EX-99.CODE ETH
CODES OF ETHICS FOR SENIOR FINANCIAL OFFICERS
FLAHERTY & CRUMRINE PREFERRED INCOME FUND INCORPORATED
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND INCORPORATED
FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED
CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS
INTRODUCTION
This Code has been written and adopted in conformity with Section 406 of the
Sarbanes-Oxley Act of 2002 as implemented by SEC rules and regulations. This
Code sets forth principles and establishes rules of conduct for Senior Officers
(as defined below) of each of the above-named Funds. This Code supplements other
Codes that the Fund or its Investment Adviser has adopted or may adopt in
connection with other matters.
GENERAL PRINCIPLES
It is the ethical and legal obligation of the Fund's Senior Officers to strive
to insure the full, fair, timely, and comprehensible financial disclosure to
shareholders, regulatory authorities, and the general public. It is also the
obligation of the Fund's Senior Officers to establish and/or maintain adequate
internal control safeguards for the purposes of (1) utilizing the Fund's
financial resources in the manner authorized by the Fund's Board of Directors
and permitted by applicable law and (2) laying the foundation for proper
financial accounting. It is the obligation of the Fund's Senior Officers to
avoid improper conflicts of interest.
As a guiding principle, a Senior Officer is expected to act in a manner that he
would wish another to act towards him if the roles were reversed.
APPLICABILITY
For purposes of this Code, a Senior Officer of the Fund means either the Chief
Executive Officer or the Chief Financial Officer or such other officer
performing the tasks of such officers in an official capacity.
COMPLIANCE WITH APPLICABLE LAW AND REGULATIONS
A Senior Officer shall maintain working knowledge of and comply with all
applicable laws, rules, and regulations of any government, government agency,
regulatory organization and licensing agencies governing matters of internal
controls and financial statement disclosure.
A Senior Officer will not knowingly participate or assist in any violation of
such laws, rules, or regulations.
FINANCIAL DISCLOSURE PROCEDURES
The following procedures and rules are to apply in all manners regarding
financial disclosure. Financial disclosure includes, without limitation, regular
periodic reports to shareholders (e.g., Annual, Semi-Annual, and Quarterly
Reports), press releases, reports to regulatory authorities or securities
exchanges, reports to taxing authorities, web pages, information released to
statistical subscriber services, etc.
A Senior Officer will not knowingly misstate a material fact nor will such
Officer fail to state a fact that is material under the circumstances.
A Senior Officer will use his best efforts to seek to assure that financial
disclosure is clear and comprehensible.
In manners regarding financial disclosure, a Senior Officer will avoid
selectively disclosing information, except to service providers of the Fund and
applicable regulatory authorities that are expected to maintain confidentiality
in accordance with ethical business practice.
A Senior Officer will make every reasonable effort to make sure that financial
disclosure is made in a timely manner.
A Senior Officer will provide and/or cause to be provided full cooperation with
financial auditors and/or other regulatory/criminal investigators.
A Senior Officer will maintain familiarity with such basic principles of GAAP,
AICPA standards, FASB pronouncements, etc., as are necessary to carrying out the
obligation of fair and full financial accounting disclosure.
INTERNAL CONTROL PROCEDURES
A Senior Officer will maintain working knowledge of the Fund's foundational
governance documents, key contracts, and actions/resolutions of its Board of
Directors and Board Committees.
A Senior Officer will make every reasonable effort to insure that the terms of
the Fund governance documents, key contracts, and actions of the Board and its
Committees are faithfully carried out.
A Senior Officer will make every reasonable effort to insure, including the
establishment of procedures as may be necessary, the proper authorization of
securities transactions and the compliance with requisite investment guidelines
and requirements.
A Senior Officer will make every reasonable effort to insure, including the
establishment of procedures as may be necessary, that payments for investments,
expenses, shareholder distributions, and other purposes have been properly made.
This may include the designation of certain persons as authorized agents.
A Senior Officer will review the operations of the Fund and review the adequacy
of internal controls through the mechanism of the Fund's Disclosure and Internal
Controls Committee and such Committee's Procedures.
ACTUAL AND APPARENT CONFLICTS OF INTEREST
A "conflict of interest" occurs when a Senior Officer's private interest
interferes with the interests of, or his service to, the Fund.
Certain conflicts of interest arise out of relationships between Senior Officers
and the Fund and already are subject to conflict of interest provisions in the
Investment Company Act of 1940 (the "Investment Company Act") and the Investment
Advisers Act of 1940 (the "Investment Advisers Act"). The Fund's and the
investment adviser's compliance programs and procedures are designed to prevent,
identify and correct, violations of these provisions. This Code does not, and is
not intended to, repeat or replace these programs and procedures, and such
conflicts fall outside the parameter of this Code.
