Financial Services Conflict of Interest Act

Bill: 115-s-265
Sponsor: full_name: Sen. Baldwin, Tammy [D-WI]
Introduced: 2017-02-01
Policy area: Government Operations and Politics
Subjects: Administrative law and regulatory procedures

Banking and financial institutions regulation

Civil actions and liability

Commodity Futures Trading Commission

Consumer Financial Protection Bureau

Department of the Treasury

Employee benefits and pensions

Employee hiring

Federal Deposit Insurance Corporation (FDIC)

Federal Housing Finance Agency

Federal Reserve System

Federal officials

Financial services and investments

Fraud offenses and financial crimes

Government employee pay, benefits, personnel management

Government ethics and transparency, public corruption

National Credit Union Administration

Office of Management and Budget (OMB)

Personnel records

Public contracts and procurement

Public participation and lobbying

Securities and Exchange Commission (SEC)

Wages and earnings
Latest action: action_date: 2017-02-01
text: Read twice and referred to the Committee on Homeland Security and Governmental Affairs.

Summaries:
action_date: 2017-02-01
action_desc: Introduced in Senate
text: <p><strong>Financial Services Conflict of Interest Act</strong></p> <p>This bill amends the Ethics in Government Act of 1978 and other laws to:</p> <ul> <li>expand&nbsp;restrictions on federal government employees' acceptance of compensation from nongovernment sources,</li> <li>generally&nbsp;require certain financial-services regulators to recuse themselves from any official action that would provide a direct and substantial pecuniary benefit for a recent former employer or client,</li> <li>generally&nbsp;prohibit such a regulator from participating in matters that involve an individual or entity with whom the regulator is&nbsp;negotiating future employment,</li> <li>prohibit a federal government employee from participating in a procurement involving a contractor that had recently employed that employee, and</li> <li>expand restrictions on lobbying by certain former financial-services regulators.</li></ul>

tv_txt: II 115th CONGRESS 1st Session S. 265 IN THE SENATE OF THE UNITED STATES February 1, 2017 Ms. Baldwin (for herself, Ms. Warren , Mr. Blumenthal , Mr. Schatz , Mr. Van Hollen , and Mr. Merkley ) introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs A BILL To prevent conflicts of interest that stem from executive Government employees receiving bonuses or other compensation arrangements from nongovernment sources, from the revolving door that raises concerns about the independence of financial services regulators, and from the revolving door that casts aspersions over the awarding of Government contracts and other financial benefits.

