(a) Engage, directly or indirectly, in ny personal business transaction or priate arrangement for personal profit hich accrues from or is based upon his fficial position or authority or upon Confidential or nonpublic information which he gains by reason of such posiion or authority.1

(b) (1) Solicit or accept, directly or ndirectly, any valuable gift, gratuity, avor, entertainment, loan, service, or any other thing of monetary value from any person with whom he transacts business on behalf of the United States; who nas, or is seeking to obtain, contractual or other business or financial relations with the Commission; who conducts operations or activities regulated by the Commission; or who has interests that may be substantially affected by the performance or nonperformance of his official duty. This paragraph does not apply (i) when the circumstances make it clear that it is obvious family relationships rather than the business of the persons concerned which govern and are the motivating factors; (ii) when, on infrequent occasions, free food and refreshments of nominal value are offered in the ordinary course of a luncheon or dinner meeting or other meeting or on an inspection tour where attendance is official and proper; (iii) when unsolicited advertising or promotional material, such as pens, pencils, note pads, calendars and other items of nominal intrinsic value are offered; or (iv) when the Commission, after due consideration, determines that an exception is warranted and appropriate in a particular situation. For purposes of this subpart, "person"

1 Members of the Commission are subject also to the following prohibition in section 4(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78d(a)): “* No Commissioner shall engage in any other business, vocation, or employment than that of serving as Commissioner, nor shall any Commissioner participate, directly or indirectly, in any stock market operations or transactions of a character subject to regulation by the Commission pursuant to this title *

In addition, members of the Commission are subject to the requirements of Executive Order 11222 of May 8, 1965.

Detailed provisions regarding outside or private employment and transactions in securities and commodities are set forth in §§ 200.735-4 and 200.735-5 respectively. Further provisions regarding use and disclosure of confidential information are set forth in paragraph (d) of this section and in the note appended thereto.

means an individual, a corporation, a company, an association, a firm, a partnership, a society, a joint stock company, or any other organization or institution.2 (2) Act in any manner, whether or not specifically prohibited by this section, which might result in, or create the appearance of: (i) Using public office for private gain; (ii) giving preferential treatment to any person; (iii) impeding Government efficiency or economy; (iv) losing complete independence or impartiality; (v) making a Government decision outside official channels; or (vi) affecting adversely the confidence of the public in the integrity of the Government.

(3) Solicit contributions from another employee for a gift to an employee in a superior official position. An employee in a superior official position shall not accept a gift presented as a contribution from employees receiving less salary than himself. An employee shall not make a donation as a gift to an employee in a superior official position (5 U.S.C. 113). However, this subparagraph (3) does not prohibit the use of completely voluntary contributions of employees within the Commission to establish funds for the limited purpose of providing token remembrances in situations such as death, illness, marriage, birth or retirement.

(4) Accept a gift, present, decoration, or other thing from a foreign government unless authorized by Congress as provided by the Constitution and in 5 U.S.C. 114-115a.

(c) Discuss or entertain proposal for future employment by any person outside the Government with whom he is transacting business on behalf of the United States.3

(d) Divulge confidential or nonpublic commercial, economic or official information to any unauthorized person, or release such information in advance of authorization for its release. Any officer or employee who is served with a subpoena requiring the disclosure of nonpublic information or documents shall,

2 Members and employees of the Commission are subject also to provisions of the Federal Criminal Code which prohibits any officer or employee of the United States from asking, accepting or receiving any money or other thing of value in connection with any matter before him in his official capacity (18 U.S.C. § 203).

3 Detailed provisions regarding negotiations for future employment are set forth in § 200.735-7.

administers without having obtained clearance from the Commission. The proposed publication or speech should be submitted to the Office of General Counsel and will be examined to determine whether it contains confidential or nonpublic information or whether there is any reason why the publication or delivery of the employee's private views on the subject matter would be otherwise inappropriate. Clearance for publication or delivery will not involve adoption of or concurrence in the views expressed, and such publication or speech shall include at an appropriate place by way of footnote or otherwise the following disclaimer of responsibility:

The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the author's colleagues upon the staff of the Commission.

(g) No employee shall hold office in or be a director of any company which has public security holders, except not for profit corporations, savings and loan associations, and similar institutions, whose securities are exempted under section 3(a) (4) or 3(a) (5) of the Securities Act of 1933 (15 U.S.C. 77c (a) (4), 77c (a) (5)).

