Document ID: SEC-2010-1094-0001
Agency: sec
Document Type: Rule
Title: Adoption of Supplemental Standards of Ethical Conduct for Members and Employees of SEC and Revisions to Commission's Ethics Rules
Posted Date: 2010-07-20T04:00Z

[Federal Register: July 20, 2010 (Volume 75, Number 138)]
[Rules and Regulations]               
[Page 42269-42278]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jy10-17]                         

[[Page 42269]]

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Part IV

Securities and Exchange Commission

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5 CFR Part 4401 and 17 CFR Part 200

Adoption of Supplemental Standards of Ethical Conduct for Members and 
Employees of the Securities and Exchange Commission and Revisions to 
the Commission's Ethics Rules; Final Rule

[[Page 42270]]

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SECURITIES AND EXCHANGE COMMISSION

5 CFR Part 4401 and 17 CFR Part 200

[Release No. 34-62501]

 
Adoption of Supplemental Standards of Ethical Conduct for Members 
and Employees of the Securities and Exchange Commission and Revisions 
to the Commission's Ethics Rules

AGENCY: Office of Government Ethics and Securities and Exchange 
Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission with the concurrence of 
the Office of Government Ethics is adopting supplemental standards of 
ethical conduct for the Commission's members and employees. The new 
supplemental standards give guidance to Commission members and 
employees on permitted, prohibited, and restricted financial interests 
and transactions and on engaging in outside employment and activities. 
In addition, the Commission has revised its ethics rules to make them 
compatible with the Office of Government Ethics' government-wide ethics 
provisions and to reflect current Commission policies.

DATES: Effective Date: August 19, 2010.

FOR FURTHER INFORMATION CONTACT: Richard E. Connor, Office of the 
General Counsel, (202) 551-5170, Securities and Exchange Commission, 
100 F Street, NE., Washington, DC 20549-1050.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission with 
the concurrence of the Office of Government Ethics (``OGE'') is 
adopting supplemental standards of ethical conduct for the Commission's 
members and employees. The Commission first adopted conduct regulations 
in 1953 ``to restate the ethical principles which it believes should 
govern and have governed the conduct of members and employees and 
former members and employees.'' Subsequent comprehensive revisions in 
1966 and 1980 were enacted to provide members, employees, special 
government employees, and former Commission members and employees with 
a comprehensive statement of standards of conduct which are dictated by 
applicable Federal law, Executive Orders, and the Commission's own 
requirements.\5\
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    \5\ See, e.g., 45 FR 36064 (May 29, 1980).
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    Executive Order 12674, as amended by Executive Order 12731, 
authorized OGE to establish a single, comprehensive, and clear set of 
executive-branch standards of conduct. On August 7, 1992, OGE published 
the Standards of ethical conduct for employees of the executive branch, 
codified at 5 CFR part 2635, to establish uniform standards of ethical 
conduct for all executive branch employees.\6\ With the concurrence of 
OGE, 5 CFR 2635.105 authorizes executive branch agencies to publish 
agency-specific supplemental regulations necessary to implement their 
respective ethics programs.
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    \6\ See 57 FR 35006-35067 (Aug. 7, 1992), as corrected at 57 FR 
48557 (Oct. 27, 1992) and 57 FR 52583 (Nov. 4, 1992), with 
additional grace period extensions at 59 FR 4779-4780 (Feb. 2, 
1994), 60 FR 6390-6391 (Feb. 2, 1995), 60 FR 66857-66858 (Dec. 27, 
1995) and 61 FR 40950-40952 (Aug. 7, 1996).
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    The Commission has responsibility for oversight of the securities 
industry and the protection of investors. These new supplemental 
standards are necessary to re-codify and provide guidance to Commission 
members and employees on permitted, prohibited, and restricted 
financial interests and transactions and on engaging in outside 
employment and activities. The Commission is also updating its existing 
ethics rules to conform to OGE's government-wide ethics obligations and 
reflect current Commission policies.
    A. The Commission's supplemental standards are contained in new 5 
CFR part 4401. New Rule 4401.101 (General) states that Commission 
members and employees must comply with 5 CFR part 2635 (Standards of 
ethical conduct for employees of the executive branch). New Rule 
4401.101 further states that members and employees are subject to the 
Executive branch financial disclosure regulations, 5 CFR part 2634; the 
Office of Personnel Management's Employee responsibilities and conduct 
regulations at 5 CFR part 735; and 17 CFR part 200, subparts C and M, 
as amended, the Commission's Canons of ethics and the Regulation 
concerning conduct of members and employees and former members and 
employees.
    New Rule 4401.102 (Prohibited and restricted financial interests 
and transactions) supersedes former Commission ethics rule 735-5 
(Securities transactions). New Rule 4401.102(a) provides that the 
rule's provisions apply to all securities holdings or transactions 
effected directly or indirectly on behalf of the member or employee. 
The rule's requirements also extend to holdings and transactions of or 
on behalf of the member's or employee's spouse, unemancipated minor 
children, or persons for whom the member or employee serves as legal 
guardian.
    New Rule 4401.102(b)(1) prohibits members and employees from 
purchasing or selling a security while in possession of material 
nonpublic information, as defined in 5 CFR 2635.703(b). Rule 
2635.703(b) states that nonpublic information is information that the 
individual gains through his or her Federal position, which the person 
knows or reasonably should know is not available to the general public. 
Under this definition, nonpublic information includes information 
routinely exempt from disclosure under the Freedom of Information Act, 
5 U.S.C. 552 or otherwise protected by statute, rule, or Executive 
Order; information that the Commission designates as confidential; and 
information that is not generally available to the public and that the 
Commission has not actually released or disseminated.\7\
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    \7\ Prohibitions regarding disclosure or use of confidential or 
nonpublic information are set forth in Clause 30 of Schedule A of 
the Securities Act of 1933, 15 U.S.C. 77aa(30) and Securities Act 
Rules 122 and 406 (17 CFR 230.122, 230.406); sections 13(f)(3) and 
24(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(f)(3), 
78x) and Exchange Act Rule 0-4 (17 CFR 240.24b-2); section 45(a)(1) 
of the Investment Company Act of 1940 (15 U.S.C. 80a-44) and 
Investment Company Act Rule 45a-1 (17 CFR 270.45a-1); and section 
210(b) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-10).
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    New Rule 4401.102(b)(2) prohibits members or employees from 
recommending or suggesting the purchase or sale of a security either 
based on material nonpublic information about the security or which the 
member or employee cannot purchase or sell because of this rule's 
restrictions.
    New Rule 4401.102(c) states that members and employees may not--

--Knowingly purchase or hold a security or other financial interest in 
an entity directly regulated by the Commission;
--Purchase a security in an initial public offering (``IPO'') for seven 
calendar days after the IPO is effective, except for IPOs of shares in 
a registered investment company or other publicly traded or publicly 
available collective investment fund;
--Purchase or carry securities on margin;
--Sell securities short; \8\
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    \8\ Short selling is defined in 17 CFR 242.200(a).
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--Enter into a financial relationship or obtain a loan from an entity 
or person directly regulated by the Commission and receive terms more 
favorable than would be available in like circumstances to members of 
the public, except as otherwise permitted

[[Page 42271]]

by 5 CFR 2635, subpart B (Gifts from outside sources);
--Engage in any transactions involving derivatives, except for 
transactions in shares in a registered investment company or other 
publicly traded or publicly available collective investment fund; or
--Purchase or sell any security of an entity that is under 
investigation by the Commission, a party to a proceeding before the 
Commission, or a party to a proceeding in which the Commission is a 
party.