1. Short title This Act may be cited as the Financial Services Conflict of Interest Act . 2. Restrictions on private sector payment for Government service Section 209 of title 18, United States Code, is amended— (1) in subsection (a)— (A) by striking any salary and inserting any bonus or salary ; and (B) by striking his services and inserting services rendered or to be rendered ; and (2) in subsection (b)— (A) by inserting (1) after (b) ; and (B) by adding at the end the following: (2) For purposes of paragraph (1), a pension, retirement, group life, health or accident insurance, profit-sharing, stock bonus, or other employee welfare or benefit plan that makes payment of compensation contingent on accepting a position in the Federal Government shall not be considered bona fide. (3) For purposes of paragraph (2), compensation includes a retention award or bonus, severance pay, and any other payment linked to future service in the Federal Government in any way. . 3. Requirements relating to slowing the revolving door among financial services regulators (a) In general The Ethics in Government Act of 1978 (5 U.S.C. App.) is amended by adding at the end the following: VI Special requirements for financial services regulators 601. Definitions (a) In general In this title, the terms designated agency ethics official and executive branch have the meanings given those terms under section 109. (b) Other definitions In this title: (1) Covered financial services agency The term covered financial services agency — (A) means a primary financial regulatory agency (as defined in section 2 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5301 )); and (B) includes— (i) the Board of Governors of the Federal Reserve System; (ii) the Office of the Comptroller of the Currency; (iii) the Federal Deposit Insurance Corporation; (iv) the National Credit Union Administration; (v) the Securities and Exchange Commission; (vi) the Federal Housing Finance Agency; (vii) the Bureau of Consumer Financial Protection; (viii) the Commodity Futures Trading Commission; (ix) the Department of the Treasury; (x) the National Economic Council; and (xi) the Council of Economic Advisors. (2) Covered financial services regulator The term covered financial services regulator means an officer or employee of a covered financial services agency who occupies— (A) a supervisory position classified above GS–15 of the General Schedule; (B) in the case of a position not under the General Schedule, a supervisory position for which the rate of basic pay is not less than 120 percent of the minimum rate of basic pay for GS–15 of the General Schedule; or (C) any other supervisory position determined to be of equal classification by the Director. (3) Director The term Director means the Director of the Office of Government Ethics. (4) Former client The term former client — (A) means a person for whom a covered financial services regulator served personally as an agent, attorney, or consultant during the 2-year period ending on the date (after such service) on which the covered financial services regulator begins service in the Federal Government; and (B) does not include— (i) instances in which the service provided was limited to a speech or similar appearance; or (ii) a client of the former employer of the covered financial services regulator to whom the covered financial services regulator did not personally provide such services. (5) Former employer The term former employer — (A) means a person for whom a covered financial services regulator served as an employee, officer, director, trustee, or general partner during the 2-year period ending on the date (after such service) on which the covered financial services regulator begins service in the Federal Government; and (B) does not include— (i) an entity in the Federal Government, including an executive branch agency; (ii) a State or local government; (iii) the District of Columbia; (iv) an Indian tribe, as defined in section 4 of the Indian Self-Determination and Education Assistance Act ( 25 U.S.C. 5304 ); or (v) the government of a territory or possession of the United States. 602. Conflict of interest and eligibility standards for financial services regulators (a) In general A covered financial services regulator shall not make, participate in making, or in any way attempt to use the official position of the covered financial services regulator to influence a particular matter that provides a direct and substantial pecuniary benefit for a former employer or former client of the covered financial services regulator. (b) Recusal A covered financial services regulator shall recuse himself or herself from any official action that would violate subsection (a). (c) Waiver (1) In general The head of the covered financial services agency employing a covered financial services regulator, in consultation with the Director, may grant a written waiver of the restrictions under subsection (a) if, and to the extent that, the head of the covered financial services agency certifies in writing that— (A) the application of the restriction to the particular matter is inconsistent with the purposes of the restriction; or (B) it is in the public interest to grant the waiver. (2) Publication The Director shall make each waiver under paragraph (1) publicly available on the Web site of the Office of Government Ethics. 