All Members, officers, and employees are prohibited from improperly using their official positions for personal gain. Members, officers, candidates, and certain employees must file annual Financial Disclosure Statements, summarizing financial information concerning themselves, their spouses, and dependent children. Such Statements must indicate outside compensation, holdings, and business transactions, generally for the calendar year preceding the filing date.
* Members of the House of Representatives;
* Candidates for the House of Representatives;
* House officers and employees earning at least 120 percent of the Federal GS-15 base level salary, i.e., $73,972 in 1991 and $77,080 in 1992; and
* Principal assistants on Members' personal staffs, as designated by the Members. At least one employee on each Member's personal staff must file, even if no one earns 120 percent of the GS-15 base salary.
Members, officers, and covered employees must file Financial Disclosure Statements by May 15 of each year.
New officers and covered employees must file within 30 days of assuming their positions.
Candidates who raise or spend more than $5,000 for their campaigns must file within 30 days of doing so, or by May 15, whichever is later, but in any event at least 30 days prior to the elections in which they run.
Termination reports must be filed within 30 days of leaving government employment by Members, officers, and employees who file Financial Disclosure Statements.
The private financial interests and investment holdings of Members and employees of, and candidates for, the House, as well as those of their immediate families, may present conflicts of interest with official duties. Circumstances may arise where a Member must act on legislation or an employee must give assistance concerning a matter that directly affects a personal financial interest. The personal financial interest, rather than the interest of the general public or the Member's constituency, could then influence official action.
As discussed by the New York City Bar Association:
The evil is not only the possibility or appearance of private gain from public office, but the risk that official decisions, whether consciously or otherwise, will be motivated by something other than the public's interests. The ultimate concern is bad government, which always means actual harm to the public.
The evil, then, is risk of impairment of impartial judgment, a risk which arises whenever there is temptation to serve personal interests. The quality of specific results is immaterial. In this sense, conflict-of-interest regulation is true to the fiduciary principle. Like other fiduciaries, such as guardians, executors, lawyers, and agents, the public trustee has a duty to avoid private interests which cause even a risk that he will not be motivated solely by the interests of the beneficiaries of his trust. (FOOTNOTE 1)
(FOOTNOTE 1) James C. Kirby, Jr. (exec. director), Ass'n of the Bar of the City of New York Special Comm. on Congressional Ethics, Congress and the Public Trust 38-39 (1970).
(FOOTNOTE 2) Donnald K. Anderson, Clerk of the House of Representatives, Rules of the House of Representatives, 102d Cong. (1991) (hereinafter House Rules), Rule 47; see also 5 U.S.C. app. 7, sec. 501(a). Conflicts of interest are also discussed in Chapter 3 of this Manual.
* Members and employees of Congress may not use their official positions for personal gain. (FOOTNOTE 3)
(FOOTNOTE 3) See House Rule 43, cl. 3; Code of Ethics for Government Service para. 5, H.Con.Res. 175, 85th Cong., 2d Sess., 72 Stat., pt. 2, B12 (1958), reprinted at the front of this Manual.
* Members may not enter into or enjoy benefits under contracts or agreements with the United States. (FOOTNOTE 4)
(FOOTNOTE 4) 18 U.S.C. sec. 431.
* Members and employees should not engage in any business with the Government, either directly or indirectly, that is inconsistent with the conscientious performance of governmental duties. (FOOTNOTE 5)
(FOOTNOTE 5) Code of Ethics for Government Service para. 7, supra note 3.
* Members and employees may not receive any compensation nor allow any compensation to accrue to their beneficial interests from any source, the receipt of which would occur by virtue of influence improperly exerted from a position in Congress. (FOOTNOTE 6)
(FOOTNOTE 6) House Rule 43, cl. 3.
* Members and employees of the House should never discriminate unfairly by the dispensing of special favors or privileges to anyone nor may they accept benefits under circumstances that might be construed by reasonable persons as influencing the performance of governmental duties. (FOOTNOTE 7)
(FOOTNOTE 7) Code of Ethics for Government Service para. 5, supra note 3.
* Members and employees should never use any information received confidentially in the performance of governmental duties as a means for making private profit. (FOOTNOTE 8)
(FOOTNOTE 8) Id. para. 8.
In its very first case, in the 94th Congress, the Committee found that the prohibition on the use of one's official position for personal gain was violated when a Member sought benefits from an organization after the Member, in his official capacity, had actively promoted the establishment of that organization. The Committee found that ``during the period of time [the Member] was active in promoting the establishment of the . . . Bank [on a military base] he approached . . . organizers of the bank and inquired about the possibility of buying stock in the Bank.'' (FOOTNOTE 9) He subsequently purchased 2500 shares of the Bank's privately held stock. The Committee noted that ``[i]f an opinion had been requested of this Committee in advance about the propriety of the investment, it would have been disapproved.'' (FOOTNOTE 10) The Member was also found to have used public office for private gain in that he had sponsored legislation to remove a reversionary interest and restrictions on land in which he had a personal financial interest. (FOOTNOTE 11) The Member was reprimanded by the House. (FOOTNOTE 12)
(FOOTNOTE 9) House Comm. on Standards of Official Conduct, In the Matter of a Complaint against Representative Robert L.F. Sikes, H. Rep. No. 94-1364, 94th Cong., 2d Sess. 3 (1976).
