Ethics Office: Guidance for State Ethics Advisors and the 450 Process

Updated 12/21/2005

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Guidance for State Ethics Advisors Managing the 450 Review Process

• This guide was developed to assist State Ethics Advisors.

1. Major Steps in the Review Process

2. Reporting Outside Employment on the 450

3. A Word About Researching Financial Interests

4. How to Use the 450 Review Guide to Get the Help You Need

5. Definition of a "Negative" versus "Positive" 450 Report

6. On-Line Research Tools for Acquiring Information on Financial Interests

7. De Minimis Exemptions

I. Major Steps in the Review Process

1. Identify Who Must File a 450

2. Insure codes assigned to designate filing status to NFC are correct. [Work with your HR staff to do this]

3. Notify Filers by October 1 annually.

4. Consult the 450 Review Guide for answers to questions from filers needing help

5. State advisors Sign on or register with NFC to use their own personal employee page

6. Log reports received and outstanding.

7. Advisor follow procedures in the 450 Review Guide (238 KB) for reviewing reports. This requires, among other things:

   • Check all reports for completeness

   • Conduct and properly document necessary follow-up with Filer

   • Separate negative reports from positive reports

   • State Advisor approves negative reports after verifying completeness

   • State forwards all approved negative reports to the NRCS Ethics Office in Beltsville, MD

   • For positive reports, the State Ethics Advisor researches financial interests on the internet and prints a copy of findings

   • State Advisor forwards all positive 450s

     1. To the NRCS Ethics Office in Beltsville, MD

     2. Attaches to each original 450 a print out of the research on reported financial interests

     3. Attaches a copy of the employee's position description (PD) and

     4. Attaches a copy of any existing approval for outside employment.

II. Reporting Outside Employment on the 450

The employee should include any positions, whether or not compensated, held outside the U.S. Government during the reporting period.  These positions include (but are not limited to) an employee, officer, director, trustee, general partner, proprietor, representative, executor, or consultant for a business, non-profit or labor organization, or educational institution.  The employee should exclude positions with religious, social, fraternal, or political entities or those solely of an honorary nature.  The employee should also exclude any positions of their spouse or dependant children.     

• OGE Form 450 (34461 bytes)

• Sign on or register with NFC

III. A Word About Researching Financial Interests

The research is a necessary part of the process for reviewing 450 reports and it can only properly be assigned a limited number employees (State Ethics Advisors) because of the requirements regarding the confidentiality of 450 reports.

IV. How to Use the 450 Review Guide to Get the Help You Need

Consult the 450 Review Guide before calling the next level advisor for help!

• To increase understanding, be sure to consult both of the following two (2) sections when using the Guide:

  1. Section II: Completing OGE Form 450 and

  2. Section III: Reviewing OGE Form 450

• Provides detailed answers to the full gamut of questions employees may have about the form, including:

  1. What needs to be provided by the employee in response to each section/question on the 450

  2. What does not need to be provided by the employee in responding to each section/question on the 450

• Lists the specific documents and resources advisors need to have before they review 450s

• Provides step–by–step instructions for advisors on how to review the forms

• Specifically states where and how advisors are to make notations on the forms to document the review process

• Includes a tutorial/practice 450 for review and specific instruction on how to review forms properly

V. Definition of a "Negative" versus a "Positive" 450 Report

A "negative" report is one that has nothing to report as shown by checking the "none" box in each section, after having properly and fully completing the general information requested. Note that the failure to reply to a section (i.e., no answer indicated) is not the same as a "negative" report. To be accepted, the employee must either provide positive information (that is, specifics) in response to a section or have checked the "None" box. To review a form that simply does not have a answer in a section, the advisor (not someone else) is required to contact the employee to ask the employee for his or her answer, write the answer on the form and initial the notation as to the answer and date of that call. When a form reflects "None" checked in every section and the general information section is properly completed, then that is a a 'negative' report. That means that, if a report has absolutely nothing showing in one or more sections, then the reviewer is required to contact the employee, ask what the answer is, and ... if the employee says there is nothing to report and that is why he or she left the section blank ... then the reviewer can check the "None" box, and initial showing the date the reviewer called and obtained that answer from the employee. This is all covered in the 450 Review Guide.

A report with anything to report is a "positive" report. (That is, anything asset, interest, activity, etc. that was "required" to have been reported by the form's instructions).

VI. On-line Research Tools for Acquiring Information on Financial Interests

The following are links to on-line tools for looking up financial holding.

• Yahoo Finance — This one is free or mostly free.

• Google

How to Use On-Line Research Tools:

• Example 1 (for State Ethics Advisors):

  1. Go to Yahoo Finance

  2. Towards the bottom of the page, see the place to search by company name

  3. After looking up an interest to determine the nature of the business and of subsidiaries, print out the information and include a hard copy with the signed 450 to be forward to the Regional Ethics Advisor for further processing. Include any recommendations you wish considered by the regional ethics advisor in reviewing the 450.

• Example 2: One way to do on-line research is to use one of these links to find the Securities and Exchange Commission (SEC) Form 10K. The 10K [AKA: The Annual Report To Shareholders, SEC Forms 10-K, ARS, 20-F, 10-KSB] is the principal document for obtaining information about any publicly traded company. The 10K is the company's annual report required by law.

  • SEC description of the 10k Form — The Annual Report to Shareholders is the principal document used by most public companies to disclose corporate information to shareholders. It is usually a state–of–the–company report including an opening letter from the chief executive officer, financial data, results of continuing operations, market segment information, new product plans, subsidiary activities and research and development activities on future programs. It provides a comprehensive overview of the registrant's business. The report must be filed within 90 days after the end of the company's fiscal year.

