Reasonableness of conflict of interest disclosures?

[maizefolk]

My current employer has decided I need to disclose any investment I have in public companies related to my work >$5,000. Seems reasonable. They have also decided that this applies to immediate family members. Still seems reasonable. They specify that "immediate family" includes siblings, spouses, children, grandchildren, parents, and grandparents by birth or marriage. The specific example they illustrate this with is that the investments of my spouses parents in public companies related to my work would also need to be disclosed.

Now I'm not married and so don't have a spouse let alone in laws so I don't know what a normal relationship with ones in laws might look like and this doesn't effect me personally. But is it a normal thing for an organization to expect their employees to either 1) expect people to know the details of their in law's investment portfolios or 2) expect people with have a conversation with their in laws "hey if you have any stock in these dozens of companies, could you please let me know right away?"

[Metalcat]

DH has no living parents, but it would absolutely be reasonable for him to request mine for this info if needed, but the request would go through me. I think that would be typical, so it's more a request coming from their own kid than their kid-in-law.

[TrMama]

I've worked for several different publicly traded companies. They all offered stock purchased at discount, or options, to all employees as a benefit. In theory, this means any employee could be party to insider trading. However, I've never signed any kind of conflict of interest document. I'd also never sign one that applied to all the relatives you listed. I have zero level of control over anyone who doesn't live in my household and therefore can't guarantee what these people might do.

Insider trading, which is what I assume your employer is worried about, is governed by the SEC.

[Tester]

I would say bullshit.
Keep in mind I am not a lawyer but as you said, how do you control what a dozen people do, especially people you see once a year...
I was always under insider trading restrictions, but I did not have to tell anyone about any other investments.
And even when I bought/sold shares of my employer on my trading account, i took precautions to only trade during the window.
That was it.

I am not sure how a discussion about this would go with all relatives listed:
Me: Every time you trade anything on these companies, you need to tell me.
Them: And you also want a nice bouquet of flowers you can shove up yours???

The other way it would be the same from my part, but I might suggest other things to shove up...

[G-dog]

I could see in-laws refusing to share this info.  Then would would one do?

[Villanelle]

Even if these people pony up the info, I don't see how you could be held accountable or if it weren't accurate, or if they changed their allocation after you got and reported the info.  Are you going to be fired if your father-in-law buys 50 shares of Whatever and doesn't tell you? 

[Zamboni]

The >$5000 threshold on that seems completely absurd. Greater than $50,000? Maybe? Certainly more reasonable.

Also, how is what you are attesting to phrased? Hopefully in a way that gives you an out, such as: To the best of my knowledge blah blah blah. That would also make it more reasonable.

[RWD]

My wife recently had to go through this as well but they only cared about her own and spouse's investments. Asking about in-laws investments seems way overkill unless you are a fund manager or something.

[Anon-E-Mouze]

I've worked in compliance and regulatory affairs (and for regulatory affairs).

It's not unusual to see a request like this applied to a) anyone living in your household, and b) in-laws, grandparents and grandchildren where the employee plays any role with respect to the family member's finances (e.g. having access to their account details, providing advice on finances or making decisions for them). If you don't have that kind of interaction with extended family members, the employer usually will be okay with not getting the information if you sign a declaration that you don't know about their finances, don't discuss them and don't influence decision-making of the extended family members.

Also, FWIW, I think it's more common for employers to request that family members have their brokerages provide statements directly to the employer - so that means the employee doesn't see them. (That deals with the potential discomfort of sharing financial information among family members.)

There is also often a major carveout for disclosures with respect to holdings in widely held funds.

[Metalcat]

Is your question more if the request from the employer is reasonable or if people typically have that kind of relationship with their in-laws?

[maizefolk]

Is your question more if the request from the employer is reasonable or if people typically have that kind of relationship with their in-laws?

Honestly either. You are right that they are separate questions. I just get frustrated with rules that seem arbitrary and impossible.

To me this seems like the sort of rule which is both extremely difficult to comply with and extremely difficult to judge compliance simply so that when-and-if my employer decides a particular employee is more trouble than they are worth they'd almost inherently have to be in violation of the rules on disclosures.

... as I write this I realize that mostly I'm just venting.

[Darian]

This seems really extreme to me. I work for the government in an agency that deals with a lot of companies. I'm required to file an annual financial disclosure form where I have to list all investments in individual stocks or sector-specific index funds greater than $1000. I only need to do this for my spouse and myself, no other family members, and there is a $25,000 exemption before you *might* need to recuse yourself from working on an issue that affects a company whose stock you own.

One exception I can think of that would make this policy more understandable is if you're in a role where you're responsible for making decisions that have major implications for company X or company Y. For example, if you're responsible for evaluating government procurement bids for a new metro line, it would be relevant if your father in-law was CEO of Kawasaki. Or if you're the guy at the FDA making a decision on whether to approve Pfizer's new drug, and your mom owns $1M of Pfizer stock that's going to tank if you reject it.

[Metalcat]

Is your question more if the request from the employer is reasonable or if people typically have that kind of relationship with their in-laws?

Honestly either. You are right that they are separate questions. I just get frustrated with rules that seem arbitrary and impossible.