(h) The Director of Personnel, or his designee, is authorized to approve or disapprove requests for outside or private employment under this rule, except as to those cases which, in his judgment, should be considered and decided by the Commission. An employee may appeal a disapproved request to the Commission. The written appeal, submitted through the Director of Personnel, shall give reasons why the proposed outside or private employment is consistent with this rule.

[31 F.R. 5483, Apr. 7, 1966, as amended at 31 F.R. 8952, June 29, 1966]

§ 200.735-5 Securities transactions.

(a) This section applies to all transactions effected by or on behalf of a member or employee, including transactions for the accounts of other persons effected by the member or employee, directly or indirectly, under a power of attorney or otherwise. A member or employee is considered to have sufficient interest in the securities transactions of his or her spouse or minor child or other member of his immediate household so that such transactions must be reported and are subject to all the terms of this

section. For purposes of this section "member of his immediate househol means a resident of the member's or er ployee's household who is related to him by blood or marriage.

(b No member or employee shall e fect or cause to be effected any trans action in a security except for bona fide investment purposes. Unless otherwise determined by the Commission for caus shown, any purchase which is held fr less than 1 year will be presumed not to be for investment purposes. This parsgraph (b) does not apply to securitie purchased by a member or employee prior to entrance on duty with the Commission. Any employee who believes the requirements of paragraph (a) of this section as to "member of his household" or the application of this paragraph will result in undue hardship in a par ticular case may make written applica tion to the Commission (through the Director of Personnel) setting out, in detail, the reasons for his belief and requesting a waiver.

(c) No member or employee shall effect any purchase or sale of a future contract for any commodity.

(d) No member or employee shall carry securities on margin. Also no member or employe shall borrow funds or securities, with or without collateral, for the purpose of purchasing or carrying securities with the proceeds unless prior approval of the Commission has been secured.

(e) No member or employee shall sell a security which he does not own, or the sale of which is consummated by the delivery of a security borrowed by or for such member's or employee's account.

(f) No member or employee shall pur chase any security which is the subject of a registration statement filed under the Securities Act of 1933 (15 U.S.C. 778 et seq.), or of a letter of notification filed under Regulation A (§§ 230.251230.263 of this chapter), or any other security of the same issuer, while such a registration statement or letter of noti fication is pending or during the first sixty days after its effective date. This prohibition applies even though the registration statement or Regulation A filing covers a so-called limited offering such as to officers and employees of the com

pany under a bonus plan.

(g) No member or employee shall purchase securities of (1) any holding company registered under section 5 of the Public Utility Holding Company Act of

935 (15 U.S.C. 79e), or any subsidiary aereof, or (2) any company if its status nder such Act or the applicability of any rovision of the Act to it is known by the mployee to be under consideration.

(h) No member or employee shall urchase any securities issued by any nvestment company prima facie subject o the jurisdiction of the Commission under the provisions of the Investment Company Act of 1940 (15 U.S.C. 80a et seq.). Capital or income dividends received from securities acquired prior to entrance on duty may not be reinvested but must be accepted in cash if this option is available.

(i) No member or employee shall have a beneficial interest in any broker, dealer or investment adviser through ownership of securities or otherwise.

(j) No member or employee shall purchase any security which to his knowledge is involved in any pending investigation by the Commission or in any proceeding before the Commission or to which the Commission is a party.

(k) No member or employee shall purchase any securities of any company which is in receivership or for which a petition has been filed under Chapter X or Chapter XI of the Bankruptcy Act.

(1) The restrictions imposed in paragraphs (f), (g), (h), (j), and (k) of this section do not apply to the exercise of a privilege to convert or exchange securities; to the exercise of rights accruing unconditionally by virtue of ownership of other securities (as distinguished from a contingent right to acquire securities I not subscribed for by others); or to the acquisition and exercise of rights in order to round out fractional shares.

(m) Members and employees shall report every transaction in any security within 5 business days. (Reports submitted by employees in field offices must be placed in the mails within 5 days of the date of each transaction.) Other changes in holdings resulting from inheritance or from reclassifications, gifts, stock dividends or splitups, for example, shall be reported promptly. In addition, every employee owning securities shall, at least once in every 12 months, furnish a complete list of all securities held by him. Reports shall be prepared on the official form provided for this purpose, copies of which may be procured from the Office of Personnel or the Publications Unit (SEC Form 681). These reports shall be transmitted to the Director of Personnel. The envelope should be

marked "Confidential-Securities Transactions."

