BROWN BROTHERS HARRIMAN & CO.
Code of Ethics
To: The Partners, Executives and Employees of all offices of Brown Brothers
Harriman & Co.
As you know, the firm has long prided itself on having an unusually dedicated
group of Employees whose honesty, integrity, high personal standards and quest
for excellence have earned the firm a high level of public trust. The
preservation of that trust continues to be of paramount importance to us all.
We live, however, in a changing world. New laws and regulations, whose intent is
frequently unclear, as well as the ambiguities that inevitably result from the
increasing complexity of the markets in which we deal, sometimes make it
difficult to discern the proper course of action in a particular situation.
In light of this, we have developed this Code of Ethics. The Code identifies the
particular responsibilities that each of us must assume to merit public
confidence in a manner that does not unduly restrict our personal affairs.
Of course, no concise set of rules can detail every circumstance in which they
may apply, and doubts or uncertainties are bound to occur. In such cases you
should seek the guidance and counsel of your immediate Supervisor or one of the
Executives or Partners.
T. M. Farley
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CODE OF ETHICS
Introduction
The Code of Ethics reaffirms our basic policies of ethical conduct for Partners,
Executives, and Employees of Brown Brothers Harriman & Co.
The foundation of the Code consists of basic standards in the areas of:
1. Honesty and candor in our activities, including observance of the
spirit, as well as the letter, of the law;
2. Evidence of conflicts between personal interests and the interests of
the firm, and the appearance of such conflicts; and
3. Maintenance of our reputation and avoidance of activities which might
reflect adversely on the firm.
Confidential Information
Partners, Executives, and Employees may become privy to confidential Information
not generally available to the public concerning the affairs and business
transactions of the firm, its former, present, and prospective clients, and
individuals in the firm. Safeguarding confidential information is essential to
the conduct of the firm's business. Therefore, caution and discretion are
required in the use of such information, and in sharing it only with those who
have legitimate need to know.
Under most circumstances, information concerning a client may not be released to
third parties without the expressed permission of the client or under
appropriate legal process.
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There is a long-standing practice of the exchange of information
relating to the extension of credit. This exchange is covered by the
Robert Morris Association Code of Ethics for Exchange of Credit
Information. All other requests for information concerning a client,
other than legal process, should be referred to your supervising
Partner. Requests pursuant to legal process, such as subpoenas or court
orders, should be referred to the Treasurer or, in the Boston Office,
the Operations Manager.
Confidential Information obtained as a result of employment with the
firm is not to be used for the purpose of furthering any private
interest or as a means of making any personal gain.
While the firm's activities require the free flow of information
throughout the firm, confidential information concerning clients of the
firm available to one department of the firm should be communicated to
other departments only when there exists a legitimate business to know.
In particular, confidential information concerning a corporation is not
to be communicated by Partners, Executives, or Employees who perform
any commercial banking or lending functions to Partners, Executives, or
Employees who perform investment or corporate finance functions, nor
shall Partners, Executives, or Employees who perform investment or
corporate finance functions request such information from other
departments of the firm.
Personal Finance
Personal finances should be managed in a manner consistent with
employment in a financial institution.
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This obligation requires the exercise of prudence in the making of
personal investments and the avoidance of clearly speculative
transactions as well as specific situations which might influence
judgments made or advice given on behalf of the firm in the course of
business.
Partners, Executives, and Employees, and members of their immediate
families are free to invest in securities at their discretion. However,
opening or maintaining any kind of securities account requires the
authorization of the firm. Margin accounts are not permitted. In
addition, care must be exercised to insure that investments do not
involve, or appear to involve, conflicts of interests with our clients
or the use of confidential information.
More particularly, Partners, Executives, and Employees, and members of
their immediate families must not purchase or sell any security of
their own account, or for any account in which they have a beneficial
interest, while it remains on the firm's Restricted List. Employees
must have all potential securities transactions in U.S. equities,
convertibles or derivative securities approved by the Compliance
Division of the Treasurer's Department in the New York office prior to
placing their orders.
Partners, Executives, and Employees should borrow money only from
reputable organizations which regularly lend money to individuals.
Borrowings from any financial institution, including correspondent
banks, however, must not involve favored treatment of any kind. Thus,
such borrowings should be obtained on substantially the same terms and
conditions, including rate of interest; prevailing at the time for
comparable loans to other borrowers.
