Corporate Governance - Conduct
|Highlights | Board of Directors | Management | Committee Composition | Guidelines | Conduct|
|Code of Business Conduct and Ethics|
Five Oaks Investment Corp. (“FOIC”) has adopted this Code of Conduct and Ethics and Policy Against Insider Trading (“Code of Conduct” or “Code”) to communicate to all FOIC personnel the ethical and legal standards that we expect you to observe when dealing with FOIC, your FOIC colleagues and others with whom we do business. It contains a number of policies and standards which, when taken together, are designed to help define the essence of the conduct of an FOIC representative. These policies and standards are also intended to provide guidance to FOIC personnel in fulfilling their obligations to comply with applicable laws, rules and regulations. This Code of Conduct was also adopted pursuant to the requirements of the Management Agreement, dated as of May 16, 2012, between FOIC and Oak Circle Capital Partners LLC (the “Manager”). This Code of Conduct applies to:
(collectively, “Covered Persons”). These standards are neither exclusive nor complete. Additional FOIC policies may be published to Covered Persons from time to time. Covered Persons are required to comply with all applicable laws, rules and regulations, whether or not specifically addressed in these policies. For additional guidance, or if you have questions regarding the existence, interpretation or application of any law, rule or regulation, please contact your supervisor, or the Compliance Officer of FOIC (“Compliance Officer”).
Our culture is based upon a set of shared values and principles. These include working with integrity and commitment to our clients, colleagues and communities. In practice, this means that our clients’ interests must always come first, that Covered Persons should treat each other with respect and consideration, and that FOIC should participate as a responsible corporate citizen in every community in which it operates. This commitment is a vital part of our achieving our principal responsibility as a private company which intends to become a publicly held company: producing a fair return on our shareholders’ capital.
This Code of Conduct contains broad and general principles that supplement the specific policies, procedures and training elsewhere within FOIC.
One person’s misconduct can damage FOIC’s hard-earned reputation and compromise the public’s trust in FOIC. Every Covered Person should therefore become familiar with this Code and abide strictly by its provisions. In brief:
STATEMENT OF GENERAL PRINCIPLES
FOIC operates in a highly-regulated and complex environment. There are numerous layers of overlapping, and occasionally conflicting, laws, customs and local practices. This Code of Conduct was designed to provide all of us who are part of FOIC with a clear statement of FOIC’s ethical and cultural standards.
1. Compliance with Laws, Rules and Regulations
FOIC strives to ensure that all activity by or on behalf of FOIC is in compliance with applicable laws, rules and regulations (“applicable laws”). Many of these applicable laws are specifically described in this Code of Conduct and in other FOIC policies and procedures. In the conduct of our business, all Covered Persons are required to comply with all applicable laws.
2. Fair and Honest Dealing
Covered Persons shall deal fairly and honestly with FOIC’s shareholders, customers, suppliers, competitors and employees. Covered Persons shall behave in an ethical manner and shall not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.
3. Conflicts of Interest
FOIC and its Covered Persons must adhere to the highest standards of honest and ethical conduct. These include, but are not limited to, sensitivity to the existence of a conflict of interest or the appearance of a conflict of interest. Conflicts of interest can arise in many ways, and we must all be sensitive to those situations in which they are most likely to be present. A conflict of interest exists when a Covered Person’s personal interest interferes, or appears to interfere, in any way with the interests of FOIC or its clients, or when a Covered Person otherwise takes actions or has interests that may make it difficult to perform his or her FOIC work objectively and effectively. For example, a conflict of interest would arise if a Covered Person, or a member of his or her family, receives improper personal benefits as a result of his or her position with FOIC.
All Covered Persons owe a duty of undivided and unqualified loyalty to FOIC and may not use their positions improperly to profit personally or to assist others in profiting at the expense of FOIC. All Covered Persons are therefore expected and required to regulate their activities so as to avoid conflicts of interest. In addition, Covered Persons shall promptly communicate to the Compliance Officer any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest so that FOIC and the Covered Person may take steps to minimize the conflict.
Covered Persons shall not take for personal use (or for use by a family member) any business opportunity learned of during the course of serving FOIC, using FOIC property or as a result of such individual’s position with FOIC. To the extent that an employee or officer learns of a business opportunity that is within FOIC’s existing or proposed lines of business, the employee or officer should inform his or her supervisor or the Board of Directors, as appropriate, of the business opportunity and refrain from personally pursuing the matter until such time as FOIC decides to forego the business opportunity. At no time may any employee or officer utilize any FOIC property, information or position to generate personal gain or engage or participate in any business that directly competes with FOIC.
