Source: http://www.oge.gov/OGE-Advisories/Legal-Advisories/LA-12-04--Public-Financial-Disclosure%E2%80%94Periodic-Transaction-Reports/
Timestamp: 2015-05-27 09:43:57
Document Index: 500225322

Matched Legal Cases: ['§ 6', '§ 102', '§ 14', '§ 2634', '§ 11', '§ 106', '§ 2634', '§ 208', 'art 2635', '§ 208', '§ 2638', '§ 103', '§ 101', '§ 101', '§ 2634', '§ 101', '§ 104', '§ 104', '§ 2634', '§ 104', '§ 2634', '§ 101', '§ 2634', '§ 101', '§ 202', '§ 101', 'art 2634']

NOTE: The guidance in this advisory regarding periodic reporting of spouse and dependent children transactions was updated in 2013 by Legal Advisory LA-13-01.
June 20, 2012 LA-12-04 TO:
Limitation to Transactions Involving Securities
Subsection 102(a)(5) of EIGA establishes the transaction reporting requirements for annual and termination public financial disclosure reports, with subsection 102(a)(5)(A) of EIGA covering certain transactions of real property and subsection 102(a)(5)(B) covering certain transactions of a variety of other assets. The new subsection 103(l) of EIGA requires reporting of only those transactions required to be reported under subsection 102(a)(5)(B) of EIGA. Pub. L. No. 112-105, § 6 (2012). In this way, subsection 103(l) of EIGA excludes transactions of real property and limits its coverage to transactions of the types of assets that subsection 102(a)(5)(B) covers: stocks, bonds, commodities futures, and other forms of securities.
Separate Transactions of an Employee’s Spouse or Dependent Child Excluded The explicit limitation in subsection 103(l) of EIGA to transactions under subsection 102(a)(5)(B) of EIGA has an additional limiting effect: The periodic transaction reporting requirements also exclude transactions of an employee’s spouse and dependent child. Subsection 102(a)(5)(B) of EIGA does not, by its terms, apply to transactions involving assets owned separately by spouses or dependent children. Authority to collect information about transactions involving spouses or dependent children is derived not from subsection 102(a)(5)(B) of EIGA but from subsection 102(e)(1) of EIGA. Subsection 102(e)(1) of EIGA provides explicitly that this collection authority is limited to any “report required by section 101.” 5 U.S.C. app. 4, § 102(e)(1). However, the STOCK Act places the new periodic transaction reporting requirements in subsection 103(l) of EIGA, outside section 101 of EIGA. Therefore, an employee may not be compelled to include information in a periodic transaction report about a transaction by a spouse or dependent child, unless the employee also owns the asset.1
Transactions of Certain Investment Vehicles Excluded Section 14 of the STOCK Act directs OGE to construe subsection 103(l) to exclude certain investment funds that covered employees must disclose in annual and termination reports. Pub. L. No. 112-105, § 14 (2012). The definition of these investment funds in section 14 of the STOCK Act parallels the definition of “excepted investment fund” in OGE’s regulations at 5 C.F.R. § 2634.310(c). Consequently, covered employees need not report transactions of excepted investment funds in their periodic transaction reports.
