interest incompatible with an unbiased exercise of official judgment.*

(1) Have direct or indirect, personal business or financial affairs which confiict or appear to conflict with his official duties and responsibilities.

(g) Use, or allow the use of, directly or indirectly, Government property of any kind, including property leased to the Government, for other than officially approved activities. An employee has a positive duty to protect and conserve Government property, including equipment, supplies, and other property entrusted or issued to him.

(h) Participate, while on Government-owned or leased property or while on duty for the Government, in any gambling activity, including the operation of a gambling device, in conducting a lottery or pool, in a game for money or property, or in selling or purchasing a numbers slip or ticket.

(1) Engage in criminal, infamous, dishonest, immoral, or notoriously disgraceful conduct, or other conduct prejudicial to the Government.

[31 F.R. 5483, Apr. 7, 1966, as amended at 33 FR. 2631, Feb. 7, 1968]

§ 200.735-4 Outside or private employ

ment.

(a) No member or employee shall permit his name to be associated in any way with any legal, accounting or other professional firm or office."

(b) (1) No employee shall have any outside or private employment or activity or affiliation incompatible with concurrent employment by the Commission. Incompatible activities include but are not limited to: (i) Employment or association with any registered broker, dealer, public utility holding company, investment company, or investment adviser, or directly or indirectly related to

Section 200.735-6 of this subpart provides a procedure for relieving employees from assignments in certain cases, including those covered by paragraph (f) of this section.

• With respect to members, this paragraph supplements the statutory prohibition of outside employment contained in section 4(a) of the Securities Exchange Act of 1934, quoted in footnote 1. Except as otherwise indicated, the remaining provisions of this section are not made applicable to members in view of the provisions of section 4(a) of the Securities Exchange Act of 1934.

the issuance, sale or purchase of securities; (ii) legal, accounting, or engineering work for compensation involving matters in which the Federal government or any State, Territorial or municipal authority may be significantly interested; (iii) acceptance of a fee, compensation, gift, payment of expense. or any other thing of monetary value in circumstances in which acceptance may result in or create the appearance of, conflicts of interest; or (iv) outside employment which tends to impair the employee's mental or physical capacity to perform his Commission duties and responsibilities in an acceptable manner. For purposes of this paragraph, the private employment or affiliation of an employee's spouse, child or relative living in his immediate household, with any registered broker, dealer, investment adviser, investment company, public utility holding company or affiliate, or directly or indirectly related to the issuance, sale, purchase or investment of securities is deemed to be incompatible with the employee's concurrent employment by the Commission, except as determined otherwise by the Commission in a specific case.

(2) No employee shall accept or perform outside employment under a State or local government prohibited by law, regulations of the Civil Service Commission or the rules in this subpart.

(3) No employee shall receive any salary or anything of monetary value from a private source as compensation for his services to the Government (18 U.S.C. 209).

(4) The Commission encourages employees to engage in teaching, lecturing, and writing activities with or without compensation. However, no employee shall engage in any such activities, including teaching, lecturing, or writing for the purpose of the special preparation of a person or class of persons for an examination of the Civil Service Commission or Board of Examiners for the Foreign Service, which are prohibited by law, the Executive orders, Civil Service Commission regulations, or the rules in this subpart; or which are dependent on information obtained as a result of the employee's Government employment, except when that information has been made available to the general public or will be made available on request, or when the Commission gives formal approval for the use of nonpublic infor

mation on the basis that the use thereof is in the public interest.?

(5) As required by Decision B-128527 of the Comptroller General dated March 7, 1967, travel expenses and subsistence of a member or employee who performs official travel under Commission orders must be paid from the Commission's appropriation. Unless prohibited by law, and notwithstanding the provisions of this paragraph (b) and of § 200.735-3, a member or employee who performs travel while on annual leave or while in -a nonofficial duty status (administrative leave), may accept such bona fide Freimbursement for actual expenses for travel and necessary subsistence from private sources as is compatible with these rules, provided no Government payment or reimbursement is made for any such expenses. However, a member or employee may not be reimbursed, and payment may not be made on his behalf, in any case for excessive personal living I expenses, gifts, entertainment, or other = personal benefits.