While not all-inclusive, the following examples of outside financial interests will serve to illustrate some of the types of activities that might cause conflicts of interest:
As described in more detail in Sections 4, 5 and 6 below, acting as an officer or director of an outside organization, personal share dealing, and the use of material non-public information represent additional areas where conflicts can arise and are of particular sensitivity.
4. Outside Activities and Compensation
No Covered Person shall perform work or render services for any competitor of FOIC or for any organization with which FOIC does business or which seeks to do business with FOIC (and that is not an affiliate of XL Global, Inc.) outside of the normal course of his or her employment with FOIC, without the prior written approval of FOIC. Nor shall any such person be a director, officer, or consultant of such an organization, or permit his or her name to be used in any fashion that would tend to indicate a business connection with such organization, without such approval. Outside organizations can include public or private corporations, partnerships, charitable foundations and other not-for-profit institutions. With the above approval, Covered Persons may receive compensation for such activities. Notwithstanding the foregoing, this policy shall not prevent any Covered Person who is an employee of XL Global, Inc. or any of its affiliates, from performing work or rendering services for any competitor of FOIC, or for any organization with which FOIC does business or which seeks to do business with FOIC, in either case with whom XL Global, Inc. or any of its affiliates already does business or is contemplating doing business.
Service with organizations outside of FOIC can, however, raise serious regulatory issues, including conflicts of interest and access to material non-public information.
As an outside board member or officer, a Covered Person may come into possession of material non-public information about the outside organization or other public companies. It is critical that a proper information barrier be in place between FOIC and the outside organization, and that the Covered Person does not communicate such information to other Covered Persons in violation of the information barrier.
Similarly, FOIC may have a business relationship with the outside organization or may seek a relationship in the future. In those circumstances, the Covered Person must not be involved in any way in the business relationship between FOIC and the outside organization, unless the outside organization is a shareholder of FOIC or an affiliate of a shareholder of FOIC.
FOIC retains the right to prohibit membership by Covered Persons on any board of directors/trustees or as an officer of an outside organization where such membership might conflict with the best interests of FOIC. Approval will be granted on a case-by-case basis, subject to proper resolution of potential conflicts of interest. Outside activities will be approved only if these issues can be satisfactorily resolved.
5. Personal Share Dealing
Purchasing and selling securities in a Covered Person’s own account, or accounts over which the Covered Person has access or control, can give rise to potential conflicts of interest. As fiduciaries, we are held to the highest standards of conduct. Improperly gaining advance knowledge of portfolio transactions, or conducting securities transactions based upon information obtained at FOIC, can be a violation of those standards.
FOIC has policies that specifically cover personal transactions in the shares of FOIC contained in Section 6 of this Code. All Covered Persons are obligated to follow those procedures whenever they conduct such transactions.
6. Insider Trading
In the conduct of our business, Covered Persons may come into possession of Material Non-Public Information (as defined below). This information could concern an issuer, a client, a portfolio, the market for a particular security, or FOIC itself. The purchase or sale of FOIC’s securities or the securities of other companies while aware of material nonpublic information about such company, or the disclosure of material nonpublic information to others who then trade in such company’s securities, is prohibited by this Code of Conduct and by United States and other jurisdictions’ securities laws. All Covered Persons should review the insider trading policy contained in this Section carefully and follow the policies and procedures described herein. The failure of a Covered Person to comply with this insider trading policy may subject him or her to FOIC-imposed sanctions, up to and including termination for cause, whether or not the failure to comply results in a violation of law. You should seek the advice of the Compliance Officer on any questions regarding this Section. All Covered Persons are prohibited from using such information in ways that violate the law, including for personal gain. Non-public information must be kept confidential, which may include keeping it confidential from other Covered Persons.
While FOIC is not an investment adviser, the Manager is. Since the Manager will be making research recommendations to FOIC, and this policy applies to Covered Persons as described above, some of whom may be officers, directors and employees of both FOIC and the Manager, the Board of Directors of FOIC have decided, out of an abundance of caution, to adopt a policy that incorporates the more stringent insider trading rules which apply to investment advisers.