Adhering to this regular reporting schedule will enable covered employees to meet the 45-day and 30-day deadlines for reporting most covered transactions. In rare instances, certain employees might occasionally receive notification of a transaction that occurred earlier than would permit timely disclosure of the transaction on the fifteenth day of a month. In that event, any such employee would need to file a report sooner than on the fifteenth day of the month, in order to comply with the 45-day deadline. Q8. Has OGE created a standardized form for periodic transaction reports? Yes. OGE has created the attached OGE Form 278-T for periodic transaction reports. Use of this form is mandatory, except for agencies that propose to use alternate reporting formats and obtain OGE’s approval. DAEOs wishing to request approval of alternate reporting systems should contact their Desk Officer Teams. Q9. What will agencies in the executive branch do with periodic transaction reports? Agencies will make the periodic transaction reports public within 30 days of the filing date. See Pub. Law 112-105, § 11(a)(3) (2012); OGE LA-12-04 (2012). For purposes of this requirement, the filing date is deemed to be the later of either the date on which the employee actually files the report or the filing deadline for the report. Within 60 days of the filing date, agency ethics officials will complete a review of the periodic transaction report and sign the report, except where additional information is being sought or remedial action is being taken in accordance with OGE’s regulations. 5 U.S.C. app. 4, § 106; 5 C.F.R. § 2634.605(a). For purposes of this review deadline, the filing date will be deemed to be the later of either the date on which the employee actually files the report or the filing deadline for the report. In conducting the review, an agency ethics official may rely on the existing review assumptions described in OGE’s manual on public financial disclosure. OGE, Public Financial Disclosure: A Reviewer’s Reference, 2d ed., 4-6 to 4-7 (2004). The ethics official may rely on an additional review assumption, as to technical disclosure procedures only, that a periodic transaction report discloses transactions consistently with asset and transaction disclosures in Schedules A and B of the employee’s annual and termination reports. However, “[w]hile the financial disclosure laws and regulations require that reviewers accept reports at face value, reviewers should use more stringent standards when a report exhibits a pattern of inconsistency that indicates the filer did not understand the reporting instructions.” Id. at 4-6. On the basis of the information contained in the periodic transaction report, the ethics official should evaluate the report in connection with the substantive conflict of interest provisions of 18 U.S.C. § 208; agency-specific prohibited holdings statutes; Executive Order 12674, as modified by Executive Order 12731; and the Standards of Ethical Conduct for Employees of the Executive Branch at 5 C.F.R. part 2635, including supplemental regulations applicable to individual agencies. The analysis should normally be prospective in nature, with the aim of preventing conflicts of interest from occurring. However, if the review of a periodic transaction report raises a concern about a possible violation of 18 U.S.C. § 208 or related laws and regulations, the ethics official may need to inquire further or, consistent with existing practice, refer the matter to an investigative authority. See 5 C.F.R. § 2638.203(b)(12). The amendments to EIGA did not change the list of employees whose public financial disclosure reports agencies must forward to OGE for additional review. Those employees continue to be: “[T]he Postmaster General, the Deputy Postmaster General, the Governors of the Board of Governors of the United States Postal Service, designated agency ethics officials, employees described in section 105(a)(2)(A) or (B), 106(a)(1)(A) or (B), or 107(a)(1)(A) or (b)(1)(A)(i), of title 3, United States Code, . . . [and] officers and employees in . . . offices or positions which require confirmation by the Senate.” 5 U.S.C. app. 4, § 103(c). Q10. May agencies grant extensions of filing deadlines? Yes. Subsection 101(g)(1) of EIGA provides for reasonable extensions for filing “any report,” but limits the total length of extensions to 90 calendar days. 5 U.S.C. app. 4, § 101(g)(1). An agency ethics official may grant extensions for good cause shown. 