[Federal Register Volume 76, Number 190 (Friday, September 30, 2011)]
[Rules and Regulations]
[Pages 60707-60710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-25105]


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DEPARTMENT OF THE TREASURY

Office of Financial Research

12 CFR Chapter XVI

RIN 1505-AC38


Supplemental Standards for Ethical Conduct for Employees of the 
Department of the Treasury

AGENCY: Office of Financial Research, Treasury.

ACTION: Interim rule.

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SUMMARY: The Department of the Treasury (Department), with the 
concurrence of the Director of the Office of Government Ethics (OGE), 
is establishing a new chapter in Title 12 of the Code of Federal 
Regulations to incorporate certain post-employment prohibitions that 
apply to employees of the Office of Financial Research (OFR). The Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) 
provides for certain post-employment prohibitions if OFR employees have 
had access to transaction or position data or other business 
confidential information about financial entities required to report to 
OFR.

DATES: Effective date: September 30, 2011. Comment due date: November 
29, 2011.

ADDRESSES: Interested persons are invited to submit comments on all 
aspects of the interim rule through one of these methods:
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. Electronic submission of comments allows 
the commenter maximum time to prepare and submit a comment, ensures 
timely receipt, and enables the Department to make them available to 
the public. Comments submitted electronically through the http://www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public.
    Mail: Department of the Treasury, Office of Financial Research, 
Attention: Post-Employment Interim Rule, Room 1334, 1500 Pennsylvania 
Avenue, NW., Washington, DC 20220.
    Fax and e-mail comments will not be accepted.
    Instructions: In general, the Department will enter all comments 
received into the docket and make them available, without change, 
including any business or personal information that you provide such as 
name and address information, e-mail addresses, or phone numbers. 
Comments, including attachments and other supporting materials, 
received are part of the public record and subject to public 
disclosure. Do not enclose any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure. Properly submitted comments will be available 
for inspection and downloading at http://www.regulations.gov.
    You may personally inspect comments at the Department of the 
Treasury Library, Room 1428, Main Treasury Building, 1500 Pennsylvania 
Avenue, NW., Washington, DC. You can make an appointment to inspect 
comments by calling (202) 622-0990.

FOR FURTHER INFORMATION CONTACT: Elizabeth A. Horton, Deputy Assistant 
General Counsel (Ethics) at (202) 622-0450 or [email protected].

SUPPLEMENTARY INFORMATION: Dodd-Frank (Pub. L. 111-203), sets forth 
rules that apply to employees of the OFR. This interim rule establishes 
12 CFR chapter XVI, consisting of part 1600, which generally prohibits 
the Director of the OFR and any employee of the OFR who has had access 
to the transaction or position data maintained by OFR's Data Center or 
other business confidential information about financial entities 
required to report to the OFR from being employed by or providing 
advice or consulting services to a financial company, for a period of 
one year after last having had access in the course of official duties 
to such transaction or position data or business confidential 
information, regardless of whether that entity is required to report to 
the OFR.

[[Page 60708]]

    The OFR was established by section 152 of Dodd-Frank (Public Law 
111-203). Section 152(g) of Dodd-Frank provides that:

    The Secretary [of the Treasury], with the concurrence of the 
Director of the Office of Government Ethics, shall issue regulations 
prohibiting the [OFR] Director and any employee of the Office [OFR] 
who has had access to the transaction or position data maintained by 
the Data Center or other business confidential information about 
financial entities required to report to the Office [OFR] from being 
employed by or providing advice or consulting services to a 
financial company, for a period of 1 year after last having had 
access in the course of official duties to such transaction or 
position data or business confidential information, regardless of 
whether that entity is required to report to the Office [OFR]. For 
employees whose access to business confidential information was 
limited, the regulations may provide, on a case-by-case basis, for a 
shorter period of post-employment prohibition, provided that the 
shorter period does not compromise business confidential 
information.