(n) At the time of taking the oath of office, or prior thereto for prospective employees if requested by the Director of Personnel, a new member or employee shall fill in the information required, on SEC Form 682, (1) relating to securities owned by him or his spouse or minor child or a member of his immediate household or by any trust or estate of which he is a trustee or other fiduciary or beneficiary or by any person for whom he effects transactions under a power of attorney or otherwise, (2) relating to accounts with securities firms, (3) relating to relatives who are partners or officers of securities firms, investment companies, investment advisers, or registered public utility holding companies or their affiliates, and (4) relating to the holding of office in or being a director of any company which has public security holders.

(0) Paragraphs (b), (m), and (n) of this section do not apply to personal notes, individual real estate mortgages, U.S. Government securities, and securities issued by building and loan associations or cooperatives.

(p) Any member or employee who is a trustee or other fiduciary or a beneficiary of a trust or estate holding securities not exempted by paragraph (o) of this section shall report the existence and nature of such trust or estate to the Director of Personnel. The transactions of such trust or estate shall be subject to all the provisions of this section except in situations where the member or employee is solely a beneficiary and has no power to control and does not in fact control or advise with respect to the investments of the trust or estate, and except to the extent that the Commission shall otherwise direct in view of the circumstances of the particular case.

(q) The Director of Personnel, or his designee, is authorized to require the disposition of securities acquired as a result of the unintentional violation of the provisions of this section. Repeated violations shall be reported to the Commission for appropriate action. § 200.735-6 Action in case of personal

interest.

Any employee assigned to work on any application, filing or matter of a company (a) in which he or his spouse or his minor child then owns any securities or has a personal interest, including a continuing financial interest through a

pension or retirement plan, shared income, or other arrangement, as a result of any current or prior employment or business or professional association; or (b) with which he has been employed or associated in the past; or (c) which was a client of a firm with which he had been associated; shall immediately advise the division director or other office head or regional administrator of the fact. Division directors, other office heads and regional administrators are authorized to direct the reporting employee to continue with the assignment in question where this appears in the interest of the Government, taking into account (1) the prohibitions stated in § 200.735-3 (e) and (f); (2) the general desirability of avoiding situations that require a question of conflict of interest or the appearance of a conflict of interest to be resolved; (3) the extent to which the employee's activities will be supervised; and (4) the difficulty of assigning the matter to some other employee. Where the employee in question is not relieved of the assignment, his written report concerning the nature of his interest shall be forwarded to the Director of Personnel with a notation that he has been directed to continue the assignment, together with such explanation, if any, as may seem appropriate. In the event that a division director or other office head or regional administrator deems that he has, himself, such personal interest in an application, filing or matter of a company as may raise a question as to his disinterestedness, he may delegate his responsibility with regard thereto to a subordinate, but in that event shall submit a brief memorandum of the circumstances to the Director of Personnel.

18 U.S.C. 208, provides, among other things, that a member or employee is prohibited from participating personally and substantially in any matter in which, to his knowledge, he, his spouse, minor child, partner, organization in which he is serving as officer, director, trustee, partner or employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest. This section (of the Criminal Code) does not apply if the employee has received a written determination made by an authorized official that the interest is not so substantial as to be deemed likely to affect the integrity of the employee's service. NOTE: Members of the Commission may follow the procedural provision contained in Part V, section 503 of Executive Order 11222.

§ 200.735-7 Negotiation for private employment.

(a) The provisions of § 200.735-3(c) are deemed to preclude negotiation for private employment by an employee who is immediately engaged in representing the Commission in any matter in which the prospective employer is opposing counsel or person chiefly affected. With

the approval of his superior or the Commission an employee may be relieved of any assignment which, in the absence of such relief, might preclude such negotiation.

(b) No employee shall undertake to act on behalf of the Commission in any capacity in a matter that, to his knowledge, affects even indirectly any person outside the Government with whom he is discussing or entertaining any proposal for future employment, except pursuant to the direction of the Commission, his division director or other office head, or his regional administrator, as provided in § 200.735-6. See footnote 9.

