[Federal Register Volume 60, Number 87 (Friday, May 5, 1995)]
[Rules and Regulations]
[Pages 22249-22255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10941]
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DEPARTMENT OF THE TREASURY
5 CFR Chapter XXI
RIN 3209-AA15
Supplemental Standards of Ethical Conduct for Employees of the
Department of the Treasury
AGENCY: Department of the Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (Department), with the
concurrence of the Office of Government Ethics (OGE), is issuing a
final rule establishing uniform supplemental standards of ethical
conduct for the officers and employees of the Department. The final
rule is a necessary supplement to the Executive Branch-wide Standards
because it addresses ethical issues unique to the Department. The final
rule is effective upon publication and establishes regulations relating
to: The designation of agency components for purposes of the rules
concerning gifts and teaching, speaking and writing; prohibitions on
the ownership of certain financial interests; prohibitions on certain
forms of borrowing and extensions of credit; prohibitions on
recommendations concerning certain securities and services of certain
types of professionals; limitations on purchases of assets controlled
by the Department or related to Department operations; and restrictions
on outside employment and business activities.
EFFECTIVE DATE: May 5, 1995.
FOR FURTHER INFORMATION CONTACT: Stephen J. McHale, Henry H. Booth, or
R. Peter Rittling, Office of the Assistant General Counsel (General Law
and Ethics), Department of the Treasury, telephone (202) 622-0450, FAX
(202) 622-1176, e-mail Peter.Rittling@treas.sprint.com.
SUPPLEMENTARY INFORMATION:
I. Rulemaking Background
On Tuesday August 3, 1993, the Department, with OGE's concurrence,
published for comment a proposed rule to establish supplemental
standards of ethical conduct for all Treasury Department employees (58
FR 41193-41203). The proposed rule was intended to supplement the
Standards of Ethical Conduct for Employees of the Executive Branch
published by OGE on August 7, 1992, and effective February 3, 1993 (5
CFR Part 2635; see also the grace period extensions at 59 FR 4779-4780,
Feb. 2, 1994, and 60 FR 6390-6391, Feb. 2, 1995). The proposed rule was
issued pursuant to 5 CFR 2635.105, which authorizes executive branch
agencies to publish agency-specific supplemental regulations necessary
to implement their respective ethics programs. The Department, with
OGE's concurrence, determined that the supplemental regulations
contained in the proposed rule were necessary to implement the
Department's ethics program successfully, considering the Department's
unique programs and operations.
The proposed rule prescribed a 30-day comment period and invited
comments from all interested parties. The Department received timely
comments from six sources, considered each comment carefully, and made
appropriate modifications to the rule. The Department, with OGE's
concurrence, is now publishing as a final rule the Supplemental
Standards of Ethical Conduct for Employees of the Department of the
Treasury, to be codified at a new part 3101, Title 5 of the Code of
Federal Regulations.
In a separate rule making, the Department is issuing as an interim
rule the Department of the Treasury Employee Rules of Conduct. The
Rules of Conduct will be codified at 31 CFR Part 0 and will prescribe
Department-specific employee rules of conduct and procedure.
II. Summary of the Comments
The Department received comments from two Department employees, two
private financial institutions and two bureaus of the Department. The
comments, discussed more fully below, fall into two general categories.
The comments received from the Department employees and the financial
[[Page 22250]] institutions asked for guidance on the application of
either the rule in general or a specific section of the rule. The
bureaus' comments recommended substantive changes to certain sections
of the rule that applied specifically to their employees. After the
comment period closed, certain offices in the Department requested
changes to Sec. 3101.103 to make it more restrictive and to increase
its coverage to include an employee's spouse and minor children. The
suggested changes are being reviewed and may be implemented in the
future by amending the rule. At this time, however, this section
applies only to Department employees.
III. Analysis of the Comments
One Department employee asked whether the final rule will apply
retroactively. The employee was concerned that the final rule, once
effective, would be used to discipline employees for actions taken
before the effective date of the final rule. The final rule applies
prospectively only.
Another Department employee asked whether Sec. 3101.103, which
prohibits Department employees from purchasing, either directly or
indirectly, certain Government owned or controlled property, would
apply to the relatives and friends of Department employees. Section
3101.103 applies only to Department employees. However, a Department
employee may not circumvent the prohibition by having a friend or
relative purchase property for the employee's use or possession that
the employee would otherwise be prohibited from purchasing. This is
considered an indirect purchase and is prohibited by Sec. 3101.103.
Two private financial institutions submitted comments asking
whether the final rule will apply to the employees of private financial
institutions. As stated in the Summary section of the proposed rule,
the regulations will apply only to the officers and employees of the
Department of the Treasury, with specific provisions also applicable to
certain members of their families. This has not been changed;
therefore, the final rule does not apply to private financial
institutions or their employees.
