Foresters Equity Services, Inc. ( Foresters Equity ) Investment Advisor Policies and Procedures Manual

Transcription

1 Foresters Equity Services, Inc. ( Foresters Equity ) Investment Advisor Policies and Procedures Manual Effective May 1, 2013 Page 1 of 67

2 Table of Contents Chapter 1: Registration, Licensing and Supervisory Structure 1.0 Introduction Advisory Programs and Services Registration and Licensing Supervisory Structure Additional Duties of the CCO Regarding Compliance with Risk Management Procedures for Compliance with Registration and Licensing 11 Chapter 2 The Fiduciary Standard 2.1 Antifraud Provisions Fiduciary Duties Procedures for Compliance with Fiduciary Requirements 13 Chapter 3 Training and Supervision 3.1 IAR Training Compliance Questionnaire Supervision New Account Review Portfolio Management Political Contributions 17 Chapter 4 Code of Ethics and Insider Trading 4.1 General Basic Principles Chief Compliance Officer Security 19 Page 2 of 67

3 4.1.4 Covered Accounts Beneficial Ownership Personal Account Trading and Investment Policy Service as a Director Gifts Duties of Confidentiality General Ethical Conduct Misappropriation of Customer Funds Insider Trading Policy Statement on Insider Trading Who is an Insider? What is Material Information? What is Nonpublic Information? Types of Liability Penalties for Insider Trading Procedures for Compliance with Code of Ethics 26 Chapter 5 Anti-Money Laundering ( AML ) 5.1 Definition Due Diligence AML Compliance Officer IAR Awareness and Training Client Identification Program ID Verification Documentary Verification Non-Documentary Verification 32 Page 3 of 67

4 5.5.4 Reliance on a Third Party for Identity Verification Special Situation Clients Who Refuse to Provide Information Government List Comparison FinCEN Requests under PATRIOT Act Section Acceptable Types of Clients Individual Clients Corporations, Partnerships and Comparable Legal Entities Domestic Operating or Commercial Entities Domestic Trusts Non-Resident Alien Accounts Prohibited Clients Suspicious Transactions and Activity Suspicious Activity at Initial Investment Transactions Suspicious Activity Related to Transactions Procedures for Compliance with Anti-Money Laundering Policies 39 Chapter 6 - Business Continuity Plan 6.1 Content of Plan IAR Training Procedures for Compliance with Business Continuity Planning 41 Chapter 7 Regulatory Filings 7.1 Forms 13D, 13F and 13G SEC Registration Procedures for Compliance with Regulatory Filing Requirements 43 Page 4 of 67

5 Chapter 8 Gifts and Entertainment 8.1 Procedures for Gifts and Entertainment 44 Chapter 9 Trading 9.1 Aggregation of Orders Best Execution Trade Errors Agency Cross Transactions 46 Chapter 10 Protection of Non-Public Customer Data 10.1 The Privacy Policy Affiliate Clear and Conspicuous Consumer Continuing Relationship Customer Customer Relationship Nonpublic Personal Information Personally Identifiable Financial Information Publicly Available Information Consumers and Customers Notification Requirement Initial Notice Annual Notice Content of Notice Privacy Policies 50 Page 5 of 67

6 Customer Information California Residents Procedures for Compliance with Privacy Regulations 51 Chapter 11 Communications with the Public 11.1 Advertisements Investment Counsel RIA Testimonials Past Recommendations Performance Data Performance Reporting Prohibited Advertisements Correspondence Electronic Communications Retention Social Media Procedures for Compliance with Public Communications Requirements 57 Chapter 12 Regulatory and Internal Inspections 12.1 Scope of the Regulatory Inspection Regulatory Exam Topics 12.3 Annual Internal Review Chapter 13 Books and Records 13.1 Required Records Advertising File Annual Notice of Material Changes to Form ADV Part 2 Firm Brochure 61 Page 6 of 67

7 Associated Persons Personal Transactions Records Financial Records Order Tickets Organizational Documents Performance Advertising Supporting Documentation Policies and Procedures Solicitor Disclosure Document Transition Records Written Agreements Written Communications Custodial Advisors Records Additional Records Complaint File Disaster Recovery Client Lists Organizational Chart Privacy Policy Regulatory Inspections Trade Errors Proxy Voting Records Books and Records Retention Electronic Maintenance of Records Procedures for Compliance with Record-Keeping Policies 66 Appendix A Senior Management Approval 67 Page 7 of 67

8 Chapter 1 Registration, Licensing and Supervisory Structure 1.0 Introduction Foresters Equity Services, Inc. ( Foresters Equity ) is an SEC Registered Investment Advisor. The Foresters Equity main office is located in San Diego, California. Foresters Equity is also a broker-dealer registered with the Financial Industry Regulatory Authority ( FINRA ). As an investment advisor, Foresters Equity is a fiduciary to its advisory clients, and has a duty of undivided loyalty to always act in utmost good faith, place its clients interests first and foremost, and to make full and fair disclosure of all material facts including information as to any conflicts of interest. This Investment Advisor Policies and Procedures Manual ( Manual ) reflects the policies and procedures that have been adopted by Foresters Equity to fulfill its obligations when providing investment advisory services. The Manual will be updated on a periodic basis to be current with Foresters Equity s business practices and regulatory requirements. All officers, employees and investment advisory representatives ( IARs ) of Foresters Equity are expected to follow the policies and procedures outlined in the Manual, and as amended from time to time. A copy of the Manual is provided to each officer, employee and IAR, and a current copy of the Manual is posted to the Foresters Equity internet website for easy reference at In addition, all IARs that are also securities registered through Foresters Equity are also expected to follow the policies and procedures outlined in the firm s brokerdealer manual entitled Written Supervisory Policies and Procedures. 1.1 Advisory Programs and Services Foresters Equity offers three types of advisory services to clients as described below. Third Party Money Management. Foresters Equity refers clients to third party investment advisory firms for management services. IARs of Foresters Equity will assist the client in determining his/her investment objective for the account, and recommend an appropriate portfolio or management style offered by the third party advisor. The third party advisor will buy and sell mutual funds, exchange traded funds ( ETFs ), or variable annuity subaccounts in the client s account on a discretionary basis. Neither Foresters Equity nor the IAR have any discretionary authority over the accounts managed by the third party advisor. For a list of approved third party management firms, IARs should refer to the firm s website at Advantage. Foresters Equity also offers the Advantage program sponsored by Southwest Securities, Inc. ( Southwest ), an investment advisor, through which Page 8 of 67

9 Foresters Equity will provide non-discretionary investment advice that is tailored to the needs of the client. The IAR will assist the client in determining his/her risk tolerance and investment objective for the account through completion of a client profile. The IAR will also assist the client in selecting an asset allocation model for the account. Based upon the goals of the client and the asset allocation model selected, the IAR will recommend investments for the client. These investments may include no-load or load-waived mutual funds, ETFs, and cash or cash equivalents. The client will be responsible for selection of the investments in the account. Southwest will then periodically rebalance the assets on an as needed basis in order to maintain the client s target asset allocation among the investments. Financial Planning Services. Foresters Equity offers financial planning services consistent with the client s financial and tax status, risk profile and investment objective. 1.2 Registration and Licensing Foresters Equity is a federally registered investment advisor. To affect its registration, Foresters Equity has registered with the SEC through the Investment Advisors Registration Depository ( IARD ). Through the IARD, Foresters Equity has submitted Form ADV Part 1 and paid all relevant fees. Foresters Equity has also created a Form ADV Part 2 Firm Brochure and keeps up with the requirements to update this document annually and whenever it becomes materially inaccurate. The IARs affiliated with Foresters Equity must also maintain the proper licenses and registration before soliciting clients. Although the approach to licensing individual IARs (including those in supervisory roles) differs from state to state, Foresters Equity as a firm requires its IARs to maintain an active 65 or 66 license or a stateapproved designation, including the Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC) designations, or other proficiency exam. Compliance with these requirements may generally be reported through disclosures on the IARD system during the application process. Each IAR must be registered as an IAR within each state in which the IAR has a place of business as defined by the SEC, unless otherwise required by the state(s) by notifying the Foresters Equity Registration Department and paying the appropriate fees. Foresters Equity is required to maintain current registration data through the IARD system. Under federal regulations, Foresters Equity is required to file an annual updating amendment through IARD within 90 days following the end of its fiscal year. This process is handled by the Registration Department. Foresters Equity is required to keep the information in its Form ADV (Parts 1 and Part 2) current. All amendments to Form ADV Parts 1 and 2 are processed through the IARD system. The IARs of Foresters Equity are also required to maintain an up-to-date Brochure Supplement, created by the back office of Foresters Equity. The information contained in the Brochure Supplement provides details regarding the IAR s Page 9 of 67

10 educational history, business background, current business activities as well as disclosure regarding any sanctions for violating securities law or entering into bankruptcy. The Form ADV Part 2 Firm Brochure along with the IAR s Brochure Supplement form a written disclosure statement that provides information about business practices, fees, and conflicts of interest Foresters Equity and its IARs may have with its clients. Foresters Equity must maintain its Form ADV Part 2 and Brochure Supplements in paper format, upload a PDF copy in electronic format through IARD, and ensure that it s IARS provide a copy to all of its clients upon entering into an investment advisory relationship. Foresters Equity requires its IARs deliver the Form ADV Part 2 Firm Brochure and relevant Brochure Supplement to the client (1) at least 48 hours prior to entering into the advisory relationship, or (2) at the time of entering into a contract with Foresters Equity, provided the client can terminate the contract without penalty within 5 business days after entering the contract. It is the obligation of the IAR to provide these documents to the client. Clients acknowledge receipt of these documents in the Disclosure and Acknowledgement of Receipt of Documents when entering into an advisory relationship with a third party money manager or for the Mutual Fund Advantage program. For clients receiving financial planning services, the acknowledgement of receipt is included within the Financial Planning and Consultation Agreement. At least once annually Foresters Equity must advise each of its clients of the material changes that were made to the ADV Part 2 Firm Brochure throughout the year, and that a current Form ADV Part 2 Firm Brochure is available if desired by the client. The firm shall maintain a record of the clients to whom the material changes and updated form is offered, the date and form of the offer (by representative sample copy), and of those accepting the offer. For those clients requesting a copy of the offered Form ADV Part 2 Firm Brochure, Foresters Equity shall also maintain evidence that such copy was provided. 1.3 Supervisory Structure Foresters Equity has established a supervisory structure that includes the designation of personnel in key positions and a description of those positions. In a separate file maintained by Foresters Equity, it has identified and maintains current a list of key personnel and their duties and supervisory obligations, as applicable. Foresters Equity has designated one employed individual to act as its Chief Compliance Officer ( CCO ), whose duty it shall be to administer Foresters Equity compliance policies and procedures. The CCO has full responsibility and authority to develop and enforce all appropriate compliance related policies and procedures for Foresters Equity. Foresters Equity identifies its CCO in its organizational chart and through the IARD system as required. Page 10 of 67

11 Foresters Equity's senior management includes but is not limited to principals such as the President/CEO, the CCO, Vice President Finance and Administration and others properly licensed and designated. These individuals are responsible for Foresters Equity's compliance, control and supervisory system, including its implementation, maintenance and ongoing review as more fully described below. Foresters Equity's principal officers may directly supervise other officers, employees, branch managers, registered representatives and IARs. Foresters Equity s principal officers are responsible for the duties performed by all personnel. Foresters Equity's President/CEO and CCO are responsible for development and enforcement of Foresters Equity's compliance program. 1.4 Additional Duties of the CCO Regarding Compliance with Risk Management In addition, the CCO is charged with responsibility for assessment of the primary areas of Foresters Equity's risk exposure. This assessment will include asking questions about such topics as the firm's affiliations, business lines, business continuity, firm viability and personnel, strategic direction, corporate governance, privacy, trading and portfolio management, custody, proxy voting, unethical behavior and insider trading, anti-money laundering, record-keeping, and disclosures, among others. Following an assessment of the risk areas, the CCO will: Examine the policies, procedures, day-to-day business processes and/or systems surrounding the risks Determine the level of risk to the firm and its clients Propose reasonable compliance solutions to eliminate or decrease the risk, if necessary 1.5 Procedures for Compliance with Registration and Licensing Foresters Equity has designated an individual who is responsible for the ongoing maintenance of accurate and current registration data, both for the firm and for the individual IARs. A list of the individual(s) so designated is maintained separately among the central advisory files of the firm, including the date the individual(s) accepted and were granted such authority. This review shall include, but is not limited to, a review of the IARD Form ADV Part 1 filed with the states and Part 2, review of the underlying criteria and supporting information for the Form, licensing of its IARs, and related supporting documentation and information. Records of these activities shall be retained among Foresters Equity s central records. Foresters Equity requires that each individual providing investment advice is required to maintain all applicable licenses, and has in place controls including the designation of a qualified supervisor to implement its policies. An associated person must be registered as an IAR in those states that require IAR registration before the IAR can open or solicit a managed money account. Page 11 of 67

