[Code of Federal Regulations]
[Title 5, Volume 3]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR5501.104]

[Page 761-762]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
          CHAPTER XLV--DEPARTMENT OF HEALTH AND HUMAN SERVICES
 
PART 5501_SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES OF THE 
 
Sec.  5501.104  Prohibited financial interests applicable to employees of the 

Food and Drug Administration.

    (a) General prohibition. Except as permitted by paragraph (b) of 
this section, no employee or spouse or minor child of an employee, other 
than a special Government employee or the spouse or minor child of a 
special Government employee, of the Food and Drug Administration shall 
have a financial interest in a significantly regulated organization.
    (b) Exceptions. Notwithstanding the prohibition in paragraph (a) of 
this section:
    (1) An employee or spouse or minor child of an employee may have a 
financial interest, such as a pension or other employee benefit, arising 
from employment with a significantly regulated organization.

    Note to paragraph (b)(1):
    FDA employees who file public or confidential financial disclosure 
reports pursuant to 5 CFR part 2634, as opposed to spouses and minor 
children of such employees, are generally prohibited under Sec.  
5501.106(c)(3) from engaging in current employment with a significantly 
regulated organization.
    (2) An employee who is not required to file a public or confidential 
financial disclosure report pursuant to 5 CFR part 2634, or the spouse 
or minor child of such employee, may hold a financial interest in a 
significantly regulated organization if:
    (i) The total cost or value, measured at the time of acquisition, of 
the combined interests of the employee and the employee's spouse and 
minor children in the regulated organization is equal to or less than 
the de minimis exemption limit for matters involving parties established 
by 5 CFR 2640.202(a) or $15,000, whichever is greater (the phrase ``time 
of acquisition'' shall mean the date on which the employee actually 
acquired the financial interest--or on which the financial interest 
became imputed to the employee under 18 U.S.C. 208--whether by purchase, 
gift, bequest, marriage, or otherwise, except that with respect to a 
financial interest that was acquired prior to the employee's entrance on 
duty as an employee of the Food and Drug Administration, the ``time of 
acquisition'' shall be deemed to be the date on which the employee 
entered on duty);
    (ii) The holding, if it represents an equity interest, constitutes 
less than 1 percent of the total outstanding equity of the organization; 
and
    (iii) The total holdings in significantly regulated organizations 
account for less than 50 percent of the total value of the combined 
investment portfolios of the employee and the employee's spouse and 
minor children.
    (3) An employee or spouse or minor child of an employee may have an 
interest in a significantly regulated organization that constitutes any 
interest in a publicly traded or publicly available investment fund 
(e.g., a mutual fund), or a widely held pension or similar fund, which, 
in the literature it distributes to prospective and current investors or 
participants, does not indicate the objective or practice of 
concentrating its investments in significantly regulated organizations, 
if the employee neither exercises control nor has the ability to 
exercise control over the financial interests held in the fund.
    (4) In cases involving exceptional circumstances, the Commissioner 
or the Commissioner's designee may grant a written exception to permit 
an employee, or the spouse or minor child of an employee, to hold a 
financial interest in a significantly regulated organization based upon 
a determination that the application of the prohibition in paragraph (a) 
of this section is not necessary to ensure public confidence in the 
impartiality or objectivity with which HHS programs are administered or 
to avoid a violation of part 2635 of this title.

    Note to paragraph (b):
    With respect to any excepted financial interest, employees are 
reminded of their obligations under 5 CFR part 2635, and specifically 
their obligation under subpart D of part 5501 to disqualify themselves 
from participating in any particular matter in which they, their spouses 
or minor children have a financial interest arising from publicly traded 
securities that exceeds the de minimis thresholds specified in the 
regulatory exemption at 5 CFR 2640.202 or from non-publicly traded 
securities that are not covered by the regulatory exemption. 
Furthermore, the agency may prohibit or restrict an individual employee 
from acquiring or holding any financial interest or a class of financial 
interests based on the agency's determination that the interest creates 
a substantial conflict

[[Page 762]]

with the employee's duties, within the meaning of 5 CFR 2635.403.

    (c) Reporting and divestiture. For purposes of determining the 
divestiture period specified in 5 CFR 2635.403(d), as applied to 
financial interests prohibited under paragraph (a) of this section, the 
``date divestiture is first directed'' means the date on which the new 
entrant public or confidential financial disclosure report required by 
part 2634 of this title or any report required by Sec.  5502.106(c) of 
this chapter is due.

[61 FR 39763, July 30, 1996, as amended at 70 FR 5558, Feb. 3, 2005]