SEC Amends Ethics Standards

The SEC and Office of Governmental Ethics have jointly released a final rule to amend the Commission’s “existing, robust ethics requirements that govern the securities holdings and transactions of all agency employees, their spouses, and minor children.” Specific provisions of the final rule include the following:

• Expanding the SEC’s prohibitions against its employees’ investing in certain stocks of entities that the Commission directly regulates (e.g., broker-dealers, investment advisers) by banning investments in financial industry sector funds.
• Enhancing and facilitating internal controls related to data collection by allowing “employees to comply with existing reporting requirements by authorizing financial institutions to transmit data on their covered securities transactions and holdings directly to the SEC through an automated electronic system.”
• Exempting diversified mutual funds from the ethics requirements in an effort to streamline the use of the SEC’s resources, since such funds “generally pose a low risk of conflicts of interest, misuse of nonpublic information for personal gain, or appearance problems as compared to other types of securities.”

For more information, see the press release on the SEC’s Web site.