    New Rule 4401.102(d)(1) generally requires members and employees to 
clear any securities or related financial transaction. Currently, the 
Commission is clearing transactions through the Ethics Program System 
(``EPS'') computer system. New Rule 4401.102(d)(2) provides that, if 
the member or employee obtains clearance of the transaction as provided 
in the rule, that clearance will be prima facie evidence that the 
member or employee did not knowingly purchase, sell, or hold a security 
of a regulated entity; improperly purchase an IPO or engage in a 
transaction in a derivative; or improperly purchase or sell a security 
of an entity subject to Commission investigation or enforcement action.
    New Rule 4401.102(e) provides generally that members and employees 
must hold a security for a minimum of six months from the trade 
date.\9\ Under new Rule 4401.102(e)(2), the holding period does not 
apply to securities that are sold for 90 percent or less of their 
original purchase price; securities with an initial term of less than 
six months that are held to term; or shares in money market funds. New 
Rule 4401.102(e)(3) requires members and employees to hold shares of 
registered investment companies for a minimum of 30 days from the 
purchase date.
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    \9\ This rule applies to securities purchased after Commission 
employment.
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    New Rule 4401.102(f)(1) generally requires members and employees to 
report all securities holdings as required by the Designated Agency 
Ethics Official (``DAEO''). Currently, this reporting occurs through 
EPS. Also, members and employees must provide duplicate statements for 
every account containing reportable securities to the DAEO. Under new 
Rule 4401.102(f)(2) members and employees must report all purchases and 
sales within five days of receipt of confirmation of the 
transaction.\10\ The reporting of purchases and sales is also done 
through EPS.
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    \10\ Any person who receives a conditional offer of employment 
from the Commission must report all securities holdings after 
acceptance of that offer and before commencement of employment with 
the Commission on the prescribed form. These reports are currently 
received on SEC Form 682.
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    Consistent with current Commission standards, new Rule 
4401.102(g)(1) excludes certain transactions and holdings from the 
rule's requirements. Certain holdings and transactions are excluded 
from the prohibition of new Rule 4401.102(c) and the prior clearance, 
holding period, and reporting requirements. These include:

--Transactions effected by the member's or employee's spouse on behalf 
of someone other than the member or employee, the spouse, their 
unemancipated minor child, or a person for whom the member or employee 
serves as legal guardian;
--Holdings or transactions effected by a member's or employee's legally 
separated spouse living apart from the member or employee (even if for 
their unemnacipated minor child) so long as the member or employee does 
not in fact control, advise with respect to, or have knowledge of these 
holdings and transactions;
--U.S. Government or Federal government agency securities;
--Investments in the Thrift Savings Plan or a government retirement 
plan administered by a Federal agency; and
--Certificates of deposit and comparable instruments issued by 
depository institutions subject to Federal regulation and Federal 
deposit insurance.

    In accordance with existing standards, new Rule 4401.102(g)(2) 
provides that certain additional transactions are not prohibited by new 
Rule 4401.102(c) and excludes these holdings and transactions from the 
prior clearance and holding requirements. However, these interests must 
be reported in accordance with new Rule 4401.102(f).
    This exclusion applies to:

--The holdings of a trust in which the member or employee (or the 
member's or employee's spouse, the member's or employee's unemancipated 
minor child, or person for whom the member or employee serves as legal 
guardian) is (i) solely a vested beneficiary of an irrevocable trust or 
(ii) solely a vested beneficiary of a revocable trust where the trust 
instrument expressly directs the trustee to make present, mandatory 
distributions of trust income or principal; provided, that the member 
or employee did not create the trust, has no power to control, and does 
not, in fact, control or advise with respect to the holdings and 
transactions of the trust or have knowledge of its holdings or 
transactions;
--The acceptance or reinvestment of stock dividends on securities 
already owned;
--The exercise of a right to convert securities; and
--The acquisition of stock or the acquisition or exercise of employee 
stock options or similar instruments received as compensation and 
issued by either (i) a member's or employee's former employer or (ii) 
the present or former employer of the member's or employee's spouse.

    New Rule 4401.102(h) sets forth the circumstances under which 
members and employees may seek a waiver of the requirements of the 
rule.
    New Rule 4401.103 supersedes in part Commission rule 735-4, 17 CFR 
200.735-4 (Outside employment and activities) and sets forth the 
circumstances under which Commission members, employees, and special 
government employees may engage in outside employment or activities. 
New Rule 4401.103(a)(2) broadly defines employment to include any form 
of non-Federal employment or business relationship, involving the 
provision of personal service by the employee. The definition includes 
acting as an officer, director, employee, agent, attorney, consultant, 
contractor, general partner, trustee, teacher, writer, or speaker. The 
rule excludes participation in certain nonprofit religious, charitable, 
and civic organizations from the definition of employment unless the 
person (i) serves as an officer or director; (ii) provides professional 
services or advice; (iii) receives compensation (other than 
reimbursement for expenses) from the organization; or (iv) is an active 
participant as defined in 5 CFR 2635.502(b)(1)(v) on a committee of a 
professional organization whose interests may be substantially affected 
by the Commission.
    New Rule 4401.103(b) encourages members and employees to 
participate in pro bono and community service so long as that service 
is consistent with OGE's requirements including 5 CFR parts 2634 
(governing financial reporting) and 2635 (establishing the government-
wide ethics standards), as well as the restrictions contained in 18 
U.S.C. 203 (prohibiting seeking or receiving compensation for 
representational services before the Government), 205 (prohibiting 
assisting in prosecution of claims against or acting as attorney or 
agent before the Government), and 208 (prohibiting an employee's 
participation in matters