Finally, two bureaus of the Department, the OCC and the OTS,
submitted comments recommending substantive changes to specific
sections of the rule that will apply exclusively to their employees.
All changes were incorporated into the final rule. In general, many of
the regulations specific to OTS and OCC employees included in this rule
are based on old OCC and OTS conduct regulations which predate and were
displaced by the Executive Branch-wide Standards. These changes fixed
inconsistencies between the new regulations and the old regulations on
which they are based.
The first change we made was to Sec. 3101.109(c)(3)(iii). Section
3101.109(c)(3)(iii) prescribes an exception to the OTS borrowing
prohibition contained in Sec. 3101.109(c). As proposed, the exception
would have permitted an OTS employee to obtain a loan or extension of
credit by assuming a mortgage loan on a personal residence without
first obtaining approval from the bureau. In the final rule, the
exception is retained but modified to require the employee to obtain
the prior approval of the Chief Counsel, a Regional Director, Regional
Deputy Director, or designee before securing a loan or extension of
credit under this exception.
We also revised Sec. 3101.109(c)(4). As proposed,
Sec. 3101.109(c)(4) would have permitted covered OTS employees, their
spouses and minor children, to retain preexisting credit in only three
specific situations. In the final rule, Sec. 3101.109(c)(4) is revised
to permit the retention of preexisting credit in a fourth situation. As
modified, a covered employee, or a spouse or a minor child, may retain
preexisting credit if the credit was extended before April 30, 1991,
the date on which the borrowing prohibition included in
Sec. 3101.109(c) was first implemented in the old OTS conduct rules.
This final rule continues the OTS borrowing prohibition; therefore, it
is necessary to include the exception for preexisting credit obtained
before April 30, 1991, the date that the prohibition originally took
effect.
In the proposed rule, the prohibition on the purchase of assets in
Sec. 3101.109(f), applied to all OTS employees, their spouses and minor
children. In the final rule, the prohibition in Sec. 3101.109(f) was
modified to apply only to ``covered'' OTS employees, their spouses and
minor children. The reason for the modification was to make
Sec. 3101.109(f) consistent with a similar prohibition contained in the
old OTS conduct rules. The term covered OTS employee is defined in
Sec. 3101.109(a).
In a joint comment, both the OTS and the OCC recommended changing
certain language in the exception to the prohibitions against owning
certain financial interests. All recommended changes were incorporated
into the final rule.
Under Secs. 3101.108(a) and 3101.109(b) of the final rule, OCC
employees and covered OTS employees are prohibited from owning the
securities of entities regulated by their respective bureaus. However,
under Secs. 3101.108(a)(3)(i) and 3101.109(b)(3)(i), which are nearly
the same for the OCC and the OTS, an OCC or covered OTS employee may
invest in a publicly traded or publicly available ``mutual fund or
other collective investment fund or in a widely held pension or similar
fund'' if the fund does not invest more than ``25 percent'' of its
``assets'' in the securities of ``one or more'' regulated entities.
In general, the revised exception describes in greater detail the
types of funds in which an employee is permitted to invest. In the
proposed rule, the exception was limited to ``publicly traded or
publicly available investment fund[s].'' Now, under the modified
exception, a covered employee may invest in a ``publicly traded or
publicly available mutual fund or other collective investment fund,''
including a registered investment company like a money market fund,
unit investment trust, or other publicly traded or publicly available
pooled investment fund, or a ``widely held pension or similar fund,''
such as a deferred compensation plan administered by a corporation for
its employees.
Additionally, the effect of the exception, as revised, is to
prohibit an employee from investing in a fund that invests more than 25
percent of its assets in the securities of one or more regulated
entities. This modification simplifies the restriction contained in the
proposed rule that would have prohibited an employee from investing in
a fund that invested more than 5 percent of its assets in the
securities of one regulated entity or more than 20 percent of its
assets in the securities of a regulated industry. The 25 percent
limitation is based upon current security law and policy, including the
definition of a diversified management company and the investment
industry concentration limit contained in Secs. 5(b) and 8(b),
respectively, of the Investment Company Act of 1940 (15 U.S.C. 80a-
5(b), 80a-8(b)). Overall, the changes to Secs. 3101.108(a) and
3101.109(b)(3) will clarify the standards employees must follow in
making personal investments.
IV. Change in the Final Rule
Section 3101.102 lists the components of the Department that are
designated as separate agencies for the purposes of the regulations
contained in 5 CFR 2635.807 and subpart B of 5 CFR Part 2635. The
United States Savings Bonds Division, which was listed as a separate
agency in the proposed rule, is deleted from the list in the final rule
because it was assumed into the Bureau of the Public
[[Page 22251]] Debt after the proposed rule was published.
