This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

7635 

Vol. 86, No. 19 

Monday, February 1, 2021 

1OGE has previously determined, after 

consultation with the Department of Justice, that 

the $200 late filing fee for public financial 

disclosure reports that are more than 30 days 

overdue (see section 104(d) of the Ethics Act, 5 

U.S.C. appendix, 104(d), and 5 CFR 2634.704 of 

OGE’s regulations thereunder) is not a CMP as 

defined under the Federal Civil Penalties Inflation 

Adjustment Act, as amended. Therefore, that fee is 

not being adjusted in this rulemaking (nor was it 

adjusted by OGE in previous CMP rulemakings), 

and will remain at its current amount of $200. 

OFFICE OF GOVERNMENT ETHICS 

5 CFR Parts 2634 and 2636 

RIN 3209–AA55 

2021 Civil Monetary Penalties Inflation 

Adjustments for Ethics in Government 

Act Violations 

AGENCY: Office of Government Ethics. 

ACTION: Final rule. 

SUMMARY: In accordance with the 

Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 

2015, the U.S. Office of Government 

Ethics is issuing this final rule to make 

the 2021 annual adjustments to the 

Ethics in Government Act civil 

monetary penalties. 

DATES: 

Effective date: This final rule is 

effective February 1, 2021. 

Applicability date: This final rule is 

applicable beginning January 15, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Margaret Dylus-Yukins, Assistant 

Counsel, General Counsel and Legal 

Policy Division, Office of Government 

Ethics, Telephone: 202–482–9300; TTY: 

800–877–8339; FAX: 202–482–9237. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In November 2015, Congress passed 

the Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 

2015 (Sec. 701 of Pub. L. 114–74) (the 

2015 Act), which further amended the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990 (Pub. L. 101– 

410). The 2015 Act required Federal 

agencies to make inflationary 

adjustments to the civil monetary 

penalties (CMPs) within their 

jurisdiction with an initial ‘‘catch-up’’ 

adjustment through an interim final rule 

effective no later than August 1, 2016, 

and further mandates that Federal 

agencies make subsequent annual 

inflationary adjustments of their CMPs, 

to be effective no later than January 15 

of each year. 

The Ethics in Government Act of 1978 

as amended, 5 U.S.C. appendix (the 

Ethics Act) provides for five CMPs.1

Specifically, the Ethics Act provides for 

penalties that can be assessed by an 

appropriate United States district court, 

based upon a civil action brought by the 

Department of Justice, for the following 

five types of violations: 

(1) Knowing and willful failure to file, 

report required information on, or 

falsification of a public financial 

disclosure report, 5 U.S.C. appendix 

104(a), 5 CFR 2634.701(b); 

(2) Knowing and willful breach of a 

qualified trust by trustees and interested 

parties, 5 U.S.C. appendix 

102(f)(6)(C)(i), 5 CFR 2634.702(a); 

(3) Negligent breach of a qualified 

trust by trustees and interested parties, 

5 U.S.C. appendix 102(f)(6)(C)(ii), 5 CFR 

2634.702(b); 

(4) Misuse of a public report, 5 U.S.C. 

appendix 105(c)(2), 5 CFR 2634.703; 

and 

(5) Violation of outside employment/ 

activities provisions, 5 U.S.C. appendix 

504(a), 5 CFR 2636.104(a). 

In compliance with the 2015 Act and 

guidance issued by the Office of 

Management and Budget (OMB), the 

U.S. Office of Government Ethics (OGE) 

made previous inflationary adjustments 

to the five Ethics Act CMPs, and is 

issuing this rulemaking to effectuate the 

2021 annual inflationary adjustments to 

those CMPs. In accordance with the 

2015 Act, these adjustments are based 

on the percent change between the 

Consumer Price Index for all Urban 

Consumers (CPI–U) for the month of 

October preceding the date of the 

adjustment, and the prior year’s October 

CPI–U. Pursuant to OMB guidance, the 

cost-of-living adjustment multiplier for 

2021, based on the CPI–U for October 

2020, not seasonally adjusted, is 

1.01182. To calculate the 2021 annual 

adjustment, agencies must multiply the 

most recent penalty by the 1.01182 

multiplier, and round to the nearest 

dollar. 