$ 200.735-8 Practice by former members and employees of the Commis

sion.

(a) (1) No person shall appear in a representative capacity before the Commission in a particular matter if such person, or one participating with him in the particular matter, personally considered it or gained knowledge of the facts thereof while he was a member or employee of the Commission. As used in this subparagraph, a single investigation or formal proceeding, or both if they are related, shall be presumed to constitute a particular matter for at least 2 years irrespective of changes in the issues. However, in cases of proceedings in which the issues change from time to time, such as proceedings involving compliance with section 11 of the Public Utility Holding Company Act (15 U.S.C. 79k), this subparagraph shall not be construed as prohibiting appearance in such a proceeding, more than two years after ceasing to be a member or employee of the Commission, unless it appears to the Commission that there is such identity of particular issues or pertinent facts as to make it likely that confidential information, derived while a member or employee of the Commission, would have continuing relevance to the proceeding, so as to make the participation therein by the former member or employee of the

Commission unethical or prejudicial to the interests of the Commission.

(2) No person who has been a member or an employee shall within 1 year after his employment has ceased, appear in a representative capacity before the Commission in any matter which was under his official responsibility as a member or employee of the Commission at any time within a period of 1 year prior to the termination of such responsibility. The term "official responsibility" as defined in 18 U.S.C. 202 means the "direct administrative or operating authority, whether intermediate or final, and either exercisable alone or with others, and either personally or through subordinates, to approve, disapprove, or otherwise direct Government action."

(b) Any former member or employee of the Commission who, within 2 years after ceasing to be such, is employed or retained as the representative of any person outside the Govermnent in any matter in which it is contemplated that he will appear before the Commission shall, within ten days of such retainer or employment, or of the time when appearance before the Commission is first contemplated, file with the Secretary of the Commission a statement as to the nature thereof together with any desired explanation as to why it is deemed consistent with this section. Employment of a recurrent character may be covered by a single comprehensive statement. Each such statement should include an appropriate caption indicating that it is filed pursuant to this section. The reporting requirements of this paragraph do not apply to communications inOcidental to court appearances in litigation involving the Commission.

or

(c) As used in this section, the term "appear before the Commission" means personal appearance before or personal communication with the Commission or any member or employee thereof, in connection with any interpretation matter of substance arising under the statutes administered by the Commission and Chapters X and XI of the Bankruptcy Act. As used in this section, the term "representative" or "representative capacity" shall include not only the usual type of representation by an attorney, etc., but also representation of a corporation in the capacity of an officer, director, or controlling stockholder thereof.

(d) Persons in doubt as to the applicability of this section may apply for an advisory ruling of the Commission.10

§ 200.735-9 Indebtedness.

The Securities and Exchange Commission considers the indebtedness of its members and employees to be essentially a matter of their own concern. The Commission will not be placed in the position of acting as a collection agency or of determining the validity or amount of contested debts. Nevertheless, failure on the part of an employee without good reason and in a proper and timely manner to honor debts acknowledged by him to be valid or reduced to judgment by a court or to make or to adhere to satisfactory arrangements for the settlement thereof may be the cause for disciplinary action. In this connection each member and employee is expected to meet his responsibilities for payment of Federal, State and local taxes. For purposes of this section, "in a proper and timely manner" means in a manner which the agency determines does not, under the circumstances, reflect adversely on the Government as his employer.

Each member and employee is responsible for acquainting himself with each statute that relates to his ethical and other conduct as an employee of the Commission and of the Government, including the statutory provisions listed below. Violations of any of these statutes are deemed to be violations of the rules in this Subpart M as well.

(a) House Concurrent Resolution 175, 85th Congress, 2d Session, 72 Stat. B12, the "Code of Ethics for Government Service."

(b) Chapter 11 of title 18, United States Code, relating to bribery, graft, and conflicts of interest, as appropriate to the employees concerned.

(c) The prohibition against lobbying with appropriated funds (18 U.S.C. 1913).

(d) The prohibition against disloyalty and striking (5 U.S.C. 118p, 118r).

(e) The prohibition against the employment of a member of a Communist organization (50 U.S.C. 784).

10 Attention of former members and employees is directed to Canons 6 and 36 of the American Bar Association and to 18 U.S.C. 207.