As authorized in section 152(g) of Dodd-Frank, the regulations include 
an exception to the general post-employment prohibitions that apply to 
employees of the OFR. Under certain circumstances and on a case-by-case 
basis, employees whose access to business confidential information was 
limited may request a waiver from the post-employment prohibitions.

Standards of Ethical Conduct for Employees of the Office of Financial 
Research

    The Department is adding this regulation to explain the 
circumstances under which an OFR employee, who has had access to the 
transaction or position data maintained by OFR's Data Center or other 
business confidential information about financial entities required to 
report to the OFR, is prohibited from being employed by or providing 
advice or consulting services to a financial company, regardless of 
whether the financial company is required to report to the OFR, for a 
period of one year after last having had access in the course of 
official duties to transaction or position data or business 
confidential information maintained by the Data Center.
    The new rule permits all OFR employees whose access to business 
confidential information was limited to seek a waiver from the 
Designated Agency Ethics Official.

Administrative Procedure Act

    Under 5 U.S.C. 553(a)(2), rules relating to agency management or 
personnel are exempt from the proposed rulemaking requirements of the 
Administrative Procedure Act (APA). As set forth in the description of 
the interim rule, this rule affects only the OFR and its personnel. 
Nonetheless, the Department is issuing this interim rule for comment 
and welcomes comments from the public on all aspects of the rule. Even 
if this rulemaking were subject to APA proposed rulemaking procedures, 
the Department finds good cause, pursuant to 5 U.S.C. 553(b) and (d), 
to waive the requirements for notice and comment and 30-day delayed 
effective date because the rule affects only the OFR and its employees. 
It is in the public interest that this rule, which concerns matters of 
agency management, personnel, organization, practice and procedure, and 
in part relieves certain restrictions placed on OFR employees, become 
effective on the date of publication.

Regulatory Flexibility Act Analysis

    Because no notice of proposed rulemaking is required, the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do 
not apply.

Executive Order 12866

    This interim rule is not a ``significant regulatory action'' for 
the purposes of Executive Order 12866.

Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act) requires an agency to prepare a budgetary impact 
statement before promulgating a rule that includes a Federal mandate 
that may result in expenditure by State, local, and Tribal governments, 
in the aggregate, or by the private sector, of $100 million or more in 
any one year. If a budgetary impact statement is required, section 205 
of the Unfunded Mandates Act also requires an agency to identify and 
consider a reasonable number of regulatory alternatives before 
promulgating a rule. This rule addresses restrictions on OFR employees 
regarding certain post-employment activities. The Department therefore 
has determined that the rule will not result in expenditures by State, 
local or Tribal governments or by the private sector of $100 million or 
more. Accordingly, the Department has not prepared a budgetary impact 
statement or specifically addressed the regulatory alternatives 
considered.

Lists of Subjects in 12 CFR Part 1600

    Post employment, Ethics, employees.

    For the reasons set forth in the preamble, the Department, with the 
concurrence of OGE, establishes 12 CFR chapter XVI, consisting of part 
1600, to read as follows:

CHAPTER XVI--OFFICE OF FINANCIAL RESEARCH

PART 1600--ORGANIZATION AND FUNCTIONS OF THE OFFICE OF FINANCIAL 
RESEARCH

Sec.
1600.1 Standards of ethical conduct.

    Authority: 5 U.S.C. 301, 7301, 31 U.S.C. 321, the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (Dodd-Frank) (Pub. L. 
111-203); E.O. 12674, 3 CFR, 1989 Comp., p. 215, as modified by E.O. 
12731, 3 CFR, 1990 Comp., p. 306.


Sec.  1600.1  Standards of ethical conduct.

