DOCUMENT #32
401.3 - Restrictions on Trading in Client or Client-Related Securities.
1. No partner or employee (or immediate family member of a partner or employee) shall purchase any securities in public offerings or private placements, or purchase securities of companies involved in a prospective merger or acquisition, or shall become a party to a limited partnership or a participant in a joint venture, if the Firm is acting as counsel for any party to the transaction or is advising security holders, fiduciaries, investment bankers, or other parties interested in the transaction. The Firm does not accept payment of fees in such transactions in the form of securities issued by the client. Notwithstanding the foregoing, the Firm or an entity controlled by the Firm (but not the partners or employees of the Firm or such entity) may invest in the securities of client companies properly classified as start-up or emerging businesses (but not companies whose equity securities are publicly traded in established markets), provided that such investments are made, held and liquidated in accordance with (i) the "Investment Principles" adopted by the Firm's Directors Committee (or its authorized designee) and (ii) the "Investment Guidelines" recommended by the Firm's Investment Committee (or its authorized designee) and adopted by the Directors Committee, as such Investment Principles and Investment Guidelines may be amended from time to time. The members of the Investment Committee will be appointed by the Directors Committee on recommendation of the Firm's Managing Partner.
2. In addition to the prohibition contained in the preceding paragraphs, no lawyer shall purchase or sell any securities issued by clients of the firm (unless the following conditions are met):
3. The lawyer shall obtain permission for such purchase or sale from a member of the Managing Partner and from the responsible lawyer for the client in question. Permission will be given only if the responsible lawyer determines that the firm does not appear to have any material, nonpublic information in its possession concerning such securities. If the responsible lawyer determines that the firm has (or may have) such material information in its possession, permission will be denied, and the lawyer shall refrain from making the purchase or sale (until ten days after the information has become public). Permission must be in writing, dated and signed, specifying the issuer and amount of securities involved. The purchase or sale must be completed within one business day from the date on which permission is given.
4. In the case of a purchase, the lawyer must agree to hold the securities for a period of at least six months, and in the case of a sale, the lawyer must have held the securities for a period of at least six months, unless the sale results from personal emergency and the holding period is waived by the responsible lawyer and the member of the Managing Partner and such waiver is noted as part of the written permission.
5. The provisions of paragraph 2 apply to the purchase or sale of client securities for any fiduciary account (trustee, executor, custodian, etc.) with respect to which the lawyer initiates the investment decision.
6. The provisions of paragraph 2 (and paragraph 1) do not apply to the following:
7. Approval by a lawyer acting in a fiduciary capacity of a transaction in client securities if the decision to buy or sell is initiated by another person who is responsible for investment decisions relating to the particular fiduciary account.
8. The purchase or sale of client securities by a "blind" trust of which the lawyer is a beneficiary, provided that the trustee of the trust makes all investment decisions for the trust, receives no input from the lawyer concerning such decisions, does not discuss with the lawyer any prospective investments, and does not receive any information from the lawyer concerning any clients of the firm, including their identity.
9. No partner shall sell short or engage in transactions in options with respect to securities of clients.
The ethical and legal constraints and prohibitions regarding confidentiality and insider trading are not limited to enterprises whose securities are publicly held or traded. The insider trading prohibitions are, however, most likely to be involved with respect to publicly-held enterprises. Each partner and employee is responsible for inquiring of the accounting department before engaging in any securities transaction to ascertain whether the issuer of the securities in question is at that time a client of the firm.
PRMS #32_ Investing in clients - Law Firm 1