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IRIDIAN ASSET MANAGEMENT LLC
276 Post Road West
Westport, CT 06880-4704
CODE OF ETHICS
and
CODE OF CONDUCT
Effective as of January 15, 1997
Adopted July 1, 1996
Revised September 18, 1996
Revised January 15, 1997
CODE OF ETHICS AND CONDUCT 1
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GENERAL BACKGROUND
Iridian Asset Management LLC is registered as an investment adviser
under the Investment Advisers Act of 1940 (the "Act"). As such, it and its
employees are subject to the Act and the rules and regulations promulgated
thereunder. In compliance with the Act, Iridian has adopted certain policies
which are embodied in its Code of Ethics and Code of Conduct.
ALL IRIDIAN PERSONNEL MUST ADHERE TO THE GENERAL PRINCIPLES AS WELL AS
COMPLY WITH THE SPECIFIC PROVISIONS OF THE CODE OF ETHICS AND CODE OF CONDUCT.
TECHNICAL COMPLIANCE WITH THE CODE OF ETHICS AND CODE OF CONDUCT AND ITS
PROCEDURES WILL NOT AUTOMATICALLY PREVENT SCRUTINY OF TRADES THAT SHOW A PATTERN
OF ABUSE OF AN INDIVIDUAL'S FIDUCIARY DUTIES TO CLIENTS.
FAILURE BY ANY IRIDIAN PERSONNEL TO ADHERE TO THE CODE OF ETHICS AND
CODE OF CONDUCT COULD RESULT IN SEVERE CONSEQUENCES FOR BOTH IRIDIAN AND IRIDIAN
PERSONNEL.
All Iridian Personnel are required to read these Codes carefully.
Iridian Personnel will be asked to sign an affidavit acknowledging compliance
with these Codes, and to make certain disclosures and to provide certain
information to the Adviser on a periodic basis. If Iridian Personnel have any
questions about these Codes and the policies and procedures contained herein,
please see the Chief Compliance Officer.
DEFINITIONS
The following definitions are used in the Code of Ethics and Code of Conduct.
"ACT" means the Investment Advisers Act of 1940.
"ADVISER" means Iridian Asset Management LLC.
"BENEFICIAL OWNERSHIP" means (i) the sole or shared power, directly or
indirectly, to vote or dispose of the subject Securities or (ii) the
opportunity, directly or indirectly, to profit or share in any profit derived
from the purchase or sale of the subject Securities. "Beneficial Ownership"
includes, but is not limited to, ownership of Securities held by members of the
immediate family sharing the same household and other interests identified in
Rule 16al(a)(2) promulgated under the Securities Exchange Act of 1934. For these
purposes, "immediate family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, and includes
adoptive relationships.
"CLIENT" means any current client of the Adviser.
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"CHIEF COMPLIANCE OFFICER" shall be the person designated on Schedule A.
"CODE" or "CODES" shall refer to the Code of Ethics and Code of Conduct of the
Adviser.
"EXCLUDED SECURITIES" include the following securities: (i) securities issued by
the United States government, (ii) short term debt securities which are
government securities within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, (iii) bankers' acceptances, (iv) bank certificates of
deposit, and (v) commercial paper.
"IRIDIAN PERSONNEL" means all employees, whether full-time or part-time, of the
Adviser. Any provisions of this Code that apply directly to Iridian Personnel
apply equally to accounts in the names of other persons in which Iridian
Personnel have Beneficial Ownership.
"INVESTMENT PERSONNEL" means (i) Portfolio Managers and (ii) other Iridian
Personnel (including securities analysts and traders), who provide information
and advice to Portfolio Managers regarding Client investment decisions. A list
of Investment Personnel is attached as Schedule A. Any provisions of this Code
that apply directly to Personal Securities Transactions by Investment Personnel
apply equally to transactions in accounts in the names of other persons in which
the Investment Personnel have Beneficial Ownership.
"MANAGEMENT COMMITTEE" shall be comprised of those persons designated on
Schedule A.
"PERSONAL SECURITIES TRANSACTION(S)" means transactions in Securities for the
account(s) in the names of Iridian Personnel, or for accounts in which Iridian
Personnel have Beneficial Ownership.