Consistent with the additional grace period extensions at 59 FR
4779-4780 and 60 FR 6390-6391, Sec. 3101.111 has been modified to
grandfather until no later than January 3, 1996, the Secret Service
rules prohibiting certain kinds of outside employment.
V. Matters of Regulatory Procedure
Executive Order 12866, Regulatory Planning and Review
This rule is limited to agency organization, management and
personnel matters; therefore, it is not subject to Executive Order
12866.
Regulatory Flexibility Act
It is hereby certified that this rule will not have significant
economic impact on a substantial number of small entities. This rule
affects only Federal employees and their immediate families.
List of Subjects in 5 CFR Part 3101
Conflict of interests, Government employees.
Dated: January 29, 1995.
Edward S. Knight,
General Counsel, Department of the Treasury.
Approved: February 28, 1995.
Stephen D. Potts,
Director, Office of Government Ethics.
For the reasons set forth in the preamble, the Department of the
Treasury, in concurrence with the Office of Government Ethics, is
amending title 5 of the Code of Federal Regulations by adding a new
chapter XXI, consisting of part 3101, to read as follows:
CHAPTER XXI--DEPARTMENT OF THE TREASURY
PART 3101--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE DEPARTMENT OF THE TREASURY
Sec.
3101.101 General.
3101.102 Designation of separate agency components.
3101.103 Prohibition on purchase of certain assets.
3101.104 Outside employment.
3101.105 Additional rules for Bureau of Alcohol, Tobacco and
Firearms employees.
3101.106 Additional rules for Internal Revenue Service employees.
3101.107 Additional rules for Legal Division employees.
3101.108 Additional rules for Office of the Comptroller of the
Currency employees.
3101.109 Additional rules for Office of Thrift Supervision
employees.
3101.110 Additional rules for United States Customs Service
employees.
3101.111 Additional rules for United States Secret Service
employees.
Authority: 5 U.S.C. 301, 7301, 7353; 5 U.S.C. App. (Ethics in
Government Act of 1978); 26 U.S.C. 7214(b); E.O. 12674, 54 FR 15159,
3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3
CFR, 1990 Comp., p. 306.; 5 CFR 2635.105, 2635.203(a), 2635.403(a),
2635.803, 2635.807(a)(2)(ii).
Sec. 3101.101 General.
(a) Purpose. In accordance with 5 CFR 2635.105, the regulations in
this part apply to employees of the Department of the Treasury and
supplement the Standards of Ethical Conduct for Employees of the
Executive Branch contained in 5 CFR part 2635. Employees are required
to comply with 5 CFR part 2635, this part, and bureau guidance and
procedures established pursuant to this section. Department employees
are also subject to any additional rules of conduct that the Department
or their employing bureaus are authorized to issue. See 31 CFR part 0,
Department of the Treasury Employee Rules of Conduct.
(b) Bureau instructions. With the concurrence of the Designated
Agency Ethics Official (DAEO), bureaus of the Department of the
Treasury are authorized to issue instructions or manual issuances
providing explanatory guidance and establishing procedures necessary to
implement this part and part 2635 of this title. See 5 CFR 2635.105(c).
(c) Definition of ``agency designee''. As used in this part and in
part 2635 of this title, the term ``agency designee'' refers to any
employee who has been delegated authority by an instruction or manual
issuance issued by a bureau under paragraph (b) of this section to make
a determination, give an approval, or take other action required or
permitted by this part or part 2635 of this title with respect to
another employee. See 5 CFR 2635.102(b).
Sec. 3101.102 Designation of separate agency components.
Pursuant to 5 CFR 2635.203(a), each of the following components of
the Department of the Treasury is designated as a separate agency for
purposes of the regulations contained in subpart B of 5 CFR part 2635
governing gifts from outside sources and 5 CFR 2635.807 governing
teaching, speaking or writing:
(a) Bureau of Alcohol, Tobacco and Firearms (ATF);
(b) Bureau of Engraving and Printing;
(c) Bureau of the Public Debt;
(d) Federal Law Enforcement Training Center;
(e) Financial Management Service;
(f) Internal Revenue Service (IRS);
(g) Office of the Comptroller of the Currency (OCC);
(h) Office of the Inspector General;
(i) Office of Thrift Supervision (OTS);
(j) United States Customs Service (USCS);
(k) United States Mint; and
(l) United States Secret Service.
For purposes of this section, employees in the Legal Division shall
be considered to be part of the bureaus or offices in which they serve.
Note: As a result of the designations contained in this section,
employees of the remaining parts of the Department of the Treasury
(e.g., employees in Departmental Offices, including the Financial
Crimes Enforcement Network) will also be treated as employees of an
agency that is separate from all of the above listed bureaus and
offices for purposes of determining whether the donor of a gift is a
prohibited source under 5 CFR 2635.203(d) and for identifying an
employee's ``agency'' under 5 CFR 2635.807 governing teaching,
speaking and writing.
