[Federal Register Volume 76, Number 69 (Monday, April 11, 2011)]
[Rules and Regulations]
[Pages 19901-19902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8485]
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Rules and Regulations
Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents
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Federal Register / Vol. 76, No. 69 / Monday, April 11, 2011 / Rules
and Regulations
[[Page 19901]]
SECURITIES AND EXCHANGE COMMISSION
5 CFR Part 4401
[Release No. 34-64172]
Supplemental Standards of Ethical Conduct for Members and
Employees of the Securities and Exchange Commission
AGENCIES: Securities and Exchange Commission and Office of Government
Ethics.
ACTION: Final rule.
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SUMMARY: The Securities and Exchange Commission with the concurrence of
the Office of Government Ethics is amending its Supplemental Standards
of Conduct for Members and Employees to eliminate a recently
established prior approval requirement for outside employment.
DATES: Effective Date: May 11, 2011.
FOR FURTHER INFORMATION CONTACT: Shira Pavis Minton, Ethics Counsel,
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
amending its Supplemental Standards of Conduct for Members and
Employees to eliminate a recently established prior approval
requirement for outside employment. Staff members of the SEC are
already subject to strict limitations regarding the type of employment
they are allowed to undertake, and staff regularly seeks advice from
the ethics office prior to taking any outside employment. In addition,
the requirement appears to be largely cumulative of other measures
without providing significant additional benefits. These other measures
include the requirement that SEC staff members submit proposed
publications or prepared speeches relating to the Commission (or to the
statutes or rules it administers) to the General Counsel for review.
These measures also include current financial disclosure regulations
and current substantive regulations prohibiting conflicting outside
employment. The requirement to obtain prior approval for outside
employment has not identified any conflicts or otherwise enhanced the
ethics program.
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,\1\ 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 \2\ 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.\3\ The rules do not contain any new
collection of information requirements as defined by the Paperwork
Reduction Act of 1995, as amended.\4\
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\1\ 5 U.S.C. 553(b)(3)(A).
\2\ 5 U.S.C. 601 et seq.
\3\ 5 U.S.C. 804(3)(C).
\4\ 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 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.
[[Page 19902]]
IV. Statutory Basis and Text of the Rule
This amendment to the Commission's ethics rules is 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 in 5 CFR Part 4401
Administrative practice and procedure, Conduct and ethics.
For the reasons set out in the preamble, Title 5, Chapter XXXIV of
the Code of Federal Regulations is amended as follows:
PART 4401--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR MEMBERS
AND EMPLOYEES OF THE SECURITIES AND EXCHANGE COMMISSION
0
1. The authority citation for part 4401 continues to read as follows:
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.
0
2. Section 4401.103 is amended by:
0
a. Removing and reserving paragraph (c)(1)(ii);
0
b. Revising paragraph (c)(1)(iii);
0
c. Removing paragraph (d); and
0
d. Redesignating paragraph (e) as paragraph (d).
The revision reads as follows:
Sec. 4401.103 Outside employment and activities.
* * * * *
(c) * * *
(1) * * *
(iii) No employee shall undertake the following types 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;
(C) Employment otherwise involved with the securities industry; or
(D) Employment otherwise in violation of any applicable law, rule
or regulation.
* * * * *
Dated: April 4, 2011.
By the Commission.
Elizabeth M. Murphy,
Secretary.
Robert I. Cusick,
Director, Office of Government Ethics.
[FR Doc. 2011-8485 Filed 4-8-11; 8:45 am]
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