"PORTFOLIO MANAGERS" means those Iridian Personnel entrusted with the direct
responsibility and authority to make investment decisions affecting any Client.
A list of Portfolio Managers is attached as Schedule A. Any provisions of this
Code that apply directly to Personal Securities Transactions by a Portfolio
Manager apply equally to transactions in accounts in the names of other persons
in which the Portfolio Manager has Beneficial Ownership.
"PURCHASE OR SALE OF A SECURITY" includes, among other things, the writing of an
option to purchase or sell a Security.
"SECURITY" means any note, stock, treasury stock, bond, debenture, evidence of
indebtedness, certificate of interest or participation in any profit-sharing
agreement, collateral trust certificate, pre-organization certificate or
subscription, transferable share, investment contract, voting trust certificate,
certificate of deposit for a security, fractional undivided interest in oil, gas
or other mineral rights, or, in general, any interest or instrument commonly
known as a "security," or any certificate or interest or participation in
temporary or interim certificate for, receipt for, guarantee of, or warrant or
right to subscribe to or purchase (including options) any of the foregoing. The
term "Security" shall not include "Excluded Securities."
CODE OF ETHICS AND CONDUCT 3
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CODE OF ETHICS
I. STATEMENT OF PRINCIPLES
The Adviser has adopted this Code of Ethics and the accompanying
procedures and forms to govern personal securities investment activities by all
Iridian Personnel. Although this Code contains a number of specific standards
and policies, there are three key principles embodied throughout the Code.
- THE INTERESTS OF CLIENTS MUST ALWAYS BE PARAMOUNT.
Iridian Personnel have a legal, fiduciary duty to place the interests
of the Clients first. Although in many instances Iridian Personnel may own
securities and engage in Personal Securities Transactions in securities in which
Clients also may have an ownership interest, Iridian Personnel, in any decision
relating to their personal investments, must scrupulously avoid serving their
own interests ahead of those of any Client.
- IRIDIAN PERSONNEL MAY NOT TAKE INAPPROPRIATE ADVANTAGE OF THEIR
RELATIONSHIP TO OUR CLIENTS.
Iridian Personnel should avoid any situation (unusual investment
opportunities, perquisites, accepting gifts of more than token value from
persons seeking to do business with the Adviser or its Clients, ETC.) that might
compromise, or call into question, the exercise of their fully independent
judgment in the interests of Clients.
- ALL PERSONAL SECURITIES TRANSACTIONS SHOULD AVOID ANY ACTUAL,
POTENTIAL OR APPARENT CONFLICTS OF INTEREST.
Although all personal securities transactions by Iridian Personnel must
be conducted in a manner consistent with this Code, the Code itself is based
upon the premise that Iridian Personnel owe a fiduciary duty to Clients, and
should avoid any activity that creates an actual, potential or apparent conflict
of interest. Before entering into a personal securities transaction, Iridian
Personnel should ask themselves what effect it would have on their reputation -
and Iridian's - if the transaction were described on the front page of THE NEW
YORK TIMES or THE WALL STREET JOURNAL.
CODE OF ETHICS AND CONDUCT 4
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II. PROHIBITED PURCHASES AND SALES OF SECURITIES
A. IN A PERSONAL SECURITIES TRANSACTION, PORTFOLIO MANAGERS MAY NOT:
1. Purchase or Sell a Security within seven calendar days before and
after the execution of a trade in the same Security. If the
Adviser is engaged in a trading program extending over several
trading days, the prohibition on trading by Portfolio Managers
begins seven trading days prior to the first Client transaction in
that program, and ends seven trading days after the last
transaction in that program.
B. IN A PERSONAL SECURITIES TRANSACTION, PORTFOLIO MANAGERS AND INVESTMENT
PERSONNEL MAY NOT:
1. Acquire any Security in an initial public offering.
2. Profit in a Personal Securities Transaction from the purchase and
sale, or sale and purchase of the same or equivalent Securities
within 60 calendar days (a "Short-Term Trade"). This restriction
does not apply to:
(a) A Short-Term Trade involving Excluded Securities;
(b) A Short-Term Trade for which express prior written approval
has been received from the Chief Compliance Officer of the
Adviser;
(c) A Short-Term Trade that is non-volitional on the part of
Iridian Personnel; or
(d) A Short-Term Trade resulting from an automatic dividend
reinvestment plan.
