[Federal Register: January 21, 2009 (Volume 74, Number 12)]
[Rules and Regulations]
[Page 3431-3436]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ja09-10]
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DEPARTMENT OF THE TREASURY
31 CFR Part 31
RIN 1505-AC05
TARP Conflicts of Interest
AGENCY: Departmental Offices, Treasury.
ACTION: Interim rule.
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SUMMARY: This interim rule provides guidance on conflicts of interest
pursuant to section 108 of the Emergency Economic Stabilization Act of
2008 (EESA), which was enacted on October 3, 2008.
DATES: Effective Date: January 21, 2009. Comment due date: March 23,
2009.
ADDRESSES: Interested members of the public are invited to submit
comments on this interim rule. Comments may be submitted to Treasury by
either of the following methods: Submit electronic comments through the
federal government e-rulemaking portal, http://www.regulations.gov, or
send comments in hard copy to the Executive Secretariat, Office of
Financial Stability, Department of the Treasury, 1500 Pennsylvania
Avenue, NW., Washington, DC 20220.
In general, Treasury will post all comments to http://
www.regulations.gov without change, including any business or personal
information provided such as names, addresses, e-mail addresses, or
telephone numbers. The Treasury will also make such comments available
for public inspection and copying in the Treasury's Library, Room 1428,
Main Department Building, 1500 Pennsylvania Avenue, NW., Washington, DC
20220, on official business days between the hours of 10 a.m. and 5
p.m. Eastern Time. Members of the public can make an appointment to
inspect comments by telephoning (202) 622-0990. All comments received,
including attachments and other supporting materials, are part of the
public record and subject to public disclosure.
FOR FURTHER INFORMATION CONTACT: For further information regarding this
interim rule contact the Troubled Asset Relief Program Chief Compliance
Officer, Office of Financial Stability, Department of the Treasury,
1500 Pennsylvania Avenue, Washington, DC, 20220, (202) 622-2000, or
TARP.Compliance@do.treas.gov.
SUPPLEMENTARY INFORMATION:
I. Background
Section 101(a) of EESA requires the Secretary of the Treasury to
establish a Troubled Asset Relief Program (TARP) to ``purchase, and to
make and fund commitments to purchase, troubled assets from any
financial institution, on such terms and conditions as are determined
by the Secretary, and in accordance with this Act and policies and
procedures developed and published by the Secretary.'' Section 120 of
EESA provides that the TARP authorities generally terminate on December
31, 2009, unless extended upon certification by the Secretary of the
Treasury to Congress, but no later than two years from the date of
enactment (October 3, 2008).
Section 108 of EESA authorizes the Secretary to issue regulations
or guidelines necessary to address and manage or to prohibit conflicts
of interest that may arise in connection with the administration and
execution of the EESA authorities. On October 6, 2008, Treasury issued
interim guidelines for potential conflicts of interest related to the
authorities granted under EESA. This interim rule implements the
guidelines by addressing conflicts that may arise during the selection
of individuals or entities seeking a contract or financial agency
agreement with the Treasury (retained entities), particularly those
involved in the acquisition, valuation, management, and disposition of
troubled assets. The interim rule also addresses conflicts and other
matters that may arise in the course of those services. The interim
rule does not address post-employment restrictions on Treasury
employees, which we believe are already adequately covered by existing
law.
II. This Interim Rule
The Department is promulgating this interim rule in order to
implement the interim guidance released on October 6, 2008. The
procedures in this rule outline the process for reviewing and
addressing actual or potential conflicts of interest among retained
entities performing services in conjunction with EESA. The procedures
set forth in this interim rule are effective immediately. Upon careful
consideration of public comments, a final rule will be issued.
Conflicts of interest may arise under EESA in a variety of
situations, such as when retained entities perform similar work for
Treasury and private clients. In these situations, retained entities
may find that their duty to private clients impairs their objectivity
when advising Treasury, or their judgment about the proper use of
nonpublic information. Conflicts may also arise from the personal
interests of individuals employed by retained entities. To address the
potential for organizational and personal conflicts of interest, it may
be necessary to restrict the activities of retained entities and key
employees, to limit the dissemination of information, and to impose
monitoring and reporting requirements. Treasury imposes these measures
through its contracts and financial agent agreements, as well as
through this interim rule. This interim rule does not substitute any
provisions of the Federal Acquisition Regulation and, to the extent the
Federal Acquisition Regulation applies to any contracts Treasury has
with a retained
[[Page 3432]]
entity, this interim rule is in addition to the Federal Acquisition
Regulation.
