The Director of Personnel, or his designee, is authorized to
approve or disapprove requests for outside or private employment
under this rule, except as to those cases which, in his judgment,
should be considered and decided by the Commission. An employee
may appeal a disapproved request to the Commission. The written
appeal, submitted through the Director of Personnel, shall give
reasons why the proposed outside or private employment is consistent
with this rule.
RULE 3 SECURITIES TRANSACTIONS
This rule applies to all transactions effected by or on behalf of
a member or employee, including transactions for the accounts of
other persons effected by the member or employee, directly or in-
directly, under a power of attorney or otherwise. A member or
employee is considered to have sufficient interest in the secur-
ities transactions of his or her spouse or minor child or other
member of his immediate household so that such transactions must
be reported and are subject to all the terms of this rule. For
purposes of this rule, "member of his immediate household" means
a resident of the member's or employee's household who is related
to him by blood or marriage.
No member or employee shall effect or cause to be effected any
transaction in a security except for bona fide investment purposes.
Unless otherwise determined by the Commission for cause shown, any
purchase which is held for less than one year will be presumed not
to be for investment purposes. This paragraph does not apply to
securities purchased by a member or employee prior to entrance on
duty with the Commission. Any employee who believes the require-
ments of paragraph A as to "member of his household" or the appli-
cation of this paragraph will result in undue hardship in a
particular case may make written application to the Commission
(through the Director of Personnel) setting out, in detail, the
reasons for his belief and requesting a waiver.
No member or employee shall effect any purchase or sale of a
future contract for any commodity.
No member or employee shall carry securities on margin. Also no
member or employee shall borrow funds or securities, with or with-
out collateral, for the purpose of purchasing or carrying securities
with the proceeds unless prior approval of the Commission has been
secured.
No member or employee shall sell a security which he does not own, or the sale of which is consummated by the delivery of a security borrowed by or for such member's or employee's account.
No member or employee shall purchase any security which is the subject of a registration statement filed under the Securities Act of 1933, or of a letter of notification filed under Regulation A, or any other security of the same issuer, while such a registration statement or letter of notification is pending or during the first sixty days after its effective date. This prohibition applies even though the registration statement or Regulation A filing covers a so-called "limited offering" such as to officers and employees of the company under a bonus plan.
No member or employee shall purchase securities of (1) any holding company registered under Section 5 of the Public Utility Holding Company Act of 1935, or any subsidiary thereof, or (2) any company if its status under such Act or the applicability of any provision of the Act to it is known by the employee to be under consideration.
No member or employee shall purchase any securities issued by any investment company prima facie subject to the jurisdiction of the Commission under the provisions of the Investment Company Act of 1940. Capital or income dividends received from securities acquired prior to entrance on duty may not be reinvested but must be accepted in cash if this option is is available.
No member or employee shall have a beneficial interest in any broker, dealer or investment adviser through ownership of securities or otherwise.
No member or employee shall purchase any security which to his knowledge is involved in any pending investigation by the Commission or in any proceeding before the Commission or to which the Commission is a party.
No member or employee shall purchase any securities of any company which is in receivership or for which a petition has been filed under Chapter X or Chapter XI of the Bankruptcy Act.
The restrictions imposed in paragraphs F, G, H, J, and K above do not apply to the exercise of a privilege to convert or exchange securities; to the exercise of rights accruing unconditionally by virtue of ownership of other securities (as distinguished from a contingent right to acquire securities not subscribed for by others); or to the acquisition and exercise of rights in order to round out fractional shares.
Members and employees shall report every transaction in any
security within five business days. (Reports submitted by employees
in field offices must be placed in the mails within five days of
the date of each transaction.) Other changes in holdings resulting
from inheritance or from reclassifications, gifts, stock dividends
or splitups, for example, shall be reported prompt lv. In addition,
every employee owning securities shall, at least once in every
12 months. furnish a complete list of all securities held by him.
Reports shall be prepared on the official form provided for this
purpose, copies of which may be procured from the Office of
Personnel or the Publications Unit (SEC Form 681). These reports
shall be transmitted to the Director of Personnel. The envelope
should be marked "Confidential - Securities Transactions."
At the time of taking the oath of office, or prior thereto for
prospective employees if requested by the Director of Personnel,
a new member or employee shall fill in the information required,
on SEC Form 682, (1) relating to securities owned by him or his
spouse or minor child or a member of his immediate household or by
any trust or estate of which he is a trustee or other iiduciary or
beneficiary or by any person for whom he effects transactions
under a power of attorney or otherwise, (2) relating to accounts
with securities firms, (3) relating to relatives who are partners
or officers of securities firms, investment companies, investment
advisers, or registered public utility holding companies or their
affiliates, and (4) relating to the holding of office in or being
a director of any company which has public security holders.