3. Serve on the board of directors of a publicly traded company
without prior authorization from the Advisor based upon a
determination that such service would be consistent with the
interests of the Clients. Investment personnel that serve on such
boards of directors are not permitted to participate in any
investment decisions made by the Advisor involving securities of a
company on whose board they serve. See VI.A.
4. Acquire any Security in a private offering without the prior
written consent of the Chief Compliance Officer. Furthermore,
should written consent be given, Investment Personnel are required
to disclose such investment when participating in the Adviser's
subsequent consideration of an investment in such issuer. In such
circumstances, the Adviser's decision to purchase securities of
the issuer should be subject to an independent review by
Investment Personnel with no personnel interest in the issuer.
C. PORTFOLIO MANAGERS, INVESTMENT PERSONNEL AND IRIDIAN PERSONNEL MAY NOT:
1. Execute a Personal Securities Transaction on a day during which
the Adviser has a pending "buy" or "sell" order in that Security,
until the Adviser's order is executed or withdrawn;
CODE OF ETHICS AND CONDUCT 5
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2. In any calendar year, receive a gift or anything else (for
example, air fare, hotel accommodations, etc.) with a value of
more than $100 from any single person or entity that does business
with or on behalf of the Adviser (see VI.B.) or
3. Execute a Personal Securities Transaction without the prior
written authorization of the Chief Compliance Officer of the
Adviser.
III. EXEMPTED TRANSACTIONS
A. The provisions described above under Section II. A., B. and C.
captioned "Prohibited Purchases and Sales of Securities" do not
apply to:
1. Purchases or Sales of Excluded Securities;
2. Purchases or Sales of options contracts on a broad-based market
index;
3. Purchases or Sales of Securities which are not eligible for
Purchase or Sale by the Adviser or not ordinarily Purchased or
Sold by the Adviser on behalf of its Clients, E.G., securities of
any investment company registered under the Investment Company Act
of 1940, Purchases or Sales of any Securities of an issuer with a
market capitalization (outstanding shares multiplied by the
current price per share) less than $500 million;
4. Purchases or Sales of any Securities in any transaction, or series
of transactions, involving 2000 shares or less in the aggregate of
an issuer with a market capitalization (outstanding shares
multiplied by the current price per share) greater than $500
million if the Iridian Personnel had no prior knowledge of
transactions in such security by the Adviser, PROVIDED, HOWEVER,
THAT PRECLEARANCE IS STILL REQUIRED FOR THESE TRANSACTIONS;
5. Purchases or Sales of Securities effected in any account over
which Iridian Personnel has no direct or indirect influence or
control, or in any account of the Iridian Personnel which is
managed on a discretionary basis by a person other than such
Iridian Personnel and with respect to which such Iridian Personnel
does not in fact influence or control such transactions;
6. Purchases or Sales of Securities which are non-volitional on the
part of Iridian Personnel (e.g., the receipt of stock dividends);
7. Purchases of Securities made as part of automatic dividend
reinvestment plans;
8. Purchases of Securities effected upon the exercise of rights
issued by an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from such
issuer, and sale of such rights so acquired; and
9. All other transactions contemplated by Iridian Personnel which
receive the prior approval of the Chief Compliance Officer in
accordance with the Adviser's preclearance procedures.
IV. PRECLEARANCE OF PERSONAL SECURITIES TRANSACTIONS
All Iridian Personnel wishing to engage in Personal Securities
Transactions which are not Exempted Transactions must obtain prior verbal
authorization of any such Personal Securities Transaction from the Chief
Compliance Officer or any Trader, or such other person or persons that the Chief
Compliance Officer may from time to time designate to make such authorizations.
Personal Securities Transactions which are not Exempted Transactions proposed to
be engaged in by the Chief Compliance Officer shall require prior
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verbal authorization of a Trader or a member of the Management Committee.