The interim rule addresses conflicts that may arise in connection
with contracts and financial agency agreements for services under the
TARP, other than administrative services identified by the TARP Chief
Compliance Officer. Because some administrative services do not have
substantial decision-making authority, they are unlikely to present
conflicts of interest and would not warrant the burden imposed by these
regulations.
The interim rule addresses organizational conflicts of interest in
section 31.211. Before entering an arrangement for services,
prospective contractors and financial agents must provide Treasury with
sufficient information to evaluate the potential for organizational
conflicts of interest and plans to mitigate them. Because the potential
for conflicts is greatest when the arrangement relates to the
acquisition, valuation, disposition, or management of assets, private
entities seeking to perform these services must take special care when
disclosing conflicts and designing mitigation plans. Once approved, a
conflicts mitigation plan becomes a binding term of the arrangement.
Personal conflicts of interest are covered in section 31.212. The
provisions here recognize that, in some cases, managers and employees
of retained entities may have personal interests that could impair
their objectivity. Conflicts may arise from their financial holdings
and those of close family members, as well as from other personal
interests. The regulation requires retained entities to obtain
information from their managers and key employees and evaluate the
potential for conflicts, and to implement monitoring and reporting
requirements designed to detect conflicts that might arise during the
arrangement. Treasury expects retained entities who assist Treasury
with the acquisition, valuation, management, and disposition of
troubled assets to have the most stringent programs for detecting and
preventing conflicts of interest.
Other provisions in the regulations notify retained entities of
restrictions on their conduct while working for Treasury. These
provisions are not designed to be comprehensive; they supplement other
requirements that may be imposed by contract, financial agency
agreement, and other federal laws. Section 31.213 includes restrictions
on giving and accepting gifts, making unauthorized promises, and
improper uses of government property. Section 31.214 describes general
prohibitions applying to retained entities who provide services for the
acquisition, valuation, disposition, and management of troubled assets.
Section 31.216 prohibits certain communications with Treasury employees
that might improperly influence the process of selecting contractors
and financial agents. Section 31.217 describes retained entities' duty
to keep nonpublic information confidential and requires a certification
of compliance in the form of a nondisclosure agreement. A sample
nondisclosure agreement is available at www.treas.gov.
In the course of implementing EESA, Treasury may permit its
retained entities to use subcontractors (including consultants) to
assist them in completing the work. Because subcontractors may have the
same potential for conflicts of interest as those entities having a
direct relationship with Treasury, these regulations impose
requirements on ``retained entities,'' which are defined to include
contractors, financial agents, and their subcontractors. We
specifically request comments on the practicality of this approach.
Overall, the regulations recognize that the potential for conflicts
and measures for mitigating them depend on many factors, such as the
type of services, a contractor's or financial agent's size and business
structure, and length of the arrangement. Treasury will take these
factors into account when reviewing conflict mitigation plans. In rare
cases, Treasury may need to waive a potential conflict that cannot be
adequately mitigated. Waiver requests will be considered on a case-by-
case basis, and granted in writing only when Treasury determines, in
its sole discretion, that stronger measures are unnecessary to protect
the interests of the Treasury. The standard for considering waivers
appears in section 31.215. This section does not affect the rules for
waiving contract provisions in the Federal Acquisition Regulations.
Section 31.218 describes some of the measures available to Treasury
to enforce these interim regulations. Measures include rejecting work
that is tainted by a conflict of interest, terminating the arrangement
for default, and in serious cases, referring violations to the United
States Department of Justice for criminal prosecution. When Treasury
has discretion in selecting or imposing a remedy, it will take into
account whether the contractor or financial agent promptly disclosed
the problem.
III. Procedural Requirements
Justification for Interim Rulemaking
Under the Office of Federal Procurement Policy Act, 41 U.S.C. 418b,
and Federal Acquisition Regulation (FAR) 48 CFR 1.501-3(b), a
procurement regulation may take effect prior to notice and comment when
there are urgent and compelling circumstances that make prior notice
and comment impracticable. Such a procurement regulation must be
published in the Federal Register and must include a statement that the
regulation is temporary pending completion of a minimum 30-day public
comment period. Under the Administrative Procedure Act, 5 U.S.C.
