Code of Ethics
Code of Ethics of Promus Advisors (the “Company”)
The Code includes:
- Guidelines for Professional Standards
- Personal Trading Policies
- Political Contribution Policies
- Insider Trading Policies
DEFINITIONS
These terms have special meanings as used in this Code of Ethics:
Access Person – An “Access Person” is a Supervised Person who has access to non-public information
regarding any client’s purchase or sale of securities, is involved in making securities
recommendations to clients, or has access to such recommendations that are non-public. All the
Company’s directors, officers, and partners are presumed to be Access Persons.
Advisory Client – Any person for whom or entity for which the Company serves as an investment
adviser, renders investment advice, or makes any investment decisions for compensation is a client.
Associated Person – For purposes of this Code, all Supervised Persons and Access Persons are
collectively referred to as ‘Associated Persons’.
Beneficial Ownership – Means any opportunity, directly or indirectly, to profit or share in the profit
from any transaction in securities, including those owned by members of an Access Person’s
immediate family living in the Access Person’s household, as defined below.
Chief Compliance Officer – Means Joshua J. Prince, or another person that has been designated to
perform the functions of Chief Compliance Officer when the named Chief Compliance Officer is not
available. For purposes of reviewing the Chief Compliance Officer’s own transactions and reports
under this Code, the functions of the Chief Compliance Officer are performed by another qualified
individual and shall be clearly denoted in the Company’s compliance files.
Contribution – See “Political Contribution.”
Covered Account – Means any account in which an Access Person has any direct or indirect
Beneficial Ownership.
Covered Associate – “Covered Associate” in reference to political contributions shall mean: (i) any
general partner, managing member or executive officer, or other individual with a similar status or
function; (ii) Any employee who solicits a government entity for the Company and any person who
supervises, directly or indirectly, such employee; and (iii) Any political action committee controlled
by the Company or by any of the aforementioned persons.
Covered Securities – Means anything that is considered a “security” under the Investment Company
Act of 1940. This is a very broad definition of security. It includes most kinds of investment
instruments, including things that one might not ordinarily think of as “securities,” such as:
- exchange traded funds;
- options on securities, on indexes and on currencies;
- investments in all kinds of limited partnerships;
- investments in foreign unit trusts and foreign mutual funds; and
- investments in private investment funds and hedge funds.
If there is any question or doubt about whether an investment is a considered a security or a Covered
Security under this Code, ask the Chief Compliance Officer.
Insiders – The concept of “insider” is broad and includes all Associated Persons of a company. In
addition, any person may be a temporary insider if she/he enters a special, confidential relationship
with a company in the conduct of a company’s affairs and as a result has access to information solely
for the company’s purposes. Any person associated with the Adviser may become a temporary insider
for a company it advises or for which it performs other services. Temporary insiders may also include
the following: a company’s attorneys, accountants, consultants, bank lending officers and the
Associated Persons of such organizations
Insider Trading – While the law concerning “insider trading” is not static, it generally prohibits: (1)
trading by an insider while in possession of material, non-public information; (2) trading by noninsiders while in possession of material, non-public information, where the information was either
disclosed to the non-insider in violation of an insider’s duty to keep it confidential or was
misappropriated; and (3) communicating material, non-public information to others.
Non-Public Information – Information is “non-public” until it has been effectively communicated to the market and the market has had time to “absorb” the information. For example, information found in a report filed with the Securities and Exchange Commission, or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal, or other publications of general circulation would be considered public.
Material Information – “Material information” generally includes:
- any information that a reasonable investor would likely consider important in making his or her investment decision; or
- any information that is reasonably certain to have a substantial effect on the price of a company’s securities.
Examples of material information include the following: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems and extraordinary management developments.
Members of the Family/Household – “Members of the Family/Household” include:
- any information that a reasonable investor would likely consider important in making his or her investment decision; or
- any information that is reasonably certain to have a substantial effect on the price of a company's securities.
