EXHIBIT A
CODE OF BUSINESS CONDUCT AND ETHICS
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INTRODUCTION
This Code of Business Conduct and Ethics (the "Code") sets forth the
commitment of Diamond Hill Investment Group, Inc. (the "Company") to conduct its
business in accordance with all applicable laws, rules and regulations and the
highest ethical standards. This Code does not cover every issue that may arise;
instead it sets out basic principles to guide all directors, officers and
employees of the Company with respect to conducting themselves in a professional
and ethical manner. Those basic principles are designed to determine wrongdoing
and to promote:
(1) honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional relationships;
(2) full, fair, accurate, timely and understandable disclosure in reports
and documents that the Company files with, or submits to the SEC, and other
public communication made by the Company;
(3) compliance with applicable governmental laws, rules and regulations;
(4) prompt internal reporting of violations of the Code to the appropriate
persons identified in this Code; and
(5) accountability for adherence to this Code.
1. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Obeying applicable laws, rules and regulations, both in letter and in
spirit, is the foundation on which this Company's ethical standards are built.
It is the personal responsibility of each director, officer and employee of the
Company to adhere to the standards and restrictions imposed by all applicable
laws, rules and regulations. While it cannot be expected that each director,
officer or employee of the Company is or will be aware of the details of every
law, rule or regulation applicable to the Company, it is important for each
director, officer and employee of the Company to, at a minimum, reach that level
of knowledge and awareness regarding these laws, rules and regulations which
allows him or her to seek advice from others regarding compliance with those
laws, rules and regulations. If any director, officer or employee of the Company
determines that he or she needs to seek advice regarding issues concerning
compliance with applicable laws, rules and regulations, that person should ask
the Chief Compliance Officer for such advice before taking any action.
All directors, officers and employees of the Company are expected to read
and have a complete understanding of the Code of Ethics of Diamond Hill Funds,
Diamond Hill Securities, Inc. and Diamond Hill Capital Management, Inc. (adopted
June 30, 2002), and as amended from time to time.
If requested, the Company will hold information and training sessions to
promote compliance with the laws, rules and regulations applicable to the
Company.
2. CONFLICTS OF INTEREST
A "conflict of interest" exists when the private interest of an officer,
director or employee of the Company interferes in any way with the interests of
the Company. A conflict situation can arise when an employee, officer or
director of the Company takes actions or has interests that may make it
difficult for him or her to perform his or her work objectively and effectively.
In particular, an employee, officer or director of the Company must never use or
attempt to use his or her position at the Company to obtain any improper
personal benefit (such as loans or guaranties of obligations of the officer,
director or employee) for himself or herself, for his or her family members, or
for any other person.
It is almost always a conflict of interest for an officer, director or
employee of the Company to work simultaneously for a competitor. A conflict of
interest is prohibited as a matter of Company policy, unless the conflict has
been approved by the Board of Directors of the Company (the "Board"). Conflicts
of interest may not
always be readily apparent, so if an employee, officer or director of the
Company has a question regarding any matter that may present a conflict of
interest, that person should immediately consult with the Chief Compliance
Officer. Also, any employee, officer or director of the Company who becomes
aware of a conflict or potential conflict should immediately bring it to the
attention of the Chief Compliance Officer.
3. PUBLIC DISCLOSURE
It is the Company's policy that the information in its public
communications, including filings to be made with or submitted to the SEC, be
full, fair, accurate, timely and understandable. All officers, directors and
employees of the Company who are involved in this disclosure process are
responsible for acting in furtherance of this policy and are responsible for
promptly informing any member of the Board of any material information of which
he or she becomes aware that may affect the disclosures made by the Company in
its public filings. In particular, these individuals are required to maintain
familiarity with the disclosure requirements applicable to the Company and are
prohibited from knowingly misrepresenting, omitting, or causing others to
misrepresent or omit, material facts about the Company or its operations to
others, whether within or outside the Company, including the Company's
independent auditors. In addition, any officer, director or employee of the
Company who has a supervisory role in the Company's disclosure process has an
obligation to discharge his or her responsibilities diligently.