If there are any questions about whether any Iridian Personnel may
engage in Personal Securities Transactions, such questions shall be resolved by
the Chief Compliance Officer. Any doubts shall be resolved in favor of
refraining from trading.
Any such verbal authorization of Personal Securities Transactions which
are not Exempted Transactions shall promptly be memorialized in writing and
submitted to the Chief Compliance Officer.
Any authorization so provided is effective until the close of business on
the third trading day after the authorization is granted. If an order for the
Personal Securities Transactions which are not Exempted Transactions is not
placed within that time period, a new authorization must be obtained. If the
order for the transaction is placed but not executed within that time period, no
new authorization is required unless the person placing the original order
amends the order in any manner.
V. TRANSACTION AND ACCOUNT POSITION REPORTING REQUIREMENTS
A. DISCLOSURE OF PERSONAL BROKERAGE ACCOUNTS. At the commencement of
employment, all Iridian Personnel are required to submit to the Chief
Compliance Officer the names and account numbers of all of their
personal brokerage accounts, brokerage accounts of members of their
immediate families, and any brokerage accounts which they control or in
which they or an immediate family member has Beneficial Ownership. Each
of these accounts is required to furnish duplicate confirmations and
statements to the Adviser. The Chief Compliance Officer shall review,
or cause to be reviewed, each confirmation from such accounts of
Iridian Personnel.
B. ANNUAL REPORTING REQUIREMENTS. All Iridian Personnel are required to
disclose all personal Securities holdings upon commencement of
employment, and thereafter on a periodic basis. At the commencement of
employment and, thereafter, at the beginning of the first quarter of
each fiscal year, all Iridian Personnel are required to certify that
they have read and understand the Codes and that they have complied
with its requirements throughout the prior fiscal year.
C. QUARTERLY REPORTING REQUIREMENTS. All Iridian Personnel shall report to
the Adviser the following information with respect to transactions in
any Security in which such person has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership in the Security:
1. The date of the transaction, the title and the number of shares,
and the principal amount of each Security involved;
2. The nature of the transaction (I.E., purchase, sale or any other
type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or through whom the
transaction
CODE OF ETHICS AND CONDUCT 7
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was effected.
Such reports shall be made no later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates was
effected.
For Iridian Personnel, such reports will be deemed to be made if the
executing broker provides to the Chief Compliance Officer, on a timely basis,
duplicate copies of confirmations of all Personal Securities Transactions and
copies of periodic statements for all securities accounts.
Not later than 10 days after the end of each calendar quarter, all
Iridian Personnel are required to certify, in writing, that they have reported
all Personal Securities Transactions required to be disclosed or reported
pursuant to the requirements of this Code of Ethics. In addition, all Iridian
Personnel are required to certify, in writing, that they have reported all
Outside Interest and Outside Activities required to be disclosed or reported
pursuant to the requirements of the Code.
Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or she has
any direct or indirect Beneficial Ownership in the Security to which the report
relates.
Iridian Personnel need not make such a report with respect to
transactions effected for any account in which they may have Beneficial
Ownership, but over which they do not have any direct or indirect influence or
control (for example, a blind trust).
VI. OUTSIDE INTERESTS AND OUTSIDE ACTIVITIES.
A. OUTSIDE INTERESTS.
1. No Iridian Personnel shall accept employment outside the Adviser,
part-time or otherwise, without first obtaining the written
approval of the Management Committee. Furthermore, no Iridian
Personnel may accept a position as a director or officer of any
corporation, public or private, or as a general partner of any
partnership, or similar position with a similar entity (e.g.,
charitable organization, trust, limited liability company or
limited partnership) without the prior approval of the Management
Committee.
B. OUTSIDE ACTIVITIES.
1. OUTSIDE PERSONS. The Adviser understands that Iridian Personnel,
in the course of performing their duties, will develop
relationships in the investment community with others, including,
but not limited to, corporate executives, securities analysts and
research personnel, brokers and traders (collectively, "Outside
Persons").
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2. DISCLOSURE. On a quarterly basis, all Iridian Personnel must
disclose to the Chief Compliance Officer any outside activity with
any Outside Person which is paid for or sponsored by the Outside
Person, setting forth the identity of the Outside Person and the
relationship to the Adviser and Iridian Personnel, and the
activity conducted. From time to time, the nature of any outside
activity with an Outside Person will be reviewed and more specific
policies and guidelines may be established.
