CS Policies for Managing Conflicts of Interest in Connection with Investment Research

1.Introduction

This note summarises certain policies (together the “Policy”) adopted by Credit Suisse Securities (Europe) Limited for compliance with the requirements of the UK Financial Services Authority (the “FSA”) relating to the management of conflicts of interest in connection with investment research. The Policy applies to all investment research prepared by the Equity, Fixed Income and High Yield Research departments of Credit Suisse AG or its subsidiaries or affiliates (collectively “CS”) that is distributed or made available in the UK.

References to Credit Suisse include all of the subsidiaries and affiliates of Credit Suisse AG, the Swiss bank, operating under its investment banking division. For more information on our structure, please follow the below link:

http://www.credit-suisse.com/who_we_are/en.

The production of research outside the UK may be subject to additional local requirements, policies and procedures. In particular, the requirements of the US, Japan, Korea, Canada and Switzerland impose additional restrictions on the activities of research analysts. This Policy has been prepared for compliance with the FSA’s conduct of business rules and is not intended to create third party rights or duties that would not already exist if the policy was not made available, nor does it form part of any contract between CS and any client.

2.      Investment Research

Investment research is material that generally contains either:

„      Analysis of factors likely to influence the future performance of an investment or issuers; or

„      Advice or recommendations based on those results or that analysis. It is substantive analysis that incorporates the critical and careful consideration and assessment of new and existing facts. Any material containing substantive analysis into investments or issuers is likely to be viewed by CS as investment research.

CS’s policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. Such research may be produced and published only by employees of the Equity, Fixed Income and High Yield Research departments (collectively “the Research Department”).

3.      Integrity

„      The views expressed in the report accurately reflect their personal views about any and all of the investments or issuers to which the report relates; and

„      No part of the Analyst’s remuneration was, is or will be directly or indirectly related to the specific recommendations or views expressed in the report.

4.      Identification of Conflicts

The FSA’s principles based approach requires that firms are responsible for identifying and managing any conflicts of interest arising in the business that might compromise the impartiality of the firm’s research analysts and their research.

Such conflicts could include conflicts between recipients of research reports and corporate finance clients (including issuers of investments covered by the research), CS’s investment clients (in particular sales and trading customers), CS’s proprietary trading and investment banking activities, and the personal interests of CS’s officers and employees.

CS’s policies in this regard include:

„      The provision of internal guidance and training on the identification of possible issues of conflict as and when they arise;

„      Escalation procedures for ensuring that issues identified are referred to and considered at the appropriate level within the Firm, and on use of and reducing the risk of inappropriate exercise of influence;

„      CS’s Control Room, located in LCD, monitors potential conflicts arising out of the publication of research in the period before, during and after Investment Banking transactions;

„      Internal guidance and arrangements for regulating the flow of information between and within business areas. These include locating Analysts separately from Investment Banking (“IBD”), Capital Markets and Sales and Trading employees; requiring that any research report is produced in an area away from the IBD, Capital Markets or Sales and Trading businesses and having arrangements, including “Chinese Walls” and other information barriers, to stop and control the flow of information between the Research Department and other parts of the business;

„      Editorial guidelines and procedures for supervisory review of research prior to publication; and

„      Limiting the production and publication of investment research to employees of the Research Department and only allowing the publication of investment research that is impartial.

„      The Analyst’s individual performance and productivity;

„      The overall quality and accuracy of the Analyst’s research;

„      Evaluations by investor clients and employees in other parts of CS with whom the Analyst interacts, excluding employees from IBD or Capital Markets;

„      The size and trading value of, the profitability of, and the potential interest of CSFB’s investor clients in Research with respect to the asset class covered by the Analyst; and

„      CS’s overall performance, which may include, in part, the profitability of IBD and Capital Markets.

6.      Analysts’ Activities

Analysts are restricted from roles that could prejudice, or appear to prejudice the independence of their research or conflict with their duties to the recipients of their research, but are otherwise free to use their expertise for the benefit of CS’s clients, subject to the restrictions outlined below, which are designed to reinforce their independence:

„      Analysts are not permitted to participate in deal related pitches for specific IBD or Capital Markets transactions, but with the prior permission of Research senior management and in accordance with any local restrictions outside the UK, may attend general marketing meetings, including marketing continuous advisory assignments, with IBD or Capital Markets employees;

„      Analysts are not permitted to act in a way that reasonably appears to be representing the issuer of a relevant investment. Analysts may not therefore attend company roadshows relating to an Investment Banking transaction or to issues or allocations of investments;

„      Normal business contact between Analysts and IBD, Capital Markets or Sales and Trading employees, or between Analysts and investment clients of CS may be permitted, provided this does not give rise to a perception of lack of impartiality in the Analyst’s research, and subject to local restrictions outside the UK. Such contact allows:

i)        Analysts to give their views on individual companies, sectors or other relevant market news, provided they do not disclose the timing or content of forthcoming research reports or receive other material non-public information in the course of their dialogue;

ii)       Analysts to meet potential Investment Banking clients prior to the award of a mandate to discuss the Analyst’s credentials, their views on the company’s industry or sector, their published views on other companies in that sector and how the Analyst would position the subject company in the sector;

iii)     Analysts to undertake vetting or due diligence on a company to assist CS’s decision to be involved in a transaction;

iv)      Analysts to provide advice to IBD and Capital Markets employees on the pricing or structuring of a securities offering or provide background on market sentiment and the likely reception of an offering; and

v)       Analysts to participate in investor education meetings with investing clients not involving the presence of company management nor IBD or Capital Markets employees.

