Conflict of Interest - Investment Committee of the Board of Trustees-University Policies - Carnegie Mellon University

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Conflict of Interest Policy - Investment Committee of the Board of Trustees


Policy Title Conflict of Interest Policy - Investment Committee of the Board of Trustees
Policy Owner Office of the President
Responsible Office Office of the Chief Investment Officer
Contact Information Questions concerning this Policy or its intent should be directed to the Chief Investment Officer at 412-268-8836.
Pertinent Dates Approved on June 20, 2016
Approved By The Investment Committee of the Board of Trustees
Entities Affected By This Policy Investment Committee members, the president’s University Leadership Council, Investment Office staff
Who Needs To Know About This Policy Board of Trustees, Investment Committee members, the president’s University Leadership Council, Investment Office staff
Definitions n/a
Forms / Instructions Board of Trustees Investment Committee Conflict of Interest Policy Disclosure Statement
Related Information n/a
Reason for Policy / Purpose The purpose of the Investment Committee Conflict of Interest Policy Statement is to provide procedures for dealing with actual or potential conflicts of interest.
Abstract Members of Carnegie Mellon University’s investment program are expected to act in accordance with the highest ethical standards when carrying out the university investment making process and investment monitoring process. Conflicts of interest, or the appearance of conflicts of interest, may arise with respect to these investment processes.

Policy Statement

Members of the Carnegie Mellon University’s (“CMU”) investment program, consisting of members of CMU’s Investment Committee (the “Members”), members of CMU’s senior University Leadership Council, and the staff of CMU’s Investment Office (collectively, the “Staff”) are expected to act in accordance with the highest ethical standards when carrying out the university investment making process and investment monitoring process. Conflicts of interest or the appearance of conflicts of interest may arise with respect to these investment processes. The purpose of this Investment Committee Conflict of Interest Policy Statement is to provide procedures for dealing with such conflicts.  The philosophy behind the procedures is to promote disclosure and transparency, rather than to impose categorical prohibitions, and to provide for a flexible approach to deal with actual or perceived conflicts.

Policies with Respect to Investment Funds Involving Members of the CMU Board of Trustees: 

  • It is presumed that CMU will not invest in any hedge fund, private equity fund, venture capital fund, limited partnership, mutual fund, or other similar entity (“Investment Fund”) of which a member of the CMU Board of Trustees is the general or managing partner, director, manager, a management-level employee, majority owner, or sponsor.  CMU may invest in such an Investment Fund if approved by the Investment Committee (“IC”) and the Chair of the CMU Board of Trustees.  In the event that the Chair of the CMU Board of Trustees has a conflict, a potential conflict or is otherwise unavailable, a Vice Chair of the CMU Board of Trustee’s may serve as substitute, providing he/she also has no conflict or potential conflict.

Policies with Respect to Members:

