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MDL CAPITAL MANAGEMENT, INC.
PERSONNEL POLICY & PROCEDURES
SECTION VI ETHICS AND REGULATORY POLICIES
A) GENERAL POLICIES
1. All "associated persons" and employees of MDL Capital Management, Inc.
(MDL) MUST read and understand the following Ethics and Regulatory Policies
(An "associated person" is taken to mean an officer, director, partner or
other person that is required to file MDL's Schedule D of Form ADV).
All associated persons and employees of MDL MUST sign a document that
acknowledges that he/she had read and understood these policies and that
attests to the fact that he/she agrees to abide by them.
2. Ms. Tracey Gist is MDL's Compliance officer (CO). In this capacity she has
overall responsibility for overseeing all compliance and regulatory matters
at MDL. All employees should view the CO as a resource for providing
guidance and answering questions.
3. Each employee is expected to read "Regulation of Investment Advisers", a
book by Lemke and Lios, which is available in the office. Alternatively,
the employee, with the CO's agreement, may choose the read an equivalent
book or resource. While reading this material, employees are expected to
pay particular attention to those subjects that pertain directly to their
duties and responsibilities.
4. MDL wishes to emphasize to its employees that breaches of MDL's policies
and/or of Federal and State laws and regulations applicable to Registered
Investment Advisors are likely to result in grave consequences to all
parties involved in such breaches.
B) REGISTRATION OF ASSOCIATED PERSONS
All associated persons or employees required to file Schedule D of Form ADV
must provide the CO with the information necessary to complete this SEC
form. It is each such person's responsibility to provide the CO with
accurate and timely information. It is MDL's policy that the CO verifies
all information required to be filed on Schedule D for each person.
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C) THE ADVISERS ACT
It is MDL's policy to entirely adhere to all requirements of the Investment
advisers Act of 1940 (The Act) at all times. All employees and associated
persons of MDL are expected to comply with all requirements of the Act at
all times.
The CO, with the assistance of MDL's CEO (Mark D. Lay) and Chief Investment
Officer (Edward Adatepe), is responsible for ensuring MDL's compliance with
the Act by:
1) Filing (with the SEC or appropriate State agencies) all
required registrations and documents on a timely basis.
2) Reviewing all contracts between MDL and its advisory
clients.
3) Reviewing all investment plans applicable to MDL's various
advisory client.
4) Monitoring, with the assistance of the CIO, MDL's various
investment activities (on behalf of its clients) and
ensuring that all investments made comply with the Act, with
the client's investment plan and with MDL's internal
investment policies, procedures, limitations and
restrictions.
5) Monitoring MDL's trading activity (on behalf of its clients)
to ensure compliance with the Act and with all MDL Trading
Policies and Procedures (a copy of which is available from
the CO).
6) Monitoring the personal securities transactions of all
employees to ensure compliance with MDL's policies on this
matter (as described further in this document).
7) Reviewing and monitoring all contracts with and fees paid to
persons who act as solicitors to MDL.
In the event that any MDL employee or associate person becomes aware of any
breach of the Act, it is his/her responsibility to report such breach to
the CO. MDL WILL CONSIDER IT GROUNDS FOR DISMISSAL IF ANY EMPLOYEE OR
ASSOCIATED PERSON KNOWS OR BECOMES AWARE OF ANY BREACH OF THE ACT BUT DOES
NOT REPORT IT TO THE CO. It is the CO's responsibility to report any
breaches of the Act to the CEO on a timely basis.
In the highly unlikely instance where MDL becomes aware of non-compliance
with the Act, IT IS MDL'S POLICY TO IMMEDIATELY TAKE WHATEVER STEPS ARE
NECESSARY TO GET BACK INTO COMPLIANCE. It is the CEO's and CO's
responsibility to ensure that the proper measures are taken to correct any
deficiencies.
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D) ERISA
IT IS MDL'S POLICY TO STRICTLY ADHERE TO ALL REQUIREMENTS, WHEN THEY ARE
APPLICABLE, OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
(ERISA) AT ALL TIMES. ALL EMPLOYEES AND ASSOCIATED PERSONS OF MDL ARE
EXPECTED TO COMPLY WITH ALL REQUIREMENTS OF ERISA AT ALL TIMES. It is
the CO's responsibility to ensure MDL's compliance with ERISA. This
compliance is achieved through the same monitoring and review policies
and procedures described above for compliance with the Advisers Act.
All employees of MDL are encouraged to read and understand the "Prudent
Man" definition of a fiduciary contained in the ERISA legislation. The
following passage from "Regulation of Investment Advisers" is reproduced
below in order to give the reader a better understanding of the meaning of
the "Prudent Man".
"An adviser to an ERISA pension plan will be subject to ERISA's
"Prudent Man" standard, which generally requires an adviser to discharge
its duties solely in the interests of the plan with the care, skill,
prudence, and diligence under the circumstances that a prudent man
acting like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims".