603. Negotiating future private sector employment (a) Prohibition Except as provided in subsection (c), and notwithstanding any other provision of law, a covered financial services regulator may not participate in any particular matter which involves, to the knowledge of the covered financial services regulator, an individual or entity with whom the covered financial services regulator is in negotiations of future employment or has an arrangement concerning prospective employment. (b) Disclosure of employment negotiations (1) In general If a covered financial services regulator begins any negotiations of future employment with another person, or an agent or intermediary of another person, or other discussion or communication with another person, or an agent or intermediary of another person, mutually conducted with a view toward reaching an agreement regarding possible employment of the covered financial services regulator, the covered financial services regulator shall notify the designated agency ethics official of the covered financial services agency employing the covered financial services regulator regarding the negotiations, discussions, or communications. (2) Information A designated agency ethics official receiving notice under paragraph (1), after consultation with the Director, shall inform the covered financial services regulator of any potential conflicts of interest involved in any negotiations, discussions, or communications with the other person and the applicable prohibitions. (c) Waivers only when exceptional circumstances exist (1) In general The head of a covered financial services agency may only grant a waiver of the prohibition under subsection (a) if the head determines that exceptional circumstances exist. (2) Review and publication For any waiver granted under paragraph (1), the Director shall— (A) review the circumstances relating to the waiver and the determination that exceptional circumstances exist; and (B) make the waiver publicly available on the Web site of the Office of Government Ethics, which shall include— (i) the name of the private person or persons involved in the negotiations or arrangement concerning prospective employment; and (ii) the date on which the negotiations or arrangements commenced. (d) Scope For purposes of this section, the term negotiations of future employment is not limited to discussions of specific terms or conditions of employment in a specific position. 604. Recordkeeping The Director shall— (1) receive all employment histories, recusal and waiver records, and other disclosure records for covered executive branch officials necessary for monitoring compliance with this title; (2) promulgate rules and regulations, in consultation with the Director of the Office of Personnel Management and the Attorney General, to implement this title; (3) provide guidance and assistance where appropriate to facilitate compliance with this title; (4) review and, where necessary, assist designated agency ethics officials in providing advice to covered financial services regulators regarding compliance with this title; and (5) if the Director determines that a violation of this title may have occurred, and in consultation with the designated agency ethics official and the Counsel to the President, refer the compliance case to the United States Attorney for the District of Columbia for enforcement action. 605. Penalties and injunctions (a) Criminal penalties (1) In general Any person who violates section 602 or 603 shall be fined under title 18, United States Code, imprisoned for not more than 1 year, or both. (2) Willful violations Any person who willfully violates section 602 or 603 shall be fined under title 18, United States Code, imprisoned for not more than 5 years, or both. (b) Civil enforcement (1) In general The Attorney General may bring a civil action in an appropriate district court of the United States against any person who violates, or whom the Attorney General has reason to believe is engaging in conduct that violates, section 602 or 603. (2) Civil penalty (A) In general Upon proof by a preponderance of the evidence that a person violated section 602 or 603, the court shall impose a civil penalty of not more than the greater of— (i) $100,000 for each violation; or (ii) the amount of compensation the person received or was offered for the conduct constituting the violation. (B) Rule of construction A civil penalty under this subsection shall be in addition to any other criminal or civil statutory, common law, or administrative remedy available to the United States or any other person. (3) Injunctive relief (A) In general In a civil action brought under paragraph (1) against a person, the Attorney General may petition the court for an order prohibiting the person from engaging in conduct that violates section 602 or 603. (B) Standard The court may issue an order under subparagraph (A) if the court finds by a preponderance of the evidence that the conduct of the person violates section 602 or 603. (C) Rule of construction The filing of a petition seeking injunctive relief under this paragraph shall not preclude any other remedy that is available by law to the United States or any other person. . 4. Prohibition of procurement officers accepting employment from Government contractors (a) Expansion of prohibition on acceptance by former officials of compensation from contractors Section 2104 of title 41, United States Code, is amended— (1) in subsection (a)— (A) in the matter preceding paragraph (1)— (i) by striking or consultant and inserting consultant, lawyer, or lobbyist ; and (ii) by striking one year and inserting 2 years ; and (B) in paragraph (3), by striking personally made for the Federal agency and inserting participated personally and substantially in ; and (2) by striking subsection (b) and inserting the following: (b) Prohibition on compensation from affiliates and subcontractors A former official responsible for a Government contract referred to in paragraph (1), (2), or (3) of subsection (a) may not accept compensation for 2 years after awarding the contract from any