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In addition, Executives must report the status of their borrowing once
each year to the Managing Partner and any additional borrowing during
the year as it occurs.
Personal Remuneration
Partners, Executives, and Employees, and their immediate families may
not solicit, accept, or retain any personal remuneration from any
client of the firm or from any individual or organization doing or
seeking to do business with the firm. In this context, personal
remuneration includes any type of gift, gratuity, favor, service, loan,
fee, or compensation, or anything of monetary value.
Specific exception to this prohibition is made if there is no, and
there appears to be no, reasonable likelihood of improper influence on
the individual's performance of duties on behalf of the firm and if the
personal remuneration involves normal business courtesies, non-cash
gifts of less than $50 value, gifts received because of social
relationships entirely apart from any business relationship, or fees
received from an organization in which the individual's membership has
been approved by the firm. Under no circumstances may anyone accept a
cash gratuity, regardless of amount.
Special care must be exercised in determining whether a particular
instance of personal remuneration is permissible in view of the limited
exceptions. Therefore, any question as to whether such an instance
might be construed as improperly influencing one's duties or whether it
falls into one of the above categories must be referred promptly to the
Executive's or Employee's supervisor.
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Business Conduct
The activities of the firm must always be in full compliance with the
spirit, as well as the letter, of all applicable laws and regulations.
When any question arises as to any law or regulation, the Treasurer's
office should be consulted first. If necessary, appropriate outside
counsel can then be consulted.
The integrity of the records of the firm is essential. Executives and
Employees responsible for keeping any books, records, and accounts for
the firm are required to record all entries based upon proper
supporting documents so that records of the firm are maintained in
reasonable detail.
Executives and Employees are expected to keep their supervisors fully
informed of all matters pertinent to the firm's affairs and business
activities with the view to ensuring that senior management will be
fully informed on a timely basis as to all such matters. In dealing
with the firm's internal or independent auditors or attorneys, complete
candor and cooperation is essential.
Discovery of events of a questionable, fraudulent or illegal nature or
those which are in violation of this Code of Ethics should be reported
immediately to one's supervisor. If such instances involve the
Executive's or Employee's supervisor
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or another person in management, the matter should be reported directly
to one of the Senior Executives or Partners. These matters will be
treated in confidence and with discretion. Failure to report such
events constitutes a violation of this Code.
Outside Activities
The firm discourages outside employment. No outside employment will be
approved which might reflect adversely on the firm or which will
encroach upon working time, interfere with regular duties, or
necessitate such long hours as to affect working effectiveness. In
those instances where outside employment is determined to be justified
by the firm, the individual involved must obtain prior written approval
from his or her department head and the Personnel Manager. Becoming a
director or trustee of an outside organization also requires Partner
approval.
The firm encourages individual participation by its Partners,
Executives, and Employees in political and civic activities conducted
outside of business hours. However, Partner approval is required before
anyone becomes a candidate for public office, elective or appointive.
Administration of the Code
This Code supplements, but does not supplant, the firm's Rules of
Conduct, personnel policies, and other policies, and the rules and
regulations of outside regulatory bodies.
Violation of any provision of the Code of Ethics constitutes grounds
for disciplinary action, up to and including termination of employment.
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Policy No.: 4.28
Policy Manual
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Date: March 10, 2000
SECURITIES: Employee Trading Authority: EJWilliams
Page: 1 of 9
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Final Version. For departmental circulation and filing in Policy Manual.
DISTRIBUTION: ALL EMPLOYEES
OUT-OF-TOWN OFFICES
New York Stock Exchange Rule 342.21 requires all member firms to
review all securities trading activities transacted for the accounts of members,
allied members, employees, and their family members. Family members are defined
to include spouses (including significant others), dependent children, and any
other household relatives. Employee accounts are defined to include any account
in which a member, allied member, employee or family member has an interest or
has the power, directly or indirectly, to make investment decisions. This
definition should be construed in the broadest sense and includes all partners
and employees in all offices and subsidiaries, both domestic and foreign.
Rule 407 of the New York Stock Exchange requires members, allied
members and employees to obtain the written consent of their employer prior to
opening an account at another member firm. This includes accounts for family
members as that term is described above. At BBH & Co., that approval must be
obtained from the Compliance Division of the Treasurer's Department and this
approval covers all brokerage accounts, both in the United States and abroad.
