AMERICAN UNITED LIFE INSURANCE COMPANY(R)
AUL AMERICAN SERIES FUND, INC.
AMERICAN UNITED LIFE POOLED EQUITY FUND B
CODE OF ETHICS
Governing the Activities of Certain Officers, Directors, and Employees
I. Legal Requirement
The AUL American Series Fund, Inc., American United Life Pooled Equity
Fund B, (each a "Fund") and American United Life Insurance Company(R) ("AUL" or
the "Adviser") have adopted this Code of Ethics in accordance with Section 17(j)
of the Investment Company Act of 1940 (the "1940 Act"), Rule 17j-1 promulgated
thereunder, and Section 206 of the Investment Advisers Act of 1940 (the
"Advisers Act").
The 1940 Act and the Advisers Act impose certain restrictions on the
activities of investment advisers, investment companies, and their directors,
officers and employees. When dealing with any person, including the Fund, for
whom the Adviser acts as an investment manager ("Advisory Client"), officers,
directors and employees of the Adviser should be mindful of the fact that
Section 206 of the Advisers Act makes it unlawful for an investment adviser to,
among other things, directly or indirectly:
1. Employ any device, scheme, or artifice to defraud any client or prospective
client;
2. Engage in any transactions, practice, or course of business which operates as
a fraud or deceit upon any client or prospective client; and
3. Engage in any act, practice, or course of business which is fraudulent,
deceptive or manipulative.
In addition, with respect to the Fund and other registered investment companies
that are Advisory Clients, Rule 17j-1 under the 1940 Act imposes additional
restrictions. Rule 17j-1 makes it unlawful for any director, officer or employee
of a fund or of its investment adviser or principal underwriter (as well as
other persons), in connection with the purchase and sale by such person of a
security "held or to be acquired" by a fund:
1. To employ any device, scheme or artifice to defraud the fund;
2. To make to the fund any untrue statement of a material fact or omit to state
to the fund a material fact necessary in order to make the statements made, in
light of the circumstances under which they are made, not misleading;
3. To engage in any act, practice, or course of business which operates or would
operate as a fraud or deceit upon the fund; or
4. To engage in any manipulative practice with respect to the fund.
A security is "held or to be acquired" if within the most recent fifteen days it
(i) is or has been held by a fund, or (ii) is being or has been considered by
the fund or the Adviser for purchase by the fund, or (iii) consists of any
option to purchase or sell, or is any security convertible into or exchangeable
for, a Covered Security as defined in Section 2(a)(36) of the Investment
Adviser's Act.
II. General Principles
The Fund and AUL shall be governed by the following principles and
shall apply them to their directors, officers, employees and "Access Persons,"
as applicable.1
A. No Access Person shall engage in any act, practice or course of conduct that
would violate the provisions of Rule 17j-1 or Section 206 set forth above.
B. The interests of the Advisory Clients are paramount and come before the
interests of any Access Person or employee.
C. Personal investing activities of all Access Persons and employees shall be
conducted in a manner that shall avoid actual or potential conflicts of interest
with the Advisory
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1 (a) With respect to AUL, an "Access Person" is each director, officer or
employee of AUL who makes or participates in the determination of any
recommendation concerning the purchase and sale of securities or whose function
or duties relate to the determination of which recommendation shall be made, or
who, in connection with his or her duties, obtains any infor-mation concerning
which securities are being recommended prior to the effective dissemination of
such recommendations or the information concerning such recommendations. In
addition, Access Persons of AUL include any of the following persons who obtain
information concerning securities recommendations being made prior to the
effective dissemination of such recommendations or of the information concerning
such recommendations: (1) any person in a control relationship to AUL; (2) any
affiliated person (as defined in Section 2(a)(3) of the 1940 Act) (see Appendix
A) of such controlling person; and (3) any affiliated person of such affiliated
person. With respect to AUL, an Access Person shall not be deemed to include any
director, officer, or employee of AUL who is not actively engaged in or
associated with activities involving registered securities products or asset
management of such registered securities products on behalf of Advisory Clients.