[[Page 42272]]

affecting the employee's own financial interest and those of certain 
specified persons and organizations).
    Under new Rule 4401.103(d)(1), each employee must obtain prior 
approval before engaging in any outside employment, whether or not for 
compensation. New Rule 4401.103(c)(1)(i) provides that no employee may 
engage in any outside employment or activity that conflicts with 
Commission employment. New Rule 4401.103(c)(1)(iii) prohibits any 
employee from (i) outside employment on behalf of any entity regulated 
by the Commission; (ii) engaging in activity directly or indirectly 
related to the issuance, purchase, investment, or trading of securities 
or securities futures, except for securities holdings or transactions 
permitted by new Rule 4401.102; or (iii) engaging in work otherwise 
involved with the securities industry. Commission members are subject 
to the restrictions of Section 4(a) of the Securities Exchange Act of 
1934, 15 U.S.C. 78d(a).
    Under new Rule 4401.103(d)(2), an employee's request for prior 
approval of any outside employment must be made both to the appropriate 
Division Directors, Office Heads, or Regional Directors as well as the 
Commission's Office of the General Counsel's Ethics Office. New Rule 
4401.103(d)(3) requires that the request identify the proposed outside 
employer; describe the work to be performed, the duration of the 
employment, and any compensation to be received; and include a 
statement that the employee will disqualify himself or herself from 
matters involving the proposed employer.
    Under new Rule 4401.103(d)(4), the request must be updated annually 
or if there is a significant change in either the nature of the 
employment or in the employee's position with the Commission. New Rule 
4401.103(d)(5) provides that approval will be granted only if the 
outside employment does not involve conduct prohibited by law or 
regulation, including the government-wide ethics requirements in 5 CFR 
part 2635.
    B. The Commission is separately amending its Regulation concerning 
conduct of Commission members and employees and former members and 
employees, 17 CFR 200-735-1 et seq. These amendments generally delete 
Commission requirements that are duplicative of OGE's government-wide 
requirements. The amendments also direct members, employees, special 
government employees, and former members and employees to the 
applicable ethics laws and regulations for ease of reference.
    Certain Commission ethics requirements remain in effect. Under 17 
CFR 200.735-3(b) (General provisions), a member or employee shall not 
engage in any personal business transaction or arrangement for personal 
profit which arises from his or her official position or authority or 
is based on nonpublic information obtained by virtue of that position 
or authority. The restrictions on release of nonpublic Commission 
documents contained in 17 CFR 200.735-3(b)(2) (Policy) (formerly Rule 
735-3(b)(7)) also remain in effect. The Commission encourages its 
members and employees to engage in teaching, lecturing, and writing. 
Therefore, the provisions governing those activities, including the 
clearance of publications and speeches, contained in 17 CFR 200.735-
4(b) and (d) (formerly Rules 735-4(b)(5) and (e)), continue.
    The Commission will also continue to require any former member or 
employee who is retained or employed to represent any person before the 
Commission within two years of leaving the Commission to provide 
written notice of that representation. 17 CFR 200.735-8(b) (Practice by 
former members and employees of the Commission).
    The amendments also replace references to the Director of Personnel 
with references to the General Counsel, the Commission's Office of the 
General Counsel's Ethics Office, and the Designated Agency Ethics 
Official to reflect current agency practice.

I. Administrative Procedure Act, Regulatory Flexibility Act, and 
Paperwork Reduction Act

    The Commission finds, in accordance with section 553(b)(3)(A) of 
the Administrative Procedure Act,\11\ that these rules relate solely to 
agency organization, procedure, or practice. These rules are therefore 
not subject to the provisions of the Administrative Procedure Act 
requiring notice, opportunity for public comment, and publication. The 
Regulatory Flexibility Act \12\ therefore does not apply. Because these 
rules relate to ``agency organization, procedure or practice that does 
not substantially affect the right or obligations of non-agency 
parties,'' they are not subject to the Small Business Regulatory 
Enforcement Fairness Act.\13\ The rules do not contain any new 
collection of information requirements as defined by the Paperwork 
Reduction Act of 1995, as amended.\14\
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    \11\ 5 U.S.C. 553(b)(3)(A).
    \12\ 5 U.S.C. 601 et seq.
    \13\ 5 U.S.C. 804(3)(C).
    \14\ 44 U.S.C. 3501 et seq.
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II. Costs and Benefits of the Amendments

    Taken as a whole, the Commission and the public have a substantial 
interest in the integrity of the Commission's processes. Congress has 
directed the Commission to oversee the securities markets and 
securities professionals and to protect investors. To that end, the 
ethical standards contained in the rules enacted today require the 
Commission's members and employees to maintain high standards of 
honesty, integrity, and impartiality, and to avoid actual, or the 
appearance of, conflicts of interest.
    In general, the costs of the procedures in the Commission's rules 
of practice fall largely on the Commission and its employees. As noted, 
the amendments set forth in this release relate to internal agency 
management. These rules re-codify pre-existing obligations on the 
Commission's members and employees with certain minor modifications. As 
such, the Commission believes that the costs imposed by compliance with 
these amended rules have not substantially increased from the 
obligations of Commission members and employees before these 
amendments.

III. Consideration of Burden on Competition

    Section 23(a)(2) of the Exchange Act, 15 U.S.C. 78w(a)(2), requires 
the Commission, in making rules pursuant to any provision of the 
Exchange Act, to consider among other matters the impact any such rule 
would have on competition. The purposes of the Exchange Act include 
protection of interstate commerce and maintenance of fair and honest 
markets. The degree of trust that investors and the public have in the 
Commission and its employees is critical to these goals. The Commission 
and its employees must adhere to the highest standards of integrity and 
impartiality and avoid the appearance of conflicts of interest. These 
rules affect a relatively small number of persons. Therefore, the 
Commission has determined that the burden on competition is small and 
is necessary and appropriate in furtherance of the purposes of the 
Exchange Act.
    Section 2(b) of the Securities Act, 15 U.S.C. 77b(b); Section 3(f) 
of the Exchange Act, 15 U.S.C. 78c(f); Section 2(c) of the Investment 
Company Act of 1940, 15 U.S.C. 80a-2(c); and Section 202(c) of the 
Investment Advisers Act of 1940, 15 U.S.C. 80b-2(c) require that the 
Commission consider efficiency, competition, and capital formation, in 
addition to the protection of investors, whenever it is required to 
consider or

[[Page 42273]]

determine whether an action is necessary or appropriate in the public 
interest. As noted above, these rules apply to a relatively small 
number of people and do not substantially alter their pre-existing 
obligations. The Commission believes that the amendments that the 
Commission is adopting today will have a small impact on competition, 
the capital markets, or capital formation.

