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
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routinely 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
D. 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
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* The communication of material, nonpublic information in violation
of a confidentiality obligation where the information leads to a
purchase or sale of securities.
(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.
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(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.
E. 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.
F. 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.
G. 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
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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 (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.
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* 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.
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
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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 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.
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(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-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
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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 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."
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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 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.
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(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 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
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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.
(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.
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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.
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E. ADDITIONAL RESTRICTIONS.
(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.
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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 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:
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(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.
(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.
B. 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.
C. 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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