Applying the formula established by 

the 2015 Act and OMB guidance, OGE 

is amending the Ethics Act CMPs 

through this rulemaking to: 

(1) Increase the three penalties 

reflected in 5 CFR 2634.702(a), 5 CFR 

2634.703, and 5 CFR 2636.104(a)— 

which were previously adjusted to a 

maximum of $20,489—to a maximum of 

$20,731; 

(2) Increase the penalty reflected in 5 

CFR 2634.702(b)—which was 

previously adjusted to a maximum of 

$10,245—to a maximum of $10,366; and 

(3) Increase the penalty reflected in 5 

CFR 2634.701(b)—which was 

previously adjusted to a maximum of 

$61,585—to a maximum of $62,313. 

These adjusted penalty amounts will 

apply to penalties assessed after January 

15, 2021 (the applicability date of this 

final rule) whose associated violations 

occurred after November 2, 2015. 

OGE will continue to make future 

annual inflationary adjustments to the 

Ethics Act CMPs in accordance with the 

statutory formula set forth in the 2015 

Act and OMB guidance. 

II. Matters of Regulatory Procedure 

Administrative Procedure Act 

Pursuant to 5 U.S.C. 553(b), as 

Director of the Office of Government 

Ethics, I find that good cause exists for 

waiving the general notice of proposed 

rulemaking and public comment 

procedures as to these technical 

amendments. The notice and comment 

procedures are being waived because 

these amendments, which concern 

matters of agency organization, 

procedure and practice, are being 

adopted in accordance with statutorily 

mandated inflation adjustment 

procedures of the 2015 Act, which 

specifies that agencies shall adjust civil 

monetary penalties notwithstanding 

Section 553 of the Administrative 

Procedure Act. It is also in the public 

interest that the adjusted rates for civil 

monetary penalties under the Ethics in 

Government Act become effective as 

soon as possible in order to maintain 

their deterrent effect. 

Regulatory Flexibility Act 

As the Director of the Office of 

Government Ethics, I certify under the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) that this final rule would not 

have a significant economic impact on 

a substantial number of small entities 

7636 Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 

because it primarily affects current 

Federal executive branch employees. 

Paperwork Reduction Act 

The Paperwork Reduction Act (44 

U.S.C. chapter 35) does not apply 

because this regulation does not contain 

information collection requirements that 

require approval of the Office of 

Management and Budget. 

Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (2 U.S.C. 

chapter 5, subchapter II), this rule 

would not significantly or uniquely 

affect small governments and will not 

result in increased expenditures by 

State, local, and tribal governments, in 

the aggregate, or by the private sector, of 

$100 million or more (as adjusted for 

inflation) in any one year. 

Executive Order 13563 and Executive 

Order 12866 

Executive Orders 13563 and 12866 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select the regulatory 

approaches that maximize net benefits 

(including economic, environmental, 

public health and safety effects, 

distributive impacts, and equity). 

Executive Order 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. The Office of Management 

and Budget has determined that 

rulemakings such as this implementing 

annual inflationary adjustments under 

the 2015 Act are not significant 

regulatory actions under Executive 

Order 12866. 

Executive Order 12988 

As Director of the Office of 

Government Ethics, I have reviewed this 

rule in light of section 3 of Executive 

Order 12988, Civil Justice Reform, and 

certify that it meets the applicable 

standards provided therein. 

List of Subjects 

5 CFR Part 2634 

Certificates of divestiture, Conflict of 

interests, Financial disclosure, 

Government employees, Penalties, 

Privacy, Reporting and recordkeeping 

requirements, Trusts and trustees. 

5 CFR Part 2636 

Conflict of interests, Government 

employees, Penalties. 

Dated: January 11, 2021. 

Emory Rounds, 

Director, U.S. Office of Government Ethics. 

