[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: 5CFR5501.110] [Page 771-773] TITLE 5--ADMINISTRATIVE PERSONNEL CHAPTER XLV--DEPARTMENT OF HEALTH AND HUMAN SERVICES PART 5501_SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES OF THE Sec. 5501.110 Prohibited financial interests applicable to senior employees of the National Institutes of Health. (a) Applicability. This section does not apply to special Government employees or the spouse or minor children of a special Government employee. (b) Definitions. For purposes of this section: (1) Senior employee means the Director and the Deputy Director of the National Institutes of Health; members of the senior staff within the Office of the Director who report directly to the NIH Director; the Directors, the Deputy Directors, Scientific Directors, and Clinical Directors of each Institute and Center within NIH; Extramural Program Officials who report directly to an Institute or Center Director; and any employee of equivalent levels of decision-making responsibility who is designated as a senior employee by the designated agency ethics official or the NIH Director, in consultation with the designated agency ethics official. (2) Substantially affected organization has the meaning set forth in Sec. 5501.109(b)(10). (c) Prohibition applicable to senior employees. Except as permitted by paragraph (d) of this section, a senior employee or the spouse or minor child of such senior employee shall not have a financial interest in a substantially affected organization. (d) Exceptions for certain financial interests. Notwithstanding the prohibition in paragraph (c) of this section: (1) Pension or other employee benefit. A senior employee or spouse or minor child of a senior employee may have a financial interest, such as a pension or other employee benefit, arising from employment with a substantially affected organization. Note to Paragraph (d)(1): NIH employees, as opposed to spouses and minor children of employees, are generally prohibited under Sec. 5501.109 from engaging in current employment with a substantially affected organization. (2) De minimis holdings. A senior employee or spouse or minor child of a senior employee may have a financial interest in a substantially affected organization if: [[Page 772]] (i) The aggregate market value of the combined interests of the senior employee and the senior employee's spouse and minor children in any one substantially affected 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; (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 substantially affected organizations and sector mutual funds that, in the literature they distribute to prospective and current investors or participants, state the objective or practice of concentrating their investments in the securities of substantially affected organizations account for less than 50 percent of the total value of the combined investment portfolios of the senior employee and the senior employee's spouse and minor children. (3) Diversified mutual funds. A senior employee or spouse or minor child of a senior employee may have an interest in a substantially affected 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 substantially affected organizations, if the employee neither exercises control nor has the ability to exercise control over the financial interests held in the fund. (4) Exceptional circumstances. In cases involving exceptional circumstances, the NIH Director or the NIH Director's designee, with the approval of the designated agency ethics official or his designee, may grant a written exception to permit a senior employee, or the spouse or minor child of a senior employee, or a class of such individuals, to hold a financial interest in a substantially affected organization based upon a determination that the application of the prohibition in paragraph (c) 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. (5) Technology transfer. A senior employee may have a financial interest in connection with the development and commercialization of invention rights obtained by the employee pursuant to Executive Order 10096, 15 U.S.C. 3710d, or implementing regulations. (6) Sector mutual funds. (i) A senior employee or spouse or minor child of a senior employee may have an interest in a substantially affected organization that constitutes any interest in a sector mutual fund that, in the literature it distributes to prospective and current investors or participants, does not indicate the objective or practice of concentrating its investments in the biomedical science, pharmaceutical, medical device, biotechnology, or health industry sectors. (ii) A senior employee or spouse or minor child of a senior employee may have an interest in a substantially affected organization that constitutes any interest in a sector mutual fund that, in the literature it distributes to prospective and current investors or participants, states the objective or practice of concentrating its investments in the securities of substantially affected organizations provided that: (A) The aggregate market value of the combined ownership interests of the senior employee and the senior employee's spouse and minor children in such sector funds is equal to or less than the de minimis exemption limit for sector mutual funds established by 5 CFR 2640.201(b)(2)(i) or $50,000, whichever is greater; and (B) The total holdings in substantially affected organizations and in sector mutual funds that, in the literature they distribute to prospective and current investors or participants, state the objective or practice of concentrating their investments in the securities of substantially affected organizations account for less than 50 percent of the total value of the combined investment portfolios of the senior employee and the senior employee's spouse and minor children. Note to Paragraph (d): With respect to any excepted financial interest, employees are reminded of their obligations under 5 [[Page 773]] CFR part 2635, and specifically their obligation under subpart D 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 with the employee's duties, within the meaning of 5 CFR 2635.403. (e) 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 (c) 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. 5502.107(c) of this chapter is due. [70 FR 5562, Feb. 3, 2005, as amended at 70 FR 51571, Aug. 31, 2005]