(b) With respect to the Fund, an "Access Person" is (1) each director, trustee,
or officer of the Fund or the Adviser; (2) any natural person in a control
relationship (25% ownership) to the Fund or the Adviser; (3) each of those
employees of the Fund or the Adviser who in connec-tion with his or her regular
duties obtains information about the purchase or sale of a security by the Fund
or whose functions relate to the making of such recommendations. With respect to
the Fund, an Access Person shall not be deemed to include any director, officer,
or employee of the Adviser who is not actively engaged in or associated with
activities involving registered securities products or asset management of such
registered securities products on behalf of Advisory Clients.
Clients. Each Access Person shall promptly report to the Compliance Officer with
respect to any corporation or unincorporated enterprise in which he or any
members of his family has a material or substantial interest and which has in
the past or may in the future engage in transactions in competition with the
Adviser or any Advisory Client. A form of Conflict of Interest Statement is
attached.
D. Access Persons shall not use such positions, or any investment opportunities
presented by virtue of such positions, to the detriment of any Advisory Client.
E. Confidential information, such as marketing studies, anticipated new
products, investment activities, or any other information relative to the Fund's
or any other client's competitive position, are not to be discussed outside the
Fund or with unauthorized employees of the Adviser. Confidential information
must not even be discussed with family or close friends, because this would
impose on them a burden they should not be expected to understand or assume.
F. Directors, officers, and employees of the Fund and the Adviser are expected
to comply with all laws and agency regulations that affect the Fund or the
Adviser, including but not limited to the following: the Internal Revenue
Service, state and local taxing authorities, state insurance and securities
commissions, the National Association of Securities Dealers, and the Securities
and Exchange Commission. Requests for information from government agencies
should be submitted to the Law Department of the Adviser unless such requests
fall within the normal course of business of the Adviser.
III. Policy Regarding Insider Trading
A. Restriction on Trading or Recommending Trading
Each officer, director, and employee of the Fund and the Adviser is
reminded that it constitutes a violation of the federal securities laws for any
person to trade in or recommend trading in the securities of a company while in
possession of material, nonpublic information concerning that company, or to
disclose such information to any person not entitled to receive it if there is
reason to believe that such information will be used in connection with a trade
in the securities of that company. Violations of federal law may give rise to
civil as well as cri-minal liability, including the imposition of monetary
penalties. Tippees (i.e., persons who receive material, nonpublic information)
also may be held liable if they trade or pass along such information to others.
B. Definition of Material, Nonpublic Information
"Material information" is any information about a company which, if
disclosed, is likely to affect the market price of the company's securities or
to be considered important by an average investor in deciding whether to
purchase or sell those securities. Examples of information which should be
presumed to be "material" are matters such as dividend increases or decreases,
earnings estimates by the company, changes in the company's previously re-leased
earnings estimates, significant new products or discoveries, major litigation by
or against the company, liquidity or solvency problems, extraordinary management
developments, significant merger or acquisition proposals, or similar major
events which would be viewed as having materially altered the "total mix" of
information available regarding the
company or the market for any of its securities.
"Nonpublic information," often referred to as "inside information," is
information that has not yet been publicly disclosed. Information about a
company is considered to be non-public information if it is received under
circumstances which indicate that it is not yet in general circulation and that
such information may be attributable, directly or indirectly, to the company or
its insiders, or that the recipient knows to have been furnished by someone in
breach of a fiduciary obligation. Courts have held that fiduciary relationships
exist between a company and another party in a broad variety of situations
involving a relationship between a company and its lawyers, investment bankers,
financial printers, employees, technical advisers and others.
Information should not be considered to have been publicly disclosed until
a reason-able time after it has been made public (for example, by a press
release). Someone with access to inside information may not "beat the market" by
trading simultaneously with, or shortly after, the official release of material
information.
In addition to the general prohibition against trading while in possession
of material, nonpublic information, and against disclosing such information to
others who trade, there is a specific rule, Rule 14e-3 under the Securities
Exchange Act of 1934, which makes it unlawful to buy or sell securities while in
possession of material information relating to a tender offer, if the person
buying or selling the securities knows or has reason to know that the
information is nonpublic and has been acquired directly or indirectly from the
person making or planning to make the tender offer, from the target company, or
from any officer, director, partner or employee or other person acting on behalf
of either the bidder or the target company. This rule prohibits not only
trading, but also the communication of material, nonpublic information relating
to a tender offer to another person in circumstances under which it is
reasonably foreseeable that the communication will result in a trade by someone
in possession of the material, non-public information.
