FACTS:
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The ABC County Retirement Board (Board) administers the public
contributory retirement system for the employees of dozens of towns
and districts, and the County of ABC. The Board is required to
administer the retirement funds of its members, to invest the
funds, and to service the members of the system in related
retirement matters. Members of the Board are required to invest
funds, interview investment managers, evaluate investment
proposals, make investment choices, and regulate and review
investment conduct on behalf of the Retirement System.
An elected member of the Board is a municipal employee from
one of the County towns who is currently on leave of absence from
that Town. He intends to retire as a municipal employee at the
conclusion of his leave of absence. He has begun employment with a
private sector investment firm (Firm) which is involved in the
public pension market. This private employment involves the
marketing, sales, and promotion of his employer's pension products
and will require discussion, advisement and personal appearances
before public retirement boards regarding his employer's services.
According to the elected member, this firm is not presently
involved with any investment activity concerning Board funds and no
future investment activity is contemplated.
QUESTION:
May the elected Board member remain a Board member and
continue private employment with an investment firm?
ANSWER:
G.L. c. 268A will permit the elected Board Member to remain a
Board member and hold private employment with the Firm, but he will
be subject to the following restrictions.
DISCUSSION:
For purposes of the G.L. c. 268A, the elected member is a
special county employee,[1] as Board members serve without
compensation. See, G.L. c. 32, 20(3)(c). Four sections of the law
are relevant.
1. Section 11
G. L. c. 268A, s.11 provides, in pertinent part, that a
special county employee may not receive compensation from or act as
the agent for anyone, other than the county, in connection with any
particular matter[2] in which the county is a party or has a direct
and substantial interest and in which he has at any time
participated as a county employee, or which is or within one year
has been the subject of his official responsibility, or which is
pending in the agency in which he is serving. For example, the
elected member may not receive compensation from the Firm for
preparing proposals which the Firm will submit to the Board.
EC-COI-91-13. In addition, he may not represent the Firm in any
dealings before the Board nor solicit any Firm business from the
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Board. See EC-COI-85-60; 83-150. Similarly, he may not receive
compensation from the Firm or act as the Firm's agent in connection
with soliciting business from municipalities in the County who are
not members of the County Retirement System or who are members but
may choose to leave. For example, if a municipality has notified
the Board of a decision to leave the County system, the elected
member will be prohibited from receiving compensation from the Firm
or acting as the Firm's agent in any request for proposal or
presentation to the municipality in order to gain the management
business which the County has lost. The County has a direct and
substantial interest in a municipal decision to use the Firm as an
investment manager, rather than to join the County system. We note
that we have previously concluded that "the distinguishing factor
of acting as agent within the meaning of the conflict law is
'acting on behalf of' some person or entity, a factor present in
acting as spokesperson, negotiating, signing documents and
submitting applications. n In re Reynolds, 1989 SEC 423, 427. See
Commonwealth v. Newman, 32 Mass. App.Ct. 148, 150 (1992). It does
not appear that issues will arise under 11 as long as the Member
does not do business with any town in ABC County system or any
business which implicates County retirement funds, or any business
with municipal pension systems which are competitors of the County
system.[3]
2. Section 13
Section 13 provides that no county employee may participate as
such an employee in any particular matter in which, to his
knowledge, a business organization in which he is serving as an
officer, director, trustee, partner, or employee has a financial
interest. The definition of participation includes participating in
the formulation of a matter for a vote, as well as voting on the
matter. Graham v. McGrail, 370 Mass. 133, 138 (1978). Section 13
encompasses any financial interest without regard to the size of
said interest, but the financial interest must be direct and
immediate or reasonably foreseeable. See EC-COI-89-19; 89-8; 86-26
(city councillor required to abstain from participating in school
committee appointment as committee reviewing specific provisions
that may affect councillor's employer). Financial interests which
are remote, speculative or not sufficiently identifiable do not
require disqualification under G.L. c. 268A. See EC-COI-84-96;
87-16. As the Firm is not involved with any investment activity
involving any County Retirement funds and does not contemplate such
activity in the future the elected member will not be required to
abstain in Board investment matters. See EC-COI-85-60 (County
Commissioner required to abstain in any matters affecting
municipalities which were his business clients and proposals
submitted by private firm employing him); 83-150 (County
Commissioner required to abstain in matters involving future
insurance contracts on which Commissioner intended to bid as
private insurance broker). However, the elected member will be
required to abstain in any decisions, determinations or other
matters concerning whether a municipality may join or leave the
County system if said municipality has a prospective business
arrangement with the Firm when it leaves the County system, or if
the municipality has a present relationship with the Firm which
will terminate upon entering the County system. In this respect,
the Firm is a competitor to the County in the field of municipal
pension management, and has a reasonably foreseeable financial
interest in a Board decision to admit or terminate a municipal
member of the system. See EC-COI-86-13.