Recent Securities and Exchange Commission (the “SEC”) pronouncements and prosecutions have made it clear that there be no perceived connection between research recommendations by an investment adviser’s personnel on particular securities and any investment banking, advisory or other business obtained by the investment adviser. In particular, the making of recommendations by an investment adviser’s research personnel while in possession of material nonpublic information, whether or not the investment adviser or any employee actually trades, can have dangerous consequences if it is apparent that (a) this information was obtained in exchange for some favor or benefit or (b) the information was used as part of a program to benefit FOIC in obtaining additional business. Advisory personnel should be alert to discuss situations of this nature as they arise with the Compliance Officer.
FOIC does not currently employ research analysts who may from time to time come into contact with material inside information. Should FOIC employ such individuals in the future, it will establish appropriate policies and procedures regarding the use of inside information obtained while in performance of their research functions.
Misuse of Material Nonpublic Information.
The rules of the SEC governing “material nonpublic information” are aimed at issuers and set forth detailed guidelines requiring the timely release of such information to the marketplace in order to avoid fraud penalties based on “market manipulation.” The penalties for violating the rules fall not only on the issuers and their officers, directors or employees who may trade with knowledge of this “material nonpublic information.” They are also applicable to so-called “tippees,” persons not directly related to the issuer who obtain this information in advance of its release and then engage in market trades. The SEC monitors all trading in the securities of public companies. Where a “market manipulation” using “material nonpublic information” is suspected, each and every trade may be examined individually by the SEC, including interviews under oath followed by possible prosecutions, fines and jail sentences for those who are found to have profited from the misuse of this “material nonpublic information.”
As an investment adviser, the Manager and its employees as well as its clients, including FOIC, may potentially, through research or other means, come into possession of “material nonpublic information.” Therefore FOIC personnel must be alert and aware of the SEC rules and regulations to be observed in order not to be caught up in a regulatory investigation or prosecution.
Regulation FD. In October 2000 the SEC adopted new Regulation FD (Fair Disclosure), which addresses selective disclosure. The Regulation provides that before an issuer, or person acting on behalf of an issuer, discloses “material nonpublic information” to certain persons (in general, securities market professionals — including investment advisers - and holders of the issuer’s securities who may trade on the basis of the information), it must make public disclosure of that information. The timing of the required public disclosure depends on whether the selective disclosure was intentional or non-intentional. For an intentional selective disclosure, the issuer must make public disclosure simultaneously; for a non-intentional disclosure, the issuer must make public disclosure promptly.
“Material Nonpublic Information” is information:
Prohibited Disclosures. Rule 100(b)(1) of Regulation FD enumerates four categories of persons to whom selective disclosure of nonpublic information may not be made absent a specified exclusion. The first three are securities market professionals, including: (1) broker-dealers and their Associated Persons, (2) investment advisers, certain institutional investment managers and their Associated Persons, and (3) investment companies, hedge funds, and affiliated persons. These categories include sell-side analysts, many buy-side analysts, large institutional investment managers, and other market professionals who may be likely to trade on the basis of selectively disclosed information. The fourth category of person included in Rule 100(b)(1) is any holder of the issuer’s securities, under circumstances in which it is reasonably foreseeable that such person would purchase or sell securities on the basis of the information.
Exemptions. Rule 100(b)(2) sets out four exclusions from the above prohibition: (1) communications made to a person who owes the issuer a duty of trust or confidence -- i.e., a “temporary insider” -- such as an attorney, investment banker, or accountant; (2) communications made to any person who expressly agrees to maintain the information in confidence; (3) disclosures to an entity whose primary business is the issuance of credit ratings, provided the information is disclosed solely for the purpose of developing a credit rating and the entity’s ratings are publicly available; and (4) communications made in connection with most offerings of securities registered under the Securities Act of 1933, as amended.
Analyst Earnings Forecasts. In adopting the Rule the SEC made the following comment on “analyst earnings forecasts”:
“One common situation that raises special concerns about selective disclosure has been the practice of securities analysts seeking “guidance” from issuers regarding earnings forecasts. When an issuer official engages in a private discussion with an analyst who is seeking guidance about earnings estimates, he or she takes on a high degree of risk under Regulation FD. If the issuer official communicates selectively to the analyst nonpublic information that the company’s anticipated earnings will be higher than, lower than, or even the same as what analysts have been forecasting, the issuer likely will have violated Regulation FD. This is true whether the information about earnings is communicated expressly or through indirect “guidance,” the meaning of which is apparent though implied. Similarly, an issuer cannot render material information immaterial simply by breaking it into ostensibly non-material pieces. At the same time, an issuer is not prohibited from disclosing a non-material piece of information to an analyst, even if, unbeknownst to the issuer, that piece helps the analyst complete a “mosaic” of information that, taken together, is material. Similarly, since materiality is an objective test keyed to the reasonable investor, Regulation FD will not be implicated where an issuer discloses immaterial information whose significance is discerned by the analyst.”