12 To ensure that its supervisory structure is adequately formed and adhered to, Foresters Equity maintains an updated record of its supervisory chain of command among its central files and records. The record is periodically distributed to individuals named as supervisors, to ensure that they will remain at all times informed of the supervisory requirements attributed to them. The CCO is responsible for implementation and ongoing oversight of these procedures, including the oversight of individuals to whom certain procedures may be delegated. No less frequently than annually, the CCO will oversee the renewal of Foresters Equity's registration. No less frequently than annually (within 90 days of the fiscal year end of Foresters Equity), the CCO will oversee the filing of an annual amendment, and reviewing the related forms and records as necessary. Page 12 of 67

13 Chapter 2 The Fiduciary Standard As an investment advisor, Foresters Equity is a fiduciary to its advisory clients and has a duty of undivided loyalty to always act in utmost good faith, place its clients interests first and foremost, and to make full and fair disclosure of all material facts including information as to any conflicts of interest. 2.1 Antifraud Provisions Whereas registered representatives have transaction-based responsibilities to their customers, IARs have relationship- type responsibilities to their clients. This standard becomes important across Foresters Equity s activities imposing fiduciary standards on each client relationship and even beyond the nature of each individual transaction. The CCO, other principals and IARs are all extensions of Foresters Equity. As such, all these individuals must act in the best interests of Foresters Equity and its clients. Failure to do so can personally subject the individuals associated with Foresters Equity to enforcement action(s). 2.2 Fiduciary Duties In general, the fiduciary duty owed by Foresters Equity to its clients will guide IARs, officers and directors in avoiding conflicts of interest where possible, providing full and fair disclosure of services and fees, seeking best execution, and a number of other areas. Foresters Equity and its IARs are prohibited to carry out any of the following: 1. Employ any device, scheme, or artifice to defraud a client or prospective client 2. Engage in any transaction, practice, or course of business which defrauds or deceives a client or prospective client 3. Knowingly sell any security to or purchase any security from a client when acting as principal for his or her own account, or knowingly to effect a purchase or sale of a security for a client's account when also acting as broker for the person on the other side of the transaction, without disclosing to the client in writing before the completion of the transaction the capacity in which Foresters Equity is acting and obtaining the client's consent to the transaction 4. Engage in fraudulent, deceptive or manipulative practices 2.3 Procedures for Compliance with Fiduciary Requirements The CCO or designee is the individual charged with monitoring Foresters Equity s performance of services in the context of its fiduciary duties. The CCO or designee shall take steps designed to ensure that IARs perform their job duties and responsibilities within the context of its fiduciary responsibility. Among these, each IAR will be required to complete an annual attestation of compliance. Page 13 of 67

14 Record of the completion shall be maintained among Foresters Equity s central compliance files. Page 14 of 67

15 Chapter 3 Training and Supervision 3.1 IAR Training Foresters Equity intends to offer training to its IARs on at least an annual basis through online training resources. All IARs will be required to take the mandatory training each year, and failure to complete the training will be grounds for disciplinary action up to and including termination from Foresters Equity. It is anticipated that the training topics to be covered will include, but not necessarily be limited to, the following: Fiduciary Duty of Investment Advisors Importance of Adhering to Policies and Procedures Manual Outside Business Activities Anti-Money Laundering Protection of Non-Public Customer Data Code of Ethics, Insider Trading and Personal Securities Transactions Political Contributions The Compliance Department will be responsible for producing the training materials or locating a third party resource that is appropriate for IARs. 3.2 Compliance Questionnaire On an annual basis, the Compliance Department will send a questionnaire to each IAR asking for certain information and responses regarding the IARs understanding of the policies and procedures of Foresters Equity. In some cases, the IAR may be required to make certain representations or attestations regarding his/her compliance with specific policies and procedures. It is the responsibility of each IAR to complete and return the questionnaire to Foresters Equity in a timely fashion. The Compliance Department will use this questionnaire to monitor the activities of its IARs and to tailor its future training programs for IARs. 3.3 Supervision Foresters Equity and its IARs have an obligation to ensure that an advisory relationship being established is appropriate for the client. At the time of establishing an advisory relationship with a client, the IAR collects certain information from the client that may include the following: annual income, net worth and other financial information, investment experience, financial goals, and account restrictions. This data collection process assists the IAR in helping the client determine an investment objective for the account or services. It also assists the IAR and Foresters Equity in determining the appropriateness of the account or services for the client. The advisory services offered through Foresters Equity are designed for clients who wish to invest assets in accordance with long term Page 15 of 67

16 investment objectives. The IAR should not recommend advisory services for the client if the services are not suitable for the client or if the client does not intend to take a long term view toward investing New Account Review IARs must submit the following original paperwork to the Foresters Equity home office in order to open an advisory account relationship: New Account Application Disclosure and Acknowledgement of Receipt of Documents The third party advisor s required documents (e.g., Solicitation Agreement, Program Selection, etc) Any additional account documents (i.e., Trustee Certification, Power or Attorney, etc.) A principal at the home office will review the submitted paperwork, sign the documents as evidence of approval and ensure that the originals are forwarded to the third party money manager. For financial planning accounts, IARs must submit the following documents to the Foresters Equity home office: New Account Application Financial Planning and Consultation Agreement Copy of financial plan delivered to client Invoice Any additional account documents (e.g., Trustee Certification, Power of Attorney, etc.) Copies of the above items must also be maintained in the appropriate client file in the IAR s office. The IAR must also maintain any additional documentation related to clients including the reviewed copies of the client quarterly reports, and completed corresponding third party risk tolerance questionnaire Portfolio Management As an investment advisor, Foresters Equity is responsible for ensuring that clients receive ongoing management that is consistent with the client s stated investment objectives. In that regard, IARs are encouraged to periodically review client accounts being managed by third party money management firms or within the Mutual Fund Advantage program to ensure that the management, asset allocation and/or security selections, as applicable, continue to meet the needs of the client. IARs are further encouraged to update the client profile as appropriate and send the original updated client profile to the home office for review, approval and forwarding to the third party money manager. In addition, a copy must be maintained in the IAR s office in the client file. Page 16 of 67

17 Reviews of client accounts are also conducted by Vice Presidents and the CCO, or their designees, on a quarterly basis. Approximately 30 accounts are reviewed on a random basis through this process Political Contributions SEC Rule 206(4)-5 (the Rule ) under the Investment Adviser Act of 1940 (the Advisers Act ) prohibits investment advisors from receiving compensation for providing advice to a government entity within 2 years after a contribution to an official of the government entity has been made by the investment advisor or by any of its covered associates advisory business. A de minimus provision permits associated persons to make contributions of up to $350 per election per candidate if the contributor is entitled to vote for the candidate and up to $150 per election per candidate if the contributor is not entitled to vote for the candidate. Foresters Equity prohibits all covered associates from making a contribution to an official, as defined above, in excess of the de minimus exemption. All covered associates must report all contributions to the compliance department at or prior to the time of the contribution on the Investment Advisor Representative Political Contribution Disclosure form. The time of the contribution is defined as no less than 24 hours prior to the contribution being paid to an official. It is the policy of Foresters Equity to separately identify all government entity accounts on its books and records. Each covered associate is required to notify compliance at the time of the account opening for this account type, if applicable. As part of Foresters Equity books and records, the firm maintains a log of all political contributions by its investment adviser representatives evidencing whether the contribution was approved or not approved Regarding cash solicitors, it is the policy of Foresters Equity to not accept referrals for government entity clients or any other form of direct or indirect solicitation. Covered associate is defined as any executive officer or other individual with a similar status or function, any employee who solicits a government entity for the investment adviser and any person who supervises directly or indirectly such employee, and any political action committed controlled by any covered associate. Violation of this policy as denoted above is subject to disciplinary action by Foresters Equity. Page 17 of 67

18 4.1 General Chapter 4 Code of Ethics and Insider Trading Foresters Equity maintains and enforces a written code of ethics, a copy of which is maintained under separate cover and available on the firm s website, In an effort to ensure that Foresters Equity Services, Inc. ( Foresters Equity ) maintains a reputation for integrity and high ethical standards, it is important that Foresters Equity and its supervised persons comply with federal securities laws and also maintain high standards of personal and professional conduct. The Code of Ethics (the Code ) is designed to help ensure that Foresters Equity conducts its business consistent with these high standards. Covered Individuals All Foresters Equity investment advisor representatives ( IARs ) and employees are covered by the Code and are required to acknowledge receipt of a copy of the Code in writing, as well as any amendments that may be provided in the future. It is the responsibility of all IARs to read, understand and comply with the requirements of the Code. Failure to comply with the Code may result in disciplinary action, including termination of employment Basic Principles This Code is based on a few basic principles that should pervade all investment related activities of all associated personnel: (1) the interests of Foresters Equity's clients come before its or any IAR s interests; (2) each IAR s professional activities and personal investment activities must be consistent with this Code and avoid any actual or potential conflict between the interests of clients and those of Foresters Equity or the IAR; and (3) those activities must be conducted in a way that avoids any abuse of an IAR s position of trust with and responsibility to Foresters Equity and its clients, including taking inappropriate advantage of that position. The IAR shall in all respects comply with applicable federal and state securities laws, and other laws, rules and regulations, any applicable laws of foreign jurisdictions, and the firm policies and procedures as may be amended from time to time, including without limitation those prohibiting insider trading and front running of client accounts. Fiduciary Duty. As a fiduciary, Foresters Equity has an affirmative duty of care, loyalty, honesty, and good faith to act in the best interests of its clients. This Page 18 of 67

19 includes the obligation to place the interests of clients ahead of its own. Foresters Equity requires that IARs place client transactions ahead of any transactions for the account of an IAR. Foresters Equity requires all IARs to conduct business in an ethical fashion. Conflicts of Interest. IARs should try to avoid any situation that has even the appearance of conflict or impropriety, and should fully disclose to the client all material facts concerning any conflict of interest that does arise. Standards of Conduct. All IARs must comply with all federal securities laws. IARs are not permitted, in connection with the purchase or sale, directly or indirectly, of a security held or to be acquired by a client: To defraud such client in any manner To mislead a client, including by making a statement that omits material facts To engage in any act, practice or course of conduct, which operates or would operate as a fraud or deceit on a client To engage in any manipulative practice with respect to such client To engage in any manipulative practice with respect to securities, including price manipulation Chief Compliance Officer Many of the specific procedures, standards, and restrictions described in this Code involve consultation with the CCO Security For purposes of this Code, the term "security" includes not only stocks, but also options, rights, warrants, futures contracts, convertible securities, mutual funds or other securities that are related to securities in which Foresters Equity's clients may invest or as to which Foresters Equity may make recommendations (sometimes also referred to as "related securities") Covered Accounts Many of the procedures, standards and restrictions in this Code govern activities in "Covered Accounts." Covered Accounts consist of: 1. Securities accounts of which Foresters Equity is a beneficial owner, provided that (except where the CCO otherwise specifies) investment partnerships or other funds of which Foresters Equity or any affiliated entity is the general partner, investment advisor or investment manager or from which Foresters Equity or such affiliated entity receives fees based on capital gains are generally not considered Covered Accounts, despite the fact that Foresters Page 19 of 67

20 Equity or associated person may be considered to have an indirect beneficial ownership interest in them. 2. Each securities account registered in an IAR s name and each account or transaction in which an IAR has any direct or indirect "beneficial ownership interest" (other than accounts of investment limited partnerships or other investment funds not specifically identified by the CCO as "Covered Accounts") Beneficial Ownership The concept of "beneficial ownership" of securities is broad. It includes not only securities a person owns directly, and not only securities owned by others specifically for his or her benefit, but also (i) securities held by his or her spouse, minor children and relatives who live full time in his or her home, and (ii) securities held by another person if by reason of any contract, understanding, relationship, agreement or other arrangement the IAR obtains benefits substantially equivalent to ownership. Note: This broad definition of "beneficial ownership" does not necessarily apply for purposes of other securities laws or for purposes of estate or income tax reporting or liability. An IAR may declare that the reporting or recording of any securities transaction should not be construed as an admission that he or she has any direct or indirect beneficial ownership in the security for other purposes Personal Account Trading and Investment Policy It is Foresters Equity's policy to impose specific requirements related to each covered person's personal trading and investment activity. Foresters Equity's policy is to consider the effects of various types of trading, including short term trading and trading in new issues as a potential conflict of interest. Similarly, Foresters Equity may impose specific requirements related to investments in private placements. Approval may be refused for any proposed trade by an IAR when the trade: Involves a security that is being or has been purchased or sold by Foresters Equity on behalf of any client account or is being considered for purchase or sale Is otherwise prohibited under any internal policies of Foresters Equity (such as Foresters Equity's Policy and Procedures to Detect and Prevent Insider Trading) Breaches the IAR s fiduciary duty to any client Is otherwise inconsistent with applicable law, including the Adviser s Act and the Employee Retirement Income Security Act of 1974, as amended Creates an appearance of impropriety The Procedures section shall address Foresters Equity's specific procedures for these types of investments and trading. Page 20 of 67

