1.  A Manager should establish a comprehensive and integrated compliance and business practices framework that is supported by adequate resources.

1.  The framework should include:

1. a written code of ethics that establishes principles governing the conduct of the Manager’s personnel;
2. a written compliance manual that addresses:
   • the various rules and regulations governing the Manager’s operations;
   • potential conflicts of interest that may arise in the course of those operations; and
   • the maintenance and preservation of adequate records;
3. the establishment of a Conflicts Committee to review conflicts;
4. regular training of personnel on the material elements of the compliance program; and
5. a compliance function that includes (i) a Chief Compliance Officer to monitor and maintain the Manager’s compliance program; (ii) appropriate discipline and sanctions to address departures from the Manager’s compliance program; and (iii) an annual review of the Manager’s compliance program.

2.  The Manager should develop and adopt a written code of ethics that establishes guidelines that are designed to foster integrity and professionalism among the Manager and its personnel. Whether particular policies or subjects are addressed in the code of ethics or compliance manual should be determined by the Manager taking into account what it believes is most effective for its business.

2.  These guidelines should address, at a minimum, the following issues, to the extent relevant to the Manager’s structure and operations:

• standards of conduct that require fund personnel to operate with integrity and professionalism;
• the fiduciary capacity of the Manager and its personnel (including the priority of the interests of the fund and its investors over the interests of the Manager and its personnel);
• protection of confidential information about the fund and its investors and any such information received by the Manager from third parties;
• personal trading by fund personnel;
• the receipt or provision of gifts and entertainment;
• a review or approval process for considering the compatibility of personnel’s internal role with outside directorships and other business interests;
• an internal reporting mechanism for conduct inconsistent with the code of ethics; and
• other policies that the Manager considers appropriate given its particular characteristics and operations.

The code of ethics should clearly identify the persons subject to it.

The code of ethics should reflect the nature of the Manager’s business.  While “off the shelf” codes or manuals may provide useful background and guidance, the code should be appropriately adapted to fit the Manager’s business.

Employees should certify that they have read the code of ethics and undertake to behave in conformity with it.

3.  The Manager should evaluate the critical elements to be addressed in its compliance manual in light of the focus of its business and operations.

3.  No applicable guidance.

4.  The Manager should develop a written compliance manual that outlines its policies and procedures for complying with laws, rules and regulations (domestic or international) applicable to the fund’s business operations and trading activities.

4.  The following are topics that a Manager should consider addressing in its compliance manual (to the extent relevant):

• Marketing and Communication:

- procedures for communicating with third parties (including media communications);
- procedures for using third-party marketers to solicit investments, where this practice is permitted; and
- procedures for review of any marketing materials used by the Manager, including review of performance presentation standards;

• Anti-Money Laundering:

- anti-money laundering policies and procedures and compliance with the Bank Secrecy Act, as applicable, such as:

o procedures for identifying investors prior to subscription and periodic review of the fund’s investor base; and
o where anti-money laundering compliance is delegated to an administrator or other third party, periodic review of the delegate’s practices (including its consistent application of those practices);

• Trading and Business Practices:

- a procedure for the prompt and accurate recording of transactions;
- trade allocation policies, such as policies in respect of allocations among funds and managed accounts or proprietary accounts, where applicable;
- a procedure for proxy voting;
- a trade error policy;
- a best execution policy that includes selection criteria for executing brokers, and provides for identification and review of such criteria by a best execution committee (where applicable) or by senior management;
- a policy for the use of soft-dollar arrangements and bundled commissions that may include:

o review of the Manager’s use of soft dollars for consistency with the practices outlined in disclosure to investors or compliance with Section 28(e) of the Securities Exchange Act of 1934 (where applicable); and
o heightened review of transactions with affiliated brokerdealers (where applicable) to monitor that the use of soft dollars is consistent with what has been disclosed to investors;

• policies prohibiting manipulation, such as:

- prohibition of late trading or market-timing;
- prohibition of front-running;
- prohibition of spreading of false rumors and wash sales, as appropriate in light of the Manager’s business;
- procedures for hedging and short sales in connection with offerings of securities (such as in connection with PIPE transactions); and
- procedures for participating in new issuances of securities and complying with representations to brokers regarding eligibility for such issuances.

• policies and procedures to prevent, detect, and address the misuse of material non-public information and insider trading (including in respect of price- or market-sensitive information and confidential information obtained from brokers, consultants or other third parties), which may include the use of information barriers, restricted lists or other appropriate procedures;
• policies and procedures designed to prevent obtaining material non-public information while conducting research and information gathering when investing in public companies;
• policies and procedures for personal trading by personnel of the Manager, such as identifying Manager personnel subject to restrictions and establishing appropriate procedures to control that trading (e.g., mandatory pre-approval or clearance of certain transactions and investments in initial public offerings or private placements, prohibition of or restriction on trading certain types of investments, restricted lists, black-out periods and holding periods); and
• policy on compliance with securities law ownership reporting requirements, such as the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Sections 13 and 16 of the Securities Exchange Act of 1934, and comparable non-U.S. reporting requirements;
• Surveillance:

- the Manager should establish a system to monitor compliance with its compliance policies and procedures; and
- appropriate surveillance will vary with the nature of the Manager’s activities and the characteristics of the fund, but should include review of records or other documentation produced in the ordinary course of business that can be useful in assessing the Manager’s compliance with its policies.

5.  Business records that are important to the Manager and fund should be maintained.

5.  Examples include contracts, constituent documents, trade data, accounting records, documents relating to valuation, records of meetings of any principal committees (such as the Risk, Valuation, and Conflicts Committee), investor communications and correspondence.

6.  The Manager should establish policies and procedures for the creation, maintenance and retention of business records that are appropriate to its size and level of activity.

6.  These policies and procedures should focus on key business records and should address, where applicable:

• the duration of retention, which may vary by type of record;
• the manner of retention, which should protect against unauthorized alteration or untimely destruction;
• communication of the retention policy to all employees as it applies to them;
• accurate and complete recording of trading activities; and
• methods to access documents retained pursuant to the policy.

7.  The Manager should establish and devote adequate resources to a compliance function to oversee, implement and review the Manager’s compliance program.

7.  In addition to a Chief Compliance Officer, other members of senior management may be appointed to oversee compliance in specific areas.

8.  The Manager should establish a robust training program to educate personnel in respect of its compliance program.
[See also Section A4 (2)]

8.  This training program should be developed in light of the following considerations (to the extent relevant):

• training should foster an understanding of all parts of the compliance framework;
• training should be tailored to the type of business undertaken by the Manager and should incorporate examples relevant to that business. It should focus on identifying compliance issues particular to the manager’s operations and on preventing market abuse;
• at least annually the Manager should organize and make available to personnel performing a significant business function a compliance training session addressing topics identified by the Chief Compliance Officer and by employees as relevant to the activities of such employees. The Manager may enlist the services of outside experts, such as outside counsel, to conduct these sessions;
• training should address circumstances where it would be appropriate to seek guidance from the Chief Compliance Officer or other member of senior management regarding a compliance matter; and
• because junior personnel will often develop greater compliance awareness through open and informal discussions with their supervisors and the Chief Compliance Officer, such contact should be encouraged as part of the training process.