17.04: Standards of Conduct for Qualified Investment Managers and Consultants      

      In addition to the standards of conduct for fiduciaries and the standards set forth
in 840 CMR 1.00 Qualified Investment Managers shall comply with 840 CMR
17.04. 840 CMR 17.04 shall also apply to Consultants retained pursuant to 840
CMR 25.00.

(1) Compliance with Applicable Law, Regulations, Code of Ethics and Standards
of Conduct.
      (a) Knowledge of and Compliance with Applicable Law, etc. Every qualified
      investment manager and every consultant shall be familiar with and comply with
      all applicable laws and rules and regulations, including rules and regulations of
      any self-regulatory agency of the profession, the standards of conduct of 840
      CMR 17.03 and 17.04 and the code of ethics of 840 CMR 17.02.
     
      (b) Assisting Legal and Ethical Violations Prohibited. No qualified investment
      manager or consultant shall knowingly participate in, or assist any act in
      violation of any statute or regulation governing securities matters or any act in
      violation of the code of ethics of 840 CMR 17.02 or the standards of conduct of
      840 CMR 17.03 and 17.04.
      (c) Use of Material Non-Public Information Prohibited. Every qualified
      investment manager and every consultant shall comply with all laws and
      regulations relating to the
      use of material non-public information. No qualified investment manager or
      consultant shall communicate or take investment action on the basis of such
      information until it is publicly disseminated and any qualified investment
      manager or consultant who acquires such information, other than as a result of a
      special or confidential relationship with an issuer, shall make reasonable efforts
      to achieve public dissemination of such information by the issuer.

(2) Supervision of Employees. Every qualified investment manager and every
consultant shall exercise reasonable supervision over employees and agents subject
to his or her control to prevent violation by such persons of applicable statutes,
regulations, the code of ethics of 840 CMR 17.02 and the standards of conduct of
840 CMR 17.03 and 17.04.

(3) Investment Recommendations and Actions.
      (a) Reasonable judgment. Every qualified investment manager and every
      consultant shall exercise diligence and thoroughness in making investment
      recommendations and/or in taking investment actions for a retirement board and
      shall:
            1. have a reasonable and adequate basis for each investment
            recommendation and action, supported by appropriate research and
            investigation; and
            2. maintain appropriate records to support the reasonableness of each
            investment recommendation and action.
      (b) Portfolio Investment Recommendations and Actions. Every qualified
      investment manager and every consultant shall, when making an investment
      recommendation or taking an investment action for any portfolio or retirement
      board, consider its appropriateness and suitability for that particular portfolio or
      board. In doing so, the qualified investment manager and consultant shall take
      into account the needs and circumstances of the board, the basic characteristics
      of the portfolio and the basic characteristics of the investment involved. Every
      qualified investment manager and every consultant shall use reasonable
      judgment in determining the factors to be considered and the weight to be given
      to each factor and shall distinguish between fact and opinion in presenting
      investment recommendations.

(4) Misrepresentation Prohibited. No qualified investment manager or consultant
shall make any statement, orally or in writing, which materially misrepresents the
services that the qualified investment manager or consultant is capable of
performing for the board, the qualifications of the qualified investment manager or
consultant, the investment performance that the qualified investment manager has
achieved or can be expected to achieve for the board or the expected performance of
any investment. No qualified investment manager or consultant shall make any
unsupported statement concerning these matters or any statement, orally or in
writing, about any investment which guarantees or conveys any unsupported
assurances, explicitly or implicitly.

(5) Fair Dealing With Retirement Boards. Every qualified investment manager and
every consultant shall act in a manner consistent with the qualified investment
manager's and consultant's obligation to deal equitably with a board when making
investment recommendations, making material changes in prior investment advice,
and taking investment action.