Penalties for Misuse
Personal Securities Transactions
“Fire Wall” Procedures
The procedures are as follows:
As stated above, FOIC does not currently employ research analysts who may from time to time come into contact with material inside and/or sensitive information. Should FOIC employ such individuals in the future, it will establish appropriate policies and procedures regarding the use of inside and/or sensitive information obtained while in performance of their research functions.
Restricted and Watch Lists
Both lists will be distributed to all Covered Persons (electronically or otherwise) and will be reviewed on a periodic basis by the Compliance Officer to determine whether additions, deletions, or other changes are required.
Trading activity within employee, employee-related, and firm accounts (where applicable) will be monitored to determine whether any securities on either of these lists have been purchased or sold while such security has been on either list.
Mergers, Tender Offers, etc.
Exception Reports; Investigations
7. Anti-Bribery and Dealings with Governmental Officials
Special care must be taken when dealing with government customers. Activities that might be appropriate when working with private sector customers may be improper and even illegal when dealing with government employees, or when providing goods and services to another customer who, in turn, will deliver FOIC’s product to a government end user. Many applicable laws and regulations prohibit the improper influencing of governmental officials or other persons by the payment of bribes, gifts, political contributions, lavish hospitality or by other means. Our policy requires adherence to those restrictions.
Do not directly or indirectly promise, offer or make payment in money or anything of value to anyone, including a government official, agent or employee of a government, political party, labor organization or business entity or a candidate of a political party, or their families, with the intent to induce favorable business treatment or to improperly affect business or government decisions. This policy prohibits actions intended either to influence a specific decision or merely to enhance future relationships. In general, all travel and entertainment that Covered Persons provide to governmental officials must be pre-approved within. If approved, a written confirmation that such expenses do not violate local law must be obtained from an appropriate third party (e.g., the business unit’s legal counsel or the government official’s supervisor).
Covered Persons shall comply with all laws, rules and regulations governing political campaign finance and lobbying activities and shall not engage in any conduct that is intended to avoid the application of such laws to activities undertaken on FOIC’s behalf. In addition, appropriate executive officers shall monitor compliance with lobbyist registration and disclosure requirements by all individuals who act on behalf of FOIC.
These prohibitions extend to any consultants or agents we may retain on behalf of FOIC.
8. Anti-Discrimination and Harassment
FOIC is committed to providing a work environment that is free of discrimination and harassment. Such conduct, whether overt or subtle, is demeaning, may be illegal, and undermines the integrity of the employment relationship.
Sexual harassment can include unwelcome sexual advances, requests for sexual favors, pressure to engage in a sexual relationship as a condition of employment or promotion, or conduct which creates a hostile or offensive work environment.
Discrimination can take many forms including actions, words, jokes, or comments based upon an individual’s race, citizenship, ethnicity, color, religion, sex, veteran status, national origin, age, disability, sexual orientation, marital status or other legally protected characteristic. Any Covered Person who engages in harassment or discrimination will be subject to disciplinary action, up to and including termination of employment.
9. Anti-Money Laundering
In the global marketplace, the attempted use of financial institutions and instruments to launder money is a significant problem that has resulted in the passage of strict laws in many countries. Money laundering is the attempt to disguise money derived from or intended to finance illegal activity including drug trafficking, terrorism, organized crime, fraud, and many other crimes. Money launderers go to great lengths to hide the sources of their funds. Among the most common stratagems are placing cash in legitimate financial institutions, layering between numerous financial institutions, and integrating the laundered proceeds back into the economy as apparently legitimate funds.
All Covered Persons must be vigilant in the fight against money laundering, and must not allow FOIC to be used for money laundering.
The antitrust laws are designed to protect consumers from illegal competitive actions such as price fixing and dividing markets. It is FOIC’s policy and practice to compete based on the merits of our products and services. In order to further that policy, Covered Persons must not fix or control prices with competitors, divide up territories or markets, limit the production or sale of products, boycott certain suppliers or customers, unfairly control or restrict trade in any way, restrict a competitor’s marketing practices, or disparage a competitor. Covered Persons must never discuss products, pricing or markets with competitors with the intent to fix prices or divide markets.
