remotely potentially harmful to the
Trust or to other clients of the Adviser, E.G.,
because they would be very unlikely to affect a
highly institutional market, or they clearly are not
related economically to the securities to be
purchased, sold or hold for the account of the Trust
or clients. In granting such approval, the compliance
officer shall ascertain that such person is not
trading upon any special knowledge acquired by virtue
of his or her position.
F. REPORTING REQUIREMENTS OF EMPLOYEES WHO ARE NOT ACCESS PERSONS
1. REPORTS REQUIRED. (Note: Employees who are access persons are
covered by Section G below) Unless excepted by paragraph 2 of
this Section (which generally excepts out ministerial personnel
and accounts that are not under an employee's control), every
employee must submit to the compliance officer, on forms provided
by the compliance officer, the following report:
(a) QUARTERLY TRANSACTION REPORTS. No later than 10 days after
the end of a calendar quarter, each employee must report the
following information:
(i) With respect to any transaction during the
quarter in a security in which the access
person had any direct or indirect beneficial
ownership:
(1) The date of the transaction, the title, the
interest rate and maturity date (if applicable),
the number of shares and the principal amount of
each security involved;
(2) The nature of the transaction (I.E., purchase,
sale, or any other type of acquisition or
disposition);
(3) The price of the security at which the transaction
was effected;
(4) The name of the broker, dealer or bank with or
through which the transaction was effected; and
(5) The date that the report is submitted by the
employee.
(ii) With respect to any account established by
employee in which any securities were held
during the quarter for the direct or
indirect benefit of the employee:
(1) The name of the broker, dealer or bank with whom
the employee established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the
employee.
2. EXCEPTIONS FROM REPORTING REQUIREMENTS
(a) An employee need not make a report with respect to
transactions effected for, and securities held in,
any account over which the employee has no direct or
indirect influence or control.
(b) An employee need not make a quarterly transaction report if
the report would duplicate information contained in broker
trade confirmations or account statements received by the
Adviser with respect to the employee for the relevant
quarter within the time period required, if all of the
information required by the report is contained in the
broker trade confirmations or account statements, or in the
records of the Adviser.
(c) An employee need not make a quarterly report if the
compliance officer has specifically identified the
employee as an exempt non-reporting employee who does
not have regular access to the type of information
that requires monitoring of personal securities
transactions. The compliance officer shall maintain a
list of all exempt non-reporting employees.
3. NOTIFICATION OF REPORTING OBLIGATION. The Adviser will identify
all employees who are required to make reports pursuant to this
section and will inform those employees of their reporting
obligation.
4. BENEFICIAL OWNERSHIP. Any report required by this section may
contain a statement that the report will not be construed as an
admission that the person making the report has any direct or
indirect beneficial ownership in the security to which the report
relates.
G. REPORTING REQUIREMENTS OF ACCESS PERSONS
1. REPORTS REQUIRED. (Note: Employees who are NOT access persons
are covered by Section F above.) Unless excepted by paragraph 2
of this Section (which generally excepts out disinterested
trustees and accounts that are not under an access person's
control), every access person must submit to the compliance
officer of the Trust or the Adviser, on forms provided by the
compliance officer, the following reports.
(a) LIST OF ACCOUNTS. A list of all persons in the
access person's household who are "covered persons"
- E.G., spouse, domestic partner, resident parent or
child -and a list of all brokerage or other accounts of
such covered persons in which securities are held or
traded.
(b) INITIAL HOLDINGS REPORTS. No later than 10 days
after the person becomes an access person, a report
with the following information:
(i) The title, number of shares and principal amount
of each security in which the access person had
any direct or indirect beneficial ownership when
the person became an access person;
(ii) The name of any broker, dealer or bank with whom
the access person maintained an account in which
any securities were held for the direct or
indirect benefit of the access person as of the
date the person became an access person; and
(iii) The date that the report is submitted by the
access person.
(c) QUARTERLY TRANSACTION REPORTS. No later than 10 days
after the end of a calendar quarter, a report with the
following information:
(i) With respect to any transaction during the quarter
in a security in which the access person had any
direct or indirect beneficial ownership:
(1) The date of the transaction, the title, the
interest rate and maturity date (if
applicable), the number of shares and the
principal amount of each security involved;
(2) The nature of the transaction (I.E., purchase,
sale, or any other type of acquisition or
disposition);
(3) The price of the security at which the
transaction was effected;
(4) The name of the broker, dealer or bank with or
through which the transaction was effected;
and
(5) The date that the report is submitted by the
access person.