division, affiliate, or subcontractor of the contractor. . (b) Requirement for procurement officers To disclose job offers made on behalf of relatives Section 2103(a) of title 41, United States Code, is amended in the matter preceding paragraph (1) by inserting after that official the following: , or for a relative (as defined in section 3110 of title 5) of that official, . (c) Requirement on award of Government contracts to former employers (1) In general Chapter 21 of title 41, United States Code, is amended by adding at the end the following: 2108. Prohibition on involvement by certain former contractor employees in procurements An employee of the Federal Government may not be personally and substantially involved with any award of a contract to, or the administration of a contract awarded to, a contractor that is a former employer of the employee during the 2-year period beginning on the date on which the employee leaves the employment of the contractor. . (2) Technical and conforming amendment The table of sections for chapter 21 of title 41, United States Code, is amended by adding at the end the following: 2108. Prohibition on involvement by certain former contractor employees in procurements. . (d) Regulations The Administrator for Federal Procurement Policy and the Director of the Office of Management and Budget shall— (1) in consultation with the Director of the Office of Personnel Management and the Counsel to the President, promulgate regulations to carry out and ensure the enforcement of chapter 21 of title 41, United States Code, as amended by this section; and (2) in consultation with designated agency ethics officials (as defined under section 601 of the Ethics in Government Act of 1978 (5 U.S.C. App.), as added by section 3), monitor compliance with that chapter by individuals and agencies. 5. Revolving door restrictions on financial services regulators moving into the private sector (a) In general Section 207 of title 18, United States Code, is amended— (1) by redesignating subsections (e) through (l) as subsections (f) through (m), respectively; and (2) by inserting after subsection (d) the following: (e) Restrictions on employment for financial services regulators (1) In general In addition to the restrictions set forth in subsections (a), (b), (c), and (d), a covered financial services regulator shall not— (A) during the 2-year period beginning on the date on which his or her employment as a covered financial services regulator ceases— (i) knowingly act as agent or attorney for, or otherwise represent, any other person for compensation (except the United States) in any formal or informal appearance before; (ii) with the intent to influence, make any oral or written communication on behalf of any other person (except the United States) to; or (iii) knowingly aid, advise, or assist in— (I) representing any other person (except the United States) in any formal or informal appearance before; or (II) making, with the intent to influence, any oral or written communication on behalf of any other person (except the United States) to, any court of the United States, or any officer or employee thereof, in connection with any judicial or other proceeding, that was actually pending under his or her official responsibility as a covered financial services regulator during the 1-year period ending on the date on which his or her employment as a covered financial services regulator ceases or in which he or she participated personally and substantially as a covered financial services regulator; or (B) during the 2-year period beginning on the date on which his or her employment as a covered financial services regulator ceases— (i) knowingly act as a lobbyist or agent for, or otherwise represent, any other person for compensation (except the United States) in any formal or informal appearance before; (ii) with the intent to influence, make any oral or written communication or conduct any lobbying activities on behalf of any other person (except the United States) to; or (iii) knowingly aid, advise, or assist in— (I) representing any other person (except the United States) in any formal or informal appearance before; or (II) making, with the intent to influence, any oral or written communication or conduct any lobbying activities on behalf of any other person (except the United States) to, any department or agency of the executive branch or Congress (including any committee of Congress), or any officer or employee thereof, in connection with any matter that is pending before the department, the agency, or Congress. (2) Penalty Any person who violates paragraph (1) shall be punished as provided in section 216. (3) Definitions In this subsection— (A) the term covered financial services regulator has the meaning given that term in section 601 of the Ethics in Government Act of 1978 (5 U.S.C. App.); and (B) the terms lobbying activities and lobbyist have the meanings given those terms in section 3 of the Lobbying Disclosure Act of 1995 ( 2 U.S.C. 1602 ). . (b) Technical and conforming amendments (1) Section 103(a) of the Honest Leadership and Open Government Act of 2007 ( 2 U.S.C. 4702(a) ) is amended by striking section 207(e) each place it appears and inserting section 207(f) . (2) Section 207 of title 18, United States Code, as amended by subsection (a), is amended— (A) in subsection (g), as so redesignated, by striking or (e) and inserting or (f) ; (B) in subsection (j)(1)(B), as so redesignated, by striking subsection (f) and inserting subsection (g) ; and (C) in subsection (k), as so redesignated— (i) in paragraph (1)(B), by striking ( 25 U.S.C. 450i(j) ) and inserting ( 25 U.S.C. 5323(j) ) ; (ii) in paragraph (2), in the matter preceding subparagraph (A), by striking and (e) and inserting (e), and (f) ; (iii) in paragraph (4), by striking and (e) and inserting (e), and (f) ; and (iv) in paragraph (7)— (I) in subparagraph (A), by striking and (e) and inserting (e), and (f) ; and (II) in subparagraph (B)(ii), in the matter preceding subclause (I), by striking subsections (c), (d), or (e) and inserting subsection (c), (d), (e), or (f) . (3) Section 141(b)(4) of the Trade Act of 1974 ( 19 U.S.C. 2171(b)(4) ) is amended by striking section 207(f)(3) and inserting 207(g)(3) . (4) Section 7802(b)(3)(B) of the Internal Revenue Code of 1986 is amended by striking and (f) of section 207 and inserting and (g) of section 207 . (5) Section 3105(c) of the USEC Privatization Act ( 42 U.S.C. 2297h–3(c) ) is amended by striking and (d) and inserting and (e) . (6) Section 106(p)(6)(I)(ii) of title 49, United States Code, is amended by striking and (f) of section 207 and inserting and (g) of section 207 . 6. Restrictions on federal examiners and supervisors of financial institutions (a) In general Section 10(k) of the Federal Deposit Insurance Act ( 12 U.S.C. 1820(k) ) is amended— (1) in the subsection heading— (A) by striking One-Year and inserting Two-Year ; and (B) by striking Examiners and inserting Examiners and Supervisors ; (2) in paragraph (1)— (A) by striking subparagraph (B) and inserting the following: (B) served— (i) not less than 2 months during the final 12 months of the employment of the person with that agency or entity as the senior examiner (or a functionally equivalent position) of a depository institution or depository institution holding company with continuing, broad responsibility for the examination (or inspection) of that depository institution or depository institution holding company on behalf of the relevant agency or Federal reserve bank; or (ii) as a supervisor of the senior examiner with responsibility for managing the oversight of not more than 5 depository institutions or depository institution holding companies on behalf of the relevant agency or Federal reserve bank; and ; and (B) in subparagraph (C)— (i) in the matter preceding clause (i), by striking 1 year and inserting 2 years ; (ii) in clause (i)— (I) by striking other company and inserting other company, firm, or association ; and (II) by striking or at the end; (iii) in clause (ii), by striking the period at the end and inserting ; or ; and (iv) by adding at the end the following: (iii) a business entity, firm, or association that represents the depository institution or depository institution holding company for compensation. ; (3) by redesignating paragraphs (2) through (6) as paragraphs (3) through (7), respectively; (4) by inserting after paragraph (1) the following: (2) Application of penalties for supervisors A supervisor of a covered financial services regulator, or a supervisor of a senior examiner described in paragraph (1)(B)(i), shall be subject to the penalties described in paragraph (7) if the supervisor knowingly accepts compensation during the 2-year period beginning on the date on which the service of the supervisor is terminated— (A) as— (i) an employee; (ii) an officer; (iii) a director; or (iv) a consultant; and (B) from— (i) a depository institution; (ii) a depository institution holding company that is designated by the Financial Stability Oversight Council as a systemically important financial market utility under section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010 ( 12 U.S.C. 5463 ); or (iii) a business entity, firm, or association that represents an institution described in clause (ii) for compensation. ; (5) in paragraph (3), as so redesignated— (A) by redesignating subparagraphs (A) and (B) as subparagraphs (B) and (C), respectively; and (B) by inserting before subparagraph (B), as so redesignated, the following: (A) the term covered financial services regulator has the meaning given the term in section 601 of the Ethics in Government Act of 1978 (5 U.S.C. App.); ; (6) in paragraph (4), as so redesignated, by striking or other company each place it appears and inserting or other company, firm, or association ; and (7) in paragraph (7), as so redesignated— (A) in subparagraph (A)— (i) in the matter preceding clause (i), by striking other company and inserting other company, firm, or association ; and (ii) in clause (i)(I), by striking other company and inserting other company, firm, or association ; and (B) in subparagraph (C), by striking a company and inserting a company, firm, or association . (b) Technical and conforming amendments Section 10(k) of the Federal Deposit Insurance Act ( 12 U.S.C. 1820(k) ) is amended— (1) in paragraph (1), in the matter preceding subparagraph (A), by striking paragraph (6) and inserting paragraph (7) ; (2) in paragraph (5)(A), as so redesignated, by striking paragraph (1)(B) and inserting paragraphs (1)(B) and (2) ; and (3) in paragraph (7), as so redesignated— (A) in subparagraph (A)— (i) by striking subject to paragraph (1) and inserting subject to paragraph (1) or (2) ; and (ii) by striking paragraph (1)(C) and inserting paragraph (1)(C) or (2) ; and (B) in subparagraph (C)— (i) by striking person described in paragraph (1) and inserting person described in paragraph (1) or (2) ; and (ii) by striking the functions described in paragraph (1)(B) and inserting the functions or duties described in paragraph (1)(B) or (2) . 7. Severability If any provision of this Act or any amendment made by this Act, or any application of such provision or amendment to any person or circumstance, is held to be unconstitutional, the remainder of the provisions of this Act and the amendments made by this Act and the application of the provision or amendment to any other person or circumstance shall not be affected.