Exhibit 99.c
NASD CODE OF CONDUCT
I. INTRODUCTION AND APPLICABILITY
The NASD -Registered Trademark- and Amex are self-regulatory organizations for
the securities industry and securities market operators. We expect NASD and Amex
members to adhere to a code of ethics and conduct in order to bring about a high
level of investor confidence in the securities industry. When NASD or Amex
members fail to follow ethical standards and violate industry rules, we take
appropriate disciplinary action.
Given our companies' roles as self-regulatory organizations and market
operators, our employees must conduct themselves in a manner that commands the
respect and confidence of both the securities industry and the public. Our
employees cannot merely refrain from improper activity; they must also be
careful to avoid situations that could create even an appearance that their
actions are not fully objective. To help ensure that our integrity, credibility,
and reputation for fair dealing are not compromised, we have adopted this Code
of Conduct to provide guidance to employees and to set standards for employee
conduct.
The Code of Conduct describes ethical standards to be observed by all NASD and
Amex employees. Although many areas of activity are treated specifically, the
Code of Conduct does not, and indeed cannot, cover all of the possible or
probable situations that may arise. A short rule that can be applied when
dealing with any questionable situation is: "WHEN IN DOUBT, DON'T." When
employees are confronted with a situation that is not addressed specifically in
the Code of Conduct, the NASD, Inc. Office of General Counsel should be
contacted to determine what effect the Code of Conduct may have on the
situation.
The Code of Conduct applies to all employees of the NASD and its subsidiary or
affiliated companies, which at this time include NASD Regulation, Inc., The
Nasdaq Stock Market, Inc., Nasdaq International, Ltd., Nasdaq International
Market Initiatives, Inc., and Amex. All NASD employees must comply with the
provisions of the Code of Conduct.
The Code of Conduct imposes standards that supplement - not supplant -
applicable legal requirements (E.G., the general prohibition against insider
trading, federal margin regulations). In addition, some employees are required
to comply with the ethical codes applicable to their professions (E.G.,
accountants, attorneys).
The Code of Conduct supersedes all previous guidelines and policies that may
have been issued by the NASD or Amex in the past, and any documents that may
have been issued by various departments to support or interpret such guidelines
or policies. Department-level management is prohibited from issuing any
documents to support, supplement, or interpret the Code of Conduct.
The text of the Code of Conduct is written in the masculine gender to facilitate
reading and understanding. Any reference to "he," "him," or "his" shall also
mean "she," "her," or "hers," as appropriate. All references herein to "NASD"
include the NASD and all of current and future subsidiary or affiliated
companies. All references herein to "employees" encompass all full-time and
temporary employees and officers of the NASD and all of its subsidiary and
affiliated companies.
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A complete list of definitions used in the Code of Conduct appears in Section
XIII, below.
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II. COMPLIANCE WITH THE CODE OF CONDUCT
All employees must become familiar with, and abide by, the Code of Conduct and
the interpretations and procedures issued thereunder. Failure to comply with one
or more of the provisions in the Code of Conduct may result in disciplinary
action against the employee, up to and including immediate termination of
employment. Disciplinary actions taken for violations of the Code of Conduct are
not subject to the Constructive Counseling Policy contained in the NASD Employee
Handbook.
When hired, each employee must certify, as a condition of employment, that he
has received, read, understands, and agrees to comply with the Code of Conduct.
Once every year, each employee must certify, as a condition of continued
employment, that he has complied with the Code of Conduct since the date of his
previous certification, and that he understands and agrees to continue complying
with the Code of Conduct until the date of his next certification. Failure to
provide a timely initial or annual certification constitutes a violation of the
Code of Conduct and can result in disciplinary action.
Certification is performed as specified in the "NASD Code of Conduct General
Procedures."
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III. WAIVER REQUESTS
If an employee believes that compliance with a specific provision of the Code of
Conduct will result in an undue hardship in his circumstances, the employee may
seek a waiver from his Executive Vice President.
