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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
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receive "inside information" except insofar as they may have
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
- The communication of material, nonpublic information in
violation of a confidentiality obligation where the
information leads to a purchase or sale of securities.
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(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 Company's Compliance
Officer.
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B. 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.
C. 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.
D. 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
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(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 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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B. 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.
C. 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
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defined) and personal transactions that create an actual or
apparent conflict must be avoided.
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 on such
futures contracts; PROVIDED that Reportable Securities shall not
include (1) equity securities issued by mutual funds (note: mutual
funds include PIC-
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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.
C. 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 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
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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.
D. 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
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approved, but will not sign the form. The form will be
signed after 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 be
purchased on the second business day after they begin trading in
the secondary market. Should any person participate in a new
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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 vehicle's 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.
(6) REPORTS OF PERSONAL TRANSACTIONS AND SECURITIES OWNERSHIP.
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(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. 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. a 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. a 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.
E. ADDITIONAL RESTRICTIONS.
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(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
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conflict of interest constitutes a clear violation and will
generally always result in disciplinary action absent highly
extenuating circumstances.
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.
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(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 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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