(FOOTNOTE 10) Id. at 4.
(FOOTNOTE 11) Id. at 3-4.
(FOOTNOTE 12) 122 Cong. Rec. 24379-83 (July 29, 1976).
(FOOTNOTE 13) Title I of the Ethics in Government Act of 1978, as amended, 5 U.S.C. app. 6, secs. 101-111.
(FOOTNOTE 14) See House Comm'n on Admin. Review, Financial Ethics, H. Doc. No. 95-73, 95th Cong., 1st Sess. 9-10 (1977).
(FOOTNOTE 15) Congress and the Public Trust, supra note 1, at 40.
(FOOTNOTE 16) House Rule 8, cl. 1; see Chapter 3 of this Manual for further discussion of this provision.
Members of Congress enter public service owning assets and having private investment interests like other citizens. Members should not ``be expected to fully strip themselves of worldly goods.'' (FOOTNOTE 17) Even a selective divestiture of potentially conflicting assets would raise problems for a legislator. Unlike many officials in the executive branch, who are concerned with administration and regulation in a narrow area, a Member of Congress must exercise judgment concerning legislation across the entire spectrum of business and economic endeavors. The wisdom of divestiture may also be questioned as likely to insulate a legislator from the personal and economic interests that his/her constituency, or society in general, has in governmental decisions and policy.
(FOOTNOTE 17) Congress and the Public Trust, supra note 1, at 47.
As noted by the Bipartisan Task Force on Ethics:
The problem of conflicts of interest involves complex and difficult issues, especially with respect to the legislative branch. A conflict of interest is generally defined as a situation in which an official's private financial interests conflict or appear to conflict with the public interest. Some conflicts of interest are inherent in a representative system of government, and are not in themselves necessarily improper or unethical. Members of Congress frequently maintain economic interests that merge or correspond with the interests of their constituents. This community of interests is in the nature of representative government, and is therefore inevitable and unavoidable.
At the other extreme, a conflict of interest becomes corruption when an official uses his position of influence to enhance his personal financial interests. Between these extremes are those ambiguous circumstances which may create a real or potential conflict of interest. The problem is identifying those instances in which an official allows his personal economic interests to impair his independence of judgment in the conduct of his public duties. (FOOTNOTE 18)
(FOOTNOTE 18) House Bipartisan Task Force on Ethics, Report on H.R. 3660, 101st Cong., 1st Sess. 22 (Comm. Print, Comm. on Rules 1989), reprinted in 135 Cong. Rec. H9253, H9259 (daily ed. Nov. 21, 1989) (hereinafter Bipartisan Task Force Report).
Each situation must be reviewed on a case by case basis to determine if an actual conflict of interest exists. This Committee has admonished all Members ``to avoid situations in which even an inference might be drawn suggesting improper action.'' (FOOTNOTE 19)
(FOOTNOTE 19) House Comm. on Standards of Official Conduct, Investigation of Financial Transactions Participated in and Gifts of Transportation Accepted by Representative Fernand J. St Germain, H. Rep. No. 100-46, 100th Cong., 1st Sess. 3, 9, 43 (1987).
Thus, public disclosure of assets, financial interests, and investments has been required as the preferred method of regulating possible conflicts of interest of Members of the House and certain congressional staff. Public disclosure is intended to provide the information necessary to allow Members' constituencies to judge their official conduct in light of possible financial conflicts with private holdings. Review of a Member's financial conduct occurs in the context of the political process. As stated by the House Commission on Administrative Review of the 95th Congress in recommending broader financial disclosure in lieu of other restrictions on investment income:
In the case of investment income, then, the Commission's belief is that potential conflicts of interest are best deterred through disclosure and the discipline of the electoral process. Other approaches are flawed both in terms of their reasonableness and practicality, and threaten to impair, rather than to protect, the relationship between the representative and the represented. (FOOTNOTE 20)
(FOOTNOTE 20) Financial Ethics, H. Doc. No. 95-73, supra note 14, at 9-10.
The House has required public financial disclosure by rule since 1968, and by statute since 1978. The Commission on Administrative Review noted: ``The objectives of financial disclosure are to inform the public about the financial interests of government officials in order to increase public confidence in the integrity of government and to deter potential conflicts of interest.'' (FOOTNOTE 21) The Bipartisan Task Force on Ethics cited two further goals underlying statutory disclosure requirements: (1) requiring disclosure of only those items that are relevant to potential conflicts of interest; and (2) developing reporting requirements that avoid unnecessary invasions of privacy or excessively burdensome record-keeping. In short, the financial disclosure requirements must effectively balance the privacy rights of the reporting individual with the governmental interests in informing the public and deterring conflicts of interest. (FOOTNOTE 22)
(FOOTNOTE 21) Id. at 4.
