Confidential Management Advisors
- About CMAI
- CMAI Form CRS (pdf)
- CMAI ADV Brochure (pdf)
- Code of Ethics
- Disclosures (pdf)
- More Information /
Code of Ethics
It is the duty of all Confidential Management Advisors, Inc. (CMAI) officers, directors, representatives and employees (CMAI personnel) to, at all times, place the interests of clients first. All personal securities transactions will be conducted in such a manner as to be consistent with this Code of Ethics and will avoid any actual or potential conflict of interest or any abuse of an employee’s position of trust and responsibility. All CMAI personnel are prohibited from taking inappropriate advantage of their positions. Information concerning the identity of security holdings and financial circumstances of clients is confidential. Independence in the investment decision-making process is paramount. General principals discussed in this section govern all conduct, whether or not the conduct also is covered by more specific standards and procedures set forth below. Failure to comply with the firm’s Code of Ethics of ethics may result in disciplinary action, including termination of employment.
Securities law - All CMAI personnel will maintain a current knowledge of and comply with all federal and state securities laws.
Who is covered – supervised persons, access persons, family members and investment personnel.
Supervised Persons include:
Directors, officers, and partners of the adviser (or other persons occupying a similar status or performing similar functions)
Employees of the adviser
Any other person who provides advice on behalf of CMAI and is subject to CMAI supervision and control
Access Persons include those who:
Have access to nonpublic information regarding any clients’ purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any fund the adviser or its control affiliates manage
Are involved in making securities recommendations to clients, or has access to such recommendations that are nonpublic. All of the firm’s directors, officers, and partners are presumed to be access persons. Access Persons might include temporary workers, consultants, independent contractors, certain employees of affiliates or particular persons designated by the chief compliance officer
of personal securities reporting requirements, “supervised person,” and “access
person” are defined to also include the person’s immediate family (including any
relative by blood or marriage living in the employee’s household), and any
account in which he or she has a direct or indirect beneficial interest (such as
Third party portfolio managers, portfolio assistants, securities analysts, and traders are subject to the General Principals of the Code of Ethics but are not required to adhere to periodic reporting requirements.
Covered Security means any stock, bond, future, investment contract or any other instrument that is considered a “security” under the Investment Advisers Act. These instruments also include, but are not limited to:
Options on securities, on indexes, and on currencies;
All kinds of limited partnerships
Foreign unit trusts and foreign mutual funds
Private investment funds, hedge funds, and investment clubs.
Covered Security does not include:
Direct obligations of the U.S. government (e.g., treasury securities)
Bankers’ acceptances, bank certificates of deposit, commercial paper, and high quality short-term debt obligations, including repurchase agreements
Shares issued by money market funds
Shares of open-end mutual funds that are not advised or sub-advised by the firm (or certain affiliates, where applicable);
Shares issued by unit investment trusts that are invested exclusively in one or more open-end funds, none of which are funds advised or sub-advised by CMAI.
Standards of Business Conduct - Supervised and access persons will comply with the standards of business conduct described under SEC rule 204A-1.
Compliance with laws and regulations
Supervised and access persons are not permitted, in connection with the purchase or sale, directly or indirectly, of a security held or to be acquired by a client. to:
Defraud such client in any manner
Mislead such client, including by making a statement that omits material facts
Engage in any act, practice or course of conduct which operates or would operate as a fraud or deceit upon such client
Engage in any manipulative practice with respect to such client
Engage in any
manipulative practice with respect to securities, including price manipulation.
Conflicts of interest - As a fiduciary, CMAI has an affirmative duty of care, loyalty, honesty, and good faith to act in the best interests of its clients. This includes not favoring larger accounts over smaller accounts, accounts compensated by performance fees over accounts not so compensated, accounts in which employees have made material personal investments, accounts of close friends or relatives of supervised and access persons. The Code of Ethics expressly prohibits inappropriate favoritism of one client over another client that would constitute a breach of fiduciary duty.
The Code of Ethics prohibits access persons from using knowledge about pending or currently considered securities transactions for clients to profit personally, directly or indirectly, as a result of such transactions, including by purchasing or selling such securities.
Insider trading – Supervised and access persons are prohibited from trading, either personally or on behalf of others, while in possession of material, nonpublic information. Material nonpublic information relates not only to issuers but also to the adviser’s securities recommendations and client securities holdings and transactions. Potential insider trading penalties may include civil injunctions, permanent bars from employment in the securities industry, civil penalties up to three times the profits made or losses avoided, criminal fines, and jail sentences.
Personal securities transactions – All supervised and access persons shall comply with the Code of Ethics policies and procedures for personal securities transactions.
Initial public offerings, limited and private placements – All supervisory and access persons are prohibited from participation in any initial public offering, limited or private placements without pre-clearance from the chief compliance officer. Pre-clearance policy will consider whether the investment opportunity is being offered to an individual by virtue of position as an adviser, whether the investment opportunity should be reserved for clients and other issues.
