These guidelines are intended to supplement the Policy on Insider Trading described in Accuride’s Code of Conduct.
Federal and state securities laws prohibit the purchase or sale of a company’s securities by persons who are aware of material information about that company that is not generally known or available to the public. These laws also prohibit persons who are aware of such material nonpublic information from disclosing this information to others who may trade. Companies and their controlling persons may be subject to liability if they fail to take reasonable steps to prevent insider trading by company personnel.
The following information regarding our policy on insider trading and unauthorized use or disclosure of material non-public information may be summarized very simply: DO NOT trade on, or pass to others, material non-public information about Accuride or its subsidiaries (collectively, the “Company”) or those with whom it has business relationships. To do so could have severe consequences for you and for the Company, including criminal liability.
It is important that you understand the breadth of activities that constitute illegal insider trading. Both the U.S. Securities and Exchange Commission (the “SEC”) and The New York Stock Exchange (the “NYSE”) investigate and are very effective at detecting insider trading. The SEC, together with the U.S. Attorneys, pursue insider trading violations vigorously. Cases have been successfully prosecuted against trading by employees through foreign accounts, trading by family members and friends, and trading involving only a small number of shares.
These guidelines address transactions in the securities the Company, transactions in the securities of other companies and the disclosure of the Company’s confidential information as follows:
Applicability of Guidelines
Statement of Policy
Potential Criminal and Civil Liability and/or Disciplinary Action
Definition of Material Nonpublic Information
Additional Information – Directors and Officers
Inquiries About the Guidelines
EXHIBIT A: Pre-Clearance Request Form (PDF)
EXHIBIT B: Rule 10b5-1 Trading Programs
EXHIBIT C: Short-Swing Profit Rule Section 16(b) Checklist
These Guidelines apply to you if you are an “Insider” to the Company, which is defined as:
As an Insider you are also responsible for making sure that the purchase or sale of any security covered by the Guidelines by any of the following persons or entities also complies with the Guidelines:
The Guidelines continue to apply to your transactions in Company securities even after you have terminated your status as an Insider if you are aware of Material Nonpublic Information at the time your employment or other relationship terminates until that information has become public or is no longer material.
Transactions in Company Securities. The Guidelines generally apply to all transactions in securities of the Company, including common stock, options for common stock and any other securities the Company may issue from time to time, such as preferred stock, warrants and convertible debentures, as well as to derivative securities relating to the Company’s stock, whether or not issued by the Company, such as exchange-traded put and call options. With respect to transactions in Company securities pursuant to employee benefit plans, please note the following:
Transactions in Other Companies’ Securities. The Guidelines also apply to transactions in other companies, including the Company’s customers, vendors or suppliers (“business partners”), about which you have Material Non-Public Information when that information was obtained in the course of your employment with, or other services performed on behalf of, the Company. Civil and criminal penalties, and termination of employment, may result from trading on inside information regarding the Company’s business partners. You should treat Material Nonpublic Information about the Company’s business partners with the same care required with respect to information related directly to the Company. You should keep in mind that information that is not material to the Company may nevertheless be material to one of the Company’s business partners.
It is illegal to purchase or sell securities when you are in possession of Material Nonpublic Information (as described below). It is also illegal to disclose or “tip” Material Nonpublic Information to others who then trade on the basis of such Material Nonpublic Information. Such actions also constitute serious violations of Company policy. These prohibitions apply regardless of the dollar amount of the transaction or the source of the non-public information.
“Purchase” and “sale” are defined broadly under the federal securities law. “Purchase” includes not only the actual purchase of a security, but any contract to purchase or otherwise acquire a security. “Sale” includes not only the actual sale of a security, but any contract to sell or otherwise dispose of a security. These definitions extend to a broad range of transactions including conventional cash-for-stock transactions, conversions, the exercise of stock options with the assistance of a broker, and acquisitions and exercises of warrants or puts, calls or other options related to a security.
It is the Company’s policy to cooperate fully with the SEC and other governmental and regulatory authorities in investigating possible violations by employees and others of applicable laws and regulations. If appropriate, the Company will assist authorities in the prosecution of persons who engage in illegal insider trading.
