Ethics NewsGram: Post-Employment Requirements for Former SEC Employees Appearing Before the Commission

June 16, 2004

As the "door" inevitably continues to "revolve," should you be about to pass through that door, we would like to remind you that there are important ethics rules and statutes governing your post-employment conduct. Hopefully, you will have sought and received ethics post-employment counseling.

The crucial rule we are discussing today is: If you wish to appear, on behalf a client, before the Commission during your first two years after you leave the SEC, you must file — and receive clearance on — a Notice of Appearance, before you actually make your appearance. The purpose for this clearance rule is to protect you from inadvertently violating 18 USC 207, the federal criminal post-employment statute which prohibits, among other things, switching sides on the same matter you participated on while at the SEC. Since the interpretation of "participation" can be tricky, and employees often forget what they have worked on, or don't realize that the work they have done on something legally constitutes "participation," we have a rule that requires an internal clearance process at the SEC to ensure that you do not accidentally represent a new client in a matter you are legally and statutorily barred from working on for anyone other than the Commission.

"Appearances" include not only formal appearances in legal or administrative proceedings, but also participation in conference calls or other telephone calls involving anything on behalf of your client beyond an extremely limited ministerial conversation about the timing or scheduling of an event. If a former SEC employee calls SEC staff to discuss timing or scheduling in a matter, and the former employee begins to discuss any substantive matters, such as whether settlement might be an option, the former employee may be violating the post-employment statute if he/she has not already been cleared to "appear" before the Commission.

Although filing a Notice of Appearance under the Commission's Conduct Rule 8(b) (often colloquially referred to as an "8b"), 17 CFR 200.735-8(b), involves writing a letter to the Secretary of the Commission, Jonathan G. Katz, the Ethics Office offers a special expedited oral pre-clearance service for emergencies. Any former SEC employee may call the Ethics Office and ask for expedited assistance to be cleared for an urgent upcoming appearance. We will assist the former employee over the telephone, while he/she simultaneously submits written notice. We can complete the clearance process, and advise the Secretary's Office if clearance is obtained. If clearance is not obtained, the former SEC employee may not appear. Moreover, the barred former employee must notify his/her new firm that the former employee's disqualification is imputed to the firm, and the firm should contact the SEC about filing a Request for a Waiver of Imputed Disqualification, under 17 CFR 200.735-8(d), with the General Counsel's Office.

http://www.sec.gov/about/offices/ethics/postemploymentrequirements.htm