Avoiding Insider Trading AVOIDING INSIDER TRADING Copyright 2010

Avoiding Insider Trading AVOIDING INSIDER TRADING Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WELCOME This training course was developed by We. Comply, a leading provider of ethics and compliance training since 1999. The course is also available online from any Internet-connected computer. We. Comply offers 60+ courses on a wide range of business ethics and compliance topics. Each course helps employees spot key compliance issues and respond appropriately. This course is designed and licensed for classroom use in parallel with We. Comply's online course on the same topic. This course may not be hosted on a learning management system or distributed to employees individually by electronic or other means without We. Comply's prior authorization. For more information about this course or others, whether for classroom use or online access, please e-mail info@wecomply. com or call 1 -866 -We. Comply. Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading INTRODUCTION Thank you for participating in our Avoiding Insider Trading training course. This course will help you understand the law and avoid the serious civil and criminal penalties that can result if you trade (or help others trade) in stock based on "inside" information. Keep in mind that this material is provided for informational purposes only and is not intended as legal advice. If you have questions about how any of this material applies to your job responsibilities, please direct them to your supervisor or the Legal Department. 1 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading OVERVIEW Laws prohibiting insider trading — • Maintain a level playing field • Promote faith in integrity and fairness of stock market • Encourage investment Trading based on material, nonpublic information is illegal • Applies to directors, officers and employees • Prohibits buying/selling securities based on material, nonpublic information • Prohibits tipping others to buy/sell based on that information • Includes non-employees who trade on nonpublic information from others 2 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading OVERVIEW (CONT’D) Laws prohibiting insider trading — • Maintain a level playing field • Promote faith in integrity and fairness of stock market • Encourage investment Trading based on material, nonpublic information is illegal • Applies to directors, officers and employees • Prohibits buying/selling securities based on material, nonpublic information • Prohibits tipping others to buy/sell based on that information • Includes non-employees who trade on nonpublic information from others 3 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading IN THE NEWS… Brotherly Love Proves Costly Three Siblings Agree to SEC Settlement in Insider Trading Case A former high-level employee of Cisco Systems and his two brothers have settled SEC charges of insider trading. The former employee was alleged to have alerted his brothers to five Cisco acquisitions before the information was made public. The brothers allegedly bought the shares before the acquisitions were announced and sold them after the information became public. The former Cisco employee agreed to pay a penalty of $150, 000, and one brother agreed to pay $200, 275. 4 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WHAT INFORMATION IS "MATERIAL"? Information is considered material if — • there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision, and • it would significantly alter the "total mix" of information made available about the company Material information includes — • Earnings information • Mergers, acquisitions or joint ventures • Developments regarding customers or suppliers • Changes in control or a change of auditors • Events regarding company stock • Bankruptcies or receiverships 5 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading POP QUIZ! An investor obtains "inside" information that XYZ Inc. is planning to send cheesecakes to its clients as a holiday gift. The investor considers this very significant, because XYZ has only sent calendars in past years. The investor proceeds to load up on XYZ stock. Is there an insider-trading issue here? A. No, since a reasonable investor would probably not consider this information significant. B. Maybe, if there's a material difference in cost between sending calendars and cheesecakes. C. Yes, because the information was very significant to the investor. 6 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WHAT IS "NONPUBLIC" INFORMATION? Nonpublic information has not been released to investing public Determining factors: • How information was disseminated • How much press coverage company receives • How much analysts monitor and report on company Market is allowed reasonable time to absorb information after publication 7 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WHO MAY BE LIABLE FOR INSIDER TRADING? Insider-trading laws cover wide range of individuals and activities Directors, Officers and Employees • Job title isn't determinative • Issue is whether individual misused material, nonpublic information — regardless of how information was discovered • Controlling person may also be liable for failing to prevent insider trading by someone under his/her supervision 8 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WHO MAY BE LIABLE FOR INSIDER TRADING? (CONT’D) Insider-trading laws cover wide range of individuals and activities Directors, Officers and Employees • Job title isn't determinative • Issue is whether individual misused material, nonpublic information — regardless of how information was discovered • Controlling person may also be liable for failing to prevent insider trading by someone under his/her supervision 9 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WHO MAY BE LIABLE? (CONT’D) Family Members, Friends and Business Associates • Employee with access to material, nonpublic information is "tipper" • Person who receives and acts on inside information is "tippee“ • Both tipper and tippee may be liable for insider trading • Tippee may also be liable as tipper as to others 10 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WHO MAY BE LIABLE? (CONT’D) Family Members, Friends and Business Associates • Employee with access to material, nonpublic information is "tipper" • Person who receives and acts on inside information is "tippee“ • Both tipper and tippee may be liable for insider trading • Tippee may also be liable as tipper as to others 11 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading IN THE NEWS… Employees, Friends Are “Insiders” Engineer Is Fined and Forfeits Profits in Related Criminal Case A federal judge has fined a former engineer for a computer-chip developer $250, 000 in an insider-trading action brought by the SEC. Also named in the SEC action were 10 other employees — eight engineers, a humanresources worker and a financial analyst — and four of their friends and relatives. The defendants were accused of buying company stock after learning that the company would win a lucrative contract with Microsoft. 12 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WHO MAY BE LIABLE? (CONT’D) Individuals Indirectly Involved with the Company • Temporary insiders • Includes lawyers, accountants, consultants, employees of other companies Both temporary insider and tippee can be liable Anyone who helps someone else engage in insider trading can be criminally prosecuted 13 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading WHO MAY BE LIABLE? (CONT’D) Individuals Indirectly Involved with the Company • Temporary insiders • Includes lawyers, accountants, consultants, employees of other companies Both temporary insider and tippee can be liable Anyone who helps someone else engage in insider trading can be criminally prosecuted 14 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading PENALTIES Penalties for insider trading are severe • Fines up to three times amount gained or loss avoided • Imprisonment for up to 20 years and fines up to $5 million for willful violation • Violations by high-level employees can lead to fines of up to $25 million and civil lawsuits 15 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading INSIDER TRADING AND REGULATION FD Regulation FD addresses selective disclosure — disclosure of material, nonpublic information to stock analysts and/or large investors before disclosing information to the public • Similar to "tipping" • Causes ordinary investors to lose confidence in fairness of the stock markets Regulation FD requires public companies that disclose material, nonpublic information to securities market professionals and shareholders to disclose that information publicly at the same time 16 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading FINAL QUIZ 17 of 17 Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved.

