ings containing the substance of the communications to all participants because: (1) The communications are so voluminous, or (2) they are of such borderline relevance to the issues in the proceeding, or (3) the participants to the proceeding are so numerous, the Secretary may, instead, notify them that the communications have been received and writings containing their substance placed in the public file where they are available for their examination.

(c) Any Commission member or decisional employee who receives a communication which would be prohibited by this Code, but for the fact that it was received subsequent to the date when the prohibition imposed hereby have ceased, shall comply with the provisions of § 200.112 with respect to such communication in the event that he is to act in a decisional capacity in the same proceeding pursuant to remand where he concludes, in fairness, that such communication should be brought to the attention of all participants to the proceeding.

§ 200.113 Opportunity to rebut; interception.

(a) All participants to a proceeding may request an opportunity to answer any allegations or contentions contained in an unauthorized ex parte communication or in any other ex parte communication brought to the attention of the participants in accordance with § 200.112. The Commission will grant such a request whenever it determines that the dictates of fairness so require. If the record has not yet been certified to the Commission this determination shall be made in the first instance by the hearing officer.

(b) All written communications addressed to the Commission respecting a proceeding will be deemed to be communications to the staff of the interested division and will be directed to that division by the Commission's mail room. A Commission member or decisional employee may instruct any of his assistants who are nondecisional employees to intercept any communication directed to him which might appear to violate this Code and authorize them either to transmit any such written communication to the staff of the interested division of the Commission, if it appears from the contents of the communication that the intent of the sender is consistent with such

action, or to return the communication to the sender.

§ 200.114 Sanctions.

(a) The Commission may, to the extent not prohibited by law, censure, suspend, or revoke the privilege to practice before it of any person who makes, or solicits the making of, an unauthorized ex parte communication.

(b) The relief or benefit sought by a participant to a proceeding may, in the Commission's discretion, be denied if the participant, or an agent of the participant makes, or solicits the making of, an authorized ex parte communication.

(c) The Commission may censure, suspend, or dismiss any Commission employee who violates the prohibitions or requirements of this Code.

Subpart G-Plan of Organization and Operation Effective During Emergency Conditions

AUTHORITY: The provisions of this Subpart G issued under secs. 19, 23, 48 Stat. 85, 901, as amended, sec. 20, 49 Stat. 833, sec. 319, 53 Stat. 1173, secs. 38, 211, 54 Stat. 841, 855; 15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11, unless otherwise noted.

SOURCE: The provisions of this Subpart G appear at 28 F.R. 6970, July 9, 1963, unless otherwise noted.

§ 200.201 Emergency conditions, effective date, and duration.

For the purposes of this subpart, emergency conditions shall be deemed to commence at the time of an armed attack upon the United States, its territories and possessions, at the time of official notification of the likelihood or imminence of such attack, or at a time specified by the authority of the President, whichever may first occur, and shall continue until official notification of cessation of such conditions. The provisions of this subpart shall become operative as at the commencement of emergency conditions and continue until cessation of those conditions, or until the Com

(a) During emergency conditions, the respective functions and responsibilities of the Commissioners, the Chairman of the Commission, and the staff members shall be, to the extent possible, as set forth in Subpart A of this part (§ 200.1 et seq.).

(b) Action for and in the name of the Commission taken pursuant to this subpart by one or more Commissioners or by a successor as designated in this section shall mean and include the delegated authority to act for the unavailable or incapacitated Commissioners.

(c) Pursuant to the statutes governing the Commission, to Reorganization Plan No. 10 of 1950, and to Public Law 87-592 approved August 20, 1962, the following automatic delegation of authority is made to provide continuity in the event of an emergency:

(1) In the absence or incapacity of the Chairman of the Commission during an emergency of the nature contemplated by this subpart, the authority of the Chairman to govern the affairs of the Commission and to act for the Commis

sion, as provided for by laws and by delegations from the Commission, will pass to the surviving successor highest on the following list until such time as a duly appointed Chairman of the Commission is available:

(i) The senior Commissioner. (ii) The General Counsel.

(iii) The Director of the Division of Corporate Regulation.

(iv) The Director of the Division of Corporation Finance.

(v) The Director of the Division of Trading and Markets.

(vi) The Chief Accountant. (vii) The Director of the Office of Opinion Writing.

(viii) The Secretary.

(ix) The Regional Administrator highest on the following list: Denver.

Fort Worth. Chicago. Atlanta.

Seattle.

San Francisco. New York. Boston.

(2) If and when a commissioner previously incapacitated or otherwise unavailable, again becomes available, he shall thereupon have all the powers and functions he would have had if he had not been incapacitated or otherwise unavailable.

(d) Actions taken for and in the name of the Commission as described above shall be effective immediately or as specified by the successor acting, but shall be subject to reconsideration by the Commissioners when the Commission has been reconstituted and is functioning.

