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PROVIDENT INVESTMENT COUNSEL
Code of Ethics
Personal Trading/Confidential Information
Policy Statement and Compliance Procedures
Revised March, 2000
Federal and state laws prohibit Provident Investment Counsel (the
"Company") and each of its employees from purchasing or selling any publicly-
traded stock, bond, option or other security on the basis of material, nonpublic
information (i.e., insider trading). In addition, the Company and each employee
has a fiduciary obligation to its clients to protect the confidentiality of all
proprietary, sensitive or other confidential information communicated to the
Company or its employees by its clients. Finally, because the Company and each
of its employees is a fiduciary to the Company's clients, the Company and its
employees must also maintain the highest ethical standards and refrain from
engaging in activities that may create actual or apparent conflicts of interest
between the interests of the Company or its employees and the interests of the
Company's clients.
To ensure that insider trading laws are not violated, that client
confidences are maintained, and that conflicts of interest are avoided, the
Company has adopted the policies and procedures set forth herein. The policies
and procedures set forth herein are intended to articulate the Company's
policies, educate its employees about the issues and the Company's policies,
establish procedures for complying with those policies, monitor compliance with
such policies and procedures, and ensure, to the extent feasible, that the
Company satisfies its obligations in this area. By doing so, the Company hopes
that the highest ethical standards are maintained and that the reputation of the
Company is sustained.
I. BACKGROUND
A. Insider Trading.
It is unlawful to engage in "insider trading." This means, in
general, that no "insider" may (i) purchase or sell a security on the
basis of material, nonpublic information, or (ii) communicate
material, nonpublic information to another where the communication
leads to, or is intended to lead to, a purchase or sale of securities.
Insider trading prohibitions extend to the activities of each employee
of the Company. Because the Company does not have an investment
banking division or affiliate it is anticipated that such employees
will not routinely
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receive "inside information" except insofar as they may have material
nonpublic information about the Company which could affect the market
price for the Company's publicly traded parent holding company, United
Asset Management Corp. ("UAM") or a publicly traded closed-end
investment company for which the Company serves as investment advisor.
However, to educate the Company's employees, more information
describing "insider trading" and the penalties for such trading are
set forth below. Compliance procedures regarding the use of inside
information by the Company's employees are also described just in case
an employee of the Company receives inside information.
B. Other Confidential Information.
Certain information obtained by the Company that does not constitute
"inside" information still constitutes confidential information that
must be protected by the Company and its employees. Compliance
procedures regarding the use and treatment of that confidential
information are set forth below.
C. Conflicts of Interest.
As a fiduciary to the Company's clients, each employee of the Company
must avoid actual and apparent conflicts of interest with the
Company's clients. Such conflicts of interest could arise if
securities are bought or sold for personal accounts in a manner that
would significantly compete with the purchase or sale of securities
for clients or if securities are bought or sold for client accounts in
a manner that is advantageous to such personal accounts. More
information describing such conflicts of interest and the compliance
procedures for avoiding such conflicts of interest are set forth
below.
II. INSIDER TRADING
A. Insider Trading Defined.
The term "insider trading" is generally used to refer to (i) a
person's use of material, nonpublic information in connection with
transactions in securities, and (ii) certain communications of
material, nonpublic information.
The laws concerning insider trading generally prohibit:
- The purchase or sale of securities by an insider, on the basis of
material, nonpublic information;
- The purchase or sale of securities by a non-insider, on the basis
of material, nonpublic information where the information was
disclosed to the non-insider in violation of an insider's duty to
keep the information confidential or was misappropriated; or
- The communication of material, nonpublic information in violation
of a confidentiality obligation where the information leads to a
purchase or sale of securities.
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(1) Who is an Insider? The concept of "insider" is broad. It
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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
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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
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liable for disclosing to others the dates on which reports on various
companies would appear in The Wall Street Journal and whether or not
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those reports would be favorable.
3) What is Nonpublic Information? Information is nonpublic unless it
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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
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Street Journal or another publication of general circulation is
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considered public. Market rumors are not considered public
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information.
