| (a) Definitions. For purposes of this section, the
following definitions have the following meanings.
(1) Commissioner--the commissioner of education. As
the commissioner is an employee of the Texas Education Agency (TEA),
any provisions that apply to TEA employees apply to the commissioner.
(2) Official act or official action--a vote, decision,
recommendation, approval, disapproval, or other action, including
inaction, that involves the use of discretionary authority.
(3) Permanent School Fund (PSF) service provider--any
person who provides services to the PSF or relating to the management
or investment of the PSF, including, but not limited to, external
investment managers and consultants, banks, custodians, and professional
services (attorneys, accountants, etc.). Notwithstanding the foregoing,
for all purposes under this section, the term PSF service provider
excludes State Board of Education (SBOE) members, TEA employees, and
private fund managers. PSF service providers who provide services
to the Texas PSF Corporation are covered by the Texas PSF Corporation's
ethics policy.
(4) Personal securities transactions--
(A) transactions for a member's or employee's own account,
including an individual retirement account; or
(B) transactions for an account, other than an account
over which the member or employee has no direct or indirect influence
or control, in which the member or employee (or the member's or employee's
spouse, minor child, or other dependent relative):
(i) is an income or principal beneficiary or other
equity owner of the account; or
(ii) receives compensation for managing the account
for the benefit of persons other than the member or employee or his
or her family.
(5) Private fund manager--a person who controls a non-publicly
traded investment fund or other investment vehicle (including, but
not limited to, a partnership, limited liability company, trust, association,
or other entity) in which the PSF is invested. A private fund manager
may include the vehicle's sponsor, general partner, managing member,
manager, advisor, or other agent thereof. For purposes of this section,
private fund managers are not considered to be PSF service providers.
(6) Publicly traded securities--securities of a class
that is listed on a national securities exchange or quoted on the
NASDAQ national market system in the United States or that is publicly
traded on any foreign stock exchange or other foreign market.
(7) Relative--an individual related within the third
degree by consanguinity (blood relative) or the second degree by affinity
(marriage) determined in accordance with Texas Government Code, §§573.021-573.025.
For purposes of this definition:
(A) examples of a relative within the third degree
by consanguinity are a child, grandchild, great-grandchild, parent,
grandparent, great-grandparent, brother, sister, uncle, aunt, niece,
or nephew;
(B) examples of a relative within the second degree
by affinity are a spouse, an individual related to a spouse within
the second degree by consanguinity, or a spouse of such an individual;
(C) an individual adopted into a family is considered
a relative on the same basis as a natural born family member; and
(D) an individual is considered a spouse even if the
marriage has been dissolved by death or divorce if there are surviving
children of that marriage.
(8) Texas Education Agency (TEA) employee--a person
employed by TEA who provides advice to the SBOE, commissioner, or
TEA concerning the PSF.
(b) General principles. Under Texas Education Code
(TEC), §43.0031, members of the SBOE, the commissioner, TEA employees,
and persons providing services to the SBOE relating to the PSF are
subject to general ethical standards relating to the PSF. The PSF
is held in public trust for the benefit of the schoolchildren of Texas.
The members of the SBOE serve as fiduciaries of the PSF in accordance
with the Texas Constitution, Article VII, §5(f). SBOE members
or anyone acting on their behalf shall aspire to the highest standards
of ethical conduct and shall comply with the provisions of this section,
the Texas Constitution, Texas statutes, and all other applicable provisions
governing the responsibilities of a fiduciary.
(c) General ethical standards.
(1) SBOE members must comply with all laws applicable
to them, which may include one or more of the following statutes:
Texas Government Code, §572.051 (Standards of Conduct; State
Agency Ethics Policy), §552.352 (Distribution or Misuse of Confidential
Information), §572.002 (General Definitions), §572.004 (Definition:
Regulation), §572.054 (Representation by Former Officer or Employee
of Regulatory Agency Restricted; Criminal Offense), §572.058
(Private Interest in Measure or Decision; Disclosure; Removal from
Office for Violation), §572.021 (Financial Statement Required), §2252.908
(Disclosure of Interested Parties), Chapter 573 (Degrees of Relationship;
Nepotism Prohibitions), and Chapter 305 (Registration of Lobbyists);
Texas Penal Code, Chapter 36 (Bribery and Corrupt Influence) and Chapter
39 (Abuse of Office); and TEC, §43.0032 (Conflicts of Interest)
and §43.0033 (Reports of Expenditures). The omission of any applicable
statute listed in this paragraph does not excuse violation of its
provisions.
(2) SBOE members must be honest in the exercise of
their duties and must not take actions that will discredit the PSF.
(3) SBOE members shall be loyal to the interests of
the PSF to the extent that such loyalty is not in conflict with other
duties that legally have priority.
(4) SBOE members shall not use nonpublic information
gained through their relationship with the PSF to seek or obtain personal
gain beyond agreed compensation and/or any properly authorized expense
reimbursement. This should not be interpreted to forbid the use of
PSF as a reference or the communication to others of the fact that
a relationship with PSF exists, provided that no misrepresentation
is involved.
(5) This section is adopted to satisfy the requirements
of TEC, §43.0031.
(d) Conflicts of interest.
(1) A conflict of interest exists whenever SBOE members,
the commissioner, or TEA employees have business, commercial, or other
relationships, including, but not limited to, personal and private
relationships, that could reasonably be expected to diminish their
independence of judgment in the performance of their duties. Conflicts
include, but are not limited to, beneficial interests in securities,
corporate memberships, trustee positions, familial relationships,
or other special relationships that could reasonably be considered
a conflict of interest with the fiduciary duties to the PSF. Further,
TEC, §43.0032, requires disclosure and no participation in a
matter affected by the possible conflict of interest, unless a waiver
is granted, when an SBOE member, the commissioner, a TEA employee,
or a person who provides services to the SBOE that relate to management
or investment of the PSF has a business, commercial, or other relationship
that could reasonably be expected to diminish a person's independence
of judgment in the performance of the person's responsibilities relating
to the PSF. Such business, commercial, or other relationship is defined
to be a relationship that is prohibited under Texas Government Code, §572.051,
or that would require public disclosure under Texas Government Code, §572.058,
or a relationship that does not rise to this level but that is determined
by the SBOE to create an unacceptable risk to the integrity and reputation
of the PSF investment program.
(2) Any person who has a possible conflict of interest
as defined in paragraph (1) of this subsection shall, upon discovery,
promptly disclose the possible conflict to the commissioner and the
chair and vice chair of the SBOE on a disclosure form prescribed by
the commissioner.
(e) Prohibited transactions and interests. SBOE members,
the commissioner, and TEA employees may not:
(1) engage in any personal securities transaction when
the person has actual knowledge that the Texas PSF Corporation is
trading such securities or has acquired information through his or
her position that is not otherwise available to the public. An SBOE
member, the commissioner, or a TEA employee may otherwise buy or sell
a publicly traded security of an issuer that is held by the Texas
PSF Corporation;
(2) accept or solicit any gifts, favors, services,
or benefits that might reasonably tend to influence the person in
the discharge of his or her duties for the PSF or that the person
knows, or should know, is being offered with the intent to influence
the person's conduct on behalf of the PSF;
Cont'd... |