(e) Except as may be determined otherwise by the Chairman or his successor, the duties of each head of a division or office of the Commission shall be discharged, in the absence or incapacity of such person during the emergency conditions, by the available staff member next in line of succession. The head of each division or office shall designate the line of succession within his division or office. If no such designation has been made or the designatee is unavailable, such duties shall be assumed by the available subordinate officer or employee in the particular division or office who is highest in grade and in the event that there is more than one such person, in length of service with the Commission. (Sec. 4, 48 Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394; 15 U.S.C. 78d-1. Reorganization Plan No. 10 of 1950, 64 Stat. 1265) [28 F.R. 6970, July 9, 1963, as amended at 28 F.R. 7672, July 27, 1963; 28 F.R. 14493, Dec. 31, 1963]

§ 200.204 Personnel, fiscal, and service functions.

In the absence of unavailability of the appropriate staff officer or his successor, authority to effect temporary appointments of such additional officers and employees, to classify and allocate positions to their proper grades, to issue travel orders, and to effect emergency purchases of supplies, equipment and services shall be exercised by the respective Regional Administrators, their deputies, or staff in line of succession, as may be required for the discharge of the lawful duties of the respective offices.

(Sec. 4, 48 Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394; 15 U.S.C. 78d-1, Reorganization Plan No. 10 of 1950, 64 Stat.

1265)

§ 200.205

Effect upon existing Commission organization, delegations, and rules.

Except as otherwise provided herein, all outstanding Commission organizational statements, delegations of authority, orders, rules and regulations shall remain in force and effect during emergency conditions, subject to all lawful requirements and such changes as may be authorized by or in the name of the Chairman or the Commission.

The Commission finds that the foregoing sections involve matters of agency organization and procedure which do not require notice and opportunity for comment under section 4(a) of the Administrative Procedure Act. Accordingly, the plan is adopted, effective forthwith.

(Sec. 4, 48 Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394, 15 U.S.C. 78d-1. Reorganization Plan No. 10 of 1950, 64 Stat. 1265)

Subparts H-L-[Reserved]

Subpart M-Regulation Concerning Conduct of Members and Employees and Former Members and Employees of the Commission

AUTHORITY: The provisions of this Subpart M issued under secs. 19, 23, 48 Stat. 85, 901, as amended, sec. 20, 49 Stat. 833, sec. 319, 53 Stat. 1173, secs. 38, 211, 54 Stat. 841, 855; 15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11; E.O. 11222, 30 F.R. 6469, 3 CFR, 1965 Supp.; 5 CFR 735.104.

SOURCE: The provisions of this Subpart M appear at 31 F.R. 5483, Apr. 7, 1966, unless otherwise noted.

This subpart sets forth the standards of ethical conduct required of members, employees and special Government employees and former members and employees of the Securities and Exchange Commission. It is a revision of a comprehensive conduct regulation first

adopted by the Commission in 1953 "to restate the ethical principles which it believes should govern and have governed the conduct of members and employees and former members and employees of the Commission." This revision is necessary to implement Executive Order 11222, May 8, 1965, and Part 735 of the Civil Service Commission regulations (5 CFR Part 735) adopted pursuant thereto. It also contains references to the several applicable statutes governing employee conduct, particularly Public Law 87-849 (76 Stat. 1119, 18 U.S.C. 201 et seq.), and the "Code of Ethics for Government Service," House Concurrent Resolution 175, 85th Congress, 2d session (72 Stat. B12).

§ 200.735-2 Policy.

(a) The Securities and Exchange Commission has been entrusted by Congress with the protection of the public interest in a highly significant area of our national economy. In view of the effect which Commission action frequently has on the general public, it is important that members, employees and special Government employees maintain unusually high standards of honesty, integrity, impartiality and conduct. They must be constantly aware of the need to avoid situations which might result either in actual or apparent misconduct or conflicts of interest and to conduct themselves in their official and personal relationships in a manner which commands the respect and confidence of their fellow citizens.

(b) For these reasons, members, employees and special Government employees should at all times abide by the standards of official and personal conduct set forth in this subpart, the canons of ethics for members of the Securities and Exchange Commission (Subpart C of this Part 200) and, in the case of attorneys, the canons of professional ethics of the American Bar Association.

§ 200.735-3 General provisions.

A member or employee of the Commission shall not:

(a) Engage, directly or indirectly, in any personal business transaction or private arrangement for personal profit which accrues from or is based upon his official position or authority or upon confidential or nonpublic information which he gains by reason of such position or authority.1

(b) (1) Solicit or accept, directly or indirectly, any valuable gift, gratuity, favor, entertainment, loan, service, or any other thing of monetary value from any person with whom he transacts business on behalf of the United States; who has, or is seeking to obtain, contractual or other business or financial relations with the Commission; who conducts operations or activities regulated by the Commission; or who has interests that may be substantially affected by the performance or nonperformance of his official duty. This paragraph does not apply (i) when the circumstances make it clear that it is obvious family relationships rather than the business of the persons concerned which govern and are the motivating factors; (ii) when, on infrequent occasions, free food and refreshments of nominal value are offered in the ordinary course of a luncheon or dinner meeting or other meeting or on an inspection tour where attendance is official and proper; (iii) when unsolicited advertising or promotional material, such as pens, pencils, note pads, calendars and other items of nominal intrinsic value are offered; or (iv) when the Commission, after due consideration, determines that an exception is warranted and appropriate in a particular situation. For purposes of this subpart, "person"

means an individual, a corporation, a company, an association, a firm, a partnership, a society, a joint stock company, or any other organization or institution.2

(2) Act in any manner, whether or not specifically prohibited by this section, which might result in, or create the appearance of: (i) Using public office for private gain; (ii) giving preferential treatment to any person; (iii) impeding Government efficiency or economy; (iv) losing complete independence or impartiality; (v) making a Government decision outside official channels; or (vi) affecting adversely the confidence of the public in the integrity of the Government.