Although typically not presenting an opportunity for improper personal benefit,
conflicts arise from, or as a result of, the contractual relationship between
the Fund and the investment adviser of which the Senior Officers are also
officers or employees. As a result, this Code recognizes that the Senior
Officers will, in the normal course of their duties (whether formally for the
Fund or for the adviser, or for both), be involved in establishing policies and
implementing decisions that will have different effects on the adviser and the
Fund. The participation of the Senior Officers in such activities is inherent in
the contractual relationship between the Fund and the adviser and is consistent
with the performance by the Senior Officers of their duties as officers of the
Fund. Thus, if performed in conformity with the provisions of the Investment
Company Act and the Investment Advisers Act, such activities will be deemed to
have been handled ethically. In addition, it is recognized by the Fund's Board
of Directors that the Senior Officers may also be officers or employees of one
or more other investment companies covered by this or other codes.
Other conflicts of interest are covered by this Code, even if such conflicts of
interest are not subject to the provisions in the Investment Company Act and the
Investment Advisers Act. The overarching principle is that the personal interest
of a Senior Officer should not be placed improperly before the interest of the
Fund.
A Senior Officer must:
(1) not use his personal influence or personal relationships improperly to
influence investment decisions or financial reporting by the Fund
whereby the Senior Officer would benefit personally to the detriment
of the Fund;
(2) not cause the Fund to take action, or to refrain from taking action,
for the individual personal benefit of the Senior Officer rather than
for the benefit of the Fund;
(3) not use material non-public knowledge of portfolio transactions made
or contemplated by the Fund to trade personally or cause others to
trade personally in contemplation of the market effect of such
transactions.
SUPERVISION
A Senior Officer will exercise appropriate supervision over employees, officers,
and other service providers to seek to insure that the foregoing procedures are
followed.
STANDARD OF CARE
A Senior Officer will exercise reasonable care in the carrying out of all duties
under this Code and as an officer of the Fund.
REPORTING AND ACCOUNTABILITY
A Senior Officer must promptly notify the President of the Fund, or a Vice
President he may designate, promptly if he knows of any violation of this Code.
Failure to do so is itself a violation of this Code.
The President of the Fund, or a Vice President he may designate, is responsible
for applying this Code to specific situations in which questions are presented
under it and has the authority to interpret this Code in any particular
situation.
The Fund will follow these procedures in investigating and enforcing this Code:
(1) the President, or a Vice President he may designate, will take all
appropriate action to investigate any potential violations reported to
him;
(2) if, after such investigation, the President or Vice President believes
that no violation has occurred, no further action is required;
(3) any matter that the President or Vice President believes is a
violation will be reported to the Audit Committee;
(4) if the Audit Committee concurs that a violation has occurred, it will
inform the Board, which will consider appropriate action, which may
include review of, and appropriate modifications to, applicable
policies and procedures, notification of appropriate personnel of the
investment adviser or its board, or a recommendation to dismiss the
Senior Officer.
The Board will be responsible for granting waivers, as appropriate, such waiver
also requiring a majority vote of the independent directors. However, any
changes to or waivers of this Code will, to the extent required, be disclosed as
provided by rules of the SEC.
CONSEQUENCES OF FAILURE TO COMPLY WITH THIS CODE
In the event that a Senior Officer has not complied with any provision of this
Code, the Audit Committee shall refer the matter to the Fund's Board of
Directors. The Board may impose appropriate sanctions including, among other
things, censure and suspension or termination of such person's officership.
OTHER POLICIES AND PROCEDURES
This Code shall be the sole code of ethics adopted by the Fund for purposes of
Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to
registered investment companies thereunder. Insofar as other policies or
procedures of the Fund, the Fund's Investment Adviser or other service providers
govern or purport to govern the behavior or activities of the Senior Officers
who are subject to this Code, they are superseded by this Code to the extent
that they overlap or conflict with the provisions of this Code. The Fund's and
its Investment Adviser's codes of ethics under Rule 17J-1 under the Investment
Company Act and the Investment Adviser's other compliance and control policies
and procedures are separate requirements applying to the Senior Officers and
others, and are not part of this Code.
ACKNOWLEDGMENT
Upon the adoption of this Code and annually thereafter and upon the appointment
of any individual to a position as a Senior Officer, he or she is required to
sign the affirmation set forth on Exhibit A.
ANNUAL REVIEW AND AMENDMENTS
This Code of Ethics shall be reviewed and approved by the Fund's Board of
Directors no less frequently than annually.
The Directors may at any time make such amendments as they deem necessary or
appropriate to effectuate the purposes of this Code. Such amendments require a
majority vote of the Board of Directors and a majority vote of the
non-interested Directors.
INTERNAL USE
This Code is intended solely for the internal use of the Fund and does not
constitute an admission, by or on behalf of the Fund, as to any fact,
circumstance, or legal conclusion.
RE-ADOPTED BY THE BOARD OF DIRECTORS AT ITS MEETING OF OCTOBER 19, 2006
EXHIBIT A
AFFIRMATION
I have read this Code of Ethics for Senior Officers. I further confirm that I am
a Senior Officer as defined therein and have complied with the requirements of
this Code.
Date:
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Name:
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Title:
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