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HomeMy WebLinkAbout17-512 ScottV�4 . � STATE ETHICS COMMISSION 309 FINANCE BUILDING PO. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1 -800- 932 -0936 ADVICE OF COUNSEL March 6, 2017 To the Requester: Mr. Mark C. Scott, Esquire Dear Mr. Scott: 17 -512 This responds to your letter dated January 10, 2017, by which you requested an advisory from the Pennsylvania State Ethics Commission ( "Commission "). Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act), 65 Pa. C-S. § 1101 et se q., would impose prohibitions or restrictions upon an individual who is preparing to conclude service as a county commissioner and who, in a private capacity, is an attorney licensed to practice law in Pennsylvania and a Certified Financial Planner, with regard to accepting a part-time position with: (1) an investment advisory firm that is a provider of investment accounts for county employees participating in the county's Section 457(b) deferred compensation plan; or (2) another investment advisory firm. Facts: You request an advisory from the Commission based upon submitted accts, the material portion of which may be fairly summarized as follows. You are currently a County Commissioner for Berks County ( "County "), Pennsylvania. In a private capacity, you are an attorney licensed to practice law in Pennsylvania and a Certified Financial Planner. Your responsibilities as a County Commissioner include serving as a Member of the Berks County Employee's Retirement Fund Board and a sponsor/fiduciary of the Berks County Section 457(b) Deferred Compensation Plan ('the County 457(b) Plan "). The County 457(b) Plan allows County employees to contribute pretax earnings to individual restricted access investment accounts provided by a plan administratorlinvestment advisory firm. In order to enhance the returns and ultimate value of investment accounts for County employees participating in the County 457(b) Plan, you sought a provider of low cost investment accounts as an option for the Count 457(b) Plan. In 2013, you met a principal from an investment advisory firm ( "the Firm "that provides low cost investment accounts for 457(b) plans. In 2015, the County Commissioners voted unanimously to add the Firm as a provider for the County 457(b) Plan, and the Firm began offering investment accounts for County employees participating in the County 457(b� Plan. FAX: (717) 787 -0806 0 Web Site: www.ethics.state.pams 0 e -mail: ethicsastate.pa.us Scott, 17 -512 Nfach 6, 2017 Page 2 You are preparing to conclude your service as a County Commissioner. In the meantime, you are considering part -time employment in some marketing capacity with the Firm or another investment advisory firm. You state that if you would obtain such employment, you would, as time permits, solicit business opportunities from other counties and municipal entities over which your elective office has no authority. You further state that you would not utilize County resources for business purposes and would refrain from discussing or voting upon any matter that would provide you or your employer with a pecuniary benefit from the County government or its employees. You additionally state that you would require of your employer a written prohibition of compensation in consideration of your past efforts to benefit County employees. Based upon the above submitted facts, you ask whether the Ethics Act would impose prohibitions or restrictions upon you with regard to obtaining part-time employment with the Firm or another investment advisory firm. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of e Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion/advice may be given only as to prospective (future) conduct. To the extent that our inquiry relates to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent your inquiry relates to future conduct, your inquiry may and shall be addressed. As a County Commissioner, you are a public official subject to the provisions of the Ethics Act. Sections 1103(a) and 11030) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j) Voting conflict,- -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be Scott, 17 -512 Nth 6, 2017 Page 3 permitted to vote if disclosures are made as otherwise pprovided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining wo members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), 0). The following terms related to Section 1103(a) are defined in the Ethics Act as follows. § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employyee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a' business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 Pa.C.S. § 1102. Subject to the statutory exclusions to the Ethics Act's definition of the term "conflict" or "conflict of interest," 65 Pa.C.S. § 1102, a public official/public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public officiallpublic employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. In each instance of a conflict of interest, the public official/public employee would be required to abstain from participation. The abstention requirement would not be Scott, 17 -512 !T! al—rch 6, 2017 Page 4 limited merely to voting, but would extend to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Subject to certain statutory exceptions, in each instance of a voting conflict, Section 11030) of the Ethics Act would require the public official /public employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. Section 1103(g) of the Ethics Act restricts a former public official/ public employee with regard to "representing" a "person" before "the governmental body with which he has been associated ": § 1103. Restricted activities (g) Former official or employee, - -No former public official or public employee shall represent a er�son, with promised- or actual compensation, on any matter before the aovernmental bodv with which he has been associated Tor one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). The terms "represent," "person," and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: § 1102. Definitions "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. "Person. " A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. § 1102. The term "person" is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public employeeTiimself, Confidential Opinion, 93 -005, as well as a new governmental employer. Ledebur, Opinion 95 -007. The term "represent" is also broadly defined to prohibit acting on behalf of any person in any activity. However, Section 1103(g) of the Ethics Act may not be applied to restrict an attorney's conduct insofar as the Pennsylvania Supreme Court has the exclusive Scott, 17 -512 