- Children who are 18 or older (unless they do not live in the same household as the Access Person and the Access Person does not contribute in any way to their support); and
- Any of the people who live in the Access Person’s household including: stepchildren, grandchildren, parents, stepparents, grandparents, brothers, sisters, in-laws, and adoptive
Non-Reportable Securities – “Non-Reportable Securities” are:
- Direct Obligations of the US Treasury;
- Bankers’ acceptance, Certificates of deposit, commercial paper, and high quality short-term debt obligations, including repurchase agreements;
- Money market fund shares;
- Shares of open end mutual funds, unless the Company or a control affiliate acts as the investment adviser or principal underwriter for the fund;
- Shares issued by unit investment trusts that are invested exclusively in unaffiliated mutual funds;
- Securities held in accounts over which the access person had no direct or indirect influence or control; or
- Transactions effected pursuant to an automatic investment plan.
Political Contribution – “Political Contribution” or “Contribution” shall include a gift, subscription, loan,
advance, deposit of money, or anything of value including payments for debts incurred in an election.
Reportable Securities – Means all Covered Securities, except Non-Reportable Securities, in which an
Access Person has Beneficial Ownership.
Supervised Person – A “Supervised Person” is any partner, officer, director (or other person
occupying a similar status or performing similar functions), or employee of an investment adviser, or
other person who provides investment advice on behalf of the investment adviser and is subject to the
supervision and control of the investment adviser. This may also include all temporary workers,
consultants, independent contractors, and anyone else designated by the Chief Compliance Officer.
For purposes of the Code, such ‘outside individuals’ will generally only be included in the definition of a
supervised person, if their duties included access to certain types of information, which would put
them in a position of sufficient knowledge to necessitate their inclusion under the Code. The Chief
Compliance Officer shall make the final determination as to which of these are considered supervised
persons.
GENERAL PRINCIPLES
The Company is a fiduciary for its investment advisory clients. Because of this fiduciary relationship, it is
generally improper for the Company or its Associated Persons to:
- use information about the Company's trading or recommendations for client accounts for their own benefit (or the benefit of anyone other than the client), to the detriment of the client; or
- to the detriment of clients, take advantage of investment opportunities that would otherwise be available for the Company's clients.
The Company wants to avoid even the appearance that the Company, its Associated Persons, or
others receive any improper benefit from information about client trading or accounts or from
our relationships with our clients or with the brokerage community.
The Company expects all Associated Persons to comply with the spirit of the Code, as well as the
specific rules contained in the Code. If there is any doubt or uncertainty about what this Code
requires or permits, ask the Chief Compliance Officer. Please do not guess the answer. All
Associated Persons are required to sign an Agreement to abide by the Company’s Code of Ethics
and to certify annual compliance with the Code.
Violation of either the letter or the spirit of this Code, may result in the Company taking
disciplinary measures, including, without limitation, imposing penalties or fines, reduction of
compensation, demotion, requiring unwinding of the trade, requiring disgorgement of trading
gains, suspending or terminating of employment, or any combination of the foregoing.
For purposes of this Code, all shareholders or other persons with Beneficial Ownership of the
Company are considered an Associated Person of the Company.
The Company’s management will review the terms and provisions of this Code at least annually and
make amendments as necessary. Any amendments will be distributed to all Associated Persons of the
Company, and each Associated Person must provide in writing their receipt, understanding, and
acceptance of the changes.
The Chief Compliance Officer has the authority to grant written waivers of the provisions of this Code
in appropriate instances. However:
- the Company expects that waivers will be granted only in rare instances, and
- some provisions of the Code that are mandated by law cannot be waived.
GUIDELINES FOR PROFESSIONAL STANDARDS
- At all times, all Associated Persons must comply with applicable federal securities laws and must reflect the professional standards expected of those engaged in the investment advisory business, and they shall act within the spirit and the letter of the federal, state, and local laws and regulations pertaining to investment advisers and the general conduct of business. These standards require all personnel to be judicious, accurate, objective, and reasonable in dealing with both clients and other parties so that his or her personal integrity is unquestionable.
- All Associated Persons are required to report any violation of the Code, by any person, to the Chief Compliance Officer or other appropriate persons of the Company immediately. Such reports will be held in confidence.
- Associated Persons must place the interests of advisory clients first. All Associated Persons must scrupulously avoid serving his or her own personal interests ahead of the interests of the Company's advisory clients. In addition, Associated Persons must work diligently to ensure that no client is preferred over any other client.
- All Associated Persons are naturally prohibited from engaging in any practice that defrauds or misleads any client, or from engaging in any manipulative or deceitful practice with respect to clients or securities
- No Associated Person may serve on the board of directors of any publicly traded company without prior written permission from the Chief Compliance Officer.