Trading on Material Nonpublic Information is Prohibited. You may not engage in any transaction involving a purchase or sale of the Company’s securities, including any offer to purchase or offer to sell, directly or through Immediate Family members or other persons or entities, if you are aware of Material Nonpublic Information relating to the Company. Similarly, you may not trade in the securities of any other company if you are aware of Material Nonpublic Information about that company that you obtained in the course of your employment with the Company. Such prohibition against trading shall remain in effect until the close of business on the second Trading Day following the date of public disclosure of that information, or at such time as such nonpublic information is no longer material. The term “Trading Day” means a day on which the NYSE is open for trading.
Voluntary Trading Window for Employees other than Financial Insiders (as defined below). To ensure compliance with the Guidelines and applicable U.S. federal and state securities laws, the Company strongly recommends that all employees having access to Material Nonpublic Information, including the Company’s internal financial statements, refrain from conducting transactions involving the purchase or sale of the Company’s securities other than during the “Voluntary Trading Window”, defined as the period in any fiscal quarter:
Unless you are a director, executive officer or other financial insider, as discussed below, you may choose not to follow this suggestion, but you should be particularly careful with respect to trading outside the Voluntary Trading Window, because you may, at such time, have access to (or later be deemed to have had access to) Material Nonpublic Information regarding, among other things, the Company’s anticipated financial performance for the quarter. Even during the Voluntary Trading Window, you may not engage in transactions in the Company’s securities if you possess Material Nonpublic Information concerning the Company until such information has been known publicly for at least two Trading Days. The Company may also, from time to time, prohibit certain Insiders from trading because of developments known to the Company and not yet disclosed to the public. Even if the Company has not adopted such a prohibition, you are responsible at all times for compliance with the prohibitions against insider trading. Trading in the Company’s securities during the Voluntary Trading Window is not considered a “safe harbor,” and you should use good judgment at all times.
Mandatory Trading Window for Employees other than Financial Insiders. The safest period for employees to trade in the Company’s securities, assuming the absence of Material Nonpublic Information, is during the Voluntary Trading Window. Periods other than the Voluntary Trading Window are more highly sensitive for transactions in the Company’s stock from the perspective of compliance with applicable securities laws. This is due to the fact that officers, directors and other financial insiders will be, as any quarter progresses, increasingly likely to possess Material Nonpublic Information about the expected financial results for the quarter. For this reason, all Insiders are required to refrain from trading other than during the “Mandatory Trading Window”, defined as the period:
In other words, no Insider may trade during the period from two (2) weeks prior to the end of each fiscal quarter until two (2) Trading Days following public disclosure of the Company’s financial results for the prior fiscal quarter or year.
The Company reserves the right to declare special blackout periods or other restrictions applying to all or a select group of Insiders when circumstances so warrant. The establishment of such a special blackout period is additional Material Nonpublic Information that you must not disclose within the Company or to third parties.
Pre-Clearance Requirement for Financial Insiders. Notwithstanding the trading windows described above, all executive officers subject to Section 16 of the Securities Exchange Act of 1934 (“executive officers”), each member of the Company’s Board of Directors and all persons who hold a Grade 15 position or above in the Corporate Finance Department (each of the foregoing is referred to as a “Financial Insider”) who is not in possession of Material Nonpublic Information and who wishes to engage in any transaction involving the Company’s securities (including any stock purchase, stock sale, gift, loan, pledge, hedge, contribution to a trust, or any other transfer or acquisition), must first obtain pre-approval of the transaction from the Company’s General Counsel or his designee, including for transactions effected during the Voluntary Trading Window. A request for pre-approval should be submitted to the General Counsel at least two (2) business days in advance of the proposed transaction. A form pre-clearance request is attached as Exhibit A. Pre-clearance requests may be made on-behalf of a Financial Insider by an agent of the Financial Insider, provided the Financial Insider confirms in writing the agency. The General Counsel or his designee will then determine whether the transaction may proceed and will promptly notify the Financial Insider of this determination. When making a pre-approval request, the Financial Insider needs to be certain to include information as to how best to be reached.
Approval for a Financial Insider’s proposed transaction may be withheld by the General Counsel or his designee in his discretion, if:
No Exception for Hardship. Every Insider has individual responsibility to comply with the Guidelines, regardless of whether the Company has recommended a trading window to that Insider or any other Insiders of the Company. Appropriate judgment should be exercised in connection with any trade in the Company’s securities, even if technically permitted by the Guidelines. An Insider may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of the Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting. The existence of a personal financial emergency does not excuse you from compliance with the Guidelines.
May I trade in Company derivative securities or short sell Company securities?