21 4.1.7 Service as a Director No IAR may serve as a director of a publicly-held company without prior approval by the CCO (or a senior principal, if the CCO is the proposed board member) based upon a determination that service as a director would not be adverse to the interests of any client. In the limited instances in which such service is authorized, IARs serving as directors will be isolated from other IARs who are involved in making decisions as to the securities of that company through procedures determined by the CCO to be appropriate in the circumstances. These practices may also constitute illegal "insider trading." Some of the specific trading rules described below are also intended, in part, to prevent front running and scalping. If an account is managed by an investment advisor, other than Foresters Equity, to which full investment discretion has been granted, these rules will not apply for so long as the IAR(s) who has (have) a beneficial ownership interest in the account do not have or exercise any discretion. Such accounts will remain subject to the reporting requirements set forth in the next section of this Code Gifts and Entertainment An IAR may not accept inappropriate gifts, favors, entertainment, or other things of value that could influence decision-making or make the IAR feel beholden to the person or firm. Similarly, IARs may not offer gifts, favors, entertainment or other things of value that could be viewed as overly generous or aimed at influencing decision-making or making a client feel beholden to Foresters Equity or the IAR. It is Foresters Equity s policy that the receipt or giving of any gift of more than nominal value ($100 per year) from or to any person or entity that does business with or on behalf of any client is prohibited, except as otherwise authorized in writing by the CCO Duties of Confidentiality Information concerning the security holdings and financial circumstances of clients, among other items, is confidential. All information about clients must be kept in strict confidence. IARs are prohibited from disclosing any information about any client, the investment made by Foresters Equity on behalf of any client, information regarding Foresters Equity s trading strategies, except as required to provide services to client or for other legitimate business purposes. All information relating to clients' portfolios and activities and to proposed recommendations is strictly confidential. Consideration of a particular purchase or sale for a client account may not be disclosed, except to authorized persons General Ethical Conduct: The following are potentially compromising situations that must be avoided: Causing Foresters Equity, acting as principal for its own account or for any account in which Foresters Equity or any person associated with Foresters Equity (within the meaning of the Investment Advisers Act) to sell any security Page 21 of 67

22 to or purchase any security from a client in violation of any applicable law, rule or regulation of a governmental agency Communicating any information regarding Foresters Equity, Foresters Equity's investment products or any client to prospective clients, journalists, or regulatory authorities that is not accurate, true or omitting to state a material fact necessary in order to make the statements Foresters Equity has made to such person materially complete Engaging in any act, practice, or course of business that is fraudulent, deceptive, or manipulative, particularly with respect to a client or prospective client Engaging in any conduct that is not in the best interest of Foresters Equity or might appear to be improper Engaging in any financial transaction with any of Foresters Equity's vendors, clients or IARs, including but not limited to: providing any rebate, directly or indirectly, to any person or entity that has received compensation from Foresters Equity; accepting, directly or indirectly, from any person or entity, other than Foresters Equity, compensation of any nature such as a bonus, commission, fee, gratuity or other consideration in connection with any transaction on behalf of Foresters Equity; beneficially owning any security of, or have, directly or indirectly, any financial interest in, any other organization engaged in securities, financial or related business, except for beneficial ownership of not more than one percent (1%) of the outstanding securities of any business that is publicly owned Engaging in any form of harassment Improperly using or authorizing the use of any inventions, programs, technology or knowledge that are the proprietary information of Foresters Equity Investing or holding outside interest or directorship in clients, vendors, customers or competing companies, including financial speculations, where such investment or directorship might influence in any manner a decision or course of action of Foresters Equity. In the limited instances in which service as a director is authorized by Foresters Equity, IARs serving as directors will be isolated from other IARs who are involved in making decisions as to the securities of that company through procedures determined by Foresters Equity to be appropriate according to the circumstances Making any unlawful agreement with vendors, existing or potential investment targets or other organizations Making any untrue statement of a material fact or omitting to state to any person a material fact necessary in order to make the statements Foresters Equity has made to such person materially complete Participation in civic or professional organizations that might involve divulging confidential information of the company Unlawfully discussing trading practices, pricing, clients, research, strategies, processes or markets with competing companies or their associated persons Using any device, scheme or artifice to defraud, or engaging in any act, practice, or course of business Page 22 of 67

23 Conduct that operates or would operate as a fraud or deceit upon, any client or prospective client or any party to any securities transaction in which Foresters Equity or any of its clients is a participant Misappropriation of Customer Funds Misappropriation, stealing, or conversion of customer funds is prohibited and constitutes serious fraudulent and criminal acts. Examples of such acts include (1) unauthorized wire or other transfers in and out of customer accounts; (2) borrowing customer funds; (3) converting customer checks that are intended to be added or debited to existing accounts; and (4) taking liquidation values of securities belonging to customers. 4.2 Insider Trading Foresters Equity has adopted the following policies and procedures to detect and prevent the misuse of material, nonpublic information by IARs of Foresters Equity Policy Statement on Insider Trading The term "insider trading" is not defined in the federal securities laws, but generally is used to refer to the use of material nonpublic information to trade in securities (whether or not one is an "insider") or to communications of material nonpublic information to others. While the law concerning insider trading is not static, it is generally understood that the law prohibits the following: Trading by an insider while in possession of material nonpublic information Trading by a non-insider, while in possession of material nonpublic information, where the information either was disclosed to the non-insider in violation of an insider's duty to keep it confidential or was misappropriated Communicating material nonpublic information to others in violation of one's duty to keep such information confidential Foresters Equity prohibits any officer, director or IAR from trading a security, either personally or on behalf of others, while in possession of material, nonpublic information about the security or communicating material nonpublic information to others in violation of the law. Additionally, IARs are prohibited from communicating, sharing, or tipping such material, non-public information to others. Material information includes any information that a reasonable investor would consider in making an investment decision. Non-public information is information that has not been disseminated in a manner that would make it generally available to investors. This conduct is frequently referred to as "insider trading." Foresters Equity's policy applies to every officer, director and IAR and extends to activities within and outside their duties at Foresters Equity. Each officer, director and IAR must read this policy statement and acknowledge his or her understanding of it. An IAR that believes Page 23 of 67

24 he/she or a client may be in possession of material, non-public information, should immediately contact Foresters Equity CCO. Any questions regarding Foresters Equity's policy and procedures should be referred to the CCO Who Is An Insider? The concept of an "insider" is broad. It includes officers, directors and IARs of a company. In addition, a person can be a "temporary insider" if he or she enters into a special confidential relationship in the conduct of Foresters Equity s affairs and as a result is given access to information solely for the firm's purposes. A temporary insider can include certain "outsiders" such as, among others, Foresters Equity s attorneys, accountants, consultants, bank lending officers, and the associated persons of such organizations. According to the United States Supreme Court, before such an "outsider" may be considered a "temporary insider", the firm's relationship with the outsider must be such that the firm reasonably expects him or her to keep the disclosed nonpublic information confidential What Is Material Information? While covered persons are prohibited from trading on inside information, trading on inside information is not a basis for liability unless the information is "material." Information generally is material if there is a substantial likelihood that a reasonable client would consider it important in making his or her investment decisions, or if public dissemination of the information is reasonably certain to have a substantial effect on the price of a company's securities. Information that should be presumed to be material includes, but is not limited to: dividend changes; earnings estimates; changes in previously released earnings estimates; significant merger or acquisition proposals or agreements; commencement of or developments in major litigation; liquidation problems; and extraordinary management developments. Questions one might ask in determining whether information is material include: Is this information that a client would consider important in making his or her investment decisions? Is this information that would substantially affect the market price of the securities if generally disclosed? Is the information nonpublic? To whom has this information been provided? Has the information been effectively communicated to the marketplace by being published in a recognized national distribution agency or publication such as Reuters, The Wall Street Journal or other such widely circulated publications? Caution must be exercised, however, because material information does not necessarily have to relate to a company's business. The Supreme Court of the United States has broadly interpreted materiality in some cases, and has asserted criminal liability associated with inappropriate disclosures. Page 24 of 67

25 4.2.4 What Is Nonpublic Information? Information is nonpublic until it has been effectively communicated to the market place. One must be able to point to some fact to show that the information is generally public. For example, information found in a report filed with the Securities and Exchange Commission, or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or other publications of general circulation would be considered public Types of Liability Actions by the US courts, including the Supreme Court, have resulted in findings that assert liability to fiduciaries in the context of trading on material nonpublic information. In some cases it has been found that a non-insider can enter into a confidential relationship with the company through which they gain information or they can acquire a fiduciary duty to the company's shareholders as "tippees" if they are aware or should have been aware that they have been given confidential information by an insider who has violated his fiduciary duty to the company's shareholders. This is a circumstance into which an associate of Foresters Equity may fall. In the "tippee" situation, a breach of duty occurs only if the insider personally benefits, directly or indirectly, from the disclosure. It is important to note that the benefit does not have to be monetary; it can be a gift, and can even be a 'reputational' benefit that will translate into future earnings. Another basis for insider trading liability is the "misappropriation" theory, where trading occurs on material nonpublic information that was stolen or misappropriated from any other person. This theory can be used to apply liability to individuals not previously thought to be encompassed under the fiduciary duty theory. 4.3 Penalties for Insider Trading Penalties for trading on or communicating material nonpublic information are severe, both for individuals involved in the trading (or tipping) and their employers. A person can be subject to some or all of the penalties below even if he or she does not personally benefit from the violation. Penalties include: Civil injunctions Damages in a civil suit as much as three times the amount of actual damages suffered by other buyers or sellers Disgorgement of profits Jail sentences Fines for the person who committed the violation of up to three times the profit gained or loss avoided, whether or not the person actually benefited, and Fines for the employer or other controlling person of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided Prohibition from employment in the securities industry Page 25 of 67

26 In addition, any violation of this policy statement by an IAR can be expected to result in serious disciplinary measures by Foresters Equity, including dismissal of the IAR involved. 4.4 Procedures for Compliance with Code of Ethics The CCO has determined that all associated persons are covered by Foresters Equity's Code of Ethics. In the following procedures all such persons shall be referred to as "covered persons." The CCO or designee will maintain in an accessible place the following materials: Copy of this Code of Ethics Record of any violation of these procedures for the most recent five years and a detailed synopsis of the actions taken in response Copy of each transaction report submitted by each officer, director and associated person of Foresters Equity for the most recent five years List of all persons who are or have been required to file transaction reports. In an effort to prevent insider trading, through his/her own efforts or as delegated to qualified covered persons under his/her supervision, the CCO will do the following: Answer questions and document responses regarding Foresters Equity's policy and procedures Provide no less than annually an educational program to familiarize covered persons with Foresters Equity s policy and procedures Require each IAR to acknowledge his or her receipt and compliance with this policy and procedures regarding insider trading on an annual basis, and retain acknowledgements among Foresters Equity s central compliance records Resolve issues of whether information received by an associated person of Foresters Equity is material and nonpublic and document findings Review on a regular basis and update as necessary Foresters Equity's policy and procedures and document any resulting amendments or revisions When it is determined that an IAR of Foresters Equity has material nonpublic information, implement measures to prevent dissemination of such information and if necessary, restrict covered persons from trading in the securities In an effort to detect insider trading, through his/her own efforts or as delegated to qualified covered persons under his/her supervision, the CCO or designee will perform the following actions: Review the trading activity reports filed by each officer, director, and IAR of Foresters Equity, documenting findings by initialing and dating the forms or reports reviewed Review the duplicate confirmations and statements and related documentation of personal and related accounts maintained by officers, directors and covered persons versus the activity in the fund(s) advised by Foresters Equity Page 26 of 67