3. PROHIBITED ACTIVITIES. While an occasional guest of an Outside
Person at a meal or sporting event may be acceptable in certain
circumstances, it would not be appropriate at any time to accept
air fare, hotel or other accommodations, etc. from any Outside
Person, or to accept personal gifts with a value of more than $100
in any calendar year from any single person or entity that does
business with or on behalf of the Adviser. Usual or customary
promotional items received from Outside Persons or food items
consumed on the premises are not required to be reported.
VII. CONFIDENTIAL STATUS OF THE ADVISER'S PORTFOLIO
The current portfolio positions of the Adviser must be kept
confidential. If non-public information regarding the portfolio should become
known to any Iridian Personnel, whether in the line of duty or otherwise, he or
she should not reveal it to anyone unless it is properly part of his or her work
to do so. If anyone is asked about the Adviser's portfolio or whether a security
has been bought or sold, his or her reply should be that this is an improper
question and that this answer does not mean that the Adviser has bought, sold or
retained the particular security.
VIII. ENFORCEMENT AND PENALTIES
The Chief Compliance Officer shall review each confirmation and brokerage
statement describing Personal Securities Transactions by Iridian Personnel. The
confirmations and brokerage statements shall be compared to the transactions of
the Adviser. If a transaction appears to be in violation of the Code, the
transaction will be reported to the Management Committee.
If a Portfolio Manager executes a Personal Securities Transaction within
seven calendar days before or after the execution of a trade in the same
Security by the Adviser, and receives a price more favorable than that received
by any Client, the Portfolio Manager will be required to make a charitable
contribution to a charity selected by the Adviser in the amount of the aggregate
price difference of the Personal Securities Transaction.
Portfolio Managers or Investment Personnel who profit from a Short-Term
Trade will be required to make a charitable contribution to a charity selected
by the Adviser in the amount of the profit made.
The Adviser may take additional action, as described below.
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IX. DUTIES AND POWERS OF THE ADVISER
The Management Committee of the Adviser shall determine the appropriate
response of the Adviser, taking into account all of the facts and circumstances
of the apparent violation. If a violation has, in fact, occurred, the Management
Committee shall, in its sole discretion, impose any one or more of the following
penalties:
1. Letter of censure to the person or persons involved;
2. Fines, in amounts to be determined by the Management Committee, to
be paid by the person or persons involved;
3. Suspension of employment of the person or persons involved; or
4. Termination of employment of the person or persons involved.
The Management Committee also may require such Iridian Personnel to
resign from any Outside Interests, and to return to an Outside Person the value
of the Outside Activity returned.
The Management Committee also may impose any penalty it deems
appropriate upon any person that has engaged in a course of conduct which,
although in technical compliance with the Code, shows a pattern of abuse by that
person of his or her fiduciary duties to Clients.
CODE OF ETHICS AND CONDUCT 10
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CODE OF CONDUCT
I. INSIDER TRADING AND SECURITIES FRAUD ENFORCEMENT ACT PROCEDURES
As a registered investment adviser under the Act, the Adviser must
establish and implement procedures designed to prevent insider trading and
securities fraud.
As prescribed by the Code of Ethics, each Iridian Personnel is required
to notify the Chief Compliance Officer of where his or her personal brokerage
accounts are maintained. This is done when the Iridian Personnel is hired and
when there is a change in this information. It is the responsibility of all
Iridian Personnel to notify promptly the Chief Compliance Officer of any changes
in his or her personal accounts.
Personal accounts are any accounts in the name of Iridian Personnel and
any accounts of family members in which the Iridian Personnel has a financial
interest or for which the Iridian Personnel has a Beneficial Interest.
Each Iridian Personnel is required to obtain prior approval on any
transactions effected in his or her personal accounts as set forth in the
preclearance procedures adopted by the Adviser.
Trades effected in all personal accounts will be reviewed periodically.
The purpose of these reviews will be to ensure that no violations of securities
laws have occurred. In this regard, all Iridian Personnel should keep the
following in mind when making personal investment decisions:
- Trading on inside information is illegal.