(FOOTNOTE 22) Bipartisan Task Force Report, supra note 18, at 22, 135 Cong. Rec. H9259.
(FOOTNOTE 23) Pub. L. No. 95-521, 92 Stat. 1824 (Oct. 26, 1978). Legislative branch disclosure requirements were then codified at 2 U.S.C. sec. 701 et seq.
(FOOTNOTE 24) Pub. L. No. 101-194, 103 Stat. 1716 (Nov. 30, 1989), as amended by Pub. L. No. 101-280, 104 Stat. 149 (May 4, 1990) and Pub. L. No. 102-90, 105 Stat. 447 (Aug. 14, 1991).
(FOOTNOTE 25) Financial Disclosure Requirements of Federal Personnel have been codified since 1991 at 5 U.S.C. app. 6, secs. 101-111.
The Committee on Standards of Official Conduct develops forms and instructions for financial disclosure and reviews the completed statements of House Members, officers, employees, candidates, and certain other legislative branch personnel for compliance with applicable laws. The Clerk of the House is responsible for making the forms available for public inspection. The discussion that follows focuses primarily on those requirements that apply to Members, officers, and employees of the House. Additional details for all filers within the Committee's jurisdiction are included in the Instructions for Completing Financial Disclosure Statements issued by and available from the Committee.
(FOOTNOTE 26) Pub. L. No. 101-509, 104 Stat. 1389 (Nov. 5, 1990) eliminated the GS-16 classification and replaced it with ``above GS-15,'' meaning 120 percent of the GS-15 base level salary. The term ``GS-16'' continues to be used in the Ethics in Government Act. All such references are deemed references to ``above GS-15.''
(FOOTNOTE 27) See Chapter 3, note 3, supra.
(FOOTNOTE 28) See also House Comm. on Standards of Official Conduct, Interpretive Ruling No. 1 (Dec. 5, 1979), reprinted at the end of this chapter.
An individual who qualifies as a candidate for the House must file within 30 days of becoming a candidate, or on or before May 15, whichever is later, but in any event at least 30 days before the election. (Individuals who do not qualify as candidates until within 30 days of the election must file as soon as they do qualify.) One becomes a candidate, as defined in the Federal Election Campaign Act, by raising or spending more than $5,000 for a campaign. (FOOTNOTE 29) An individual who does not raise or spend that much money has no financial disclosure obligations. All individuals who do meet this definition must file each year that they continue to be candidates.
(FOOTNOTE 29) See 2 U.S.C. sec. 431(2).
(FOOTNOTE 30) 5 U.S.C. app. 6, sec. 102(e)(1).
(1) The item is the sole interest or responsibility of the spouse or dependent child, and the reporting individual has no knowledge of the item;
(2) The item was not in any way, past or present, derived from the income, assets, or activities of the reporting individual; and
(3) The reporting individual neither derives, nor expects to derive, any financial or economic benefit from the item. (FOOTNOTE 31)
(FOOTNOTE 31) Id. sec. 102(e)(1)(E). See also House Comm. on Standards of Official Conduct, In the Matter of Representative Geraldine A. Ferraro, H. Rep. No. 98-1169, 98th Cong., 2d Sess. (1984).
An individual is not required to disclose financial information about a spouse from whom he or she has separated with the intention of terminating the marriage or providing for a permanent separation. (FOOTNOTE 32)
(FOOTNOTE 32) 5 U.S.C. app. 6, sec. 102(e)(2).
Example 1. Member A sets up an account in his 10-year-old daughter's name, into which he deposits funds that he has earmarked to pay for her college education. Member A must disclose the account.
Example 2. Member B's husband has a stock portfolio, entirely in his own name. He uses the income from these investments to finance family vacations and other non-routine family expenses. Member B must disclose the stock portfolio.
Example 3. Candidate C's wife inherits some real estate. She is the sole owner, but C will inherit the land if his wife predeceases him. C must disclose the property.
(FOOTNOTE 33) Id. sec. 102(a)(1)(A).
While Members, officers, and employees may not themselves receive honoraria, (FOOTNOTE 34) reporting individuals must still disclose the source and amount of payments in lieu of honoraria that are directed to charity. In addition, a confidential listing of the recipient charities must be filed separately with the Committee on Standards of Official Conduct. (FOOTNOTE 35) The source and exact amount of spousal honoraria must also be disclosed. Only the source of other earned income of a spouse need be reported, when such income exceeds $1,000. Earned income of a dependent child need not be reported. (FOOTNOTE 36)
(FOOTNOTE 34) See Chapter 3 of this Manual for a discussion of the honoraria ban.
(FOOTNOTE 35) 5 U.S.C. app. 6, sec. 102(a)(1)(A).
(FOOTNOTE 36) Id. sec. 102(e)(1)(A).