All waiver requests must be in writing and approved by an Executive Vice
President (or the Senior Vice President and General Counsel of NASD, Inc. if the
waiver request is made by an employee who is an Executive Vice President or
higher). Waivers may be granted only if the application of a specific provision
of the Code of Conduct will, in fact, result in an undue hardship to the
employee making the waiver request. In determining whether an undue hardship
exists, the Executive Vice President will consider whether: 1) compliance with
the Code of Conduct is contrary to the best business interests of the NASD;
and/or 2) the burden on the employee and the NASD of complying with the Code of
Conduct outweighs the business needs of the NASD. A written response to the
waiver request must be provided and must clearly state whether the waiver is
denied, granted as requested, or granted with modifications or restrictions. If
a waiver is granted, the response must detail the nature of the undue hardship
present and reference specific sections of the Code of Conduct, as applicable.
If any restriction(s) or condition(s) are placed on the employee in granting the
waiver, the response must detail the restrictions. If denied, the response must
provide the reason(s) for the action taken and reference to the specific Code
sections, as applicable.
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IV. CONFLICTS OF INTEREST
A. General Provision
All employees should act in the best interests of the NASD and refrain from
any conduct that would be detrimental to the interests or the reputation of
the NASD. Employees should ensure they do not act on behalf of the NASD in
situations where there exists a personal, financial, or other conflict of
interest. The following guidance is provided to assist employees in
achieving this end.
B. Disclosure of Actual and Potential Conflicts
1. Employees must avoid acting in a manner that may be interpreted by
others as having been influenced by personal relationships or for
personal gain, and must avoid situations that appear improper or
diminish the NASD's reputation. To help ensure these situations
are avoided, every employee must disclose to his Department
Director (or next higher level officer) all situations and
relationships that could be perceived as raising an actual or
potential conflict of interest.
2. If the Department Director (or next higher level officer)
determines that an ACTUAL conflict of interest exists, the
employee cannot be assigned to work on NASD matters involving the
person or entity with which the employee has the conflict. If the
Department Director (or next high level officer) determines that a
POTENTIAL conflict of interest exists, the employee may not be
involved in any matter related to the area of potential conflict
without prior written approval from his Executive Vice President.
3. An employee who personally becomes the subject of an inquiry,
investigation, legal proceeding, or any other matter that may
affect NASD's interests must immediately disclose this fact to his
Department Director (or next higher level officer). For purposes
of the Code of Conduct, the NASD is presumed to be affected by any
occurrence that would require disclosure on a Form U-4 or U-5, if
an employee were employed by a broker/dealer.
Detailed procedures for reporting and addressing actual and potential
conflicts of interest are contained in the "NASD Code of Conduct General
Procedures." In addition, examples of conflicts of interest are discussed
in the "NASD Code of Conduct Interpretations."
C. Specific Prohibitions
Employees are specifically prohibited from:
1. Engaging in any criminal or dishonest acts in an attempt to
promote the interests of the NASD.
2. Engaging in any criminal, dishonest or other conduct prejudicial
to the interests of the NASD.
3. Engaging directly or indirectly in any personal business
transaction or private arrangement that accrues from or is based
on:
a. The employee's position authority with the NASD; or
b. Confidential or other information that is not available to
the public or that the employee gains by reason of his
position or authority with the NASD.
4. Acting in any manner in respect to the business of the NASD,
whether or not specifically prohibited, that might result in:
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a. Impeding the expeditious processing of NASD actions;
b. Losing independence, impartiality, or objectivity; or
c. Affecting adversely the confidence of members of the public
in the integrity credibility of the NASD or its procedures
and actions.
5. Absent prior written disclosure and approval from his Executive
Vice President, an employee also is prohibited from:
a. Acting in any NASD matter with anyone with whom the
employee has a current or past personal, business, or
financial interest. This includes but is not limited to
anyone who is a prospective or current issuer, vendor, NASD
member, arbitrator, or subscriber.
b. Engaging directly or indirectly in any personal, business, or
financial transaction with an NASD member, including any such
transaction that may have been initiated prior to starting
employment with the NASD. This prohibition does not apply to
securities transactions effected with an NASD member in the
normal course of business and reported as required by Section
VIII of the Code of Conduct.
D. The potential for a conflict of interest, if not an actual conflict of
interest, will be presumed to exist whenever a member of an employee's immediate
family:
1. Is employed by a broker/dealer, exchange that is not operated by
the NASD or Amex, alternative trading system, electronic
communications network, mutual fund, or investment adviser.
