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EXTRACT FROM CREDIT SUISSE ASSET MANAGEMENT LTD'S COMPLIANCE MANUAL (MARCH
2000).
EMPLOYEE SECURITIES TRANSACTIONS POLICY ("PA DEALING")
INTRODUCTION
In order to satisfy legal requirements and protect the reputation of the firm
and its Employees, CSAM has implemented an Employee Securities Dealing Policy
(the "POLICY"). As a matter of good business practice, it is essential that CSAM
maintains the trust and confidence of its clients. Even the suspicion or
appearance of a misuse of CSAM's market position, research capacity, or of a
client's confidential information must be avoided.
In conducting personal investment activities, all Covered Persons (as defined
below) are required to act consistent with the following general fiduciary
principles:
- the interests of CSAM clients must always be placed first;
- all personal securities transactions must be conducted in such a manner as to
avoid any actual or potential conflict of interest or any abuse of an
individual's position of trust and responsibility; and
- Covered Persons must not take inappropriate advantage of their positions.
CSAM has a separate policy and procedures designed to detect and prevent insider
trading, which should be read together with this Policy. Nothing contained in
this Policy should be interpreted as relieving any Covered Person from acting in
accordance with any applicable law, rule or regulation or any other statement of
policy or procedure adopted by CSAM or any Covered Fund.
APPLICABILITY
This Policy establishes rules of conduct for "Covered Persons" (as defined
below) and each registered investment company that adopts this Policy
("COVERED FUND") (CSAM and the Covered Funds are collectively referred to as
the "COVERED COMPANIES"). For the purposes of this Policy the following
definitions apply:
- EMPLOYEE includes full-time consultants and long-term temporary employees.
- COVERED PERSON
- any Employee and any natural person in a control relationship to CSAML.
- any director, trustee or officer of a Covered Fund, whether or not such person
is an Employee.
- SECURITY shall include any option or other derivative interest relating to
the security.
- COVERED ACCOUNT includes any securities dealing account in which an
Employee has Beneficial Ownership.
- BANK OR BROKER includes any bank or broker which an Employee uses to deal on a
Covered Account.
- BENEFICIAL OWNERSHIP is to be interpreted by reference to Rule 16a-1(a)(2)
under the US Securities Exchange Act of 1934 ("RULE"). Under the Rule, a
person is generally deemed to have Beneficial Ownership of securities if the
person (directly or indirectly), through any contract, arrangement,
understanding, relationship or otherwise, has or shares a direct or indirect
pecuniary interest in the securities.
The term "PECUNIARY INTEREST" is generally defined in the Rule to mean the
opportunity (directly or indirectly) to profit or share in any profit
derived from a transaction in the securities. A person is deemed to have an
"INDIRECT PECUNIARY INTEREST" within the meaning of the Rule:
- in any securities held by members of the person's immediate family sharing the
same household; the term "IMMEDIATE FAMILY" includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law,
as well as adoptive relationships;
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- a general partner's proportionate interest in the portfolio securities held
by a general or limited partnership;
- a person's right to dividends that is separated or separable from the
underlying securities;
- a person's interest in certain trusts; and
- a person's right to acquire equity securities through the exercise or
conversion of any derivative security, whether or not presently exercisable.
The term "DERIVATIVE SECURITY" is defined as any option, warrant,
convertible security, stock appreciation right or similar right with an
exercise or conversion privilege at a price related to an equity security
(or similar securities) with a value derived from the value of an equity
security.
For purposes of the Rule, a person who is a shareholder of a corporation or
similar entity is NOT deemed to have a pecuniary interest in portfolio
securities held by the corporation or entity, so long as the shareholder is
not a controlling shareholder of the corporation or the entity and does not
have or share investment control over the corporation's or the entity's
portfolio. The term "control" means the power to exercise a controlling
influence over management or policies, unless the power is solely the
result of an official position with the company.
Employees must take reasonable steps to ensure that any trading activity through
a Covered Account which is not initiated by them observes the requirements of
this Policy.
DISCLOSURE OF BROKER ACCOUNTS
Employees may maintain Covered Accounts with banks or brokers. Employees are
required to provide LCD with full details of any Covered Accounts prior to
initiating any transaction.