4. CONFIDENTIALITY; INSIDER TRADING
In conducting the Company's business, officers, directors and employees of
the Company may learn confidential or proprietary information about the Company,
its clients, its prospective clients or other third parties. All officers,
directors and employees of the Company must maintain the confidentiality of such
information, except where disclosure is authorized or legally mandated.
Confidential or proprietary information includes, without limitation, any
non-public information concerning the Company (or clients, prospective clients
or third parties), its, his or her business, financial performance or prospects,
and any non-public information provided by a third party to the Company with the
expectation that the information be kept confidential and used solely for the
business purposes for which it was conveyed.
All officers, directors and employees of the Company who have had access to
confidential or proprietary information are prohibited from using or sharing
that information in connection with the buying and selling of any of the
Company's securities. If any officer, director or employee of the Company has
any question regarding whether information is confidential or proprietary
information, that person should discuss the matter with the Chief Compliance
Officer as soon as such question arises.
5. CORPORATE OPPORTUNITIES
Employees, officers and directors of the Company owe a duty to the Company
to advance its legitimate interests when the opportunity to do so arises. No
employee, officer or a director of the Company may use Company property,
information or position for improper personal gain or competing with the
Company, directly or indirectly. Employees, officers and directors of the
Company are also prohibited from taking for themselves (or directing to a third
party) a business opportunity that is discovered through the use of Company
property, information or position without the consent of the Board.
Any employee, officer or director of the Company who has any question as
to whether or not the use of Company property, information or position would
violate this Code should, prior to taking any course of action, contact the
Chief Compliance Officer.
6. COMPETITION AND FAIR DEALING
The Company seeks to outperform its competition fairly and honestly. Each
employee, officer and director of the Company should endeavor to respect the
rights of and deal fairly with the Company's clients, suppliers and competitors.
No employee, officer or director of the Company should take unfair advantage of
anyone through manipulation, concealment, abuse of privileged information,
misrepresentation of material facts, or any other intentional unfair dealing
practice.
7. EQUAL EMPLOYMENT OPPORTUNITY AND HARASSMENT
All personnel decisions made by the Company are based on merit and
contribution to the Company's success. Concern for the personal dignity and
individual worth of every employee, officer or director of the Company is an
indispensable element in the standard of conduct that the Company has set for
itself. The Company will afford equal employment opportunities to all qualified
persons without regard to any impermissible criterion or circumstance. The
Company will not tolerate or condone any type of discrimination or harassment of
any kind.
8. RECORD-KEEPING
The Company requires honest and accurate recording and reporting of
information in order to make responsible business decisions. All of the
Company's books, records, accounts and financial statements must be maintained
in reasonable detail, must appropriately reflect the Company's transactions and
must conform both to applicable legal requirements and to the Company's system
of internal controls.
Business records and communications may become public. The officers,
directors and employees of the Company should avoid exaggeration, derogatory
remarks or inappropriate characterizations of people or entities that may be
misunderstood. This applies equally to e-mail, internal memoranda and formal
reports. Records should always be retained or destroyed according to the
Company's record retention policies, a copy of which is available upon request
from the Chief Compliance Officer.
9. PROTECTION AND PROPER USE OF COMPANY ASSETS
All employees, officers and directors of the Company should endeavor to
protect the Company's assets and ensure their efficient use. Theft, carelessness
and waste have a direct impact on the Company's profitability. Any suspected
incident of fraud or theft should be immediately reported to the Chief
Compliance Officer for investigation.
The obligation of employees, officers and directors of the Company to
protect the Company's assets includes the obligation to protect the Company's
proprietary information. Proprietary information includes, without limitation,
the Company's intellectual property such as trade secrets, and the Company's
business, marketing and service plans, databases, records, salary information
and any unpublished financial data and reports. Unauthorized use or distribution
of this information is prohibited hereunder and could also be illegal and result
in civil or even criminal penalties.