- Associated Persons must conduct all personal securities transactions in full compliance with this Code. Doubtful situations should be resolved in favor of advisory clients and in cooperation with the Chief Compliance Officer. Technical compliance with the Code's provisions shall not automatically insulate from scrutiny any securities transactions or actions that could indicate a violation of the Company's fiduciary duties.
- Personal transactions in securities by Access Persons must be transacted to avoid even the appearance of a conflict of interest on the part of such personnel with the interests of the Company's clients. Likewise, Associated Persons must avoid actions or activities that allow (or appear to allow) a person to profit or benefit from his or her position with the Company at the expense of clients, or that otherwise bring into question the person's judgment.
- Associated Persons are subject to Insider Trading Policies adopted by the Company to detect and prevent the misuse of material non-public information.
- No Associated Person shall communicate information known to be false to others (including but not limited to clients, prospective clients and other Associated Persons) with the intention of manipulating financial markets for personal gain.
- Associated Persons are prohibited from accepting compensation for services from outside sources without the specific prior written permission of the Chief Compliance Officer. When any Associated Person faces a conflict or potential conflict between his or her personal interest and the interests of clients, he or she is required to immediately report the conflict to the Chief Compliance Officer for instructions regarding how to proceed.
- Associated Persons must treat recommendations and actions of the Company as confidential and private matters. Accordingly, we have adopted a Privacy Policy to prohibit the transmission, distribution, or communication of any information regarding securities transactions in client accounts or other non-public information, except to broker/dealers or other bona fide service providers in the ordinary course of business. In addition, no information obtained during the course of employment regarding particular securities (including internal reports and recommendations) may be transmitted, distributed, or communicated to anyone who is not affiliated with the Company, without the prior written approval of the Chief Compliance Officer.
- No gift or other accommodation valued in excess of $100.00 may be accepted by the Company or any Associated Person from any vendor, broker, securities sales representative, client, or prospective client (a "business contact") - per business contact per year. All gifts or other accommodations, which have a value in excess of $100.00 received by Associated Persons or 6 their Family/Household from a business contact, must be immediately reported to the Chief Compliance Officer.
- No gift or other accommodation valued more than $100.00 may be given to any business contact on behalf of the Company or any Associated Person, without prior written approval from the Chief Compliance Officer. (Note: Policies regarding gift receipt/giving are not intended to prohibit normal business entertainment.)
- No Associated Person shall intentionally sell to or purchase from a client any security or other property
- No Associated Person shall provide loans or receive loans from clients.
PERSONAL TRADING POLICIES
The following policies and procedures apply to all accounts owned or controlled by an Access Person,
and any Covered Account. Any account in question should be addressed to the Chief Compliance
Officer immediately to determine if it is considered a covered account.
Improper trading activity can constitute a violation of this Code. Nevertheless, the Code can be violated
by failing to file required reports, or by making inaccurate or misleading reports or statements
concerning trading activity or securities accounts. Individual conduct can violate this Code even if no
clients are harmed by such conduct.
Improper trading activity can constitute a violation of this Code. Nevertheless, the Code can be violated by failing to file required reports, or by making inaccurate or misleading reports or statements concerning trading activity or securities accounts. Individual conduct can violate this Code even if no clients are harmed by such conduct.
REPORTING REQUIREMENTS
All Access Persons must file three reports as described below, even if there are no holdings,
transactions, or accounts to list in the reports. Copies of the Reporting Forms are included at the end
of the Code or can be obtained from the Chief Compliance Officer.
1. Initial Holdings Reports
No later than 10 calendar days after an Associated Person becomes an Access Person (or within 10 days
of the adoption of this Code if the Associated Person was already an Access Person at the time of its
adoption), that Access Person must file an Initial Holdings Report with the Chief Compliance Officer.
The Initial Holdings Report requires that each Access Person list all Reportable Securities on the date
the Associated Person became an Access Person. It also requires each Access Person to list all brokers,
dealers, and banks holding any Covered Account on the date the Associated Person became an Access
Person (or on the date this Code was adopted if the Associated Person was already an Access Person on
such date).
This requirement may be satisfied by instructing the custodian for these accounts to send duplicate
confirmations and brokerage account statements for the Covered Accounts to the Company, clo the
Chief Compliance Officer, provided all required information is included in the report. Alternatively,
Access Persons may submit this information on the reporting form provided by the Company.