C. "Chinese Walls"
In order to guard against the inadvertent dissemination of any nonpublic
information about investments reviewed by personnel of the Fund or of the
investment adviser, the Fund may establish a set of policies and procedures (a
so called "Chinese Wall") designed to re-strict access to such information. If
this is deemed to be necessary, no information obtained by Fund or Adviser
personnel relating to any investment or prospective investment by the Fund may
be revealed to, or sought by, any person who is not a member of the Adviser's
Investment Department, the Adviser's Investment or Finance Committee, a director
of the Fund or the Adviser, or a member of the Law or Auditing Department. All
"access persons" of the Adviser would, under these procedures and if they are
adopted, be required to certify annually that they have read, understood, have
complied with and will comply with these Chinese Wall procedures.
D. Sanctions
Any officer, director, or employee of the Fund or the Adviser who knowingly
trades or recommends trading while in possession of material, nonpublic
information may be subject to civil and criminal penalties, as well as to
immediate suspension and/or dismissal.
IV. Substantive Restrictions
A. The price paid or received by a Fund or any other Advisory Client for any
security should not be affected by a buying or selling interest on the part of
an Access Person, or otherwise result in an inappropriate advantage to the
Access Person. To that end:
(1) no Access Person shall enter an order for the purchase or sale of a
security which such Access Person knows or should have known that an
Advisory Client is, or is considering, purchasing or selling until two days
after the Advisory Client's transactions in that security have been
completed unless the Compliance Officer determines that it is clear that,
in view of the nature of the security and the market for such security, the
order of the Access Person will not affect the price paid or received by
the Advisory Client, provided that the provisions of this paragraph IV.A
shall not apply to any director of the Fund who is not an "interested
person" of the Fund [as defined in Section 2(a)(19) of the Invest-ment
Company Act of 1940 (see Appendix A)] except with respect to securities
transactions where such director knew or, in the ordinary course of
fulfilling his or her official duties as a director of the Fund, should
have known that such security was being purchased or sold by the Fund or a
purchase or sale of such security was being considered by or with respect
to the Fund; and
(2) a Portfolio Manager2 of the Fund and an "Investment Person3" of the
Adviser may not buy or sell a security within seven days before or after
that Fund trades in the security.
B. In accordance with the insider trading policy set forth in Section III of
this Code of Ethics:
(1) No Access Person or director, officer, or employee of AUL may trade,
either for his or her own account or the account of another, or recommend
trading in a security while in possession of material nonpublic information
with respect to that security.
(2) Whenever an Access Person or director, officer, or employee of AUL
believes that he or she may have come into possession of material nonpublic
information about a public company, he or she personally must notify the
Law Department of the Adviser and should not discuss the information with
anyone else.
C. No "Investment Person" may acquire any securities issued as part of an
initial public offering of the issuer which is also being purchased or sold by
AUL for its General Account or on behalf of an Advisory Client.
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2 "Portfolio Managers" include those employees of a Fund, the Adviser or the
Distributor authorized to make investment decisions on behalf of the Fund.
3 An "Investment Person" includes any Portfolio Manager or employee of a Fund,
the Adviser or the Distributor, such as a securities analyst and trader, who
advises Portfolio Managers or executes their decisions.
D. Each Investment Person must seek written approval from the Compliance Officer
prior to directly or indirectly acquiring any beneficial interest in an initial
public offering ("IPO") or private placement transactions. The Compliance
Officer shall maintain a record of all such requests by Investment personnel to
acquire such securities, which shall include a description of the rationale
supporting the approval or denial of such requests, and whether the request was
ultimately approved or rejected. Such approval shall take into account, among
other factors, whether the investment opportunity should be reserved for an
Advisory Client or the Adviser and whether the opportunity is being offered to
such person because of his or her position with the Fund or the Adviser. Any
such Investment Person who has been authorized to acquire securities in an IPO
or a private placement must disclose his or her interest if he or she is
involved in the Fund's or the Adviser's consideration of an investment in such
issuer.