2. Is employed by a bank or insurance company in a capacity related
to the securities industry.
3. Is employed in a capacity directly or indirectly related to the
issuance, sale, or purchase of securities by an NASD member.
4. Is an owner, co-owner, officer, partner, or director of any entity
which, to the best of the employee's knowledge, is seeking to sell
goods or services to the NASD.
5. Has (or within the past three years has had) a professional,
personal, or financial relationship to any matter to which the
employee is to be assigned or otherwise may be asked to work.
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V. INFORMATION DISCLOSURE
A. General Provisions
The nature of our business often causes employees to receive or have access
to confidential, sensitive, or non-public information. Employees must act
to preserve the security and confidentiality of such information. Employees
must exercise special care if they need to discuss confidential or
sensitive information with another employee in a public place, such as a
restaurant, elevator, or airplane, to ensure such information is not
inadvertently overheard by others.
B. Specific Prohibitions
Employees are specifically prohibited from:
1. Disclosing to, or discussing with, any unauthorized person any
information not generally available to the public (unless prior
approval is obtained from his Executive Vice President). This
prohibition does not apply to information disclosed or discussed
by employees in fulfilling responsibilities or duties that are
within their job description. Some examples of non-public
information include, but are not limited to:
a. the NASD's strategic plans or initiatives;
b. advertising or marketing plans and strategies;
c. technological information regarding NASD systems or
technology strategies;
d. information provided by a broker/dealer regarding its
financial position, business, or trading strategies;
e. information related to regulatory investigations in progress;
f. questions, or answers to questions, contained in securities
licensing tests; or
g. non-public information concerning other corporate strategies,
examinations, disciplinary actions, arbitration proceedings,
settlements of lawsuits or administrative proceedings,
economic data, personnel information, or other information
regarding issuers, NASD members, NASD employees, or
arbitrators.
2. Responding to inquiries received from the news media. Any
inquiries received must be referred immediately to the Media
Relations Department or the designated spokesperson, as provided
for in the Media Relations Guidelines.
3. Transmitting confidential or sensitive information to other
employees within the NASD other than to fulfill the business needs
of the NASD. Employees are expected to comply with all corporate
policies relating to the handling of confidential or sensitive
information (E.G., Information Security Policy, E-Mail Policy, and
Internet Policy). An employee who receives a request for
information by persons who would appear to have no need for such
information in the daily performance of their jobs shall
immediately report the request to the employee's Department
Director (or next higher level officer).
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VI. LEGAL PROCEEDINGS
A. Responses to requests for information or testimony in legal proceedings
must be coordinated with the NASD, Inc. Office of General Counsel. In this
regard:
1. All matters involving potential litigation must be referred to and
discussed with the NASD, Inc. Office of the General Counsel, and
the Office of General Counsel of the affected NASD entity or
entities, at the earliest opportunity.
2. Any employee who is served with a subpoena, complaint, or other
legal pleading that relates to his employment with the NASD or
involves an NASD member, Amex member, regulated firm, or issuer
must immediately notify his Department Director (or next higher
level officer) and the NASD, Inc. Office of General Counsel. The
employee should then await instructions concerning compliance with
the subpoena or pleading from the NASD, Inc. Office of General
Counsel.
3. No employee shall testify in any proceeding in respect to
securities or any matter related to the NASD without prior
approval of the NASD, Inc. Office of General Counsel and
notification to his Executive Vice President. This provision does
not apply to proceedings initiated by the NASD (E.G., disciplinary
hearings).
4. No employee shall act as a witness, expert, consultant, or
adjudicator in any NASD-sponsored arbitration, mediation, early
neutral evaluation, hearing, or other proceeding, on behalf of any
party other than the NASD (except Hearing Officers, when carrying
out their responsibilities relating to disciplinary proceedings
under the applicable NASD rules).
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VII. OUTSIDE EMPLOYMENT AND OTHER ACTIVITIES
A. General Provision
Employees may not engage in any outside employment or other activity that
would create an actual or apparent conflict of interest with their concurrent
NASD employment.