IV. Statutory Basis for the Rules

    These new supplemental rules and the amendments to the Commission's 
ethics rules are being adopted pursuant to statutory authority granted 
to OGE and to the Commission. These include 5 U.S.C. 7301; 5 U.S.C. 
App. (Ethics in Government Act of 1978); section 19 of the Securities 
Act of 1933, 15 U.S.C. 77s; section 23 of the Securities Exchange Act 
of 1934, 15 U.S.C. 78w; section 319 of the Trust Indenture Act of 1939, 
15 U.S.C. 77sss; section 40 of the Investment Company Act of 1940, 15 
U.S.C. 80a-39; and section 211 of the Investment Advisers Act of 1940, 
15 U.S.C. 80b-11.

List of Subjects

5 CFR Part 4401

    Administrative practice and procedure, Conduct and Ethics.

17 CFR Part 200

    Administrative practice and procedure, Authority delegations 
(Government Agencies), Conduct and Ethics, Information and Requests, 
and Organization.

0
For the reasons set out in the preamble, Title 5 of the Code of Federal 
Regulations and Title 17, Chapter II, Part 200, are amended as follows:

TITLE 5--ADMINISTRATIVE PERSONNEL

0
1. Add a new chapter XXXIV, consisting of part 4401 to read as follows:

CHAPTER XXXIV--SECURITIES AND EXCHANGE COMMISSION

PART 4401--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR MEMBERS 
AND EMPLOYEES OF THE SECURITIES AND EXCHANGE COMMISSION

Sec.
4401.101 General.
4401.102 Prohibited and restricted financial interests and 
transactions.
4401.103 Outside employment and activities.

    Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government 
Act of 1978); 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, 2635.403, 2635.803; 15 U.S.C. 77s, 78w, 77sss, 80a-37, 
80b-11.

Sec.  4401.101  General.

    In accordance with 5 CFR 2635.105, the regulations in this part 
apply to members and employees of the Securities and Exchange 
Commission (``Commission'') and supplement the Standards of ethical 
conduct for employees of the executive branch contained in 5 CFR part 
2635. Members and employees of the Commission are required to comply 
with 5 CFR part 2635 and this part. In addition, they are subject to 
the Executive branch financial disclosure regulations, 5 CFR part 2634; 
the Office of Personnel Management Employee responsibilities and 
conduct regulations at 5 CFR part 735; and the Commission's Canons of 
ethics and Regulation concerning conduct of members and employees and 
former members and employees, 17 CFR part 200, subparts C and M.

Sec.  4401.102  Prohibited and restricted financial interests and 
transactions.

    (a) Applicability. The requirements of this section apply to all 
securities holdings or transactions effected, directly or indirectly, 
by or on behalf of a member or employee, the member's or employee's 
spouse, the member's or employee's unemancipated minor child, or any 
person for whom the member or employee serves as legal guardian. A 
member or employee is deemed to have sufficient interest in the 
securities holdings and transactions of his or her spouse, 
unemancipated minor child, or person for whom the member or employee 
serves as legal guardian that such holdings or transactions are subject 
to all the terms of this part.
    (b) In general.
    (1) Members and employees are prohibited from purchasing or selling 
any security while in possession of material nonpublic information 
regarding that security. Nonpublic information has the meaning as 
provided in 5 CFR 2635.703(b).
    (2) Members and employees are prohibited from recommending or 
suggesting to any person the purchase or sale of security:
    (i) Based on material nonpublic information regarding that 
security; or
    (ii) That the member or employee could not purchase or sell because 
of the restrictions contained in this Rule.
    (c) Prohibited and restricted holdings and transactions. Members 
and employees are prohibited from:
    (1) Knowingly purchasing or holding a security or other financial 
interest in an entity directly regulated by the Commission;
    (2) Purchasing a security in an initial public offering (``IPO'') 
for seven calendar days after the IPO effective date, except that this 
prohibition does not apply to an IPO of shares in a registered 
investment company or other publicly traded or publicly available 
collective investment fund;
    (3) Purchasing or otherwise carrying securities on margin;
    (4) Selling securities short as defined in 17 CFR 242.200(a);
    (5) Accepting a loan from, or entering into any other financial 
relationship with, an entity, institution or other person directly 
regulated by the Commission if the loan or financial relationship is 
governed by terms more favorable than would be available in like 
circumstances to members of the public, except as otherwise permitted 
by 5 CFR part 2635, subpart B (Gifts from outside sources);
    (6) Engaging in transactions involving financial instruments that 
are derivatives of securities (that is, the value of the security 
depends on or is derived from, in whole or in part, the value of 
another security, or a group, or an index of securities), except that 
this prohibition does not apply to transactions in shares in a 
registered investment company or other publicly traded or publicly 
available collective investment fund; and
    (7) Purchasing or selling any security issued by an entity that is:
    (i) Under investigation by the Commission;
    (ii) A party to a proceeding before the Commission; or
    (iii) A party to a proceeding to which the Commission is a party.
    (d) Prior clearance of transactions in securities or related 
financial interests.
    (1) Except as set forth in paragraph (g) of this section, members 
and employees must confirm before entering into any security or other 
related financial transaction that the security or related financial 
transaction is not prohibited or restricted as to them by clearing the 
transaction in the manner required by the Designated Agency Ethics 
Official (``DAEO''). A member or employee will have five business days 
after clearance to effect a transaction.
    (2) Documentation of the clearance of any transaction pursuant to 
this paragraph (d) shall be prima facie evidence that the member or 
employee has not knowingly purchased, sold, or held such financial 
interest in violation of the provisions of paragraphs (c)(1), (2), (6), 
or (7) of this section.
    (3) The DAEO shall be responsible for administering the 
Commission's