Each Access Person must notify the Chief Compliance Officer of any updates or changes to his or her
Covered Accounts within 10 days of such update or change. All information contained in the holding
report must be current as of the date no more than 45 days prior to the date the report is submitted.
2. Quarterly Transaction Reports
No later than 30 calendar days after the end of March, June, September, and December, each year,
each Access Person must file a Quarterly Transaction Report with the Chief Compliance Officer.
The Quarterly Transaction Report requires each Access Person to list all transactions in Reportable
Securities during the most recent calendar quarter in which the Access Person had Beneficial
Ownership. This requirement may be satisfied by instructing the custodian for these accounts to send
duplicate confirmations and brokerage account statements for the Covered Accounts, in which such
transactions took place, to the Company, c/o the Chief Compliance Officer, provided all required
information is included in the report and the Company receives the confirmations or statements not
later than 30 days after the close of the calendar quarter in which the transaction(s) took place.
Alternatively, Access Persons may submit this information on the reporting form provided by the
Company.
3. Annual Holdings Reports
By March 31 of each year, each Access Person must file an Annual Holdings Report with the Chief
Compliance Officer.
The Annual Holdings Report requires the Access Person to list all Reportable Securities in Covered
Accounts in which the Access Person had Beneficial Ownership as of December 31 of the previous
year. It also requires the Access Person to list all brokers, dealers, and banks holding any accounts in
which such person had direct or indirect Beneficial Ownership on December 31 of the previous year.
This requirement may be satisfied by instructing the custodian for these accounts to send duplicate
confirmations and brokerage account statements for the Covered Accounts to the Company, c/o the
Chief Compliance Officer, provided all required information is included in the report. Alternatively,
Access Persons may submit this information on the reporting form provided by the Company. All
information contained in the holding report must be current as of the date no more than 45 days prior
to the date the report is submitted.
4. Review and Recordkeeping
The CCO shall review personal trading reports for all Access Persons no less than quarterly and will
otherwise take reasonable steps to monitor compliance with and enforce this Code of Ethics. Evidence
of the reviews shall be maintained in the Company’s files.
The Company reserves the right to require the Access Person to reverse, cancel, or freeze, at the Access
Person’s expense, any transaction or position in a specific security if the Company believes the
transaction or position violates its policies or appears improper. The Company will keep all such
information confidential except as required to enforce this policy or to participate in any investigation
concerning violations of applicable law.
If the Company discovers any trading activity that appears to be in violation of this policy, the CCO,
and/or other senior representatives of the Company, will meet with the Access Person to review the
findings and to discuss additional pertinent information related to the situation. Where necessary, one
or more of the following remedial actions may be taken:
- Written warning that will be made a permanent part of the Access Person's record;
- Disgorgement of profits;
- Monetary fine;
- and/or Termination of employment.
PROHIBITED AND RESTRICTED TRANSACTIONS
Access Persons may not acquire any Beneficial Ownership in any security in an initial public offering
without first seeking written approval from the Chief Compliance Officer.
Purchases and sales of restricted securities issued by public companies are generally prohibited,
unless the compliance office determines that the contemplated transaction will raise no actual,
potential, or apparent conflict of interest.
Any Access Person wishing to purchase or sell a security obtained through a private placement,
including purchase of any interest in a hedge fund, must first seek written approval by the
compliance office. In addition, if an Associated Person who owns a security in a private company
knows that the company is about to engage in an IPO, he or she must disclose such information to
the Chief Compliance Officer.
Participation in Investment Clubs must be approved in writing by the compliance office in
advance of any such participation.
