paragraph (b)(6)(i) of this section must, prior to participation, obtain the written approval of their Division Director, Office Head, or Regional Administrator to participate in the program and the written approval of the Chairman, if paragraph (b)(6)(ii)(A)(3) of this section applies. If paragraph (b)(6)(ii)(A)(3) of this section does not apply, the Executive Director shall determine in writing whether the Commission will accept the payment or reimbursement.

(1) In acting on requests to participate, Division Directors, Office Heads, and Regional Administrators shall consider: (i) The benefit to the Commission and the public of participation; (ii) the expertise of the proposed participant; and (iii) the appropriate allocation of resources.

(2) In determining whether the Commission shall accept payment or reimbursement, the Executive Director shall consider the possibility of any appearance of impropriety.

(B) Division Directors, Office Heads, and Regional Administrators must, prior to participation, obtain the written approval of the Chairman, if paragraph (b)(6)(ii)(A)(3) of this section applies. If paragraph (b)(6)(ii)(A)(3) of this section does not apply, the Executive Director shall determine, in writing, considering the possibility of any appearance of impropriety, whether the Commission will accept the payment or reimbursement. Division Directors, Office Heads, and Regional Administrators shall make the determinations specified in paragraph (b)(6)(iii)(A)(1) of this section as to their own participation.

(C) Except if paragraph (b)(6)(ii)(A)(3) of this section applies, each Commissioner shall determine for himself or herself whether payment or reimbursement for his or her expenses incident to participation in programs meeting the criteria of paragraph (b)(6)(i) of this section should be accepted by the Commission. Notice of each decision shall be sent to the Executive Director.

(D) Whenever it is determined, pursuant to paragraphs (b)(6)(iii) (A), (B), or (C) of this section that the Commission will accept a particular payment or reimbursement, the Executive Di

rector shall forward notice of that decision to the Public Reference Room, Washington, D.C., for insertion in a public file.

(iv) Payment or reimbursement shall not be accepted for expenses which are unreasonable or lavish.

(v) On a quarterly basis, the Commission shall publish in the SEC Docket a compilation of payments and reimbursements accepted.

(vi) The Commission's acceptance from any person of payment or reimbursement for the expenses of а spouse or traveling companion accompanying a member or employee is prohibited. If a staff member wishes to participate in a program which offers payment or reimbursement meeting the criteria of paragraph (b)(6)(i) of this section and acceptance would not be prohibited by paragraph (b)(6)(ii) of this section, but is denied approval in accordance with paragraphs (b)(6)(iii)(A) or (B) of this section, or wishes to accept reimbursement for the travel expenses of his or her spouse or traveling companion, the staff member may participate in the program and accept such reimbursement personally, Provided, That:

(A) No reimbursement for travel expenses may be accepted from a person who does, or is seeking to do, business with the Commission, is regulated directly or indirectly by the Commission, is registered with the Commission, or has interests which may be substantially affected by the official's performance or non-performance of his or her official duties.

(B) No reimbursement may be accepted for the travel expenses of an employee's spouse or traveling companion unless the prior written approval of the General Counsel is obtained. Under appropriate circumstances, such as programs where participants are expected to engage in social activities, the General Counsel may approve acceptance upon written application.

(C) A copy of the General Counsel's approval and notice of the amount of payment or reimbursement accepted from the sponsor must be sent to the Executive Director for inclusion in the public file in accordance with paragraph (b)(6)(iii)(D) of this section.

(D) Such staff member's participation and travel occur only while on annual leave, approved in accord with regular leave procedures. Note 7 CFR 200.735-4(e)(2)(ii).

(vii) Members or employees who are participating in a program meeting the criteria of paragraph (b)(6)(i) of this section, which is sponsored by a person determined by the Secretary of the Treasury to be a tax-exempt organization pursuant to 26 U.S.C. 501(c)(3), and for which reimbursement for the member's or employee's participation will be accepted by the Commission, may, while on official duty, accept from the sponsoring entity bona fide reimbursement for actual expenses for travel and necessary subsistence for a spouse or traveling companion Provided that the procedures detailed in paragraphs (d)(6)(vi) (A)-(C) of this section are followed.

