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Home My WebLink About86-501 CrisciMr. Raymond L. Crisci Resident Manager Merrill Lynch Suite 402, Wilkes Barre Center Puhlic Square Wilkes Barre, PA 18701 Dear Mr. Crisci: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 January 8, 1986 ADVICE OF COUNSEL Re: Conflict of Interest, Borough Councilmemher, Investment Manager This responds to your letter of Decemher 10, 1985, wherein you requested the advice of the State Ethics Commission. Issue: Whether the State Ethics Act places any restrictions upon your participation as a borough councilmemher in the borough's selection of an administrator or investment manager for the borough's Police Pension Program. Facts: You are currently an elected member of the West Pittston Borough Council. The horough has a police pension fund that is currently administered by a local financial institution. The horough councilmemhers, along with one police officer, constitute the Police Pension Board. This hoard is currently seeking proposals regarding the administration of the Borough Police Pension Plan as well as the managing of the investments for that plan. You also serve privately as the resident manager for Merrill Lynch, Pierce, Finner & Smith, Inc. This company is a nationwide stock brokerage and investment administration firm. You have requested the advice of the Commission as to any prohihition that would he placed upon you or your firm's participation as administrator, investment manager or advisor of the plan. Discussion: As an elected member of council, you are a public official as that term is defined in the State Ethics Act. 65 P.S. MO2. As such, your conduct must conform to the requirements of the Act. Damian, 79 -057, Davis, 84 -012. Generally, the State Ethics Act provides as follows: 86 -501 Mr. Raymond L. Crisci January 8, 1986 Page 2 Section 3. Restricted activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). The Act further defines a business with which an official is associated as follows : Section 2. Definitions. "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 holder of stock. 65 P.S. 402. Pursuant to Section 3(a) of the State Ethics Act and previously issued Ethics Commission opinions, a councilman would not be able to use his position or confidential information received as a councilman to obtain financial gain for himself or a business with which he is associated. You are clearly associated with the firm of Merrill Lynch in that you serve as it's resident manager for the Wilkes Barre office. As a result, you would be prohibited from using any confidential information received as a councilman to benefit this company. You may not, therefore, use such information in an effort to enable that company to secure the borough pension program administration or investment contract. Likewise, as a borough councilman you must abstain from the discussions relating to and voting upon the decisions of the council in reference to obtaining an investment management or administrative firm to operate the Borough Police Pension Plan. The fact that you have abstained frctn participating in this matter and the reasons for your abstention should be placed upon the public record. See Sowers, 80 -050, Welsh, 83 -518; Skrapits, 84 -501. In addition to the foregoing provision of law, the Ethics Commission is further empowered to address other areas of possible conflicts of interest. 65 P.S. 403(d). Generally, the parameters of the types of activities that may be addressed by the Commission within this provision of law are determined through the intent and purpose of the Act as set forth in Section 1 of the Act. That Section provides that the conduct of a public official should present neither a conflict of interest nor the appearance of such a conflict. 65 P.S. 6401. The use of this particular section of the Act as guidance in determining other areas of conflicts has been specifically permitted by the Supreme Court of Pennsylvania in Pennsylvania State Association of Township Supervisors v. Thornburgh, 496 Pa. 324, 437 A.2d 1, (1981) . The Commission has determined that such a conflict of interest w i l l arise when a public official attempts to serve one or more interests that are adverse. See Alfano, 80 -007. Thus, in order to avoid any actual or Mr. Raymond L. Crisci January 8, 1986 Page 3 apparent conflicts of interest, you should not personally represent your company before the borough council if that company is anticipating presenting a hid or proposal to obtain the borough pension program contract. This is not to say that your company may not present such a hid or accept a contract for that business. Your activity in light of the fact that you are a horough councilperson, however, must be restricted pursuant to the terms of the State Ethics Act. Additionally, the Ethics Act provides as follows: Section 3. Restricted activities. (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. Any contract made in violation of this subsection shall he voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c). If you or a member of your immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair maket value of the business, the contract between the borough and this business, if valued at more than $500, must be awarded through an open and public process. That process would include prior public notice of the contracting possibility; sufficient time for a reasonable and prudent competitor or applicant to be able to prepare and present an application or proposal; public disclosure of all applications or proposals considered; and public disclosure of the contract awarded or offered and accepted. Howard, 79 -044; Fields, 82 -006; Cantor, 82 -004. Conclusion: The Ethics Act places no per se prohibition upon a borough council awarding a municipal pension program administration contract to an investment firm that employs a member of the borough council. The member of the borough council, however, as a public official, may not participate to any extent in the borough's review, consideration, or award of that contract. Additionally, the borough councilperson should not participate in the presentation or structuring of the plan by his private employer for presentation to the borough council. Finally, if the borough councilperson stands in a position of director, officer, or owner of more than 5% of the equity value of the business seeking to contract with the business, such contract must be awarded through an open and public process as defined ahove. Mr. Raymond L. Crisci January 8, 1986 Page 4 Pursuant to Section 7(9)(ii), this 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, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. JJC /sfb This letter is a public record and will be made available as such. Si nc n "J. /,� General ,Counsel