[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR612.2165]



[Page 91-92]

 

                       TITLE 12--BANKS AND BANKING

 

                 CHAPTER VI--FARM CREDIT ADMINISTRATION

 

PART 612_STANDARDS OF CONDUCT AND REFERRAL OF KNOWN OR SUSPECTED CRIMINAL 

VIOLATIONS--Table of Contents

 

                     Subpart A_Standards of Conduct

 

Sec. 612.2165  Policies and procedures.



    (a) Each institution's board of directors shall issue, consistent 

with this part, policies and procedures governing standards of conduct 

for directors and employees.

    (b) Board policies and procedures issued pursuant to paragraph (a) 

of this section shall reflect due consideration of the potential adverse 

impact of any activities permitted under the policies and shall at a 

minimum:

    (1) Establish such requirements and prohibitions as are necessary to 

promote public confidence in the institution and the System, preserve 

the integrity and independence of the supervisory process, and prevent 

the improper use of official property, position, or information. In 

developing such requirements and prohibitions, the institution shall 

address such issues as the hiring of relatives, political activity, 

devotion of time to duty, the exchange of gifts and favors among 

directors and employees of the employing, supervising, and supervised 

institution, and the circumstances under which gifts may be accepted by 

directors and employees from outside sources, in light of the foregoing 

objectives;

    (2) Outline authorities and responsibilities of the Standards of 

Conduct Official;

    (3) Establish criteria for business relationships and transactions 

not specifically prohibited by this part between employees or directors 

and borrowers, loan applicants, directors, or employees of the 

employing, supervised, or supervising institutions, or persons 

transacting business with such institutions, including OFIs or other 

lenders having an access or participation relationship;

    (4) Establish criteria under which employees may accept outside 

employment or compensation;

    (5) Establish conditions under which employees may receive loans 

from System institutions;

    (6) Establish conditions under which employees may acquire an 

interest in real or personal property that was mortgaged to a System 

institution at any time within the preceding 12 months;

    (7) Establish conditions under which employees may purchase any real 

or personal property of a System institution acquired by such 

institution for its operations. Farm Credit institutions must use open 

competitive bidding whenever they sell surplus property above a stated 

value (as established by the board) to their employees.

    (8) Provide for a reasonable period of time for directors and 

employees to terminate transactions, relationships, or activities that 

are subject to prohibitions that arise at the time of adoption or 

amendment of the policies.



[[Page 92]]



    (9) Require new directors and new employees involved at the time of 

election or hiring in transactions, relationships, and activities 

prohibited by these regulations or internal policies to terminate such 

transactions within the same time period established for existing 

directors or employees pursuant to paragraph (b)(8) of this section, 

beginning with the commencement of official duties, or such shorter time 

period as the institution may establish.

    (10) Establish procedures providing for a director's or employee's 

recusal from official action on any matter in which he or she is 

prohibited from participating under these regulations or the 

institution's policies.

    (11) Establish documentation requirements demonstrating compliance 

with standards-of-conduct decisions and board policy;

    (12) Establish reporting requirements, consistent with this part, to 

enable the institution to comply with Sec. 620.5 of this chapter, 

monitor conflicts of interest, and monitor recusal compliance; and

    (13) Establish appeal procedures available to any employee to whom 

any required approval has been denied.



[59 FR 24894, May 13, 1994, as amended at 64 FR 43048, Aug. 9, 1999]



    Effective Date Note: At 70 FR 53907, Sept. 13, 2005, Sec. 612.2165 

was amended by revising paragraphs (b)(12) and (b)(13) and adding 

(b)(14) and (b)(15).The effective date of these paragraphs was delayed 

for 6 months from the effective date of this final rule. For the 

convenience of the user, the revised and added text is set forth as 

follows:



Sec. 612.2165  Policies and procedures.



                                * * * * *



    (b) * * *

    (12) Establish reporting requirements, consistent with this part, to 

enable the institution to comply with Sec. 620.5 of this chapter, 

monitor conflicts of interest, and monitor recusal compliance;

    (13) Establish appeal procedures available to any employee to whom 

any required approval has been denied;

    (14) Prohibit directors and employees from purchasing or retiring 

any stock in advance of the release of material non-public information 

concerning the institution to other stockholders; and

    (15) Establish when directors and employees may purchase and retire 

their preferred stock in the institution.