The Company considers it improper and inappropriate for Insiders to engage in short-term or speculative transactions in the Company’s securities or in other transactions in the Company’s securities that may lead to inadvertent violations of the insider trading laws. Accordingly, your trading in Company securities is subject to the following restrictions:
Short Sales. You may not engage in short sales of the Company’s securities (sales of securities that are not then owned), including a “sale against the box” (a sale with delayed delivery).
Publicly Traded Options. You may not engage in transactions in publicly traded options, such as puts, calls and other derivative securities, on an exchange or in any other organized market.
Standing Orders or Stop Loss Orders. Standing orders and stop loss orders should generally be avoided and, if used, should be left in place only for a very brief period of time. A standing order or stop loss order placed with a broker to purchase or sell stock at a specified price leaves you with no
control over the timing of the transaction. A standing order or stop loss order transaction executed by the broker when you are aware of Material Nonpublic Information may result in unlawful insider trading.
Hedging or Monetization Transactions. Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, involve the establishment of a short position in the Company’s securities and limit or eliminate your ability to profit from an increase in the value of the Company’s securities. Therefore, you are prohibited from engaging in any hedging or monetization transactions involving Company securities.
Margin Accounts and Pledges. Securities held in a margin account or pledged as collateral for a loan may be sold without your consent by the broker if you fail to meet a margin call or by the lender in foreclosure if you default on the loan. Because a margin or foreclosure sale may occur at a time when you are aware of Material Nonpublic Information or otherwise are not permitted to trade in Company securities, you are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan. An exception to this prohibition may be granted where you wish to pledge Company securities as collateral for a loan (not including margin debt) and clearly demonstrate the financial capacity to repay the loan without resort to the pledged securities. If you wish to pledge Company securities as collateral for a loan, you must submit a request for approval to the Company’s General Counsel at least two weeks prior to the proposed execution of documents evidencing the proposed pledge.
Pursuant to U.S. Securities and Exchange Rule 10b5-1, directors, officers and employees of the Company may establish written programs that permit (i) automatic trading of the Company’s stock through a third-party broker or (ii) trading of the Company’s stock by an independent person (e.g., an investment banker) who is not aware of Material Nonpublic Information at the time of a trade. All such automatic trading programs or blind trusts (“Trading Programs”) must be reviewed and pre-approved by the General Counsel or his designee prior to establishment, to confirm compliance with the Guidelines and the applicable securities laws. All Trading Programs shall be subject to the restrictions and limitation set forth in Exhibit B, attached hereto, which shall be updated from time to time by the Company’s legal department to conform with any changes to Rule 10b5-1 or the practices thereunder. Once a Trading Program is Implemented in accordance with Exhibit B, trades under the Trading Program shall not be subject to the limitations and restrictions included in other sections of the Guidelines. Trading under a Trading Program may occur even at a time outside of the Company’s trading window or when the person on whose behalf such trade is made is aware of Material Nonpublic Information.
Maintain the Confidentiality of Nonpublic Information. Nonpublic information relating to the Company or its business partners is the property of the Company and the unauthorized disclosure of such information is forbidden.
Maintaining the confidentiality of Company information is essential for competitive, security and other business reasons, as well as to comply with securities laws. You should treat all information you learn about the Company or its business plans in connection with your employment as confidential and proprietary to the Company. Inadvertent disclosure of confidential or inside information may expose the Company and you to significant risk of investigation and litigation.
The timing and nature of the Company’s disclosure of material information to outsiders is subject to legal rules, the breach of which could result in substantial liability to you, the Company and its management. Accordingly, it is important that responses to inquiries about the Company by the press, investment analysts or others in the financial community be made on the Company’s behalf only through authorized individuals.
If you receive inquiries about the Company from securities analysts, reporters, or others, decline comment and direct them to the Company’s Investor Relations Representative.
Do not discuss Material Nonpublic Information where it may be overheard, such as in restaurants, elevators, restrooms, and other public places. Remember that cellular phone conversations are often overheard and that persons other than their intended recipients may retrieve voice mail and e-mail messages.
If you believe it is necessary to the performance of your specific job duties to disclose any Material Nonpublic Information to persons outside of the Company, you must receive approval by an employee who holds a Vice President level or more senior title and such disclosure must be consistent with the Company’s contractual and legal obligations. Generally, such disclosures may only be made after the Company has received an appropriate confidentiality agreement from the receiving party.