(3) Solicit contributions from another employee for a gift to an employee in a superior official position. An employee in a superior official position shall not accept a gift presented as a contribution from employees receiving less salary than himself. An employee shall not make a donation as a gift to an employee in a superior official position (5 U.S.C. 113). However, this subparagraph (3) does not prohibit the use of completely voluntary contributions of employees within the Commission to establish funds for the limited purpose of providing token remembrances in situations such as death, illness, marriage, birth or retirement.

(4) Accept a gift, present, decoration, or other thing from a foreign government unless authorized by Congress as provided by the Constitution and in 5 U.S.C. 114-115a.

(c) Discuss or entertain proposal for future employment by any person outside the Government with whom he is transacting business on behalf of the United States.3

(d) Divulge confidential or nonpublic commercial, economic or official information to any unauthorized person, or release such information in advance of authorization for its release. Any officer or employee who is served with a subpoena requiring the disclosure of nonpublic information or documents shall,

2 Members and employees of the Commission are subject also to provisions of the Federal Criminal Code which prohibits any officer or employee of the United States from asking, accepting or receiving any money or other thing of value in connection with any matter before him in his official capacity (18 U.S.C. § 203).

3 Detailed provisions regarding negotiations for future employment are set forth in $ 200.735-7.

unless the Commission authorizes the disclosure of such information, respectfully decline to disclose the information or produce the documents called for, basing his refusal upon this paragraph. Any officer or employee who is served with such a subpoena shall promptly advise the Commission of the service of such subpoena, the nature of the information or documents sought, and any circumstances which may bear upon the desirability in the public interest of making available such information or documents.

(e) Act in any official matter with respect to which there exists a personal interest incompatible with an unbiased exercise of official judgment.5

(f) Have direct or indirect, personal business or financial affairs which conflict or appear to conflict with his official duties and responsibilities.

(g) Use, or allow the use of, directly or indirectly, Government property of any kind, including property leased to the Government, for other than officially approved activities. An employee has a positive duty to protect and conserve Government property, including equipment, supplies, and other property entrusted or issued to him.

(h) Participate, while on Government-owned or leased property or while on duty for the Government, in any gambling activity, including the operation of a gambling device, in conducting a lottery or pool, in a game for money or

The prohibitions regarding confidential or nonpublic information stated in paragraphs (a) and (d) of this section are intended to cover cases where, apart from specific prohibitions in any statute or other rule, the disclosure or use of such information would be unethical. Detailed prohibitions regarding disclosure or use of confidential or nonpublic information are set forth in Rule 122 (17 CFR 230.122), under the Securities Act of 1933; section 24(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78x) and Rule 0-4 thereunder (17 CFR 240.0-4); section 22(a) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79v) and Rule 104 thereunder (17 CFR 250.104); section 45(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-44(a)) and Rule 45a-1 thereunder (17 CFR 270.45a-1); and section 210(b) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-10).

5 Section 200.735-6 of this subpart provides a procedure for relieving employees from assignments in certain cases, including those covered by paragraph (f) of this section.

(a) No member or employee shall permit his name to be associated in any way with any legal, accounting or other professional firm or office.®

(b) (1) No employee shall have any outside or private employment or activity or affiliation incompatible with concurrent employment by the Commission. Incompatible activities include but are not limited to: (i) Employment or association with any registered broker, dealer, public utility holding company, investment company, or investment adviser, or directly or indirectly related to the issuance, sale or purchase of securities; (ii) legal, accounting, or engineering work for compensation involving matters in which the Federal government or any State, Territorial or municipal authority may be significantly interested; (iii) acceptance of a fee, compensation, gift, payment of expense, or any other thing of monetary value in circumstances in which acceptance may result in or create the appearance of, conflicts of interest; or (iv) outside employment which tends to impair the employee's mental or physical capacity to perform his Commission duties and responsibilities in an acceptable manner. For purposes of this paragraph, the private employment or affiliation of an employee's spouse, child or relative living in his immediate household, with any registered broker, dealer, investment adviser, investment company, public utility holding company or affiliate, or directly or indirectly related to the issuance, sale, purchase or investment of securities is deemed to be incompatible with the employee's concurrent employment by the Commission, except as determined otherwise by the Commission in a specific case.

• With respect to members, this paragraph supplements the statutory prohibition of outside employment contained in section 4(a) of the Securities Exchange Act of 1934, quoted in footnote 1. Except as otherwise indicated, the remaining provisions of this section are not made applicable to members in view of the provisions of section 4(a) of the Securities Exchange Act of 1934.