This Code of Business Conduct and Ethics (the "Code") is designed to promote honest, ethical and lawful conduct by all employees, officers and directors of Refco Inc. and its subsidiaries (collectively, "Refco"). The Code is intended to help employees, officers and directors understand Refco's standards of ethical business practices and to stimulate awareness of ethical and legal issues that may be encountered in carrying out their responsibilities.
The actions of every employee, officer and director affect the reputation and integrity of Refco. Therefore, it is essential that each take the time to review this Code and develop a working knowledge of its provisions. This Code is part of a broader set of policies and compliance procedures in effect at Refco and should be read in conjunction with those other policies and compliance procedures.
It is difficult to anticipate every decision or action that an employee, officer or director of Refco may face or consider. Whenever there is doubt about the right ethical or legal choice to make, fully disclose the circumstances, seek guidance about the right thing to do, and keep asking until guidance is obtained. An employee should make full disclosure to, and seek guidance from, the employee's supervisor in the first instance. Other avenues to consider are Refco's General Counsel and, in instances involving accounting practices, internal controls or audits, the Audit Committee of the Board of Directors of Refco.
It is Refco's policy to encourage the communication of bona fide concerns relating to the lawful and ethical conduct of business, and audit and accounting procedures or related matters. It is also Refco's policy to protect persons who communicate bona fide concerns from any retaliation for such reporting. Confidential and anonymous mechanisms for reporting concerns are available and are described in this Code. See "Reporting Violations" below.
Every employee, officer and director has an obligation to avoid any activity, agreement, business investment or interest or other situation that might in fact or in appearance cause the individual to place his or her own interests, or those of another, above his or her obligation to Refco. Care should be taken about the appearance of a conflict since such appearance might impair confidence in, or the reputation of, Refco even if there is no actual conflict and no wrongdoing.
While it is not possible to describe or anticipate all the circumstances and situations that might involve a conflict of interest, some examples are where an employee, officer or director, or any member of his or her family:
In all instances where the appearance of a conflict exists, the nature of the conflict must be disclosed to a responsible supervisor, the General Counsel, or other appropriate internal authority. Where there is a real or perceived conflict of interest involving a director of Refco, the matter should be referred to the General Counsel.
Refco's employees and officers are expected to devote their full time and attention to company business during regular working hours and for whatever additional time may be required. Outside business activities can easily create conflicts of interest or diminish productivity and effectiveness. For these reasons, employees and officers should avoid outside business activities that divert their time and talents from Refco's business. Although Refco encourages professional activities and community involvement, special care must be taken not to compromise duties owed to Refco. Employees and officers are expected to disclose the nature of any non-company activity for which compensation is received.
Employees and officers must obtain approval from Refco's General Counsel before agreeing to serve on the board of directors or similar body of a for-profit enterprise or government agency.
Serving on boards of not-for-profit or community organizations does not require prior approval. However, if service with a not-for-profit or community organization creates a situation that poses a conflict of interest with Refco (for example, the organization solicits charitable contributions from Refco or purchases significant services from Refco), Refco's General Counsel should be contacted for approval to continue such service.
Prior to seeking any election or appointment to public office, an employee or officer must notify the General Counsel to clarify Refco's position in the event the candidacy is successful or the appointment is made.
Every employee, officer and director has a personal responsibility to protect the assets of Refco from misuse or misappropriation. The assets of Refco include tangible assets, such as products, equipment and facilities, as well as intangible assets, such as corporate opportunities, intellectual property, trade secrets and business information (including any non-public information learned as an employee, officer or director of Refco).
Theft or Misuse of Refco Assets
Refco's assets may only be used for business purposes and such other purposes as are approved by Refco. No employee, officer or director may take, make use of, or knowingly misappropriate the assets of Refco, for personal use, for use by another, or for an improper or illegal purpose. No employee, officer or director is permitted to remove, dispose of, or destroy anything of value belonging to Refco without Refco's consent, including both physical items and electronic information.
No employee, officer or director of Refco shall for personal gain, or for the gain of any other person or entity, deprive Refco of any business opportunity which could be construed as related to any existing or reasonably anticipated future activity of Refco. Employees, officers and directors who learn of any such opportunity through their association with Refco may not disclose it to a third party or invest in the opportunity without first offering it to Refco.
No employee, officer or director of Refco may participate in an initial public offering or otherwise accept special investment opportunities from a supplier, vendor (including banks or financial advisers), or customer with whom Refco is doing business or that is seeking to sell products or services to Refco without first disclosing the opportunity to Refco's General Counsel.
No employee, officer or director of Refco who is entrusted with information of a confidential or proprietary nature (about Refco, its suppliers, customers or other constituents) shall disclose or use that information outside Refco, either during or after service with Refco, except with written authorization of Refco or as may be required by law.