Rules 3(b), 3() and 3(n) do not apply to personal notes, individual
real estate mortgages, United States Government securities, and
securities issued by building and loan associations or cooperatives.
Any member or employee who is a trustee or other fiduciary or a
beneficiary of a trust or estate holding securities not exempted
by paragraph 0 of Rule 3 shall report the existence and nature of
such trust or estate to the Director of Personnel. The transactions
of such trust or estate shall be subject to all the provisions of
Rule 3 except in situations where the member or employee is solely
a beneficiary and has no power to control and does not in fact
control or advise with respect to the investments of the trust or
estate, and except to the extent that the Commission shall otherwise
direct in view of the circumstances of the particular case.
The Director of Personnel, or his designee, is authorized to require the disposition of securities acquired as a result of the unintentional violation of the provisions of this rule. Repeated violations shall be reported to the Commission for appropriate action.
RULE 4 ACTION IN CASE OF PERSONAL INTEREST
Any employee assigned to work on any application, filing or matter of a
company (a) in which he or his spouse or his minor child then owns any
securities or has a personal interest, including a continuing financial
interest through a pension or retirement plan, shared income, or other
arrangement, as a result of any current or prior employment or business
or professional association; or (b) with which he has been employed
or associated in the past; or (c) which was a client of a firm with
which he had been associated; shall immediately advise the division
director or other office head or regional administrator of the fact.
Division directors, other office heads and regional administrators are
authorized to direct the reporting employee to continue with the
assignment in question where this appears in the interest of the Govern-
ment, taking into account (a) the prohibitions stated in Rule IE and
F; (b) the general desirability of avoiding situations that require
a question of conflict of interest or the appearance of a conflict of
interest to be resolved; (c) the extent to which the employee's
activities will be supervised; and (d) the difficulty of assigning the
matter to some other employee. Where the employee in question is not
relieved of the assignment, his written report concerning the nature of
his interest shall be forwarded to the Director of Personnel with a
notation that he has been directed to continue the assignment, together
with such explanation, if any, as may seem appropriate. In the event
that a division director or other office head or regional administrator
deems that he has, himself, such personal interest in an application,
filing or matter of a company as may raise a question as to his dis-
interestedness, he may delegate his responsibility with regard thereto
to a subordinate, but in that event shall submit a brief memorandum of
the circumstances to the Director of Personnel.
9/ 13 U.S.C. § 208, provides, among other things, that a member or employee is prohibited from participating personally and substantially in any matter in which, to his knowledge, he, his spouse, minor child, partner, organization in which he is serving as officer, director, trustee, partner or employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest. This section does not apply if the employee has received a written determination made by an authorized official that the interest is not so substantial as to be deemed likely to affect the integrity of the employee's service. Note: Members of the Commission may follow the procedural provision contained in Part V, Section 503 of Executive Order 11222.
RULE 5 NEGOTIATION FOR PRIVATE EMPLOYMENT
A. The provisions of Rule 1C are deemed to preclude negotiation for
private employment by an employee who is immediately engaged in
representing the Commission in any matter in which the prospective
employer is opposing counsel or person chiefly affected. With
the approval of his superior or the Commission an employee may
be relieved of any assignment which, in the absence of such
relief, might preclude such negotiation.
No employee shall undertake to act on behalf of the Commission in any capacity in a matter that, to his knowledge, affects even indirectly any person outside the Government with whom he is discussing or entertaining any proposal for future employment, except pursuant to the direction of the Commission, his division director or other office head, or his regional administrator, as provided in Rule 4. See footnote 9.
RULE 6 PRACTICE BY FORMER MEMBERS AND EMPLOYEES OF THE COMMISSION— No person shall appear in a representative capacity before the Commission in a particular matter if such person, or one participating with him in the particular matter, personally considered it or gained knowledge of the facts thereof while he was a member or employee of the Commission. As used in this paragraph, a single investigation or formal proceeding, or both if they are related, shall be presumed to constitute a particular matter for at least two years irrespective of changes in the issues. However, in cases of proceedings in which the issues change from time to time, such as proceedings involving compliance with Section 11 of the Public Utility Holding Company Act, this paragraph shall not be construed as prohibiting appearance in such a proceeding, more than two years after ceasing to be a member or employee of the Commission, unless it appears to the Commission that there is such identity of particular issues or pertinent facts as to make it likely that confidential information, derived while a member or employee of the Commission, would have continuing relevance to the proceeding, so as to make the participation therein by the former member or employee of the Commission unethical or prejudicial to the interests of the Commission.
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