Supervised and access persons who have been authorized to acquire securities in a private placement are required to disclose that investment when they play a part in any client’s subsequent consideration of an investment in the issuer. In such circumstances, the decision to purchase securities of the issuer for the client should be made either by another employee or, at a minimum, should be subject to an independent review by investment personnel with no personal interest in the issuer.
Blackout periods – Supervised and access persons are prohibited from executing a securities transaction on a day during which any client has a pending “buy” or “sell” order in the same (or a related) security until that order is executed or withdrawn.
Short term trading – Short term trading by any
supervised or access persons in any security held in client accounts is
prohibited. This prohibition includes short selling, options and futures. Short
term trading shall mean the buying and selling of a security within a 30 day
period. Any profits realized on prohibited short term trades shall be disgorged.
Gifts and entertainment - A conflict of interest occurs when the personal interests of employees interfere or could potentially interfere with their responsibilities to the firm and its clients. The overriding principle is that supervised and access persons should not accept inappropriate gifts, favors, entertainment, special accommodations, or other things of material value that could influence their decision-making or make them feel beholden to a person or firm. Similarly, supervised and access persons should not offer gifts, favors, entertainment or other things of value that could be viewed as overly generous or aimed at influencing decision-making or making a client feel beholden to the firm or the supervised person.
Gifts - No supervised or access person may receive any gift, service, or other thing of more than $100 invalue from any person or entity that does business with or on behalf of the adviser. No supervised or access person may give or offer any gift of more than $100 in value to existing clients, prospective clients, or any entity that does business with or on behalf of the adviser without pre-approval by the chief compliance officer.
Cash - No supervised or access person may give or accept cash gifts or cash equivalents to or from a client, prospective client, or any entity that does business with or on behalf of the CMAI.
Entertainment - No supervised or access person may provide or accept extravagant or excessive entertainment to or from a client, prospective client, or any person or entity that does or seeks to do business with or on behalf of the adviser. Supervised and access persons may provide or accept a business entertainment event, such as dinner or a sporting event, of reasonable value, if the person or entity providing the entertainment is present.
Confidentiality – All information concerning the identity of security holdings and financial circumstances of clients is confidential.
Firm Duties. CMAI will keep all information about clients (including former clients) in strict confidence, including the client’s identity (unless the client consents), the client’s financial circumstances, the client’s security holdings, and advice furnished to the client by the firm. 10
Supervised and access Persons’ duties. - In addition to insider trading procedures, supervised and access persons are prohibited from disclosing to persons outside the firm any material nonpublic information about any client, the securities investments made by the firm on behalf of a client, information about contemplated securities transactions, or information regarding the firm’s trading strategies, except as required to effectuate securities transactions on behalf of a client or for other legitimate business purposes.
Board of Director service – Supervised and access persons are prohibited from serving as directors of public companies.
Other outside activities – CMAI discourages supervised and access persons from engaging in outside business or investment activities that may interfere with their duties with the firm. Outside business affiliations, including directorships of private companies, consulting engagements, or public/charitable positions, is prohibited without the prior written approval of the chief compliance officer.
Regardless of whether an activity is specifically addressed in the Code of Ethics, supervised and access persons should disclose any personal interest that might present a conflict of interest or harm the reputation of the firm.
Marketing and promotional activities - all oral and written statements, including those made to clients, prospective clients, their representatives, or the media, must be professional, accurate, balanced, and not misleading in any way. No promotional materials may be distributed by any employee without the written authorization of the chief compliance officer.
Personal securities transaction procedures and reporting
All supervised and access persons shall report their holdings of covered securities within ten days of becoming a supervised or access person and annually thereafter.
The holdings report must include:
The title and exchange ticker symbol or CUSIP number, type of security, number of shares and principal amount (if applicable) of each reportable security in which the access person has any direct or indirect beneficial ownership;
The name of any broker, dealer or bank with which the access person maintains an account in which any securities are held for the access person’s direct or indirect benefit
The date the report is submitted
Quarterly Transaction Reports.
Supervised and access persons are required to submit to the chief compliance officer transaction reports no later than 30 days after the end of each calendar quarter covering all transactions in covered securities during the quarter.
The transaction reports must include information about each transaction involving a reportable security in which the supervised or access person had, or as a result of the transaction acquired, any direct or indirect beneficial ownership.