``Unearned'' income includes such items as interest, rents, dividends, capital gains, trust income, proceeds from life insurance policies and other amounts received as a return on investment. The source, type, and category of value (FOOTNOTE 37) of such income must be disclosed when it exceeds $200 in value from any source during a calendar year. (FOOTNOTE 38) The filer must report the category of value reflecting the gross amount of unearned income; net figures may also be disclosed if the filer so chooses. The unearned income of a spouse or dependent child must be reported in the same level of detail as that of the reporting individual.
(FOOTNOTE 37) Except for earned income, the exact value of financial interests need not be disclosed; only the range within which an item falls -- called the ``category of value'' -- is required.
(FOOTNOTE 38) 5 U.S.C. app. 6, sec. 102(a)(1)(B).
(FOOTNOTE 39) Id. sec. 102(a)(3), (a)(1)(B).
The identity of the property, in addition to its category of value, must be specified. Disclosure of real property should include a description sufficient to permit its identification (e.g., street address or plat and map location). Each company in which stock worth over $1,000 is held must be listed separately.
Interest-bearing savings accounts valued at more than $1,000 must be disclosed if all such accounts total more than $5,000 in value. Savings accounts include certificates of deposit, money market accounts, or any other form of deposit in a bank, savings and loan association, credit union, or similar financial institution. Non-interest-bearing checking accounts, on the other hand, need not be disclosed since they produce no income. Financial interests in U.S. Government retirement programs (e.g., the Thrift Savings Plan) need not be reported. As a result of a policy change occasioned by the Ethics Reform Act, however, non-federal retirement plans (including state government programs, Individual Retirement Accounts, and Keogh plans) must now be disclosed.
Example 4. Member A has a stock portfolio, managed by a stock broker. Member A must disclose each stock in the portfolio that is worth more than $1,000 at the end of the year or generates more than $200 in income during the year.
Example 5. Principal Assistant B begins the year with $1,200 of stock in Company Z. Z suffers losses during the year such that it declares no dividends during the year and B's stock declines in value to $900 by year's end. B need not disclose her stock in Z.
Example 6. Member C has $10,000 invested in a money market account with a brokerage firm. The money market fund is managed by an employee of the firm, who invests the fund's assets in stocks. Individual investors like Member C have no control over which stocks the fund holds. Member C must disclose his investment in the fund, but need not list the individual stocks in the fund's portfolio.
Example 7. Member D was a state legislator before becoming a Member of Congress. Her interest in the state employees' retirement program is worth $15,000. Member D must disclose this interest as an asset on her Financial Disclosure Statement.
Example 8. Candidate E's wife has an IRA, worth $12,000. E must disclose the IRA.
The holdings of and income derived from a trust or other financial arrangement in which the reporting individual, spouse, or dependent child has a beneficial interest in principal or income generally must be disclosed. The three instances when such assets need not be disclosed are when they are held in (1) a qualified blind trust, (2) a qualified diversified trust, or (3) a trust which was not created by the beneficiary and regarding which neither the reporting individual, spouse, nor dependent child have specific knowledge of the holdings or sources of income. (FOOTNOTE 40) Even for such trusts, the category of value of any unearned trust income must be reported if it exceeds $200. Both qualified blind trusts and qualified diversified trusts must be pre-approved by the Committee on Standards of Official Conduct. These instruments are discussed in greater detail later in this chapter.
(FOOTNOTE 40) Id. sec. 102(f)(2).
Amounts owed by certain close relatives, personal residences not producing rental income, and personal property not held primarily for investment or the production of income need not be reported.
Example 9. Member F owns a vacation home, which she uses for one month during the year. The rest of the time, she allows family members and close friends to use it at no charge. F need not disclose this property.
Example 10. Candidate G owns a vacation home, which he uses for one month during the year. The rest of the time, he rents it out. G must disclose this property.
Example 11. Member H rents out a basement apartment in her home to her son for $400 a month. H must disclose this rental income, as well as the property that generated it.
Example 12. Employee J owns an antique car, worth $50,000. J never uses the car for commercial purposes; he uses it exclusively for his personal enjoyment. J need not disclose the car.
(FOOTNOTE 41) Id. sec. 102(a)(5).
Stock and commodity options, futures contracts, and bonds (corporate and government) are considered types of securities. As such, transactions in these items are reportable. Transactions by a partnership in which the reporting individual has an interest must be disclosed when the partnership is organized for the investment or production of income and is not actively engaged in a trade or business. These partnership transactions need only be reported, however, to the extent that the filer's share of the transaction exceeds $1,000.
The purchase or sale of property used solely as a personal residence (including a secondary residence not used for rental purposes) of the reporting individual or spouse and transactions solely by and between the reporting individual, spouse, or dependent children need not be disclosed. Likewise, the opening or closing of bank accounts, the purchase or sale of certificates of deposit, and contributions to or the rollover of IRAs and other retirement plans need not be reported.
Example 13. Member A sells stock in Company Z for $5,000, realizing a $700 capital loss. A must report the $5,000 sale as a transaction. A may add that the sale represents a loss if she so chooses, but this information is not required.
Example 14. Member B has a 25 percent interest in a partnership that buys and sells real estate for investment purposes. The partnership buys a piece of property for $400,000. B must disclose the partnership's purchase, in the category of value reflecting his $100,000 share of the transaction.