- Trading based on knowledge that large orders will be
executed for Clients (frontrunning) is considered
manipulative and is illegal.
If any Iridian Personnel believes that he or she is in possession of
material inside information, he or she must notify the Chief Compliance Officer
immediately.
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II. MEMORANDUM ON INSIDER TRADING
This memorandum explains procedures adopted by the Adviser to prevent
insider trading.
READ IT CAREFULLY. INSIDER TRADING IS ILLEGAL AND PUNISHABLE BY FINES
AND IMPRISONMENT.
THIS MEMORANDUM EXPLAINS THE CONDUCT PROHIBITED BY THE LAW OF INSIDER
TRADING. IT IS MEANT TO BE A GUIDELINE - AS THE LAW OF INSIDER TRADING DEVELOPS,
OTHER ACTIVITIES MAY FALL WITHIN THE SCOPE OF THE INSIDER TRADING LAWS.
READ THIS MEMORANDUM CAREFULLY. ALL IRIDIAN PERSONNEL WILL BE ASKED TO
SIGN A STATEMENT AFFIRMING THAT HE OR SHE HAS READ THIS CODE AND THAT HE OR SHE
UNDERSTANDS ITS CONTENTS AND WILL ABIDE BY THE PROCEDURES BEING ESTABLISHED.
NEW EMPLOYEES WILL BE ASKED TO SIGN SUCH A STATEMENT AT THE TIME THEY
JOIN THE ADVISER. BY SIGNING THIS STATEMENT, EACH IRIDIAN PERSONNEL ALSO AFFIRMS
THAT HE OR SHE WILL MAINTAIN THE CONFIDENTIALITY OF INFORMATION CONCERNING THE
ADVISER'S TRADING AND OTHER ACTIVITIES OF THE ADVISER AND ITS CLIENTS. IF
IRIDIAN PERSONNEL HAVE ANY QUESTIONS ABOUT WHAT CONDUCT IS PROHIBITED BY THE LAW
OF INSIDER TRADING, CONTACT THE CHIEF COMPLIANCE OFFICER IMMEDIATELY.
IGNORANCE OF THE LAW IS NO EXCUSE.
A. TRADING BY IRIDIAN PERSONNEL
The Adviser has adopted procedures to ensure that Iridian Personnel do
not trade on inside information.
Iridian Personnel have been instructed to arrange for daily
confirmations and monthly statements for all securities accounts to be sent to
the Chief Compliance Officer. Whenever Iridian Personnel open new accounts,
Iridian Personnel must arrange for the daily confirmations and monthly
statements for these accounts to be sent to the Chief Compliance Officer.
Employment of any Iridian Personnel may be terminated if it is determined that
he or she has not complied with this procedure.
In addition, Iridian Personnel must arrange for the daily confirmations
and monthly statements for any account in which Iridian Personnel own an
interest to be sent to the Chief Compliance Officer. Iridian Personnel may be
deemed to own an interest in someone else's account if Iridian Personnel share
in the profits earned in the other account have discretion over the account or
have any other financial interest in the other account. Iridian Personnel should
contact the Chief Compliance Officer if he or she has any questions about
whether Iridian Personnel own an interest in someone else's account. Iridian
Personnel must also arrange for the daily confirmations and monthly statements
for the securities accounts of his or her spouse and children and other persons
who live with Iridian Personnel to be sent to the Chief Compliance Officer.
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B. WHAT TO DO IF YOU LEARN INSIDE INFORMATION
It is not illegal to learn inside information. It is only illegal to
trade on such information. If any Iridian Personnel thinks that he or she may
have learned inside information, he or she must contact immediately the Chief
Compliance Officer or, in his absence, any member of the Management Committee.
UNTIL YOU SPEAK WITH THE CHIEF COMPLIANCE OFFICER OR, IN HIS ABSENCE, ANY MEMBER
OF THE MANAGEMENT COMMITTEE, DO NOT TRADE ON THE INFORMATION OR DISCUSS THE
POSSIBLE INSIDE INFORMATION WITH ANY OTHER PERSON.
