HomeMy WebLinkAbout83-539 ShowersJohn Showers, Representative
85th District
House P.O. Box 9
Main Capitol Building
Harrisburg, PA 17120
Mailin Address
STATE ETHICS COMMISSION
P.O. BOX 1179
HARRISBURG, PA 17108
TELEPFJONE. (717) 783 -1610
April 28, 1983
ADVICE OF COUNSEL
RE: Reporting, Management Investment Account
Dear Representatives Showers:
83 -539
This responds to your letter of March 29, 1983, in which you requested
advice from the State Ethics Commission. -
Issue: You ask whether individual sources of income which are managed by an
investment account at a bank must be reported.
Facts: You are considering possible future family investments which will be
held in a bank- operated management investment account. These investments,
hopefully, represent sources of income in excess of $500 from earnings from
this account. You anticipate mostly investments in municipal tax -free bonds
but other types of investments could be made with the advice and consent of
the family members.
Discussion: As an elected Representative you are, of course, a public
official subject to the financial reporting and disclosure requirements of the
Ethics Act. Those disclosure requirements indicate that reporting must be
made of any "direct or indirect source of income totalling in the aggregate of
$500 or more." See Section 5(b)(5) of the Ethics Act, 65 P.S. 405(b)(5).
Generally, the Commission has concluded where income is from a trust fund
which is unrelated to a family business only the name of the trustee and not
the individual investments in a portfolio would need to be reported. However,
it is not clear that the above - referenced investment account is a trust fund.
Thus, the general provisions and requirements of reporting of individual
sources of income would appear to be applicable. Specifically, the
Commission's regulations in 51 Pa. Code 5.7(d) indicate that only the name of
publicly traded securities, stocks or bonds must be listed, but that
individual sources of income must continued to be reported, if these are
known. Compare the situation of a blind trust or investment account.
However, generally, where the identity of the investment is known and exceeds
$500, reporting is required. Likewise, the concept of "income" includes the
total of interest, plus dividends, plus capital gain. See Mueller, 79 -535.
State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania
John Showers, Representative
April 28, 1983
Page 2
Conclusion: Even though the investments may be subject to the management of a
bank, where the investments are.made with the advice and consent of your
family and the individual sources of income in excess of $500 thereunder are
known, income derived from the bank - operated management investment account
should be reported individually as sources of income. Please note that income
from publicly held and traded securities, stocks, and bonds can be listed by
name only.
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.
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 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.
SSC /rdp
Sincerely,
Sandra S. Christianson
General Counsel