Ruane, Cunniff & Goldfarb Inc.,
Ruane, Cunniff & Goldfarb LLC and
Sequoia Fund, Inc.
Code of Ethics
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(Amended and Restated as of December 13, 2004)
1. Introduction
Ruane, Cunniff & Goldfarb Inc. ("Ruane Cunniff"), the Sequoia Fund, Inc.
(the "Fund") and Ruane, Cunniff & Goldfarb LLC, the Fund's distributor,
(the "Distributor") believe that adherence to the highest ethical standards
is essential to maintaining the continuing confidence of its clients.
Therefore, Ruane Cunniff, the Fund and the Distributor adopt the following
Code of Ethics (the "Code") and Policies for Preventing Insider Trading
(the "Insider Trading Policy") to establish procedures designed to address
potential conflicts of interest resulting from the personal securities
trading of employees, officers and directors of Ruane Cunniff, the Fund and
the Distributor (collectively, "Covered Persons").
2. Definitions
The following definitions of underlined terms apply for purposes of the
Code and the Insider Trading Policy in addition to the definitions
contained elsewhere herein.
(a) "Advisers Act" means the Investment Advisers Act of 1940, as amended.
(b) "Beneficial Ownership" means ownership by any person who has or shares
a direct or indirect financial interest in a Covered Security.
(c) "Client" means any person or entity for which Ruane Cunniff provides
advisory services and for which Ruane Cunniff receives an advisory
fee. Independent Directors of the Fund who have Personal Accounts
managed by Ruane Cunniff shall not be treated as "Clients" under the
Code and the Insider Trading Policy.
(d) "Company Act" means the Investment Company Act of 1940, as amended.
(e) "Covered Security" means the instruments commonly known as securities
(as set forth in Section 2(a)(36) of the Company Act) and includes any
derivative of a security, commodities, options or forward contracts,
but does not include shares of open-end investment companies
registered under the Company Act (other than those for whom Ruane
Cunniff acts as an investment adviser or the Distributor acts as
principal underwriter), direct obligations of the Government of the
United States, bankers' acceptances, bank certificates of deposit,
commercial paper, and high quality short term debt instruments,
including repurchase agreements.
(f) "Designated Supervisory Person" refers to Joe Quinones.
(g) "Head of Trading" refers to Jim Berkery.
(h) "Initial Public Offering" or "IPO" means an offering of securities
registered under the Securities Act of 1933 (the "1933 Act"), the
issuer of which, immediately before the registration, was not subject
to the reporting requirements of the Securities Exchange Act of 1934.
(i) "Insider Trading Policy" means the "Policies for Preventing and
Detecting Insider Trading" adopted by Ruane Cunniff.
(j) "Limited Offering" means an offering that is exempt from registration
under the 1933 Act.
(k) "Personal Account" means an account in which a Covered Person has any
Beneficial Ownership. The Covered Person's Personal Accounts include
accounts of:
(i) the Covered Person's spouse (other than a legally separated or
divorced spouse) or minor children,
(ii) any person who resides with the Covered Person, and
(iii) any other account (except a Client account) managed by the
Covered Person.
Notwithstanding the above, for purposes of this Code, Acacia Partners,
L.P., Acacia Partners II, L.P and Acacia Institutional Partners, L.P.
will not be treated as "Personal Accounts".
(l) "Purchase" or "sale" of a Covered Security includes, among other
things, the writing of an option to purchase or sell a Covered
Security.
(m) A Covered Security is "Under Active Consideration" for purchase or
sale when it is subject to active analytical review in anticipation of
developing or refining an investment opinion or it may be a candidate
to be purchased or sold at or about at the current market price on
behalf of a Client as determined by the Head of Trading.
3. Objectives of the Code
(a) The Code is designed to ensure that the personal securities
transactions of Covered Persons are conducted in accordance with the
following standards:
(i) A duty at all times to place first the interests of Clients;
(ii) The requirement that all personal securities transactions be
conducted consistent with the Code and in such a manner as to
avoid any actual or potential conflict of interest or any abuse
of an individual's responsibility and position of trust; and
(iii) The fundamental standard that Covered Persons not take
inappropriate advantage of their positions.
