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PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806
TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov
613 NORTH STREET, ROOM 309
HARRISBURG, PA 17120-0400
ADVICE OF COUNSEL
February 7, 2022
21-505-CL
To the Requester:
Ms. Jacqueline Dunn
City Treasurer
Philadelphia, Pennsylvania
Dear Ms. Dunn:
This responds to your email received January 19, 2022, by which you requested
clarification of Dunn, Advice of Counsel: 21-505, regarding the applicability of the Conflicts of
Interests restrictions of the Public Official and Employee Ethics Act (Ethics Act), 65 Pa.C.S. §
1101 et seq.
Issues for Clarification:
1). What restrictions remain concerning official action you may take and subsidiaries who do
not employ your husband?
Brief Answer: YES. Pursuant Commission precedent, no conflict would exist as to parent
companies/subsidiaries which are truly a separate corporate entity from the business with
which you and/or member(s) of your immediate family are associated.
2). Is the implementation of a structure whereby you are removed from decision making and
instead your staff seeks app-ranking financial officer, the
Director of Finance, an appropriate way to avoid a conflict of interest regarding your
Brief Answer: Given your position with the City, there appears to be no alternative other
than the delegation to your superior, who may then re-delegate to your staff/subordinate
Dunn, 21-505 CL
February 7, 2022
Page 2
employees. So long as there is no use of authority of your office or any undue influence
placed upon the delegated party, there appears to be no violation under the Ethics Act.
3). As City Treasurer, can you approve payments to businesses that do not employ your spouse
but are subsidiaries of the parent company of which your spouse is employed, in
accordance with a contractual agreement reached without your participation?
Brief Answer: YES. See, Brief Answer No. 1 above.
4). May you take any other official action that impacts the parent company and/or its
subsidiaries that do not employ your spouse?
Brief Answer: YES. See, Brief Answer No. 1 above.
5). As City Treasurer, can you participate in quarterly informational meetings where the City
reviews the performance of contracted investment managers, including
employer, when no official action is taken, or contractual discussions occur?
Brief Answer: YES. See, Brief Answer No. 1 above.
Facts:
By communication received January 20, 2021, you initially requested an advisory from the
Pennsylvania State Ethics Commission (Commission) regarding Conflict of Interests pursuant
Section 1103(a) of the Ethics Act. In response to your initial advisory request, Dunn, Advice: 21-
505 was issued to you on February 18, 2021.
By email received January 19, 2022, you requested clarification as to those issues identified
above. In addition to your request for clarification, you submitted the following facts:
Your spouse is employed with Public Financial Management Asset Management LLC
(PFMAM). PFMAM was recently sold to US Bancorp Asset Management (USBAM), a subsidiary
of US Bancorp in December 2021. You previously sought guidance \[Dunn, Advice: 21-505\] as
with the City of Philadelphia, many of which were specifically managed by your office. Similarly,
US Bancorp subsidiaries also hold various contracts with the Given this
transition, you request updated guidance.
Through conversations with PFMAM and US Bancorp, you understand the ownership
structure and relationships to be the following:
1. PFMAM is a wholly owned subsidiary of U.S. Bancorp but will continue to operate as a
separate entity and registered investment advisor as PFM Asset Management LLC, a
division of USBAM. PFMAM is separately registered with the Securities and Exchange
Commission.
Dunn, 21-505 CL
February 7, 2022
Page 3
2. The parent ownership of PFMAM has changed. Previously owned by Public Finance
Management Incorporated, PFMAM is now owned by USBAM.
3. US Bancorp is the parent company of USBAM and other US Bancorp subsidiaries. US
Bancorp is a publicly traded company.
4. Per PFMAM and US Bancorp, there is a complete separation between business lines and
management of PFMAM and other subsidiaries.
a. PFMAM and US Bancorp hold separate contracts with the City of Philadelphia for
separate services.
b. PFMAM cannot access City information held by other subsidiaries.
5. Representatives from PFMAM and US Bancorp assured you that there is no official action
that you can take in your role as City Treasurer that can impact your
compensation through US Bancorp and its subsidiaries other than PFMAM.
a. There is no profit sharing across subsidiaries or from subsidiary up to parent to
another subsidiary.
b. Your ance plan is contingent upon his tenure with the firm and his
retirement savings vehicle requires his participation in order to receive matching
compensation from the employer.
6. PFMAM has a referral agreement structure in place with the PFM Advisors, a subsidiary
of PFM Inc., where the City may choose to engage PFMAM as an extension of work with
PFM Advisors. The referral agreement would result in a separate contract with PFMAM if
the City determined to engage PFMAM.
Discussion/Conclusion:
It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the 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 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 material facts.
It is further noted that, pursuant the same aforesaid Sections of the Ethics Act, an
opinion/advice may only be given as to prospective (future) conduct. To the extent that your
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.
The recitation of the facts and Section 1103(a) restrictions set forth in Dunn, Advice: 21-
505 are incorporated herein by reference. In addition, the organizational chart depicting the
relationship between PFMAM and its new parent entity, US Bancorp Asset Management, Inc.,
which was provided along with the request for clarification, is likewise incorporated by reference.
