[Federal Register Volume 68, Number 220 (Friday, November 14, 2003)]
[Notices]
[Pages 64672-64673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-28474]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48755; File No. PCAOB-2003-04]


Public Company Accounting Oversight Board; Order Approving 
Proposed Code of Ethics

November 7, 2003.

I. Introduction

    On July 11, 2003, the Public Company Accounting Oversight Board 
(the ``Board'' or the ``PCAOB'') filed with the Securities and Exchange 
Commission (the ``Commission'') proposed rule PCAOB-2003-04 pursuant to 
Section 101 of the Sarbanes-Oxley Act of 2002 (the ``Act'')\1\, 
relating to the establishment of an ethics code. Notice of the proposed 
rule was published in the Federal Register on September 26, 2003.\2\ 
The Commission received no comment letters. For the reasons discussed 
below, the Commission is granting approval of the proposed rule.
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    \1\ 15 U.S.C. 7201, et seq.
    \2\ Release No. 34-48506 (September 22, 2003); 68 FR 55673 
(September 26, 2003).
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II. Description

    Section 101(g)(3) of the Act directs the PCAOB to establish ethics 
rules and standards of conduct for Board members and staff. The Act 
required that this code include a one-year bar on practice before the 
Board (and the Commission, with respect to Board-related matters) for 
former members of the Board, and a bar for former staff that was not to 
exceed one year.
    In furtherance of this provision, the PCAOB issued a proposed 
ethics code for public comment on April 18, 2003. In response to 
comments received, the PCAOB adopted a proposed ethics code

[[Page 64673]]

on June 30, 2003 and filed it with the Commission's Office of the 
Secretary on July 11, 2003. Pursuant to the requirements of section 
107(b) of the Act and section 19(b) of the Securities Exchange Act of 
1934 (the ``Exchange Act''), the Commission published the proposed 
ethics code for public comment on September 26, 2003.
    The PCAOB's proposed ethics code consists of 14 sections (EC 1 
through EC 14) that establish rules governing the conduct of PCOAB 
members, employees and certain contractors and consultants. The code, 
among other things, adopts a set of basic principles, clarifies who is 
covered by which provisions, establishes permitted and prohibited 
financial and employment interests, requires certain financial 
disclosures, restricts certain outside activities, limits the gifts 
that may be received by members and employees, employs a reasonable 
person standard for analyzing disqualification issues, maintains a 
permanent ban on the release of non-public information, establishes the 
position of an Ethics Officer to counsel and provide interpretations of 
the code, addresses the conflict-of-interest issues relating to seeking 
other employment, imposes a post-employment restriction on former 
members and staff with respect to practicing before the Board (or the 
Commission with respect to Board-related matters) with respect to 
particular matters involving specific parties that the former member or 
staff person had worked on at the Board, provides that waivers of the 
ethics code will be made public (subject to the protection of certain 
information on privacy grounds), and requires an annual certification 
of compliance with the Code's provisions.

III. Discussion

    The Commission received no public comments regarding the PCAOB's 
proposed ethics code. Section 101 of the Act directs the PCAOB to 
establish ethics rules and standards of conduct for Board members and 
staff. The proposed ethics code addresses all of the essential elements 
of an effective ethics code, including standards on financial and 
personal conflicts, protection of non-public information, acceptance of 
gifts, outside activities, waivers of the code, and restrictions on 
seeking other employment, and post-Board employment activities.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed ethics code is consistent with the requirements of the Act and 
the securities laws and is necessary and appropriate in the public 
interest and for the protection of investors.
    It is thefore ordered, pursuant to section 107 of the Act and 
section 19(b)(2) of the Exchange Act, that the proposed ethics code 
(File No. PCAOB-2003-04) be and hereby is approved.

    By the Commission.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 03-28474 Filed 11-13-03; 8:45 am]
BILLING CODE 8010-01-P