B. Specific Prohibitions
Employees are specifically prohibited from:
1. Maintaining any securities or commodities licensing registrations.
2. Performing any work for any broker/dealer, person or entity
registered under the Commodity Exchange Act, exchange that is not
operated by the NASD, alternative trading system, electronic
communications network, mutual fund, or investment adviser.
3. Performing any securities-related work for any bank or insurance
company.
4. Performing any activity regarding securities matters involving any
issuer or subscriber.
5. Performing any non-NASD work for, or providing non-NASD
professional services to, anyone who participates in the
employee's NASD performance evaluations.
6. Using company stationery, logos, addresses, or telephone numbers
in any manner that could be construed as indicating an outside
activity is being performed on behalf of, or is sanctioned by, the
NASD.
7. Using NASD office facilities for conducting outside employment or
other non-work-related activities.
8. Conducting any securities-related teaching, lecturing, or writing
activities (other than those that may be part of an employee's
designated job responsibilities), unless all of the following
conditions are met.
a. the employee requests and receives prior written approval
from his Executive Vice President;
b. the activity does not involve an organization that provides
training designed to facilitate passing securities licensing
requirements;
c. the employee clearly discloses that the views expressed are
his own and not the views of the NASD;
d. compensation is not accepted from an NASD or Amex member; and
e. any activity for which compensation is to be received is
performed by the employee during personal time (E.G.,
vacation, leave without pay, after business hours).
C. Service as Officer or Director of a Publicly Traded Company; Holding
Public Office
1. An employee may not serve as an officer or director of a company
that is listed on The Nasdaq Stock Market or Amex, without the
prior approval of the NASD Audit Committee. An employee who wishes
to serve as the officer or director of a Nasdaq or Amex-listed
company must submit (through his Department Director and Executive
Vice President) a written request for approval to the NASD Chief
Executive Officer. The Chief Executive Officer will make a
recommendation to the NASD Audit Committee on whether the request
should be approved or denied. The decision of the Audit Committee
will be final.
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2. An employee may not serve as an officer or director of any other
publicly traded company without the prior approval of the NASD
Chief Executive Officer. An employee who wishes to serve as the
officer or director of a publicly traded company that is not
listed on Nasdaq or Amex must submit (through his Department
Director and Executive Vice President) a written request for
approval to the NASD Chief Executive Officer. The decision of the
Chief Executive Officer on the request will be final.
3. If an employee wishes to serve as an officer or director of a
company that is not publicly traded, the matter is handled in
conformity with Subsection D ("Advance Notification of Outside
Employment"), below.
4. An employee cannot hold elected or appointed political office
without the prior written approval of the NASD Chief Executive
Officer. An employee who wishes to hold political office must
submit (through his Department Director and Executive Vice
President) a written request for approval to the NASD Chief
Executive Officer. The decision of the Chief Executive Officer on
the request will be final.
D. Advance Notification of Outside Employment
1. For any outside employment not prohibited above, an employee must
provide advance written notification to his Department Director
(or next higher level officer) describing the nature of any
planned outside employment or similar activity, including any
compensation expected to be received. Proposed outside employment
disclosed pursuant to this section will be deemed permissible
unless the Department Director (or next higher level officer)
determines that the proposed employment will create a conflict of
interest and provides the employee with written notification of
this determination.
2. If the nature of an employee's previously disclosed outside
employment changes, the employee is required to give written
notice of this fact to his Department Director (or next higher
level officer).
3. Exempt from the above notification provision are:
a. professional services (E.G., preparation of a will or a tax
return) provided for no fee to family members, friends, or
charitable or civic organizations; and
b. other services provided to charitable or civic organizations
for which an employee will not be compensated (E.G., selling
Girl Scout cookies; serving as President of a homeowners'
association).
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VIII. SECURITY ACCOUNTS, POSITIONS, AND TRANSACTIONS
A. Relevant Definitions
Security account means any account maintained with a broker/dealer or
commodity futures merchant.
Security position means any debt or equity security, option, and other
derivative product.
Security transaction means: 1) any transaction in a security account; or 2)
the creation, modification, or termination of a security position.