(7) The provisions of this paragraph (b) and § 200.735-3(b)(2) do not preclude 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 acceptance of an award for a meritorious public contribution or achievement given by, a charitable, religious, professional, social, fraternal, nonprofit educational, recreational, public service, or civic organization.

(8)(i) As a matter of general policy, the Commission discourages the acceptance of honoraria or similar fees and payments which are given for publications, speeches or lectures based on the official duties of the employee. In accord with this policy, no member or employee may accept such an honorarium unless written approval is obtained in advance from the Commission's General Counsel, subject to the general review of the Commission. Requests for such approval should be submitted to the General Counsel in writing and should include a statement in support of the request.

(ii) Honoraria which are most likely to be deemed acceptable are those which appear to be remuneration for teaching. An employee may not, under any circumstances, accept an honorarium from any person from whom reim

bursement for travel expenses is prohibited by paragraph (b)(6)(ii) of this section. In any event an employee may not accept an excessive honorarium as described in 2 U.S.C. 441(i). This section does not preclude the acceptance of a modest gift for participation as a speaker, as provided in Rule 3.

(c) No employee shall appear in court or on a brief in a representative capacity (with or without compensation) or otherwise accept or perform legal, accounting, engineering, or similar professional work, unless specifically authorized to do so by the Commission. Acceptance of a forwarding fee shall be deemed to be within the foregoing prohibition. As a matter of general policy, 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 off-duty hours and consistent with official responsibilities, to participate, without compensation, in programs to provide legal or other appropriate assistance and representation to indigents. 12 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, Executive orders, Office of Personnel Management regulations, or this Subpart M.13

12 As a matter of policy, the Commission encourages members of its staff to participate in matters involving improvement to their communities and service to indigent persons, provided that the necessary approval is obtained in advance. However, in no case will approval be given to participate in matters involving securities.

13 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 and 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 compensaContinued

For example, 18 U.S.C. 205 prohibits a Federal employee from appearing in court in a matter in which the United States has an interest (other than on behalf of the United States), without regard to compensation.

(1) The provisions of this paragraph (c) and § 200.735-3(b)(2) do not preclude an employee from:

(i) Acting without compensation as agent or attorney (A) for a Commission employee who is sued or is under investigation in connection with his or her official duties; (B) for any Commission employee who is the subject of disciplinary, loyalty or other personnel administrative proceedings in connection with those proceedings; or (C) for any Commission employee who raises claims or against whom allegations of wrongdoing are made pursuant to the Commission's Equal Opportunity regulations, if such representation is not inconsistent with the faithful performance of the employee's duties. 14

(d) No member or 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)). (e)(1) As paragraph (b)(5) of this section indicates, the Commission encourages employees to engage in teaching, lecturing and writing activities. 15 It is understood, however, that

tion whatever for services rendered or to be rendered to any persons in relation to any matter in which the United States is a party or directly or indirectly interested. 18 U.S.C. 205 contains an exception from the foregoing restrictions for acting as agent or attorney, without compensation, for government employees who are the subject of disciplinary, loyalty or other personnel-type proceedings, in connection with these proceedings.

14 This is adapted from the provision in 18 U.S.C. 205 and expresses the Commission's general policy which favors the representation of fellow employees without compensation. However, it may be necessary to look to other regulations for specific provisions regarding such representation.

15 This paragraph (e), requiring review of prepared speeches or writings relating to

Commission employees in their teaching, writing and lecturing shall not

(i) Use confidential or nonpublic information;

(ii) Make comments on pending litigation in which the Commission is participating as a party or amicus curiae; or

(iii) Make comments on rulemaking proceedings pending before the Commission which would adversely affect the operations of the Commission.

(2) To assist employees in conforming to these requirements the following procedure for reviewing writings prior to publication, or prepared speeches prior to delivery, has been established:

(i) Employees must submit proposed publications or prepared speeches relating to the Commission, or the statutes or rules it administers, to the General Counsel for review. Employees will be notified as promptly as possible, with due regard to publication deadlines, but in any event within 30 days of receipt of the written document, whether such document conforms to the requirements of this Rule.

(ii) A determination by the General Counsel that a proposed publication conforms to the requirements of the rule will not involve adoption of, or concurrence in, the views expressed. Therefore, such publication or speech shall include at an appropriate place or 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 or statement 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.