CASE-BY-CASE EXEMPTIONS
Because no written policy can provide for every possible contingency, the Chief Compliance Officer
may consider granting additional exemptions from the Prohibitions on Trading on a case-by-case
basis. Any request for such consideration must be submitted by the Access Person in writing to the
Chief Compliance Officer. Exceptions will only be granted in those cases in which the Chief
Compliance Officer determines that granting the request will create no actual, potential, or
apparent conflict of interest
SERVICES FOR GOVERNMENT ENTITIES
The Company shall not provide investment advisory services for compensation within two years after
the Company or any Covered Associate contribute to an elected official of a government entity
(incumbent, candidate or successful candidate) who is in a position, directly or indirectly, to influence
the selection of the Company. (This prohibition shall not apply to contributions by a Covered Associate
who is a natural person if and to:
(1) Officials who the Covered Associate was entitled to vote at the time of the contribution
and which in the aggregate do not exceed $350 to anyone official, per election, or to officials
for whom the Covered Associate was not entitled to vote at the time of the contribution and
which in the aggregate do not exceed $150 to anyone official, per election;
(2) The contribution was made more than six months prior to becoming a Covered Associate of
the Company unless such person, after becoming a Covered Associate, solicits clients on behalf
of the Company; or
(3) The Company returns any contribution (which cannot exceed $350) within four months of
the date of the contribution and within 60 days of the date of discovery of the contribution
(Limited to one instance by the same Covered Associate, two instances for advisers with 50 or
fewer employers or two instances for advisers with more than 50 employees).
The Company and its Covered Associates shall not coordinate or solicit any person to make any
contributions to an elected official (incumbent, candidate or successful candidate) of a government
entity to which the Company is providing or seeking to provide investment advisory services and shall
not coordinate or solicit payment to political parties of a state or locality where the Company is
providing or seeking to provide investment advisory services to a government entity.
The Company shall not agree to pay or pay a third party, such as a solicitor or placement agent, to
solicit government entity clients on behalf of the Company, unless that third party is an executive
officer, general partner, managing member (or similar status) or employee of the Company, an SECregistered investment adviser in compliance with Rule 206(4)-5 or broker-dealer subject to similar
restrictions imposed by FINRA.
INSIDER TRADING POLICIES
The purpose of these policies and procedures (the “Insider Trading Policies”) is to educate our
Associated Persons regarding insider trading, and to detect and prevent insider trading by any person
associated with the Company. The term “insider trading” is not defined in the securities laws, but
generally, it refers to the use of material, non-public information to trade in securities or the
communication of material, non-public information to others
PROHIBITED ACTIVITIES
All Associated Persons of the Company, including contract, temporary, or part-time personnel, or any
other person associated with the Company are prohibited from the following activities:
- trading or recommending trading in securities for any account (personal or client) while in possession of material, non-public information about the issuer of the securities; or
- communicating material, non-public information about the issuer of any securities to any other person.
Any Associated Person who possesses or believes that she/he may possess material, non-public
information about any issuer of securities must report the matter immediately to the Chief
Compliance Officer. The Chief Compliance Officer will review the matter and provide further
instructions regarding appropriate handling of the information to the reporting individual.
REPORTING OF MATERIAL, NON-PUBLIC INFORMATION
Any Associated Person who possesses or believes that she/he may possess material, nonpublic information about any issuer of securities must report the matter immediately to the Chief Compliance Officer. The Chief Compliance Officer will review the matter and provide further instructions regarding appropriate handling of the information to the reporting individual.
Examples of material information include the following: dividend changes, earnings estimates,
changes in previously released earnings estimates, significant merger or acquisition proposals or
agreements, major litigation, liquidation problems and extraordinary management developments
PENALTIES FOR INSIDER TRADING
The legal consequences for trading on or communicating material, non-public information are severe,
both for individuals involved in such unlawful conduct and their employers. A person can be subject
to some or all of the penalties below even if he/she does not personally benefit from the violation.
Penalties may include:
- civil injunctions;
- jail sentences;
- revocation of applicable securities-related registrations and licenses;
- fines for the person who committed the violation of up to three times the profit gained or loss avoided, whether or not the person actually benefited; and
- fines for the Associated Person or other controlling person of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoi
In addition, the Company’s management will impose serious sanctions on any person who violates the
Insider Trading Policies. These sanctions may include suspension or dismissal of the person or
persons involved.
COMPANY SANCTIONS
All disciplinary responses to violations of the Code shall be administered by the Chief Compliance
Officer, subject to approval by the of the Company. Determinations regarding appropriate disciplinary
responses will be administered on a case-by-case basis.
CODE OF ETHICS CERTIFICATION
Upon the Company’s adoption of this Code and annually thereafter, all Associated Persons are required
to certify in writing his or her understanding and continuing acceptance of, as well as agreement to
abide by, the guidelines and polices set forth herein. Additionally, any change or modification to the
Code will be distributed to all Associated Persons and they will be required to certify in writing their
receipt, understanding, and acceptance of the change(s).