[[Page 42274]]

clearance systems. The DAEO shall maintain a record of securities that 
members and employees may not purchase or sell, or otherwise hold, 
because such securities are the subject of the various prohibitions and 
restrictions contained in this section.
    (e) Holding periods for securities and related financial interests.
    (1) General rule. Except as set forth in paragraph (g) and in 
paragraphs (e)(2) and (3) of this section, members and employees must 
hold a security purchased after commencement of employment with the 
Commission for a minimum of six (6) months from the trade date.
    (2) General exceptions. This holding period does not apply to:
    (i) Securities sold for ninety percent (90) or less of the original 
purchase price;
    (ii) Securities with an initial term of less than six (6) months 
that are held to term; and
    (iii) Shares in money market funds, as defined in Rule 12d1-
1(d)(2), 17 CFR 270.12d1-1(d)(2).
    (3) Exception for shares in registered investment companies. 
Members and employees must hold shares in registered investment 
companies for a minimum of thirty (30) days from the purchase date.
    (f) Reporting requirements.
    (1) Except as set forth in paragraph (g) of this section, members 
and employees must:
    (i) Report and certify all securities holdings according to the 
schedule required by the DAEO; and
    (ii) Submit duplicate statements for every account containing 
reportable securities to the DAEO according to such procedures required 
by the DAEO.
    (2) Members and employees must report all purchases, sales, 
acquisitions, or dispositions of securities within five (5) business 
days after receipt of confirmation of the transaction.
    (3) Any person who receives a conditional offer of employment from 
the Commission must report all securities holdings after acceptance of 
that offer and before commencement of employment with the Commission on 
the form prescribed by the Commission.
    (g) Exceptions.
    (1) The following transactions are exempt from the requirements of 
paragraphs (c), (d), (e), and (f) of this section:
    (i) Securities transactions effected by a member's or employee's 
spouse on behalf of an entity or person other than the member or 
employee, the member's or employee's spouse, the member's or employee's 
unemancipated minor child, or any person for whom the member or 
employee serves as legal guardian;
    (ii) Securities holdings and transactions of a member's or 
employee's legally separated spouse living apart from the member or 
employee (including those effected for the benefit of the member's or 
employee's minor child), provided that the member or employee has no 
control, and does not, in fact, control, advise with respect to, or 
have knowledge of those holdings and transactions;
    (iii) Securities issued by the United States Government or one of 
its agencies;
    (iv) Investments in funds administered by the Thrift Savings Plan 
or by any retirement plan administered by a Federal government agency; 
and
    (v) Certificates of deposit or other comparable instruments issued 
by depository institutions subject to Federal regulation and Federal 
deposit insurance.
    (2) The following holdings and transactions are exempt from the 
requirements of paragraphs (c), (d), and (e), but these interests must 
be reported in accordance with this paragraph (f) of this section:
    (i) The holdings of a trust in which the member or employee (or the 
member's or employee's spouse, the member's or employee's unemancipated 
minor child, or person for whom the member or employee serves as legal 
guardian) is:
    (A) Solely a vested beneficiary of an irrevocable trust; or
    (B) Solely a vested beneficiary of a revocable trust where the 
trust instrument expressly directs the trustee to make present, 
mandatory distributions of trust income or principal; provided, the 
member or employee did not create the trust, has no power to control, 
and does not, in fact, control or advise with respect to the holdings 
and transactions of the trust;
    (ii) Acceptance or reinvestment of stock dividends on securities 
already owned;
    (iii) Exercise of a right to convert securities; and
    (iv) The acquisition of stock or the acquisition or the exercise of 
employee stock options, or other comparable instruments, received as 
compensation from an issuer that is:
    (A) The member's or employee's former employer; or
    (B) The present or former employer of the member's or employee's 
spouse.
    (h) Waivers.
    (1) Members may request from the Commission a waiver of the 
prohibitions or limitations that would otherwise apply to a securities 
holding or transaction on the grounds that application of the rule 
would cause an undue hardship. A member requests a waiver by submitting 
a confidential written application to the Commission's Office of the 
General Counsel's Ethics Office. The DAEO will review the request and 
provide to the Commission a recommendation for resolution of the waiver 
request. In developing a recommendation, the DAEO may consult, on a 
confidential basis, other Commission personnel as the DAEO in his or 
her discretion considers necessary.
    (2) Employees may request from the DAEO a waiver of the 
prohibitions or limitations that would otherwise apply to a securities 
holding or transaction on the grounds that application of the rule 
would cause an undue hardship. An employee requests a waiver by 
submitting a confidential written application to the Commission's 
Office of the General Counsel's Ethics Office in the manner prescribed 
by the DAEO. In considering a waiver request, the DAEO, or his or her 
designee, may consult with the employee's supervisors and other 
Commission personnel as the DAEO in his or her discretion considers 
necessary.
    (3) The Commission or the DAEO, as applicable, will provide written 
notice of its determination of the waiver request to the requesting 
member or employee.
    (4) The Commission or the DAEO, as applicable, may condition the 
grant of a waiver under this provision upon the agreement to certain 
undertakings (such as execution of a written statement of 
disqualification) to avoid the appearance of misuse of position or loss 
of impartiality, and to ensure confidence in the impartiality and 
objectivity of the Commission. The Commission or DAEO, as applicable, 
shall note the existence of conditions on the waiver and describe them 
in reasonable detail in the text of the waiver-request determination.
    (5) The grant of a waiver requested pursuant to this section must 
reflect the judgment that the waiver:
    (i) Is necessary to avoid an undue hardship; and, under the 
particular circumstances, application of the prohibition or restriction 
is not necessary to avoid the appearance of misuse of position or loss 
of impartiality, or otherwise necessary to ensure confidence in the 
impartiality and objectivity of the Commission;
    (ii) Is consistent with 18 U.S.C. 208 (Acts affecting a personal 
financial interest), 5 CFR part 2635 (Standards of ethical conduct for 
employees of the executive branch), and 5 CFR part 2640

[[Page 42275]]

(Interpretation, exemptions and waiver guidance concerning 18 U.S.C. 
208); and
    (iii) Is not otherwise prohibited by law.
    (6) The determination of the Commission with respect to a member's 
request for a waiver is final and binding on the member.
    (7) The determination of the DAEO with respect to an employee's 
request for a waiver may be appealed to the Commission, in accordance 
with the requirements of Rules 430 and 431 of the Commission's Rule of 
Practice, 17 CFR 201.430, 201.431. The determination of the DAEO or, if 
appealed, the Commission, is final and binding on the employee.
    (8) Notwithstanding the grant of a waiver, a member or employee 
remains subject to the disqualification requirements of 5 CFR 2635.402 
(Disqualifying financial interests) and 5 CFR 2635.502 (Personal and 
business relationships) with respect to transactions or holdings 
subject to the waiver.
    (i) Required disposition of securities. The DAEO is authorized to 
require disposition of securities acquired as a result of a violation 
of the provisions of this section, whether unintentional or not. The 
DAEO shall report repeated violations to the Commission for appropriate 
action.

Sec.  4401.103  Outside employment and activities.