E. An Investment Person must not accept gifts in excess of limits contained in
Section 10(a) of the Rules of Fair Practice of The National Association of
Securities Dealers from any entity doing business with or on behalf of a Fund or
the Adviser.
F. An Investment Person shall not serve on the boards of directors of publicly
traded companies, or in any similar capacity, absent the prior approval of such
service by the Compliance officer following the receipt of a written request for
such approval. In the event such a request is approved, procedures shall be
developed to avoid potential conflicts of interest.
G. Unless otherwise determined by AUL or the Fund, any profits derived from
securities transactions in violation of paragraphs A, B, C, or D above, shall be
forfeited and paid to the appropriate Advisory Client for its benefit or for the
benefit of its shareholders. Gifts accepted in violation of paragraph E shall be
forfeited, if practicable, and/or dealt with in any manner determined
appropriate and in the best interests of any affected Advisory Client and its
shareholders.
H. The restrictions of this Section IV shall not apply to the following
transactions unless the Compliance Officer determines that such transactions
violate the General Princi-ples of this Code:
1. reinvestments of dividends pursuant to a plan;
2. transactions in: direct obligations of the U.S. Treasury and short-term
securi-ties issued or guaranteed by an agency or instrumentality of the U.S.
Govern-ment; bankers' acceptances; U.S. bank certificates of deposit; and
commercial paper;
3. transactions in which direct or indirect beneficial ownership is not acquired
or disposed of;
4. transactions in accounts as to which an Access Person has no investment
control; provided that this exemption shall not be available for a transaction
which is suggested or directed by the Access Person;
5. transactions in securities in connection with an employer sponsored tax
qualified plan, such as a 401(k) plan, or ESOP, in an amount not exceeding
$1,000
in any calendar month;
6. purchases or sales of securities which are not eligible for purchase or sale
by Advisory Clients; except as provided by Section IV D above;
7. purchases or sales which are non-volitional on the part of either the Access
Person;
8. purchases 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 sales of such rights so acquired;
9. purchases or sales which, as determined by the Compliance Officer, are only
remotely potentially harmful to an Advisory Client because they would be very
unlikely to affect a highly institutional market (for example, companies that
have a market capitalization of greater than three billion dollars or companies
that are listed on a national securities exchange), or because they clearly are
not related economically to the securities to be purchased, sold or held by the
Advisory Client;
10. purchases or sales of shares of open-end investment companies; and
11. purchases or sales of high-quality short-term debt instruments4.
V. Procedures
A. To enable the Adviser and the Fund to determine with reasonable assurance
whether the provisions of this Code of Ethics are being observed by its Access
Persons:
1. Each Access Person shall notify the Compliance Officer of all brokerage
accounts in which he or she has any "Beneficial Interest"2 (a) within ten (10)
days of becoming an Access Person or (b) within ten (10) days of an Access
Person opening of any such account, if such account is opened subsequent to such
person becoming an Access Person.
2. Each Access Person, with respect to each brokerage account in which such
Access Person has any beneficial interest, shall arrange that the broker shall
mail duplicate copies of periodic statements with respect to the account
directly to the Compliance Officer at the same time they are mailed or furnished
to such Access Person.
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4. "High quality short-term debt instrument" is defined as any instrument that
has a maturity of less than 366 days and that is rated in one of the two highest
rating categories by a Nationally Recognized Statistical Rating Agency.
5 "Beneficial Ownership" generally means having a direct or indirect pecuniary
interest in a security and is legally defined to be beneficial ownership as used
in Rule 16a-l(a)(2) under Section 16 of the Securities Exchange Act of 1934.
Beneficial ownership is presumed regarding securities and accounts held in the
name of a spouse or any other immediate family member or over which such family
members or the Access Person have discretionary authority. Beneficial ownership
also extends to transactions by entities over which a person has ownership,
voting or investment control, including corporations (and similar entities),
trusts and foundations.