(iv) The fundamental standard that all Covered Persons must comply
with the federal securities laws
(b) Prohibited Conduct. Even if a transaction is otherwise permitted by
the Code, all Covered Persons are prohibited from:
(i) acting in any manner to defraud any Client;
(ii) making to any Client, to the Head of Trading or to a Designated
Supervisory Person any untrue statement of a material fact or
omitting to state to such person a material fact necessary in
order to make the statements made, in light of the circumstances
under which they are made, not misleading;
(iii) engaging in any act, practice or course of business which does
or could defraud or deceive any Client;
(iv) engaging in any manipulative practice with respect to any Client;
or
(v) revealing to any other person (except in the normal course of his
or her duties on behalf of a Client) any information regarding
securities transactions by any Client or the consideration by any
Client or Ruane Cunniff of any such securities transactions.
4. Personal Trading Restrictions and Procedures
(a) Transactions in Covered Securities must be effected in accordance with
the following provisions:
(i) Preclearance. Generally, all personal transactions in Covered
Securities must be precleared. The Head of Trading (assuming that
he has no personal interest in the subject transaction, if so,
then a Designated Supervisory Person [or any qualified and
properly registered assistant trader]) may approve the
transaction if he concludes that the transaction is not likely to
have any adverse economic impact on a Client. A preclearance
request is made by completing the "Preclearance Request," a copy
of which is attached.
(ii) Black Out Period. - Preclearance requests will not be granted if
there is a pending buy or sell order in that same Covered
Security for any Client or if the Covered Security is Under
Active Consideration for purchase or sale on behalf of a Client.
(iii) Two-Day Waiting Period. Once a Covered Security is no longer
Under Active Consideration for purchase or sale by a Client,
Covered Persons may be permitted to buy or sell that Covered
Security after a waiting period of two business days. The two day
waiting period may be waived, in the sole discretion of the Head
of Trading or a Designated Supervisory Person, under the
following circumstances: (a) if an order by a Covered Person to
purchase or sell a Covered Security would represent less than 5%
of the average daily market trading volume for that Covered
Security for the preceding three months (as determined and
documented by the Head of Trading) and (b) if the Covered
Person's order is a sell order, all Client orders within the
prior two business days have been sell orders and no Client
currently owns such Covered Security. In the event a decision is
made to waive the waiting period, the basis of the decision must
be reflected in writing on the approval form.
(iv) Commingling of Covered Person Trades with Client Trades. Orders
for Clients and Covered Persons for Covered Securities may not be
commingled unless the Head of Trading has determined that
commingling would not disadvantage any Client.
(v) Board Service. Covered Persons who serve on the board of a
publicly traded company or who have a material business
relationship involving a Covered Security Under Active
Consideration must disclose such board service or business
relationship to the Head of Trading before recommending the
purchase or sale of an affected Covered Security.
(b) Personal transactions involving shares of the Fund are subject to the
preclearance requirements in Section 4(a) of the Code.
5. Exempted Transactions
(a) The requirements of Section 4(a)(i) through (iv) of the Code do not
apply to:
(i) purchases or sales of Covered Securities that are non-volitional
on the part of either a Covered Person or a Client or are
pursuant to an automatic reinvestment plan, such as a dividend
reinvestment plan; and
(ii) purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of the issuer's
securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired.
(b) Shareholders of Ruane Cunniff and Members of the Distributor. A
shareholder of Ruane Cunniff or a member of the Distributor who is not
an employee, officer or director of Ruane Cunniff or a member, officer
or manager of the Distributor, shall not be subject to the provisions
of this Code unless the shareholder owns 25% or more of the
outstanding voting securities of Ruane Cunniff or the Distributor, as
appropriate.