    (a) Definitions. As used in this section:
    (1) Employee is defined in 5 CFR 2635.102(h) and includes employees 
and special government employees of the Commission.
    (2) Employment is defined broadly, as any form of non-Federal 
employment or business relationship, involving the provision of 
personal services by the employee. It includes services as an officer, 
director, employee, agent, attorney, accountant, consultant, 
contractor, general partner, trustee, teacher, writer, or speaker, but 
does not include participation in the activities of a nonprofit 
charitable, religious, professional, civic, or public service 
organization, unless such activities:
    (i) Involve serving as an officer or director of the organization;
    (ii) Involve providing professional services or advice to the 
organization;
    (iii) Are for compensation, other than reimbursement of expenses; 
or
    (iv) Involve serving as an active participant (as defined in 5 CFR 
2635.502(b)(1)(v)) in a professional organization whose interests may 
be substantially affected by the Commission.
    (3) Professional services means practicing a profession as the term 
``profession'' is defined in 5 CFR 2636.305(b)(1).
    (4) DAEO is the Designated Agency Ethics Official.
    (b) Pro bono and community service. Subject to the prohibitions, 
restrictions and requirements contained in law and Federal regulations, 
including 18 U.S.C. 203 (Compensation to members of Congress, officers, 
and others in matters affecting the Government), 205 (Activities of 
officers and employees in claims against and other matters affecting 
the Government), and 208 (Acts affecting a personal financial 
interest), 5 CFR part 2634 (Executive branch financial disclosure), 5 
CFR part 2635 (Standards of ethical conduct for employees of the 
executive branch), and paragraph (c) of this section, employees are 
encouraged to participate in matters involving improvement to their 
communities, and, when qualified, to provide professional pro bono 
services.
    (c) Prohibitions and restrictions on outside employment and 
activities.
    (1) Prohibitions and restrictions on employees other than members.
    (i) No employee may engage in any outside employment or activities 
that conflict with employment with the Commission.
    (ii) No employee shall engage in any outside employment, whether or 
not for compensation, without prior approval, in accordance with 
paragraph (d) of this section.
    (iii) The Commission will not approve the following kinds of 
employment or activities:
    (A) Employment with any entity regulated by the Commission;
    (B) Employment or any activity directly or indirectly related to 
the issuance, purchase, sale, investment or trading of securities or 
futures on securities or a group of securities, except this prohibition 
does not apply to securities holdings or transactions permitted by 
Sec.  4401.102 of this subpart; or
    (C) Employment otherwise involved with the securities industry.
    (2) Prohibitions and restrictions on members.
    (i) Members of the Commission may engage in outside employment only 
to the extent permitted by Section 4(a) of the Securities Exchange Act 
of 1934, 15 U.S.C. 78d(a). This provision does not preclude members 
from engaging in permitted securities transactions.
    (ii) Notwithstanding the absence of a statutory prohibition, a 
member may not engage in any outside employment or activity, if such 
outside employment or activity would materially impair the member's 
ability to perform properly the member's duties. Such outside 
employment or activity includes such fiduciary relationships such as 
serving as a trustee, executor or corporate director.
    (d) Prior approval requirement.
    (1) An employee, other than a member or special government 
employee, must obtain written approval before engaging in any outside 
employment (whether or not for compensation).
    (2) Requests for prior approval of outside employment shall be 
submitted in writing to the appropriate agency designee and to the 
Commission's Office of the General Counsel's Ethics Office. Agency 
designees include Division Directors, Office Heads and Regional 
Directors.
    (3) The request shall include, at a minimum:
    (i) The name and address of the prospective outside employer;
    (ii) A description of the proposed outside employment, including 
the duties and services to be performed;
    (iii) The expected duration of the outside employment;
    (iv) The fee or other compensation, if any, to be received by the 
Commission employee for the outside employment; and
    (v) A statement that the employee will disqualify himself or 
herself, if the request is approved, from participating in particular 
matters that could directly affect his outside employer during the 
period of the outside employment and, thereafter, from participating in 
particular matters involving specific parties, consistent with 5 CFR 
2635.502 (Personal and business relationships).
    (4) The employee shall submit an updated request for approval:
    (i) Annually;
    (ii) Upon a significant change in the nature or scope of the 
outside employment; or
    (iii) Upon a significant change in the employee's official position 
at the Commission.
    (5) Approval shall be granted only upon a determination by both the 
agency designee and Designated Agency Ethics Officers (``DAEO'') or by 
the Commission, on appeal, pursuant to paragraph (d)(6) of this 
section, that the outside employment is not expected to involve conduct 
prohibited by law or Federal regulation, including 5 CFR part 2635 
(Standards of ethical conduct for employees of the executive branch), 
and this part.
    (6) An employee may appeal the disapproval of a request to engage 
in outside employment by the agency designee or by the Commission's 
Office of the General Counsel's Ethics Office to

[[Page 42276]]

the Commission in accordance with the requirements of Commission Rules 
430 and 431 of the Commission's Rules of Practice, 17 CFR 201.430, 
201.431. That appeal shall be submitted in writing to the Commission 
through the Commission's Office of the General Counsel's Ethics Office 
and shall explain why the employee believes that his or her request 
should be approved.
    (e) Employees are required to submit proposed publications or 
prepared speeches relating to the Commission, or the statutes or rules 
it administers, to the Commission's Office of the General Counsel's 
Ethics Office for review, pursuant to the Commission's Regulation 
Concerning Conduct of Members and Employees and Former Members and 
Employees of the Commission, 17 CFR 200.735-4 (Outside Employment and 
Activities). Any such publication or speech must include the disclaimer 
prescribed in 17 CFR 200.735-4(c). Employees who wish to engage in 
teaching, writing or speaking for compensation should review the 
provisions of 5 CFR 2635.807 (Teaching, Speaking, and Writing).

TITLE 17--COMMODITY AND SECURITIES EXCHANGES

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND 
REQUESTS

Subpart M--Regulation Concerning Conduct of Members and Employees 
and Former Members and Employees of the Commission

0
2. The general authority citation for part 200, subpart M is revised to 
read as follows:

    Authority: 15 U.S.C. 77s, 77sss, 78w, 80a-37, 80b-11; E.O. 
11222, 3 CFR, 1964-1965 Comp., p. 36; 5 CFR 735.104; 5 CFR 2634; and 
5 CFR 2635, unless otherwise noted.

0
3. Sec.  200.735-1 is amended as follows:
0
a. Revising Sec.  200.735-1 to read as follows; and
0
b. Removing footnote 1.

    This revision reads as follows:

Sec.  200.735-1  Purpose.

    This subpart sets forth the standards of ethical conduct required 
of members, employees and special Government employees, and former 
members and employees of the Securities and Exchange Commission.

0
4. Sec.  200.735-2(b) is revised to read as follows:

Sec.  200.735-2  Policy.