In respect of any Covered Account(s) Employees will be required by LCD to sign
an irrevocable order that provides standing instructions to the bank or broker
concerned to report all transactions by sending copies of all confirmations and
contract notes to LCD. The Legal & Compliance Department will prepare a
standard letter for his/her signature which it will send to the bank or broker
advising them of CSAM's reporting arrangements under the Policy. The Employee
will remain ultimately responsible for ensuring that copies of confirmations
and contract notes of all transactions in any Covered Account maintained with
banks or brokers are provided promptly to LCD.
PRE-CLEARANCE OF TRANSACTIONS
In respect of any transaction for a Covered Account the approval of LCD must be
obtained prior to the order (including limit orders) or instructions being given
to the bank or broker concerned (subject to the exceptions listed below).
This approval will be good only for the transaction in respect of which it is
given and for the day(s) on which it is given. Should orders or instructions not
be given to a bank or broker for any reason on the date(s) for which approval
has been received, Employees must re-obtain approval from LCD prior to dealing.
PRE-CLEARANCE IS REQUIRED for transactions in the following investments and
investment accounts:
- Corporate debt securities and related derivatives
- Equity and equity-related securities
- Self-Directed Personal Equity Plans (PEPs), Individual Savings Accounts
(ISAs) or Pension Plans (excluding Unit Trusts)
- Investment Trusts
- Business Expansion Schemes
- Self-Directed IRAs
PRE-CLEARANCE IS NOT REQUIRED for transactions in the following investments and
investment accounts, but otherwise remain fully subject to the policies and
procedures contained herein:
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- Government (including agency, e.g. Ginnie Mae, and supranational, e.g. EEC,
World Bank) securities or futures and/or options thereon
- Foreign exchange
- Securities and Derivatives on the following broad based market indices :
S&P 500, S&P 100, Dow Jones, FIB 30, DAX, Nikkei 225, CAC 40, FTSE 100,
FTSE500, TSE 300, MIB 30, Nasdaq, SMI, AEX (for the avoidance of doubt this
exclusion relates to the indices themselves and not the constituent stocks).
- Sports or gaming contracts
- Commodities
- Swaps
- Futures or options on currencies or interest rates
- Authorised Unit Trusts and Open Ended Investment Companies (OEICs) (listed
in the FT Managed Funds Service Section of The Financial Times)
- Non-Self Directed PEPs or ISAs
- Non-Self Directed IRAs, Mutual Funds, Money Market Accounts, Cash
Management Accounts
EMPLOYEES WISHING TO PRE-CLEAR PURCHASES OR SALES FOR COVERED ACCOUNTS MUST
COMPLETE A PERSONAL ACCOUNT DEALING PRE-CLEARANCE FORM AND OBTAIN APPROVAL FROM
LCD.
PROHIBITIONS
The following prohibitions and related requirements apply to Covered Persons and
Covered Accounts.
SHORT TERM TRADING
CSAM encourages Employees to refrain from short-term trading, as such activity
could be viewed as being in conflict with CSAM's general fiduciary principles.
In no event, however, may an Employee make a purchase and sale (or sale and
purchase) of a security within five business days, except where a significant
loss would occur and written approval of the trade for this reason has been
obtained from the Employee's supervisor and LCD. CSAM reserves the right to
extend this prohibition period for the short-term trading activities of any or
all Employees if CSAM determines that such activities are being conducted in a
manner that may be perceived to be in conflict with CSAM's general fiduciary
principles. Any Employee wishing to purchase securities which are sparsely
traded (as determined by LCD) will be required to hold such investments for a
minimum period of 60 days.
EMPLOYEE-RELATED CONFLICTS
No Employee shall execute any transaction for a Covered Account:
(a) if he knows or should know that to do so would involve him in a conflict
of his own interest or that of any person connected with him, with that of
any client of CSAM or with his duty to any such client; or
(b) as principal with a client whose portfolio is under the discretionary
management of CSAML.
No CSAM Employee may purchase or sell for a Covered Account
(a) any security which the employee recommends to or trades on behalf of
clients; or
(b) any security of a company which is itself a client of CSAML or any
security of a company in the same group as the client,
without the prior written approval on a PERSONAL ACCOUNT DEALING PRE-CLEARANCE
FORM of LCD and a Managing Director of CSAML.