(4) Not Certain if You Have "Inside" Information? If you have any
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doubts about whether you are in possession of material nonpublic
information, consult with the Company's Compliance Officer.
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B. Penalties for Insider Trading.
Penalties for trading on or communicating material, nonpublic
information are severe, both for the individuals involved in the
unlawful conduct and for their employers. A person can be subject to
some or all of the penalties set forth below even if he or she does
not personally benefit from the violation. Penalties include:
- Administrative penalties;
- Civil injunctions;
- Disgorgement of profits;
- Jail sentences;
Fines for the person who committed the violation of up to three times
the profit gained or loss avoided (per violation, or illegal trade),
whether or not the person actually benefited from the violation; and
Fines for the employer or other controlling person of the person who
committed the violation of up to the greater of $1,000,000 or three
times the amount of the profit gained or loss avoided (per violation,
or illegal trade).
In addition, any violation of the procedures set forth in this
Compliance Manual can be expected to result in serious sanctions by
the Company, including dismissal of the persons involved.
C. Policy Statement Regarding Insider Trading.
The Company expects that each of its employees will obey the law and
not trade on the basis of material, nonpublic information. In
addition, the Company discourages its employees from seeking or
knowingly obtaining material nonpublic information. The Company
requires approval for each of its Managing Directors, officers and
employees to serve as an officer or director of a company having
Publicly-Traded Securities.
D. Procedures to Prevent Insider Trading.
As indicated above, because the Company does not have an investment
banking division or affiliate and because the Company prohibits its
Managing Directors, officers and employees from serving as an officer
or director of a company having Publicly-Traded Securities, the
Company does not anticipate its Managing Directors, officers,
portfolio managers and employees routinely being in receipt of
material, nonpublic information except with respect to UAM and closed-
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end investment companies advised by the Company. However, Company
employees may from time to time receive such information. If any such
person receives any information which may constitute such material,
nonpublic information, such person (i) should not buy or sell any
securities
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(including options or other securities convertible into or
exchangeable for such securities) for a personal account or a client
account, (ii) should not communicate such information to any other
person (other than the Compliance Department), and (iii) should
discuss promptly such information with the Compliance Department. The
Compliance Department is defined as the Compliance Officer, the
Compliance Manager, and any other person specifically assigned to
undertake Compliance Department tasks by the Compliance Officer. Under
no circumstances should such information be shared with any persons
not employed by the Company, including family members and friends. It
is recommended that each employee contacting an issuer or analyst (i)
identify himself as associated with the Company, (ii) identify the
Company as an investment management firm, and, (iii) after the
conversation, make a memorandum memorializing the conversation with
the issuer or analyst (including the beginning of the conversation
where the employee identified himself as associated with the Company).
III. OTHER CONFIDENTIAL INFORMATION
A. Confidential Information Defined.
As noted above, even if the Company and its employees do not receive
material, nonpublic information (i.e., "inside" information), the
Company or its employees may receive other confidential or sensitive
information from or about the Company's parent holding company and the
Company's clients, and the Company's employees may receive
confidential or sensitive information about the Company's affairs.
Such confidential or sensitive information may include, among other
things:
. The name of the client. The Company is obligated by law not to
divulge or use its clients' names without their consent.
. Financial or other information about the client, such as the
client's financial condition or the specific securities held in a
specific client's portfolio.
. The names of the securities on the Company's various buy and sell
lists.
. The name of any security under consideration for placement on any
buy or sell list.
. Any information privately given to an employee, that if publicly
known, would be likely to (i) affect the price of any security in
the portfolio of any client of the Company, and/or (ii) embarrass
or harm the client or the Company, the Company's parent holding
company (UAM) or any of the Company's affiliates.
Given the breadth of the above, all information that an employee
obtains through his or her association with the Company should be
considered confidential unless that information is specifically
available to the public.
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B. Policy Statement Regarding Use and Treatment of Confidential
Information.
All confidential information, whatever the source, may be used only in
the discharge of the employee's duties with the Company. Confidential
information may not be used for any personal purpose, including the
purchase or sale of securities for a personal account.
C. Procedures Regarding Use and Treatment of Confidential Information.
The Company encourages each of its employees to be aware of, and
sensitive to, such employee's treatment of confidential information.