* * * * *
    (b) For these reasons, members, employees, and special Government 
employees should at all times abide by the standards of ethical conduct 
for employees of the executive branch (codified in 5 CFR part 2635); 
the supplemental standards of ethical conduct for members and employees 
of the Securities and Exchange Commission (codified in 5 CFR part 
4401); the standards of conduct set forth in this subpart; the Canons 
of ethics for members of the Securities and Exchange Commission 
(codified in subpart C of this part 200); and, in the case of a person 
practicing a profession as defined in 5 CFR 2636.305(b)(1), the 
applicable professional ethical standards.

0
5. Sec.  200.735-3 is amended by:
0
a. Revising paragraph (a);
0
b. Removing footnote 2 in paragraph (b)(1);
0
c. Removing paragraphs (b)(2) through (b)(6) and footnotes 3 and 4 in 
paragraphs (b)(3)(vi) and (b)(6) respectively;
0
d. Redesignating paragraph (b)(7) as paragraph (b)(2), removing 
footnote 5 in paragraph (b)(7)(i), redesignating footnote 6 in 
paragraph (b)(7)(iii) as footnote 1 and removing the words ``section 
22(c) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79y) 
and Rule 104 thereunder (17 CFR 250.104)'' and removing the words ``But 
see, section 171 of the Administrative Manual which authorizes the 
staff to divulge certain nonpublic information with Commission approval 
(n. 5, supra).'' from the newly redesignated footnote 2 to newly 
redesignated paragraph (b)(2);
0
e. Removing paragraphs (b)(8) through (b)(12) and footnote 7 in 
paragraph (b)(8); and
0
f. Adding paragraphs (c), (d), (e), (f), (g), and (h).
    The revision and additions read as follows:

Sec.  200.735-3  General provisions.

    (a) A member or employee shall comply with the requirements of 5 
CFR part 2635, subpart A (General provisions) and in particular with 
the provisions of 5 CFR 2635.101 (Basic obligations of public service); 
2635.103 (Applicability to members of the uniformed services); and 
2635.104 (Applicability to employees on detail).
* * * * *
    (c) A member or employee shall comply with the requirements of 5 
CFR part 2635, subpart B (Gifts from outside sources).
    (d) A member or employee shall comply with the requirements of 5 
CFR part 2635, subpart C (Gifts between employees).
    (e) A member or employee shall comply with the requirements of 5 
CFR part 2635, subpart D (Conflicting financial requirements);
    (f) A member or employee shall comply with the requirements of 5 
CFR part 2635, subpart E (Impartiality).
    (g) A member or employee shall comply with the requirements of 5 
CFR part 2635, subpart G (Misuse of position).
    (h) No member or employee shall accept host-paid travel or 
reimbursement except as in accordance with the requirements of the 
Supplemental standards of ethical conduct for members and employees of 
the Securities and Exchange Commission (codified at 5 CFR 4401.103 
(Outside Employment and Activities)); 5 CFR part 2635, subpart H 
(Outside Activities); and 31 U.S.C. 353 and 41 CFR 304-1.1 (Acceptance 
of payment from a non-Federal source for travel expenses).

0
6. Sec.  200.735-4 is amended by:
0
a. Revising paragraph (a) and removing footnote 8 to paragraph (a);
0
b. Removing paragraphs (b)(1) through (b)(4) and paragraphs (b)(6) 
through (b)(8);
0
c. Redesignating paragraph (b)(5) as paragraph (b); in redesignated 
paragraph (b), further redesginating paragraphs (i), (ii), and (iii) as 
paragraphs (b)(1), (2), and (3); and redesignating footnotes 9 and 10 
in newly designated paragraphs (b) introductory text and (b)(3) as 
footnotes 2 and 3 respectively and removing the words ``(See 17 CFR 
200.735-4(b)(7))'' from newly redesignated footnote 2;
0
d. Removing footnote 11;
0
e. Revising paragraph (c) and removing footnotes 12, 13, and 14;
0
f. Removing paragraph (d);
0
g. Redesignating paragraph (e) as paragraph (d) and removing footnote 
15 in newly redesignated paragraph (d)(1) and adding new footnote 4 to 
newly redesignated paragraph (d)(1);
0
h. In newly redesignated paragraph (d)(1), removing the words 
``paragraph (b)(5)'' and, in their place, adding ``paragraph (b)'', and 
revising newly redesignated paragraph (d)(2)(ii);
0
i. Redesignating paragraphs (f) and (g) as paragraphs (g) and (h);
0
j. Adding new paragraphs (e) and (f);
0
k. Removing footnote 16 in paragraph (g) and the authority citation at 
the end of the section.
    The revisions and additions read as follows:

Sec.  200.735-4  Outside employment and activities.

    (a) Members and employees shall comply with the requirements of the

[[Page 42277]]

Supplemental standards of ethical conduct for members and employees of 
the Securities and Exchange Commission (codified at 5 CFR 4401.103 
(Outside employment and activities) and 5 CFR part 2635, subpart H 
(Outside activities)).
* * * * *
    (c) If otherwise permitted by 18 U.S.C. 203 and 205, the provisions 
of these rules or of 5 CFR 4401.103 do not preclude an employee from 
acting as agent or attorney:
    (1) For any Commission employee who is sued or under investigation 
in connection with his or her official duties;
    (2) For any Commission employee who is the subject of disciplinary, 
loyalty, or other personnel administrative proceedings in connection 
with those proceedings; or
    (3) For any Commission employee who raises claims or against whom 
allegations of wrongdoing are made pursuant to the Commission's Equal 
Opportunity regulations, if such representation is not inconsistent 
with the faithful performance of the employee's duties.
    (d)(1) * * * \4\
---------------------------------------------------------------------------

    \4\ This paragraph (d), requiring review of prepared speeches or 
writings relating to the Commission does not apply to teaching 
activities.
---------------------------------------------------------------------------