(6) The provisions of this paragraph (b) and $ 200.735-3 (b) (1) do not preEclude a member or employee from:

(i) Participation in the activities of national or State political parties not proscribed by law;

(ii) Participation in the affairs of, or acceptances of an award for a merietorious public contribution or achievement given by, a charitable, religious, professional, social, fraternal, nonprofit educational and recreational, public service, or civic organization.

'Since members of the Commission are covered by section 401(a) of Executive Order 11222, they are prohibited by Civil Service Regulations (5 CFR 735.203(c)) from receiving compensation or anything of monetary value for any consultation, lecture, discussion, writing, or appearance, the subject matter of which is devoted substantially to the responsibilities, programs, or operations of their agencies, or which draws substantially on official data or ideas which have not become part of the body of public information.

outside or private professional work or practice by the staff is discouraged and only in unusual cases or circumstances will it be authorized. However, the Commission encourages its employees, in offduty hours and consistent with official responsibilites, to participate, without compensation, in programs to provide legal assistance and representation to indigents. Such participation may include limited appearances in court and on briefs when required in connection with such programs. However, such participation may not involve any activities which are prohibited by law, the Executive Orders, Civil Service Commission regulations, or this Subpart M.

(d) An employee who intends to accept or perform any outside or private employment or professional work shall obtain necessary authorization in advance of such acceptance or performance. A request for such authorization shall be submitted to the division or office head or regional administrator concerned, together with all pertinent facts regarding the proposed employment, such as the name of the employer, the nature of the work to be performed, its estimated duration, and the fee or compensation to be received. Division and office heads and regional administrators shall forward all requests, together with their recommendations thereon, to the Director of Personnel.

(e) No employee shall accept a fee from an outside source on account of a public appearance, speech, lecture or publication if the public appearance or the preparation of the speech, lecture, or publication was a part of the official duties of the employee.

(f) No employee shall publish any article or treatise or deliver any prepared

8 Attention is called to Title 18, United States Code, sections 201 through 209 which provide, among other things, that Federal employees are prohibited from acting as agent or attorney in prosecuting any claim against the United States or from aiding or assisting in any way, except as otherwise permitted in the discharge of official duties, in the prosecution or support of any such claim, or from receiving any gratuity, or any share of an interest in any claim from any claimant against the United States; and from directly or indirectly receiving or agreeing to receive any compensation whatever for services rendered or to be renedered to any person in relation to any matter in which the United States is a party or directly or indirectly interested.

speech or address relating to the Commission or the statutes and rules it 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.Sa 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.

(E.O. 11408; 3 CFR, 1968 Comp.) [31 F.R. 5483, Apr. 7, 1966, as amended at 32 F.R. 3741, Mar. 4, 1967; 33 F.R. 2631, Feb. 7, 1968; 33 F.R. 9391, June 27, 1968]

Ba Clearance will not be granted with respect to any address or article relating to current litigation in which the Commission

articipating as a party, or as amicus or in any other capacity, except where ress or article is nonargumentative nothing more than describe the or explain the Commission's

§ 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 household" means a resident of the member's or employee's household who is related to him by blood or marriage.

(b) No member or employee shall effect or cause to be effected any transaction in a security except for bona fide investment purposes. Unless otherwise determined by the Commission for cause shown, any purchase which is held for less than 1 year will be presumed not to be for investment purposes. This paragraph (b) does not apply to securities 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 particular case may make written application 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 & 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 purchase 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 iled 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 notiication 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 company 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 1935 (15 U.S.C. 79e), or any subsidiary thereof, or (2) any company if its status under such Act or the applicability of any provision of the Act to it is known by the employee to be under consideration.

(h) No member or employee shall purchase any securities issued by any investment company prima facie subject to 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 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 sub

mitted 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 ex

cept 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 reto to a subordinate, but in

(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 tr 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 Commission.

(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

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 emplovee's service. NOTE: Members of the Commission may follow the procedural provision contained in Part V, section 503 of Executive Order 11222.