Each employee is encouraged not to discuss such information unless
necessary as part of his or her duties and responsibilities with the
Company, not to store confidential information in plain view in public
areas of the Company's facilities where anyone entering the room may
see it, and to remove confidential information from conference rooms,
reception areas or other areas where third parties may inadvertently
see it. Particular care should be exercised if confidential
information must be discussed in public places, such as elevators,
taxicabs, trains or airplanes, where such information may be
overheard. Under no circumstances may confidential information be
shared with any person, including any spouse or other family member,
who is not an employee of the Company.
IV. CONFLICTS OF INTEREST INVOLVING PERSONAL SECURITIES ACCOUNTS
A. Fiduciary Duty to Avoid Conflicts of Interest Between Client Accounts
and Personal Accounts.
As noted above, because the Company and each of its officers,
directors, and employees is a fiduciary to the Company's clients, the
Company and such persons must avoid actual and apparent conflicts of
interest with the Company's clients. In any situation where the
potential for conflict exists, the client's interest must take
precedence over personal interests. This includes situations where a
client may be eligible for a "limited availability" investment
opportunity offered to an employee. Employees are not to make a trade
if the employee has reason to believe that the trade should first be
offered to the Company's clients. If there is any doubt, resolve the
matter in the client's favor and confer with the Compliance
Department.
If both an officer, director or employee of the Company and a client
of the Company are engaging in transactions involving a Publicly-
Traded Security (defined below) or a "Company Name" (defined below),
an actual or apparent conflict of interest could arise. In those
cases, transactions for client accounts must take precedence over
transactions for Personal Accounts (as hereinafter
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defined) and personal transactions that create an actual or apparent
conflict must be avoided.
B. Key Definitions.
(1) Personal Account. The "Personal Account" of an employee of the
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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
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includes all officers, directors and employees of the Company as well
as spouses, domestic partners and dependents. "Employee" also
includes long-term temporaries and on-site consultants.
(3) Reportable Securities. "Reportable Securities" are those
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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
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that Reportable Securities shall not include (1) equity securities
issued by mutual funds (note: mutual funds include PIC-
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advised mutual funds, but do not include closed end funds), and (2)
certificates of deposit, U.S. treasury bills and other U.S.
government-issued debt instruments.
(4) Pre-Clearance Securities. "Pre-Clearance Securities" are those
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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
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securities and options, warrants, rights or other securities related
to such Publicly Traded Securities that are on the various buy and
sell lists. Company Names also include the following securities
specifically: UAM stock and options, closed-end investment companies
advised by the Company. A list of Company Names is available in the
research library. In order to find out if a stock is a Company Name,
the Compliance Department should be contacted. If an employee of PIC
currently owns stock that is added to the buy list at some point in
the future, the employee must disclose this information in writing to
the Compliance Dept. and to the respective investment committee. This
only applies to employees who are considered "Access" or "Control"
persons of the firm. "Access" or "Control" persons are those PIC
employees who are Managing Directors, Portfolio Managers, Portfolio
Assistants, Research Analysts, Research Assistants, or any person who
works in the Research Library. The employee is subject to the 60 day
holding period restriction effective the day the stock is added to the
PIC Buy list.
C. Policy Statement Regarding Trading for Personal Accounts.
The Company does not wish to prohibit or even discourage responsible
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personal investing by its employees. The Company believes that
personal investing can sharpen the investment acumen of employees to
the ultimate benefit of clients. However, the Company recognizes that
the personal investment transactions of its employees demand the
application of a strict code of ethics and must be appropriately
circumscribed so as to not create a high level of distraction. The
Company requires that all personal investment transactions be carried
out in a manner that does not endanger the interest of any client or
create any apparent or actual conflict of interest between the Company
or the employee, on the one hand, and the client, on the other hand.
At the same time, the Company believes
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that if investment goals are similar for clients and employees, it is
logical and even desirable that there be common ownership of some
securities. Therefore, the Company has adopted the procedures set
forth below.