Dunn, 21-505 CL
February 7, 2022
Page 4
In response to your request for clarification of Advice of Counsel 21-505, you are advised
as follows:
1). s PFMAM is legally separated from other PFM subsidiaries, \[you\] would like to
confirm that \[you\] may now take official actions with and regarding other PFM
subsidiaries who do not employ \[your\] husband or engage PFMAM as an extension
The Answer to this question hinges on the factual conclusion of whether the subsidiaries
are businesses with which you or your husband are associated. Since your husband is employed
by PFMAM, that is a business with which you and your husband (a member of your immediate
family) are associated. However, any PFM subsidiary corporations would not be businesses with
which you/your immediate family are associated, provided they are in fact separate corporate
entities. See, Confidential Opinion, 92-003 which held:
Our inquiry must focus upon the business(es) with which you are
associated. Given your employment with D, it is clear that that is a
business with which you are associated. The fact that there are
parent and subsidiary corporations of D, does not make those other
corporations, in and of themselves, businesses with which you are
associated since they are separate corporate entities.
. . . We must conclude that you would have a conflict under Section
\[1103(a)\] of the Ethics \[Act\] as to matters involving D, the business
with which you are associated; you would not have any conflict as
to E or any other subsidiaries or affiliates provided those affiliates
are separate corporate entities and provided that your interests
would be less than the threshold as set forth in the definition of
Confidential Opinion, 92-003, at p. 6.
In as much as the Commission concluded that a conflict of interests would not occur as to
subsidiaries or affiliates of a parent corporation, you are advised that a conflict would not occur if
you were to direct work being performed by businesses that do not employ your husband, but are
subsidiaries of PFM LLC.
2. Is continuing to implement a structure where \[you are\] removed from decision
making and \[your\] staff instead seek approval from the Director of Finance (\[your\]
direct supervisor) and \[sic\] appropriate way to avoid a direct conflict of interest
regarding PFMAM? This would involve removing \[yourself\] from vendor selection
and contract discussions that may directly impact PFMAM or other approved
investment managers. Instead, \[your\]
highest ranking \[sic\] financial officer, the Director of Finance.
Dunn, 21-505 CL
February 7, 2022
Page 5
Pursuant to Section 1103(a), where there is no pre-existing mechanism in place specifying
public officials delegation of such authority to a subordinate is itself a use of authority of office.
(See, Edwards, Opinion 91 -003 at 6.) Although a mechanism for delegation in the event of a
conflict has been implemented, same does not appear to be pursuant any statutory authority or
directive. To the extent that delegation has been made to a subordinate, as a public official/public
See,
Confidential Opinion, 02-004).
However, in the event a superior within your chain of command, for example
Finance Director, would reallocate all matters and work involving instances where official action
within your chain of command; and there would be no means by which you could use the authority
of the office of City Treasurer or confidential information accessed as a result of being in that
position for the private pecuniary benefit of yourself, your immediate family members, or any
business with which you or your immediate family members would be associated, a conflict of
interests would be avoided. See, Dobrowolski, 07-002.
3. As City Treasurer, can \[you\] approve payments to businesses that do not employ
\[your\] spouse but are subsidiaries of US Bancorp, the parent company of which
\[your\] spouse is employed, in accordance with a contractual agreement reached
without \[your\] participation?
4. Furthermore, may \[you\] take any other official action that impacts US Bancorp
and/or its subsidiaries that do not employ \[your\] spouse?
5. As City Treasurer, can \[you\] participate in quarterly informational meetings where
the City reviews the performance of contracted investment managers, including
PFMAM and other businesses that do not employ \[your\] spouse, when no official
action is taken or contractual discussions occur?
In as much as the Commission has opined that no conflict would occur as to parent
companies/subsidiaries which are truly a separate corporate entity, as noted in the discussion of
Question 1 above, there does not appear to be a conflict should you take official action regarding
subsidiaries are in fact separate corporate entities.
Additionally, the Ethics Act would not prohibit you from attending informational meetings
of the City that would involve discussions, informational items, or other actions/matters pertaining
to the subsidiaries of a parent company. However, you are advised that you would violate Section
1103(a) of the Ethics Act if you would use the authority of your public position as the City
Treasurer, or confidential information accessed or received as a result of being in your public
position, for a prohibited private pecuniary benefit to you, a member of your immediate family, or
a business with which you or a member of your immediate family is associated. (See, Confidential
Advisory, 20-515).
Dunn, 21-505 CL
February 7, 2022
Page 6
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.
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.
Any such appeal must be in writing and must be actually received at the Commission within
thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be
received at the Commission by hand delivery, United States mail, delivery service, or by FAX
transmission (717-787-0806). Failure to file such an appeal at the Commission within thirty (30)
days may result in the dismissal of the appeal.
Respectfully,
Brian D. Jacisin
Chief Counsel