B. General Provisions
As a self-regulatory organization and market operator, the interests of the
NASD require that employees' investment activities be free from any
appearance of having been based on non-public or other information gained
through employment with the NASD. Further, these interests require that
work performed for the NASD is neither influenced, nor perceived to be
influenced, by an employee's security positions or the location of his
accounts. It constitutes a conflict of interest for any employee to
participate in an examination, investigation, disciplinary action, listing
decision, or other regulatory matter (E.G., advertising reviews, trading
halts) related to the issuer of any security (including mutual funds) in
which he maintains an ownership interest, controls trading, or has a
financial interest.
C. Disclosure of Security Accounts, Positions, and Transactions
To help ensure the interests of NASD are not compromised, each employee is
required to disclose the security accounts, positions, and transactions
described below. Disclosure is to be made as specified by the "NASD Code of
Conduct General Procedures."
1. All security accounts established by the employee.
2. All security accounts in which an employee has a financial
interest, including but not limited to, investment clubs, joint
accounts, trusts, and private corporations controlled by the
employee. Employees are presumed to have a financial interest in
the accounts of a spouse who lives with the employee. This
presumption may be rebutted if the employee demonstrates the
contrary by clear and convincing evidence; the determination of
whether an employee has satisfied this burden will be made by the
Senior Vice President and General Counsel of the NASD, and will be
final and binding on the employee.
3. All security accounts in which an employee may effect transactions
either directly or indirectly, including transactions effected for
the accounts of other persons under a power of attorney or
otherwise. Employees are presumed to control trading in the
accounts of any child under the age of 18 who lives with the
employee. This presumption may be rebutted if the employee
demonstrates the contrary by clear and convincing evidence; the
determination of whether an employee has satisfied this burden
will be made by the Senior Vice President and General Counsel of
the NASD, and will be final and binding on the employee.
4. All security positions held outside a brokerage account that the
employee directly or indirectly controls or in which he has a
financial interest. Employees are presumed to control the
positions of any child under the age of 18 who lives with the
employee,
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and to have a financial interest in the positions of a spouse who
lives with the employee. These presumptions may be rebutted if the
employee demonstrates the contrary by clear and convincing
evidence; the determination of whether an employee has satisfied
this burden will be made by the Senior Vice President and General
Counsel of the NASD, and will be final and binding on the
employee. Security positions held outside brokerage accounts
include securities held in certificate form, or securities
acquired through a dividend reinvestment plan and held in
book-entry form by the issuer.
5. All security transactions effected in any security accounts or
security positions that are required to be disclosed in Section
VIII C.1. through C.4., above.
D. The disclosures required by Subsection C are not required for:
1. Mutual fund accounts that are maintained directly with the fund
distributors.
2. Variable annuities sold directly by an insurance company.
3. Defined contribution savings plans (E.G., the NASD Savings Plus
Plan, and other 401(k) plans) for which the only investment
options are mutual funds or similar pooled funds whose investment
decisions the employee cannot control.
4. Accounts maintained by the U.S. Treasury to enable investors to
purchase U.S. Government securities directly from the issuing
agency (E.G., "Treasury Direct" accounts).
E. Trading Restrictions
It is impermissible for employees, either directly or through security
accounts or security positions in which they control trading or have a
financial interest, to:
1. Purchase, sell, or recommend the purchase or sale of any security
based on non-public information obtained through NASD employment.
2. Purchase or maintain any debt or equity interest in any
broker/dealer. If an ownership interest is acquired through a
spin-off, merger, other business reorganization, inheritance, or
marriage, the employee is required to dispose of the securities
acquired within 90 calendar days of the date on which the employee
becomes able to trade the securities.
3. Purchase or maintain any debt or equity interest in any entity
which derives more than 25% of its gross revenues (based upon the
most recent consolidated audited annual financial statements) from
the combined broker/dealer activities of all of its subsidiaries
and affiliates. If an ownership interest is acquired through a
spin-off, merger, other business reorganization, inheritance, or
marriage, the employee is required to dispose of the securities
acquired within 90 calendar days of the date on which the employee
becomes able to trade the securities.
4. Knowingly purchase or sell securities of any company with which
the NASD has a contract or business relationship that represents a
material contribution to the business of such company.
5. Enter into any security transaction that exceeds an employee's
ability to meet his payment or delivery obligations for the
initial purchase price, margin call, or other payment or
settlement obligation.