D. Procedures Regarding Trading for Personal Accounts.
(1) Trading Procedures. The following procedures must be followed by
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all officers, directors and employees of the Company before buying or
selling securities for a Personal Account.
(i) Confirm That Not in Receipt of Inside Information.
Each officer, director and employee wishing to buy or sell
a security for a Personal Account should first confirm that
he or she is not in receipt of any material, nonpublic
information (i.e., "inside information") that would affect
the price of that security.
(ii) Confirm That the Trade is Not an Opportunity That Should Be
Offered to Company Clients.
Employees are not to make a trade if the employee has
reason to believe that the trade should first be offered to
the Company's clients, such as the situation where a client
may be eligible for a "limited availability" investment
opportunity offered to an employee. If you have any doubt,
resolve the matter in the client's favor and confer with
the Compliance Department.
(iii) Seek Pre-Approval of all Trades Made in "Pre-Clearance
Securities," including "Company Names."
Any officer, director or employee wishing to buy or sell
any publicly traded equity security or fixed income
security that is eligible for client investment (see
definition above) for any Personal Account shall request
approval to buy or sell such Security by completing and
submitting to the Trading Desk an "Intention to Execute
Employee Personal Trades" form (a sample form is attached).
Approval for the trade must be obtained from the Trading
Desk in writing prior to the trade being executed. Persons
wishing to obtain pre-approval while out of the office
should make sure that someone inside the office (such as
your assistant) obtains the necessary pre-approval. Do not
rely on the Trading Desk to complete your paperwork. The
Trading Desk cannot provide verbal authorizations for
trades except in the following circumstances:
If you are traveling and you cannot reach your assistant to
process a pre-approval form, you need to contact any Vice
President in Trading (VPT) to obtain verbal approval. If
the trade is within the guidelines and is approved
verbally, the VPT will time stamp a pre-approval form.
Trading will fill out your name and the name of the stock
that was
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approved, but will not sign the form. The form will be
signed after you, or someone acting on your behalf,
completes the form. The form will then be signed by any
VPT. Once the traveler is in receipt of the Intention to
Trade form, the traveler must sign the bottom of the
Intention to Trade form as acknowledgment of approval and
execution of the trade.
(iv) No Open Orders for Clients.
A request to trade a Pre-Clearance Security will be
approved automatically if the security is not a Company
Name. If the security is a Company Name, the request will
be approved only if there are no open orders for clients to
buy or sell the same security at the time the request is
submitted.
(v) Prompt Execution; No Limit Orders; No Option Writing. All
approved trades must be executed promptly. For Pre-
Clearance Securities that are Company Names, this means
before the close of business on the day the approval is
given. For Pre-Clearance Securities that are not Company
Names, this means before the close of trading on the third
business day after the day approval is given. If the trade
is not executed promptly within these limits, another
"Intention To Execute Employee Personal Trades" form must
be submitted. No Pre-Clearance Security may be the subject
of an open limit order or stop loss order that continues in
effect beyond the limited execution periods specified
above. No employee may write options on a Pre-Clearance
Security that is a Company Name.
(vi) Contrary Positions: Trading in the Opposite Direction from
Clients. Trades for Personal Accounts should be consistent
with recent trades that the Company has placed in the same
security on behalf of clients. Therefore, an employee
generally should not take a position in a Company Name
contrary to the position taken by the Company for its
clients. A trade that is not consistent with client
activity should be based on specific need and should be
accomplished in a manner that will likely have no material
impact on the market price of the Company Name because of
the size of the proposed trade, the daily trading volume of
the Company Name, or other factors. If a trade is a
contrary trade, that fact should be noted on the "Intention
To Execute Employee Personal Trades" form. Contrary
positions will be allowed if they are taken to met a
personal financial necessity (please specify the
necessity). Contrary positions will not be allowed to
facilitate an investment strategy decision or strictly for
financial gain. Gains taken for tax benefit will not be
permitted.