11. Data Privacy
Data privacy, as it relates both to our clients and our employees, has become a major political and legal issue in many jurisdictions in which we do business. A variety of laws in each of those jurisdictions governs the collection, storage, dissemination, transfer, use, access to and confidentiality of personal information and patient health information. These laws can work to limit transfers of such data across borders and even among affiliated corporate entities. FOIC and its Covered Persons will comply with all provisions of these laws that relate to its business, including the privacy, security and electronic transmission of financial, health and other personal information. FOIC expects its Covered Persons to keep all such data confidential and to protect, use and disclose information in the conduct of our business only in compliance with these laws. FOIC will consider and may release personal information to third parties to comply with law or to protect the rights, property or safety of FOIC and its customers.
With respect to Covered Persons, all salary, benefit, medical and other personal information relating to Covered Persons shall generally be treated as confidential. Personnel files, payroll information, disciplinary matters, and similar information are to be maintained in a manner designed to protect confidentiality in accordance with applicable laws. All Covered Persons shall exercise due care to prevent the release or sharing of such information beyond those persons who may need such information to fulfill their job functions. Notwithstanding the foregoing, all personnel information belongs solely to FOIC and may be reviewed or used by FOIC as needed to conduct its business.
12. Communications with the Media and Analysts
FOIC has a policy of co-operating with the news media and the financial community. This policy is intended to enhance respect for FOIC, provide accurate information, and achieve our business goals.
FOIC relies upon media relations professionals who are responsible for handling all contacts with the news media. FOIC’s Chief Financial Officer is responsible for formulating and directing our media relations policy worldwide. Other Covered Persons may not speak to or disseminate information to the news media unless such contact has been requested and arranged by or coordinated with an FOIC media relations professional in accordance with FOIC’s media relations policy. Any contact from the news media should be referred promptly and without comment to an FOIC media relations professional. If you do not know the appropriate media relations professional, you can refer the contact to FOIC’s Chief Financial Officer.
A public company must have procedures for controlling the release of information that may have a material impact on its share price. Once FOIC becomes a public company, the Chief Executive Officer and the Chief Financial Officer shall be responsible for FOIC’s relationships with the financial community, including the release of price sensitive information. Other FOIC employees may not speak to or disseminate financial or other material information regarding FOIC to the financial community (including analysts, investors, shareholders, counterparties, Company lenders, and rating agencies) unless such contact has been requested and arranged by the Chief Executive Officer or the Chief Financial Officer.
13. Electronic Communications
The use of electronic mail, the Internet and other technology assets is an important part of our work at FOIC. Used improperly, this technology presents legal and business risks for FOIC and for individual employees. There are also important privacy issues associated with the use of technology, and related regulations are evolving.
Accordingly, all Covered Persons are required to use information technology for proper business purposes and in a manner that does not compromise the confidentiality of sensitive or proprietary information. All communications with the public, clients, prospects and fellow employees must be conducted with dignity, integrity, and competence and in an ethical and professional manner.
Covered Persons must not use information technology to: transmit or store materials which are obscene, pornographic, or otherwise offensive; engage in criminal activity; obtain unauthorized access to data or files; commit copyright violations; install personal software without permission; or make Internet statements, without permission, that suggest that the user is speaking on behalf of FOIC or its affiliates.
14. Gifts and Relationships with Customers and Suppliers
FOIC seeks to do business with clients and suppliers on a fair and equitable basis. We may not accept gifts of other than nominal value, or lavish entertainment, or other valuable benefits or special favors from customers or suppliers. We must also observe any limits imposed by local laws or regulations with respect to the acceptance of gifts or gratuities.
15. International Issues
If you conduct business for FOIC outside of the United States, in addition to being familiar with the local laws of the other countries involved, be sure you are familiar with the following U.S. laws and regulations. Violations of these laws can result in substantial fines, imprisonment and severe restrictions on FOIC’s ability to do business.
Foreign Corrupt Practices Act
Similarly, many countries contribute the names of criminal or terrorist organizations or individuals to a common database and require financial institutions to screen customer lists against the database as part of their “Know Your Customer” obligations. We must be aware of, and, where appropriate, adhere to any such restrictions.
16. Political Activities and Lobbying
Covered Persons are encouraged to vote in elections for which they are eligible and, subject to the Pay for Play Policy contained in Section 27 of this Code, to make contributions supporting candidates or parties of their choice. Covered Persons are also encouraged to express their views on government, legislation and other matters of local or national interest.
Many jurisdictions have imposed severe and complex restrictions on the ability of individuals and companies to make political contributions. You should assume that FOIC and its Covered Persons are generally prohibited from certain types of political activities. No Covered Person may, under any circumstances, use FOIC funds to make political contributions without the prior written approval of the Compliance Officer, nor may you represent your personal political views as being those of FOIC.
