SEC Proposes Updates to the Agency's Ethical Conduct Standards

The SEC proposed amendments to the Supplemental Standards of Ethical Conduct for Members and Employees of the Securities and Exchange Commission.

Under the updated standards, which are supported by the U.S. Office of Government Ethics, the SEC would:

• prohibit ownership of sector funds that maintain a policy of concentrating investments in entities under direct SEC regulation;

• remove the pre-clearance, reporting and holding period requirements for certain diversified investments;

• enhance accountability of employee securities transaction reporting by authorizing the SEC to automatically collect relevant information from applicable financial institutions; and

• clarify that the limitation on purchasing securities that are part of an initial public offering ("IPO") until seven days after the IPO also applies to direct listings of securities.

The proposal would also make other structural and technical corrections to the regulations as needed. The proposal would apply to SEC employees as well as their spouses and any children under the age of 18.