5 U.S.C. app. 4, § 101(g)(1); 5 C.F.R. § 2634.201(f). For example, an agency should toll the deadline while an employee is on official or personal travel at the time of notification or shortly after notification. If an extension pushes the deadline for a periodic transaction report beyond the deadline for subsequent periodic transaction reports, the deadline for all such reports will be the date on which the extension expires. In that case, the employee may combine all disclosures in a single periodic transaction report. Extensions may be granted before or after the filing deadline, but 90 days is the maximum total length of such extensions. Q11. Are combat zone extensions available? Yes. Combat zone extensions are available under 5 U.S.C. app. 4, § 101(g)(2)(A). The catch-up annual or termination report that a covered employee files after this extension will satisfy the periodic transaction reporting requirements as to all transactions disclosed in that report. There is no need for the employee to make duplicate disclosures of transactions. At the same time, a catch-up annual report will not capture transactions that occurred after the end of the covered calendar year. If an employee has any such transactions to report, the employee will need to file a catch-up annual or termination report and a catch-up periodic transaction report at the same time. However, if the employee has not received notification of a transaction when the employee files this catch-up periodic transaction report, the deadline will be the earlier of (a) 45 days after the transaction or (b) 30 days after receiving notification of the transaction. Q12. Does the $200 late filing fee apply to a periodic transaction report? The subsection of EIGA establishing the $200 late filing fee, subsection 104(d), is applicable to any public financial disclosure report filed under title I of EIGA. 5 U.S.C. app. 4, § 104(d)(1) (late fee for untimely “report”). Therefore, the $200 late filing fee is applicable to periodic transaction reports, though not to individual transactions. A late fee covers all transactions that the employee could have timely included in a single report. Amendment of a timely filed report does not trigger a late filing fee when the DAEO or the DAEO’s designee is satisfied that the employee attempted in good faith to comply fully with applicable disclosure requirements and merely made an inadvertent error or omission. Because a covered employee may report a transaction up to 45 days after the transaction or up to 30 days after notification, the late filing fee covers all transactions within the reporting period. For example, an employee might receive notification on April 7 of three transactions that occurred between March 1 and March 31. If the disclosure of these three transactions is sufficiently untimely to trigger a late fee, the agency may assess one $200 fee for this period of time because one transaction report would have disclosed all three transactions. Similarly, if the disclosure of transactions spanning the period from October 1 through December 30 is sufficiently untimely to trigger late fees, the agency may assess up to two $200 late filing fees because the employee had up to 45 days after each transaction to disclose these transactions. Q13. When should the $200 late filing fee be waived? Agencies have the authority under EIGA to waive the $200 fee in extraordinary circumstances. 5 U.S.C. app. 4, § 104(d)(2); 5 C.F.R. § 2634.704(b). In light of the extraordinary circumstance presented by the challenge of advising approximately 28,000 covered employees of the new reporting requirements, OGE is exercising its authority under 5 U.S.C. app. 4, § 104(d)(2) to waive the late filing fee for transactions occurring prior to July 3, 2013, except where a DAEO or the DAEO’s designee determines that the failure to file a periodic transaction report was intentional. After this initial implementation period, agency ethics officials should remain mindful that the standard for what constitutes an extraordinary circumstance is necessarily relative to the amount of time that an employee has to make a filing. In some cases, the meaning of “extraordinary circumstances” is readily apparent. OGE’s regulations provide that an extraordinary circumstance exists when “the agency's failure to notify a new entrant, first-time annual filer, or termination filer of the requirement to file the public financial disclosure report . . . made the delay reasonably necessary.” 5 C.F.R. § 2634.704(b)(1). Likewise, an extraordinary circumstance logically exists when an employee has no legal right or ability to acquire transaction information before the deadline. Other non-exclusive examples of “extraordinary circumstances” include: a family emergency, such as illness, death, a flood, or a fire; the employee’s unawareness that a position to which the employee was transferred or detailed was subject to public filing; and agency administrative errors prevented the filer from filing reports on time. See OGE DAEOgram, DO-94-002 (Jan. 14, 1994). Q14. May agencies exclude any covered employees from periodic transaction reporting requirements? Agencies may not exclude an employee from the periodic transaction reporting requirements. However, subsection 101(i) of EIGA provides OGE with limited authority to grant a publicly available request by an agency to exclude a special Government employee from public financial disclosure requirements. 5 U.S.C. app. 4, § 101(i). OGE’s Director also may exclude certain persons who are in positions excepted from the competitive service by reason of being of a confidential or policymaking character. 