6. Reporting
(a) Personal Accounts to be maintained at Neuberger Berman. Personal
Accounts should be maintained at Neuberger Berman, LLC ("Neuberger
Berman"). Neuberger Berman will provide monthly reports to Ruane
Cunniff regarding Covered Person trading. Each Covered Person who
maintains a Personal Account at a broker other than Neuberger Berman
must receive written approval for such account from the Designated
Supervisory Person and must direct the broker to submit to the
Designated Supervisory Person a duplicate copy of the confirmation of
each personal transaction in Covered Securities in such Personal
Account and a copy of the Covered Person's monthly or quarterly
statements for the account. All such statements must be received by
Ruane Cunniff, the Distributor or the Fund, as applicable, within 30
days after the close of the month or quarter covered by such
statement.
(b) Statement of Security Ownership. Covered Persons must, within ten (10)
days of commencement of employment with Ruane Cunniff, the Distributor
or the Fund, and annually thereafter, submit a statement to the
Designated Supervisory Person listing all of the (i) the title and
type, the exchange ticker symbol or CUSIP number (if applicable),
number of shares and principal amount of Covered Securities in which
the Covered Person has any Beneficial Ownership, (ii) business
activities in which the Covered Person has a significant role
(including any service as a director of a publicly traded company) and
(iii) the names of the brokerage firms or banks where the Covered
Person maintains a securities account and the date the account was
established. The statement must be current as of a date no more than
30 days before the statement is submitted. Statements under this
Section shall carry the date when submitted to the Designated
Supervisory Person.
(c) Annual Certification of Code. Each person subject to the Code and the
Insider Trading Policy must certify annually that he or she has read
and understands them, recognizes that he or she is subject thereto and
has complied with their provisions and disclosed or reported all
personal securities transactions required to be disclosed or reported
thereunder. Such certificates and reports are to be given to the
Designated Supervisory Person.
(d) Confidentiality of Reports. All reports furnished pursuant to this
Section will be kept confidential, subject to the rights of inspection
by a Designated Supervisory Person, the Securities and Exchange
Commission or other regulatory bodies and by other third parties
pursuant to applicable law.
(e) Acknowledgement of Receipt. The Designated Supervisory Person is
responsible for providing each Covered Person with a copy of this Code
and any amendments thereto. Each Covered Person is responsible for
providing the Designated Supervisory Person with a written
acknowledgement receipt of the Code and any amendments thereto. The
Designated Supervisory Person is responsible for ensuring that all
such written acknowledgements are received.
7. Prohibited Purchases and Sales and Reporting Requirements For Non-Employee
Directors of Ruane Cunniff and the Fund and Managers of the Distributor
(a) The requirements in Section 4(a)(i) - (iv) apply to an independent
director of the Fund or an independent manager of the Distributor only
if the director or manager had actual knowledge that during the 15-day
period preceding or following a purchase or sale of a Covered Security
in the director's or manager's Personal Account such Covered Security
was Under Active Consideration for purchase or sale by a Client (for
independent directors of Ruane Cunniff or independent managers of the
Distributor) or the Fund (for independent directors of the Fund).
Nevertheless, the requirements of Section 4(a)(ii)-(iv) above shall
apply to transactions by or for any Personal Accounts of an
independent director that are managed by Ruane Cunniff.
(b) Independent directors of the Fund need not submit the confirmations
and account statements described in Section 6(a) above unless the
director knew or, in the ordinary course of fulfilling his or her
official duties as a Fund director, should have known that during the
15-day period immediately before or after the director's transaction
in a Covered Security, the Fund purchased or sold the Covered
Security, or the Fund (or Ruane Cunniff on behalf of the Fund)
considered purchasing or selling the Covered Security.
(c) The statement described in Section 6(b) above shall not apply to
independent directors of the Fund.
8. Sanctions
Upon learning of a violation of the Code, Ruane Cunniff, may impose such
sanctions as it deems appropriate, including, among other things,
disgorgement of profits, censure, suspension or termination of service.
Further, such violation may also be a violation of the federal securities
laws or other federal and state laws. Any such person who is suspected of
violating the Code should be reported immediately to a Designated
Supervisory Person.