6. Knowingly purchase or sell a security at a price, commission, or
mark-up (down) that is more favorable than the price, commission,
or mark-up (down) afforded a similarly situated member of the
general public in the normal course of business.
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7. Purchase: a) any security during its initial public offering or
distribution; b) or a secondary offering of a security that is not
"actively traded;" or c) either a) or b) within 15 calendar days
of the offering date. This prohibition does not apply to:
a. offerings of open-end mutual funds, unit investment trusts,
U.S. government securities, municipal debt securities, or
variable contracts; and
b. rights offerings, or securities issued as a result of
spin-offs, mergers, and other business reorganizations if
both of the following conditions are met:
i. an interest in the issuing entity (or its
predecessor) was owned prior to the public
announcement of the offering or reorganization; and
ii. new securities are acquired in a percentage amount
that is equal to or less than the interest that
existed at the time the offering or distribution was
announced.
F. Additional Trading Restrictions Applicable to Certain Employees
All employees are subject to the federal securities laws, which prohibit
insider trading. It is thus unlawful for any employee to trade on material
non-public information. Employees who work in certain departments that
regularly receive market-sensitive information are subject to additional
trading restrictions. These additional restrictions apply to otherwise
lawful transactions.
Employees who work in specified departments (specified in the Code of
Conduct General Procedures, Section VIII) are required to hold securities
for 90 days. The holding period applies to employees' own security accounts
and positions, and to security accounts and positions in which they control
trading or have a financial interest. During the holding period, an
employee may not sell, purchase, exercise or otherwise dispose of his
interest in a security, whether directly or indirectly (E.G., through the
use of an offsetting derivative position).
Employees who work in specified departments (specified in the Code of
Conduct General Procedures, Section VIII) are prohibited from directly or
indirectly maintaining a net short position in certain securities that are
traded on markets operated by the NASD without the prior written approval
of his Executive Vice President. The net-short prohibition applies to
employees' own security accounts and positions, and to security accounts
and positions in which they control trading or have a financial interest.
This prohibition applies to Nasdaq and Amex-listed securities enumerated in
the Code of Conduct General Procedures, Section VIII, and to derivatives of
those securities.
G. Liquidation of Prohibited Investments
1. If an employee acquires, controls, or derives a financial benefit
from a security position that is prohibited by the Code of
Conduct, the NASD will require the security position to be
immediately liquidated. The employee will be responsible for any
losses that result from such disposition, and will be required to
forfeit any resulting profits to the corporate entity for which
the employee works. If warranted by the facts and circumstances
surrounding a violation, additional disciplinary actions may be
imposed against the employee, including immediate termination of
employment.
2. If at the time of hire an employee, or an account in which he
controls trading or has a financial interest, holds a security
that is prohibited by the Code of Conduct, it is the
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employee's responsibility to liquidate the holding immediately. If
a new employee believes that immediate liquidation would cause an
undue hardship under his circumstances, it is the employee's
responsibility to promptly seek a waiver from his Executive Vice
President.
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IX. BUSINESS GIFTS, GRATUITIES, AND COURTESIES
A. Relevant Definitions
Business courtesy means an item provided in conjunction with, and
incidental to, a meeting, seminar, or conference that an employee attends
for the purpose of conducting NASD business with the approval of his
Department Director (or next higher level officer).
Business gift means any item that is received from any NASD or Amex member,
Nasdaq or Amex issuer, or any person with whom the NASD transacts business.
Business gratuity means any favor or item received from any NASD or Amex
member, Nasdaq or Amex issuer, or any person with whom the NASD transacts
business in return for a specific service.
B. General Provisions
1. Unsolicited non-cash business gifts or courtesies may be accepted
only if the employee will not appear to be improperly influenced.
Business gifts received may not exceed $100 in aggregate value
from any person during a calendar year. Employees must report all
business gifts and courtesies they accept, regardless of value.
Reporting is performed as specified in the "NASD Code of Conduct
General Procedures."
2. When conducting NASD business, employees generally should pay for
incidental business expenses (E.G., meals) and obtain
reimbursement through the submission of a Travel and Entertainment
Form to the NASD Finance Department. In some situations, it may
not be possible or practical for an employee to pay for his own
expenses, and the person with whom the NASD is conducting business
may pay for these items. In such circumstances, the employee is
required to report the estimated value of the expenses paid by the
third party as a business courtesy. Reporting is performed as
specified in the "NASD Code of Conduct General Procedures." Any
business courtesies accepted must be in furtherance of NASD
business and, when reported, the business purpose must be
specified.
