Supplemental Conflict of Interest Policy
The Chief Investment Officer will assume responsibility for the management of Smith’s endowment investments, effective January 1, 2022. In addition, the Investment Committee’s role and responsibilities will similarly evolve. Accordingly, the Board of Trustees has determined that it would be appropriate to provide additional guidance with respect to conflicts of interest. To that end, the Board has adopted this Supplemental Conflict of Interest Policy (“Supplemental Policy”). For the avoidance of doubt, the provisions of the Smith College Conflict of Interest Policy are also applicable.
This Supplemental Policy applies, as relevant, to (a) members of the Board’s Investment Committee, including its non-trustee members, (b) the Chief Investment Officer, (c) staff members of the Investments Office, and (d) Board designated College officers and personnel supporting the Investment Committee or the Investments Office. Members of the Investment Committee and designated College officers and personnel are referred to as “Investment Committee Members.” The Chief Investment Officer and Investments Office staff members are referred to as “Investments Office Members.”
Investment Committee Members and Investments Office Members shall adhere at all times to the highest ethical and legal standards in the performance of their duties. This Supplemental Policy provides guidance to Investment Committee Members and Investments Office Members in order to avoid situations that pose actual, potential or the appearance of any conflict of interest with respect to supervision and management of Smith’s endowment investments. Generally, this Supplemental Policy requires full disclosure and transparency as the approach to dealing with conflicts of interest rather than on blanket investment prohibitions. In all cases, however, Investment Committee Members and Investments Office Members have a continuing obligation promptly to disclose any actual, potential or perceived conflicts of interest, as set out below.
I. General Guidelines
Investment in Non-Publicly Traded Investment Vehicles
With respect to new investments in entities that are not publicly traded, it is generally not permitted for Smith to invest in any fund, partnership, or vehicle (for example, a marketable securities fund, hedge fund, private equity fund, venture capital fund, real estate fund) or any similar entity, wherever organized, in which an Investment Committee Member, an Investments Office Member, or a “family member” (as defined in Smith’s Conflict of Interest Policy) of any such person, is a general or managing partner, director, sponsor, controlling person, or has a “material financial interest”(as defined in Smith’s Conflict of Interest Policy).
In the event a potential or actual conflict occurs, either prior to making an investment or after an investment has been made, upon becoming aware of any conflict (including any potential or actual conflict of any Trustee) the Investment Committee or Investments Office Member must promptly disclose it to the Chair of the Investment Committee. Any person with any conflict should not participate in any discussion or decision with respect to the investment. After full disclosure has been made relating to the nature of and reason for the conflict, and a determination has been made that such transaction has not and will not constitute an “excess benefit transaction” within IRS law, rule or regulation, the investment may be made or continue to be held if it is approved by the Chair of the Investment Committee and the Executive Committee of the Board of Trustees. If the Chair of the Investment Committee has a conflict, then the Executive Committee of the Board, other than the Chair of the Investment Committee, may approve such investment or determine that the investment must be divested.
II. Investments Office Guidelines
Every Investments Office Member should exercise care to avoid any potential or actual conflict of interest or the appearance of a conflict of interest between the Investments Office Member’s personal or business interests and the interests of Smith.
Every Investments Office Member will comply with all applicable local, state and federal laws, in addition to the provisions of the Smith College Conflict of Interest Policy, as supplemented by this Policy.
These guidelines apply to personal accounts and accounts over which the Investments Office Member has control or the ability to influence investment decisions.
Disclosure of Confidential Information
Confidential information of any kind obtained by an Investments Office Member through or as a result of his or her position in the Investments Office shall not be disclosed to any person, including any family member, outside the Investments Office. Trading on the basis of material non-public information about a public company or disclosure to any person of such information is prohibited and may be considered insider trading under applicable law.
No Investments Office Member shall make any investment in a publicly-traded company which would be considered “front running,” e.g., an investment made prior to or coincidental with execution of an investment made for Smith.
Pre-Approval of Trades
The Director of Operations of the Investments Office shall maintain a complete and updated list of investments in publicly-traded companies directly held by Smith and in publicly-traded companies about which the Investments Office has obtained any material non-public information.
This list maintained by the Director of Operations is referred to as the “Restricted List.”
Investments Office Members are permitted to make investments in bank accounts, open-end mutual funds, publicly-traded ETFs, government and municipal securities and Smith-sponsored retirement plans, without pre-clearance and approval. Investments Office Members must seek pre-clearance from the Director of Operations for any other transaction in any publicly-traded security by submitting a written request to the Director of Operations. No transaction in such a publicly-traded security shall be executed by any Investments Office Member prior to obtaining pre-approval from the Director of Operations. If a security is on the Restricted List, the Director of Operations shall not grant approval. If an Investments Office Staff Member intentionally violates this requirement, he or she may be subject to termination of employment.
A list of personal accounts or accounts pertaining to or containing publicly-traded securities over which any Investments Office Member has control or the ability to influence investment decisions must be submitted to the Chief Investment Officer at the time such Investments Office Member is hired and annually thereafter.
Additional Investment Guidance
- Without pre-approval by the Chief Investment Officer and the Chair of the Investment Committee, an Investments Office Member cannot invest in any non-publicly traded investment vehicle or fund which is not available in the general market and in which Smith has invested, plans to invest, or is considering an investment.
- An Investments Office Member cannot have a “material financial interest” (as defined in Smith’s Conflict of Interest Policy) in any investment manager, investment advisor, or key service provider to Smith’s Investments Office.
An Investments Office Member must obtain the written approval of the Chief Investment Officer prior to joining or participating in any outside board, committee or undertaking any similar activity. All Investments Office Members shall provide a list of outside activities, and disclose any compensation or remuneration, to the Chief Investment Officer, who will make a report to the Chair of the Investment Committee about such activities.
Meals and Lodging
Investments Office Members can participate in investor meetings hosted by an existing or prospective investment advisor or manager, service provider or other persons as long as such meetings are a basis for communicating relevant investment decisions to investors. The modest cost of related meals, transportation and hotel accommodations may be accepted if provided to all other existing or potential investors. All persons must use good judgment and no acceptance of any meal, lodging, etc., should in any case be viewed to compromise independence or objectivity.
Except for items of nominal value (less than $50), all gifts or other items of value must be turned over to the Chief Investment Officer who shall make a determination about donating such gifts to charity. Gifts may, however, be accepted if the same gifts of equivalent value are provided to all other persons attending a general event.