(FOOTNOTE 42) Id. sec. 102(a)(4).
Just as personal liabilities owed to a reporting individual by certain relatives need not be reported as assets, liabilities owed by a reporting individual to a spouse, parent, brother, sister, or child of the filer or of the filer's spouse need not be listed. Mortgages secured by a personal residence (including secondary residences not used for rental purposes) as well as personal loans secured by motor vehicles, household furniture, or appliances need not be disclosed as long as the indebtedness does not exceed the purchase price of the item. One also need not report contingent liabilities, such as that of a guarantor, endorser, or surety; liabilities of a business in which the reporting individual has an interest; loans secured by the cash value of a life insurance policy; and tax deficiencies.
(FOOTNOTE 43) See Legislative Branch Appropriations Act, 1992, Pub. L. No. 102-90, sec. 314(a) and (d), 105 Stat. 447, 469-70 (1991) (amending sec. 102(a)(2) of the Ethics in Government Act of 1978 and House Rule 43, clause 4).
In 1991, the gift limit was $200 (with gifts of $75 or less not counting), but the disclosure threshold was $250 for gifts of transportation, lodging, food, and entertainment and $100 for all other gifts. On January 1, 1992, the gift limit rose to $250 and the disclosure threshold for all gifts that are received in 1992 and reported in 1993 also rose to $250. Gifts of $100 or less do not count towards the $250. When these figures are periodically adjusted for inflation, they will rise at the same rate at the same time.
Example 15. In 1991, Member A received from a friend a case of wine worth $150. A must disclose the gift on the report filed in 1992.
Example 16. In 1992, Member A receives from a friend a case of wine worth $150. A need not disclose the gift on the report filed in 1993.
As a result of these changes harmonizing the acceptance and reporting requirements, most gifts that may be accepted in 1992 and thereafter will not need to be reported. The only exception will be gifts for which a waiver has been obtained from the gift rule but not the disclosure requirement. In that case, the donor, description, and value of the gifts must be listed on the Financial Disclosure Statement. The Committee may waive the requirement that certain gifts be aggregated and disclosed for good cause, upon written request. Such requests, however, are publicly available.
A number of exceptions pertain. Gifts from relatives, personal hospitality, and local meals need not be disclosed. ``Personal hospitality'' means hospitality extended for a nonbusiness purpose by an individual, at the individual's residence or other property. A ``local meal'' means a meal unconnected with a travel package, at which the host is present. Gifts to a spouse or dependent child that are totally independent of the recipient's relationship with the reporting individual are exempt from both the gift rule and the disclosure statute. If not totally independent, gifts from third parties to a spouse or dependent child are treated the same as gifts to the reporting individual. However, simultaneous gifts to the reporting individual and his or her spouse or dependent child may be treated as separate gifts for the purpose of determining whether the $100 aggregation threshold has been reached. (FOOTNOTE 44)
(FOOTNOTE 44) See Chapter 2 of this Manual for a detailed discussion of the gift rule in general and the simultaneous gift rule in particular.
Example 17. Member B receives from her father a gift of $10,000. B need not disclose the gift.
(FOOTNOTE 45) 5 U.S.C. app. 6, sec. 102(a)(2).
Example 18. Member B gives a speech in Chicago at a meeting of a trade association which pays airfare, food, and lodging for B and his wife to attend. The expenses for Mr. and Mrs. B exceed $250. B must disclose the source, dates and nature of expenses, but need not report any dollar amounts.
Travel reported on campaign filings, such as Federal Election Commission reports, need not be disclosed on a Financial Disclosure Statement, nor need travel provided on an official basis by Federal, state or local governments be reported. Travel provided by a foreign government pursuant to the Foreign Gifts and Decorations Act (FOOTNOTE 46) is disclosed on a separate form for that purpose available from the Committee.
(FOOTNOTE 46) 5 U.S.C. sec. 7342.
(FOOTNOTE 47) 5 U.S.C. app. 6, sec. 102(a)(6)(A).
The title or nature of each position and the name of the organization should be stated. Only positions held by the reporting individual need to be disclosed, not those held by a spouse or dependent child.
(FOOTNOTE 48) Id. sec. 102(a)(7).
Continued payments or benefits from a former employer would include interest in or contributions to a pension fund, profit-sharing plan, or life and health insurance; buyout agreements; severance payments and the like. A deferred compensation plan would include an arrangement for the delayed payment of amounts due for services rendered by a reporting individual. Deferred compensation is not subject to outside earned income limitations, but it is reportable.
(FOOTNOTE 49) Id. sec. 102(a)(6)(B).
Both the name and location of the entity that made the payment should be specified. The nature of the duties performed only need be described generally. Thus, a firm name and ``legal services'' would be sufficient for services rendered by an attorney. Individual clients need not be identified. The amount of compensation also need not be disclosed.
(FOOTNOTE 50) Id. sec. 102(f).