9. Recordkeeping
(a) The Designated Supervisory Person will keep the following records:
(i) a copy of each Code that is in effect, or at any time within the
past five years was in effect, maintained in an easily accessible
place;
(ii) a record of any violation of the Code and of any action taken as
a result of the violation, maintained in an easily accessible
place for at least five years after the end of the fiscal year in
which the violation occurs;
(iii) a copy of each report made by Covered Persons maintained for at
least five years after the end of the fiscal year in which the
report is made, the first two years in an easily accessible
place;
(iv) a record of all persons currently or within the past five years,
who are or were required to make reports or who are or were
responsible for reviewing these reports, maintained in an easily
accessible place; and
(v) a copy of all preclearance request approvals.
A copy of every report required by this Section of the Code must be
maintained for at least five years after the end of the fiscal year in
which it is made, the first two years in an easily accessible place.
10. Administration of the Code
(a) The Head of Trading or the Designated Supervisory Person will be
responsible for approving Preclearance Requests.
(b) The Designated Supervisory Person will be responsible for reviewing
reports of securities holdings, brokerage confirmations and periodic
statements to determine whether all Covered Persons are complying with
the Code.
(c) The Designated Supervisory Person will inform Covered Persons of their
reporting and other obligations under the Code.
(d) The Designated Supervisory Person will maintain a current list of all
Covered Persons subject to the Code.
(e) The Designated Supervisory Person will periodically report to the
President of Ruane Cunniff regarding the administration of the Code.
(f) The Designated Supervisory Person will submit a written report
annually to the Board of Directors of the Fund (i) describing any
issues arising under the Code since the last such report, including,
but not limited to, information about material violations of the Code
and sanctions imposed in response to the material violations; and (ii)
certifying that Ruane Cunniff and the Distributor have each adopted
procedures reasonably necessary to prevent relevant Covered Persons
from violating the Code.
Approved by action of Adviser's Board of Directors, Sequoia Fund, Inc's Board of
Directors and the Board of Managers of the Distributor on December 13, 2004.
By: /s/ Joseph Quinones, Jr.
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Joseph Quinones, Jr.
Ruane, Cunniff & Goldfarb Inc.
By: /s/ Joseph Quinones, Jr.
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Joseph Quinones, Jr.
Ruane Cunniff & Goldfarb LLC
By: /s/ Joseph Quinones, Jr.
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Joseph Quinones, Jr.
Sequoia Fund, Inc.
EXHIBIT A
RUANE, CUNNIFF & GOLDFARB INC.
RUANE CUNNIFF & GOLDFARB LLC
SEQUOIA FUND, INC.
Request Date:
Ruane, Cunniff & Goldfarb Inc.
767 Fifth Avenue, Suite 4701
New York, New York 10153-4798
PRECLEARANCE REQUEST
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I hereby request preclearance for the following trade(s) for the account of
:
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(Please print name* )
(Note Purchase or Sale) Security Number of Shares Broker
Please signify your approval by signing below.
Approved:
- ---------------------------- ----------------------------------
Trading Desk Covered Person Signature
- ----------
* Self, spouse or other family members (including minor children and adults
living in the same household).
This trading intention applies to current strategy for near-term execution
(within 5 business days), allowing for market conditions and in accordance with
the guidelines in the Code of Ethics of Ruane, Cunniff & Goldfarb Inc., Ruane
Cunniff & Goldfarb LLC and Sequoia Fund, Inc.
Note: Waive (2) day waiting period due to daily trading volume
(see attached): (_)
Waive (2) day waiting period; all customers' holdings in securities
sold. (_)
EXHIBIT B
RUANE, CUNNIFF & Goldfarb INC.
RUANE CUNNIFF & Goldfarb LLC
POLICIES FOR PREVENTING AND DETECTING INSIDER TRADING
SECTION I. INSIDER TRADING POLICY
A. Introduction
Ruane, Cunniff & Goldfarb Inc. (the "Adviser") and Ruane Cunniff &
Goldfarb LLC (the "Distributor") (each, a "Firm" and together, the "Firms")
seek to foster a reputation for integrity and professionalism. To further that
goal, this Insider Trading Policy implements procedures to deter the misuse of
material, nonpublic information in securities transactions.