Sec. 3101.103 Prohibition on purchase of certain assets.
(a) General prohibition. Except as provided in paragraph (b) of
this section, no employee of the Department of the Treasury shall
purchase, directly or indirectly, property:
(1) Owned by the Government and under the control of the employee's
bureau (or a bureau over which the employee exercises supervision); or
(2) Sold under the direction or incident to the functions of the
employee's bureau.
(b) Exceptions. The prohibition in paragraph (a) of this section
does not apply to the purchase of Government securities or items sold
generally to the public at fixed prices, such as numismatic items
produced by the United States Mint or foreign gifts deposited with the
Department pursuant to 5 U.S.C. 7342 that an employee may purchase
pursuant to 41 CFR part 101-49.
(c) Waiver. An employee may make a purchase otherwise prohibited by
this section where a written waiver of the prohibition has been given
to the employee by an agency designee with the advice and legal
clearance of the DAEO, or the appropriate Office of Chief or Legal
Counsel. Such a waiver may be granted only on a determination that the
waiver is not otherwise prohibited by law and that, in the mind of a
reasonable person with knowledge of the particular circumstances, the
purchase of the asset will not raise a question as to whether the
employee has used his or her official position or inside information to
obtain an [[Page 22252]] advantageous purchase or create an appearance
of loss of impartiality in the performance of the employee's duties.
Note: Employees of the OCC and OTS are subject to additional
limitations on the purchase of assets that are set out in bureau-
specific rules contained in Secs. 3101.108 and 3101.109.
Sec. 3101.104 Outside employment.
(a) General requirement for prior approval. All Department of the
Treasury employees shall obtain prior written approval before engaging
in any outside employment or business activities, with or without
compensation, except to the extent that the employing bureau issues an
instruction or manual issuance pursuant to paragraph (b) of this
section exempting an activity or class of activities from this
requirement. Approval shall be granted only on a determination that the
employment or activity is not expected to involve conduct prohibited by
statute, part 2635 of this title, or any provision of this part.
Note: Employees of the ATF, IRS, Legal Division, OCC, USCS and
United States Secret Service are subject to additional limitations
on outside employment and activities that are set out in bureau-
specific rules contained in this part.
(b) Bureau responsibilities. Each bureau, which for the purposes of
this section includes the Departmental Offices and the Office of the
Inspector General, shall issue instructions or manual issuances
governing the submission of requests for approval of outside employment
or business activities and designating appropriate officials to act on
such requests. The instructions or manual issuances may exempt
categories of employment or activities from the prior approval
requirement based on a determination that employment or activities
within those categories would generally be approved and are not likely
to involve conduct prohibited by statute, part 2635 of this title or
any provision of this part. Bureaus may include in their instructions
or issuances examples of outside employment or activities that are
permissible or impermissible consistent with this part and part 2635 of
this title. Bureaus shall retain in employees' Official Personnel
Folders (temporary side) all requests for approval whether granted or
denied.
Sec. 3101.105 Additional rules for Bureau of Alcohol, Tobacco and
Firearms employees.
The following rules apply to the employees of the Bureau of
Alcohol, Tobacco and Firearms and are in addition to Secs. 3101.101
through 3101.104:
(a) Prohibited financial interests. Except as provided in this
section, no employee of the ATF, or spouse or minor child of an ATF
employee, shall have, directly or indirectly, any financial interest,
including compensated employment, in the alcohol, tobacco, firearms or
explosives industries. The term financial interest is defined in
Sec. 2635.403(c) of this title.
(b) Waiver. An agency designee, with the advice and legal clearance
of the DAEO or Office of the Chief Counsel, may grant a written waiver
of the prohibition in paragraph (a) of this section on a determination
that the financial interest is not prohibited by 26 U.S.C. 7214(b) and
that, in the mind of a reasonable person with knowledge of the
particular circumstances, the financial interest will not create an
appearance of misuse of position or loss of impartiality, or call into
question the impartiality and objectivity with which the ATF's programs
are administered. A waiver under this paragraph may require appropriate
conditions, such as execution of a written disqualification.
Sec. 3101.106 Additional rules for Internal Revenue Service employees.
The following rules apply to the employees of the Internal Revenue
Service and are in addition to Secs. 3101.101 through 3101.104:
(a) Prohibited recommendations. Employees of the IRS shall not
recommend, refer or suggest, specifically or by implication, any
attorney, accountant, or firm of attorneys or accountants to any person
in connection with any official business which involves or may involve
the IRS.
