VI. INVESTMENTS
A. Inside Information
The use of inside, or non-public, material information in connection with the purchase or sale of Freddie Mac securities, including its debt and mortgage-related securities or another’s securities, is unethical and is generally prohibited by law. Non-public material information includes information about Freddie Mac or another company that is obtained by virtue of your service on Freddie Mac’s Board, which has not been effectively disclosed to the general public, and which could, if known, affect a reasonable investor’s decision to buy or sell the securities of Freddie Mac or the other company. Rules pertaining to “insider trading” are set forth in Corporate Policy 7-145, Insider Trading and Related Conduct.
These rules apply both to trading in Freddie Mac securities, including mortgage-related and debt securities, for your own account and to causing another person or entity to trade our securities on behalf of that person or entity. In particular, these rules apply to the purchase and sale of Freddie Mac’s securities and to the possession of non-public information with respect to those securities. Accordingly, corporate policy prohibits conduct by any Director that could result in, or appear to be the result of, insider trading in Freddie Mac securities. You must comply with this general prohibition and with specific provisions of applicable corporate policy.
B. Pre-Clearance of Transactions
In addition to the restrictions imposed by “insider trading” considerations, Corporate Policy 7-110, Securities Transaction Pre-Clearance Policy, provides for the designation of periods during which transactions in Freddie Mac securities (including gifts or donations of such securities) are permissible and periods when such transactions are prohibited. You may not engage in transactions in Freddie Mac securities outside of a “window period” or within a “blackout period” unless the transaction has been pre-cleared by the Legal Division. At certain times, you may also be advised in writing by the Legal Division that pre-clearance for securities transactions by a Director will be required even if the transaction will occur during a window period.
C. Personal Securities Investments
1. Financial Interests Generally
In addition to complying with the rules concerning insider trading and pre-clearance of transactions, you should not hold any investment that might cause you to have a Conflict of Interest with Freddie Mac. Toward this end, you should comply with the specific limitations on investments that are set forth in Corporate Policy 3-206—Personal Securities Investments . The investments that are generally subject to those rules include any ownership interest in securities and any other financial interest, regardless of how it is acquired, and any investments you acquire or hold through immediate household members, through agents and fiduciaries (such as brokers, investment advisers or similar fiduciaries), and intermediary entities (such as private or charitable trusts, corporations or partnerships) whose investment decisions are controlled, individually or collectively, by you or an immediate household member.
Outside Directors whose professional activities involve the management of investment funds or assets of others are not restricted by the restrictions on investment that are set forth in this Section VI.C of the Code of Conduct (“Investment Limitations”) and in Corporate Policy 3-206 when making investment decisions for such funds or clients.
2. Freddie Mac Options, Short Sales and “Short Sales Against the Box”
Trading in Freddie Mac’s exchange-traded options, i.e., puts and calls, generally is prohibited, as are short sales and “short sales against the box.” Corporate Policy 7-145, Insider Trading and Related Conduct, sets forth the applicable rules.
3. Public Offerings
You should neither request, nor knowingly accept, preferential participation in offerings of securities of other companies: (i) as a result of your position as a Director of Freddie Mac; or (ii) in order to induce Freddie Mac to enter into a transaction or business relationship with the third party that is providing the preferential treatment.
D. Additional Rules Concerning Purchases and Sales of Freddie Mac Securities by Directors
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act") requires directors of companies whose securities are registered under the 1934 Act to report their purchases and sales of company equity securities to the Securities and Exchange Commission. Section 16(b) of the 1934 Act essentially prohibits directors from engaging in any purchase and sale, or sale and purchase, of any equity security of such company within a period of less than six months ("short-swing transaction").
Although Freddie Mac currently is not subject to Section 16(a) or (b) of the 1934 Act, Freddie Mac has chosen to require that its Directors comply voluntarily with certain of its provisions. Corporate Policy 7-109, Securities Trading Policy, requires all Freddie Mac Directors to report to the Legal Division all purchases and sales of Freddie Mac equity securities (including common and preferred stock and options on such stock), including those received under a Freddie Mac employee benefit or compensation plan. Corporate Policy 7-109 also prohibits Directors from engaging in certain short-swing transactions and requires reporting of short-swing transactions that are permitted.