Tag: Code of Conduct

New York Public Pension Fund Reform Code of Conduct

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In a widely publicized story, The Carlyle Group has agreed to adopt New York Attorney General Andrew Cuomo’s Public Pension Fund Reform Code of Conduct. It is the first money manager to adopt Cuomo’s new “code of reform” for the municipal-pension market. (Carlyle executives will not be subject to any criminal liability under the settlement with the NYAG.)

It is not clear how the ban on placement agents will interact with the SEC limitations on general solicitation under Rule 502. Many private investment funds use a broker/dealer as an intermediary with potential investors (including public pension funds) to comply with the SEC rule. It seems like the ban on placement agents could hurt the ability of smaller funds and newer funds to obtain investments from public pension funds. If a private investment fund seeking investors has no existing relationship with the public pension fund, then contacting the public pension fund directly could be considered part of a general solicitation in violation of SEC rules. The placement agent, if a licensed broker/dealer, can help establish the relationship to avoid a general solicitation.

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Business Codes of The Global 200

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In drafting and updating my code of conduct and ethics it is always useful to see what other companies are doing. I look for both approach, content and style. For instance, I collected the Whistleblower Hotlines for Home Builders. It is great to see a comparison of a group of compliance codes. KPMG put together a study of the codes of conduct for the Fortune Global 200 companies: Business codes of the Global 200 — their prevalence, content and embedding (.pdf).

A good and properly implemented business code is not just a nice thing to have; it is based on an all-encompassing business need. A business code contributes to an organization’s strategic positioning, to strengthening its identity and reputation, to an improved corporate culture and work climate, and to improved financial performance. A business code and the compliance program to implement it are the cornerstone of an organization.

This whitepaper illustrates some of the results from a study that KPMG conducted with RSM Erasmus University. In 1990 only 14% of the Global 200 had a code of conduct but in 2007 86% of them have a code, including 100% of North American firms.

A few interesting things jumped out at me.

The codes are mostly directed at employees, with less than half discussing corporate responsibility to shareholders. I found this strange since the purpose of the code should be to protect the shareholder’s investment and provide a long-term result for shareholders. It is the focus on the short-term that leads to trouble.

Although 73% of the codes refer to the acceptance of gifts, only 59% refer to the offering of gifts. You would expect a code to address both.  Since both offer the same danger of being viewed as bribery.

See:

Top Ranked Codes of Conduct

Ethisphere ranked 50 Codes of Conduct.

According to Ethisphere, here are some of the best:

Cisco’s Code of Business Conduct
“An attractive Code that passes with flying colors. Only areas that could be improved are the non-retaliation and reporting sections, and the 13,000 word length.”

Alltel Wireless Ethics Policy
“Excellent supportive learning aids and good adherence to core topics with actionable immediate steps hyperlinked within the document if an employee wants to report a concern.”