(b) Prohibited outside employment. Involvement by an employee of
the IRS in the following types of outside employment or business
activities is prohibited and shall constitute a conflict with the
employee's official duties pursuant to 5 CFR 2635.802:
(1) Performance of legal services involving Federal, State or local
tax matters;
(2) Appearing on behalf of any taxpayer as a representative before
any Federal, State, or local government agency, in an action involving
a tax matter except on written authorization of the Commissioner of
Internal Revenue;
(3) Engaging in accounting, or the use, analysis, and
interpretation of financial records when such activity involves tax
matters;
(4) Engaging in bookkeeping, the recording of transactions, or the
record-making phase of accounting, when such activity is directly
related to a tax determination; and
(5) Engaging in the preparation of tax returns for compensation,
gift, or favor.
(c) Seasonal employees. Seasonal employees of the IRS while in non-
duty status may engage in outside employment or activities other than
those prohibited by paragraph (b) of this section without obtaining
prior written permission.
Sec. 3101.107 Additional rules for Legal Division employees.
The following rules apply to the employees of the Legal Division
and are in addition to Secs. 3101.101 through 3101.104:
(a) Application of rules of other bureaus. In addition to the rule
contained in paragraph (b) of this section, employees in the Legal
Division shall be covered by the rules contained in this part that are
applicable to employees of the bureaus or offices in which the Legal
Division employees serve, subject to any instructions which the General
Counsel or appropriate Chief or Legal Counsel may issue in accordance
with Sec. 3101.101(b).
(b) Prohibited outside employment. Pursuant to 5 CFR 2635.802, it
is prohibited and shall constitute a conflict with the employee's
official duties for an attorney employed in the Legal Division to
engage in the outside practice of law that might require the attorney
to:
(1) Take a position that is or appears to be in conflict with the
interests of the Department of the Treasury which is the client to whom
the attorney owes a professional responsibility; or
(2) Interpret any statute, regulation or rule administered or
issued by the Department.
Sec. 3101.108 Additional rules for Office of the Comptroller of the
Currency employees.
The following rules apply to the employees of the Office of the
Comptroller of the Currency and are in addition to Secs. 3101.101-
3101.104:
(a) Prohibited financial interests--(1) Prohibition. Except as
provided in paragraphs (a)(3) and (g) of this section, no OCC employee,
or spouse or minor child of an OCC employee, shall own, directly or
indirectly, securities of any commercial bank (including both national
and State-chartered banks) or commercial bank affiliate, including a
bank holding company.
(2) Definition of ``securities''. For purposes of paragraphs (a)(1)
and (a)(3) of this section, the term ``securities'' includes all
interests in debt or equity instruments. The term includes, without
limitation, secured and unsecured bonds, debentures, notes, securitized
assets and commercial paper, as well as [[Page 22253]] all types of
preferred and common stock. The term encompasses both current and
contingent ownership interests, including any beneficial or legal
interest derived from a trust. It extends to any right to acquire or
dispose of any long or short position in such securities and includes,
without limitation, interests convertible into such securities, as well
as options, rights, warrants, puts, calls, and straddles with respect
thereto.
(3) Exceptions. Nothing in this section prohibits an OCC employee,
or spouse or minor child of an OCC employee, from:
(i) Investing in a publicly traded or publicly available mutual
fund or other collective investment fund or in a widely held pension or
similar fund provided that the fund does not invest more than 25
percent of its assets in securities of one or more commercial banks
(including both national and State-chartered banks) and commercial bank
affiliates (including bank holding companies) and the employee neither
exercises control over nor has the ability to exercise control over the
financial interests held in the fund;
(ii) Investing in the publicly traded securities of a holding
company of a nonbank bank or of a retailing firm that owns or sponsors
a credit card bank as defined by the Competitive Equality Banking Act
of 1987, except that an employee who owns such an interest must be
disqualified from participating in the regulation or supervision of the
nonbank bank or the credit card bank;
(iii) Using a commercial bank or commercial bank affiliate as
custodian or trustee of accounts containing tax-deferred retirement
funds; or
(iv) Owning any security pursuant to a waiver granted under
paragraph (g) of this section.
(b) Prohibited borrowing--(1) Prohibition on employee borrowing.
Except as provided in this section, no covered OCC employee shall seek
or obtain any loan or extension of credit, including credit obtained
through the use of a credit card, from any national bank or from an
officer, director, employee, or subsidiary of any national bank.
(2) Prohibition on borrowing by a spouse or minor child. The
prohibition in paragraph (b)(1) of this section shall apply to the
spouse or minor child of a covered OCC employee unless the loan or
extension of credit:
(i) Is supported only by the income or independent means of the
spouse or minor child;
(ii) Is obtained on terms and conditions no more favorable than
those offered to the general public; and
(iii) The covered OCC employee does not participate in the
negotiation for the loan or serve as co-maker, endorser, or guarantor
of the loan.