27 Require officers, directors and covered persons to submit periodic reports of personal trading activity, and to attest to the completeness of each individual's disclosure of outside accounts at the time of hiring and at least annually thereafter To determine whether Foresters Equity's covered persons have complied with the rules described above (and to detect possible insider trading), the CCO will have access to and will review transactions effected in Covered Accounts within 30 days after the end of each month. The CCO will compare transactions in Covered Accounts with transactions in client accounts for transactions or trading patterns that suggest violations of this policy or potential front running, scalping, or other practices that constitute or could appear to involve abuses of covered persons' positions. Annually each covered person must certify that he or she has read and understands this Code, that he or she recognizes that this Code applies to him or her, and that he or she has complied with all of the rules and requirements of this Code that apply to him or her. The CCO or designee is charged with responsibility for collection, review, and retention of the certifications submitted by covered persons. Although covered persons are not prohibited under this policy from trading securities for their own accounts at the same time that they are involved in trading on behalf of Foresters Equity, they must do so only in full compliance with this policy and their fiduciary obligations. At all times, the interests of Foresters Equity's clients will prevail over the covered person's interest. No trades or trading strategies used by a covered person may conflict with Foresters Equity's strategies or the markets in which Foresters Equity is trading. Personal account trading must be done on the covered person's own without placing undue burden on Foresters Equity's time. No transactions should be undertaken that are beyond the financial resources of the covered person. No IAR may purchase new publicly offered issues ( IPO ) of any securities ("New Issue Securities") for any covered account in the public offering of those securities without the prior written consent of the CCO. At the onset of firm association and immediately following subsequent events involving the acquisition of securities (marriage, inheritance, etc.), each covered person must, disclose to the CCO the identities, amounts and locations of all securities he/she owns. On an annual basis, each IAR will be required to confirm the location of all Covered Accounts. In all cases, duplicate statements must be sent directly to the CCO or designee from the custodian. All statements of holdings, duplicate account statements, and monthly and quarterly reports will generally be held in confidence by the CCO or designee(s). However, the CCO or designee(s) may provide access to any of those materials to other members of Foresters Equity's management in order to resolve questions regarding compliance with this policy and regarding potential purchases or sales for client accounts, and Foresters Equity may provide regulatory authorities with access to those materials where required to do so under applicable laws, regulations, or orders of such authorities. Page 27 of 67

28 To prevent the misappropriation, theft or conversion of customer funds, Foresters Equity will implement one or more of the following procedures: Verify changes of address with the customer by requesting such changes in writing from the customer or by verifying the change through a telephone call or to the customer. Require supervisory review of changes of address or customer account information to ensure that associated persons do not independently change customers' addresses and account information. Ensure IARs do not have the ability to alter account statements online. Closely analyze customers' use of any address other than their home address. Use of P.O. boxes, "in care of" addresses, and other- than- home addresses are prohibited absent a valid reason for their use. All transfers, withdrawals, or wires from the customer's account require the customer's authorization and confirmation of the customer s identity, typically by having the client give the last 4 digits of their social security number. If possible, provide customers with access to their account statements on a secure firm website so that customers can easily verify activity in their accounts. The use of personal electronic devices (e.g., personal computers, Blackberries) to conduct firm business is prohibited unless the use of personal electronic devices is pre-approved and the devices can be linked with the firm's system to allow for supervisory review. Require each associated person who has knowledge of misappropriation, stealing or conversion of customer funds to promptly report the situation to the CCO. Page 28 of 67

29 Chapter 5 - Anti-Money Laundering ( AML ) In compliance with financial industry regulations and the USA PATRIOT ACT, Foresters Equity has: Established and implemented policies and procedures that can be reasonably expected to detect and cause the reporting of transactions that raise a suspicion of money laundering Established and implemented policies, procedures and internal controls reasonably designed to achieve compliance with the Bank Secrecy Act and regulations thereunder Designated an individual or individuals responsible for implementing and monitoring the day-to-day operations and internal controls of the program Provided and will continue to provide ongoing training for appropriate personnel Provided for independent compliance testing by Foresters Equity s personnel or a qualified outside party on a regular schedule but no less than annually Senior Management is committed to the goals of the USA PATRIOT ACT. Further, anti-money laundering compliance is the responsibility of every IAR, and any IAR that detects activity that seems to be suspicious is instructed to report such activity to the AML Compliance Officer ( AML CO ). The responsibility of IARs to participate in the AML Compliance Program is reinforced through training, no less frequently than annually, and through ongoing oversight performed by or at the instruction of the AML CO. Foresters Equity will periodically update its AML Policies and Procedures to conform to regulatory changes and firm growth. Foresters Equity will continue to seek guidance from the Department of Treasury, the states and others regarding effective AML Policies and Procedures. 5.1 Definition Money laundering is engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the unlawful proceeds appear to have been derived from legitimate origins or to constitute legitimate assets. Generally, money laundering occurs in three stages. Cash first enters the financial system at the "placement" stage, where the cash generated from criminal activities is converted into monetary instruments, such as money orders or traveler's checks, or deposited into accounts at financial institutions. At the "layering" stage, the funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin. At the "integration" stage, the funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses. Terrorist financing may not involve the proceeds of criminal conduct, but rather an attempt to conceal the origin or intended use of the funds, which will later be used for criminal purposes. Page 29 of 67

30 In addition, money laundering may include (1) willfully ignoring ("willful blindness") the source of a client's assets or the nature of client transactions; and/or (2) failing to report suspected money laundering activities and failing to maintain required records of transactions in order to hide and transfer assets. Money launderers require the intentional or unintentional assistance of an associated person or a financial institution. Foresters Equity has adopted the following policies and procedures, to be adhered to by every IAR of Foresters Equity. 5.2 Due Diligence It is Foresters Equity's policy to prohibit and actively prevent money laundering and any activity that facilitates money laundering of the funding of terrorist or criminal activities. Accordingly, Foresters Equity requires a corresponding commitment by its IARs, irrespective of job duty or assignment. Foresters Equity requires every IAR to diligently protect Foresters Equity from money launderer's exploitation. Foresters Equity and its IARs could be subject to civil, criminal and disciplinary action, and harm to their reputation. The purpose of Foresters Equity's AML policies and procedures is to: 1. Uphold the law 2. Protect Foresters Equity and its IARs from persons who would misuse Foresters Equity facilities and resources 3. Safeguard Foresters Equity and its IARs from the appearance of impropriety and from the violation of anti-money laundering laws 4. Maintain Foresters Equity's high level of service to clients and counter-parties without disruption or inconvenience 5.3 AML Compliance Officer Foresters Equity has assigned an individual, noted at the end of this chapter, as Foresters Equity's AML CO. Foresters Equity will provide the appropriate regulator with AML CO s contact information, including name, title, mailing address, address, telephone number and facsimile number. Firm personnel should contact the AML CO if they have any questions regarding Foresters Equity's AML Policies and Procedures or how to implement them. The AML CO will: Implement Foresters Equity's AML Policies and Procedures. Ensure appropriate firm personnel attend periodic AML training. Ensure the accuracy of third party reports on which Foresters Equity relies in complying with these policies and procedures. Ensure that Suspicious Activity Reports (SAR-SFs) are filed when necessary. Page 30 of 67

31 Because the relationship between Foresters Equity and its clearing firm (or any custodian) may divide responsibilities related to AML, or may overlap causing complication or confusion regarding its AML Policies and Procedures implementation, Foresters Equity and its clearing firm or custodian(s) remain in ongoing communication and understanding regarding the responsibilities of each entity. In most cases, Foresters Equity is in the best position to know its client, and understands that it is responsible for reviewing anti-money laundering. The AML CO is responsible for knowing about and procuring any and all available reports that may be utilized in connection with these procedures. 5.4 IAR Awareness and Training Foresters Equity requires existing IARs to periodically acknowledge receipt of these procedures, as deemed appropriate by the AML CO. Foresters Equity shall establish a training program to include periodic training related to AML. 5.5 Client Identification Program Foresters Equity has implemented a Client Identification Program ("CIP") to ensure that Foresters Equity and its IARs can form a reasonable belief that they know the true identity of each individual accepted as a client. Further, the CIP shall ensure that Foresters Equity and its IARs know the identity of individuals underlying any entity that is accepted as a client. Underlying the CIP is the policy that requires that the AML CO be involved in the acceptance of each and every new client. Foresters Equity will verify the identity of each of the following: New clients and persons to whom any client grants investment authority Existing clients for whom Foresters Equity has not previously checked the identity, and those granted investment authority subsequent to any initial investment Any clients whose identity the AML CO deems should be verified Prior to opening an account, IARs must obtain from the client the following: Client's name Date of birth, for an individual An address, which will be: (1) for an individual, a residential or business street address; (2) for an individual who does not have a residential or business street address, an Army Post Office (APO) or Fleet Post Office (FPO) box number, or the residential or business street address of next of kin or another contact individual; or (3) for a person other than an individual (such as a corporation, partnership, or trust), a principal place of business, local office, or other physical location An identification number, which will be: (1) for a U.S. person, a taxpayer identification number or (2) for a non-u.s. person, a taxpayer identification number and one or more of the following: (a) a passport number and country Page 31 of 67

32 of issuance; (b) an alien identification card number; or (c) the number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard ID Verification Foresters Equity will determine what and how much identification it will require a client to provide based on Foresters Equity's perceived client risk. Foresters Equity will determine the client's risk using the following factors, among others at the discretion of the AML CO: Types of identifying information available about the client and or parties associated with the client Input by qualified third parties, such as the custodian, fund administrator, or other such counter-party Foresters Equity will verify the client's identity within a reasonable time before it opens the client's account. Foresters Equity will use documentary, non-documentary, or a combination of both methods to verify client's identities Documentary Verification Foresters Equity will use the following documents and others based on its client's perceived risk to verify the client's identity: For an individual, an unexpired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard, such as a driver's license or passport For a person other than an individual (such as a corporation, partnership, or trust), documents showing the existence of the entity, such as certified articles of incorporation, a government-issued business license, a partnership agreement, or a trust instrument In certain instances, Foresters Equity's account opening documents may require the client to: (1) represent and covenant that all evidence of identity provided is genuine and all related information furnished is accurate; (2) agree to provide any information deemed necessary by Foresters Equity in its sole discretion to comply with its anti-money laundering responsibilities and policies; and (3) represent that it is investing solely as principal and not for the benefit of any third parties Non-Documentary Verification Foresters Equity will use the following non-documentary methods and others based on the perceived risk to verify client's identity: Contacting the client Page 32 of 67

33 Independently verifying the client's identity through the comparison of information provided by the client with information obtained from a consumer reporting agency, public database, or other source Checking references with other financial institutions Obtaining a financial statement Foresters Equity will use this information to determine whether there is a logical consistency between the client's identifying information, such as name, street address, zip code, telephone number, date of birth, and taxpayer identification number Reliance on a Third Party for Identity Verification Foresters Equity may, under the following circumstances, rely on the performance by another financial institution (including an affiliate) of some or all of the elements of CIP with respect to any client that is opening an account or has established in account or similar business relationship with the other financial institution to provide or engage in services, dealings, or other financial transactions: When such reliance is reasonable under the circumstances When the other financial institution is subject to a rule implementing the antimoney laundering compliance program requirements When the other financial institution has entered into a contract with Foresters Equity requiring it to certify annually to us that it has implemented its antimoney laundering program, and that it will perform specified requirements of the fund client identification program Special Situations If a client or potential client is unable to present an unexpired government-issued identification document that bears a photograph or similar safeguard, Foresters Equity will attempt to use other documentary and non-documentary methods to verify the person's identity. If Foresters Equity is unfamiliar with the documents the client presents, Foresters Equity will verify the authenticity of the document and/or use other methods to verify the person's identity. If Foresters Equity opens a client account without obtaining the required documents, Foresters Equity will discontinue transacting business for the client until Foresters Equity obtains identifying information. If Foresters Equity opens the client account without the client appearing in person, Foresters Equity will use documentary and non-documentary verification methods as stated above. If the client's circumstances increase the risk that Foresters Equity will not be able to verify the client's identity, Foresters Equity will attempt to verify the person's identity Page 33 of 67

34 with documentary methods and if Foresters Equity is unable to verify the person's identity, Foresters Equity will use non-documentary methods or not open the account. Until Foresters Equity verifies the client's identity, Foresters Equity will determine whether each transaction is appropriate without client identity verification. If Foresters Equity fails to verify the client's identity, it will close the client's account and not reopen the account until it positively identifies the client. If Foresters Equity suspects that clients are not who they purport to be, Foresters Equity will not open accounts on those clients' behalf, and Foresters Equity will file a suspicious activity report in accordance with the SAR section of these policies and procedures Clients Who Refuse to Provide Information If a potential or existing client either refuses to provide the information described above when requested, or appears to have intentionally provided misleading information, Foresters Equity will not transact business for the client and, after considering the risks involved, Foresters Equity will consider closing any existing account. In either case, the AML CO will be notified so that a determination can be made regarding reporting the situation via a Form SAR-SF. The AML CO shall be the final determinant of the client's status Government List Comparison Foresters Equity will verify within a reasonable time after the client opens an account, or earlier if required, that the client does not appear on any list of known or suspected terrorist or terrorist organization. Foresters Equity will follow all Federal directives issued in connection with such lists. On an ongoing basis, Foresters Equity will check the OFAC list to ensure, before transacting any business with them, that potential clients and existing clients are not prohibited persons or entities and are not from embargoed countries or regions. From time to time, Foresters Equity may receive notice that a government agency has issued a list of known or suspected terrorists. Within a reasonable period of time after an account is opened (or earlier), Foresters Equity will determine whether a client appears on any such list of known or suspected terrorists or terrorist organizations issued by any government agency. Foresters Equity will follow all directives issued in connection with such lists. Foresters Equity will continue to comply with the Treasury's Office of Foreign Asset Control rules prohibiting transactions with certain foreign countries or their nationals FinCEN Requests under PATRIOT Act Section 314 Foresters Equity responds to Financial Crimes Enforcement Network (FinCEN) requests about accounts or transactions by immediately searching its records at its head office to determine whether Foresters Equity maintains or has maintained any Page 34 of 67