  • A Member must disclose to the IC Chair any employment or financial interest that the Member or a person in the Member’s household has in an investment or other transaction being considered by the Investment Committee.    To avoid doubt, the following relationships do not require disclosure: (1) small ownership interests  (defined as less than 5%) in investment management companies whose investment services and products are being considered by the program; (2) professional and business relationships with investment management companies unless the Member owns more than five percent (5%) of the entity providing services to, or having a relationship with, such investment management company, or provides such services personally; and (3)  any portfolio position of other investment entities, where the member is serving as a fiduciary or employee, provided, however, that a Member must disclose an investment or transaction as a fiduciary or employee if (a) such investment or transaction would be impacted by CMU’s investment or transaction or (b) CMU’s investment or transaction would be impacted by the other entity’s investment or transaction.  
  • A Member must recuse himself/herself from the vote and discussion on any matter with respect to an entity in which the Member or a person in the Member’s household has an employment or financial interest; however, a Member may respond to any questions of the IC prior to recusal.  Any such matter may only be approved upon a finding, by the disinterested Members that the investment or other transaction is in CMU’s best interest and is fair and reasonable to CMU.  To avoid doubt, the following relationships do not require recusal: (1) small ownership interests (defined as less than 5%) in investment management companies whose investment services and products are being considered by the program; (2) professional and business relationships with investment management companies unless the Member owns more than five percent (5%) of the entity providing services to, or having a relationship with, such investment management company, or provides such services personally; and (3) roles serving as fiduciaries or employees of other investment entities.    
  • It is presumed that CMU will not invest in any Investment Fund of which a Member is the general or managing partner, director, manager, a management-level employee, majority owner, or sponsor.  CMU may invest in such an Investment Fund if a 5-person special committee, consisting of three disinterested Members appointed by the Chair of the IC as well as the Chairs of the IC and the Board of Trustees, determines that the investment is in CMU’s best interest and is fair and reasonable to CMU.
  • A Member must disclose to the IC Chair an intent by the Member or a person in the Member’s household to invest in any investment opportunity learned about through such Member’s position on the IC, except for investment opportunities in publicly traded securities purchased on an established market, including mutual funds.  No Member or person in a Member’s household may invest in an investment opportunity learned about through such Member’s position on the IC, if the investment would adversely affect CMU’s opportunity.  This provision also applies to Members serving as fiduciaries or employees of other investment entities.   
  • To facilitate the monitoring of this Policy, annually, each Member shall, on the form or form similar to the one attached, disclose to the Chair of the IC and the Chief Investment Officer his or her employment interests and business relationships beyond being a passive investor, which may give rise to, a conflict of interest or an appearance of a conflict of interest in the context of the Member’s service on the IC on behalf of the University.  If there are material changes in those interests and relationships during the year, the Member shall promptly amend his or her disclosure for the purpose of disclosing those materials.  The Chair of the IC will be responsible for reviewing the disclosure forms.  The individual disclosure statements shall be held by the Secretary to the Board of Trustees as confidential to the extent permitted by law, but shall be available for review by Members, the University President, the University’s General Counsel, the University’s Chief Investment Officer, and the University’s Board of Trustees Executive Committee members.

Policies with Respect to Staff:

  • A Staff member must disclose to the IC any employment or financial interest that the Staff member or a person in the Staff member’s household has in an investment or other transaction being considered by the Investment Office.  Any such investment or other transaction must be approved by the IC. To avoid doubt, the following relationships do not require disclosure: (1) small ownership interests (defined as less than 5%) in investment management companies whose investment services and products are being considered by the program; (2) professional and business relationships with investment management companies unless the Member owns more than five percent (5%) of the entity providing services to, or having a relationship with, such investment management company, or provides such services personally; and (3) roles serving as fiduciaries of other investment entities.  
  • A Staff member must disclose to the IC an intent by the Staff member or a person in the Staff member’s household to invest in any investment opportunity learned about through such Staff member’s position in the Investment Office, except for investment opportunities in publicly traded securities purchased on an established market, including mutual funds.  No Staff member or person in a Staff member’s household may invest in an investment opportunity learned about through such Staff member’s position in the Investment Office, if the investment would adversely affect CMU’s opportunity.  
  • A Staff member may not accept benefits, favors, gifts, or other items of value that are reasonably likely to affect the exercise of such person’s judgment on behalf of CMU, impair confidence in CMU, or create the appearance of impropriety.  Notwithstanding the foregoing, Staff is encouraged to interact with entities in which CMU is considering an investment and may accept reimbursed travel costs and de minimis benefits from such entities in the normal course of business that are of the kind customary in the industry.  
  • A Staff member who chooses to make a private investment in a company, fund, or other similar opportunity where a Member of the University’s Board of Trustees or an IC Member serves as an executive officer, partner or other similar role, must disclose the proposed investment to the Chair of the University Board of Trustees, the University President and the Secretary of the Board of Trustees, who will maintain a record of such investment.  In the event that the majority of the Chair of the University’s Board of Trustees, the University President, and the Secretary of the Board decide there is a conflict of interest, the Staff Member will be notified and will not be permitted to make the investment creating the conflict.     

Policies with Respect to Members and Staff:

  • Whenever the IC holds a meeting at which an interest or investment is disclosed, a Member is recused, a special committee is constituted, or an investment or transaction with respect to which a Member or a Staff member has a conflict of interest is considered, the IC’s consideration of such issues will be reflected in the minutes of the meeting.
  • No Policy can specifically address every conceivable situation that may entail a conflict or potential of interest.  As a general matter, Members and Staff should avoid any actions or situations that might result in or create the appearance of using their association with CMU for private gain, according unwarranted preferential treatment to any individual or organization, losing impartiality, or adversely affecting CMU’s reputation.  Further, the Chair of the IC may appoint a special committee, consisting of three disinterested Members, to address any actual or perceived conflict of interest that is not specifically addressed in this Policy.