If the Chief Compliance Officer concludes that such Iridian Personnel
may in fact have learned inside information, procedures will be established so
that other Iridian Personnel do not learn the inside information.
C. INVESTIGATIONS OF SUSPICIOUS TRADING
It is possible that the Exchanges, the NASD and the SEC may request
information from the Adviser concerning suspicious trading. Iridian Personnel
may be asked to sign a sworn affidavit affirming that, at the time of such
trading, he or she did not have any inside information about the securities in
questions. Employment of such Iridian personnel may be terminated if he or she
refuses to sign such an affidavit or cooperate with any such investigation. The
Adviser may submit these affidavits to the SEC.
D. THE ADVISER'S TRADING ACTIVITIES ARE CONFIDENTIAL
It is the duty of each Iridian Personnel to maintain the
confidentiality of information concerning the Adviser's trading. This
confidential information includes the Adviser's and its Clients' securities
positions, the timing and magnitude of trades, its trading plans and any
internally prepared analysis of particular securities or of the markets. Iridian
Personnel should take every practicable step you can to preserve the
confidentiality of this confidential information. For example:
1. Don't discuss confidential matters in elevators, hallways,
restaurants, airplanes, taxicabs or any place where you can be
overheard.
2. Don't gossip.
3. Don't read confidential documents in public places or discard
them where they can be retrieved by others.
4. Don't carry confidential documents in elevators, hallways, ETC.,
in an exposed manner.
5. Beware of the carrying quality of conversations conducted on
speaker telephones, in offices, on car or airplane telephones,
on cellular phones, ETC.
Obviously, a list such as this can only be suggestive. It is the
responsibility of each Iridian Personnel to take whatever practicable steps are
appropriate to preserve the confidentiality of confidential information.
CODE OF ETHICS AND CONDUCT 13
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The Adviser has a vital interest in the integrity of the securities
markets. Insider trading destroys that integrity. The Adviser is committed to
preventing insider trading and may terminate the employment of any Iridian
Personnel who engages in this illegal practice.
E. Conduct Prohibited by the Law of Insider Trading
This section is intended to provide information and guidance concerning
insider trading, which has become an enforcement priority of the Securities and
Exchange Commission and the Department of Justice. THIS SECTION IS A GUIDELINE -
AS THE LAW OF INSIDER TRADING DEVELOPS, OTHER ACTIVITIES MAY FALL WITHIN THE
SCOPE OF THE INSIDER TRADING LAWS. If any Iridian Personnel does not understand
the following summary or have any questions about the conduct prohibited by the
law of insider trading, please contact the Chief Compliance Officer.
1. THE BASIC PRINCIPLE: Disclose or Refrain.
Although insider trading law has become increasingly complex, the
prohibition against insider trading is simple: if you are in possession of
"inside" information you must either publicly disclose the information or
refrain from trading. The essence of the prohibition against insider trading is
this principle of "disclose refrain."
2. WHAT CONSTITUTES INSIDE INFORMATION.
Since the disclose or refrain obligation applies only to "inside"
information, it is important to recognize what constitutes "inside" information.
Simply, it is information which is (i) material, (ii) non-public, and (iii) the
use of which for trading purposes would create a breach of duty.
(a) MATERIAL INFORMATION. Information is material if there is a
substantial likelihood that a reasonable investor would
consider it important in deciding how to act. Several rules of
thumb can be helpful in assessing whether information is
material. First, information that, when disclosed, is likely
to have a direct effect on a stock's price should be treated
as material. Examples include information concerning impending
tender offers, significant earnings swings and other major
corporate events. Additionally, the decision to trade on
non-public information can itself be evidence of the
information's materiality.
(b) NON-PUBLIC INFORMATION. Information is non-public when it has
not been disseminated in a manner making it available to
investors generally. Information is public once it has
been publicly disseminated, such as when it is reported on the
Dow Jones Broad Tape, and investors have had a reasonable time
to react to the information. Once the information has become
public, it may be traded on freely.
(c) DISCLOSURE BREACHING A DUTY. Generally, a violation of the
insider trading prohibition occurs when a person violates a
duty owed either to the person on the other side of the
transaction or to a third party by trading on the
CODE OF ETHICS AND CONDUCT 14
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information. This duty may take one of several forms, which
include but are not limited to the following. As law of
insider trading develops other activities may fall within
the scope of the law.