(6) Priority of Transactions. Every qualified investment manager and consultant
shall conduct himself or herself in such a manner that transactions for the retirement
board have priority over personal transactions, and that personal transactions do not
operate adversely to the board's interest. A qualified investment manager making a
recommendation about the purchase or sale of a security shall give the board
adequate opportunity to act on the recommendation before acting on the qualified
investment manager's own behalf.

(7) Disclosure of Conflicts.
      (a) Every qualified investment manager, and every consultant when making an
      investment recommendation or taking an investment action, shall disclose to
      Commission and the board in writing any conflict of interest the qualified
      investment manager or consultant may have and any beneficial ownership of the
      securities involved which could reasonably be expected to impair the qualified
      investment manager's or consultant's ability to render unbiased and objective
      advice.
      (b) Every qualified investment manager, and every consultant shall disclose to
      the Commission and the board in writing all matters which could reasonably
      appear to interfere with the qualified investment manager's or consultant's duty
      to the board or ability to render unbiased and objective advice.
      (c) Every qualified investment manager, and every consultant shall also comply
      with all requirements as to disclosure of conflicts of interest imposed by law and
      by rules and regulations of organizations governing the activities of investment
      advisors and shall comply with any prohibition of such activities if a conflict of
      interest exists.

(8) Compensation.
      (a) Disclosure of Additional Compensation Arrangements. Every qualified
      investment manager, and every consultant shall inform the Commission and the
      board of any arrangements, oral or in writing, for compensation or other benefit
      received or expected to be received by the qualified investment manager or
      consultant or a related person from others in connection with the qualified
      investment manager's or consultant's services to the board.
      (b) Disclosure of Referral Fees. Every qualified investment manager and every
      consultant shall disclose to the Commission and the board any compensation
      paid or expected to be paid, directly or indirectly, by the qualified investment
      manager or consultant or a related person to others for referring the services of
      the qualified investment manager or consultant to the board.

(9) Relationships with Others.
      (a) Preservation of Confidentiality. Every qualified investment manager and
      every consultant shall preserve the confidentiality of information communicated
      by the board concerning matters within the scope of the confidential relationship,
      unless the qualified investment manager or consultant receives information
      concerning illegal or potentially illegal activities on the part of any fiduciary or
      employee of the board. Any knowledge of illegal or potentially illegal activities
      on the part of any fiduciary or employee of the board shall be conveyed to all the
      members of the board and the Commission.

      (b) Maintenance of Independence and Objectivity. Every qualified investment
      manager and every consultant, in relationships and contacts with an issuer of
      securities, whether individually or as a member of a group, shall use particular
      care and good judgment to achieve and maintain independence and objectivity.

(10) Enforcement and Liability.
      (a) Every qualified investment manager and every consultant shall be deemed
      to have agreed with the retirement board:
            1. to be liable to the board for any losses due to any violation of the
            provisions of M.G.L. c. 32, § 23 or of 840 CMR 17.00 including without
            limitation, any violation of the code of ethics of 840 CMR 17.02 or the
            standards of conduct of 840 CMR 17.03 and 17.04;
            2. to be subject to removal as a qualified investment manager or consultant
            by the Commission in the event that the Commission determines that the
            qualified investment manager or consultant has violated any of the
            provisions of M.G.L. c. 32, § 23 or of 840 CMR 17.00, including, without
            limitation, any provision of the code of ethics of 840 CMR 17.02 or the
            standards of conduct of 840 CMR 17.03 and 17.04; and
            3. that neither the board nor the Commission shall be liable to the qualified
            investment manager or consultant for any such loss, by way of indemnity or
            otherwise, or for any such removal.
      (b) No qualified investment manager or consultant removed by the Commission
      pursuant to 840 CMR 17.04(10)(a)2. shall continue to serve or be employed as a
      qualified investment manager or as a consultant by any other retirement board
      except as may otherwise be authorized by the Commission.

REGULATORY AUTHORITY
840 CMR 17.00: M.G.L. c. 7, § 50; c. 32, §§ 21 and 23.

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