For the reasons set forth in the 

preamble, the U.S. Office of Government 

Ethics is amending 5 CFR parts 2634 

and 2636 as follows: 

PART 2634—EXECUTIVE BRANCH 

FINANCIAL DISCLOSURE, QUALIFIED 

TRUSTS, AND CERTIFICATES OF 

DIVESTITURE 

■ 1. The authority citation for part 2634 

continues to read as follows: 

Authority: 5 U.S.C. app.; 26 U.S.C. 1043; 

Pub. L. 101–410, 104 Stat. 890, 28 U.S.C. 

2461 note, as amended by Sec. 31001, Pub. 

L. 104–134, 110 Stat. 1321 and Sec. 701, Pub. 

L. 114–74; Pub. L. 112–105, 126 Stat. 291; 

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. 

■ 2. Section 2634.701 is amended by 

revising paragraph (b) to read as follows: 

§ 2634.701 Failure to file or falsifying 

reports. 

* * * * * 

(b) Civil action. The Attorney General 

may bring a civil action in any 

appropriate United States district court 

against any individual who knowingly 

and willfully falsifies or who knowingly 

and willfully fails to file or report any 

information required by filers of public 

reports under subpart B of this part. The 

court in which the action is brought 

may assess against the individual a civil 

monetary penalty in any amount, not to 

exceed the amounts set forth in Table 1 

to this section, as provided by section 

104(a) of the Act, as amended, and as 

adjusted in accordance with the 

inflation adjustment procedures 

prescribed in the Federal Civil Penalties 

Inflation Adjustment Act of 1990, as 

amended. 

TABLE 1 TO § 2634.701 

Date of violation Penalty 

Violation occurring between Sept. 14, 

2007 and Nov. 2, 2015 .......................... $50,000 

Violation occurring after Nov. 2, 2015 ...... 62,313 

* * * * * 

■ 3. Section 2634.702 is revised to read 

as follows: 

§ 2634.702 Breaches by trust fiduciaries 

and interested parties. 

(a) The Attorney General may bring a 

civil action in any appropriate United 

States district court against any 

individual who knowingly and willfully 

violates the provisions of 

§ 2634.408(d)(1) or (e)(1). The court in 

which the action is brought may assess 

against the individual a civil monetary 

penalty in any amount, not to exceed 

the amounts set forth in Table 1 to this 

section, as provided by section 

102(f)(6)(C)(i) of the Act and as adjusted 

in accordance with the inflation 

adjustment procedures prescribed in the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990, as amended. 

TABLE 1 TO § 2634.702 

Date of violation Penalty 

Violation occurring between Sept. 29, 

1999 and Nov. 2, 2015 .......................... $11,000 

Violation occurring after Nov. 2, 2015 ...... 20,731 

(b) The Attorney General may bring a 

civil action in any appropriate United 

States district court against any 

individual who negligently violates the 

provisions of § 2634.408(d)(1) or (e)(1). 

The court in which the action is brought 

may assess against the individual a civil 

monetary penalty in any amount, not to 

exceed the amounts set forth in Table 2 

to this section, as provided by section 

102(f)(6)(C)(ii) of the Act and as 

adjusted in accordance with the 

inflation adjustment procedures of the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990, as amended. 

TABLE 2 TO § 2634.702 

Date of violation Penalty 

Violation occurring between Sept. 29, 

1999 and Nov. 2, 2015 .......................... $5,500 

Violation occurring after Nov. 2, 2015 ...... 10,366 

■ 4. Section 2634.703 is amended by 

revising paragraph (a) to read as follows: 

§ 2634.703 Misuse of public reports. 

(a) The Attorney General may bring a 

civil action against any person who 

obtains or uses a report filed under this 

part for any purpose prohibited by 

section 105(c)(1) of the Act, as 

incorporated in § 2634.603(f). The court 

in which the action is brought may 

assess against the person a civil 

monetary penalty in any amount, not to 

exceed the amounts set forth in Table 1 

to this section, as provided by section 

105(c)(2) of the Act and as adjusted in 

accordance with the inflation 

adjustment procedures prescribed in the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990, as amended. 

