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WELCOME

WELCOME. Annual Meeting & Compliance Seminar. Code of Conduct - Impact on Corporate Culture by Andy Greenstein Knight Capital Group, Inc. Code of Conduct as Part of an Overall Corporate Compliance and Ethics Program.

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WELCOME

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  1. WELCOME Annual Meeting & Compliance Seminar

  2. Code of Conduct - Impact on Corporate Culture by Andy GreensteinKnight Capital Group, Inc.

  3. Code of Conduct as Part of an Overall Corporate Compliance and Ethics Program An effective code of conduct is one of the most impactful parts of any corporate compliance and ethics program. It also helps to satisfy the first hallmark set by the Federal Sentencing Guidelines, which recommends the “promotion of an organizational culture that encourages ethical conduct and a commitment to compliance with the law [through the establishment of] standards and procedures to prevent and detect criminal conduct”.

  4. Role of Code of Conduct To educate directors, officers and employees about the corporate values, ethical standards, Company policies and laws and regulations that they must comply with.

  5. Benefits of an Effective Code of Conduct First step in creating an ethical culture Protects your company’s reputation and bottom line Prevents lawsuits and investigations Complies with The Sarbanes-Oxley Act of 2002 (SOX), The Federal Sentencing Guidelines for Organizations, as amended in 2004, and the NASDAQ and NYSE listing standards, adopted in 2003.

  6. Mandates for Code of Conduct SOX: Public companies must disclose whether they have a code of ethics (or code of conduct) that applies to key officers. Companies that have not adopted a code must explain why not. Federal Sentencing Guidelines: Amendments in 2004 provide for reduced penalties for companies that have “effective programs to prevent and detect violations of law”. Establishment of an effective code of conduct is one part of establishing an effective compliance and risk program. NYSE and NASDAQ Listing Standards: Require publicly listed companies to adopt a code of conduct for directors, officers and employees. Slightly different standards for each exchange.

  7. SOX Guidelines Meant to deter wrongdoing and promote: Honest and ethical conduct Full, fair, accurate, timely and understandable disclosure Compliance with applicable governmental laws, rules and regulations Prompt internal reporting of violations of the code of conduct Accountability for adherence to the code of conduct

  8. Items to be Covered in a Code of Conduct Core Values Financial recordkeeping and reporting Unlawful harassment and discrimination Antitrust (fair competition) Anti-corruption (Foreign Corrupt Practices Act) Reporting (hotline) Insider Trading Proper use of Intellectual Property Privacy Confidentiality Conflicts of Interest Gifts and Entertainment Whistleblower protection/non-retaliation policies Consequences of violating the code of conduct Records retention and management Additional company specific risk items

  9. Code of Conduct Administration Post the code of conduct on your company website and disclose its availability in your company’s annual report (if a listed company) Provide an independent hotline for reporting, including anonymous reporting, of suspected violations of the code of conduct Regularly remind employees, officers and directors of the various ways to report suspected violations of the code of conduct Annual acknowledgment by employees, officers and directors of compliance with code of conduct Handling of investigations

  10. Ensuring Code of Conduct Effectiveness Regularly review the code of conduct Conduct training on its subject matter to provide additional knowledge to employees May also provide additional liability protection to the company Regularly monitor and evaluate its effectiveness

  11. Appendix A- End Notes Federal Sentencing Guidelines for Organizations, Chapter 8- Part B- §8B2.1 Effective Compliance and Ethics Program Sarbanes- Oxley Act of 2002, Section 406 15 USC (S)7264 Section 7264, Code of ethics for senior financial officers Securities and Exchange Commission, 17 CFR 229.406- Sec. 229.406 (Item 406) Code of ethics. New York Stock Exchange, Listed Company Manual Section 303A.10 Code of Business Conduct and Ethics NASDAQ Market Rule 4350(n) Code of Conduct

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