(3) Covered OCC employee. For purposes of the prohibitions on
borrowing contained in paragraphs (b)(1) and (b)(2) of this section,
``covered OCC employee'' means:
(i) An OCC bank examiner; and
(ii) Any other OCC employee specified in an OCC instruction or
manual issuance whose duties and responsibilities, as determined by the
Comptroller of the Currency or his or her designee, require application
of the prohibition on borrowing contained in this section to ensure
public confidence that the OCC's programs are conducted impartially and
objectively.
(4) Exceptions. Nothing in this section prohibits a covered OCC
employee, or the spouse or minor child of a covered OCC employee, from
obtaining a loan or extension of credit described in paragraphs
(b)(4)(i) through (b)(4)(iii) of this section from a national bank if
the loan or extension of credit is obtained on terms and conditions no
more favorable than those offered to the general public, the employee
is not assigned to examine the bank at the time the loan or extension
of credit is obtained, and the employee submits to the Chief Counsel or
designee a written disqualification from examining or otherwise
participating in the supervision of the bank. The exceptions provided
by this paragraph are for loans or extensions of credit obtained:
(i) Through use of a credit card issued by a national bank where:
(A) The employee is assigned to a district office and the bank is
not headquartered in the employee's district;
(B) The employee is assigned to the Multinational Division and the
bank is not supervised by that Division; or
(C) The employee is assigned to the Washington office (other than
the Multinational Division);
(ii) Through use of a national bank credit card sponsored by a
retailing firm (e.g., Nordstrom, Lord and Taylor, Amoco Oil Company);
or
(iii) Through assumption of a mortgage loan on the employee's
residence which is liquidated in accordance with its original terms
without renewal or renegotiation.
(5) Pre-existing credit. This section does not prohibit a covered
OCC employee, or spouse or minor child of a covered OCC employee, from
retaining a loan from a national bank on its original terms if the loan
was incurred prior to employment by the OCC or as a result of the sale
or transfer of a loan to a national bank or the conversion or merger of
the lender into a national bank. Any renewal or renegotiation of a pre-
existing loan or extension of credit will be treated as a new loan
subject to the prohibitions in paragraphs (b)(1) and (b)(2) of this
section.
(c) Restrictions arising from third party relationships. If any of
the entities listed in paragraphs (c)(1) through (c)(7) of this section
have securities that an OCC employee would be prohibited from having by
paragraph (a) of this section, or loans or extensions of credit that a
covered OCC employee would be prohibited from obtaining under paragraph
(b) of this section, the employee shall promptly report such interests
to the Chief Counsel or designee. The Chief Counsel or designee may
require the employee to terminate the third party relationship,
undertake an appropriate disqualification, or take other appropriate
action necessary, under the particular circumstances, to avoid a
statutory violation or a violation of part 2635 of this title, or this
part, including an appearance of misuse of position or loss of
impartiality. This paragraph applies to any:
(1) Partnership in which the employee, or spouse or minor child of
the employee, is a general partner;
(2) Partnership in which the employee, or spouse or minor child of
the employee, individually or jointly holds more than a 10 percent
limited partnership interest;
(3) Closely held corporation in which the employee, or spouse or
minor child of the employee, individually or jointly holds more than a
10 percent equity interest;
(4) Trust in which the employee, or spouse or minor child of the
employee, has a legal or beneficial interest;
(5) Investment club or similar informal investment arrangement
between the employee, or spouse or minor child of the employee, and
others;
(6) Qualified profit sharing, retirement or similar plan in which
the employee, or spouse or minor child of the employee, has an
interest; or
(7) Other entity if the employee, or spouse or minor child of the
employee, individually or jointly holds more than a 25 percent equity
interest.
(d) Prohibited recommendations. Employees of the OCC shall not make
recommendations or suggestions, directly or indirectly, concerning the
acquisition or sale or other divestiture of securities of any
commercial bank or commercial bank affiliate, including a bank holding
company.
(e) Prohibited purchase of assets. No employee of the OCC, or
spouse or [[Page 22254]] minor child of an OCC employee, shall
purchase, directly or indirectly, an asset (e.g., real property,
automobiles, furniture, or similar items) from a national bank or
national bank affiliate, including a bank holding company, unless it is
sold at a public auction or by other means which assure that the
selling price is the asset's fair market value.
(f) Outside employment--(1) Prohibition on outside employment. No
covered OCC employee shall perform services for compensation for any
bank, banking or loan association, or national bank affiliate, or for
any officer, director or employee of, or for any person connected in
any capacity with a bank, banking or loan association or national bank
affiliate.
(2) Covered OCC employee. For purposes of the prohibitions on
outside employment contained in paragraph (f)(1) of this section,
``covered OCC employee'' means:
(i) An OCC bank examiner; and
(ii) Any other OCC employee specified in an OCC instruction or
manual issuance whose duties and responsibilities, as determined by the
Comptroller of the Currency or his or her designee, require application
of the prohibition on outside employment contained in this section to
ensure public confidence that the OCC's programs are conducted
impartially and objectively.
