[Federal Register Volume 64, Number 235 (Wednesday, December 8, 1999)]
[Rules and Regulations]
[Pages 68615-68616]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 99-31726]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 64, No. 235 / Wednesday, December 8, 1999 / 
Rules and Regulations

[[Page 68615]]


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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.

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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.


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    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