Trading securities while in possession of material, nonpublic
information or improperly communicating that information to others may expose
you to stringent penalties. Criminal sanctions may include a fine of up to
$1,000,000 and/or ten years imprisonment. Finally, you may be sued by investors
seeking to recover damages for insider trading violations.
The Firms view seriously any violation of this Insider Trading Policy.
Violations may constitute grounds for disciplinary sanctions, including
dismissal.
B. Scope of the Insider Trading Policy
This Insider Trading Policy will be applied and interpreted broadly.
This Insider Trading Statement applies to securities trading and information
handling by directors, managers, officers and employees of the Firms including
family members, and extends to activities within and outside their duties at the
Firms.
The law of insider trading is unsettled; an individual legitimately
may be uncertain about the application of the Insider Trading Policy in a
particular circumstance. Often, asking a single question can forestall
disciplinary action or complex legal problems. You should direct any questions
relating to the Insider Trading Policy to the Designated Supervisory Person. You
also must notify the Designated Supervisory Person immediately if you have any
reason to believe that a violation of the Insider Trading Policy has occurred or
is about to occur.
C. Insider Trading Policy
The Firms forbid any officer, director, manager or employee from
trading, either personally or on behalf of others, including accounts managed by
the Adviser, on material nonpublic information or communicating material
nonpublic information to others in violation of the law. This conduct is
frequently referred to as "insider trading." Every officer, director, manager
and employee must read and retain this Insider Trading Policy. Any questions
regarding the Firms' policy and procedures should be referred to the Designated
Supervisory Person.
The term "insider trading" is not defined in the federal securities
laws, but generally is used to refer to the use of material nonpublic
information to trade in securities (whether or not one is an "insider") or to
communications of material nonpublic information to others.
While the law concerning insider trading is not static, it is
generally understood that the law prohibits:
a. trading by an insider, while in possession of material
nonpublic information, or
b. trading by a non-insider, while in possession of
material nonpublic information, where the information
either was disclosed to the non-insider in violation of
an insider's duty to keep it confidential or was
misappropriated, or
c. communicating material nonpublic information to others.
The elements of insider trading and the penalties for such unlawful
conduct are discussed below. If, after reviewing this Policy Statement, you have
any questions you should consult the Designated Supervisory Person.
D. Who is an Insider?
The concept of "insider" is broad. It includes officers, directors,
managers and employees of a company. In addition, a person can be a "temporary
insider" if he or she enters into a special confidential relationship in the
conduct of a company's affairs and as a result is given access to information
solely for the company's purposes. A temporary insider can include, among
others, a company's attorneys, accountants, consultants, bank lending officers,
and the employees of such organizations. In addition, the Adviser or the
Distributor may become a temporary insider of a company it advises or for which
it performs other services. According to the Supreme Court, the company must
expect the outsider to keep the disclosed nonpublic information confidential and
the relationship must at least imply such a duty before the outsider will be
considered an insider.
E. What is Material Information?
Trading on insider information is not a basis for liability unless the
information is material. Information is "material" when there is a substantial
likelihood that a reasonable investor would consider it important in making his
or her investment decisions, or if it is reasonably certain to have a
substantial effect on the price of a company's securities. Information that
officers, directors, managers and employees should consider 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, liquidation problems, and
extraordinary management developments.
Material information does not have to relate to a company's business,
but may also relate to the market for a company's securities. For example, in
Carpenter v. U.S., 108 U.S. 316 (1987), the Supreme Court considered as material
certain information about the contents of a forthcoming newspaper column that
was expected to affect the market price of a security. In that case, a Wall
Street Journal reporter was found criminally liable for disclosing to others the
dates that reports on various companies would appear in the Journal and whether
those reports would be favorable or not.
No simple "bright line" test exists to determine when information is
material; assessments of materiality involve a highly fact-specific inquiry. For
this reason, you should direct any questions about whether information is
material to the Designated Supervisory Person.