A ``qualified blind trust'' must satisfy a number of requirements, including the following:
(1) The trustee must be an independent financial institution, lawyer, certified public accountant, broker, or investment advisor;
(2) There may be no restrictions on the disposal of the trust assets;
(3) The trust instrument must limit communications between the trustee and interested parties; and
(4) The trust instrument and the trustee must be approved by the Committee on Standards of Official Conduct.
In creating such a trust, an official places financial assets under the exclusive control of an independent party. All assets or holdings transferred to a trust at the time of its creation or anytime thereafter must be identified, valued, and publicly disclosed. Eventually, through the sale of existing assets and the acquisition of new ones, the identity of specific assets owned by the trust will be unknown to the official and will thus be eliminated as a factor in influencing official decision-making.
The third exception from trust disclosure is for a ``qualified diversified trust,'' an arrangement not generally well-suited to use in the legislative branch because of the breadth of legislators' official duties. Such a trust must meet the following requirements:
(1) The trust must consist of a diversified portfolio of readily marketable securities;
(2) The trust assets may not consist of securities of entities having substantial activities in the area of primary responsibility of the reporting individual;
(3) The trust instrument must prohibit the trustee from publicly disclosing or informing any interested party of the sale of any security;
(4) The trustee must have power of attorney to prepare the personal income tax returns of the individual and any other returns that may contain information pertaining to the trust; and
(5) The trustee as well as the trust instrument must be approved in advance by the Committee on Standards of Official Conduct.
(FOOTNOTE 51) Id. sec. 101(e).
Example 19. Member A resigns from Congress to take a position as a Cabinet Secretary. A need not file a termination report.
(FOOTNOTE 52) Id. sec. 101(g).
(FOOTNOTE 53) Id. sec. 104(d).
Within 60 days of receipt, the Committee on Standards of Official Conduct reviews Financial Disclosure Statements of filers under its jurisdiction to determine whether the reports have been filed in a timely manner, appear substantially accurate and complete, and comply with applicable conflict of interest laws and rules. (FOOTNOTE 54) If the review indicates a possible problem, the reporting individual is notified and given an opportunity to amend within a specified period.
(FOOTNOTE 54) Id. sec. 106.
A filer may also amend a Financial Disclosure Statement on his or her own initiative. Such amendments are normally given a presumption of good faith by the Committee if submitted before the end of the year in which the report was originally filed. (FOOTNOTE 55)
(FOOTNOTE 55) The Committee's amendment policy is reprinted at the end of this chapter. Memorandum to all Members, Officers, and Employees from Julian C. Dixon, Chairman, and John T. Myers, Ranking Minority Member, House Comm. on Standards of Official Conduct (Apr. 23, 1986).
To amend a Financial Disclosure Statement, a filer need not submit an entirely new form. Instead, an amendment can be in the form of a letter addressed to, and filed with, the Clerk of the House. Both the original filing and the amendment are made public.
(FOOTNOTE 56) House Rule 44.
(FOOTNOTE 57) See House Rule 10, cl. 1(t).
(FOOTNOTE 58) 5 U.S.C. app. 6, sec. 104(a).
(FOOTNOTE 59) 18 U.S.C. sec. 1001.
(FOOTNOTE 60) See United States v. Hansen, 772 F.2d 940 (D.C. Cir. 1985), cert. denied, 475 U.S. 1045 (1986).
(FOOTNOTE 61) 5 U.S.C. app. 6, sec. 106(b)(7).
(FOOTNOTE 1) Originally issued on December 5, 1979, this ruling was modified by the Committee on March 6, 1991, to reflect changes made by the Ethics Reform Act of 1989.
Designation of principal assistants by Members of the House of Representatives for purposes of filing a Financial Disclosure Statement pursuant to Title I of the Ethics in Government Act (5 U.S.C. app. 6, secs. 101-111) as amended by the Ethics Reform Act of 1989 (Public Laws 101-194 and 101-280).
The Ethics in Government Act applies financial disclosure requirements to each employee of the Legislative Branch who is compensated at a rate equal to or in excess of the annual rate of basic pay in effect for grade GS-16 (FOOTNOTE 2) of the General Schedule. Such employees must file a Financial Disclosure Statement by May 15 of each year covering the preceding calendar year. Any Member who does not have an employee in his or her congressional office compensated at the GS-16 salary level is required to designate at least one principal assistant for purposes of the Act. The principal assistant must be an individual who was employed in the Member's office for more than 60 days in the calendar year covered by the Financial Disclosure Statement.
(FOOTNOTE 2) Public Law 101-509 eliminated the GS-16 classification and replaced it with ``above GS-15,'' meaning 120 percent of the GS-15 base level salary . The term ``GS-16'' continues to be used in the Ethics in Government Act. All such references are deemed references to ``above GS-15'' pending enactment of correcting legislation.