March 6, 2017 Page 5 authority to regulate such conduct. Shaulis v. Pennsylvania _S_ tate Ethics Commission, 574 Pa. 680, 833 A.2d 123 (2003). Having established the above general principles, you are advised as follows. Section 1103(a) of the Ethics Act would not prohibit you, in your private capacity, from acce ting a part -time position with the Firm or another investment advisory firm. If you wouldpaccept such a position, the investment advisory firm that employs you would be considered a business with which you are associated in your capacity as an employee, and subject to the statutory exclusions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, you would have a conflict of interest in your capacity as a County Commissioner in matters that would financially impact you or the investment advisory firm. As noted above, in each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103 0) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting Upon termination of service as a County Commissioner, you would become a former public official and would be subject to the restrictions of Section 1103() of the Ethics Act to the extent your conduct would not be subject to the exclusive jurisdiction of the Supreme Court of Pennsylvania. The governmental body with which you would be deemed to have been associated upon termination of public service would include: (1) the Board of County Commissioners; (2) the Berks County Employee's Retirement Fund Board; and (3) all agencies, bureaus and departments under the Board of County Commissioners but not the judiciary or the independently elected County row offices. For the first ear following termination of your service as a County Commissioner, Section 11039) of the Ethics Act would apply and restrict "representation" of a "person" before your former governmental body as identified above to the extent such representation would not be subject to the exclusive Jurisdiction of the Supreme Court of Pennsylvania. Cf., Moore, Opinion 05 -008; Rapes, Advice 14 -509; Confidential Advice, 11 -570; Jones, Marks, Advice '11 -508; Kane, Advice 10 -608; awe, Advice 10 -547; Confidential Advice, 05 -583. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the County Code. Conclusion: Based upon the submitted facts that: (1) you are a County Commissioner for Berks County ( "County "), Pennsylvania; (2) in a private capacity, you are an attorney licensed to practice law in Pennsylvania and a Certified Financial Planner; (3) your responsibilities as a County Commissioner include serving as a Member of the Berks County Employees Retirement Fund Board and a sponsor /fiduciary of the Berks County Section 457(b) Deferred Compensation Plan ( "the County 457(b) Plan "); (4) the County 457(b) Plan allows County employees to contribute pre -tax earnings to individual restricted access investment accounts provided by a plan administrator /investment advisory firm; (5) in order to enhance the returns and ultimate value of investment accounts for County employees participating in the County 457(b) Plan, you sought a provider of low cost investment accounts as an option for the County 457(b) Plan; (6) in 2013, you met a principal from an investment advisory firm ( "the Firm ") that provides low cost investment accounts for 457(b) plans; (7) in 2015, the County Commissioners voted unanimously to add the Firm as a provider for the County 457(b) Plan, and the Firm began offering investment accounts for County employees participating in the County 457(b) Plan; (8) you are preparing to conclude service as a Scott, 17 -512 Mach 6, 2017 Page 6 County Commissioner, and in the meantime, you are considering part -time employment in some marketing capacity with the Firm or another investment advisory firm; (9) if you would obtain such employment, you would, as time permits, solicit business opportunities from other counties and municipal entities over which your elective office has no authority; (10) you would not utilize County resources for business purposes and would refrain from discussing or voting upon any matter that would provide you or your em layer with a pecuniary benefit from the County government or its employees; and (11 you would require of your employer a written prohibition of compensation to consideration of your past efforts to benefit County employees, you are advised as follows. As a Count Commissioner, you are a public official subject to the provisions of the Public Official and Employee Ethics Act (`Ethics Act "), 65 Pa.C.S. § 11101 et seg. Section 1103(a) of the Ethics Act would not prohibit you, in your private capacity, from accepting a part -time position with the Firm or another investment advisory firm. If you would accept such a position, the investment advisory firm that employs you would be considered a business with which you are associated in your capacity as an employee, and subject to the statutory exclusions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, you would have a conflict of interest in your capacity as a County Commissioner in matters that would financially impact you or the investment advisory firm. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1'103{1) of the Ethics Act would have to be satisfied in the event of a voting conflict. Upon termination of service as a County Commissioner, you would become a former public official and would be subject to the restrictions of Section 11030 of the Ethics Act to the extent your conduct would not be subject to the exclusive jurisdiction of the Supreme Court of Pennsylvania. The governmental body with which you would be deemed to have been associated upon termination of public service would include: (1) the Board of County Commissioners; (2) the Berks County Employee's Retirement Fund Board; and (3) all agencies, bureaus and departments under the Board of County Commissioners but not the judiciary or the independently elected County row offices. For the first ear following termination of your service as a County Commissioner, Section 1103(g) of the Ethics Act would apply and restrict "representation" of a "person" before your former governmental body as identified above to the extent such representation would not be subject to the exclusive jurisdiction of the Supreme Court of Pennsylvania. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally,. if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Scott, 17 -512 Bch 6, 2017 Page 7 Any such appeal must be in writingg and must be actual! received at the Commission within thirty (30) days of the date o this Advice pursuant to 59 Pa. Code § 93.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (797 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, t Robin M. Hittie Chief Counsel