    (2) * * *
    (ii) (A) A determination by the General Counsel that a proposed 
publication conforms to the requirements of the rule will not involve 
adoption of, or concurrence in, the views expressed. Therefore, such 
publication or speech shall include at an appropriate place or in a 
footnote or otherwise, the following disclaimer of responsibility:
    The Securities and Exchange Commission disclaims responsibility for 
any private publication or statement of any SEC employee or 
Commissioner.
    This [article, outline, speech, chapter] expresses the author's 
views and does not necessarily reflect those of the Commission, the 
[other] Commissioners, or [other] members of the staff.
    (B) In appropriate cases, the above disclaimer may be modified by 
the General Counsel or the Commission to reflect the circumstances of 
an individual case. In addition, any publication or speech that 
reflects positions taken by the Commission shall set forth those 
positions accurately and, if it contains differences with Commission 
positions, it shall clearly state that such positions are those of the 
employee.
    (e) With respect to host-paid travel, members and employees shall 
comply with the requirements of the Supplemental standards of ethical 
conduct for members and employees of the Securities and Exchange 
Commission (codified at 5 CFR 4401.103 (Outside employment and 
activities)); 5 CFR part 2635, subpart H (Outside Activities); and 31 
U.S.C. 1353 and 41 CFR 304-1.1 (Acceptance of payment from a non-
Federal source for travel expenses).
    (f)(1) With respect to seeking or negotiating outside employment, 
members and employees shall comply with the requirements of the 
Supplemental standards of ethical conduct for members and employees of 
the Securities and Exchange Commission (codified at 5 CFR 4401.103 
(Outside employment and activities)); 5 CFR part 2635, subpart F 
(Seeking other employment); 5 CFR part 2635, subpart H (Outside 
activities).
    (2) Members and employees should be aware that 18 U.S.C. 208 (Acts 
affecting a personal interest) provides, among other things, that a 
member or employee is prohibited from participating personally and 
substantially in any particular matter in which, to his or her 
knowledge, the member or employee, his or her spouse, minor child, 
general partner, organization of which the employee is an officer, 
director, trustee, general partner or employee, or any person or 
organization with whom he or she is negotiating or has any arrangement 
concerning prospective employment, has a financial interest. This 
provision does not apply if the employee has received a written 
determination by an authorized official that the financial interest is 
not so substantial as to be deemed likely to affect the integrity of 
the employee's government service.
    (3) Members may follow the procedural provision contained in Part 
V, Section 503 of the Executive Order 11222.
* * * * *

0
7. Sec.  200.735-5 is amended by:
0
a. Revising Sec.  200.735-5; and
0
b. Removing footnote 17 in paragraph (b)(1)(ii).
    The revision reads as follows:

Sec.  200.735.5  Securities transactions.

    Securities transactions by members and employees must comply with 
the provisions of 5 CFR 4401.102 (Prohibited and restricted financial 
interests and transactions).

0
8. Sec.  200.735-6 is amended by:
0
(a) Revising Sec.  200.735-6; and
0
(b) Removing footnote 18.
    The revision reads as follows:

Sec.  200.735-6  Action in case of personal interest.

    Members and employees shall comply with the requirements of 5 CFR 
part 2640 (Interpretation, exemptions, and waiver guidance concerning 
18 U.S.C. 208 (Acts affecting a personal interest)).

0
9. Sec.  200.735-7 is amended by:
0
(a) Revising 200.735-7;
0
(b) Removing footnote 19 in paragraph (c).
    The revision reads as follows:

Sec.  200.735-7  Negotiation for employment.

    Members and employees shall comply with the requirements of 18 
U.S.C. 208 (Acts affecting a personal interest) and 5 CFR part 2635, 
subpart F (Seeking other employment). See Sec.  200.735-4(f)(2) of this 
subpart.

0
10. Sec.  200.735-8 is amended as follows:
0
a. Revising paragraph (a) and removing footnotes 20 and 21 in paragraph 
(a);
0
b. Removing footnote 22 in paragraph (a)(4);
0
c. In paragraph (d)(1) removing the words ``by paragraph (a)(1) of this 
section'';
0
d. In paragraph (d)(2) removing the words ``under paragraph (a)(1) of 
this section'';
0
e. Redesignating footnote 23 in paragraph (d)(3) as footnote 5; and
0
f. Redesignating footnote 24 in paragraph (e) as footnote 6.
    The revisions read as follows:

Sec.  200.735-8  Practice by former members and employees of the 
Commission.

    (a) Members and employees and former members and employees shall 
comply with the requirements of 18 U.S.C. 207 and 5 CFR part 2641 (Post 
employment conflict of interest restrictions). Members and employees 
and former members and employees should be aware that, among other 
restrictions, 18 U.S.C. 207 generally prohibits a former member or 
employee from knowingly communicating to or appearing before a Federal 
agency with the intent to influence a particular matter involving 
specific parties in which that person personally and substantially 
participated while at the Commission.
* * * * *

0
11. Sec.  200.735-9 is revised to read as follows:

Sec.  200.735-9  Indebtedness.

    Members and employees shall comply with the requirements of 5 CFR 
2635.809 (Just financial obligations).
0
12. Sec.  200.735-10 is revised to read as follows:

[[Page 42278]]

Sec.  200.735-10  Miscellaneous statutory provisions.

    Each member and employee is responsible for acquainting himself or 
herself with the statutory provisions listed in 5 CFR 2635.902 (Related 
statutes). A violation of any of these provisions is deemed a violation 
of this subpart M.

0
13. Sec.  200.735-11 is amended as follows:
0
a. Revising paragraph (a) and removing footnote 25 in paragraph (b);
0
b. Removing paragraphs (c) through (f);
0
c. Redesignating paragraph (g) as paragraph (c), removing the words 
``paragraph (c)'' and in their place, adding the words ``paragraph 
(a)'' and removing the words ``Director of Personnel'' and in their 
place, adding the words ``Commission's Office of the General Counsel's 
Ethics Office'' in newly redesignated paragraph (c);
0
d. Redesignating paragraph (h) through (i) as paragraphs (d) through 
(e);
0
e. Removing paragraph (j);
0
f. Redesignating paragraphs (k) through (l) as paragraph (f) through 
(g);
0
g. In newly redesignated paragraph (d), removing each time they appear 
the words ``Director of Personnel or the Assistant Director of 
Personnel'' and, in their place, adding the words ``Commission's Office 
of the General Counsel's Ethics Office''; and
0
h. In newly redesignated paragraph (e), removing the words ``paragraph 
(c)'' and in their place, adding the words ``paragraph (a)''; and 
removing the words ``Director of Personnel or the Assistant Director of 
Personnel'' and, in their place, adding the words ``Commission's Office 
of the General Counsel's Ethics Office''.
    The revision reads as follows:

Sec.  200.735-11  Statement of employment and financial interests.

    (a) Members and employees shall file financial disclosure reports 
in accordance with the requirements of 5 CFR part 2634 (Executive 
branch financial disclosure).
* * * * *

0
14. Sec.  200.735-15(b), (e), and (f) are amended by removing the words 
``Director of Personnel'' and, in their place, adding ``Commission's 
Office of the General Counsel's Ethics Office''.

0
15. Sec.  200.735-17 is amended by removing the words ``the Executive 
Director, the Director of Personnel'' and adding, in their place, ``the 
General Counsel, the Designated Agency Ethics Official''.

    Dated: July 14, 2010.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
Robert I. Cusick,
Director, Office of Government Ethics.
[FR Doc. 2010-17658 Filed 7-19-10; 8:45 am]
BILLING CODE 8010-01-P