The purpose of the requirement that a Member designate a principal assistant is to ensure that at least one employee in each Member's office files an annual Financial Disclosure Statement. See House Report No. 95-574, Select Committee on Ethics. However, the Act is ambiguous concerning when a Member's obligation to designate a principal assistant takes effect, when that designation must occur, and if the designation requirement applicable to a Member may subsequently be nullified under certain circumstances, requiring the designation of another individual as principal assistant. An additional requirement of the Act is that any ``covered employee'' must file a termination report within 30 days of leaving his or her Government position. Not clear are the circumstances under which a person who is replaced as principal assistant must file a termination report, as well as whether the filing of a termination report can satisfy the annual filing requirement for a Member's office. While a principal assistant usually will be designated by a Member early in a calendar year for purposes of filing a Financial Disclosure Statement in the succeeding calendar year, an employee who had been required to file may leave the Member's office before the May 15 filing date or prior to having been employed in the Member's office for more than 60 days in a calendar year. Consequently, Members who do not have an employee required to file may designate a principal assistant for the purposes of the statute any time prior to May 15, in order that a Financial Disclosure Statement can be filed by that date. Such an interpretation of the designation requirement ensures that at least one employee in each Member's office will file a disclosure statement in each calendar year. The newly designated person should be an individual who served in the Member's office for more than 60 days in the period covered by the report. A GS-16 employee who is employed in a Member's office for more than 60 days in a calendar year is required to file a Financial Disclosure Statement irrespective of whether he or she continues to be paid at the GS-16 salary level on May 15. A principal assistant designated by a Member who does not have a GS-16 employee would be required to file a disclosure statement only if: (1) The individual has been employed in the Member's office for more than 60 days in the preceding calendar year; and (2) The Member does not have a GS-16 employee required to file a disclosure statement on or before May 15. Thus, a principal assistant not a GS-16 employee, designated by a Member who subsequently has a GS-16 employee meeting the statutory requirements, would not be required to file a disclosure statement on or before May 15 of the succeeding calendar year An employee not paid at the GS-16 level, who is no longer obligated to file an annual Financial Disclosure Statement as principal assistant (either because there is a qualifying GS-16 employee or because someone else has been designated) does not have to file a termination report. This is the case whether the individual remains an employee in the same office, moves to a different congressional office, or leaves Government service entirely. As long as the Member designates someone else to file by May 15, the statutory objective is met. The only instance where a termination report is required of a principal assistant not paid at the GS-16 level is in the case of a Member leaving Congress, where both the Member and the designated employee would be required to file termination reports. In light of the intent that a Member have at least one employee file on or before May 15, whether an individual compensated at the GS-16 level or a principal assistant, a termination report cannot be used to satisfy the annual filing requirement. To permit otherwise would mean that the report would be filed by an individual who is no longer employed in the Member's office. Since the filing of a disclosure statement upon termination cannot be used to satisfy the annual filing requirement of a Member's office, the Member must designate a new principal assistant in the event that the previously designated individual has left his or her employment prior to the May 15 filing. The newly designated individual must have performed his or her duties for more than 60 days in the calendar year covered by the report. Any employee designated as a principal assistant need not report information with respect to gifts and reimbursements received in a period when the individual was not so designated. This interpretation is consistent with the statutory provision exempting gifts and reimbursements received when the reporting individual was not a government employee, since the individual may not have kept records of such items. A further issue concerns the application of the designation requirement to Members serving their first term, and the circumstances under which a new employee designated as a principal assistant would be required to file the abbreviated disclosure statement applicable to new employees (FORM B). If a newly elected Member does not hire a new employee compensated at the GS-16 salary level, there might be no employee of that Member required to file a disclosure statement for a period of almost 17 months. Again, the intent of the statute is that at least one employee in each Member's office file a Financial Disclosure Statement in each calendar year. Accordingly, any Member first taking office on January 3 who does not have a GS-16 employee should designate a principal assistant to file a disclosure statement by May 15. Any such designated principal assistant should file a Financial Disclosure Statement as a new employee (FORM B), even if that employee previously worked in another congressional office. SUMMARY RULING
The purpose of this ruling is to ensure that at least one employee in each Member's office files a disclosure statement by May 15 of each calendar year. The ruling is based on three specific provisions of the Ethics in Government Act: (1) At least one principal assistant must be designated by each Member who does not have an employee compensated at a rate equal to or in excess of the GS-16 salary level; (2) An employee in a position subject to the Act is required to file a Financial Disclosure Statement for the preceding calendar year only if he or she was employed by the Member for more than sixty days during the preceding calendar year; and (3) A GS-16 employee is required to file a disclosure statement within thirty days after termination of government employment, covering the preceding calendar year if the annual disclosure statement has not been filed, as well as that portion of the calendar year in which the termination occurred up to the date that such employee left the position. Any Member who does not have an employee required to file a Financial Disclosure Statement on or before May 15 in a calendar year must designate at least one principal assistant to file a disclosure statement by that date. The designation of a principal assistant may occur at any time prior to the May 15 filing date. Any such designated principal assistant must have been employed in the Member's congressional office for more than 60 days in the preceding calendar year and must continue to be so employed when the Financial Disclosure Statement is filed. A principal assistant who is not GS-16 employee does not have to file a termination report if someone else in the Member's office is designated to file in that person's place. The newly designated individual must meet the statutory requirements for filing, including having worked in the Member's office for more than 60 days in the year covered by the report. An employee designated as a principal assistant in accordance with this ruling by a Member first taking office on January 3 must file the Financial Disclosure Statement required of new employees on or before May 15 of that calendar year. An employee designated as a principal assistant need not report information with respect to gifts and reimbursements received in a period when the individual was not designated as a principal assistant for purposes of the Act.