„      In connection with securities offerings where CS acts as lead or co-manager, Analysts may be permitted to educate the market in respect of the transaction and to provide independent pre-deal research for this purpose. Procedures in respect of pre-deal research include:

i)        Pre-deal research is produced outside the US and is not distributed in the US or any other jurisdiction in which its production and distribution would be inconsistent with local regulations;

ii)       Pre-deal research is prepared and published on the same basis and in accordance with the same policies and procedures as any other research report published by CS. It must be impartial and represent the independent views of the Analyst;

iii)     Pre-deal research will not include investment recommendations or price targets and will normally only be distributed in hard copy format and will not be available electronically;

iv)      Issuers, counsel to the issuer, underwriters counsel and IBD and Capital Markets employees may review draft pre-deal research only to verify factual accuracy and consistency with the prospectus or offering circular, provided all such comments are provided to LCD and not directly to the Analyst. Any significant proposed changes to the draft pre-deal research require approval from Research senior management.

„      Analysts may review a proposed securities offering for the purpose of vetting the issuer or the transaction before CS commits to underwriting the transaction. Discussions between Analysts and IBD and Capital Markets employees on vetting require the prior approval of Research senior management.

7.      Inducements and Inappropriate Influences

CS’s policies to prevent any inappropriate influence over Analysts or the preparation of research reports include:

„      Analysts and other employees of CS are not permitted to accept any remuneration or other benefit from the issuer or any other party in respect of the publication of research;

„      Analysts and other employees of CS are not permitted to offer or accept any inducement for the production of favourable research, including selective disclosure by an issuer of material information not generally available;

„      Analysts and other CS employees are not permitted to directly or indirectly offer favourable research, specific ratings or specific price targets as consideration or inducement for the receipt of business or compensation;

„      Analysts and other CS employees are not permitted to directly or indirectly offer or threaten to change research, a rating or price target as consideration or inducement for the receipt of business or compensation;

„      Analysts may not discuss unpublished or draft research reports (“unpublished reports”) with IBD, Capital Markets or Sales and Trading employees, or any portions of such reports, either verbally or in writing, other than for the purpose of verifying factual information with the prior approval of LCD;

„      The Research department has editorial control over the contents of research reports and no other business areas are permitted to review or comment on unpublished reports, other than for the purpose of verifying factual information with the prior approval of LCD;

„      Issuers may be sent unpublished reports for the purpose of verifying their factual accuracy. These reports must exclude the research summary, the research rating and price target and be marked draft. For Fixed Income the report must omit the research recommendation and rating and the yield/spread target range (if any).Any material changes to an unpublished report that are required following the verification of factual accuracy by the issuer, require the approval of Research senior management;

„      Analysts are located separately from IBD, Capital Markets and Sales and Trading employees; and

„      Analysts may have free access to the Firm’s trading floors in order to maintain an active dialogue with Sales and Trading employees, although Analysts may not discuss unpublished reports with Sales and Trading employees.

8.      Method and Timing of Publication

The timing and content of unpublished research reports may not be disclosed by any means to anyone, either inside or outside of CS, until the information is broadly disseminated. CS’s policies require research reports to be published or distributed only through its usual channels and to ensure that they are made available simultaneously to clients and CS employees within the Sales and Trading areas.

Where CS has a significant role in an Investment Banking transaction, CS’s policy is to limit the content of research reports from the time the transaction is publicly announced until the transaction closes.  This may include the removal of any investment recommendation, price target, expression of views on the possible outcome of the transaction and limiting updates to estimates or forecasts to reasonable inferences that may be drawn from publicly available information. The decision whether to impose such a restriction on content and the nature, timing and length of restriction appropriate will be made by LCD.

9.      Disclosure of Interests and Personal Account Dealing

Where research reports provide an investment view or recommendation regarding a specific security, CS will add disclosures as required by various legal and regulatory requirements. These include:

„      An explanation of the meaning of the Firm's ratings; information relating to the valuation methods used by the Firm; the percentage of securities on which the Firm has a rating of outperform, neutral or underperform; and a chart depicting the share price of the companies referred in research reports over time and the points at which the Firm assigned or changed a rating or price target;

„      Whether CS holds 1% or more of the securities of companies referred to in research reports;

„      Whether CS has significant holdings in the securities of companies referred in research reports;

„      Whether companies referred in research reports hold more than 5% in Credit Suisse Group AG;

„      Whether research has been sent to any of the companies referred in research reports for fact checking and whether it has been changed as a result;

„      Whether CS acts as a market maker in the securities of companies referred to in research reports;

„      Information regarding any directorships or other material relationships of individual officers of CS with companies referred to in research reports;

„      Any personal interest of the Analyst or close relations of the Analyst in securities of companies referred to in research reports;

„      Past significant relationships of CS with companies referred to in research reports, including Investment Banking or other advisory assignments or relationships;

„      Subject to legal and confidentiality constraints on disclosure, current or prospective relationships between CS and companies referred to in research reports, or the fact that such relationships may exist; and

„      The organisational and administrative arrangements for the prevention of conflicts of interest.

„      Analysts are generally prohibited from trading in any securities, loans, derivatives or other instruments of companies (and their affiliates) in their coverage industry globally, whether or not they currently provide research coverage of the company;

„      Analysts are required to comply with CS’s rules on personal account dealing, which include the requirement to pre-clear any proposed dealings with LCD and/or Research senior management;

„      Analysts are prohibited from serving as an officer, director or member of a supervisory board of any publicly quoted company;

„      Analysts are required to comply with CS’s rules on outside business activities, which will require approval from Research senior management and LCD.