35 account for, or have engaged in any transaction with, each individual, entity, or organization named in FinCEN's request. Upon receiving an information request, the AML CO will designate one person to be the point of contact regarding the request and to receive similar requests in the future. Unless otherwise stated in FinCEN's request, Foresters Equity is required to search current accounts, accounts maintained by a named suspect during the preceding 12 months, and transactions conducted by or on behalf of or with a named subject during the preceding six months. If Foresters Equity finds a match, Foresters Equity will report it to FinCEN by completing FinCEN's subject information form. This form can be sent to FinCEN by electronic mail at [email protected], or by facsimile transmission to If the search parameters differ from those mentioned above (e.g., if FinCEN requests longer periods of time or limits the search to a geographic location), Foresters Equity will limit its search accordingly. If Foresters Equity searches its records and does not uncover a matching account or transaction, then Foresters Equity will not reply to the FinCEN request. Foresters Equity will not disclose the fact that FinCEN has requested or obtained information, except to the extent necessary to comply with the information request. Foresters Equity will maintain procedures to protect the security and confidentiality of requests from FinCEN. Foresters Equity will direct any questions it has about the request to the requesting Federal law enforcement agency as designated in the FinCEN request. Unless otherwise stated in the information request, Foresters Equity will not be required to treat the information request as continuing in nature, and Foresters Equity will not be required to treat the request as a list for purposes of the fund clients identification and verification requirements. Foresters Equity will not use information provided to FinCEN for any purpose other than (1) to report to FinCEN as required under Section 314 of the PATRIOT Act; (2) to determine whether to establish or maintain an account, or to engage in a transaction; or (3) to assist the firm in complying with any requirement of Section 314 of the PATRIOT Act. 5.6 Acceptable Types of Clients Generally Foresters Equity will accept the following types of clients, subject to the final review and acceptance of an appropriately licensed registered principal Individual Clients At minimum, Foresters Equity will obtain the client's: Name and address Date of birth Investment experience and objectives Social Security Number Names of all persons authorized to trade on the account Page 35 of 67

36 5.6.2 Corporations, Partnerships and Comparable Legal Entities In order to confirm the identity of a legal entity, Foresters Equity will obtain satisfactory evidence of the entity's name and address and its authority to make the contemplated investment. Where the client is neither a publicly traded company listed on a major, regulated exchange (or a subsidiary or a pension fund of such a company) nor a regulated institution organized in a FATF-Compliant Jurisdiction, Foresters Equity may wish to gain additional comfort regarding the client's identity by obtaining certain of the following, as appropriate under the circumstances: Evidence that the client has been duly organized in its jurisdiction of organization If Foresters Equity believes it would be reasonable to rely upon a certification from the client, a certification ("AML Certificate") from the client that it has implemented and complies with anti-money laundering policies, procedures and controls that seek to ensure that none of its directors, officers or equity holders are prohibited clients, as set forth in a certificate or other list Domestic Operating or Commercial Entities For all commercial entities, Foresters Equity will verify the business identity and verify that the person investing has authority to transact business with Foresters Equity Domestic Trusts For all domestic trusts, Foresters Equity will identify the principal owner of the trust and confirm that the individual establishing the investment has authority to transact business on behalf of the trust. Foresters Equity may accept evidence of the trustee's authority to make the contemplated investment in the form of either an AML Certificate from the trustee or the identities of beneficiaries, the provider of funds (e.g., settler(s)), those who have control over funds (e.g., trustee(s)) and any persons who have the power to remove trustees Non-Resident Alien Accounts In addition to resident requirements, Foresters Equity should obtain from nonresident alien clients a current passport number or other valid government ID number, and any necessary U.S. tax forms. 5.7 Prohibited Clients Foresters Equity will not accept an investment from or on behalf of the following: Any client (a "Listed Client") whose name appears on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Office of Page 36 of 67

37 Foreign Assets Control ("OFAC") or such other lists of prohibited persons and entities as may be mandated by applicable law or regulation Foreign Shell Bank (with respect to clients that are Foreign Banks, Foresters Equity may wish to consider obtaining a representation that the bank either (1) has a physical presence; or (2) does not have a physical presence, but is a regulated affiliate.) Senior Foreign Political Figure, any member of a Senior Foreign Political Figure's immediate family, and any close associate of a Senior Foreign Political Figure Any client resident in, or organized or chartered under the laws of, a noncooperative country or territory Any client resident in, or organized or chartered under the laws of, a jurisdiction that has been designated by the USA PATRIOT Act as warranting special measures due to money laundering concerns Any client who gives Foresters Equity reason to believe that its investment funds originate from, or are routed through, an account maintained at an "offshore bank", or a bank organized or chartered under the laws of a noncooperative jurisdiction Any client who gives Foresters Equity reason to believe that the source of its investment funds may not be legitimate 5.8 Suspicious Transactions and Activity Foresters Equity will monitor its account activity to identify patterns of unusual size, volume, pattern or type of transactions, geographic factors such as whether jurisdictions designated as "non-cooperative" are involved, or any "red flags." Foresters Equity will review transactions, including trading and wire transfers, in the context of other account activity to determine if a transaction lacks financial sense or is suspicious because it is an unusual transaction or strategy for that client. The AML CO is responsible for monitoring, documenting, and reporting this activity to the appropriate authorities. Foresters Equity will submit Suspicious Activity Reports (SARs) for suspicious client activity when opening accounts and when transacting business Suspicious Activity at Initial Investment At initial investment, IARs should report the following and any other suspicious activities to the AML CO: Client has a suspicious background or originates from a suspicious area Client exhibits reluctance to provide pertinent information related to source of investment funds, business background or other information Client expresses objections to Foresters Equity's compliance procedures, restrictions, disclosures or other practices Client appears to be acting as an agent for an undisclosed principal, but declines or is reluctant, without legitimate commercial reasons, to provide information or is otherwise evasive regarding that person or entity Page 37 of 67

38 Client is from, or has accounts in, a country identified as a non-cooperative country or territory Client cannot describe in reasonable terms the nature of his/her business or investment experience Client cannot adequately document appropriate authority for the account Client wishes to engage in investments that are inconsistent with the client's apparent investment strategy Client (or a person publicly associated with the client) is the subject of news reports indicating possible criminal, civil or regulatory violations Transactions An IAR should report the following client activities to the AML CO: Large cash transactions (in excess of $10,000) Transactions that may be structured to fall just below reporting thresholds Wire transfers, journals or cash transactions that have no apparent investment purpose especially if conducted among countries considered to be tax or bank secrecy havens Account activity is limited to cash and cash equivalents Significant deposit earmarked for investment with subsequent or sudden request for withdrawal Multiple accounts for the same individual with no apparent reason for separate accounts Customer activity limited to investments often utilized in connection with fraudulent schemes and money laundering Investment activity not impacted by any apparent consideration of risk, return or other performance Sudden change in activity, especially wire activity, in an account previously not active A deposit is made for the purpose of purchasing a long-term investment but is withdrawn or the investment is liquidated within a short term Deposits and withdrawals to the account appear to be well beyond the financial means, income or resources of the client 5.9 Suspicious Activity Related to Transactions The AML CO will file form SAR-SF for any attempted or conducted account activity where Foresters Equity knows, suspects, or has reason to suspect one or more of the following: The transaction involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity as part of a plan to violate or evade federal law or regulation or to avoid any transaction reporting requirement under federal law or regulation. The transaction is designed, whether through structuring or otherwise, to evade the requirements of the Bank Secrecy Act regulations. Page 38 of 67

39 The transaction has no business or apparent lawful purpose or is not the sort in which the client would normally be expected to engage, and Foresters Equity knows, after examining the background, the possible purpose of the transaction and other facts, of no reasonable explanation for the transaction. The transaction involves the use of Foresters Equity to facilitate criminal activity. The AML CO will file form SAR-SF and notify law enforcement of all transactions that raise an identifiable suspicion of criminal, terrorist, or corrupt activities. In high-risk situations, Foresters Equity will notify the government immediately and file the SAR- SF with FinCEN. The AML CO will file a SAR-SF within 30 days of the date of the initial detection of the facts that constitute a basis for filing the SAR-SF. If Foresters Equity cannot identify any suspect on the date of initial detection, Foresters Equity may delay filing the SAR-SF for an additional 30 days pending identification of a suspect. The AML CO will retain copies of any SAR-SF filed and the original or business record equivalent of any supporting documentation for five years from the date of filing the SAR-SF. The AML CO will maintain supporting documentation and make such information available to FinCEN, any other appropriate law enforcement agencies, or federal or state securities regulators, upon request. The AML CO will not notify any person involved in the transaction that the transaction has been reported, except as permitted by the BSA regulations Procedures for Compliance with Anti-Money Laundering Policies The Primary AML CO is Judith E. Gil, and Stephen A. Cheeseman is the Alternate AML CO. The AML program will be reviewed annually by the AML CO, the CCO or an independent auditor. The review of the AML program will be conducted as part of the firm's annual compliance program review of the policies and procedures or as an independent test. The AML CO will maintain a written summary of the test and any corrective actions taken. The AML CO will supervise the retention of CIP records of all client identity and verification information. For each document Foresters Equity uses to verify client identity, the AML CO will maintain a record of either the documentary or nondocumentary evidence used to verify the individual's ID. Page 39 of 67

40 Chapter 6 - Business Continuity Plan The Business Continuity Plan ("BCP") is a comprehensive document outlining Foresters Equity's procedures for recovering from events, such as natural disasters and other emergencies that interfere with operations. Foresters Equity has developed its disaster recovery and business continuity plan to meet its responsibilities to clients, staff, business associates and others who may be affected by a disruption in Foresters Equity's business. A member of senior management, who is also a principal of the firm, must approve the plan. It must also be updated at least annually or as soon as possible in the event of a material change in operations, structure, business and/or location(s). 6.1 Content of Plan Although a detailed copy of the BCP is retained under separate cover, it includes the following information: Terms and conditions for major risk areas, including credit risk, market risk, liquidity risk and other related risks A backup system for recovery of data (both hard copy and electronic data) as protection against market and other risk Plan for rapid recovery of mission critical systems including means of testing the system Review of financial and operational assessments including contingency planning for financial risk Plans for alternate communications for use between IARs and Foresters Equity, as well as between clients and Foresters Equity Identification of and instructions regarding an alternative physical location of IARs Instructions for required and other communications with regulators and regulatory reporting Identification of and risk assessment related to primary business constituents, banks and other counter parties How Foresters Equity will assure clients prompt access to their funds and securities in the event Foresters Equity determines that it is unable to continue its business To add value to the plan, Foresters Equity has also developed alternate communication plans for clients, service providers, and regulators to use if/when regular channels are not working. The alternate communications plan assigns personnel to communicate with regulators, government agencies, and mission critical vendors, providing for the type of information to be shared. Communication planning should identify alternate modes of communication, such as pagers, cellular phones or . Periodically Foresters Equity and its IARs exchange emergency telephone numbers, address(es), and physical address (es) to facilitate communication during an unanticipated interruption in Foresters Page 40 of 67

41 Equity's business. The list provides all alternatives, since one or more telecommunications systems could be unavailable. Foresters Equity's capability to conduct business is tested, and ultimately determined, by its own financial and operation assessments. 6.2 IAR Training IAR training and preparation are crucial parts of maintaining the BCP. Key personnel are involved in development of both the BCP and maintenance strategies. This preparation encompasses industry standards and specific training. As an outcome of training addressing emergency preparedness, IARs should be able to answer the following questions: Who is the immediate contact for each division or unit? What events trigger implementation of all or parts of the BCP? Who is responsible for implementing the BCP for each division or unit and for the organization as a whole? Where they should report if normal means of communication are unavailable? What to do if key persons become unavailable? The BCP also outlines IAR responsibilities to both clients as well as to Foresters Equity following a disaster. Posting on websites or well-known bulletin boards and using telephone banks are ways to distribute information during a disaster. Reporting or calling locations can also serve the dual purpose of accounting for missing personnel. Business continuity training is scheduled and updated consistently to reflect changes to the BCP. 6.3 Procedures for Compliance with Business Continuity Planning The CCO will ensure that Foresters Equity maintains a BCP under separate cover. The CCO or designee will make certain that training is conducted so Foresters Equity's IARs are informed of components of the BCP relevant to their job function. A record of the training shall be retained among the central compliance files. Each IAR will be required to provide emergency contact information to Foresters Equity. Upon material change, each IAR must notify Foresters Equity of changes in emergency contact information. No less than annually, the CCO or designee will reevaluate the efficacy of the plan, and amend the plan according to his findings. To the extent that testing is performed, the CCO or designee will retain evidence of the test results and subsequent corrective action. Page 41 of 67

