[Federal Register: December 8, 1999 (Volume 64, Number 235)] [Rules and Regulations] [Page 68615-68616] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr08de99-1] ======================================================================== Rules and Regulations Federal Register ________________________________________________________________________ This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. ======================================================================== [[Page 68615]] ======================================================================= ----------------------------------------------------------------------- FEDERAL RESERVE SYSTEM 5 CFR Part 6801 RIN 3209-AA15 Supplemental Standards of Ethical Conduct for Employees of the Board of Governors of the Federal Reserve System AGENCY: Board of Governors of the Federal Reserve System (Board). ACTION: Final rule; amendment. ----------------------------------------------------------------------- SUMMARY: The Board of Governors of the Federal Reserve System, with the concurrence of the Office of Government Ethics (OGE), is amending the Supplemental Standards of Ethical Conduct for Employees of the Board. This amendment would: eliminate the general prohibition on ownership of stock in primary dealers for most Board employees; and expand the availability of stock ownership waivers by allowing waivers to be granted permitting Board employees to retain bank stock acquired prior to Federal Reserve employment if the stock does not present a conflict of interest with the employees' duties. EFFECTIVE DATE: December 8, 1999. FOR FURTHER INFORMATION CONTACT: Cary Williams, Managing Senior Counsel, Legal Division, Board of Governors of the Federal Reserve System, telephone 202/452-3295, FAX 202/452-3101. For the hearing impaired only, Telecommunications Device for the Deaf (TDD), Diane Jenkins, 202/452-3544. SUPPLEMENTARY INFORMATION: 5 CFR 2635.105 authorizes executive agencies, with the concurrence of OGE, to publish agency-specific supplemental regulations necessary to implement their respective ethics programs. On October 16, 1996, the Board, with OGE's concurrence, published in the Federal Register a final rule to establish supplemental standards of ethical conduct for Board employees (61 FR 53827-53830), effective November 1, 1996. The Board, with OGE's concurrence, now amends its supplemental standards in two respects: First, the amendment modifies the prohibition against ownership of stock in primary government securities dealers to apply only to Board employees who have ongoing access to highly sensitive information (Class I) collected in connection with Federal Open Market Committee (FOMC) deliberations and decisions, and identified as such by the FOMC Committee. The Board believes that the current prohibition of share ownership in primary dealers for all Board employees is unnecessarily broad and that the prohibition properly should be extended only to those employees where the possibility of the appearance of a conflict of interest occurs. For that reason, the Board is retaining but liberalizing this provision, so as to allow such share ownership except for those Board employees who have ongoing access to Class I FOMC information. Second, the amendment explicitly provides for waivers to be granted permitting Board employees to retain bank stock acquired prior to Federal Reserve employment if the stock does not present a conflict of interest with the employees' duties. The current regulation states that waivers may be available if ownership or control was acquired through inheritance or gift, as a result of a merger or other change in corporate structure, or otherwise without specific intent of the employee, spouse or minor child to acquire the interest. The purpose of the amendment is to make clear that new Board employees need not, in every case, divest banking organization stock previously acquired, and that a waiver may be available if a new employee is not involved in bank regulatory matters. This revision would not change the existing prohibition on any current employee (or an employee's spouse or child) purchasing stock in a depository institution or its affiliate (except in the case of a spouse in compensation for the spouse's employment). Matters of Regulatory Procedure Administrative Procedure Act Pursuant to 5 U.S.C. 553(a)(2), (b) and (d), the Board has determined that good cause exists for waiving the regular notice of proposed rulemaking, opportunity for comment, and 30-day delayed effective date as to this final rule amendment. This action is being taken because it is in the public interest that this rule, which concerns matters of agency organization, practice and procedure and which relieves certain restrictions placed on Board employees, become effective on the date of publication. Regulatory Flexibility Act The Board has determined under the Regulatory Flexibility Act (5 U.S.C. chapter 6) that this regulation will not have a significant economic impact on a substantial number of small entities because it primarily affects Board employees and their families. Paperwork Reduction Act The Board has determined that the Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply because this regulation does not contain any information collection requirements that require the approval of the Office of Management and Budget. List of Subjects in 5 CFR Part 6801 Conflict of interests, Government employees. Dated: November 23, 1999. Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System. Approved: November 30, 1999. Stephen D. Potts, Director, Office of Government Ethics. For the reasons set forth in the preamble, the Board of Governors of the Federal Reserve System, with the concurrence of the Office of Government Ethics, is amending 5 CFR part 6801 as follows: PART 6801--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 1. The authority citation for part 6801 continues to read as follows: Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government Act of 1978); 12 U.S.C. 244, 248; E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 5 CFR 2635.105, 2635.403(a), 2635.502, 2635.803. [[Page 68616]] 2. Section 6801.103 is amended by: a. Revising paragraph (a)(2); b. Redesignating paragraphs (c)(1)(i) and (c)(1)(ii) as (c)(1)(ii) and (c)(1)(iii), respectively; and c. Adding a new paragraph (c)(1)(i). The revision and addition read as follows: Sec. 6801.103 Prohibited financial interests. (a) * * * (2) A primary government securities dealer or any of its affiliates, if such employee has regular, ongoing access to Class I Federal Open Market Committee information. * * * * * (c) * * * (1) * * * (i) Prior to Federal Reserve employment; * * * * * [FR Doc. 99-31726 Filed 12-7-99; 8:45 am] BILLING CODE 6210-01-P