(2) Prohibition on New Issue Purchases. Officers, directors and
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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
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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,
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directors and employees who purchase private placements (i.e.,
restricted or unregistered securities) may do so subject to the
following restrictions. The private placement must be approved in
advance by the Compliance Officer - for any person involved in making
investment recommendations for the Company. The investment will be
disallowed if it represents a present or future conflict for the
Company. The private placement must be acquired on terms that are
similar to the terms offered to other private investors. If the
acquiring employee has any specific knowledge of an imminent public
offering or has any other material nonpublic information about the
issuer that is not available to other similarly situated private
investors, the private placement should not be acquired. Any employee
wishing to dispose of a private placement that has subsequently become
registered or converted into a freely tradable security must also
obtain prior approval from the Compliance Department. Any employee
owning a private placement is prohibited from contributing analysis or
recommendations regarding such security or its issuer to the Company's
Investment Committee. Private placements include investments in
private investment partnerships, but do not include the portfolio
securities of such partnerships (for example, a distribution from a
venture capital partnership of a stock that has gone public can be
sold immediately).
(4) Ban on Short-Term Trading Profits. All officers, directors and
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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.
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In appropriate circumstances (e.g., financial need, extreme market
conditions, unexpected corporate developments, discovery of
inadvertent violation), the Compliance Department may grant an
exception or waiver to permit specifically requested trading. A
memorandum describing the scope of circumstances of any such
waiver/exception shall be created and maintained in the employee's
files and part of the Company's books and records.
(6) Reports of Personal Transactions and Securities Ownership.
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(i) Submission of Reports. In order for the Company to monitor
compliance with its insider trading and conflict of interest
policies and procedures, each employee of the Company shall
submit:
a. a signed "Quarterly Personal Transaction Report" (a form of
which is attached) for all trades in Reportable Securities
in each of his or her personal accounts. The report shall
be submitted to the Compliance Department within ten (10)
calendar days following the end of each calendar quarter
regardless of whether any trading activity took place in
that account during the quarter;
b. a signed "Initial Holdings Report" (a form of which is
attached) for all securities in each of his or her personal
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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
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accounts. The report shall be submitted to the Compliance
Department within ten (10) calendar days following the end
of the annual period.
If the tenth day is not a work-day, then the report must be
submitted earlier. The employee should sign and submit the
report certifying the completeness of the information included
therein and certifying certain other matters. The reports
contain important acknowledgments.
(ii) Review and Retention of Reports. The Compliance Department
shall promptly review each Quarterly Initial and Annual
Personal Transaction Reports with respect to the quarterly
report, the Compliance Department will compare the
transactions reported in Pre-Clearance Securities and Company
Names against the lists of Company Names and the Pre-Clearance
Forms that were prepared during the quarter to determine
whether any violations of the Company's policies or of the
applicable securities laws took place. If the Compliance
Department is aware that any employee's Quarterly Initial and
Annual Personal Transaction Report fails to contain all
required information, the Compliance Department shall promptly
contact such employee to obtain the missing information. The
Company shall retain all Quarterly Initial and Annual Personal
Transaction Reports as part of the books and records required
by the Advisers Act and the rules promulgated thereunder.
(iii) Annual Acknowledgment of Procedures. Each employee shall
submit an annual acknowledgment that the employee has received
a copy of the current version of this Personal
Trading/Confidential Information Policy Statement and
Compliance Procedures of the Company and is familiar with such
Statement and Compliance Procedures. It shall be the
responsibility of the Compliance Department to ensure that a
copy of the current Policy Statement and Compliance Procedures
is circulated to each employee prior to May 31 each year.
E. Additional Restrictions.
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(1) Directorships Require Approval. Employees should discuss with the
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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
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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
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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
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is as important as the assessment of the gift's value in the
employees- judgment. (Rose Bowl tickets for employees and their
families are considered de minimis and may be accepted.)
V. SANCTIONS
A. Procedural Noncompliance.
Noncompliance with the procedural requirements of this Code of Ethics
(e.g., failure to submit quarterly reports in a timely manner) shall
be noted. Repeated noncompliance (i.e., three similar failures to
comply with procedural requirements within a one year period) will be
considered a violation and may result in disciplinary action.