553(b)(B), an agency may dispense with notice and comment procedures
when the agency finds that good cause exists that prior notice and
comment are unnecessary, impracticable, or contrary to the public
interest. For the reasons set forth below, a determination has been
made that urgent and compelling circumstances and good cause exist that
justify the promulgation of this interim rule without prior opportunity
for public comment.
This rule is promulgated pursuant to EESA, the purpose of which is
to immediately provide authority and facilities that the Secretary of
the Treasury can use to restore liquidity and stability to the
financial system of the United States. Specifically, this rule
implements section 108, which requires the Secretary to develop
regulations or guidelines for addressing conflicts of interest that may
arise in connection with the administration and execution of the
authorities provided under EESA. Because EESA provides such immediate
authority to the Secretary to restore liquidity and stability to the
financial system, it is essential that the conflicts of interest
regulations be issued without delay so that anyone participating in the
TARP program will have clear conflicts of interest information as soon
as possible. Pursuant to 5 U.S.C. 553(b)(B), the Treasury finds that it
would be unnecessary and contrary to the public interest to delay the
issuance of this rule pending an opportunity for public comment and
good cause exists to dispense with this requirement. For the same
reasons, pursuant to 5 U.S.C. 553(d)(3), the Treasury has determined
that there is good cause for the interim rule to become effective
immediately upon publication. While this regulation is effective
immediately upon publication, Treasury is seeking public comment on the
regulation and will consider all comments in developing a final rule.
[[Page 3433]]
Regulatory Planning and Review
This regulation is a significant regulatory action as defined in
3(f)(4) of Executive Order 12866, as amended. Accordingly this interim
final rule has been reviewed by the Office of Management and Budget
(OMB).
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required, this rule is
not subject to the provisions of the Regulatory Flexibility Act (5
U.S.C chapter 6).
Paperwork Reduction Act
The information collections contained in the rule have been
reviewed and approved by OMB under the Paperwork Reduction Act (44
U.S.C. chapter 35) and assigned OMB control number 1505-0209. Under the
Paperwork Reduction Act, an agency may not conduct or sponsor and a
person is not required to respond to, a collection of information
unless it displays a valid OMB control number.
List of Subjects in 31 CFR Part 31
Conflicts of interest, Contracts, Executive compensation, Troubled
assets.
0
For the reasons set out in the preamble, Title 31 of the Code of
Federal Regulations is amended as follows:
0
1. Add part 31 to read as follows:
PART 31--TROUBLED ASSET RELIEF PROGRAM
Sec.
31.1 General.
Subpart A--[Reserved]
Subpart B--Conflicts of Interest
31.200 Purpose and scope.
31.201 Definitions.
31.211 Organizational conflicts of interest.
31.212 Personal conflicts of interest.
31.213 General standards.
31.214 Limitations on concurrent activities.
31.215 Grant of Waivers.
31.216 Communications with Treasury employees.
31.217 Confidentiality of information.
31.218 Enforcement.
Authority: 31 U.S.C. 321; Pub. L. 110-343; 122 Stat 3765.
Sec. 31.1 General.
This Part sets forth regulations to implement and administer the
Emergency Economic Stabilization Act of 2008 (Pub. L. 110-343; 122 Stat
3765).
Subpart A--[Reserved]
Subpart B--Conflicts of Interest
Sec. 31.200 Purpose and scope.
(a) Purpose. This regulation sets forth standards to address and
manage or to prohibit conflicts of interest that may arise in
connection with the administration and execution of the authorities
under the Troubled Asset Relief Program (TARP), established under
sections 101 and 102 of the Emergency Economic Stabilization Act of
2008 (EESA).
(b) Scope. This regulation addresses actual and potential conflicts
of interest that may arise from contracts and financial agency
agreements between private sector entities and the Treasury for
services under the TARP, other than administrative services identified
by TARP Chief Compliance Officer.
Sec. 31.201 Definitions.
As used in this part:
Arrangement means a contract or financial agency agreement between
a private sector entity and the Treasury for services under the TARP,
other than administrative services identified by the TARP Chief
Compliance Officer.
EESA means the Emergency Economic Stabilization Act of 2008.
Key individual means an individual providing services to a private
sector entity who participates personally and substantially, through
decision, approval, disapproval, recommendation, or the rendering of
advice, in the negotiation or performance of, or monitoring for
compliance under, the arrangement with the Treasury. For purposes of
the definition of key individual, the words ``personally and
substantially'' shall have the same meaning and interpretation as such
words have in 5 CFR 2635.402(b)(4).