17. Retention of Books and Records
FOIC corporate records are important assets. Corporate records include essentially everything you produce as a Covered Person, regardless of its format. A corporate record may be in the form of paper, computer tapes, microfilm, e-mail, or voice mail. It may be something as obvious as a memorandum or a contract or something not as obvious, such as a desk calendar, an appointment book or an expense record.
FOIC is required by law to maintain certain types of corporate records, usually for a specified period of time. Failure to retain such documents for such minimum periods could subject FOIC to penalties and fines, cause the loss of rights, obstruct justice, place FOIC in contempt of court, or place FOIC at a serious disadvantage in litigation. However, storage of voluminous records over time is costly. Therefore, FOIC has established controls to assure retention for required periods and timely destruction of retrievable records, such as paper copies and records on computers, electronic systems, microfiche, and microfilm. Even if a document is retained for the legally required period, liability could still result if a document is destroyed before its scheduled destruction date.
FOIC and its affiliates are subject to the regulatory requirements of numerous countries and regulatory agencies. Virtually all of them have specific requirements concerning the creation, maintenance and storage of business records. FOIC expects all Covered Persons to become familiar with and fully comply with the records retention/destruction schedule for the departments and office locations for which they work. If you believe documents should be retained beyond the applicable retention period, consult with the Compliance Officer.
18. Sales and Marketing Materials
FOIC is committed to building sustained, open, and honest relationships with our customers, and to complying with all relevant regulatory requirements. This requires that all marketing and sales-related materials be prepared under standards approved by the Compliance Officer and, prior to use, reviewed and approved by the appropriate supervisor. Covered materials include solicitations of interest, requests for proposals, client presentations, performance summaries, advertisements and published market commentaries.
19. Substance Abuse
FOIC is committed to providing a safe and healthy work place for all employees. The use, possession, sale, transfer, purchase, or being “under the influence” of drugs at any time while on FOIC premises or on FOIC business is prohibited. The term “drug” includes alcoholic beverages (other than in connection with entertainment events, or in other appropriate settings), prescriptions not authorized by your doctor, inhalants, marijuana, cocaine, heroin and other illegal substances.
20. Confidential Information
Confidential information includes all non-public information that might be of use to competitors, or harmful to FOIC or its customers, if disclosed. All information (in any form, including electronic information) that is created or used in support of FOIC business activities is the property of FOIC. This FOIC information is a valuable asset and Covered Persons are expected to protect it from unauthorized disclosure. This includes FOIC customer, supplier, business partner and employee data. United States (federal and state) and other jurisdictions’ laws may restrict the use of such information and impose penalties for impermissible use or disclosure.
Covered Persons must maintain the confidentiality of information entrusted to them by FOIC or its customers, vendors or consultants except when disclosure is properly authorized by FOIC or legally mandated. Covered Persons shall take all reasonable efforts to safeguard such confidential information that is in their possession against inadvertent disclosure and shall comply with any non-disclosure obligations imposed on FOIC in its agreements with third parties.
Information pertaining to FOIC’s competitive position or business strategies, and information relating to negotiations with Covered Persons or third parties, should be protected and shared only with Covered Persons having a need to know such information in order to perform their job responsibilities.
21. Protection and Proper Use of Company Assets
All Covered Persons shall strive to preserve and protect FOIC’s assets and resources and to promote their efficient use. The standards set forth below are intended to guide Covered Persons by articulating FOIC’s expectations as they relate to activities or behaviors that may affect FOIC’s assets.
Personal Use of Corporate Assets
Use of Company Software
22. FOIC Intellectual Property
Employees and officers must carefully maintain and manage the intellectual property rights of FOIC, including patents, trademarks, copyrights and trade secrets, to preserve and protect their value. Information, ideas and intellectual property assets of FOIC are important to FOIC’s success.
FOIC’s name, logo, trademarks, inventions, processes and innovations are intellectual property assets and their protection is vital to the success of FOIC’s business. FOIC’s and any of its subsidiaries’ names, logos and other trademarks and service marks are to be used only for authorized FOIC business and never in connection with personal or other activities unless appropriately approved and in accordance with FOIC policy. In addition, our Covered Persons must respect the intellectual property rights of third parties. Violation of these rights can subject both you and FOIC to substantial liability, including criminal penalties.