3. If an Access Person acquires or disposes of Reportable Securities6 in which
he or she has a beneficial interest other than through a brokerage account, he
or she shall submit a signed report to the Compliance Officer no later than 10
days after the end of the quarter in which the transaction was effected, which
report must contain, at a minimum, the following information:
(a) The date of each transaction, the title of the security, the interest
rate and maturity date (if applicable), the number of the shares held, and
the principal amount of the security;
(b) The nature of the transaction (i.e., purchase, sale, or any other type
of acquisition or disposition);
(c) The price at which the transaction was affected;
(d) The name of the broker-dealer, bank, or other entity through which the
transaction was effected; and
(e) The date the report was signed.
4. Each Access Person shall, on an annual basis, provide the Compliance Officer
with an annual holdings report listing all securities beneficially owned by such
Access Person as of the end of each calendar year. Each individual who is
designated an Access Person shall provide an initial holdings report listing all
securities beneficially owned by such Access Person within ten (10) days of
being so designated as an Access Person. Each holdings report shall: (i) be
dated not more than thirty (30) days before the report is submitted; (ii)
include the title, number of shares and principal amount of each Security in
which the Access Person had any direct or indirect ownership; (iii) provide the
name of each broker, dealer or bank with whom the Access Person maintains an
account in which any securities are held for the direct or indirect benefit of
the Access Person; and (iv) be dated by the person submitting the report.
The provisions of this Section V.A. shall not apply to any director of the Fund
who is not an "interested person" of the Fund [as defined in Section 2(a)(19) of
the Investment Company Act of 1940 (see Appendix A)] except with respect to
reporting of securities transactions where such director knew or, in the
ordinary course of fulfilling his or her official duties as a di-rector of the
Fund, should have known that, during the 15-day period immediately preceding or
after the date of a transaction in a security by the director, such security was
purchased or sold by the Fund or a purchase or sale of such security was
considered by the Fund or the Adviser.
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6 "Reportable Securities" include generally all securities, and financial
instruments related to securities, except: securities issued by, or that are
direct obligations of, the United States Government; bankers' acceptances; bank
certificates of deposit; commercial paper; and shares of registered open-end
investment companies.
B. The Compliance Officer shall notify each Access Person that he or she is
subject to this reporting requirement, and shall deliver a copy of this policy
to each Access Person. The Compliance Officer shall annually obtain written
assurances from each Access Person that he or she is aware of his or her
obligations under this Code of Ethics and has complied with the Code and with
its reporting requirements.
C. The Compliance Officer shall implement a system to monitor the personal
investment activity by Access Persons that is designed to identify abusive or
inappropriate trading patterns or other practices of Access Persons.
D. The Compliance Officer shall, at each regularly scheduled meeting of the
Board of Directors, report to the Board any issues arising under this Code of
Ethics or the Procedures relating to any material violations of the reporting
requirement or material violations of the Code by any director, officer, or
employee of the Fund or of the Adviser not previously reported including any
sanctions imposed in response to a material violation of the Code or the
Procedures implementing the Code.
E. In determining materiality, the Compliance Officer may consider the size of
the transaction, harm to the Fund, fairness or unfairness of any benefit to the
Access Person, the circumstances of a particular transaction, the presence or
absence of fraud or deceit or manipulative practice which could reasonably be
found to have been practiced on the Fund in connection with its holding or
acquisition of the security.
F. The Board of Directors of the Fund shall consider reports made to it
hereunder and upon discovering that a violation of this Code has occurred, the
Board of Directors may impose such sanctions, in addition to any forfeitures
imposed pursuant to Section IV.G. hereof, as it deems appropriate, including,
among other things, a letter of sanction or suspension or termination of the
employment of the violator. In addition, the Board of Directors of the Fund may
recommend any actions or sanctions to the Adviser regarding violations of the
Code by Access Persons of the Adviser.
G. The Compliance Officer shall, on an annual basis, provide a written report to
the Board of Directors of the Fund that describes: (i) any issues arising under
this Code of Ethics or the Procedures used to implement this Code, including any
material violations of the reporting requirements or other requirements set
forth herein by any director, officer, or employee of the Fund or of the
Adviser; (ii) any sanctions imposed in response to a material violation of the
Code or the Procedures used to implement the Code; (iii) whether the Adviser has
adopted procedures reasonable necessary to prevent Access Persons from violating
the Code; and (iv) any recommended changes in existing restrictions or
procedures.