B. Violations and Trading Noncompliance.
Failure to comply with the preapproval requirements and/or substantive
prohibitions of this Code of Ethics with respect to trading activity
may result in immediate disciplinary action even for "first-time
offenses." In this regard, the Company believes that trading activity
which creates an actual or apparent
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conflict of interest constitutes a clear violation and will generally
always result in disciplinary action absent highly extenuating
circumstances.
C. Extenuating Circumstances.
The Company recognizes that instances of inadvertent noncompliance or
violation may occur or that extenuating circumstances may apply to
specific instances of noncompliance or violation. In such an event,
the employee shall immediately notify the Compliance Department which
shall have discretion to determine appropriate remedial action.
D. Disciplinary Actions.
The Company may take one or more of the following disciplinary
actions: issuing a disciplinary memorandum; issuing a violation
report; issuing a letter of reprimand; requiring disgorgement of
profits; requiring trade to be broken at employee's expense; requiring
corrective action; suspension of trading privileges; requiring
employee to have broker send the Company duplicate account statements;
requiring the consolidation of employee accounts with certain brokers;
monetary fines; and dismissal. Absent special circumstances, the
disciplinary actions set forth on the attached Schedule of
Disciplinary Actions will be applied.
E. Trading Department Sanctions.
If any VP of Trading fails to fully comply with the procedures for
approving personal trades, the VP will be personally subject to the
sanctions as stated in this policy. Where the employee has requested
the approval of a trade that violates these policies, the employee is
also subject to the sanctions as stated in this policy.
VI. RESPONSIBILITIES OF COMPLIANCE DEPARTMENT
A. Making Compliance Manageable
The Compliance Department will do everything it can to make compliance
with the Company's Code of Ethics easy. Among the things that the
Compliance Department will do are the following:
(1) Be Available. The Compliance Department will consist of enough
------------
individuals so that there is always access to a representative of the
Compliance Department.
(2) Keep Company Lists Current. The Compliance Department will make
--------------------------
sure that employees have access through the research library to
current Company Lists so that Company Names can be readily identified.
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(3) Update Forms and Assist in Reporting. The Compliance Department
------------------------------------
will make sure that all employees have access to the forms necessary
to report personal securities transactions. The Compliance Department
will assist employees in making arrangements to accommodate vacation
and travel schedules that might interfere with timely pre-clearance,
execution and/or report submission.
(4) Keep Current Employee List. The Compliance Department will
--------------------------
maintain a current list of all employees covered by this Code of
Ethics so that employees can easily assure themselves that all persons
covered by the definition of "employee" (e.g., family members) are
correctly identified. Other information, such as identification of
brokerage accounts, will also be maintained by the Compliance
Department.
(5) Respect Confidentiality. The Compliance Department understands
-----------------------
the sensitivity of personal financial information and will maintain
all information in a confidential manner that respects each individual
employee's privacy.
VII. SUMMARY
A. Importance of Adherence to Procedures.
It is very important that all employees adhere strictly to the
Personal Trading/ Confidential Information Compliance Procedures. Any
violations of such policies and procedures may result in serious
sanctions, including dismissal from the Company.
B. Questions.
Any questions regarding the Company's policies or procedures regarding
insider trading, confidential information and conflicts of interest
should be referred to the Compliance Department.
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Schedule of Disciplinary Action
-------------------------------
Set forth below are the typical disciplinary actions that will be taken in the
event of noncompliance with, or violation of, this Code of Ethics. Provident
Investment Counsel is an "at will" employer and reserves the right to impose
different penalties at any time, including immediate dismissal. Only certain
types of events are listed; other events of noncompliance (also referred to as
procedural non-compliance) or violations will be dealt with on a case-by-case
basis. Exceptional circumstances may warrant more lenient or severe action, and
this Schedule may be overridden by the Compliance Officer with the consent of a
majority of the Managing Directors. All fines on disgorgement amounts will be
contributed by the Company to a non-profit organization of the Company's
choosing. The Schedule of Disciplinary Action is to be strictly construed
except in exceptional circumstances, such as: personal or family illness, death
in family, sequestered jury service, or any other involuntary emergency
absences.