10. PAYMENTS TO GOVERNMENT PERSONNEL
The U.S. Foreign Corrupt Practices Act prohibits giving anything of value,
directly or indirectly, to officials of foreign governments or foreign political
candidates in order to obtain or retain business. It is strictly prohibited to
make illegal payments to government officials of any country.
In addition, the U.S. government has a number of laws and regulations
regarding business gratuities which may be accepted by U.S. government
personnel. State and local governments, as well as foreign governments, may have
similar rules. The promise, offer or delivery to an official or employee of the
any governmental agency of a gift, favor or other gratuity in violation of these
rules is prohibited hereunder and could also be a criminal offense. If any
officer, director or employee of the Company has any question regarding any
possible payment or issuance of a gratuity to a governmental official, he or she
should immediately contact the Chief Compliance Officer.
11. WAIVERS OF THIS CODE
Any waiver of this Code may be made only by the Board, and will be promptly
disclosed by the Company as required by law or any applicable stock exchange or
NASDAQ national market or small cap system regulation.
12. REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR
Any employee, officer or director of the Company who becomes aware of any
existing or potential violation of this Code should promptly notify the Chief
Compliance Officer. If the matter cannot be reported to the Chief
Compliance Officer for any reason, the matter should be promptly reported to any
member of the Board. Employees, officers and directors of the Company are
encouraged to talk to their supervisors, the CEO, Chief Compliance Officer or
members of the Board about observed illegal or unethical behavior and, when in
doubt, about the best course of action in a particular situation. It is the
policy of the Company not to allow retaliation against any Company personnel
(including, without limitation, termination of employment or a demotion of
position) for reports (made in good faith) of illegal or unethical behavior by
others. Whenever in doubt, an officer, director or employee of the Company
should seek advice from the appropriate person.
13. COMPLIANCE AND ENFORCEMENT PROCEDURES
The Company's policy is to ensure prompt and consistent enforcement of
this Code. Upon being advised of, or otherwise learning of, a possible violation
of this Code, the CEO and/or the Chief Compliance Officer (or the Board, if the
CEO or Chief Compliance Officer are not in a position to act), shall promptly
investigate the matter and set forth his, her or their findings in writing. Such
writing shall also include the enforcement action to be taken, which action
shall be taken at the time set forth in such writing. Any enforcement action
shall be reasonably designed to deter wrongdoing and to promote accountability
for adherence to this Code. In determining what enforcement action is
appropriate in a particular case, the person or persons making the determination
shall take into account all relevant information, including the nature and
severity of the violation, whether the violation was a single occurrence or
repeat occurrence, whether the violation appears to have been intentional or
inadvertent, whether the individual in question had been advised prior to the
violation as to the proper course of action and whether the individual in
question had committed other violations in the past.
The Company is aware that it may be difficult to know if a violation of
this Code has occurred or may occur in the future. However, each officer,
director or employee of the Company should strive to identify and raise
potential issues with respect to the application of this Code before those
issues become violations of this Code.
14. PROVISIONS SPECIFICALLY APPLICABLE TO CEO, CHIEF COMPLIANCE OFFICER AND ALL
SENIOR FINANCIAL OFFICERS
In addition to the other provisions set forth in this Code, the CEO, Chief
Compliance Officer and senior financial officers of the Company are also subject
to the following additional specific policies:
1. Each shall promptly bring to the attention of the Audit Committee any
information he or she may have concerning (a) significant deficiencies
in the design or operation of internal controls which could adversely
affect the Company's ability to record, process, summarize and report
financial data or (b) any fraud, whether or not material, that
involves management or other employees who have a significant role in
the Company's financial reporting, disclosures or internal controls.
2. Each shall promptly bring to the attention of the CEO or Chief
Compliance Officer, and to the Audit Committee, any information he or
she may have concerning any violation of this Code involving any
management or other employees who have a significant role in the
Company's financial reporting, disclosures or internal controls.
3. Each shall promptly bring to the attention of the CEO or the Chief
Compliance Officer and to the Audit Committee, any information he or
she may have concerning evidence of a material violation by the
Company or any agent thereof of the securities or other laws, rules or
regulations applicable to the Company and the operation of its
business.