    This section applies to the employees of the Office of Financial 
Research and is in addition to 5 CFR 3101.101-104, and 31 CFR part 0:
    (a) Definitions--For purposes of this subpart:
    (1) ``Business confidential information'' shall include trade 
secret or other formula, practice, process, design, instrument, 
pattern, or compilation of information which is not generally known or 
reasonably ascertainable, by which a business can obtain an economic 
advantage over competitors or customers. This shall include non-public 
position and transaction data, as well as data provided to supervisors 
or regulators that is unpublished.
    (2) ``Position data'' is defined as:
    (i) Data on financial assets or liabilities held on the balance 
sheet of a financial company, where positions are created or changed by 
the execution of a financial transaction; and
    (ii) Includes information that identifies counterparties, the 
valuation by the financial company of the position, and information 
that makes possible an independent valuation of the position.
    (3) ``Transaction data'' is defined as the structure and legal 
description of a financial contract, with sufficient detail to describe 
the rights and obligations between counterparties and make possible an 
independent valuation.
    (4) ``Micro-level data'' is defined as information specific to an 
individual transaction or position.
    (5) ``Masked data'' is defined as data that has been altered to 
prevent attribution to a particular financial company.
    (6) ``Financial company'' has the same meaning given to such term 
in title II of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, 12 U.S.C. 5301 et seq. (2010), and includes an insured 
depository institution and an insurance company.

[[Page 60709]]

    (b) One-year post-employment restriction. (1) A current or former 
employee of the Office of Financial Research who has had access to the 
transaction or position data or business confidential information 
maintained by the Data Center about financial entities required to 
report to the Office may not, within one year after last having had 
access in the course of official duties to such transaction or position 
data or business confidential information, be employed by or provide 
advice or consulting services to a financial company, regardless of 
whether that financial company is required to report to the Office.
    (2) A current or former employee of the Office of Financial 
Research who has had limited access to the transaction or position data 
or business confidential information maintained by the Data Center 
about financial entities required to report to the Office may request a 
written waiver pursuant to paragraph (c) of this section from the 
Designated Agency Ethics Official to be employed by or provide advice 
or consulting services to a financial company, provided that the 
issuance of the waiver would not compromise any data or business 
confidential information.
    (c) Waivers--The post-employment restrictions set forth in section 
152(g) of the Dodd-Frank Wall Street Reform and Consumer Protection Act 
may be waived in whole or in part for an employee with limited access 
to the transaction or position data or business confidential 
information maintained by the Data Center if--
    (1) The Designated Agency Ethics Official, in consultation with the 
Director of the Office of Financial Research or the Department's 
General Counsel in instances where consultation with the Director poses 
a conflict or the Director's position is vacant, determines in writing 
that such waiver is unlikely to compromise any financial company's 
business confidential information, unfairly advantage or disadvantage 
any financial company, or affect the integrity or effectiveness of the 
Office of Financial Research.
    (2) Relevant factors to be considered by the Designated Agency 
Ethics Official and the Director or General Counsel include--
    (i) The nature and importance of the employee's position and the 
degree to which the employee had access to non-public or business 
confidential data for the purpose of analysis, standardization, or 
performing applied research or essential long-term research;
    (ii) Whether the information to which the employee had access 
revealed positions or transactions of an individual financial company;
    (iii) Whether the data, especially position data, remains sensitive 
considering changing circumstances or the passage of time;
    (iv) Whether the employee had access to micro-level data, as 
compared to aggregated information;
    (v) If the employee had access to micro-level data, whether it was 
sufficiently masked or coded to protect the identity of the provider or 
the subject financial company;
    (vi) Whether the information to which the employee had access would 
provide a financial company employer with a competitive commercial 
advantage;
    (vii) Whether the financial company employer has made a 
satisfactory representation that it has adopted screening measures 
which will effectively prevent a potential employee from sharing any 
transaction or position data or business confidential information 
acquired at the Office of Financial Research one year prior to 
accepting employment with the company;
    (viii) Whether granting the waiver would affect the willingness of 
a financial company to continue to provide transaction or position data 
or business confidential information to the Office; and
    (ix) Whether the proposed employment would create an appearance of 
impropriety or would otherwise adversely affect the interests of the 
government or compromise the integrity of the office.
    (d) The following examples are illustrative of how the OFR post-
employment prohibitions would apply under certain circumstances:
    (1) Example 1. (i) Fact pattern: OFR employs a business data 
manager and such employee has no access to the transaction or position 
data maintained by the Data Center or other business confidential 
information about financial entities required to report to OFR.
    (ii) Designated Agency Ethics Official's Determination: Upon 
termination of their employment by OFR, such employee would not be 
prohibited from being employed by or providing advice or consulting 
services to a financial company, regardless of whether that financial 
company is required to report to the Office.
    (2) Example 2. (i) Fact pattern: OFR employs a data analyst and 
such employee has access to transaction or position data across all 
sectors maintained by the Data Center or other business confidential 
information about specific financial entities required to report to 
OFR.
    (ii) Designated Agency Ethics Official's Determination: Upon 
termination of their employment by OFR, such employee would be 
prohibited, for a period of one year immediately after leaving OFR, 
from being employed by or providing advice or consulting services to a 
financial company, regardless of whether that financial company is 
required to report to the Office.
    (3) Example 3. (i) Fact pattern: OFR employs a data analyst and 
such employee has access to transaction or position data across all 
sectors maintained by the Data Center or other business confidential 
information about specific financial entities required to report to 
OFR. Employee last had access to such data six months before 
termination of her employment at OFR.
    (ii) Designated Agency Ethics Official's Determination: Upon 
termination of employment by OFR, such employee would be prohibited, 
for a period of six months immediately after leaving OFR, from being 
employed by or providing advice or consulting services to a financial 
company, regardless of whether that financial company is required to 
report to the Office.
    (4) Example 4. (i) Fact pattern: OFR employs a researcher and such 
employee has access only to ``aggregated'' or ``masked'' transaction or 
position data maintained by the Data Center or other business 
confidential information about financial entities required to report to 
OFR.
    (ii) Designated Agency Ethics Official's Determination: Upon 
termination of their employment by OFR, such employee would not be 
prohibited from being employed by or providing advice or consulting 
services to a financial company, regardless of whether that financial 
company is required to report to the Office.
    (5) Example 5. (i) Fact pattern: OFR employs a data analyst and 
such employee has access to transaction or position data maintained by 
the Data Center or other business confidential information relating to 
a particular sector (i.e. banking).
    (ii) Designated Agency Ethics Official's Determination: Upon 
termination of employment by OFR, such employee would be prohibited, 
for a period of one year immediately after leaving OFR, from being 
employed by or providing advice or consulting services to a financial 
company in that particular sector (i.e. banking) where such employment 
or services involves employment or advice or consulting services, 
regardless of whether that financial company is required to report to 
the Office. Such employee would be