For your guidance, the rule reads as follows:
"Rule 407 a. No member or member organization shall, without the prior
written consent of the employer, open a securities or commodities
account or execute any transaction in which a member, allied member or
employee associated with another member or member organization or an
employee of the Exchange is directly or indirectly interested.
In connection with accounts or transactions of members, allied members
and employees associated with another member or member organization,
duplicate confirmations and account statements shall be sent promptly
to the employer.
b. No member, allied member or employee associated with a member or
member organization shall have a securities or commodities account
with respect to which such person has a financial interest or the
power, directly or indirectly, to make investment decisions, at
another member or member organization, or a domestic or foreign
non-member broker-dealer, investment adviser, bank or other
financial institution without the prior written consent of another
person designated by the member or member organization under Rule
342(b)(1) to sign such consents and review such accounts.
Persons having accounts referred to above shall arrange for
duplicate confirmations and monthly statements of said accounts to be
sent to another person designated by the member or member organization
under Rule 342(b)(1) to review such accounts."
Beyond Exchange requirements, Firm policy requires that employees
advise the Compliance Division by memorandum of investments transacted through
banks, insurance companies or other organizations which are not required to
report such transactions to the employee's firm. This includes among other
things, private placements, limited partnerships and the purchase of shares
through dividend re-investment plans in excess of the declared dividend as well
as the sale of shares through dividend re-investment plans.
Prior to opening an Employee Account at an outside brokerage firm,
approval must be obtained either from the Compliance Division or, in the case of
London, the Branch Manager. Once approved, a letter to the brokerage firm
granting permission for the opening of an account will be prepared and mailed by
the Compliance Division. In the case of London employees, copies of statements
and confirmations must be sent to both the London Branch Manager and the New
York Compliance Division.
In those cases where local law prohibits brokerage firms from
forwarding confirmations and statements to the Compliance Division, the Partner
or employee is expected to so advise Compliance and take on the responsibility
to forward copies of these statements and confirmations. Failure to comply with
this requirement will not be tolerated.
The review of employee trading will be conducted by the Compliance
Division in New York for all partners and employees of the bank at all offices,
branches and subsidiaries, both domestic and foreign.
Securities Transactions By Employees and Conflicts of Interest
As a bank, custodian, investment adviser and member of the major
securities exchanges, Brown Brothers Harriman & Co. (BBH & Co.) has a fiduciary
relationship with its clients. The firm's first responsibility is to safeguard
and promote the best interests of its clients.
Partners and employees should exercise particular care in making
purchases and sales of securities to avoid a conflict of interest with clients.
It is the individual responsibility of each partner or employee to refrain from
market activity if a conflict with the interest of a client might result. This
includes, among other things, trading in anticipation of or immediately after a
rating change by BBH & Co. for a security followed by either the Research
Department or any of the research areas associated with the investment advisory
areas. It should be emphasized that this standard of conduct also applies to
family members of partners and employees.
The ethical considerations are most important among Firm personnel who
participate in making the recommendation or have any pre-publication knowledge
of it. Such personnel clearly should refrain from any action in contemplation of
the report, such as making a transaction for their own account, or for accounts
in which they have an interest or discretion, or passing on advance information
concerning the report to clients or other persons outside the firm.
When trading marketable securities for their own or related accounts,
it is the responsibility of all partners and employees to be familiar with and
comply with Policy 4.49, Chinese Wall Policies. It must be remembered that front
running research recommendations and trading on inside information are not the
only concerns when partners or employees contemplate personal securities
transactions. Any strategy that may infringe on a client's interest, such as
front running client trades, using Deliver & Receive (D&R) activity to make
investment decisions, etc., are also considered unacceptable practices. In the
case of those individuals involved in the management of The 59 Wall Street Funds
and Portfolios, there are additional restrictions on trading activities as
outlined in Exhibit "A" attached.
NYSE Floor Brokers
The NYSE Floor Brokers are subject to the same employee trading
restrictions as all other members of BBH & Co.. They are required to enter their
orders either through BBH & Co. or an account at another broker. They are
prohibited from executing trades on the floor for their own account,
subsequently assigning the order to the member firm where their securities
accounts are located.
Should the Floor Broker execute transactions on behalf of other NYSE
member firms, they must notify the head of Equity Trading and/or the Compliance
Division. They must retain the order ticket for retention as required in the
NYSE Books and Records rules and provide the firm in whose behalf the order was
executed the "Report of Execution".