The quarterly transaction reports must include:
The date of the transaction, the title and exchange ticker symbol or CUSIP number
The interest rate and maturity date (if applicable),
The number of shares and the principal amount (if applicable) of each reportable security involved
The nature of the transaction (e.g., purchase, sale)
The price of the security at which the transaction was effected
The name of the broker, dealer, or bank with or through which the transaction was effected
The date the report is submitted
Exempt Transactions include:
Securities held in accounts over which the access person has no direct or indirect influence or control
A transaction report with respect to transactions effected pursuant to an automatic investment plan;
A transaction report if the report would duplicate information contained in broker trade confirmations or account statements that the firm holds in its records so long as the firm receives the confirmations or statements no later than 30 days after the end of the applicable calendar quarter
Pre-Clearance Exemptions. Pre-Clearance is not required for the following:
Purchases or sales over which an access person has no direct or indirect influence or control
Purchases or sales pursuant to an automatic investment plan
Purchases effected upon exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuers, and sales of such rights so acquired
Acquisition of securities through stock dividends, dividend reinvestments, stock splits, reverse stock splits, mergers, consolidations, spin-offs, and other similar corporate reorganizations or distributions generally applicable to all holders of the same class of securities
Open end investment company shares other than shares of investment companies advised by the firm or its affiliates or sub-advised by the firm
Certain closed-end index funds
Unit investment trusts
Exchange traded funds that are based on a broad based securities index
Futures and options on currencies or on a broad based securities index of interest rates
Other non-volitional events, such as assignment of options or exercise of an option at expiration
Duplicate Brokerage Confirmations and
Statements. Supervised and access persons are required to direct their brokers
to provide to the chief compliance officer or other designated compliance
official, on a timely basis, duplicate copies of confirmations of all personal
securities transactions and copies of periodic statements for all securities
accounts. These statements may be used in lieu of submitting their quarterly
transaction reports, provided that all of the required information is contained
in those confirmations and statements.
Monitoring of Personal Securities Transactions. The chief compliance officer will to review personal securities transactions and holdings reports periodically. Reviews will include monitoring personal securities transactions and trading patterns of access persons to assure compliance with the Code of Ethics including:
An assessment of whether the access person followed any required internal procedures, such as pre-clearance
Comparison of personal trading to any restricted lists
An assessment of whether the access person is trading for his or her own account in the same securities he or she is trading for clients, and if so, whether the clients are receiving terms as favorable as the access person takes for him or herself
Periodically analyzing the access person’s trading for patterns that may indicate abuse, including market timing
An investigation of any substantial disparities between the percentage of trades that are profitable when the access person trades for his or her own account and the percentage that are profitable when he or she places trades for clients.
Certification of compliance
Initial Certification - CMAI will provide all supervised and access persons with a copy of the Code of Ethics. All supervised and access persons are to certify in writing that they have:
Received a copy of the Code of Ethics
Read and understand all provisions of the Code of Ethics
Agreed to comply with the terms of the Code of Ethics.
Acknowledgement of Amendments - CMAI will provide supervised and access persons with any amendments to the Code of Ethics and supervised and access persons should submit a written acknowledgement that they have received, read, and understood the amendments to the Code of Ethics.
Annual Certification - All supervised and access persons shall annually certify that they have read, understood, and complied with the Code of Ethics. Additionally, each supervised and access person shall certify annually that they are not subject to any of the disciplinary events listed in Item 11 of Form ADV, Part 1.
Recordkeeping - CMAI will maintain the following records in a readily accessible place:
A copy of each Code of Ethics that has been in effect at any time during the past five years
A record of any violation of the Code of Ethics and any action taken as a result of such violation for five years from the end of the fiscal year in which the violation occurred
A record of all written acknowledgements of receipt of the Code of Ethics and amendments for each person who is currently, or within the past five years was, a supervised or access person
These records must be kept for five years after the individual ceases to be a supervised or access person of the firm
Holdings and transactions reports made pursuant to the Code of Ethics, including any brokerage confirmation and account statements made in lieu of these reports
A list of the names of persons who are currently, or within the past five years were, access persons
A record of any decision and supporting reasons for approving the acquisition of securities by access persons in limited offerings for at least five years after the end of the fiscal year in which approval was granted.
Administration and enforcement of the Code of Ethics
Training and Education. - The chief compliance officer is responsible for training and educating supervised and access persons regarding the Code of Ethics. Training will occur periodically and all supervised and access persons are required to attend any training sessions and read any applicable materials supplied by CMAI.
Annual Review. - The chief compliance officer shall review at least annually the adequacy of the Code of Ethics and the effectiveness of its implementation.
Report to Senior Management The chief compliance officer shall report to senior management regarding his or her annual review of the Code of Ethics and to bring material violations to the attention of senior management.
Reporting Violations. - All supervised and access persons are required to report violations of the firm’s Code of Ethics of ethics promptly to the chief compliance
Confidentiality. - Such reports will be treated confidentially to the extent permitted by law and investigated promptly and appropriately. Such reports may be submitted anonymously.
Types of Reporting. - Types of reporting include noncompliance with applicable laws, rules, and regulations; fraud or illegal acts involving any aspect of the firm’s business; material misstatements in regulatory filings, internal books and records, clients’ records or reports; activity that is harmful to clients, including fund shareholders; and deviations from required controls and procedures that safeguard clients and the firm.
Advice of Counsel. - Supervised and access persons are encouraged to seek advice from legal council with respect to any action or transaction which may violate the Code of Ethics and to refrain from any action or transaction which might lead to the appearance of a violation.
Retaliation. - Retaliation against an individual who reports a violation is prohibited and constitutes a further violation of the Code of Ethics.
Sanctions - Supervised and access persons are warned that any violation of the Code of Ethics may result in any disciplinary action that a designated person or group (e.g., chief compliance officer, compliance committee) deems appropriate, including, but not limited to, a warning, fines, disgorgement, suspension, demotion, or termination of employment. In addition to sanctions, violations may result in referral to civil or criminal authorities where appropriate.