Fund managers are permitted to purchase units in funds (including shares in
investment trusts, unit trusts and Open Ended Investment Companies) which they
also manage. Such transactions must be pre-cleared through LCD and will be
subject to a minimum holding period of 6 months.
If any pre-clearance request is denied, no reason will be given and no
assumptions should be made from such denial. Denials may be for any one of a
variety of reasons, however, you must not discuss with anyone the fact that LCD
has denied pre-clearance nor engage in speculation as to the reasons for this.
An Employee who effects a transaction for a Covered Account shall inform the
broker/bank concerned that he is an Employee of CSAM and he shall not request or
accept from that broker any credit or special dealing facilities in connection
with the transaction.
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An Employee may not arrange for CSAM to enter into any transaction on behalf of
a client if he knows or has reason to believe the transaction involves an
individual or employee of another firm who is contravening, or attempting to
evade, the Criminal Justice Act 1993 or rules on personal account transactions
made by a relevant regulatory organisation.
NEW ISSUES/PUBLIC OFFERINGS
No Employee may acquire any security in a public offering in the primary
securities market.
PRIVATE PLACEMENTS
No Employee may buy or sell any privately placed security without the express
prior written approval of LCD. Approval will take into account, among other
factors, whether the investment opportunity should be reserved for a CSAM client
and whether the opportunity is being offered to the Employee because of his or
her position with CSAM.
FRONT-RUNNING - RESEARCH
No Employee who knows that the CS Group intends to publish a research
recommendation and who knows or should know that publication of the research
recommendation may have market significance, i.e. is reasonably expected to
affect the price of an investment, shall enter into a transaction in such
investment or related investment until the recommendation has been published and
the customers for whom the recommendation is principally intended have had a
reasonable opportunity to react to it.
Information of market significance may include: a change of recommendation, new
information concerning an issuer, advice of impending unannounced publicity
likely to draw increased attention to an issuer's security, a new analysis of
existing information the significance of which had not been previously
recognised, updates on fast-breaking news stories, and any other communication
that provides a fresh stimulus for investment decisions. Persons responsible
for research communications must preserve the confidentiality of the material
they are preparing for release until it is published.
TRAILING OR ANTICIPATING FIRM OR CUSTOMER ORDERS
Employees should not base their personal investment decisions on knowledge of
trading activity by CSAML. Transactions entered into on the basis of such
knowledge represents an improper use of information obtained solely for business
purposes, and could conflict with a customer's interest.
In addition, an Employee must refrain from personally entering into a
transaction he knows will or is likely to have a direct adverse effect on the
particular interests of a customer of CSAML. An Employee who knows that CSAML
intends to deal for a customer should not deal until the relevant order has
been executed or cancelled.
SHORT SELLING
No Employee may engage in any transaction that has the effect of creating any
"short exposure" in a particular security.
BLACKOUT PERIODS
No Employee may execute a securities transaction within five business days
before and one business day after a transaction in that security for a CSAML
client.
TRADING, HEDGING AND SPECULATION IN CREDIT SUISSE GROUP SECURITIES
Transactions by Employees in securities of Credit Suisse Group ("CSG") are
prohibited for each period beginning 15 calendar days before announcement of CSG
yearly or half-yearly results and ending two business days after the
announcement. Employees may only hedge VESTED positions in CSG stock through
short sales or derivative instruments. Uncovered short exposure, through short
sales or otherwise, is not permitted without the express prior written approval
of LCD.
DISCLOSURE OF INTEREST
No Employee may recommend or effect for any CSAML client any securities
transaction without having disclosed his or her personal interest, if any, in
the issuer of the securities, including without limitation:
- any ownership or contemplated ownership of any privately placed securities
of the issuer or any of its affiliates;
- any employment, management or official position with the issuer or any of
its affiliates;
- any present or proposed business relationship between the Employee and the
issuer or any of its affiliates; and
- any additional factors that may be relevant to a conflict of interest
analysis.
Where the Employee has a personal interest in an issuer, a decision to purchase
or sell securities of the issuer or any of its affiliates by or for a CSAML
client may be subject to an independent review by LCD.
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INVESTMENT CLUBS
No Employee may participate in any `investment club' or similar activity
unless specifically approved by LCD.