(g) Waivers. An agency designee may grant a written waiver from any
provision of this section based on a determination made with the advice
and legal clearance of the DAEO or Office of the Chief Counsel that the
waiver is not inconsistent with part 2635 of this title or otherwise
prohibited by law and that, under the particular circumstances,
application of the prohibition is not necessary to avoid the appearance
of misuse of position or loss of impartiality or otherwise to ensure
confidence in the impartiality and objectivity with which agency
programs are administered. A waiver under this paragraph may impose
appropriate conditions, such as requiring execution of a written
disqualification.
Sec. 3101.109 Additional rules for Office of Thrift Supervision
employees.
The following rules apply to the employees of the Office of Thrift
Supervision and are in addition to Secs. 3101.101 through 3101.104:
(a) Covered OTS employee. For purposes of this section, the term
``covered OTS employee'' means:
(1) An OTS examiner;
(2) An employee in a position at OTS grade 17 or above; and
(3) Any other OTS employee specified in an OTS instruction or
manual issuance whose duties and responsibilities, as determined by the
Director of the OTS or his or her designee, require application of the
prohibitions contained in this section to ensure public confidence that
the OTS's programs are conducted impartially and objectively.
(b) Prohibited financial interests--(1) Prohibition. Except as
provided in paragraphs (b)(3) and (g) of this section, no covered OTS
employee, or spouse or minor child of a covered OTS employee, shall
own, directly or indirectly, securities of any OTS-regulated savings
association or savings association holding company.
(2) Definition of ``securities''. For purposes of paragraphs (b)(1)
and (b)(3) of this section, the term ``securities'' includes all
interests in debt or equity instruments. The term includes, without
limitation, secured and unsecured bonds, debentures, notes, securitized
assets and commercial paper, as well as all types of preferred and
common stock. The term encompasses both current and contingent
ownership interests, including any beneficial or legal interest derived
from a trust. It extends to any right to acquire or dispose of any long
or short position in such securities and includes, without limitation,
interests convertible into such securities, as well as options, rights,
warrants, puts, calls, and straddles with respect thereto.
(3) Exceptions. Nothing in this section prohibits a covered OTS
employee, or spouse or minor child of a covered OTS employee, from:
(i) Investing in a publicly traded or publicly available mutual
fund or other collective investment fund or in a widely held pension or
similar fund provided that the fund does not invest more than 25
percent of its assets in securities of one or more OTS-regulated
savings associations or savings association holding companies and the
employee neither exercises control over nor has the ability to exercise
control over the financial interests held in the fund;
(ii) Investing in certain non-financial holding companies whose
principal business is unrelated to the financial services industry and
which are identified as such on a list maintained by the Chief Counsel
of the OTS;
(iii) Using a savings association as custodian or trustee of
accounts containing tax-deferred retirement funds; or
(iv) Owning any security pursuant to a waiver granted under
paragraph (g) of this section.
(c) Prohibited borrowing--(1) Prohibition on employee borrowing.
Except as provided in this section, no covered OTS employee shall seek
or obtain any loan or extension of credit, including credit obtained
through the use of a credit card, from any OTS-regulated savings
association or an officer, director, employee, or subsidiary of any
such association.
(2) Prohibition on borrowing by a spouse or minor child. The
prohibition in paragraph (c)(1) of this section shall apply to the
spouse or minor child of a covered OTS employee unless the loan or
extension of credit:
(i) Is supported only by the income or independent means of the
spouse or minor child;
(ii) Is obtained on terms and conditions no more favorable than
those offered to the general public; and
(iii) The covered OTS employee does not participate in the
negotiation for the loan or serve as co-maker, endorser, or guarantor
of the loan.
(3) Exceptions. Nothing in this section prohibits a covered OTS
employee, or the spouse or minor child of a covered OTS employee, from
obtaining a loan or extension of credit described in paragraphs
(c)(3)(i) through (c)(3)(iii) of this section from an OTS-regulated
savings association if the loan or extension of credit is obtained on
terms and conditions no more favorable than those offered to the
general public, the employee is not assigned to examine the savings
association at the time the loan or extension of credit is obtained,
and the employee submits to the Chief Counsel or designee a written
disqualification from examining or otherwise participating in the
supervision of the savings association. The exceptions provided by this
paragraph are for loans or extensions of credit obtained:
(i) Through use of a credit card issued by a savings association
where:
(A) The employee is assigned to a regional office and the savings
association is not headquartered in the employee's region; or
(B) The employee is assigned to the Washington office;
(ii) Through use of a savings association credit card sponsored by
a retailing firm (e.g., Sears); or
(iii) Through assumption of a mortgage loan on the employee's
residence which is liquidated in accordance with its original terms
without renewal or renegotiation, with prior approval from the Chief
Counsel, a Regional Director, Regional Deputy Director or designee.