TO: All Members, Officers, and Employees of the U.S. House of Representatives
FROM: Committee on Standards of Official Conduct Julian C. Dixon, Chairman John T. Myers, Ranking Minority Member
The purpose of this letter is to inform all Members, officers, and employees who are required to file Financial Disclosure (FD) Statements pursuant to the Ethics in Government Act (EIGA) of 1978, 5 U.S.C. app. 6, sec. 101 et seq., (FOOTNOTE 1) whose filings are under the jurisdiction of this Committee, of a revision to the Committee's policy regarding the submission of amendments to earlier filed disclosure statements. The new policy, discussed below, will be implemented immediately and all future statements as well as the amendments thereto will be handled in accordance therewith.
(FOOTNOTE 1) Title I of EIGA was recodified following enactment of the Ethics Reform Act of 1989, P.L. 101-194, 103 Stat. 1716. Legislative branch disclosure requirements were previously found at 2 U.S.C. sec. 701 et seq. The 1989 statute combined separate provisions applicable to all three branches into the one title now found at Appendix 6 of title 5, United States Code.
To date, it has been the general policy of this Committee to accept amended FD Statements from all filers and consider such amendments to have been timely filed without regard to the duration of time between the date of the original filing and the amendment submitted thereto. Over time, this practice has resulted in the Committee having received a significant number of amendments to disclosure statements under circumstances not necessarily reflecting adequate justification or explanation that the amendment was necessary to clarify previously disclosed information or that a disclosure was omitted due either to unavailability of information or inadvertence. Moreover, and particularly in the case of an individual whose conduct (having EIGA implications) is under review, the Committee has been faced with the somewhat inconsistent tasks of identifying the deficiencies in earlier FD Statements while simultaneously accepting amendments to such statements that may well have been intended to have a mitigating or even exculpating effect. Quite clearly, both time and experience have established the need to make some adjustments to the financial disclosure process in order to alleviate such perceived problems and create a more logical and predictable environment for filers to meet their statutory obligation under EIGA and the parallel responsibility of this Committee to implement that law. It is in this context that a new policy for accepting and considering amended disclosure statements is being implemented. To begin, effective immediately, an amendment to an earlier FD Statement will be considered timely filed if it is submitted by no later that the close of the year in which the original filing so affected was proffered. There will be, however, a further caveat to this ``close-of-year'' approach. Specifically, an amendment will not be considered to be timely if the submission thereof is clearly intended to ``paper over'' an earlier mis/non filing or there is no showing that such amendment was occasioned by either the prior unavailability of information or the inadvertent omission thereof. Thus, for example, so long as a filer wishes to amend within the appropriate period of prescribed ``timeliness'' and such amendments are not submitted as a result of, or in connection with, action by this Committee that may have the effect of discrediting the quality of the initial filing(s), then such amendments will be deemed to be presumptively good faith revisions to the filings. In essence, the amendment, per se, should be submitted only as a result of the need to clarify an earlier filing or to disclose information not known (or inadvertently omitted) at the time the original FD was submitted. In sum, the Committee will adopt a two-pronged test for determining whether an amendment is considered to be filed with a presumption of good faith: First, whether it is submitted within the appropriate amendment period (close-of-year); and second, a ``circumstance'' text addressing why the amendment is justified. In this latter regard, filers will be expected to submit with the amendment a brief statement on why the earlier FD is being revised. Thus, amendments meeting the two-pronged test will be accorded a rebuttable presumption of good faith and this Committee will have the burden to overcome such a presumption. Conversely, any amendment not satisfying both of the above-stated criteria will not be accorded the rebuttable presumption of good faith. In such a case, the burden will be on the filer to establish such a presumption. The Committee is well aware that disclosure statements filed in years past may be in need of revision. To this end, the Committee has determined that a grace period ending at the close of calendar year 1986 will be granted during which time all filers may amend any previously submitted FD Statements. Again, while an amendment may be timely from the standpoint of when it is submitted -- i.e., within the current year -- information regarding the need for and, hence, appropriateness of the amendment will also be considered vis-a-vis the rebuttable presumption of good faith. In sum, the effect of the new policy is to establish a practice of receiving and anticipating that FD Statements and amendment thereto will be submitted within the same calendar year and that departures based on either timeliness or circumstances can be readily identified for scrutiny and possible Committee action. As noted, implementation of the new policy will affect not only statements filed this year but also all statements filed in prior years in light of the grace period being adopted. Should you have a question regarding this matter, please feel free to contact the Committee staff at 225-7103.