Management official means an individual within a retained entity's
organization who has substantial responsibility for the direction and
control of the retained entity's policies and operations. With respect
to organizations that have a management committee or executive
committee that has been given such responsibilities, this means the
members of those committees and, if no such committee exists, this
means each of the general partners.
Organizational conflict of interest means a situation in which the
retained entity has an interest or relationship that could cause a
reasonable person with knowledge of the relevant facts to question the
retained entity's objectivity or judgment to perform under the
arrangement, or its ability to represent the Treasury. Without limiting
the scope of this definition, organizational conflicts of interest may
include the following situations:
(1) A prior or current arrangement between the Treasury and the
retained entity that may give the retained entity an unfair competitive
advantage in obtaining a new arrangement with Treasury.
(2) The retained entity is, or represents, a party in litigation
against the Treasury relating to activities under the EESA.
(3) The retained entity provides services for Treasury relating to
the acquisition, valuation, disposition, or management of troubled
assets at the same time it provides those services for itself or
others.
(4) The retained entity gains, or stands to gain, an unfair
competitive advantage in private business arrangements or investments
by using information provided under an arrangement or obtained or
developed pursuant to an arrangement with Treasury.
(5) The retained entity is a potential candidate for relief under
EESA, is currently participating in an EESA program, or has a financial
interest that could be affected by its performance of the arrangement.
Personal conflict of interest means a personal, business, or
financial interest of an individual, his or her spouse, minor child, or
other family member with whom the individual has a close personal
relationship, that could adversely affect the individual's ability to
perform under the arrangement, his or her objectivity or judgment in
such performance, or his or her ability to represent the interests of
the Treasury;
Related entity means the parent company and subsidiaries of a
retained entity, any entity holding a controlling interest in the
retained entity, and any entity in which the retained entity holds a
controlling interest.
Retained entity means the individual or entity seeking an
arrangement with the Treasury or having such an arrangement with the
Treasury, but does not include special government employees. A
``retained entity'' includes the subcontractors and consultants it
hires to perform services under the arrangement.
Special government employee means any employee serving the Treasury
with or without compensation for a period not to exceed 130 days during
any 365-day period on a full-time or intermittent basis.
Treasury means the United States Department of the Treasury.
Treasury employee means an officer or employee of the Treasury,
including
[[Page 3434]]
a special government employee, or an employee of any other government
agency who is properly acting on behalf of the Treasury.
Troubled assets means residential or commercial mortgages and any
securities, obligations, or other instruments that are based on or
related to such mortgages, that in each case originated or was issued
on or before March 14, 2008; and any other financial instrument that
the Secretary of the Treasury has determined, upon transmittal in
writing to the appropriate committees of Congress, the purchase of
which is necessary to promote financial market stability.
Sec. 31.211 Organizational conflicts of interest.
(a) Retained entity's responsibility. A retained entity working
under an arrangement shall not permit an organizational conflict of
interest unless the conflict has been disclosed to Treasury under this
Section and mitigated under a plan approved by Treasury, or Treasury
has waived the conflict. With respect to arrangements for the
acquisition, valuation, management, or disposition of troubled assets,
the retained entity shall maintain a compliance program designed to
detect and prevent violations of federal securities laws and
organizational conflicts of interest.
(b) Information required about the retained entity. As early as
possible before entering an arrangement to perform services for
Treasury under the EESA, a retained entity shall provide Treasury with
sufficient information to evaluate any organizational conflicts of
interest. The information shall include the following:
(1) The retained entity's relationship to any related entities.
(2) The categories of troubled assets owned or controlled by the
retained entity and its related entities, if the arrangement relates to
the acquisition, valuation, disposition, or management of troubled
assets.
(3) Information concerning all other business or financial
interests of the retained entity, its proposed subcontractors, or its
related entities, which could conflict with the retained entity's
obligations under the arrangement with Treasury.
(4) A description of all organizational conflicts of interest and
potential conflicts of interest.
(5) A written detailed plan to mitigate all organizational
conflicts of interest, along with supporting documents.
(6) Any other information or documentation about the retained
entity, its proposed subcontractors, or its related entities that
Treasury may request.