Avoiding Insider Trading ABOUT WECOMPLY We. Comply is a leading provider of customized ethics and compliance training solutions. We are committed to providing the best-of-breed training content, technology and customer service. ü Specializing in ethics and compliance training since 1999 ü 60+ ethics and compliance training courses in 42 languages ü Content partners include the Association of Corporate Counsel (ACC), Proskauer Rose and White & Case ü 500+ clients of all sizes and in all industries Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved. 1 -866 -We. Comply

Avoiding Insider Trading COURSE-DELIVERY OPTIONS We. Comply offers training courses in multiple delivery formats to reach all employees -- not just those with computers: ü Online – available 24/7 from any computer ü Mobile – tablets and smartphones ü Offline options when Internet access is unavailable: Ø Power. Point with presenter notes for classroom training Ø PDF booklets with tear-off certifications Ø CD-ROM/intranet with tracking via e-mail Ø Phone-based training and certification Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved. 1 -866 -We. Comply

Avoiding Insider Trading ONLINE TRAINING BENEFITS While classroom training has certain advantages, it can be challenging to implement in large and/or geographically dispersed companies. Consider these advantages of online training: ü ü ü ü Better Attendance Higher Completion Rates Less Impact on Productivity Perfect for New Hires Convenient for Remote Locations Available in 42 Foreign Languages Easy Access to Courses Periodic Refreshers Copyright© 2010 We. Comply, Inc. All rights reserved. Copyright © 2011 We. Comply, Inc. All rights reserved. Blended Benefits Get the best of both worlds by providing classroom training where feasible and online training elsewhere – all centrally tracked and organized for easy monitoring and reporting.