§ 9401.106 Prohibited financial interests. ( a ) *Prohibited interests.* Except as permitted by this section, an employee or an employee's spouse or minor child shall not own or control a security in: ( 1 ) An entity supervised by the Bureau; or
( 2 ) A collective investment fund that has a stated policy of concentrating its investments in the financial services or banking industry. A collective investment fund includes, without limitation, mutual funds, unit investment trusts (UITs), exchange traded funds (ETFs), real estate investment trusts (REITs), and limited partnerships.
( b ) *Exceptions.* Interests prohibited in paragraph (a) of this section do not include the ownership or control of a security in: ( 1 ) *Collective investment funds.* A publicly traded or publicly available collective investment fund if: ( i ) The fund does not have a stated policy of concentrating its investments in the financial services or banking industry; and
( ii ) Neither the employee nor the employee's spouse or minor child exercises or has the ability to exercise control over or selection of the financial interests held by the fund.
( 2 ) *Diversified employee benefit plans.* A pension or other retirement fund, trust, or plan established or maintained by an employer or an employee organization, or both, to provide its participants with medical, disability, death, unemployment, or vacation benefits, training programs, day care centers, scholarship funds, prepaid legal services, deferred income, or retirement income (employee plan), provided: ( i ) The employee plan does not have a stated policy of concentrating its investments in any industry, business, single country other than the United States, or bonds of a single State within the United States;
( ii ) The investments of the employee plan are administered by an independent trustee;
( iii ) The employee plan's trustee has a written policy of varying the plan investments;
( iv ) Neither the employee nor the employee's spouse or minor child participates in the selection of the employee plan's investments or designates specific plan investments (except for directing that contributions be divided among several different categories of investments, such as stocks, bonds, or mutual funds, which are available to plan participants); and
( v ) The employee plan is not a profit-sharing or stock bonus plan.
( 3 ) *Federal retirement and thrift savings plans.* Funds administered by the Thrift Plan for Employees of the Federal Reserve System, the Retirement Plan for Employees of the Federal Reserve System, the Thrift Savings Plan, or a Federal government agency.
( 4 ) *State pension plans.* A pension plan established or maintained by a State government or any political subdivision of a State government for its employees.
( c ) *Reporting and divestiture of prohibited interests* — ( 1 ) *New employees.* Within 30 calendar days from the start of employment with the Bureau, an employee must notify the DAEO in writing of a financial interest prohibited under paragraph (a) of this section that the employee or the employee's spouse or minor child acquired prior to the start of the employee's employment with the Bureau. The employee or the employee's spouse or minor child shall divest prohibited securities within 90 days after the start of the employee's employment at the Bureau.
( 2 ) *Newly prohibited interest.* Within 30 days after the Bureau updates and internally publishes a new list of entities supervised by the Bureau, an employee who owns or controls, or whose spouse or minor child owns or controls, a security in an entity newly added to that list must notify the DAEO in writing. The employee or the employee's spouse or minor child shall divest prohibited securities within 90 days after internal publication of the new list.
( 3 ) *Interests acquired without specific intent.* If an employee or an employee's spouse or minor child acquires a financial interest prohibited under paragraph (a) of this section as a result of marriage, inheritance, or otherwise without specific intent to acquire, the employee must notify the DAEO in writing within 30 days of the acquisition. The employee or the employee's spouse or minor child shall divest prohibited securities within 90 days of the acquisition.
( d ) *Disqualification and divestiture* — ( 1 ) *Securities in entities supervised by the Bureau.* If an employee or an employee's spouse or minor child owns or controls a security in an entity that is prohibited under paragraph (a)(1) of this section, the employee shall immediately disqualify himself or herself from participating in all particular matters affecting that entity, unless and until the security is divested or the employee is granted a waiver pursuant to paragraph (e) of this section and the waiver includes an authorization allowing the employee to participate in such matters.
( 2 ) *Securities in collective investment funds.* If an employee or an employee's spouse or minor child owns or controls a security in a collective investment fund that is prohibited under paragraph (a)(2) of this section, the employee shall immediately disqualify himself or herself from participating in all particular matters affecting one or more holdings of the collective investment fund if the affected holding is invested in the financial services or banking industry, unless and until the collective investment fund is divested or the employee is granted a waiver pursuant to paragraph (e) of this section and the waiver includes an authorization allowing the employee to participate in such matters.
( e ) *Waivers.* Upon request by the employee, the DAEO in the DAEO's sole discretion has the authority to grant an individual waiver under this paragraph. The DAEO's authority to grant an individual waiver under this paragraph may not be delegated to any person except the Alternate DAEO. The DAEO, in consultation with senior management in the Division in which the employee works, may issue a written waiver permitting the employee or the employee's spouse or minor child to own or control a particular security that otherwise would be prohibited by this section, after considering all relevant factors. Relevant factors include, without limitation, whether: ( 1 ) Mitigating circumstances exist due to the way the employee or the employee's spouse or minor child acquired ownership or control of the security. Mitigating circumstances may include without limitation: ( i ) The employee or the employee's spouse or minor child acquired the security through inheritance, merger, acquisition, or other change in corporate structure, or otherwise without specific intent on the part of the employee or the employee's spouse or minor child; or
( ii ) The employee's spouse received the security as part of a compensation package in connection with employment or prior to marriage to the employee;
( 2 ) The employee makes a prompt and complete written disclosure of the security to the DAEO;
( 3 ) The disqualification of the employee from participating in particular matters pursuant to paragraph (d) of this section, as specified in the written waiver, would not unduly interfere with the full performance of the employee's duties; and
( 4 ) The granting of the waiver would not unduly undermine the public's confidence in the impartiality and objectivity with which: ( i ) The employee performs the employee's official Bureau duties; and
( ii ) The Division in which the employee works executes its programs and functions.
( f ) *Covered third party entities.* Immediately after becoming aware that a covered third party entity owns or controls a security that an employee would be prohibited from owning or controlling under paragraph (a) of this section, the employee shall report the interest in writing to the DAEO. The DAEO may require the employee to terminate the relationship with the covered third party entity, disqualify himself or herself from certain particular matters, or take other action as necessary to avoid a statutory violation, a violation of the OGE Standards, or the CFPB Ethics Regulations, including an appearance of misuse of position or loss of impartiality. For purposes of this paragraph, “covered third party entity” includes: ( 1 ) A partnership in which the employee or the employee's spouse or minor child is a general partner;
( 2 ) A partnership or closely held corporation in which the employee or the employee's spouse or minor child individually or jointly holds more than a 10 percent equity interest;
( 3 ) A trust in which the employee or the employee's spouse or minor child has a vested legal or beneficial interest;
( 4 ) An investment club or similar informal investment arrangement between the employee or the employee's spouse or minor child, and others;
( 5 ) A qualified profit sharing, retirement, or similar plan in which the employee or the employee's spouse or minor child has an interest; or
( 6 ) An entity in which the employee or the employee's spouse or minor child individually or jointly holds more than a 25 percent equity interest.
[82 FR 35885, Aug. 2, 2017]