[[Page 60710]]

granted a waiver to work in other designated sectors immediately after 
leaving OFR.
    (6) Example 6. (i) Fact pattern: OFR employs a data analyst and 
such employee has access to business confidential information in an 
area where data, such as equity mutual fund holdings, changes 
frequently. Employee last had access to such data six months before 
termination of her employment at OFR and, because of portfolio 
turnover, there is no risk of compromising business confidential 
information.
    (ii) Designated Agency Ethics Official's Determination: Upon 
termination of their employment by OFR, such employee would not be 
prohibited from being employed by or providing advice or consulting 
services to a financial company, regardless of whether that financial 
company is required to report to the Office.
    (7) Example 7. (i) Fact pattern: OFR employs an information 
technology specialist and such employee has access only to ``masked'' 
transaction or position data maintained by the Data Center or other 
``masked'' business confidential information about specific financial 
entities required to report to OFR.
    (ii) Designated Agency Ethics Official's Determination: Upon 
termination of their employment by OFR, such employee would not be 
prohibited from being employed by or providing advice or consulting 
services to a financial company, regardless of whether that financial 
company is required to report to the Office.

    Dated: September 19, 2011.
George W. Madison,
General Counsel, Department of the Treasury.
[FR Doc. 2011-25105 Filed 9-29-11; 8:45 am]
BILLING CODE 4810-25-P