(c) Plans to mitigate organizational conflicts of interest. The
steps necessary to mitigate a conflict may depend on a variety of
factors, including the type of conflict, the scope of work under the
arrangement, and the organizational structure of the retained entity.
Some conflicts may be so substantial and pervasive that they cannot be
mitigated. Retained entities should consider the following measures
when designing a mitigation plan:
(1) Adopting, implementing, and enforcing appropriate information
barriers to prevent unauthorized people from learning nonpublic
information relating to the arrangement and isolate key individuals
from learning how their performance under the arrangement could affect
the financial interests of the retained entity, its clients, and
related entities.
(2) Divesting assets that give rise to conflicts of interest.
(3) Terminating or refraining from business relationships that give
rise to conflicts of interest.
(4) If consistent with the terms of the arrangement and permitted
by Treasury, refraining from performing specific types of work under
the arrangement.
(5) Any other steps appropriate under the circumstances.
(d) Certification required. When the retained entity provides the
information required by paragraph (b) of this section, the retained
entity shall certify that the information is complete and accurate in
all material respects.
(e) Determination required. Prior to entering into any arrangement,
the Treasury must conclude that no organizational conflict of interest
exists that has not been adequately mitigated, or if a conflict cannot
be adequately mitigated, that Treasury has expressly waived it. Once
Treasury has approved a conflicts mitigation plan, the plan becomes an
enforceable term under the arrangement.
(f) Subsequent notification. The retained entity has a continuing
obligation to search for and to report any potential organizational
conflict of interest. Within five (5) business days after learning of a
potential organizational conflict of interest, the retained entity
shall disclose the potential conflict of interest in writing to the
TARP Chief Compliance Officer. The disclosure shall describe the steps
it has taken or proposes to take to mitigate the potential conflict or
request a waiver from Treasury.
(g) Periodic Certification. No later than one year after the
arrangement's effective date, and at least annually thereafter, the
retained entity shall certify in writing that it has no organizational
conflicts of interest, or explain in detail the extent to which it can
certify, and describe the actions is has taken and plans to take to
mitigate any conflicts. Treasury may require more frequent
certifications, depending on the arrangement
(h) Retention of information. A retained entity shall retain the
information needed to comply with this section and to support the
certifications required by this section for three (3) years following
termination or expiration of the arrangement, and shall make that
information available to Treasury upon request. Such retained
information shall include, but is not limited to, written documentation
regarding the factors the retained entity considered in its mitigation
plan as well as written documentation addressing the results of the
retained entities' periodic review of the mitigation plan.
Sec. 31.212 Personal conflicts of interest.
(a) Retained entity's responsibility. A retained entity shall
ensure that all management officials performing work under the
arrangement and key individuals have no personal conflicts of interest
unless mitigation measures have neutralized the conflict, or Treasury
has waived the conflict.
(b) Information required. Before management officials and key
individuals begin work under an arrangement, a retained entity shall
obtain information from each of them in writing about their personal,
business, and financial relationships, as well as those of their
spouses, minor children, and other family members with whom the
individuals have a close personal relationship that would cause a
reasonable person with knowledge of the relevant facts to question the
individual's ability to perform, his or her objectivity or judgment in
such performance, or his or her ability to represent the interests of
the Treasury. When the arrangement concerns the acquisition, valuation,
management, or disposition of troubled assets, the information shall be
no less extensive than that required of certain new federal employees
under Office of Government Ethics Form 278. Treasury may extend the
time necessary to meet these requirements in urgent and compelling
circumstances.
(c) Disqualification. The retained entity shall disqualify persons
with personal conflicts of interests from performing work pursuant to
the arrangement unless mitigation measures have neutralized the
conflict to the satisfaction of the TARP Chief
[[Page 3435]]
Compliance Officer. The retained entity may seek a waiver from the TARP
Chief Compliance Officer to allow an individual with a personal
conflict of interest to work under the arrangement.
(d) Initial Certification. No later than ten business days after
the effective date of the arrangement, the retained entity shall
certify to the Treasury that all management officials and key
individuals performing services under the arrangement have no personal
conflicts of interest, or are subject to a mitigation plan or waiver
approved by Treasury. In making this certification, the retained entity
may rely on the information obtained pursuant to paragraph (b) of this
section, unless the retained entity knows or should have known that the
information provided is false or inaccurate. Treasury may extend the
certification deadline in urgent and compelling circumstances.