An adviser will be deemed to have satisfied the prudent man
standard it is has given "appropriate consideration" to the facts and
circumstances that, given the scope of the adviser's investment duties,
the adviser should know are relevant to a particular investment or
course of action, including the role the investment plays in the plan's
investment portfolio. "Appropriate Consideration" includes a
determination by the adviser that the particular investment is
reasonably designed, as part of the plan's portfolio, to further the
purposes of the plan, taking into consideration risk of loss,
opportunity for gain, and factors such as diversification, liquidity,
and projected return of the portfolio. Most significantly, the prudent
man rule looks to total performance of the entire portfolio, rather than
the actual performance of any particular investment. Accordingly, to
determine whether any investment is imprudent (or prudent) it must be
analyzed in the content of the overall portfolio."
In the event that any MDL employee or associated person becomes aware
of any breach of ERISA regulations, it is his/her responsibility to report
such breach to the CO. MDL WILL CONSIDER IT GROUNDS FOR DISMISSAL IF ANY
EMPLOYEE OR ASSOCIATED PERSON KNOWS OR BECOMES AWARE OF ANY BREACH OF ERISA
BUT DOES NOT REPORT IT TO THE CO. It is the CO's responsibility to report
any breaches of ERISA regulations to the CEO on a timely basis.
In the highly unlikely instance where MDL becomes aware of non-compliance
with the Act, IT IS MDL'S POLICY TO IMMEDIATELY TAKE WHATEVER STEPS ARE
NECESSARY TO GET BACK INTO COMPLIANCE. It is the CEO's and CO's
responsibility to ensure that the proper measures are taken to correct any
deficiencies.
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E) INSIDER TRADING
The Advisers Act requires an investment adviser to adopt policies and
procedures to preserve the confidentiality of information and prevent
possible insider trading. IT IS MDL'S POLICY THAT ALL ASSOCIATED PERSONS
AND EMPLOYEES OF MDL ARE PROHIBITED FROM USING MATERIAL NON-PUBLIC
INFORMATION IN AN ATTEMPT TO RECEIVE AN ECONOMIC BENEFIT FOR THEMSELVES
OR ANYONE ELSE. The CO is responsible for enforcing this provision of
the law, with the assistance of the CIO, by monitoring MDL's various
investment activities and by reviewing the rationale for various
investments. It is the responsibility of individual portfolio managers
to explain the reason for various investments through investment policy
committee presentations or through maintaining appropriate records,
notes and files.
In the event that any MDL employee or associated person becomes aware of
any breach of the "insider trading" regulations of the Act, it is
his/her responsibility to report such breach to the CO. MDL WILL
CONSIDER IT GROUNDS FOR DISMISSAL IF ANY EMPLOYEE OR ASSOCIATED PERSON
KNOWS OR BECOMES AWARE OF ANY BREACH OF ERISA BUT DOES NOT REPORT IT TO
THE CO. It is the CO's responsibility to report any breaches of ERISA
regulations to the CEO on a timely basis.
In the highly unlikely instance where MDL becomes aware of non-compliance
with the Act, IT IS MDL'S POLICY TO IMMEDIATELY TAKE WHATEVER STEPS ARE
NECESSARY TO GET BACK INTO COMPLIANCE. It is the CEO's and CO's
responsibility to ensure that the proper measures are taken to correct any
deficiencies.
F) PERSONAL SECURITIES TRANSACTIONS
It is MDL's policy that ALL ASSOCIATED PERSONS AND EMPLOYEES who make, or
participate in making, investment decisions at MDL will be required to
abide by the following policies and procedures regarding their personal
securities transactions:
(1) Within ten days of the end of each calendar quarter, each person
will submit to the CO a record of their personal securities
transactions. Such record shall include:
(a) The Title and amount of the security involved.
(b) Date of Transaction.
(c) Type of Transaction.
(d) Price of the Transaction.
(e) The Name of the Broker.
(2) IT IS MDL'S POLICY THAT THESE PERSONS CAN NOT TRADE IN THE
SECURITIES THAT MDL HAS TRADED FOR ITS CLIENTS, FOR A PERIOD OF
TWO WEEKS BEFORE AND AFTER THE TRADE DATE OF MDL'S TRADES FOR ITS
CLIENTS.
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(3) If you are unsure of a particular securities transaction, ask the
CO before effecting the transaction.
G) TRADING POLICIES
IT IS MDL'S POLICY THAT ALL ASSOCIATED PERSONS AND EMPLOYEES OF MDL MUST
ABIDE BY MDL'S TRADING POLICIES as outlined in the attached document
entitled Internal Trading Procedures. If you are unsure of any policy or
procedure please ask the CO for clarification.
It is the CO's responsibility to monitor MDL's various trading
activities to ensure compliance with these policies and procedures. Such
monitoring may include review of trade logs, etc.
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