§ 12.107. CONFLICT OF INTEREST. (a) In this section, "Texas trade association" means a cooperative and voluntarily joined association of business or professional competitors in this state that: (1) is primarily designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest; and (2) includes business and professional competitors located in this state among its members. (b) A person may not be a department employee if: (1) the person is an officer, employee, or paid consultant of a Texas trade association in an industry regulated by the department; or (2) the person's spouse is an officer, manager, or paid consultant of a Texas trade association in an industry regulated by the department. (c) A person may not act as the general counsel to the department if the person is required to register as a lobbyist under Chapter 305, Government Code, because of the person's activities for compensation on behalf of a profession related to the operation of the department. (d) A department employee may not: (1) purchase an asset owned by a person regulated by the department in the possession of the banking commissioner or other receiver for purposes of liquidation, unless the asset is purchased at public auction or with the approval of the receivership court; (2) except as provided by Subsection (e), become directly or indirectly indebted to a person regulated by the department; (3) except as provided by Subsection (f), become directly or indirectly financially interested in a person regulated by the department; or (4) obtain a product or service from a person regulated by the department, or an affiliate of a person regulated by the department, on terms or rates that are more favorable to the employee than those prevailing at the time for comparable transactions with or involving other similarly situated consumers. (e) Subject to Subsection (d)(4) and except as otherwise provided by employment policies adopted by the banking commissioner, Subsection (d)(2) does not prohibit indebtedness of: (1) a clerical or administrative employee to a person regulated by the department, if the employee does not exercise discretionary decision-making authority with respect to the person; or (2) an employee of the department, other than a clerical or administrative employee, if the indebtedness was permissible when incurred and became prohibited indebtedness under Subsection (d)(2) as a result of employment by the department or a circumstance over which the employee has no control, including a merger, acquisition, purchase or sale of assets, or assumption of liabilities involving a regulated person, if the employee: (A) repays the indebtedness; or (B) does not knowingly participate in or consider any matter concerning the person to whom the employee is indebted. (f) Except as otherwise provided by employment policies adopted by the banking commissioner, Subsection (d)(3) does not prohibit a financial interest of an employee of the department solely because: (1) the employee owns publicly traded shares of a registered investment company (mutual fund) that owns publicly traded equity securities issued by a person regulated by the department; or (2) the spouse of or other person related to the employee is employed by a person regulated by the department and receives equity securities of the person through participation in an employee benefit plan, including an employee stock option, bonus, or ownership plan, if: (A) the sole purpose of the plan is to compensate employees with an ownership interest in the person for services rendered; and (B) the employee does not knowingly participate in or consider any matter concerning the person until the spouse or other related person no longer owns equity securities issued by the person. (g) The banking commissioner may adopt employment policies relating to this section, including policies to: (1) require employees to notify the department of possible conflicts of interest; (2) specify the manner or extent of required recusal; (3) define the circumstances under which adverse employment action may be taken; and (4) impose more restrictive requirements on senior officers of the department for whom recusal is not viable or consistent with the prudent exercise of the department's responsibilities. (h) The finance commission may adopt rules to administer this section, including rules to: (1) codify employment policies of the banking commissioner adopted under Subsection (g); (2) define or further define terms used by this section; and (3) establish limits, requirements, or exemptions other than those specified by this section, except that an exempted employee must be recused from participation in or consideration of all regulatory matters specifically concerning the person to whom the exempted indebtedness is owed or the financial interest relates. (i) Before the 11th day after the date on which an employee begins employment with the department, the employee shall read the conflict-of-interest statutes, rules, and policies applicable to employees of the department and sign a notarized affidavit stating that the employee has read those statutes, rules, and policies. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 699, § 1, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 412, § 1.04, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 1276, § 8.001, eff. Sept. 1, 2003.

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Last modified: August 10, 2007