42 Chapter 7 Regulatory Filings Foresters Equity may be required to make certain regulatory filings on an ongoing basis. A list of filings that Foresters Equity is required to file is described below. The list below specifically excludes tax filings as well as filings that may be required of registered broker-dealers. The filings made to particular regulators by Foresters Equity depend on its business model and the jurisdictions in which it operates. These requirements may change from time to time based on various triggering events. Foresters Equity s policy is to maintain the firm s regulatory reporting requirements on an effective and good standing basis at all times. Forms 13D, 13F and 13G are filings that may be required under the Securities Exchange Act related to client holdings in equity securities. Any required regulatory filings for the firm are to be made promptly and accurately. It is not anticipated that Foresters Equity will need to file these forms given its current business model. This assumption will be verified on an annual basis by Foresters Equity. 7.1 Forms 13D, 13F and 13G Form 13D. This schedule must be filed for any person, including advisors, who, after acquiring directly or indirectly a beneficial ownership of more than 5 percent of the outstanding shares of any equity security of a class registered pursuant to Subsection 12 of the Securities Exchange Act or any equity security of an insurance company relying on Subsection 12(g)(2)(G) or any closed-end investment company registered under the 1940 Act to report beneficial ownership with either the intent or effect of causing a change in control of an issuer. The Form must be filed within 10 days after such acquisition with (1) the SEC, (2) each exchange where the security is traded, and with (3) the principal office of the issuer. The duty to amend Form 13 D is found in Rule 13d-2 under the Securities Exchange Act. Form 13F. This form must be filed by an institutional investment manager that exercises investment discretion with respect to accounts holding exchange traded or NASDAQ quoted equity securities having an aggregate fair market value of at least $100 million on the last trading day of any month. Any person subject to this provision must initially file within 45 days after the last day of the year in which $100 million is obtained and thereafter 45 days after the end of each subsequent quarter. Once an advisor is obligated to make a 13F filing, the advisor must continue to make quarterly filings for as long as the advisor continues to manage $100 million of the equity securities on a discretionary basis. Form 13G. Form 13G may be filed in lieu of a Schedule 13D if such person has acquired more than 5% of the outstanding shares of a security in the ordinary course of business and not with the purpose of changing or influencing control of the issuer and such person is a registered investment advisor or a specified type of Page 42 of 67

43 institutional investor [Rule 13d-1(b) (1) (ii) (E)] under the Securities Exchange Act]. 7.2 SEC Registration As an SEC registered investment advisor, Foresters Equity is required to file Form ADV, which is divided into two parts. The information submitted in Part 1 is filed electronically through IARD and includes information about Foresters Equity s business, the persons who own and control Foresters Equity and whether they have been sanctioned for violating securities or other laws. The information in Part 2 is geared primarily toward Foresters Equity s clients. Part 2 contains information relating to the business practices, fees, investment strategies and conflicts of interest Foresters Equity may have with its clients. Part 2 is also uploaded through IARD as a.pdf document. Part 2 is required to be updated annually, within 90 days of Foresters Equity s fiscal year end, and whenever it becomes materially inaccurate. 7.3 Procedures for Compliance with Regulatory Filing Requirements The CCO shall determine which of the regulatory filings must be made by Foresters Equity, and shall assign data collection and reporting duties accordingly to ensure timely filings are made. Page 43 of 67

44 Chapter 8 Gifts and Entertainment For purposes of the following policies on receipt of gifts and sending gifts, a gift of nominal value shall be defined as cash, a cash equivalent, a physical item, a service or event tickets with a value not to exceed one hundred dollars ($100.00). Any gifts given or received by Foresters Equity or any of its IARs are considered in aggregate whether or not they were conferred by the same or different people at Foresters Equity or the other (recipient) firm or party. For purposes of Foresters Equity's policies regarding entertainment, an entertainment event shall include any conference, meal, and sporting event or sponsored outing. No IAR or member of an IAR s immediate family may receive any gift of more than nominal value from any person or entity including clients and their service providers, vendors and competitors. Gifts of nominal value are subject to disclosure requirements as outlined in the Procedures section below. IARs are generally permitted to attend an approved event provided that the purpose of the meeting is to discuss Foresters Equity's business, and provided that the IAR and the vendor, service provider or client paying for the event must be in attendance. Similarly, IARs may invite clients to an event provided that the purpose of the meeting is to discuss Foresters Equity's business, and the event has been approved by a responsible principal. 8.1 Procedures for Gifts and Entertainment The CCO or designee is charged with responsibility for Foresters Equity's Gift and Entertainment policies. To monitor compliance, the CCO or designee will require: Reporting gifts given and received within a timely manner, deemed to be 10 business days prior to giving or after receiving the gift Reporting events attended and/or hosted within a timely manner, deemed to be 5 business days prior to extending an invitation or upon receipt of an invitation to attend an event As evidence of compliance, the CCO or designee shall record gifts given and received on a log retained among the central compliance files of Foresters Equity. Page 44 of 67

45 Chapter 9 Trading Foresters Equity's trading policies include best execution guidelines, resolution of trade errors, and other issues. Foresters Equity's trading practices must be fair and equitable to customers and order executions must be periodically tested to ensure that the firm has met its obligation to seek best execution. All trades in money management accounts are directed by and the responsibility of the third party advisor. The custodian and executing broker-dealer are selected by either the third party advisor or the client, as described in the Form ADV Part 2 for the third party advisor. Within the Mutual Fund Advantage account, Southwest requires that client direct Southwest as the sole and exclusive broker-dealer to execute transactions. Foresters Equity enters all transactions in the Mutual Fund Advantage account on a non-discretionary basis. The financial planning services offered by Foresters Equity conclude upon delivery of the financial plan, analysis or report. The services offered do not include implementation of any recommendations or any transactions. 9.1 Aggregation of Orders As Foresters Equity is not responsible for placing client trades in third party money management program accounts, Foresters Equity is not involved in the decision as to whether or not to aggregate trades for execution. Within the Mutual Fund Advantage program, all transactions are entered by IARs on a non-discretionary basis and, therefore, such transactions are not aggregated. For information on the aggregation of orders in a particular advisory program, refer to the Form ADV Part 2 for the third party advisor of the money management program. 9.2 Best Execution As a fiduciary, Foresters Equity is required to act in the best interests of its advisory clients and to seek to obtain the best price and execution for securities transaction placed by Foresters Equity. The term best execution means seeking the best price for a security in the marketplace as well as ensuring that, in executing client transactions, clients do not incur unnecessary brokerage costs and charges. It does not mean getting the lowest possible commission cost, but rather, determining whether the transaction represents the best qualitative execution for the client. Page 45 of 67

46 As a practical matter, Foresters Equity is not responsible for placing client trades in third party money management program accounts; that is the responsibility of the third party advisor. And, within the Mutual Fund Advantage program account, Southwest is responsible for executing all transactions. However, Foresters Equity is still responsible for ensuring that best execution has been achieved. Southwest conducts an internal best execution review and performs testing on a quarterly basis. Foresters Equity periodically requests a copy of this information and spot checks its ETF transaction prices versus independent market data on a sampling basis. Documentation supporting this review is retained in the firm s books and records. The CCO of Foresters Equity is charged with oversight of selecting the third party advisors and reviewing their trading practices. From time to time, the CCO may require principals of Foresters Equity and other qualified persons to participate in the review. Included among the documents and information reviewed in this regard may be: Public reviews and reports Cost appraisals related to their custodial, clearing and settlement relationships and any and all other information deemed appropriate by the CCO 9.3 Trade Errors Foresters Equity's handling of trade errors must be conducted in a manner that does not disadvantage the client, irrespective of the cause of the error. The following procedures apply to all trade errors resolved by Foresters Equity: Foresters Equity does not use agency cross transactions to resolve trade errors. The client must not be disadvantaged as a result of Foresters Equity's error. In no event shall an associated person of Foresters Equity resolve a trade error without the approval of a senior principal or other supervisor. A record of all trade errors will be maintained in the books and records of Foresters Equity. 9.4 Agency Cross Transactions Foresters Equity will not engage in any agency cross transactions in advisory client accounts. An agency cross transaction is defined as a transaction where a person acts as an investment advisor in relation to a transaction in which the investment advisor, or any person controlled by or under common control with the investment advisor, acts as broker for both the advisory client and for another person on the other side of a transaction. Page 46 of 67

47 Chapter 10 Protection of Non-Public Customer Data Foresters Equity is required by its regulators to protect nonpublic customer data The Privacy Policy Foresters Equity is required to adhere to the privacy laws and regulations in each and every state in which it has clients. Regulations of the Federal Trade Commission and other state laws are applicable to state covered investment advisors and govern the sharing of client information. The California Financial Information Privacy Act governs client information sharing and applies to investment advisors with Californian clients. Foresters Equity has therefore developed and implemented a "privacy policy" in order to control the management and disclosure of client information Affiliate An affiliate is any company that controls, is controlled by, or is under common control with Foresters Equity Clear and Conspicuous Clear and conspicuous means that a privacy policy notice must be designed to call attention to the information contained in the notice, and that the notice must be reasonably understandable. This means that the typeface and size must be large enough to be easily read, and of such a design that will illustrate the significance of the disclosure Consumer A consumer is an individual who obtains financial products or services that are to be used primarily for personal, family, or household purposes. The legal representative(s) of the consumer are included in the definition. Financial products and services include the investments themselves and those evaluations or analyses that led to the investment. Consumers are not any of the following persons: Individuals who provide only a name, address, or other general contact information for the purpose of obtaining information, such as a response request Other individuals who are not directly defined as consumers of Foresters Equity Continuing Relationship A continuing relationship is one in which there is an ongoing association with Foresters Equity. This will include: Page 47 of 67

48 An individual who is the recorded owner of securities; Any individual with whom Foresters Equity has had one transaction but with whom Foresters Equity expects to develop an ongoing relationship, and future, subsequent transactions; Any individual who has contracted with Foresters Equity for continuous and ongoing investment services or investment supervisory services. A continuing relationship is not established in cases where there is a stand-alone transaction that is not expected to result in future transactions Customer A customer is an individual or consumer who has a "customer relationship" with Foresters Equity Customer Relationship A customer relationship is a continuing relationship between the individual and Foresters Equity in which Foresters Equity provides a financial or investment product or service that is to be used primarily for personal, family or household purposes Nonpublic Personal Information Nonpublic personal information is essentially that information obtained or collected by Foresters Equity that is personally identifiable financial information. The definition includes lists, groups, or other categories that have been created or derived on the basis of individual or household nonpublic information. For instance, a list of names derived from specific account numbers is nonpublic personal information Personally Identifiable Financial Information Personally identifiable financial information is that information provided to Foresters Equity by the individual that results in a transaction with the consumer that results in the provision of any service to the consumer, and/or is obtained by Foresters Equity through the use of account applications, client profiles or questionnaires, or through other means Publicly Available Information Publicly available information is that which Foresters Equity may reasonably believe is available to the general public (1) legally through federal, state, or local governments; or (2) broadly through public media such as phone books, web listings, or newspapers. Page 48 of 67

49 10.2 Consumers and Customers State regulations draw distinctions between customers and consumers, requiring different levels of protection to each. Foresters Equity must provide customers with notice about the entity's privacy policies, and must give consumers a method to opt out of any sharing practices by giving reasonable notice. A consumer is an individual who obtains financial products or services to be used primarily for personal purposes. Products and services can include evaluations of information in addition to the product or service. By contrast, a customer is a consumer with a continuing relationship with the entity to obtain the services of a consumer. Therefore, all customers are also consumers Notification Requirement Foresters Equity ensures that notice of its privacy policies are given to consumers and customers initially and annually Initial Notice The initial notice must be clear and conspicuous in the manner in which it presents Foresters Equity s privacy policy. For customers, initial notice must be provided at or before the point when a customer relationship is established. Conditions exist to allow notice within a reasonable time frame, when the notice requirements may interfere with the transaction itself (e.g., an account transfer or telephone order). Initial notice to consumers is only required if the entity intends to share nonpublic information with a non-affiliated third party. An abbreviated form of the privacy policy may be created and distributed for use with consumers Annual Notice During each 12 month period in which an ongoing client relationship exists, Foresters Equity must provide a subsequent notice of its privacy policy to all customers. If there is a change in the privacy policy, notice must be given to all customers whose information may be affected by the change Content of Notice Privacy policy notices must contain specific information, including: Types of nonpublic information collected by Foresters Equity, including the names of forms on which the information is collected Categories of nonpublic information shared by Foresters Equity, including the same for former customers Page 49 of 67