F. Contacts with Public Companies.
For the Firms, contacts with public companies represent an important
part of our research efforts and other services. For example, the Adviser may
make investment decisions on the basis of the Adviser's conclusions formed
through such contacts and analysis of publicly-available information. Difficult
legal issues arise, however, when, in the course of these contacts, a Firm's
employee or other person subject to this Insider Trading Policy becomes aware of
material, nonpublic information. This could happen, for example, if a Firm
employee serves as a director on the board of a publicly traded company, if a
company's Chief Financial Officer prematurely discloses quarterly results to an
analyst or if an investor relations representative makes a selective disclosure
of adverse news to a handful of investors. In such situations, that Firm must
make a judgment as to its further conduct. To protect yourself, our clients and
the Firms, you should contact the Designated Supervisory Person immediately and
before trading in the securities of a company on whose board you serve, if you
believe that you may have received material, nonpublic information.
G. Tender Offers.
Tender offers represent a particular concern in the law of insider
trading for two reasons. First, tender offer activity often produces
extraordinary gyrations in the price of the target company's securities. Trading
during this time period is more likely to attract regulatory attention (and
produces a disproportionate percentage of insider trading cases). Second, the
SEC has adopted a rule which expressly forbids trading and "tipping" while in
possession of material, nonpublic information regarding a tender offer received
from the tender offeror, the target company or anyone acting on behalf of
either. The employees of the Firms and others subject to this Insider Trading
Policy should exercise particular caution any time they become aware of
nonpublic information relating to a tender offer.
H. What is Nonpublic Information?
Information is nonpublic until it has been effectively communicated to
the market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, The
Wall Street Journal or other publications of general circulation would be
considered public.
I. Bases for Liability
i. Fiduciary Duty Theory
In 1980, the Supreme Court found that there is no general duty to
disclose before trading on material nonpublic information, but that such a duty
arises only where there is a fiduciary relationship. That is, there must be a
relationship between the parties to the transaction such that one party has a
right to expect that the other party will disclose any material nonpublic
information or refrain from trading. Chiarella v. U.S., 445 U.S. 22 (1980).
In Dirks v. SEC, 463 U.S. 646 (1983), the Supreme Court stated
alternate theories under which non-insiders can acquire the fiduciary duties of
insiders: they can enter into a confidential relationship with the company
through which they gain information (e.g., attorneys, accountants), or they can
acquire a fiduciary duty to the company's shareholders as "tippees" if they are
aware or should have been aware that they have been given confidential
information by an insider who has violated his fiduciary duty to the company's
shareholders.
However, in the "tippee" situation, a breach of duty occurs only if
the insider personally benefits, directly or indirectly, from the disclosure.
The benefit does not have to be pecuniary, but can be a gift, a reputational
benefit that will translate into future earnings, or even evidence of a
relationship that suggests a quid pro quo.
ii. Misappropriation Theory
Another basis for insider trading liability is the "misappropriation"
theory, where liability is established when trading occurs on material
nonpublic information that was stolen or misappropriated from any other
person. In U.S. v. Carpenter, supra, the Court found, in 1987, a columnist
defrauded The Wall Street Journal when he stole information from the
Journal and used it for trading in the securities markets. It should be
noted that the misappropriation theory can be used to reach a variety of
individuals not previously thought to be encompassed under the fiduciary
duty theory.
J. Penalties for Insider Trading
Penalties for trading on or communicating material nonpublic
information are severe, both for individuals involved in such unlawful
conduct and their employers. A person can be subject to some or all of
the penalties below even if he or she does not personally benefit from
the violation. Penalties include:
- civil injunctions
- treble damages
- disorgement of profits
- jail sentences
- fines for the person who committed the violation o up
to three time the profit gains or loss avoided, whether
or not the person actually benefited, and
- fines for the employer or other controlling person of
up to the greater of $1,000,000 or three times the
amount of the profit gains or loss avoided.