C. Specific Prohibitions
With respect to any NASD or Amex member, Nasdaq or Amex issuer, or any
person with whom the NASD transacts business, employees and members of
their immediate families are prohibited from directly or indirectly:
1. Soliciting any business gift, gratuity, or courtesy.
2. Accepting any business gratuity.
3. Accepting any business gift or courtesy consisting of cash, cash
equivalents (E.G., gift certificates), securities, or loans.
4. Accepting non-cash business gifts with an aggregate value in
excess of $100 from any person per calendar year.
5. Accepting any business gift of tickets to a concert, theatrical
performance, sporting event, or similar function.
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6. Accepting any business gift or courtesy (E.G., lunch, dinner,
transportation, etc.) from any person or entity that is the
subject of an investigative, adjudicatory, or disciplinary
function in which the employee is involved.
7. Accepting any business gift or courtesy (E.G., lunch, dinner,
transportation, etc.) from an attorney or party to an arbitration,
mediation, or other dispute-resolution proceeding in which an
employee is involved.
D. The provisions of Subsections B and C, above, do not apply if:
1. Circumstances make it clear that a personal or family
relationship, rather than a business relationship, is the
motivating factor behind a gift to an employee or a member of an
employee's immediate family.
2. A business gift, gratuity, or courtesy was received by a member of
the employee's immediate family in connection with that family
member's employment or professional standing.
3. A discount or other promotional benefit is available to all
employees through an NASD-sanctioned arrangement.
E. Disposition of Impermissible Business Gifts, Gratuities, and Courtesies
If an employee or a member of his immediate family accepts a business gift,
courtesy, or gratuity that is prohibited by the Code of Conduct or which,
in fact or appearance, may improperly influence the employee in the
performance of his duties, the employee's Department Director (or next
higher level officer) may require the business gift, courtesy, or gratuity
to be returned (or otherwise disposed of), or require the employee to
reimburse the donor for the cost of the item. If warranted by the
circumstances, additional disciplinary actions may be imposed, up to or
including immediate termination of employment.
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X. CODE OF CONDUCT ENFORCEMENT AND DISCIPLINE
A. Investigations
Employees who are aware, or become aware, of unreported or undisclosed
suspected violations of the Code of Conduct by other employees are expected
to report such violations to the NASD, Inc. Office of General Counsel or to
the Internal Audit section of the Internal Review Department. Employees
reporting alleged violations of the Code of Conduct will be provided with
confidentiality to the extent possible. Failure to report violations may
subject the non-reporting employee to disciplinary action.
When suspected violations are reported or discovered, the NASD, Inc. Office
of General Counsel and the Internal Review Department will confer regarding
the extent of the investigation required. The Internal Review Department
generally will conduct any investigation determined necessary.
Employees are expected to cooperate fully with any investigation of
possible violations of the Code of Conduct. Failure to do so will be
considered a violation of the Code of Conduct and may subject the
non-cooperating employee to disciplinary action.
Investigative findings will be reported to appropriate management.
B. Discipline
In the event that an employee is found to have violated the Code of
Conduct, appropriate sanctions will be imposed by management. In assessing
sanctions, the NASD aims to treat all employees fairly and consistently. To
achieve these goals with respect to disciplinary actions imposed for Code
of Conduct violations, management must consult with the NASD, Inc. Office
of General Counsel whenever an employee has violated the Code of Conduct.
The NASD, Inc. Office of General Counsel will advise management regarding
past disciplinary actions that have been imposed under similar
circumstances. If management proposes an action that is inconsistent with
precedent or appears inappropriate, NASD, Inc. Office of General Counsel
may require that more senior management agree with the proposed action.
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XI. INTERPRETATIONS
The NASD, Inc. Office of General Counsel is responsible for providing
interpretations of the Code of Conduct. Employees may contact the Office of
General Counsel either directly, or through their Department Director (or next
higher level officer), as specified in the NASD Code of Conduct General
Procedures.