H. The Board of Directors of the Fund shall approve the Code at least once a
year.
I. This Code and any related procedures, a copy of each report by (or duplicate
statement for the account of) an Access Person, any written report or memorandum
hereunder by the Compliance Officer, and lists of all persons required to make
reports shall be preserved by AUL and the Fund for the period of time required
by Rule 204-2 of the Adviser's Act or Rule 17j-1, as applicable.
Dated: February 2, 2000
Appendix A
1. Definition of "Interested Person" under Sec. 2(a)(19) of the Investment
Company Act of 1940.
"Interested person" of another person means--(A) when used with respect to an
investment company--
(i) any affiliated person of such company,
(ii) any member of the immediate family of any natural person who is an
affiliated person of such company,
(iii) any interested person of any investment adviser of or principal
underwriter for such company,
(iv) any person or partner or employee of any person who at any time since
the beginning of the last two completed fiscal years of such company has
acted as legal counsel for such company,
(v) any broker or dealer registered under the Securities Exchange Act of
1934 or any affiliated person of such a broker or dealer, and
(vi) any natural person whom the Commission by order shall have determined
to be an interested person by reason of having had, at any time since the
beginning of the last two completed fiscal years of such company, a
material business or professional relationship with such company or with
the principal executive officer of such company or with any other
investment company having the same investment adviser or principal
underwriter or with the principal executive officer of such other
investment company:
Provided, that no person shall be deemed to be an interested person of an
investment company solely by reason of (aa) his being a member of its board of
directors or advisory board or an owner of its securities, or (bb) his
membership in the immediate family of any person specified in clause (aa) of
this proviso; and
(B) when used with respect to an investment adviser of or principal underwriter
for any investment company--
(i) any affiliated person of such investment adviser or principal
underwriter,
(ii) any member of the immediate family of any natural person who is an
affiliated person of such investment adviser or principal underwriter,
(iii) any person who knowingly has any direct or indirect beneficial
interest in, or who is designated as trustee, executor, or guardian of any
legal interest in, any security issued either by such investment adviser or
principal underwriter or by a controlling person of such investment adviser
or principal underwriter,
(iv) any person or partner or employee of any person who at any time since
the beginning of the last two completed fiscal years of such investment
company has acted as legal counsel for such investment adviser or principal
underwriter,
(v) any broker or dealer registered under the Securities Exchange Act of
1934 or any affiliated person of such a broker or dealer, and
(vi) any natural person whom the Commission by order shall have determined
to be an interested person by reason of having had at any time since the
beginning of the last two completed fiscal years of such investment company
a material business or professional relationship with such investment
adviser or principal underwriter or with the principal executive officer or
any controlling person of such investment adviser or principal underwriter.
Appendix A (Continued)
For the purposes of this paragraph (19), "member of the immediate family" means
any parent, spouse of a parent, child, spouse of a child, spouse, brother, or
sister, and includes step and adoptive relationships. The Commission may modify
or revoke any order issued under clause (vi) of subparagraph (A) or (B) of this
paragraph whenever it finds that such order is no longer sustained with the
facts. No order issued pursuant to clause (vi) of subparagraph (A) or (B) of
this paragraph shall become effective until at least sixty days after the entry
thereof, and no such order shall affect the status of any person for the
purposes of this title or for any other purpose for any period prior to the
effective date of such order.
2. Definition of "Affiliated Person" under Section 2(a)(3) of the Investment
Company Act of 1940.
Affiliated Person of another person means
(A) any person directly or indirectly owning, controlling, or holding with power
to vote, 5 per centum or more of the outstanding voting securities of such other
person;
(B) any person 5 per centum or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held with power to vote by such
other person;
(C) any person directly or indirectly controlling, controlled by, or under
common control with, such other person;
(D) any officer, director, partner, copartner, or employee of such other person;
(E) if such other person is an investment company, any investment adviser
thereof or any member of an advisory board thereof; and
(F) if such other person is an unincorporated investment company not having a
board of directors, the depositor thereof.