Any work product produced in the course of performing your job shall be deemed to be a “work made for hire” and shall belong to, and be used only for the benefit of, FOIC. This includes such items as marketing plans, product development plans, computer programs, software, hardware and similar materials. You must share any innovations or inventions you create with your supervisor so that FOIC can take steps to protect these valuable assets.
23. Integrity and Accuracy of Financial Records
The preparation and maintenance of accurate books, records and accounts is required by law and essential to the proper discharge of financial, legal and reporting obligations. All Covered Persons are prohibited from directly or indirectly falsifying or causing to be false or misleading any financial or accounting book, record or account. In addition, all financial data must be completely and accurately recorded in compliance with applicable law and FOIC’s accounting policies and procedures. A Covered Person may violate this section by acting or by failing to act when he or she becomes aware of a violation or potential violation of this section.
24. Disclosure in Reports and Documents
Filings and Public Materials
Disclosure and Reporting Policy
Information for Filings
Disclosure Controls and Procedures and Internal Control Over Financial Reporting
25. Improper Influence on the Conduct of Audits
Every Covered Person must deal fairly and honestly with outside accountants performing audits, reviews or examinations of FOIC’s and its subsidiaries’ financial statements. To that end, no Covered Person of FOIC may make or cause to be made a materially false or misleading statement (or omit facts necessary to make the statements made not misleading) in connection with an audit, review or examination of financial statements by independent accountants or the preparation of any document or report required to be filed with a governmental or regulatory authority. Covered Persons also are prohibited from coercing, manipulating, misleading or fraudulently inducing any independent public or certified public accountant engaged in the performance or review of financial statements that are required to be filed with a governmental or regulatory authority if he or she knows or should have known that his or her actions could result in making those financial statements materially misleading.
26. Standards for FOIC’s Financial Officers
FOIC’s Chief Executive Officer and Chief Financial Officer (the “Financial Officers”) are required to take all reasonable steps to provide full, fair, accurate, timely and understandable disclosures in the reports and documents that FOIC will (upon becoming a public company) file with or submit to the SEC and other regulatory bodies and in other public communications made by FOIC. In the event that a Financial Officer learns that any such report, document or communication does not meet this standard and such deviation is material, then the Financial Officers are required to review and investigate such deviation, advise the Board of Directors, when formed, or the Audit Committee of the Board of Directors regarding the deviation and, where necessary, revise the relevant report, document or communication.
Although a particular accounting treatment for one or more of FOIC’s operations may be permitted under applicable accounting standards, the Financial Officers may not authorize or permit the use of such an accounting treatment if the effect is to distort or conceal FOIC’s true financial condition. The accounting standards and treatments utilized by FOIC must, in all instances, be determined on an objective and uniform basis and without reference to a single transaction or series of transactions and their impact on FOIC’s financial results for a particular time period. Any new or novel accounting treatment or standard that is to be utilized in the preparation of FOIC’s financial statements must be discussed with FOIC’s Audit Committee, when formed, and its independent auditors.
27. Pay to Play Policy
The SEC voted unanimously on June 30, 2010 to approve new rules effectively banning the influence of so-called “pay to play” practices by investment advisers, significantly curtailing their ability to make political contributions to elected officials who have a decision-making role over public pension fund assets. The new rule follows a number of recent scandals, including one involving the New York State Common Retirement Fund, in which investment advisers allegedly made campaign contributions to certain politicians with the intention of influencing their selection of state pension fund asset managers.
The new Rule 206(4)-5 now directly prohibits an investment adviser from receiving any compensation for advisory services provided to a government entity, including any public pension plan, for two years after the advisory firm or certain of its executives or employees makes a political contribution to a government official or related political action committee (“PAC”). The rule encompasses donations made to any incumbent or candidate for elective office with responsibility for or influence over the selection of an investment adviser. There is, however, a de minimis exception for contributions up to $350 per candidate per election, if the donor is eligible to vote for the candidate, or up to $150, if the donor is ineligible. Furthermore, investment advisers are prohibited from “bundling” political contributions, that is, soliciting or coordinating contributions from others on behalf of an elected official or PAC.
Based on this recent rule, it is the policy of FOIC that no Covered Person shall:
(a) Make any contribution to an official of any government entity to whom FOIC or the Manager may provide investment advisory services or that is, or may become, a shareholder of FOIC; or
(b) Coordinate, or solicit any person or political action committee to make, any:
(i) Contribution to an official of a government entity to which FOIC or the Manager may provide investment advisory services or that is, or may become, a shareholder of FOIC; or
(ii) Payment to a political party of a state or locality where FOIC or the Manager may provide investment advisory services or in which any governmental entity that is, or may become, a shareholder of FOIC is located.