Pre-Approval of Securities Transactions
All partners and employees in all offices and subsidiaries, both
domestic and foreign must have all contemplated securities* transactions, both
purchase and sales, both domestic and foreign, whether traded in the U.S. or
abroad for themselves (but not their family members or discretionary accounts as
described below) or the accounts they have investment control over pre-approved
by the Compliance Division in New York. This is to insure that trades in
securities on the Watch List, the New Names List or the Restricted List (See
Policy 4.49, Chinese Wall Policy, for a description of these lists) are properly
reviewed and approved, where appropriate, before they are executed. It is the
responsibility of the partner or employee to obtain pre-approval prior to
entering any orders through an outside broker. If the order is to be entered
through BBH & Co., the BBH & Co. account executive will obtain Compliance
pre-approval on behalf of the partner or employee. Requests for pre-approval by
NON-BBH personnel will not be accepted.
When requesting pre-approval, the partner, employee or BBH & Co.
account executive must supply the name of the employee, the name of the account,
the name and class of the security involved, the size of the order, whether it
is a purchase or sale, the name of the executing broker. Pre-approvals are good
for the day they are received only. Occasionally, in exceptional cases, a period
of up to five days may be granted for "Good Until Cancelled" orders. However,
should this privilege begin to be abused, it will be revoked. It is purely at
the discretion of Compliance. Additionally, should a particular security be
placed on one of the Control Lists, BBH & Co. reserves the right to revoke, with
notice, the pre-approval of any trade not yet executed. Exceptions from the
pre-approval process will be granted to those individuals who have discretionary
accounts at another member firm as well as to those individuals who can
demonstrate that they do not have the power to influence the investment
decisions of their accounts at another member firm. Copies of the relevant
documents must be provided to the Compliance Division when requesting the
exemption. While we do not require preapproval for discretionary accounts or
family related accounts, Compliance reserves the right to contact the partner,
employee, family member or brokers for trades that appear to violate this
policy.
Any failure to have trades pre-approved will be investigated and
documented as to the reason for such failure and the person counseled to prevent
further mishaps. Repeated violation of the policy will not be permitted.
Preapproval of a transaction does not permit partners or employees to
violate their ethical responsibility to our clients. Preapproval will not
protect someone from the restrictions contained in Exhibit A, front running
client trades, misuse of knowledge of D&R activity or using or trading based on
other information obtained from BBH & Co.'s relationship with our clients. It
will also not protect employees from entering trades based on research activity
not yet conveyed to the Compliance Division by the appropriate entities.
Information concerning these activities would not necessarily be known to
Compliance at the time a trade is preapproved. Apparent violation of clients'
interests will be investigated and proven incidents will not be tolerated or
excused.
Prohibited Accounts and Transactions
There are a number of types of transactions and accounts that
partners, employees and their family members are prohibited to have or engage
in, by firm policy, whether they are done at BBH & Co. or with an outside
brokerage firm or with any other financial institution. These include:
1 - Purchase or selling securities on margin.
2 - Participating in short sales.
3 - Participating in Initial Public Offerings (IPO's) while still
in subscription.
4 - Opening or maintaining a commodities account.
5. "Free stock" offerings presented on the Internet. These
are illegal unregistered public offerings of securities.
It is important that the guidelines outlined in this policy be
strictly observed by all members of our organization in handling their personal
investments to prevent conflicts of interest and embarrassment.
This supersedes Policy 4.28, "SECURITIES: Employee Trading, dated June
10, 1999, which should be removed from the manual and destroyed.
You should also refer to the most current version of Policy No. 4.49,
"Chinese Wall: Policies and Procedures".
* * * * *
"Security" means any note, stock, treasury stock, bond debenture, evidence of
indebtedness, certificate of interest or participation in any profit-sharing
agreement, collateral-trust certificate, pre-organization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security (including certificate of deposit) or on any group or index of
securities (including any interest therein or based on the value thereof), or
any put , call, straddle, option or privilege entered into on a national
securities exchange relating to foreign currency, or, in general, any interest
or instrument commonly known as a "security", or any certificate of interest or
participation in, temporary or interim certificate for , receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any of the foregoing.
However, "Security" shall not include direct obligation of the Government of the
United States, bankers' acceptances, bank certificates of deposits, commercial
paper and high quality short-term debt instruments, including repurchase
agreements, and share issued by open-end mutual funds.