3. Section 23
Section 23 contains general standards of conduct which are
applicable to all public employees. It provides, in pertinent part,
that no employee may use or attempt to use his official position to
secure unwarranted privileges or exemptions of substantial value
for himself or others. G.L. c. 268A, 23(b)(2). Section 23(b)(2)
will prohibit the Board member from using county resources,
such as staff, equipment, or county time or his county title in order to
further his private business activities. See, Public Enforcement
Letter 89-4 (state employee's use of official stationery and state
resources in attempt to promote private trip from which employee
would benefit was unwanted use of official position); In re
Buckley, 1983 SEC 157 (municipal housing authority employee who was
also private landlord violated s.23(b)(2) by using official agency
stationery to communicate with private tenants); EC-COI-86-13;
85-28. This section would also prohibit the Board member from
soliciting Firm business from the various public entities whose
funds comprise the Retirement system. In past precedent the State
Ethics Commission has held that public employees are prohibited
from privately soliciting private business from those whom they
oversee. See EC-COI-92-7; 82-124 (county commissioner could not
solicit private insurance business from county vendors); 84-61
(legislator could not market tax shelters to persons with interest
in legislative
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business); In re Burke, 1985 SEC 248 (fining official for using
official position to obtain access for private purposes to persons
his agency regulated).
Further, 23 (b)(3) prohibits a county employee from engaging
in conduct which gives a reasonable basis for the impression that
any person or entity can improperly influence him or unduly enjoy
his favor in the performance of his official duties or that he is
likely to act or fail to act as a result of kinship, rank, or
position of anyone. For example, issues under this section will
arise if the Board member is required to make an investment
decision affecting an investment firm which is currently competing
with his firm for a non-County contract. In order to dispel the
appearance of a conflict of interest, this section requires that an
elected official disclose all of the relevant factors pertaining to
the perceived conflict in a public manner prior to participating in
a particular matter. This disclosure should be filed, in writing,
in the County Clerk's or County Administrator's office. EC-COI-90-
2: 89-19.
Additionally, s.23(c) prohibits the Board member from
disclosing confidential information which he has acquired in his
public position or from engaging in professional activities which
would require the disclosure of such information. See EC-COI-84-26;
83-154. The Commission has previously defined "confidential
information" as information that is unavailable to the general
public, as distinguished from information that, although not well
known, is a matter of public record. EC-COI-89-7.
4. Section 12
When the Board member retires or resigns from the Board, he
will be subject to the restrictions of 12, which governs the
activities of former county employees. In general, he will be
prohibited from receiving compensation from or acting as the agent
for someone, other than the County, in connection with a matter in
which the County is a party or has a direct and substantial
interest and in which he had participated as a County employee. He
will also be prohibited from personally appearing, before a County
agency, on behalf of someone other than the County in connection
with a matter which was under his official responsibility in the
two years prior to his termination of County service.[4]
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[1] "Special county employee," a county employee who is
performing services or holding an office, position, employment or
membership for which no compensation is provided; or who is not an
elected official and (1) occupies a position which, by its
classification in the county agency involved or by the terms of the
contract or conditions of employment, permits personal or private
employment during normal working hours, provided that disclosure of
such classification or permission is filed in writing with the
State Ethics Commission and the office of the county commissioners
prior to the commencement of any personal or private employment, or
(2) in fact does not earn compensation as a county employee for an
aggregate of more than eight hundred hours during the preceding
three hundred and sixty-five days. For this purpose compensation by
the law shall be considered an equivalent to compensation for seven
hours per day. A special county employee shall be in such a status
on days for which he is not compensated as well as on days on which
he earns compensation. G.L. c. 268A, s.1(m).
[2] "Particular matter," any judicial or other proceeding,
application, submission, request for a ruling or other
determination, contract, claim, controversy, charge, accusation,
arrest, decision, determination, finding, but excluding enactment
of general legislation by the general court and petitions of
cities, towns, counties and districts for special laws related to
their governmental organizations, powers, duties, finances and
property. G.L. c. 268A, s.1(k).
[3] If these facts change, the elected member should seek
further guidance from the State Ethics Commission.
[4] The Board member should seek further guidance from this
Commission regarding these restrictions if he leaves the Board and
if the Firm decides to pursue business with the Board.
End Of Decision