Paragraph (a) of this Section 27 does not apply to contributions made by a Covered Person, if a natural person, to officials for whom the Covered Person was entitled to vote at the time of the contributions and which in the aggregate do not exceed $350 to any one official, per election, or to officials for whom the Covered Person was not entitled to vote at the time of the contributions and which in the aggregate do not exceed $150 to any one official, per election.
28. Policy and Procedures on Reporting Potential Material Violations
FOIC strives to ensure that all activity by or on behalf of FOIC is in compliance with applicable laws. FOIC and its employees must adhere to the highest standards of honest and ethical conduct. All Covered Persons are affirmatively required to report possible violations of the FOIC Code of Conduct, laws or regulations.
If you are a Covered Person with complaints or concerns regarding:
you may report your concerns to an appropriate individual within FOIC or anonymously through a third party service FOIC has retained for this purpose, in each case as described below:
Internal Reporting. We encourage you to first contact your immediate supervisor, who is in turn responsible for informing the Compliance Officer of any concerns raised. If you prefer not to discuss a concern with your own supervisor, you may instead contact the Compliance Officer directly.
Anonymous Reporting. If you are in any way uncomfortable with reporting your concerns in a manner that allows you to be identified as the source of the report, you may use Silent Whistle, an anonymous reporting service. You may make an anonymous report by:
You will not be required to identify yourself when you report your concerns to Silent Whistle, but you may choose to do so if you wish to be contacted by Silent Whistle during its review process. Silent Whistle will not share your identity with FOIC.
If you report a possible violation, regardless of the method that you use to make the report, it is important that you provide as much detail as possible, including names, dates, times, locations and the specific conduct in question. Only with sufficient specific information can FOIC adequately investigate the reported action.
Your submission of information will be treated in a confidential manner to the extent reasonably possible. Please note, however, that if an investigation by FOIC of the activities you have reported takes place, it may be impossible for FOIC to maintain the confidentiality of the fact of the report or the information reported.
Complaints relating to Accounting Matters will be reviewed under Audit Committee direction and oversight by such persons as the Audit Committee determines to be appropriate. All other matters will be reviewed under the direction and oversight of the appropriate persons within FOIC, usually also including the Compliance Officer. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee or other reviewing department.
FOIC will not permit retribution, harassment, or intimidation of any employee who in good faith reports a possible violation. Along with the reporting methods described above, this also includes, but is not limited to an employee who discloses information to a government or law enforcement agency, or any other national, state or provincial securities regulatory authority where the employee has reasonable cause to believe that the information discloses a violation or possible violation of federal or state law or regulation. FOIC policy also prevents any employee from being subject to disciplinary or retaliatory action by FOIC or any of its employees or agents as a result of the employee’s good faith.
However, employees who file reports or provide evidence which they know to be false or without a reasonable belief in the truth and accuracy of such information may be subject to disciplinary action, including termination of their employment.
29. Disclosure; Amendments; Waivers
To the extent required by law, FOIC shall publicly (e.g., in its Annual Report and/or on its website) disclose this Code of Conduct and any amendments hereto.
This Code may only be amended by FOIC’s Board of Directors or a duly authorized committee thereof. The FOIC has elected to disclose certain amendments to the Code that affect, and any waivers of the Code granted to, Financial Officers on FOIC’s website.
30. Waivers of the Code
31. Internal Use.
This Code is intended solely for the internal use by FOIC and does not constitute an admission, by or on behalf of FOIC, as to any fact, circumstance, or legal conclusion.
As Covered Persons, each of us is obligated to read and understand this Code of Conduct and our other policies and procedures. No code of conduct, however, can address every situation for which guidance may be necessary. If you are unclear about a situation, stop and ask for guidance before taking action. All Covered Persons are expected to abide by both the letter and spirit of this Code. Covered Persons are also expected to perform their work with honesty and integrity in any areas not specifically addressed by the Code. FOIC will investigate reported violations of the Code and, if violations are found, may take disciplinary action, if appropriate, against the individuals involved, and may make reports, if appropriate, to civil, criminal or regulatory authorities. Nothing in this Code restricts FOIC from taking any disciplinary action on any matters pertaining to the conduct of a Covered Person, whether or not expressly set forth in the Code. Any questions regarding the scope or interpretation of this Code should be referred to the Compliance Officer.
As adopted: March 14, 2013