1. Examples of Procedural Noncompliance
------------------------------------
<TABLE>
<CAPTION>
*Event *Event 2nd Occurrence* 3rd Occurrence* Subsequent*
<S> <C> <C> <C> <C>
Late report Disciplinary Disciplinary Disciplinary Violation report
(pre-clearance or memorandum memorandum and memorandum and and $500 fine
Failure to submit Disciplinary Disciplinary Disciplinary Disciplinary
report or memorandum: must memorandum and memorandum and memorandum and
Report submitted
with missing
trades: Disciplinary Disciplinary Disciplinary Violation report
Non-Company memorandum memorandum and memorandum and and $500 fine
Names Violation report Violation report Violation report Violation report
Company and $500 fine and $1,000 fine and $2,500 fine and $5,000 fine
Names
Unauthorized Disciplinary Disciplinary Violation report, Violation report,
short-term memorandum and memorandum disgorgement and disgorgement and
trading
2. Examples of Violations
----------------------
Late execution on Disciplinary Disciplinary Violation report Violation report
pre-cleared trade memorandum and memorandum and and $500 fine and $1,000 fine
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Failure to Disciplinary Violation report Violation Report Violation Report
pre-clear memorandum and and $500 fine and $1,000 fine and $5,000 fine
</TABLE>
ANNUAL SECURITIES OWNERSHIP REPORT
for 1999
Please complete the chart below for any holdings you have as of December 31,
1999 and return it to Kathy Mesa by March 3, 2000. Be sure to include any
-------------
private investment holdings (non-public stock holdings), stocks and bonds.
This applies to any stocks or bonds you hold in an IRA account, self-directed
-------------
401k plan, brokerage account or bank account. Also, do not include mutual
funds or U.S. Government Securities.
You may attach copies of all brokerage statement, where necessary. Statements
should cover the year ending 12/31/99. If you do not have any securities
holdings, please write "NONE" on the form.
<TABLE>
<CAPTION>
# of Shares Owned Market Value Date
Security Name As of 12/31/99 As of 12/31/99 Acquired
============================================================================
<S> <C> <C> <C>
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</TABLE>
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___________________________________ _____________________________
Employee Name (Print) Signature
_____________________________
Date
INITIAL HOLDINGS REPORT
As part of the SEC's and ICAA's requirements for personal trades, we are
requesting that each employee prepare a detail of their current holdings.
Please complete the chart below for any holdings you have as of your start date.
Be sure to include any private investment holdings (non-public stock holdings),
stocks and bonds. This applies to any stocks or bonds you hold in an IRA
account, self-directed 401k plan, brokerage account or bank account. Do not
-------------
include mutual funds or U.S. Government Securities.
You may attach copies of all brokerage statement, where necessary. You may use
the most recent month end value as the current market value.
If you do not have any securities holdings, please write "NONE" on the form.
<TABLE>
<CAPTION>
# of Shares Owned Current Market Date
Security Name Value Acquired
=============================================================================
<S> <C> <C> <C>
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</TABLE>
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------------------------------- ---------------------------
Employee Name (Print) Signature
---------------------------
Date
Provident Investment Counsel
Quarterly Report of Securities Transactions
December 31, 1999
_______________________________ ---------------------------------
Name of Employee For the quarter ending
<TABLE>
<CAPTION>
=======================================================================================================
PIC
Date of Buy/ Stock Shares or Security
Trade Sell (tick) Amount Name Symbol Name of Broker Price
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_______________________________________________________________________________________________________
=======================================================================================================
</TABLE>
The transactions listed above are all the transactions in securities I have
effected for every account in my name, my spouse's name and the name of each of
my minor children, every account for which I act as trustee or executor, and
every other account I control including client accounts in which I have or
acquire any direct or indirect beneficial ownership, except (1) any such account
where I have no direct or indirect influence or control over investments and for
which I have provided no information used by others to make investment decisions
and (2) transactions in securities which are direct obligations of the United
States.
___________________________________ _____________________
Employee Signature Date
Directions:
-----------
1. A report on this form is required from every employee by Rule 204-2(a)12 of
the Investment Advisers Act of 1940. It is to be filed quarterly within
ten (10) days after the end of each quarter. If no securities transactions
have been effected during the quarter, you should submit a report for the
quarter indicating "no transactions".
