Fedweek

Washington DC, Jan 2017: Former director of the Office of Government Ethics, Walter Shaub Jr., who sparred with the Trump Administration over divesting business interests, arrives for a scheduled meeting with the leaders of the House Oversight and Reform Committee. Emory Rounds III, a former ethics counsel in the G.W. Bush White House is the current OGE director.

The Office of Government Ethics has revised its guidance on several exceptions to the general requirements for federal employees who file financial disclosures designed to detect possible conflicts of interest.

While employees are generally prohibited from participating in “particular government matters in which they have a personal or imputed financial interest,” the guidance notes, there are exceptions for holdings in “diversified” mutual funds and holdings in “sector” mutual funds.

The new guidance clarifies the distinction between the two—which it says “is not always easily defined” and is the result of a reconsideration of prior guidance—for purposes of reporting holdings in funds that invest in information technology and Internet companies.

It says that mutual funds that have a stated policy of investing broadly across the information technology or internet field are now considered “diversified.” That would include funds that invest generally in technology, “high” technology, or information technology; funds that invest broadly in companies that do business primarily over the internet; and funds that invest in companies engaged in online retail.

In contrast, funds that have a stated investment policy of concentrating more narrowly on particular information technology products or services, or on a specific or specialized segment of interrelated information technology or internet-based companies, will continue to be considered “sector” funds. That would include funds that have a policy of concentrating their investments in companies that produce computer hardware, semiconductors, or software, or that provide specific information technology services or products such as cybersecurity, social media networks, or digital currency software.

Says the guidance, “To determine whether a mutual fund that invests in the information technology or internet field is diversified, employees and agency ethics officials should review the prospectus or other summary of investment strategy produced by the fund. If questions remain, OGE encourages agency ethics officials to contact their agency’s desk officer for assistance.”