(i) CORPORATE FIDUCIARIES. Fiduciaries, such as corporate
directors and officers, owe a duty not to use their
positions to take advantage of the holders of the
corporation's securities.
(ii) TEMPORARY INSIDERS. In addition to traditional insiders
(directors and officers), underwriters, accountants,
lawyers and consultants, as well as other persons who
have entered into special relationships of confidence
with a corporation, are also considered to be insiders
and come within the disclose or refrain prohibition.
(iii) RELATIONSHIP WITH THE MARKET. Certain persons who enter
into special obligations of trust and confidence with
purchasers and sellers in the market are also considered
insiders. These insiders include investment advisers,
market makers and SEC employees.
(iv) MISAPPROPRIATION: THEFT OF INFORMATION. Virtually anyone
- a financial printer, a newspaper reporter, or a
non-attorney employed by a law firm - can become subject
to the disclose or refrain prohibition merely by
obtaining material non-public information by unlawful
means or by lawfully obtaining such information and
illegally converting it. In essence, the
misappropriation theory prohibits a thief from profiting
from stolen information.
(v) TIPPEES. A tippee is a person who receives a "tip." He
is considered an insider and subject to the disclose or
refrain prohibition in two sets of circumstances.
1. DERIVATIVE LIABILITY. Under derivative
liability, a tippee essentially stands in the
shoes of the insider for purposes of the insider
trading prohibition. To be liable as a tippee
there must be a breach of duty by the original
insider in disclosing the information to the
tippee and the tippee must know, or have reason
to know, of this breach. The chain of tippee
liability can extend from one tippee to another
so long as each successive tippee is aware of
the original violator's breach.
2. LIABILITY UNDER RULE 14e-3. There is a special
SEC rule relating to tippee liability for
information relating to tender offers. Rule
14e-3 imposes the disclose or refrain
prohibition upon any person, including a tippee,
who is in possession of material non-public
information relating to a tender offer if (i)
the bidder has taken a "substantial step"
towards the commencement of a tender offer, and
(ii) the person in possession of the information
knows or has reason to know the information was
acquired from the bidder, the target or their
agents. Under this rule a duty does not have to
be breached by
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the person providing the information for a
tippee to be held liable. However, to be liable
for insider trading, the tippee must be aware
that the bidder, target or one of their agents
is the ultimate source of the information.
F. LAWFUL USE OF PUBLIC INFORMATION
Although insider trading is illegal, the federal securities laws permit
a trader to make use of information that is publicly available. Also, the
prohibition against insider trading does not punish sound market analysis and
legitimate trading practices.
For example, it is legal to use your superior skills in analyzing
public information to make profitable trades. It also is legal to trade on
market rumors if the source of the information is unknown and you have no reason
to believe that the source is an insider.
The law does not require that all traders in the market have equal
access to all information. However, when a person breaches a duty by disclosing
material non-public information, the law prohibits and severely punishes (civil
and criminal remedies include disgorgement of profits, treble damages, fines and
imprisonment) trading on that information.
G. CONCLUSION
Insider trading is a serious matter and it is important to be able to
recognize what constitutes impermissible trading. Again, if you have any doubt
whether a particular practice is permissible consult with the Chief Compliance
Officer as soon as possible and before you act.
CODE OF ETHICS AND CONDUCT 16
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SCHEDULE A
As of 7/24/00
PORTFOLIO MANAGERS:
David L. Cohen
Harold J. Levy
INVESTMENT PERSONNEL:
SECURITY ANALYSTS:
Michele Drasher
Robert Thomas Zankel
Caryn Seidman Becker
Andrew L. Weinberg
Vivien W. Liu
TRADERS:
Caroline B. Keenan
Courtney McKenna
Robert B. Shapiro
MANAGEMENT COMMITTEE:
David L. Cohen
Harold J. Levy
Jeffrey M. Elliott
Alice B. Hicks
CHIEF COMPLIANCE OFFICER:
Jeffrey M. Elliott
CODE OF ETHICS AND CONDUCT 17