In addition, any violation of this Insider Trading Policy can be
expected to result in serious sanctions by the Firms, including dismissal of the
persons involved.
SECTION II. PROCEDURES TO IMPLEMENT THE POLICY OF THE FIRMS
The following procedures have been established to aid the officers,
directors, managers and employees of the Firms in avoiding insider
trading, and to aid the Firms in preventing, detecting and imposing
sanctions against insider trading. Every officer, director, manager
and employee of the Firms must follow these procedures or risk serious
sanctions, including dismissal, substantial personal liability and
criminal penalties. If you have any questions about these procedures
you should consult the Designated Supervisory Person.
A. Identifying Insider Information
Before trading for yourself or others, including accounts managed by
the Adviser or for whom either of the Firms performs services, in the
securities of a company about which you may have potential inside
information, ask yourself the following questions:
i. Is the information material? Is this information that an investor
would consider important in making his or her investment
decisions? Is this information that would substantially affect
the market price of the securities if generally disclosed?
ii. Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to
the marketplace by being published in Reuters, The Wall Street
Journal or other publications of general circulation?
If, after consideration of the above, you believe that the information
is material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you should take the following steps:
i. Report the matter immediately to the Designated Supervisory
Person.
ii. Do not purchase or sell the securities on behalf of yourself or
others, including accounts managed by the Adviser or for whom
either of the Firms perform services.
iii. Do not communicate the information inside or outside your Firm,
other than to the Designated Supervisory Person.
iv. After the Designated Supervisory Person has reviewed the issue,
you will be instructed to continue the prohibitions against
trading and communication, or you will be allowed to trade and
communicate the information.
B. Personal Securities Trading.
The Firms have adopted a Code of Ethics (the "Code"), which, among
other things, restricts personal securities trading and requires preclearance of
personal securities transactions. Transactions permitted under the Code may
nevertheless be prohibited under this Insider Trading Policy.
All officers, directors, managers and employees of the Firms shall
submit to the Designated Supervisory Person a report of every securities
transaction in which they, their families (including the spouse, minor children
and adults living in the same household as the officer, director, manager or
employee), have a beneficial interest.
C. High-Risk Trading Activities.
Certain high-risk trading activities, if used in the management of the
Firms' officers', directors', managers' or employees' personal trading
portfolios are risky not only because of the nature of the securities
transactions themselves, but also because of the potential that action necessary
to close out the transaction may become prohibited during the pendency of the
transactions. Examples of such activities include short sales of common stock
and trading in derivative instruments such as option contracts to purchase
("call") or sell ("put") securities at certain predetermined prices. Officers,
directors, managers and employees of either of the Firms should understand that
short sales and trading in derivative instruments involve special
risks--derivative instruments, for example, ordinarily have greater price
volatility than the underlying security. The fulfillment of the obligations
owned by each officer, director, manager and employee to the Firms may heighten
those risks. For example, if a Firm becomes aware of material, nonpublic
information about the issuer of the underlying securities, that Firm's personnel
may find themselves "frozen" in a position in a derivative security. A Firm will
not bear any losses resulting in personal accounts through the implementation of
this Insider Trading Policy.
D. Restricting Access to Material Nonpublic Information
Information in your possession that you identify as material and
nonpublic may not be communicated to anyone, including persons within either of
the Firms, except as provided in paragraph 1 above. In addition, care should be
taken so that such information is secure. For example, files containing material
nonpublic information should be sealed; access to computer files containing
material nonpublic information should be restricted, and conversations
containing such information, if appropriate at all, should be conducted in
private (for example not by cellular telephone), to avoid potential
interception.
E. Resolving Issues Concerning Insider Trading
If, after consideration of the items set forth in paragraph 1, doubt
remains as to whether information is material or nonpublic, or if there is any
unresolved question as to the applicability or interpretation of the foregoing
procedures, or as to the propriety of any action, it must be discussed with the
Designated Supervisory Person before trading or communicating the information to
anyone.
F. Acknowledgment
I have read and understand the foregoing procedures and will comply in
all respects with such procedures. I understand that any violation of the
Insider Trading Policy may lead to sanctions, including dismissal.