50 Categories of affiliated and non-affiliated third parties to whom information is disclosed/shared by Foresters Equity Separate disclosure is required for any servicing or joint marketing agreements, including the categories of information and of the third parties involved Notice of opt out rights available to customers, which must adhere to any state regulation regarding the sharing of information General disclosures regarding the policies of Foresters Equity to protect and secure confidential information Disclosure regarding shared information among affiliated parties as defined by the state(s) in which Foresters Equity is registered Statement(s) regarding allowed third party sharing relationships, such as those conducted under the transactional exemption or others Privacy Policies Access to the completed documents and client files must be restricted to following persons: Only those IARs who are required by their job function to access this information Applicable staff, such as individuals in Management, Legal or Compliance Departments in cases where the information is requested to resolve a customer dispute Management, Legal and Compliance personnel in cases where such information is requested by a regulatory agency Others as specifically permitted by the CCO Customer Information Foresters Equity collects and records client information on the following types of forms that contain personal and financial data: Client Profiles Account Applications Client Questionnaires Trust, Organizational records, and other documents used to conduct due diligence, among other purposes Other internal documentation Because this data contains nonpublic client information, it is subject to every available protection under these policies California Residents The California Financial Information Privacy Act (the "Privacy Act") provides for more stringent consumer protection provisions than are available under federal law. The Page 50 of 67

51 Privacy Act took effect on July 1, 2004 and applies to all investment advisors with customers who are California residents. Relevant provisions that apply to California customers include the following: Foresters Equity cannot share nonpublic personal client information with a non-affiliated third party without first obtaining explicit written client consent. Foresters Equity cannot share nonpublic personal client information with an affiliate unless Foresters Equity clearly and conspicuously notifies the client annually in writing that the information may be disclosed, gives the client the opportunity to refuse permission and the client does not opt out. Foresters Equity may share nonpublic personal client information with a nonaffiliated financial institution in order to jointly offer a financial product or service if the following conditions are met: The financial product or service is provided by one of the institutions as part of a written agreement The financial product or service is jointly offered, endorsed, or sponsored and, clearly and conspicuously identifies for the client the advisors that disclosed and received the disclosed information The written agreement requires that the receiving institution maintain the confidentiality of the information and disclose it only for the purpose of carrying out the terms of the joint offering The client has not prohibited the disclosure of the nonpublic personal information Examples of standard exceptions to the Privacy Act disclosure requirements include allowing disclosure of nonpublic client information in such circumstances as to complete a transaction authorized by the client; to prevent actual or potential fraud, identity theft, or unauthorized transactions; to resolve client disputes or inquiries; or as required by law. Foresters Equity is required to comply with any client directions on sharing his or her nonpublic personal information within 45 days of receipt. No written notice is required if Foresters Equity does not disclose nonpublic personal client information except as allowed under the exceptions to the Privacy Act Procedures for Compliance with Privacy Regulations The CCO is charged with responsibility for Foresters Equity s privacy policies and procedures designed to protect nonpublic client data from unauthorized access. In its efforts to ensure that such data will be secure from unauthorized access, Foresters Equity mandates that each IAR observes its procedures and respects the privacy of nonpublic data by carrying out his or her specific duties with care. Included in the duties of certain associates with access to nonpublic data is a high degree of discretion in maintaining the privacy of that data. Page 51 of 67

52 To maintain this degree of security, the CCO shall ensure that each individual with access to nonpublic data undergoes a background check at the time of hiring or by the date these policies are effective. Record of the background check shall be maintained among Foresters Equity s central files and records. Nonpublic data is maintained electronically (i.e., imaged into an electronic archival system). Only those IARs and employees with passwords can access the information found on this system. The CCO or designee shall ensure that upon termination, or at any time in which job functions are reassigned and access to nonpublic information is no longer required of any IAR, that the password assigned to that individual shall be terminated. The Information Technology department of Foresters Equity will update the back office data management system weekly to ensure that terminated IARs do not have access to computer systems. Page 52 of 67

53 Chapter 11 Communications with the Public Foresters Equity s communications with the public, which include its advertisements, its website, and correspondence (both electronic and written) including internal communications, are subject to state regulations that require each such communication to be fair, reasonable and balanced. The regulations subject the communications to record keeping requirements. Regular and ongoing oversight of Foresters Equity s communications with the public is a fundamental component of its compliance program. The IARs of Foresters Equity are required to submit all materials referenced below to the designated Advertising Review Principal for review and approval prior to use. Please reference the Foresters Equity broker-dealer Written Supervisory Policies and Procedures for additional information Advertisements An advertisement is defined as any written communication addressed to more than one individual or any notice or announcement in any publication or by other means (such as radio, web/internet, cable or television) that offers any analysis, report, or publications regarding securities; or any graph, chart, formula or other device for making investment or investment advisory decisions. All advertisements developed by or for Foresters Equity or its promoters, including third parties if applicable, shall be consistent with the provisions of Rule 206(4) of the Investment Advisors Act of 1940, applicable state standards, and other rules. These rules require that no IAR of Foresters Equity shall publish, circulate, distribute, or otherwise use any advertisement that is incomplete, false, or misleading. While the definition requires that the material must include an offer of services of some nature, regulators have broadly interpreted the definition to include brochures, websites, form letters, chat room participation, materials used to maintain existing client relationships, materials intended to solicit new clients, and other such materials Investment Counsel It is Foresters Equity s policy not to refer to itself as an "investment counsel" or use the term to describe its business unless the "principal" business of Foresters Equity is rendering investment advice and a substantial part of Foresters Equity s business consists of rendering "investment supervisory services" as defined on Form ADV "RIA" In rendering effective licensure for a registered investment advisor and/or its registered agents, the states do not approve or endorse the firm. Therefore, while Foresters Equity may represent that it is "registered," it, along with its IARs, is Page 53 of 67

54 prohibited to the use of the term "RIA" on stationery, business cards, or in advertising, as it may imply to the investment community that the firm has achieved approval, endorsement, or other credential. Foresters Equity may use "registered investment advisor" provided the words are spelled out. The IARs of Foresters Equity may use terms such as Investment Advisor Representative, Financial Advisor, or Financial Planner Testimonials A "testimonial" includes, but is not limited to, a summary of a specific case situation, real or fictional, which may create an inference that all clients of Foresters Equity typically experience favorable results. Client surveys conducted by third party service providers are considered by the states to be testimonials. Testimonials are prohibited on any advertising materials Past Recommendations Foresters Equity is prohibited from 'cherry picking', which is generally considered to be the use of any promotional materials that refer to any past profitable recommendations absent specific disclosure regarding all recommendations made by Foresters Equity. Foresters Equity requires that any such promotion of past profitable recommendations must include a list of ALL recommendations made by Foresters Equity in the past year. The requirement applies equally to direct and indirect references to past recommendations, but does not apply to advertisements that discuss investments or strategies that were not profitable. Any advertisement that includes past recommendations must include at minimum the name of the security, the date and type of transaction (whether it was a buy or sell recommendation), the market price at the time of the recommendation and the terms of the order (market, limit, etc.). The advertisement must also include a statement that it should not be assumed that recommendations made in the future will be profitable or will equal the performance of the listed securities. This statement must be made with adequate prominence. For instance, the font size of the disclosure should equal or exceed the smallest font in use in other font type on the page Performance Data The third part advisor offering money management services will be responsible for determining the investment performance data on its managed accounts. IARs distributing such performance advertisements must disclose all material facts so as to avoid unwarranted implications or inferences Performance Reporting Foresters Equity does not prepare performance reporting materials nor does it permit its IARs to prepare performance reports. However, all IARs distributing performance Page 54 of 67

55 reporting materials prepared by third party money managers for use with clients must maintain copies of ALL materials provided to clients Prohibited Advertisements It is Foresters Equity's duty to ensure that its advertising and that of its IARS is fair, balanced, and accurate. Certain types of advertising are prohibited: Materials including the acronym "RIA," including but not limited to brochures, stationery or business cards Materials including statement(s) to the effect that any report, analysis or other service will be furnished without a charge unless such report or other service is actually furnished without charge or obligation Testimonial(s) of any kind concerning Foresters Equity, its IARs or third party money managers, or any advice, analysis, report or other services rendered by Foresters Equity Statement(s) of material fact that are false or misleading Direct or indirect specific past profitable recommendations absent appropriate disclosure statement and a list of all recommendations made in the most recent year Statement(s) that any graph, chart, formula or other device being offered can be used in and of itself by a client to determine what securities should be bought and sold, or that such a device will assist any person in making decisions concerning specific securities transactions 11.2 Correspondence Foresters Equity has in place written policies and procedures reasonably designed to prevent violations of the Act and other rules. These include Foresters Equity's internal and external business related communications. In addition, the communications by individual IARs are monitored for inappropriate communications with existing or prospective clients. In its enforcement of procedures related to its communications with the public, Foresters Equity has in place the following requirements: Prohibiting or restricting the use of any stationery, or server other than that under the control of and subject to the review of the CCO for business related communications Prohibiting or restricting the use of instant messaging or electronic communications from any means that might prevent the oversight of the CCO Prominent disclosure of the name of Foresters Equity on stationery or in electronic 'tag lines' including contact information for the branch office of Foresters Equity Subjecting any or all communications to the prior and/or timely review of the CCO or his designee Recording the review of written and electronic communications to include monitoring content (to detect potential misleading or fraudulent Page 55 of 67

56 communications, violations of Foresters Equity's internal policies and procedures, etc), among numerous other types of reviews Electronic Communications Electronic communications, including those among the general investing public and other internal business related communications, require review and retention the same as for any other type of written communication. Certain types of electronic communications are prohibited: The use of social media when it pertains to Foresters Equity business Investment-related blogs Investment-related instant messaging Investment-related posts on electronic bulletin boards Retention Foresters Equity retains originals of all written communications it has received and sent relating to (1) any recommendation made or proposed to be made and any advice given or proposed to be given; (2) any receipt, disbursement or delivery of funds or securities; or (3) the placing or execution of any order to purchase or sell any security provided, however, (a) that Foresters Equity shall not be required to keep any unsolicited market letters and other similar communications of general public distribution not prepared by or for Foresters Equity, and (b) that if Foresters Equity sends any notice, circular or other advertisement offering any report, analysis, publication or other investment advisory service to more than 10 persons, Foresters Equity shall not be required to keep a record of the names and addresses of the persons to whom it was sent; except that if such notice, circular or advertisement is distributed to persons named on any list, the investment advisor shall retain with the copy of such notice, circular or advertisement a memorandum describing the list and the source thereof. The above referenced advertising and communications along with supporting documentation for the same must be maintained for a period of at least 5 years, the first two 2 years in an easily accessible location Social Media Foresters Equity does not permit its IARs to make use of social media (e.g., Facebook, etc.) for business purposes, with the exception of LinkedIn. IARs will also be required to sign an annual attestation representing that he/she is in compliance with these policies and procedures. Foresters Equity will be responsible for periodically conducting a random spot-check on social media sites, to ensure that the policies and procedures of Foresters Equity are being followed. Page 56 of 67

57 Documentation of all review and approvals of materials, periodic compliance reviews, and copies of the annual attestations will be retained in Foresters Equity s books and records Procedures for Compliance with Public Communications Requirements The CCO or designee is charged with responsibility for implementation, ongoing monitoring and retention of Foresters Equity's communications with the public. To monitor Foresters Equity's outgoing written paper communications, the CCO requires that all communications be provided to Compliance for written approval prior to dissemination. IARs are required to use a pre-approved platform. s sent and received on these platforms are captured and retained by a third party system that meets all regulatory requirements. The CCO or designee(s) will use a lexicon-based surveillance system to assist in the process of review and retention of Foresters Equity's electronic communications. Incoming paper correspondence is centrally opened, copied for the client file, provided to a principal for review, and maintained in a central incoming correspondence file. Outgoing correspondence is sent to the applicable branch office manager for review and sign-off on a monthly basis. Foresters Equity has charged the CCO or designee(s) with the responsibility and authority to review and approve any and all forms of advertisements in advance of their use. This mandate is to include the firm's marketing materials, slide presentations, and any and all other materials used in presentations whether to one individual or to multiple parties. Evidence of the review and approval will be retained among the central files. Page 57 of 67