Confidential information includes all non-public information learned as an employee, officer or director of Refco. It includes, but is not limited to;
Each employee, officer and director should deal fairly with Refco's suppliers, customers, competitors and employees. No employee, officer or director should take unfair advantage through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice. Refco respects the confidentiality and privacy of its suppliers and customers. Information about Refco's suppliers, customers, competitors and employees must be used in an ethical manner and in compliance with the law. Under no circumstance should information be obtained through theft, illegal entry, blackmail, or electronic eavesdropping, or through misrepresenting affiliation with Refco or identity. Any confidential or proprietary information should not be used if it is suspected that such information has been obtained improperly.
Refco requires its employees, officers and directors to comply with all applicable laws, rules and regulations in countries where Refco does business. Violation of domestic or foreign laws and regulations may subject an individual, as well as Refco, to civil or criminal penalties. To assure compliance with applicable laws and regulations, Refco has established various policies and procedures that are currently in effect, and employees have an obligation to comply with these policies and procedures and to promptly alert management of any deviation from them.
Legal compliance is not always intuitive. To comply with the law, employees, officers and directors must learn enough about the federal, state, local and foreign laws that affect Refco to spot potential issues and to obtain guidance on the proper way to proceed. This means, for example, that employees and officers whose day-to-day work is directly affected by particular laws have a responsibility to understand them well enough to recognize potential problem areas and to know when and where to seek advice. When there is any doubt as to the lawfulness of any proposed activity, advice should be sought from Refco's General Counsel.
Employees, officers and directors are strongly encouraged, and indeed have an obligation, to raise concerns promptly when they are uncertain as to the proper legal course of action or they suspect that some action may violate the law. The earlier a potential problem is detected and corrected, the better off Refco will be in protecting against harm to Refco's business and reputation.
Refco strictly prohibits giving anything of value, directly or indirectly, to a governmental official, agent or employee anywhere in the world in consideration for such official's, agent's or employee's assistance or influence (including the failure by such individual to perform his or her official duty), the purpose of which is to obtain favored treatment with respect to any aspect of Refco's business. Under no circumstance is it acceptable for any employee, officer or director to offer, give, solicit or receive any form of bribe, kickback, payoff, or inducement.
As a general matter, it is Refco's policy to cooperate in any government investigations and inquiries. All subpoenas, information document requests, or other inquiries should be referred immediately to the General Counsel.
Specific laws and regulations apply to participation in international business. Employees and officers involved in foreign business transactions must be fully familiar with, and strictly adhere to, all applicable foreign and domestic laws and regulations. Employees and officers involved in international business matters must, at a minimum, be aware of regulations, anti-boycott provisions, Treasury Department Office of Foreign Assets Control restrictions, and applicable trade embargoes in force.
Refco is an equal opportunity employer and bases its recruitment, employment, development and promotion decisions solely on a person's ability and potential in relation to the needs of the job and in compliance with local, state and federal employment laws. Refco makes reasonable job-related accommodations for any qualified employee or officer with a disability when notified by the employee that he or she needs an accommodation.
Refco is committed to a workplace that is free from sexual, racial, or other unlawful harassment, and from threats or acts of violence or physical intimidation. Abusive, harassing or other offensive conduct is unacceptable, whether verbal, physical or visual. Any person who believes that they have been harassed or threatened with or subjected to physical violence in or related to the workplace should report the incident to an appropriate supervisor or Human Resources, the General Counsel or the Legal Department, who will arrange for it to be investigated. All efforts will be made to handle the investigation confidentially.
Refco will not tolerate the possession, use or distribution of offensive materials on company property, or the use of company personal computers or other equipment to obtain or view such materials. All employees and officers must promptly contact an appropriate supervisor or Human Resources, the General Counsel or the Legal Department about the existence of offensive materials on the company's systems or premises so that appropriate action may be taken, including notifying the proper authorities, if necessary.
Refco is committed to providing a drug-free work environment. The illegal possession, distribution, or use of any controlled substances on company premises or at company functions is strictly prohibited.
All accidents, injuries, or concerns about unsafe equipment, practices, conditions or other potential hazards should be immediately reported to an appropriate supervisor or the Legal Department.
No employee, officer or director may trade in securities while in possession of material inside information or disclose material inside information to third parties ("tipping"). Material inside information is any information that has not reached the general marketplace and is likely to be considered important by investors deciding whether to trade (e.g., earnings estimates, significant business investments, mergers, acquisitions, dispositions and other developments, expansion or curtailment of operations, and other activity of significance). Using material inside information for trading, or tipping others to trade, is both unethical and illegal.