- ------------------------------- -----------------------------------
NAME DATE
SECTION III. SUPERVISORY PROCEDURES
The roles of the Head of Trading and the Designated Supervisory Person
are critical to the implementation and maintenance of the Firms' policy and
procedures against insider trading. Supervisory Procedures can be divided into
two classifications--prevention of insider trading and detection of insider
trading.
A. Prevention of Insider Trading
To prevent insider trading, the Firms should:
i. distribute and review the Firms' policy and procedures with new
employees and periodically review them with existing directors,
managers, officers and employees
ii. answer questions regarding the Firms' policy and procedures
iii. resolve issues of whether information received by an officer,
director, manager or employee of a Firm is material and nonpublic
iv. review on a regular basis and update as necessary the Firms'
policy and procedures
v. when it has been determined that an officer, director, manager or
employee of a Firm has material nonpublic information
a. implement measures to prevent dissemination of such
information, and
b. if necessary, restrict officer, directors, managers and
employees from trading the securities.
vi. promptly review and either approve or disapprove, in writing,
each request of an officer, director, manager or employee for
clearance to trade in specified securities.
B. Detection of Insider Trading
To detect insider trading, the Designated Supervisory Person should:
i. Monitor trading activities of the relevant Firm's own account, if
any, on a daily basis in addition to review of trade
confirmations and monthly customer statements provided by any
NASD Member broker-dealer with whom that Firm may establish an
account (transactions in that Firm's account.
ii. Monitor trading activities of a Firm's employees through review
of duplicates of confirmations and customer statements provided
by any NASD Member broker-dealer with whom the employee has an
account (the Firms recommend that all employees maintain their
Personal Accounts, as defined in Section 2 of the Firms' Code, at
Neuberger Berman but if, with the written permission of the
Designated Supervisory Person, a Personal Account is maintained
at a brokerage firm other than Neuberger Berman, a duplicate of
all brokerage confirmations should be sent to the Designated
Supervisory Person.
iii. Coordinate the review of such reports with other appropriate
officers, directors, managers or employees of the appropriate
Firm.
iv. Promptly investigate all reports of any possible violations of
the Firms' Policy and Statement.
C. Special Reports
Promptly, upon learning of a potential violation of the Firms' Insider
Trading Policy, the Designated Supervisory Person should prepare a written
report providing full details and recommendations for further action which may
include any or all of the following:
i. the name of particular securities involved, if any,
ii. the date(s) the Designated Supervisory Person learned of the
potential violation and began investigating,
iii. the accounts and individuals involved,
iv. actions taken as a result of the investigation, if any, and
v. recommendations for further action.
D. General Reports to Management and/or the Board of Directors or Managers
On an as-needed or periodic basis, it may be useful for the Designated
Supervisory Person to prepare a written report to the management and/or the
Board of Directors of the Adviser or the Board of Managers of the Distributor
setting forth some or all of the following:
i. a summary of existing procedures to detect and prevent insider
trading,
ii. a summary of changes in procedures made in the last year,
iii. full details of any investigation since the last report (either
internal or by a regulatory agency) of any suspected insider
trading, the results of the investigation and a description of
any changes in procedures prompted by any such investigation,
iv. an evaluation of the current procedures and a description of
anticipated changes in procedures, and
v. a description of each Firm's continuing educational program
regarding insider trading, including the dates of such programs
since the last report to management.
E. Annual Reports
On an annual basis, the Adviser's Board of Directors and the Board of
Managers of the Distributor will re-evaluate the current policies and procedures
in place.
Approved by action of Adviser's Board of Directors and the Board of
Managers of the Distributor on December 13, 2004.
By: /s/ Joseph Quinones, Jr.
-------------------------
Joseph Quinones, Jr.
Ruane, Cunniff & Goldfarb Inc.
By: /s/ Joseph Quinones, Jr.
------------------------
Joseph Quinones, Jr.
Ruane Cunniff & Goldfarb LLC
69900.0020 #530303