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Opinion EC-COI-87-13

Date: 04/27/1987
Organization: State Ethics Commission

A chairman of a state agency may serve on the board of directors of a bank mutual fund, subject to provisions.


You are the chairman of state agency ABC and you serve in an
unpaid capacity in that position. You have recently been asked by
a Bank to serve on the six member board of directors of a mutual
fund which the Bank is creating. If appointed, you would meet
periodically to provide general oversight of the fund's management
and investment activity, and would receive a fee for your
attendance at each meeting. You have been offered the directorship
because of your prior experience as an investment broker and as a
member of the business community.


Does G.L. c. 268A permit you to serve on the mutual fund board
of directors while you remain as the ABC chairman?


Yes, subject to certain limitations set forth below.


In your capacity as ABC chairman, you are a state employee and
a special state employee for the purposes of G.L. c. 268A. If you
accept the Bank's invitation, three sections of G.L. c. 268A will
be relevant to your question.

1. Section 6

This section prohibits you from participating[1] as a ABC board
member in any particular matter[2] in which the Bank has a
financial interest Inasmuch as there is no current business
relationship between ABC and the Bank, there is no need to apply
the disqualification requirements of s.6. Should matters affecting
the Bank's financial interest arise in the future, however, you
will be required to abstain from official participation in the
matter and to follow the disclosure procedures of s.6. For example,
s.6 would apply to you if ABC were considering a Bank proposal to
provide banking services to ABC.

2. Section 4

This section places certain restrictions on your Bank
activities. Specifically, you may not be paid as a Bank fund
director or act as its agent in connection with any particular
matter which is within your official responsibility as an ABC
member. Given the general oversight responsibilities which you
anticipate performing as a fund director, and your statement that
you will not be an agent or employee of the fund, issues under s.4
are not likely to arise. Specifically, it does not appear that your
fund director activities will relate to any ABC matters.[3]

3. Section 23

This section prohibits a state employee from using his official
position to secure unwarranted privileges of substantial value for
himself or others and from improperly disclosing confidential
information acquired as a state employee. To comply with these
provisions, you must keep your Bank activities separate from your
ABC working schedule and not use ABC resources to assist you in
your Bank director capacity.

[1] "Participating," is defined as participate in agency action or
in a particular matter personally and substantially as state, county
and municipal employee, through approval, disapproval, decision,
recommendation, the rendering of advice, investigation or
otherwise. G.L.c. 268A, s.1(j).

[2] "Particular matter," is defined as 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 law, related to
their governmental organizations, powers, duties, finances and
property. G.L. c. 268A, s.1(k).

[3] We note that the fund have an as yet unidentified variety of
investment portfolios which could include stocks, fixed income
corporate bonds and governmental issues. To the extent that ABC
could potentially be affected by the portfolios whose management
you would be overseeing. issues may arise under s.4. If this
hypothetical situation were to occur, you should renew your opinion
request with the Commission. Given an actual set of facts, the
Commission will be in a better position to assess such issues as
whether your compensation as a fund director is "in relation to"
any ABC matters.


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