2. In order to adhere to a high code of ethics and to protect the interests of
our clients, the following accounts are prohibited from trading in
securities which have been added to or deleted from the firm's approved
list until all purchases or sales have been completed for all client
accounts: all accounts in the name of employees, their spouses, their minor
children, accounts for which employees act as trustee or executor and
client accounts in which an employee has or acquires any direct or indirect
beneficial
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<PAGE>
ownership, except any such account where the employee has no direct or
indirect influence or control over investments and provides no information
used by others to make investment decisions.
3. All of this information will be kept confidential and will be made
available for inspection only to proper authorities.
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<PAGE>
PROVIDENT INVESTMENT COUNSEL
INTENTION TO TRADE FORM/EMPLOYEE PERSONAL TRADES
Employee Name: _____________________________________________
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Date Buy or PIC Name Shares Or Security Name Symbol Broker Price
Sell Amount
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
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</TABLE>
[_] Trade involves taking a contrary position to clients
Explanation of contrary position:___________ ______________________
Employee Signature
____________________________________________ ______________________
Date
<TABLE>
<CAPTION>
GUIDELINES
<S> <C>
Who should submit this form? What trades require approval?
All regular and long-term temporary PIC employees and on-site Stocks, options, OEX options, warrants and PIC-advised
consultants. closed-end mutual funds.
When should this form be submitted? What trades do not require approval?
---
Before the trade is placed. If traveling, refer to travel policy CDs, commercial paper, open-end mutual funds, banker
outlined in Code of Ethics. acceptances and U.S. government bonds, municipal bonds.
Whose trades are covered? Art short term trades acceptable?
PIC employees and any account over which employee controls Employees may not trade for short-term profits in PIC
---
investment decisions. names. Gains on any short-term trades (60 days or less)
in PIC names will be forfeited. Day trading (buying or
How is approval granted? selling in the same security in the same business day)
Approval is automatic for non-PIC Names. For PIC Names, approval in any securities is strictly prohibited.
will be granted if there are no open orders at time of submission.
Are contrary positions acceptable?
How long is approval valid? Yes, but only in accordance with procedures outlined in
The trade must be executed on the day approval is given for PIC Code of Ethics and must be explained above.
names, or within 3 business days for non-PIC names.
Are Initial Public Offerings (IPOs) and secondaries
Who grants the approval? allowed to be purchased? IPOs are not allowed. However,
Trading Department officers. trades of secondaries will be allowed on or after the
second business day after they begin trading on the
secondary market.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The PIC Trading Policy is designed to avoid the actual or apparent conflicts of
interest between the interests of PIC or its employees and the interests of
PIC's clients. The guidelines presented above address the most commonly asked
questions. Please refer to the PIC Trading Policy for a complete explanation of
these and other issues, or contact the Compliance Department directly.
-------------------------------------------------------------------------------
TRADING DEPARTMENT APPROVAL
Approval has been granted for the above transaction(s) in accordance with the
current PIC Personal Trading Policy and Compliance Procedures as indicated
below:
[_] Securities are not PIC Names (approval is automatic); trades must be
completed by c.o.b. on third business day after date on this form.
[_] Securities are PIC Names and there are no open orders for PIC clients to
buy or sell the above security(ies) at the time reviewed (see time stamp).
Notes (e.g., explain any unusual detail):______________________________________
_______________________________________________________________________________
________________________________ ___________________________________
21
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Vice President of Trading Signature Date and Time Stamp
22
<PAGE>
Employee Acknowledgment to PIC's Code of Ethics
------------------------------------------------
(Personal Trading Policy) Revisions
-----------------------------------
The undersigned acknowledges that he/she has received a copy of the foregoing
Personal Trading/Confidential Information Policy Statement and Compliance
Procedures, revised March, 2000, has read and understands the Procedures; and
agrees to abide by these Procedures.
____________________________ _____________________________________
Employee Name (Print) Signature
______________________________________
Date
PLEASE RETURN THIS FORM TO KATHY MESA BY
MONDAY, MARCH 27, 2000
----------------------
23