Don’t Tout the Company’s Securities; Don’t Tip Material Nonpublic Information. You must not disclose (“tip”) Material Nonpublic Information to any other person (including Immediate Family members) where such information may be used by such person to his or her profit by trading in the securities of companies to which such information relates, nor are you permitted to make recommendations or express opinions on the basis of Material Nonpublic Information as to trading in the Company’s securities. Even if you are not in possession of Material Nonpublic Information, do not recommend to any other person that they buy or sell securities of the Company. (Remember that “tipping” Material Nonpublic Information is always prohibited, and that your recommendation could be imputed to the Company and may be misleading if you do not have all relevant information).
Insiders that engage in securities transactions at a time when they have knowledge of Material Nonpublic Information may be subject to penalties that include:
Insiders may be liable for improper transactions by any person (commonly referred to as a “tippee”) to whom they have disclosed Material Nonpublic Information regarding the Company or to whom they have made recommendations or expressed opinions on the basis of such information as to trading in the Company’s securities. The SEC has imposed large penalties even when the disclosing person did not profit from the trading. The SEC, the stock exchanges and the National Association of Securities Dealers, Inc. use sophisticated electronic surveillance techniques to uncover insider trading.
Could the Company incur liability for my actions if I engage in securities transactions at a time that I have Material Nonpublic Information?
If the Company fails to take appropriate steps to prevent illegal insider trading, the Company may have “controlling person” liability for a trading violation, with civil penalties of up to the greater of $1 million and three times the profit gained or loss avoided, as well as a criminal penalty of up to $25 million. The civil penalties can extend personal liability to the Company’s directors, officers and other supervisory personnel if they fail to take appropriate steps to prevent insider trading.
Insiders who violate the Guidelines will be subject to disciplinary action by the Company. This disciplinary action may include ineligibility for future participation in the Company’s equity incentive plans, other Company imposed sanctions, suspension or termination of employment.
Note that inside information has two important elements – materiality and public availability.
It is not possible to define all categories of material information. However, information should be regarded as material if there is a reasonable likelihood that it would be considered important to an investor in making a decision to buy, hold or sell a security. While it may be difficult under this standard to determine whether particular information is material, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. Examples of such information include:
This list is not exhaustive and, depending upon the circumstances, other information may be material. In short, if you would consider the information in making an investment decision, you should assume it is material. Either positive or negative information may be material. Because trading that receives scrutiny will be evaluated after the fact with the benefit of hindsight, questions concerning the materiality of particular information should be resolved in favor of materiality, and trading should be avoided. When in doubt, please contact the Company’s General Counsel.
Nonpublic information is information that is not generally known or available to the public. One common misconception is that material information loses its “nonpublic” status as soon as a press release is issued disclosing the information. In fact, information is considered to be available to the public only when it has been released broadly to the marketplace (such as by a press release or an SEC filing) and the investing public has had time to absorb the information fully. As a general rule, information is considered nonpublic until the second full Trading Day after the information is released. For example, if the Company announces financial earnings before trading begins on a Tuesday, the first time you can buy or sell Company securities is the opening of the market on Thursday (assuming you are not aware of other Material Nonpublic Information at that time). However, if the Company announces earnings after trading begins on that Tuesday, the first time you can buy or sell Company securities is the opening of the market on the following Friday.
Section 16(a) of the 1934 Act generally requires all officers, directors and 10% stockholders (“Reporting Persons”) within 10 days after the Reporting Person becomes an officer, director, or 10% stockholder, to file with the SEC an “Initial Statement of Beneficial Ownership of Securities” on SEC Form 3 listing the amount of the Company’s securities which the Reporting Person beneficially owns. Following the initial filing on SEC Form 3, every change in the beneficial ownership of the Company’s securities must be reported on SEC Form 4 within 2 business days of the date on which the change occurs. Certain changes in ownership can be filed on Form 5 within 45 days after fiscal year end. Form 4 must be filed even if, as a result of balancing transactions, there has been no net change in holdings. In deciding the day on which a purchase or sale on the open market occurs for purposes of filing Form 4, with certain exceptions, the date of the broker’s or dealer’s confirmation would ordinarily be determinative.