EXEMPTIONS
Express prior written approval may be granted by LCD if a purchase or sale of
securities or other outside activity is consistent with the purposes of this
Policy and Section 17(j) of the US Investment Company Act of 1940 ("1940
ACT") and rules thereunder. For example, a purchase or sale may be considered
consistent with those purposes if the purchase or sale is not harmful to a
CSAML client because such purchase or sale would be unlikely to affect a
highly institutional market, or because such purchase or sale is clearly not
related economically to the securities held, purchased or sold by the CSAML
client.
REPORTING
Each Covered Person shall disclose to LCD all personal securities holdings in
which he or she has Beneficial Ownership upon the commencement of his or her
employment with CSAM, or his or her affiliation with any Covered Fund, and
then annually thereafter. In addition, each Covered Person shall annually
complete a certification to:
- certify that he or she has read and understood this Policy and recognises
that he or she is subject to its requirements;
- certify that he or she has complied with the requirements of this Policy
and has disclosed or reported all personal securities transactions as
required by this Policy.
Covered Persons who are not Employees are required to report a transaction only
if he or she, at the time of that transaction, knew (or in the ordinary course
of fulfilling official duties with a Covered Fund should have known) that during
the 15 day period immediately preceding the date of the transaction the security
such person purchased or sold was purchased or sold by the fund or was being
considered for purchase or sale by the fund.
COMPLIANCE MONITORING AND SUPERVISORY REVIEW
LCD will periodically review confirmations from brokers to assure that all
transactions effected through a Covered Account are in compliance with this
Policy.
Material violations of this Policy and any sanctions imposed shall be reported
not less frequently than quarterly to the Board of Directors of each relevant
Covered Fund and to the senior management of CSAML. CSAM shall prepare an annual
report to the Board of Directors of each Covered Fund and to the senior
management of CSAM that:
- summarises existing procedures concerning personal investing and any
changes in the procedures made during the past year;
- identifies any violations requiring significant remedial action during the
past year not previously reported; and
- identifies any recommended changes in existing restrictions or procedures
based upon each Covered Company's experience under this Policy, evolving
industry practices or developments in applicable laws or regulations.
SANCTIONS
Upon discovering that a Covered Person has not complied with the requirements of
this Policy, the senior management of the Covered Company may impose on that
person whatever sanctions are deemed appropriate, including censure; fine;
reversal of transactions and disgorgement of profits; suspension; or termination
of employment.
CONFIDENTIALITY
All information obtained from any Covered Person under this Policy shall be kept
in strict confidence, except that reports of transactions may be made available
to the FSA, IMRO, the Securities and Exchange Commission or any other regulatory
or self-regulatory organisation to the extent required by law or regulation or
to the individual's Department Head.
CIRCUMVENTION
An Employee who is precluded by this Policy from entering into a transaction may
not circumvent the Policy by counselling or procuring any other person to enter
into such a transaction. Communicating any information or opinion to any other
person who may enter into such a transaction or procure any other person to do
so is also prohibited.
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GIFTS/ENTERTAINMENT
RECEIVED:
No Employee may solicit or accept any benefit or inducement which is likely
to conflict with any duties owed by CSAML to its customers.
Normal business gifts and courtesies, e.g. lunch and dinner invitations are
acceptable. Invitations to artistic or sporting events should only be
accepted occasionally, should only be accepted if you are accompanied by the
counterparty, must not be solicited and must be agreed prior to the event by
your Head of Department.
If gifts are received, where possible, you should share them amongst your
department. In general, it is considered acceptable for you to receive a gift
to the value of up to (pound)50. Gifts in excess of this amount must be
reported to LCD.
OFFERED:
No Employee may offer or give any inducement which is likely to conflict with
any duties of the recipient owed to its customers.
If you wish to give gifts/entertainment then you must obtain the approval of
your Head of Department.
Repeated and/or lavish gifts, entertainment and hospitality are not
acceptable.
Entertainment of or gifts to government officials is not permitted without
prior guidance from LCD. The term "government official" is widely defined and
includes, but is not limited to politicians, government ministers, Local
Authority officials, members of the Inland Revenue and the Police Force. If
in any doubt please contact LCD for further guidance.
