(a) Prohibited interests. Except as permitted by this section, an
employee, or an employee’s spouse or minor child, shall not own or
control, directly or indirectly, any debt or equity interest in—
(1) a depository institution or any of
its affiliates; or
(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.
(b) Exceptions. The prohibition in paragraph
(a) of this section does not apply to the ownership or control of
a debt or equity interest in the following:
(1) Nonbanking
holding companies. A publicly traded holding company that—
(i) owns a bank and either the holding company or the bank is exempt
under the Bank Holding Company Act of 1956, 12 USC 1841 et seq., (for
example, a credit card bank, a nonbank bank, or a grandfathered bank
holding company), and the holding company’s predominant activity is
not the ownership or operation of banks and thrifts;
(ii) owns a thrift and its predominant
activity is not the ownership or operation of banks and thrifts; or
(iii) owns a primary
government securities dealer and its predominant activity is not the
ownership or operation of banks, thrifts, or securities firms.
(2) Mutual funds. A publicly traded or publicly
available mutual fund or other collective investment fund if—
(i) the fund
does not have a stated policy of concentration in the financial services
industry; and
(ii)
neither the employee nor the employee’s spouse exercises or has the
ability to exercise control over the financial interests held by the
fund or their selection.
(3) Pension plans. A widely held, diversified pension or other retirement fund that
is administered by an independent trustee.
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(c) Waivers. The Board’s designated
agency ethics official, in consultation with division management,
may grant a written waiver permitting the employee to own or control
a debt or equity interest prohibited by paragraph (a) of this section
if—
(1) extenuating circumstances
exist, such as that ownership or control was acquired—
(i) prior
to Federal Reserve employment;
(ii) through inheritance, gift, merger,
acquisition, or other change in corporate structure, or otherwise
without specific intent on the part of the employee, spouse, or minor
child to acquire the debt or equity interest; or
(iii) by an employee’s spouse as part
of a compensation package in connection with the spouse’s employment
or prior to marriage to the employee;
(2) the employee makes a prompt
and complete written disclosure of the interest;
(3) the employee’s disqualification from
participating in any particular matter having a direct and predictable
effect on the institution or any of its affiliates does not unduly
interfere with the full performance of the employee’s duties; and
(4) granting the waiver
would be consistent with division policy.
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(d) Disqualification. If an employee
or an employee’s spouse or minor child holds an interest in an entity
under paragraph (b)(1) or (c) of this section, the employee must consult
the designated agency ethics official in order to determine whether
the employee must be disqualified from participating in any particular
matter involving that entity or affiliate under the conflicts-of-interest
rules of the Office of Government Ethics.