TABLE 1 TO § 2634.703 

Date of violation Penalty 

Violation occurring between Sept. 29, 

1999 and Nov. 2, 2015 .......................... $11,000 

Violation occurring after Nov. 2, 2015 ...... 20,731 

* * * * * 

Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations 7637 

1 15 U.S.C. 78c–4(a) (setting forth the registration 

requirement for security-based swap execution 

facilities). The Commission has not yet adopted 

rules regarding the registration of security-based 

swap execution facilities. The Commission has 

granted a temporary exemption from the 

registration requirement for security-based swap 

execution facilities. See Release No. 34–64678 (June 

15, 2011), 76 FR 36287, 36292–93, 36306 (June 22, 

2011). This exemption will expire on the earliest 

compliance date set forth in any of the final rules 

regarding registration of security-based swap 

execution facilities. See id. at 36292–93, 36306. 

2 15 U.S.C. 78o–10(a)(1); see also Release No. 34– 

75611 (Aug. 5, 2015), 80 FR 48964, 48988 (Aug. 14, 

2015). A security-based swap market participant 

that meets the definition of ‘‘security-based swap 

dealer’’ as of August 6, 2021 is required to register 

with the Commission no later than November 1, 

2021. See Release No. 34–87780 (Dec. 18, 2019), 85 

FR 6270, 6345–46 (Feb. 4, 2020). 

3 In contrast to the definition of ‘‘dealer’’ in 

Section 3(a)(5) of the Exchange Act, Section 

3(a)(71)(D) of the Exchange Act and 17 CFR 

240.3a71–2(a) thereunder contain an exception 

from the definition of ‘‘security-based swap dealer’’ 

for any entity that engages in a de minimis quantity 

of security-based swap dealing in connection with 

transactions with or on behalf of its customers. See 

15 U.S.C. 78c(a)(71)(D); 17 CFR 240.3a71–2(a). In 

addition, 17 CFR 240.3a71–2(b) provides that a 

person that has not registered as a security-based 

swap dealer by virtue of satisfying the requirements 

of paragraph (a) of the rule, but that no longer can 

take advantage of the de minimis exception, will be 

deemed not to be a security-based swap dealer 

under section 3(a)(71) of the Act (15 U.S.C. 

78c(a)(71)) and subject to the requirements of 

section 15F of the Act (15 U.S.C. 78o–10) and the 

rules, regulations and interpretations issued 

thereunder until the earlier of the date on which it 

submits a complete application for registration 

pursuant to section 15F(b) (15 U.S.C. 78o–10(b)) or 

two months after the end of the month in which 

that person becomes no longer able to take 

advantage of the exception. 

4Specifically, the term ‘‘clearing agency’’ 

includes, among other things, any person who acts 

as an intermediary in making payments or 

deliveries or both in connection with transactions 

in securities or that provides the facilities for 

comparison of data respecting the terms of 

settlement of securities transactions, to reduce the 

number of settlements of securities transactions, or 

for the allocation of securities settlement 

responsibilities. The definition also includes any 

person, such as a securities depository, who (i) acts 

as a custodian of securities in connection with a 

system for the central handling of securities 

whereby all securities of a particular class or series 

of any issuer deposited within the system are 

treated as fungible and may be transferred, loaned, 

or pledged by bookkeeping entry without physical 

delivery of securities certificates, or (ii) otherwise 

permits or facilitates the settlement of securities 

transactions or the hypothecation or lending of 

securities without physical delivery of securities 

certificates. 15 U.S.C. 78c(a)(23)(A); see also Release 

Nos. 34–71699 (Mar. 12, 2014), 79 FR 16865 (Mar. 

26, 2014), corrected at 79 FR 29507, 29510–11 (May 

22, 2014); 34–68080 (Oct. 22, 2012), 77 FR 66219, 

66221–22 (Nov. 2, 2012) (‘‘Clearing Agency 

Standards adopting release’’) (discussing the same). 