Interpretive advice will be provided either orally or in writing, as deemed
appropriate by the NASD, Inc. Office of General Counsel. The NASD, Inc. Office
of General Counsel may publish interpretations of general interest on OASIS, and
such published interpretations are binding upon employees in the same manner as
the Code of Conduct. Published interpretations become effective and binding upon
their posting on OASIS with notice to employees. The effective date will be
noted for interpretations posted after February 1, 1998; if no effective date is
indicated, an interpretation was effective February 1, 1998, when the NASD Code
of Conduct became effective.
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XII. AVAILABILITY
The NASD Code of Conduct, and interpretations and procedures issued thereunder
will be maintained in electronic form on OASIS. Amendments to these materials
will be posted from time to time as deemed necessary by the Senior Vice
President and General Counsel of NASD, Inc.
The NASD Code of Conduct will be maintained in printed form, with copies
available to employees through their local Human Resources Department. However,
Code of Conduct interpretations and procedures will not be maintained in printed
form by the Human Resources Department. Therefore, employees should use OASIS to
ensure they are referencing the most current version of the Code,
interpretations, and procedures.
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XIII. DEFINITIONS
For purposes of the Code of Conduct the following terms shall have the following
meanings:
BROKER/DEALER means any entity or person registered as a "broker" or "dealer,"
as those terms are defined in the Securities Exchange Act of 1934.
BUSINESS COURTESY means an item provided in conjunction with, and incidental to,
a meeting, seminar or conference that an employee attends for the purpose of
conducting NASD business with the approval of his Department Director (or next
higher level officer).
BUSINESS GIFT means any item that is received from any NASD or Amex member,
Nasdaq or Amex issuer, or any person with whom the NASD transacts business.
BUSINESS GRATUITY means any favor or item that is received from any NASD or Amex
member, Nasdaq or Amex issuer, or any person with whom the NASD transacts
business in return for a specific service.
DEPARTMENT DIRECTOR means a person with direct responsibility for the overall
operation of a Department or District Office, regardless of the person's title.
Typically these persons will be a Director, Vice President, or Senior Vice
President.
DEPARTMENT DIRECTOR (OR NEXT HIGHER LEVEL OFFICER) means that an employee who is
a Department Director (or higher) must notify or get approval from the person to
whom he reports. Typically, this will require Department Directors to go to
their Vice President; Vice Presidents to go to their Senior Vice President; and
Senior Vice Presidents to go to their Executive Vice President. For employees at
or above the Executive Vice President level, disclosures must be made to (or
approvals received from) the Senior Vice President and General Counsel of NASD,
Inc.
EMPLOYEE means full-time, part-time, and temporary staff and officers of the
NASD. For purposes of the Code of Conduct, the following categories of persons
are not considered employees:
- - Chairmen, Vice-Chairmen and other members of NASD Boards and
Committees, unless they hold another elected, non-Board office with the
NASD or perform other duties for the NASD outside of their Board duties
(E.G., the President of The Nasdaq Stock Market or NASD Regulation,
Inc.);
- - Consultants or independent contractors working under contract for the
NASD; and
- - Temporary staff hired through an employment agency.
IMMEDIATE FAMILY means an employee's parents, siblings, spouse, children,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law or
daughter-in-law. The term also includes any other person who is supported,
directly or indirectly, to a material extent by the employee.
ISSUER means any company that is listed, or has applied for listing, on any
market or market system operated by the NASD. As used in the Code of Conduct,
the term shall also include any natural person employed by such a company.
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NASD means the NASD, Inc., and all of its subsidiary or affiliated companies,
which at this time include: NASD Regulation, Inc., The Nasdaq Stock Market,
Nasdaq International, Ltd., Nasdaq International Market Initiatives, Inc., and
Amex.
NASD MEMBER means any broker/dealer that has been admitted to, or applied for,
membership in the NASD. As used in the Code of Conduct, the term shall also
include any natural person associated with such a company.
SECURITY ACCOUNT means any account maintained with a broker/dealer or commodity
futures merchant.
SECURITY POSITION means any debt or equity security, option, or other derivative
product.
SECURITY TRANSACTION means: 1) any transaction in a security account; or 2) the
creation, modification, or termination of a security position.
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