Accordingly, no employee, officer or director of Refco may: (a) trade securities of Refco or any other company while in possession of material inside information with respect to such entity; (b) recommend or suggest that anyone else buy, sell or hold securities of any company while the employee, officer or director is in possession of material inside information with respect to that company (this includes formal or informal advice given to family, household members and friends); and (c) disclose material inside information to anyone, other than those persons who need to know such information in order for Refco to properly and effectively carry out its business (e.g., to lawyers, advisers and other Refco employees working on the matter). Of course, where material inside information is permitted to be disclosed, the recipient should be advised of its non public nature and the limitations on its use. Any questions as to whether information is material or non-public should be directed to Refco's General Counsel.
Refco reserves the right to monitor or review any and all data and information contained on any employee's or officer's computer or other electronic device issued by Refco. In addition, Refco reserves the right, without prior notice, to monitor or review an employee's or officer's use of the Internet, the company Intranet and company e-mail or any other electronic communications. Access to Refco's systems will be revoked and disciplinary action may be taken in the event that such systems are used to commit illegal acts, to violate the terms of this Code or for any other improper use.
In order to maintain systems integrity and protect Refco's network, no employee or officer should divulge any passwords used to access any Refco computer or database. Any suspected breach of Refco's network security systems should be reported to a responsible supervisor or appropriate internal authority immediately.
All employees and officers should refrain from using or distributing software that may damage or disrupt Refco's work environment by transmitting a virus or conflicting with Refco's systems.
It is Refco's policy to fully and fairly disclose its financial condition in compliance with applicable accounting principles, laws, rules and regulations and to make full, fair, accurate, timely and understandable disclosure in periodic reports filed with the Securities and Exchange Commission and in other communications to securities analysts, rating agencies and investors. All employees, officers and directors, in particular, the chief executive officer, the chief financial officer and the comptroller, have a responsibility to ensure that Refco's accounting records do not contain any false or intentionally misleading entries. In particular:
Any effort to mislead or coerce the independent auditors or a member of internal audit staff concerning issues related to audit, accounting or financial disclosure is strictly prohibited. If you become aware of any violation of this policy, you must report the matter immediately to the General Counsel or the Chair of the Audit Committee at the following addresses.
To the General Counsel as follows:
One World Financial Center
To the Chair of the Audit Committee as follows:
Chair of the Audit Committee
c/o General Counsel
One World Financial Center
Employees are not authorized to answer questions from the media, analysts, investors or any other members of the public. If you should receive such an inquiry, you must record the name of the person and immediately notify Investor Relations, at 212-693-7000.
No Refco policy can provide definitive answers to all questions. If employees have questions regarding any of the standards discussed or policies referenced in this Code or are in doubt about the best course of action in a particular situation, the employee should refer to the reporting requirements for that goal or standard as stated in this Code, or the reporting requirements set forth in a specific policy and contact the person or party designated.
This Code is not intended to supersede or materially alter Refco policies and procedures already in effect.
Each employee, officer and director is under an
affirmative obligation to promptly report to a responsible supervisor, the
General Counsel or other appropriate internal authority any circumstances that
such person believes in good faith may constitute a violation of this Code, or
any other Refco policy, or applicable law,
regulations and rules. Except as provided in the next
paragraph, suspected policy violations may be reported to the General Counsel
at the telephone number listed in the company address book, by e-mail at email@example.com, or by
letter to the General Counsel,
Any complaint regarding accounting, internal accounting controls or auditing matters (including confidential and anonymous complaints) should be reported by telephone on a special toll-free line monitored by a third party for reporting to the Audit Committee of the Board of Directors, or by e-mail, or by letter to the Audit Committee, as follows:
By telephone: 1 (866) 299-8597
By e-mail: firstname.lastname@example.org
By letter: Audit
Committee of the Board of Directors of Refco
c/o General Counsel
One World Financial Center
200 Liberty Street, Tower A
New York, New York 10281-1094
No retribution against any individual who reports violations of this Code in good faith will be permitted, and mechanisms for reporting in a confidential and anonymous manner are noted above. While self-reporting a violation will not excuse the violation itself, the extent and promptness of such reporting will be considered in determining any appropriate sanction. Refco will promptly investigate any matter which is reported and take appropriate action.
Failure to follow this Code, as well as any of Refco's policies and procedures, may result in suspension of work duties, diminution of responsibilities or demotion, or termination of employment or board service, as the case may be.
From time to time, Refco may waive certain provisions of this Code. Any employee who believes a waiver may be called for should disclose the matter with the General Counsel. Any waivers for officers or directors, including the chief executive officer, chief financial officer and comptroller, may be made only by the Board of Directors or the Audit Committee to which such responsibility has been delegated, and will promptly be disclosed as required by applicable law, rule or regulation.