(e) Periodic Certification. No later than one year after the
arrangement's effective date, and at least annually thereafter, the
retained entity shall renew the certification required by paragraph (d)
of this section. The retained entity shall provide more frequent
certifications to Treasury when requested.
(f) Retained Entities' Responsibilities. The retained entity shall
adopt and implement procedures designed to discover, monitor, and
report personal conflicts of interest on a continuous basis.
(g) Subsequent notification. Within five business days after
learning of a personal conflict of interest, the retained entity shall
notify Treasury of the conflict and describe the steps it has taken and
will take in the future to neutralize the conflict.
(h) Retention of information. A retained entity shall retain the
information needed to comply with this section and to support the
certifications required by this section for three years following
termination or expiration of the arrangement, and shall make that
information available to Treasury upon request.
Sec. 31.213 General standards.
(a) During the time period in which a retained entity is seeking an
arrangement and during the term of any arrangement, a retained entity,
its officers and partners, and its employees shall not:
(1) Accept or solicit favors, gifts, or other items of monetary
value from any individual or entity whom the retained entity, officer,
partner, or employee knows is seeking official action from the Treasury
in connection with the arrangement or has interests which may be
substantially affected by the performance or nonperformance of duties
to the Treasury under the arrangement.
(2) Improperly use or allow the improper use of Treasury property
for the personal benefit of any individual or entity other than the
Treasury.
(3) Make any unauthorized promise or commitment on behalf of the
Treasury.
(b) Any individual who acts for or on behalf of the Treasury
pursuant to an arrangement shall comply with 18 U.S.C. 201, which
generally prohibits the direct or indirect acceptance by a public
official of anything of value in return for being influenced in, or
because of, an official act. Violators are subject to criminal
penalties.
(c) Any individual or entity who provides information or makes a
certification to the Treasury that is relating to services under EESA
or required pursuant to 31 CFR Part 31 is subject to 18 U.S.C. 1001,
which generally prohibits the making of any false or fraudulent
statement to a federal officer. Upon receipt of information indicating
that any individual or entity has violated any provision of title 18 of
the U.S. Code or other provision of criminal law, Treasury shall refer
such information to the Department of Justice and the Special Inspector
General provided for under EESA.
(d) A retained entity shall disclose to the Special Inspector
General provided for the TARP, or the Treasury Office of the Inspector
General, any credible evidence, in connection with the designation,
services, or closeout of the arrangement, that a management official,
employee, or contractor of the retained entity has committed a
violation of Federal criminal law involving fraud, conflict of
interest, bribery, or gratuity violations found in Title 18 of the
United States Code, or a violation of the civil False Claims Act (31
U.S.C. 3729-3733).
Sec. 31.214 Limitations on concurrent activities.
Treasury has determined that certain market activities by a
retained entity during the arrangement are likely to cause
impermissible conflicts of interest. Accordingly, the following
restrictions shall apply unless waived pursuant to Sec. 31.215, or
Treasury agrees in writing to specific mitigation measures.
(a) If the retained entity assists Treasury in the acquisition,
valuation, management, or disposition of specific troubled assets, the
retained entity, management officials performing work under the
arrangement, and key individuals shall not purchase or offer to
purchase such assets from Treasury, or assist anyone else in purchasing
or offering to purchase such troubled assets from the Treasury, during
the term of its arrangement.
(b) If the retained entity advises Treasury with respect to a
program for the purchase of troubled assets, the retained entity,
management officials performing work under the arrangement, and key
individuals shall not, during the term of the arrangement, sell or
offer to sell, or act on behalf of anyone with respect to a sale or
offer to sell, any asset to Treasury under the terms of that program.
Sec. 31.215 Grant of waivers.
The TARP Chief Compliance Officer may waive a requirement under
this Part that is not otherwise imposed by law when it is clear from
the totality of the circumstances that a waiver is in the government's
interest.
Sec. 31.216 Communications with Treasury employees.
(a) Prohibitions. During the course of any process for selecting a
retained entity (including any process using non-competitive
procedures), a retained entity participating in the process and its
representatives shall not:
(1) Directly or indirectly make any offer or promise of future
employment or business opportunity to, or engage directly or indirectly
in any discussion of future employment or business opportunity with,
any Treasury employee with personal or direct responsibility for that
procurement.