PART 2636—LIMITATIONS ON 

OUTSIDE EARNED INCOME, 

EMPLOYMENT AND AFFILIATIONS 

FOR CERTAIN NONCAREER 

EMPLOYEES 

■ 5. The authority citation for part 2636 

continues to read as follows: 

Authority: 5 U.S.C. App. (Ethics in 

Government Act of 1978); Pub. L. 101–410, 

104 Stat. 890, 28 U.S.C. 2461 note (Federal 

Civil Penalties Inflation Adjustment Act of 

1990), as amended by Sec. 31001, Pub. L. 

104–134, 110 Stat. 1321 (Debt Collection 

Improvement Act of 1996) and Sec. 701, Pub. 

L. 114–74 (Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 2015); 

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. 

■ 6. Section 2636.104 is amended by 

revising paragraph (a) to read as follows: 

§ 2636.104 Civil, disciplinary and other 

action. 

(a) Civil action. Except when the 

employee engages in conduct in good 

faith reliance upon an advisory opinion 

issued under § 2636.103, an employee 

who engages in any conduct in violation 

of the prohibitions, limitations and 

restrictions contained in this part may 

be subject to civil action under 5 U.S.C. 

app. 504(a) and a civil monetary penalty 

of not more than the amounts set in 

Table 1 to this section, as adjusted in 

accordance with the inflation 

adjustment procedures prescribed in the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990, as amended, or 

the amount of the compensation the 

individual received for the prohibited 

conduct, whichever is greater. 

TABLE 1 TO § 2636.104 

Date of violation Penalty 

Violation occurring between Sept. 29, 

1999 and Nov. 2, 2015 .......................... $11,000 

Violation occurring after Nov. 2, 2015 ...... 20,731 

* * * * * 

[FR Doc. 2021–00714 Filed 1–29–21; 8:45 am] 

BILLING CODE 6345–03–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Part 240 

[Release No. 34–90667; File No. S7–08–11] 

RIN 3235–AK74 

Exemption From the Definition of 

‘‘Clearing Agency’’ for Certain 

Activities of Security-Based Swap 

Dealers and Security-Based Swap 

Execution Facilities 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule. 

SUMMARY: The Securities and Exchange 

Commission (‘‘Commission’’) is 

adopting a rule pursuant to Section 36 

of the Securities Exchange Act of 1934 

(‘‘Exchange Act’’) to exempt from the 

definition of ‘‘clearing agency’’ in 

Section 3(a)(23) of the Exchange Act 

certain activities of a registered securitybased swap dealer, a registered securitybased swap execution facility, and a 

person engaging in dealing activity in 

security-based swaps that is eligible for 

an exception from registration as a 

security-based swap dealer because the 

quantity of dealing activity is de 

minimis. 

DATES: Effective date: April 2, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Matthew Lee, Assistant Director, or 

Jesse Capelle, Special Counsel, Office of 

Clearance and Settlement, Division of 

Trading and Markets, Securities and 

Exchange Commission, 100 F Street NE, 

Washington, DC 20549–7010, at (202) 

551–5710. 

SUPPLEMENTARY INFORMATION: The 

Commission is adopting 17 CFR 

240.17Ad–24 (‘‘Rule 17Ad–24’’) to 

exempt certain activities of a registered 

security-based swap execution facility,1

a registered security-based swap dealer,2

and an entity that is eligible for an 

exception under 17 CFR 240.3a71–2(a) 

(or subject to the period set forth in 17 

CFR 240.3a71–2(b)) 3 from the definition 

of ‘‘clearing agency.’’ 

Table of Contents 

I. Background 

II. New Rule 17Ad–24 

A. Proposed Rule Text 

B. Comment Received 

C. Final Rule 

III. Economic Analysis 

A. Baseline 

B. Consideration of Benefits, Costs, and the 

Effect on Competition, Efficiency, and 

Capital Formation 

IV. Paperwork Reduction Act 

V. Regulatory Flexibility Act Certification 

VI. Other Matters 

VII. Statutory Authority 

I. Background 

The term ‘‘clearing agency’’ is broadly 

defined in Section 3(a)(23)(A) of the 

Exchange Act and includes a variety of 

functions.4 Section 3(a)(23)(B) of the 

Exchange Act excludes a number of