5 C.F.R. § 2634.203(b). Q15. Must a person serving for 60 days or less file periodic transaction reports? No. An executive branch agency may not collect periodic transaction reports from a person who is reasonably expected to serve for 60 days or less. 5 U.S.C. app. 4, §§ 101(h), 103(l) (providing exclusions and incorporating exclusions). An employee, including a short-term detailee, will become subject to the reporting requirements upon serving more than 60 days during the calendar year. See OGE Advisory Op. 02 x 11 (2002); OGE Advisory Op. 06 x 10 (2006). In that case, periodic transaction reporting requirements apply to transactions occurring (a) on or after the sixty-first calendar day and (b) while the employee remains in the position. A slightly modified calculation applies to any special Government employee who is reasonably expected to serve in the position for 60 days or less in any calendar year. Such an individual will become subject to the periodic transaction disclosure requirements upon exceeding 60 days worked during the calendar year. See DO-03-021 (Oct. 23, 2003). The reporting requirements will apply to any transaction occurring both (a) on or after the sixty-first day worked in a calendar year and (b) on or before the end of a period of three hundred and sixty-five consecutive days from the date of appointment. Ethics officials should take care to note the distinction made between “calendar year” and “period of three hundred and sixty-five consecutive days” in this paragraph. See 18 U.S.C. § 202(a); 5 U.S.C. app. 4, § 101(h). Q16. How can agency ethics officials obtain additional information about periodic transaction reporting requirements in specific cases? Ethics officials should consult with their OGE Desk Officer Teams regarding questions about the issues addressed in this Legal Advisory. In the future, OGE will issue regulations for inclusion in 5 C.F.R. part 2634 with regard to the periodic transaction reporting requirements. Attachment
1 The legislative history indicates that this limitation was intentional. The version of the STOCK Act originally passed by the Senate would have established periodic transaction reporting requirements in a new section 101(j) of EIGA. 158 Cong. Rec. S310 (Feb. 2, 2012). Including these requirements in section 101 of EIGA would have had the effect of requiring disclosure of information about spouses and children, as subsection 102(e)(1) of EIGA applies to “each report required by section 101.” By its terms, subsection 102(e)(1) of EIGA would have applied to reports under subsection 101(j) of EIGA. After the Senate passed S. 2038, however, the House took up the Senate bill and replaced the text in its entirety before passing it. In replacing the text with language of its own, the House moved the periodic transaction reporting requirements to section 103 of EIGA in a new subsection 103(l) of EIGA. 158 Cong. Rec. H657 (Feb. 9, 2012). Because the House deliberately moved the periodic transaction reporting requirements from section 101 of EIGA, the authority under subsection 101(e)(1) of EIGA does not extend to the periodic transaction reporting requirements. The Senate then passed the House version of S. 2038 without amendment on March 22, 2012, and the House version of the bill became the enrolled bill sent to the President for signature. 158 Cong. Rec. S1981 (Mar. 22, 2012). As a result, OGE lacks authority to require employees to disclose transactions of a spouse or dependent child in periodic transaction reports. For a related reason, OGE also lacks authority to collect information about the transactions of certain investment vehicles, such as irrevocable trusts and investment funds, for the benefit of an employee’s spouse or dependent child. Subsection 101(f)(1) of EIGA is applicable to periodic transaction reports under subsection 103(l) of EIGA, but the reference in that subsection to a spouse or dependent child does not apply to periodic transaction reports. The language of subsection 102(f)(1) limits its coverage to “information required to be reported pursuant to subsections (a), (b), and (c)” of section 102 of EIGA. Subsections (a), (b) and (c) of section 102 of EIGA do not require disclosure of information about a spouse or dependent child, except when subsection 102(e)(1) of EIGA is applicable. As discussed above, subsection 101(e)(1) of EIGA does not apply to periodic transaction reports.
Additional Advisories about the STOCK Act LA-12-01: Post-Employment Negotiation and Recusal Requirements under the STOCK ActLA-12-02: Mortgage Reporting Requirement under the STOCK ActLA-13-01: Periodic Reporting of Spouse and Dependent Children TransactionsLA-13-06: Notification of Negotiations for Post-Government Compensation under Section 17 of the STOCK ActLA-13-09: Periodic Transaction Reporting—Lapse of Penalty WaiverLA-14-02: Participation in Initial Public Offerings by Certain Employees Periodic Transaction Reports This video is an introduction to the periodic transaction reporting requirement for public financial disclosure filers.