(2) Offer, give, or promise to offer or give, directly or
indirectly, any money, gratuity, or other thing of value to any
Treasury employee, except as permitted by Government-Wide Ethics Rules,
5 CFR part 2635.
(3) Solicit or obtain from any Treasury employee, directly or
indirectly, any information that is not public and was prepared for use
by Treasury for the purpose of evaluating an offer, quotation, or
response to enter into an arrangement.
(b) Certification. Before a retained entity enters a new
arrangement, or accepts a modification to an existing arrangement, the
retained entity must certify to the following:
(1) The retained entity is aware of the prohibitions of paragraph
(a) of this section and, to the best of its knowledge after making
reasonable inquiry, the retained entity has no information concerning a
violation or possible violation of paragraph (a) of this section.
(2) Each officer, employee, and representative of the retained
entity who participated personally and
[[Page 3436]]
substantially in preparing and submitting a bid, offer, proposal, or
request for modification of the arrangement has certified that he or
she:
(i) Is familiar with and will comply with the requirements of
paragraph (a) of this section; and
(ii) Has no information of any violations or possible violations of
paragraph (a) of this section, and will report immediately to the
retained entity any subsequently gained information concerning a
violation or possible violation of paragraph (a) of this section.
Sec. 31.217 Confidentiality of information.
(a) Nonpublic information defined. Any information that Treasury
provides to a retained entity under an arrangement, or that the
retained entity obtains or develops pursuant to the arrangement, shall
be deemed nonpublic until the Treasury determines otherwise in writing,
or the information becomes part of the body of public information from
a source other than the retained entity.
(b) Prohibitions. The retained entity shall not:
(1) Disclose nonpublic information to anyone except as required to
perform the retained entity's obligations pursuant to the arrangement,
or pursuant to a lawful court order or valid subpoena after giving
prior notice to Treasury.
(2) Use or allow the use of any nonpublic information to further
any private interest other than as contemplated by the arrangement.
(c) Retained entity's responsibility. A retained entity shall take
appropriate measures to ensure the confidentiality of nonpublic
information and to prevent its inappropriate use. The retained entity
shall document these measures in sufficient detail to demonstrate
compliance, and shall maintain this documentation for three years after
the arrangement has terminated. The retained entity shall notify the
TARP Chief Compliance Officer in writing within five business days of
detecting a violation of the prohibitions in paragraph (b), above. The
security measures required by this paragraph shall include:
(1) Security measures to prevent unauthorized access to facilities
and storage containers where nonpublic information is stored.
(2) Security measures to detect and prevent unauthorized access to
computer equipment and data storage devices that store or transmit
nonpublic information.
(3) Periodic training to ensure that persons receiving nonpublic
information know their obligation to maintain its confidentiality and
to use it only for purposes contemplated by the arrangement.
(4) Programs to ensure compliance with federal securities laws,
including laws relating to insider trading, when the arrangement
relates to the acquisition, valuation, management, or disposition of
troubled assets.
(5) A certification from each management official performing work
under the arrangement and each key individual stating that he or she
will comply with the requirements in section 31.217(b). The retained
entity shall obtain this certification, in the form of a nondisclosure
agreement, before a management official or key individual performs work
under the arrangement, and then annually thereafter.
Sec. 31.218 Enforcement.
(a) Compliance with these rules concerning conflicts of interest is
of the utmost importance. In the event a retained entity or any
individual or entity providing information pursuant to 31 U.S.C. Part
31 violates any of these rules, Treasury may impose or pursue one or
more of the following sanctions:
(1) Rejection of work tainted by an organizational conflict of
interest or a personal conflict of interest and denial of payment for
that work.
(2) Termination of the arrangement for default.
(3) Debarment of the retained entity for Federal government
contracting and/or disqualification of the retained entity from future
financial agency agreements.
(4) Imposition of any other remedy available under the terms of the
arrangement or at law.
(5) In the event of violation of a criminal statue, referral to the
Department of Justice for prosecution of the retained entity and/or its
officers or employees. In such cases, the Department of Justice may
make direct and derivative use of any statements and information
provided by any entity, its representatives and employees or any
individual, to the extent permitted by law.
(b) To the extent Treasury has discretion in selecting or imposing
a remedy, it will give significant consideration to a retained entity's
prompt disclosure of any violation of these rules.
Dated: January 14, 2009.
Neel Kashkari,
Interim Assistant Secretary for Financial Stability.
[FR Doc. E9-1179 Filed 1-15-09; 4:15 pm]
BILLING CODE 4810-25-P