In appropriate cases, the above disclaimer may be modified by the General Counsel or the Commission to reflect the circumstances of an individual case. In addition, any publication or speech which reflects positions taken by the Commission shall set

the Commission, does not apply to teaching activities.

forth those positions accurately and, if it contains differences with Commission positions, it shall clearly state that such positions are those of the employee.

(f) 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 Director, 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 Directors, Office Heads and Regional Administrators have been delegated the authority to approve routine requests for outside employment. The approving official shall forward to the Director of Personnel a copy of each request showing the date of approval. Requests of a non-routine nature should be forwarded to the Director of Personnel.

(g) 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. The Director of Personnel may not approve proposed outside or private employment which is absolutely prohibited by these rules. The Commission may, in a particular case, approve such employment. 16

(Pub. L. 98-38)

[45 FR 36064, May 29, 1980; 45 FR 40975, June 17, 1980; 48 FR 39216, Aug. 30, 1983; 50 FR 45603, Nov. 1, 1985]

16 The Commission does not favor the granting of waivers from the provision of this subsection.

§ 200.735-5 Securities transactions.

or

(a)(1) 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 unemancipated minor child or other member of his or her 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 or her immediate household" means a resident of the member's or employee's household who is related to the employee by blood or marriage or who is in the legal care and/or custody of the employee by reason of adoption, prospective adoption or guardianship.

(2) No securities which a member or employee could not purchase because of a restriction under this rule shall be recommended or suggested by the employee for purchase by any person over whom the employee has control or substantial influence with respect to investments, by reason of (i) monetary payments made by the employee to or on behalf of the person; or (ii) the age or mental condition of the person.

(b)(1) 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 except of money market fund shares 17 which is held for less than 11 months will be presumed not to be for investment purposes. This 11 month holding period is not applicable to securities purchased by a member or employee prior to entrance on duty with the Commission, and such securities may, therefore, be disposed of at any time.

17 For purposes of this rule a "money market fund" is defined as an open-end investment company whose investment policy calls for investment of at least 80% of its assets in debt securities maturing in thirteen months or less.

Nor is it applicable to debt securities with an initial term of less than one year which are held to term, or shares of a unit investment trust having a term of less than one year.

(2) Any member or employee who believes the requirement of paragraph (a) of this section as to spouse, child or "member of his or her household" or the application of this paragraph (b) 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 that belief and requesting a waiver.

(c) No member or employee shall effect any purchase or sale of an option or future contract for any commodity or involving a security. The prohibition on the purchase or sale of options or future contracts for commodities shall not apply to spouses or other members of a member's or employee's household.

(d) No member or employee shall carry securities on margin. Also no member or employee 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 a security which he or she 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. 77a et seq.), or of a letter of notification filed under Regulation A (§§ 230.251—230.263 of this chapter), or any other security of the same issuer, while such a registration statement or letter of notification 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. However, with respect to securities issued by an investment company, other than a closed-end investment company, this

provision shall not apply except during the pendency of an initial offering of shares to the public or during the first sixty days after the effective date of such initial offering.

(g) No member or employee shall purchase any security which to his or her 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.

(h) No member or employee shall purchase any securities of any company which is in a receivership proceeding in which the Commission is participating, or which arose out of a Commission action which is the subject of a proceeding under the Bankruptcy Act, in which the Commission is a party.

(i) The restrictions imposed in paragraphs (f), (g), (h), and (j) of this section do not apply:

(1) To the exercise of a privilege to convert or exchange securities;

(2) To the exercise of rights accruing unconditionally by virtue of ownership of other securities (as distiguished from a contingent right to acquire securities not subscribed for by others);

(3) To the acquisition and exercise of rights in order to round out fractional shares; or

(4) To the acceptance of stock dividends on securities already owned; to the reinvestment of cash dividends on a security already owned under a reinvestment program; or the participation in a monthly investment plan for the purchase of a security when the original purchase was consistent with the provisions of this rule.

(j) 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.

(k) No member or employee holding a Senior Executive Service position in the Division of Investment Management shall purchase any securities issued by any investment company prima facie subject to the jurisdiction