(ii) With respect to any account established by the
access person in which any securities were held
during the quarter for the direct or indirect
benefit of the access person:
(1) The name of the broker, dealer or bank with
whom the access person established the
account;
(2) The date the account was established; and
(3) The date that the report is submitted by the
access person.
(d) ANNUAL HOLDINGS REPORTS. Annually, by the date
specified by the compliance officer, a report with the
following information (which information must be current
as of a date no more than 30 days before the report is
submitted):
(i) The title, number of shares and principal amount
of each security in which the access person had
any direct or indirect beneficial ownership;
(ii) The name of any broker, dealer or bank with whom
the access person maintains an account in which
any securities are held for the direct or indirect
benefit of the access person; and
(iii) The date that the report is submitted by the
access person.
2. EXCEPTIONS FROM REPORTING REQUIREMENTS.
(a) A person need not make a report with respect to
transactions effected for, and securities held in, any
account over which the person has no direct or indirect
influence or control.
(b) A disinterested trustee who would be required to make a
report solely by reason of being trustee of the Trust,
need not make:
(i) An Initial Holdings Report, or an Annual Holdings
Report;
(ii) A Quarterly Transaction Report, unless the trustee
knew or, in the ordinary course of fulfilling his
or her official duties as a trustee, should have
known that during the 15-day period immediately
before or after the trustee's transaction in a
security, the Trust purchased or sold the
security, or the Trust or the Adviser considered
purchasing or selling the security.
(c) An access person need not make a Quarterly Transaction
Report if the report would duplicate information
contained in broker trade confirmations or account
statements received by the Trust or the Adviser with
respect to the access person for the relevant quarter
within the time period required if all of the
information required by that paragraph is contained in
the broker trade confirmations or account statements, or
in the records of the Trust or the Adviser, and the
access person regularly certifies that these
confirmations and account statements do not omit any
reportable transactions.
3. NOTIFICATION OF REPORTING OBLIGATION. The Trust and the Adviser
will identify all access persons who are required to make reports
and will inform those access persons of their reporting
obligation.
4. BENEFICIAL OWNERSHIP. Any report required by this section may
contain a statement that the report will not be construed as an
admission that the person making the report has any direct or
indirect beneficial ownership in the security to which the report
relates.
H. DUTIES OF THE COMPLIANCE OFFICER
1. The compliance officer shall be responsible for notifying all
trustees, directors, officers, access persons, and employees
of either the Trust or the Adviser that they are subject to
this Code of Ethics.
2. The compliance officer shall be responsible for maintaining
lists of all employees of the Adviser, all employees who are
considered exempt non-reporting employees, all directors of
the Adviser, all trustees and officers of the Trust, all
access persons, all advisory persons and all investment
personnel who are subject to various provisions of this Code
of Ethics (collectively, all "covered persons").
3. The compliance officer shall be responsible for circulating or
making available forms for the various reports required by this
Code of Ethics.
4. The compliance officer shall be responsible for the collection
and review of the various reports, and for establishing review
procedures to ascertain any deficiencies, irregularities and
violations of the requirements of this Code of Ethics.
5. The compliance officer shall designate one or more assistants
to review his/her own reports and to handle various of the
compliance officer's duties when the compliance officer is
unavailable.
6. The compliance officer shall submit quarterly and annual
reports to the Trust's Board of Trustees regarding compliance
by covered persons with the provisions of this Code of Ethics,
and shall make such other reports and certifications regarding
this Code as are either required by Rule 17j-1 of the
Investment Company Act or requested by the Trust's Board of
Trustees.
7. The compliance officer shall take appropriate steps to ensure
that all "covered persons" are periodically educated regarding
their duties under this Code and annually submit an
acknowledgement that they have read, understood and complied
with this Code of Ethics.
I. SANCTIONS
No Code of Ethics can cover every possible circumstance, and an
individual's conduct must depend ultimately upon his or her sense of fiduciary
obligation to the Trust and their shareholders. Nevertheless, this Code of
Ethics sets forth the Trust's and the Adviser's policy regarding conduct in
those situations in which conflicts of interest are most likely to develop.
Because the standards in this Code of Ethics are minimal rather than permissive,
careful adherence to the Code is essential.
In response to a violation of this Code, the Board of Trustees of the
Trust or the applicable office of the Adviser may impose such sanctions as it
deems appropriate under the circumstances. Violators may be required to give up
any profit or other benefit realized from any transaction in violation of this
Code. In addition, conduct inconsistent with this Code may result in a letter of
censure or suspension or termination of the employment of the violator. A record
of violations of this Code of Ethics, and of any action taken as a result of
such violations will be available for inspection by the SEC at any time during
the five-year period following the end of the fiscal year in which each such
violation occurs.