  • What You'll Find In The10k — The authoritative description of a company's operations.

    • Other Versions:
      • 20-F: form for foreign businesses
      • 40-F: form for Canadian businesses
      • 10-KSB: form for small businesses

Things to Remember When Reviewing Financial Interests for Potential Conflicts of Interests

1. When you have to determine that a stock is related to the employee's official duties, remember to check the holding against the de minimis exemptions before determining whether the interest is a problem. If it is within the de minimis exemption(s), consider it 'okay'. There is no need to disclose the fact that an employee has a certain interest outside of the Ethics channel by raising concerns about an employee's holding certain stock (not otherwise prohibited by ethics regulation) if it is within de minimis exemptions.
2. The dollar threshhold(s) for what the employee must report is stated on the form. But the de minimis threshholds for conflict of interest are different. (See below.) In other words, an employee must report certain things on the 450 even though they may be well below the de minimis exemptions threshholds in 5 CFR Part 2640.
3. If you need assistance in a particular situation to properly appy the de minimis exemptions, contact the next level ethics advisor.

VII. De Minimis Exemptions

Why Do Advisors Need to Understand the Concept of De Minimus Exemptions?

Answer: To avoid causing unnecessary concern on the part of an employee or unnecessarily disclosing the fact that an employee has a certain financial interest outside of the Ethics channel by raising concerns about an employee's holding certain stock (not otherwise prohibited by ethics regulation) if it is covered by a de minimis exemption.

• 5 C.F.R. PART 2640: OGE's Regulation on Interpretation, Exemptions and Waiver Guidance Concerning 18 U.S.C. 208 (Acts Affecting a Personal Financial Interest

  • As amended 67 Fed. Register 12443-12446

  • As explained in DAEOgram DO-02-006 (03/19/02)

• Provides interpretation, exemptions and waiver guidance concerning 18 U.S.C. 208 (Acts affecting a personal financial interest). This affects the determination as to whether or not an employee must disqualify him or herself from official involvement in  particular matter pursuant to 18 USC 208 [see 5 CFR Part 2635.402(a)] because of certain financial interest.




• Use of the information on de minimis exemptions is essential to correctly and efficiently reviewing 450s or advising in real-life situations whether the employee must disqualify him or herself from official involvement in a particular matters due to certain types of financial interest.




• For example, this affects determinations based on interests in publicly traded mutual funds, sector funds, and with respect to certain rulemaking, among other things. Because these rules, as amended, will significantly reduce the number of conflicts of interest involving NRCS employees, NRCS Ethics Advisors must remember to consider these rules when providing ethics advice regarding specific financial holdings and whether they may lead to a conflict of interests.




• De minimis exemptions are explained in 5 CFR Part 2640, as amended. Reviewers should review that document for the full list of such exemptions and refer to it when when reviewing 450s.




• On March 19, 2002, OGE made several amendments to 2640 by increasing the dollar amount of several exemption categories. The changes are explained in DAEOgram DO-02-006 dated March 19, 2002. The amendment itself is published in 67 Federal Register 12443-12446 For example:

  1. Established a new de minimis exemption for particular matters affecting the holdings of a sector mutual fund. The exemption applies to the ownership of (a total value of) no more than $50,000 by the employee and anyone else whose interest is imputed to the employee (e.g., spouse and minor child) [See 2640.201(b)(2)]

  2. Raises the old $5,000 de minimis exemption for publicly traded securities to $15,000 for particular matters involving specific parties. [See 2640.202(a)(2).] Also, clarifies that mutual funds are not covered by the exemptions for securities except the one at 2640.202(e) mentioned in #1, above, as being expressly for sector funds. [See 2640.102 (r). ]

  3. Creates a new $25,000 de minimis exemption with respect to particular matters involving specific parties where the interest is in publicly traded securities issued by a non-party. [See 2640 .202(b)] This exemption applies only to securities owned by the employee and the spouse and minor children and note that the affected holdings of ALL those individuals must be aggregated to determine whether they are, in fact, within the $25,000 thresh hold. This covers all types of particular matters involving specific parties that might have an effect on non-parties.

Example for Reviewers — How de minimis exemptions affect review of a 450

• Let's say that an employee reports an interest in a Mutual fund. [The employee must provide the entire name of the fund. If not, the reviewer must contact the employee and ask for the entire name and so note it on the form, as required in the 450 Review Guide.]


• You (the reviewer) research it on-line and determine that it is a 'sector fund'. Its market sector is Agriculture.


• Since, on the 450 form the employee is not initially asked to put down the dollar value of reported stock, the reviewer must call and get that information, and place it on the form itself. The reviewer initials and dates the notation that the employee advised that the value of his interest in the sector fund is $30,000; his wife and minor child are also investors in the same sector fund — the value (as of September 30) of stock owned by his wife and minor child is $10,000 and $3,000, respectively.


• You know that you must add up the interests of the employee, spouse and minor child. You find that the total of this, the employee's interest, is $43,000 ($30,000 plus $10,000 plus $3,000). That does not exceed the $50,000 de minimis exemption. Accordingly, you find that this fits within a de minimis exemption and, therefore, the employee would not be required to disqualify him or herself from involvement in a particular matter because of this financial interest.


• So, you will find that there is no problem with the employee's holding stock in a mutual fund that is a sector fund even if the market sector in which the fund specializes in is Agriculture because the total value of what is owned by the employee, spouse and minor child is within the de minimis exemption.

Send comments to nrcs-ethics@wdc.usda.gov

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