58 Chapter 12 Regulatory and Internal Inspections Foresters Equity and its IARs are subject to the ongoing scrutiny of state regulatory agencies and are also likely to be affected by "cause" (i.e., a client complaint or other investigation examinations). Regulatory examinations may be announced or unannounced Scope of the Regulatory Inspection At the onset of an examination, the regulatory representative should present identification to verify the jurisdiction that the individual represents. Questions regarding the legitimacy of the individual should be directed to the state or regional office to which the individual reports. Verification of the identification is important to ensure that nonpublic client data will not be revealed to or shared with unqualified persons. IARs are required to contact Foresters Equity s Compliance Department immediately if a regulator appears to conduct an examination of his/her business. The regulatory examination typically begins with an opening interview. At times, the interview questions are provided in advance of the examination. The duration of the regulatory examination can be as long as several weeks, but more commonly several days. The examination itself may conclude over time, with follow-up work conducted off-premises by phone or mail Regulatory Exam Topics The regulatory exam will likely open with an interview to discuss the primary business systems of Foresters Equity or the IAR and any internal controls. In each of these areas, the examiner will inquire about Foresters Equity's compliance and control policies and procedures and will evaluate their implementation and effectiveness. The state examiners typically provide a checklist of documentation that the IAR is required to produce Annual Internal Review As a SEC registered investment adviser, it is Foresters Equity s policy to conduct an annual internal review of the firm s policies and procedures to determine that they are adequate, current and effective in view of the firm s businesses, practices, advisory services, and current regulatory requirements. This includes amending or updating the firm s policies and procedures to reflect any changes in the firm s activities, personnel, or regulatory developments, among other things, either as part of the firm s annual review, or more frequently, as may be appropriate, and to maintain relevant records of the annual reviews. Page 58 of 67

59 The Chief Compliance Officer has the overall responsibility and authority to develop and implement the firm s compliance policies and procedures and to conduct an annual review to determine their adequacy and effectiveness in detecting and preventing violations of the firm s policies, procedures or federal securities laws. On at least an annual basis, the Chief Compliance Officer, and such other persons as may be designated, will undertake a review of Foresters Equity's written compliance policies and procedures. The review will include a review of targeted policies to determine the following: o Adequacy; o Effectiveness; o Accuracy; o Appropriateness for the firm s current activities o Current regulatory requirements; o Any prior policy issues, violations or sanctions; and o Any changes or updates that may otherwise be required or appropriate. The annual internal review process will also consider and assess the risk areas for the firm and review and update any risk assessments in view of any changes in advisory services, client base and/or regulatory developments. The annual internal review will include a review of any prior violations or issues under any of the firm s policies or procedures with any revisions or amendments to the policy or procedures designed to address such violations or issues to help avoid similar violations or issues in the future. Foresters Equity will maintain hardcopy or electronic records of the firm s current policies and procedures as well as prior versions for a period of five years from the end of the year in which the record was last used. Documentation supporting the annual review will be maintained in Foresters Equity s books and records. Page 59 of 67

60 Chapter 13 Books and Records It is Foresters Equity s policy to maintain required books and records for certain specified periods of time Required Records The following is meant to be a summary of the books and records that Foresters Equity and its IARs will maintain; it is not necessarily an exhaustive list. These records are required to be maintained and preserved in an easily accessible place for a period of not less than 5 years from the end of the fiscal year during which the last entry was made on the document. For the first 2 years, the record must be maintained on the premises of Foresters Equity. This retention requirement applies to the records noted below EXCEPT that organizational records must be retained for at least 3 years following the date on which Foresters Equity terminates its registration. Account opening documents Signed investment advisory agreements Correspondence, including Notes from conversations with clients (may be retained in a contact management system) Trade records, including confirmations as applicable Best execution reviews Documentation to support supervision (e.g., suitability reviews, portfolio management oversight, transaction reviews, and surveillance) Personal securities transaction reviews Performance reports Account statements Advertising Customer complaints and responses Current and prior versions of Form ADV Part 2 Firm Brochures Current and prior versions of Brochure Supplements Current and prior versions of investment advisory agreements Organizational records for Foresters Equity IAR registration filings All other records required under Rule of the Advisers Act. The remainder of this chapter discusses specific areas of the books and records requirements in greater detail Advertising File Foresters Equity must retain a copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication that an IAR circulates or distributes, directly or indirectly, to 10 or more persons (other than persons connected with Foresters Equity). If such notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication recommends the purchase or sale of a specific security and does not state the reasons for such Page 60 of 67

61 recommendation, a memorandum by Foresters Equity including information to support the recommendation must be included in the file Annual Notice of Material Changes to Form ADV Part 2 Firm Brochure Foresters Equity must notify all clients of material changes that have been made to its disclosure brochure no less than annually and offer to provide a copy of its current disclosure brochure. This notice must be made within 120 days of the firm s fiscal year end. Foresters Equity must document and maintain a record of the communication. Foresters Equity must also retain a sample version of the Form ADV Part 2 Firm Brochure as evidence of timely amendment and distribution. The file shall include the following: List of each individual or other party to whom the communication or an updated Form ADV Part 2 was provided Copy of the letter Form ADV Part 2 in effect at the time of the offer Any individual or other party that responded to the request List of evidence that any individual or other party who responded was provided with the current form, as requested Associated Persons Personal Transactions Records Foresters Equity permits Associated Persons to maintain personal securities accounts or holdings at outside financial institutions. Personal securities accounts or holdings include those securities in which the Associated Person has any direct or indirect beneficial ownership. An Associated Person is considered to be the beneficial owner of an account in which he/she has any financial interest or ability to exercise control and of any account belonging to immediate family members sharing the Associated Person s household. Foresters Equity retains records relating to its receipt and review of personal transaction reports and/or duplicate account statements in accordance with its code of ethics and related policies. Foresters Equity requires that each Associated Person provide the following documents to Foresters Equity for review: Duplicate copies of all account statements for accounts held at an outside financial institution submitted directly to Foresters Equity by the financial institution. Copies of statements for accounts of new hires are requested of the outside financial institution upon joining Foresters Equity. Duplicate statements will be reviewed by Foresters Equity on a monthly basis. Page 61 of 67

62 Financial Records Foresters Equity maintains records of its financial condition and evidence of current and accurate accountings. Included in these records are the following: Journal(s) that lists all cash receipts and disbursement records, and any other records of original entry used to create the journal entries General and auxiliary ledgers (or other comparable records) reflecting asset, liability, reserve, capital, income and expense accounts All check books, bank statements, canceled checks and evidence of current reconciliations All bills or statements relating to the business of Foresters Equity, and evidence of payment, which might include copies of checks received or other statements demonstrating payment of invoices Current financial statements, including trial balances and net capital computations, balance sheets, income and expense statements and internal audit working papers relating to the business of Foresters Equity Order Tickets A ticket or memorandum of each order placed by Foresters Equity for the purchase or sale of a security, or any instruction received by Foresters Equity from the client concerning the purchase, sale, receipt or delivery of a particular security, and of any modification or cancellation of any such order or instruction, must be retained and must include the following information: Terms and conditions of the order, instruction, modification or cancellation Person connected with Foresters Equity who recommended the transaction (if applicable) Person who placed the order Account for which the order was entered Date Bank, broker or dealer by or through whom the order was executed Whether or not the order was discretionary Organizational Documents Foresters Equity must maintain current and complete Articles of Incorporation, charters, minute books, partnership records, stock certificate books and other reports as evidence of its viability as an entity, as required by state or other jurisdictions. As mentioned in the introduction, different from other records noted in this section, these records must be preserved for at least three years after the cessation of Foresters Equity's operations. Page 62 of 67

63 Performance Advertising Supporting Documentation If Foresters Equity distributes performance advertising (or reporting that includes performance of any managed accounts/fund(s) and such report is sent directly or indirectly to 10 or more persons, it must retain all accounts, books, internal working papers, and any other records or documents that are necessary to form the basis for or demonstrate the calculation of the performance or rate of return of any or all managed accounts or securities recommendations Policies and Procedures Foresters Equity retains a copy of its policies and procedures that are currently in effect or which were in effect within the most recent 5 year period Solicitor Disclosure Document All written acknowledgements of receipt of disclosure documents and copies of the solicitor disclosure document that was provided must be retained. At this time, Foresters Equity does not use solicitors Transaction Records If Foresters Equity provides any investment supervisory or management service to any client, it must retain a record showing separately for each client the securities purchased and sold, and the date, amount and price of each such transaction; as well as by-security information for each client such that Foresters Equity can promptly furnish the name of each client with an interest in the security and the amount of that interest Written Agreements Copies of any and all written agreements (e.g., advisory agreements, subscription agreements, etc) in use with clients must be maintained, including all powers of attorney. Written agreements shall be retained among Foresters Equity's central records. It is advisable that Foresters Equity maintains a representative sample of each such agreement, and a list of the clients of the firm subject to each type of agreement. The executed agreements may be retained in separate client files Written Communications Originals of all written communications received and copies of all written communications sent by Foresters Equity relating to its advisory business must be retained by Foresters Equity. This includes electronic communications, including s, and also includes internal communications (those sent among associated personnel of Foresters Equity). Unsolicited market letters and other similar Page 63 of 67

64 communications of general public distribution not prepared by or for Foresters Equity are not required Custodial Advisors Records Foresters Equity does not have custody or possession of customer securities, nor does it have plans to take custody Additional Records Although not enumerated in specific regulations, certain files and records may be requested by a regulatory examiner at the time of an audit. While not an exhaustive or all-inclusive list, Foresters Equity may elect to maintain any or all of these additional types of records Complaint File Foresters Equity should maintain a central record of any and all written or verbal client complaints, including the method or status of resolution, any settlement or litigation related to the complaint, and current disposition of the matter Disaster Recovery Records of Foresters Equity's efforts to monitor and maintain systems in a manner that would enable its continuous operation in the event of an unforeseen disaster or other interruption in business shall be maintained and available for review. The file should include evidence of distribution of Foresters Equity's policies to appropriate parties, including IARs and clients/investors. At minimum, the plan should include means for recovery of Foresters Equity's critical systems; restoration or recovery of any permanent record of the firm, such as its organizational documents, associated person files and financial records; primary contact information; location and status of back-ups; alternative venue for associated persons and other systems; and procedures or access codes that might enable Foresters Equity and its clients to regain effective operations Client Lists Upon regulatory examination, Foresters Equity may be required to produce lists of its clients that contain: Client Name State of Residence of Client Whether the client is related to an IAR of Foresters Equity (including his/her spouse, dependent, living in the same household, or any client subject to the direct or indirect control of Foresters Equity) Type of Account (und or funds in which the client is invested) Account establishment date Opening balance of account Page 64 of 67

65 Current balance of account (as of most recent quarter end) Account redemption date, balance at the time of redemption, and the reason for redemption Clients subject to Power of Attorney Whether the account is subject to ERISA Custodian for the account Organizational Chart Foresters Equity's organizational chart, or supervisory chain of command, should be current and complete at all times Privacy Policy Foresters Equity maintains a privacy policy to ensure that nonpublic client data is subject to adequate controls and security. Foresters Equity is required to distribute its privacy statement at the time of initial investment, and no less than annually thereafter to clients. The privacy policy file should contain evidence of the statement's annual distribution to clients Regulatory Inspections Documentation related to any regulatory inspection, including documentation of steps taken to remedy findings, shall be maintained Trade Errors Evidence of Foresters Equity's resolution of trade errors shall be maintained in a log and/or file kept among the central records. The record shall include the manner in which the error was resolved, the client and transaction(s) effected by the error, and evidence that a supervisor of Foresters Equity was aware of the error and its resolution Proxy Voting Records Foresters Equity does not vote proxies on behalf of advisory clients. The money managers will forward any proxy material received directly to the client's attention. Foresters Equity discloses that it does not vote proxies on behalf of its clients in its Form ADV Part Books and Records Retention All records of Foresters Equity (except as noted below) must be retained for 5 years in an easily accessible place. The records must remain on Foresters Equity's premises for at least 2 years. Additionally, the following must be retained for 3 years beyond the life of the entity: Page 65 of 67

66 Copies of the original documents filed with the state securities commission(s) Registration letters received from all regulatory agencies Organizational Records Annual filings (Schedule I) Withdrawal notification (Form ADV-W) 13.5 Electronic Maintenance of Records In general, Foresters Equity adheres to the following when electronic media is used for retention: Foresters Equity is required to maintain an index of the records in a way that permits easy location, access and retrieval of any particular record. Foresters Equity shall promptly provide a legible, true, and complete copy of the record in the medium and format in which it is stored, as well as the means to view such record. For instance, if stored on CD ROM, the record must be protected from alteration, and any software required to produce a copy of, or to read the record, must be available on the disk. Additionally, Foresters Equity must ensure that electronic records are subject to an appropriate degree of security, including provisions to prevent viewing or access by unauthorized parties. Foresters Equity must ensure that any regulatory examiner is granted access to view the records Procedures for Compliance with Record-Keeping Policies The CCO is responsible for assuring that Foresters Equity has established policies to ensure that its records are maintained in a secure central location in a manner that is consistent with applicable state requirements. Periodically, but no less than annually, Foresters Equity conducts an internal review to ensure that records are maintained in a manner that is compliant with state regulations, and that documents are retained for an appropriate period of time. Page 66 of 67

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