[Code of Federal Regulations]
[Title 5, Volume 3]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR2634.406]

[Page 529-530]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
                CHAPTER XVI--OFFICE OF GOVERNMENT ETHICS
 
PART 2634_EXECUTIVE BRANCH FINANCIAL DISCLOSURE, QUALIFIED TRUSTS, AND 
 
                       Subpart D_Qualified Trusts
 
Sec. 2634.406  Independent trustees.

    (a) Standards. (1) The term independent trustee means any entity 
referred to in paragraph (a)(2) of this section which, under all the 
facts and circumstances, is determined by the Director of the Office of 
Government Ethics and in the Director's sole discretion, to be 
independent of any interested party with respect to a trust proposed for 
certification under this subpart. The term includes, unless the context 
indicates otherwise, in addition to the party to a trust instrument who 
is designated to serve as trustee, those parties who are designated to 
perform fiduciary duties. Approval of a proposed trustee or other 
designated fiduciary shall be granted only if it is established to the 
Director's satisfaction that the requirements of section 102 of the Act 
and this subpart have been met, and that approval in the case is in the 
public interest and consistent with the policies established by those 
provisions and other applicable laws and regulations.
    (2) Eligible entities. Eligibility to serve as a trustee or other 
fiduciary under this section is limited to a financial institution (not 
a person), not more than 10 percent of which is owned or controlled by a 
single individual, which is:
    (i) A bank, as defined in 12 U.S.C. 1841(c); or
    (ii) An investment adviser, as defined in 15 U.S.C. 80b-2(a)(11).
    Note: By the terms of paragraph (3)(A)(i) of section 102(f) of the 
Act, an individual who is an attorney, a certified public accountant, a 
broker, or an investment advisor is also eligible to serve as an 
independent trustee. However, experience of the Office of Government 
Ethics over the years dictates the necessity of limiting service as a 
trustee or other fiduciary to the financial institutions referred to in 
this paragraph, to maintain effective administration of trust 
arrangements and preserve confidence in the Federal qualified trust 
program. Accordingly, under its authority pursuant to paragraph (3)(D) 
of section 102(f) of the Act, the Office of Government Ethics will not 
approve proposed trustees or other fiduciaries who are not financial 
institutions, except in unusual cases where compelling necessity is 
demonstrated to the Director, in his sole discretion.
    (3) Requirements. No eligible entity shall be determined to be an 
independent trustee under this section unless:
    (i) That entity is independent of and unassociated with any 
interested party so that it cannot be controlled or influenced in the 
administration of the trust by any interested party; and
    (ii) That entity is not and has not been affiliated with any 
interested party, and is not a partner of, or involved in any joint 
venture or other investment or business with, any interested party; and

[[Page 530]]

    (iii) Any director, officer, or employee of such entity:
    (A) Is independent of and unassociated with any interested party so 
that such director, officer, or employee cannot be controlled or 
influenced in the administration of the trust by any interested party;
    (B) Is not and has not been employed by any interested party, not 
served as a director, officer, or employee of any organization 
affiliated with any interested party, and is not and has not been a 
partner of, or involved in any joint venture or other investment with, 
any interested party; and
    (C) Is not a relative of any interested party.
    (b) Approval procedures. (1) Appropriate documentation to establish, 
pursuant to the requirements of paragraph (a)(3) of this section, the 
independence of a proposed trustee or any other person to be designated 
in a trust instrument to perform fiduciary duties shall be submitted to 
the Office of Government Ethics in writing, including the Certificate of 
Independence in the form prescribed in appendix A of this part. The 
existence of any other banking or client relationship between an 
interested party and a proposed trustee or other designated fiduciary 
must be disclosed in such documentation, and may be subject to 
discontinuance as a condition of approval.
    (2) The Director shall indicate approval of a proposed trustee, and 
of any other person designated in the trust instrument to perform 
fiduciary duties, including those of an investment adviser, by reporting 
such approval in writing to the interested parties or to their 
representatives.
    (c) Review of approval. The Office of Government Ethics shall 
maintain a program to assess, on a frequent basis, the appropriateness 
of any approval which has been granted under this section.
    (d) Revocation of approval. Approval of a trustee or any other 
designated fiduciary may be revoked pursuant to the rules of subpart E 
of this part.