Special rules apply in certain situations. If any officer or director purchases or sells any Company securities within six months after the event which required him or her to file Form 3, the Form 4 filed with respect to that purchase or sale must also report any other purchases or sales he or she made within the preceding six months which were not previously reported. Similarly, if an officer or director purchases or sells any Company securities within six months after his or her termination from such position, the transaction must be reported on Form 4 if he made any purchase or sale within the preceding six months and prior to termination.
Certain transactions pursuant to tax-conditioned plans, including purchases of securities under qualified 401(k) and other retirement plans, are exempt from Section 16(b) liability and do not need to be reported on Form 4. However, in addition to the Form 3 and Form 4 reporting requirements, every reporting person is required to file a Form 5 within 45 days after the end of the Company’s fiscal year, unless he/she has previously reported all changes in beneficial ownership, including those transactions exempt from Section 16(b) liability, on Form 4. Form 5 reconciles the reporting person’s Section 16 reports by requiring disclosure of the reporting person’s total beneficial ownership of the Company’s securities at year-end and, with certain exceptions, all transactions affecting the reporting person’s beneficial ownership not disclosed on Form 4. Form 5 must also identify any required reports that the reporting person failed to file during the previous year.
For the purpose of preventing the unfair use of information which may have been obtained by a Reporting Person, any profits realized by any officer, director or 10% stockholder from any “purchase” and “sale” of Company stock during a six-month period, so called “short-swing profits,” may be recovered by the Company. When such a purchase and sale occurs, good faith is no defense. The Reporting Person is liable even if compelled to sell for personal reasons, and even if the sale takes place after full disclosure and without the use of any inside information.
The liability of a Reporting Person under Section 16(b) of the 1934 Act is only to the Company itself. The Company, however, cannot waive its right to short swing profits, and any Company stockholder can bring suit in the name of the Company. In this connection it must be remembered that reports of ownership filed with the SEC on Form 3, Form 4 or Form 5 pursuant to Section 16(a) (discussed above) are readily available to the public, and certain attorneys carefully monitor these reports for potential Section 16(b) violations. In addition, liabilities under Section 16(b) may require separate disclosure in the Company’s annual report to the SEC on Form 10-K or its proxy statement for its annual meeting of stockholders. No suit may be brought more than two years after the date the profit was realized. However, if the Reporting Person fails to file a report of the transaction under Section 16(a), as required, the two-year limitation period does not begin to run until after the transactions giving rise to the profit have been disclosed. Failure to report transactions and late filing of reports require separate disclosure in the Company’s proxy statements.
Officers and directors should consult the attached “Short-Swing Profit Rule 16(b) Checklist” attached hereto as “Exhibit C” in addition to consulting the General Counsel prior to engaging in any transactions involving the Company’s securities
Section 16(c) of the 1934 Act prohibits Reporting Persons absolutely from making short sales of the Company’s securities, i.e., sales of shares which the Reporting Person does not own at the time of sale, or sales of securities against which the Reporting Person does not deliver the shares within 20 days after the sale. Under certain circumstances, the purchase or sale of put or call options, or the writing of such options, can result in a violation of Section 16(c). Reporting Persons violating Section 16(c) face criminal liability.
The General Counsel should be consulted if you have any questions regarding reporting obligations, short-swing profits or short sales under Section 16.
Please direct your questions as to any of the matters discussed in the Guidelines to Steve Martin, Senior Vice President/General Counsel and Corporate Secretary, at (812) 962-5068.
Rule 10b5-1 trading programs established pursuant to the Company’s Policy on Insider Trading (each a “Program”) are limited to the following two types:
Additional Program Restrictions. All Programs shall also be subject to the following restrictions:
The Company shall not have any liability to any Program Eligible Person as a result of the establishment of a Program, any Company disclosure with respect thereto, or any cancellation or transactions and/or suspension of a Program as discussed above.
Note: Any combination of purchase and sale or sale and purchase within six months of each other results in a violation of Section 16(b), and the “profit” must be recovered by the Company. It makes no difference how long the shares being sold have been held–or that you are an insider for only one of the two matching transactions. The highest priced sale will be matched with the lowest priced purchase within the six month period.
If a sale is to be made by an officer, director or 10% stockholder (or any family member living in the same household):
Note: If a sale is to be made by an affiliate of the Company and unregistered stock is to be sold, has a Form 144 been prepared and has the broker been reminded to sell pursuant to Rule 144?
If a purchase or option exercise for stock is to be made:
Before proceeding with a purchase or sale, consider whether you are aware of material inside information which could affect the price of the stock.