(4) Pre-existing credit. This section does not prohibit a covered
OTS [[Page 22255]] employee, or spouse or minor child of a covered OTS
employee, from retaining a loan from an OTS-regulated savings
association on its original terms if the loan was incurred prior to
April 30, 1991, or employment by the OTS, whichever date is later, or
as a result of the sale or transfer of the loan to a savings
association or the conversion or merger of the lender into an OTS-
regulated savings association. Any renewal or renegotiation of a pre-
existing loan or extension of credit is covered by paragraphs (c)(1)
and (c)(2) of this section.
(d) Restrictions arising from third party relationships. If any of
the entities listed in paragraphs (d)(1) through (d)(7) of this section
have securities that a covered OTS employee would be prohibited from
having by paragraph (b) of this section, or loans or extensions of
credit that a covered OTS employee would be prohibited from obtaining
under paragraph (c) of this section, the employee shall promptly report
such interests to the Chief Counsel or designee. The Chief Counsel or
designee may require the employee to terminate the third party
relationship, undertake an appropriate disqualification, or take other
appropriate action necessary, under the particular circumstances, to
avoid a statutory violation or a violation of part 2635 of this title
or this part, including an appearance of misuse of position or loss of
impartiality. This paragraph (d) applies to any:
(1) Partnership in which the employee, or spouse or minor child of
the employee, is a general partner;
(2) Partnership in which the employee, or spouse or minor child of
the employee, individually or jointly holds more than a 10 percent
limited partnership interest;
(3) Closely held corporation in which the employee, or spouse or
minor child of the employee, individually or jointly holds more than a
10 percent equity interest;
(4) Trust in which the employee, or spouse or minor child of the
employee, has a legal or beneficial interest;
(5) Investment club or similar informal investment arrangement
between the employee, or spouse or minor child of the employee, and
others;
(6) Qualified profit sharing, retirement or similar plan in which
the employee, or spouse or minor child of the employee, has an
interest; or
(7) Other entity if the employee, or spouse or minor child of the
employee, individually or jointly holds more than a 25 percent equity
interest.
(e) Prohibited recommendations. Employees of the OTS shall not make
recommendations or suggestions, directly or indirectly, concerning the
acquisition or sale, or other divestiture of securities of any OTS-
regulated savings association or savings association holding company.
(f) Prohibited purchase of assets. No covered OTS employee, or
spouse or minor child of a covered OTS employee, shall purchase,
directly or indirectly, an asset (e.g., real property, automobiles,
furniture, or similar items) from a savings association or savings
association affiliate, including a savings association holding company,
unless it is sold at a public auction or by other means which assure
that the selling price is the asset's fair market value.
(g) Waivers. An agency designee may grant a written waiver from any
provision of this section based on a determination made with the advice
and legal clearance of the DAEO or Office of the Chief Counsel that the
waiver is not inconsistent with part 2635 of this title or otherwise
prohibited by law and that, under the particular circumstances,
application of the prohibition is not necessary to avoid the appearance
of misuse of position or loss of impartiality, or otherwise to ensure
confidence in the impartiality and objectivity with which agency
programs are administered. A waiver under this paragraph may impose
appropriate conditions, such as requiring execution of a written
disqualification.
Sec. 3101.110 Additional rules for United States Customs Service
employees.
The following rules apply to the employees of the United States
Customs Service and are in addition to Secs. 3101.101 through 3101.104:
(a) Prohibition on outside employment. No employee of the USCS
shall work for a customs broker, international carrier, bonded
warehouse, foreign trade zone, cartman, law firm engaged in the
practice of customs law or importation department of a business, nor be
employed in any private capacity related to the importation or
exportation of merchandise.
(b) Restrictions arising from employment of relatives. If the
spouse of a USCS employee, or other relative who is dependent on or
resides with a USCS employee, is employed in a position that the
employee would be prohibited from occupying by paragraph (a) of this
section, the employee shall file a report of family member employment
with his or her supervisor. Supervisors shall forward such reports to
the appropriate Regional Counsel for transmittal to the Chief Counsel.
The employee shall be disqualified from participation in any matter
involving the relative or the relative's employer unless an agency
designee, with the advice and legal clearance of the DAEO or Office of
the Chief Counsel, authorizes the employee to participate in the matter
using the standard in Sec. 2635.502(d) of this title.
Sec. 3101.111 Additional rules for United States Secret Service
employees. [Reserved]
[FR Doc. 95-10941 Filed 5-4-95; 8:45 am]
BILLING CODE 4810-25-P