To me this seems like the sort of rule which is both extremely difficult to comply with and extremely difficult to judge compliance simply so that when-and-if my employer decides a particular employee is more trouble than they are worth they'd almost inherently have to be in violation of the rules on disclosures.

... as I write this I realize that mostly I'm just venting.

You could just refuse. If I was given a disclosure that I felt was unnecessary and unreasonable, I would refuse.

There are rare scenarios where I can see this level of disclosure being necessary, but if it's a frivolous policy, then it should be revisited by your employer, and you can insist that it's not reasonable.

Policies are ideas put on paper by humans, they're not infallible dictates from God. They can often be changed or at least circumvented.

[Sibley]

I suspect that the policy was intended to include something like "if you manage/have influence or knowledge of their investments". Otherwise it's a privacy violation. I would approach the question as a "oh, I think a piece got left out of this, of course you're only asking about x situations".

[Anon-E-Mouze]

"You could just refuse." - That depends. Your job might be on the line. You might have signed something when you took the job indicating that you'd comply with various employer policies (including policies relating to insider trading and conflicts of interest, as they evolve from time to time), so refusal to go along with a policy or revised policy could be grounds for termination.

"There are rare scenarios where I can see this level of disclosure as being necessary ..." Actually, in my line of work (which includes 30 years in financial services, financial services regulation, business law etc), I can see the need for this kind of disclosure if the employee has access to information, or influence on decisions, that either present a risk of conflicts of interest (in terms of decision-making) or insider trading or tipping.

"Policies ... can often be changed or at least circumvented." Well, circumventing a policy would be a bad idea. That could be grounds for discipline or termination.

If you think the policy is ambiguous or overly broad in scope, then it is worth having a discussion with the people who drafted it to get a sense of what was intended. You might have overlooked some language - and I have a feeling that the description you provided in your original question might have left out some information about how the policy works. If the policy is badly drafted, then you can provide input on how it could be changed, but keep in mind that, as I mentioned earlier, it's not that unusual for a policy like this to cover extended family members where the employee has knowledge of the family member's investments and/or influence over trading decisions. And if the company wants to keep track of extended family members' holdings, arrangements can be made to have the information provided directly by the family member's financial institution to the compliance department at your company (so that means you don't see the information).

[former player]

It's not unknown for people involved in e.g. insider trading to use their relatives as proxies to launder purchases and proceeds, and a disclosure requirement that spreads as widely as grandparents-in-law is probably an anti-avoidance measure.  But I would expect anyone asked for such a wide-ranging disclosure to be in a position of very high seniority and business/financial influence in an organisation sensitive to stock market movements.

If I were asked a question like this I would probably reply "I have no legal interests in the finances of any relative and no knowledge of their stock holdings.  I confirm that if this changes I will make the disclosures requested in relation to any such interest."

[Catbert]

If my sisters, step-children, step-grandchildren, sisters-in-law, etc. wanted me to give this info to them/their employer my answer would be a firm, "No".  It's an unreasonable ask unless, of course, they were involved in my investment decisions.

[Metalcat]

"You could just refuse." - That depends. Your job might be on the line. You might have signed something when you took the job indicating that you'd comply with various employer policies (including policies relating to insider trading and conflicts of interest, as they evolve from time to time), so refusal to go along with a policy or revised policy could be grounds for termination.

"There are rare scenarios where I can see this level of disclosure as being necessary ..." Actually, in my line of work (which includes 30 years in financial services, financial services regulation, business law etc), I can see the need for this kind of disclosure if the employee has access to information, or influence on decisions, that either present a risk of conflicts of interest (in terms of decision-making) or insider trading or tipping.

"Policies ... can often be changed or at least circumvented." Well, circumventing a policy would be a bad idea. That could be grounds for discipline or termination.

If you think the policy is ambiguous or overly broad in scope, then it is worth having a discussion with the people who drafted it to get a sense of what was intended. You might have overlooked some language - and I have a feeling that the description you provided in your original question might have left out some information about how the policy works. If the policy is badly drafted, then you can provide input on how it could be changed, but keep in mind that, as I mentioned earlier, it's not that unusual for a policy like this to cover extended family members where the employee has knowledge of the family member's investments and/or influence over trading decisions. And if the company wants to keep track of extended family members' holdings, arrangements can be made to have the information provided directly by the family member's financial institution to the compliance department at your company (so that means you don't see the information).

I never said that refusing was consequence free. But it is always an option.

[maizefolk]

I'm in an academic research position where I should not have access to information which would enable insider trading, although it might be possible under a fairly bizarre set of circumstances.

My understanding is that the primary motivations here are 1) identify the potential for the misuse of government funds 2) identify potential for financial interests to result in research misconduct (e.g. grad student makes a discovery which would undermine the business model of a company I've invested in so I don't let them publish it).

Those are both very bad things. But being in breach because my hypothetical spouse's hypothetical grandmother bought $5,001 worth of stock in a company that is arguably in the same field as I work in and neglected to mention it to me sits poorly.

I should add this is a web form we are required to fill out annually (as well as within 30 days of any new financial conflict) which is entirely lacking in comment fields.

Most of the language seems to have been adopted directly from the US federal code 42 CFR § 50.603. But with my employer's far more expansive definition of "immediate family" substituted for the federal code's definition of "Investigator (or the Investigator's spouse or dependent children)"

[Metalcat]

I'm in an academic research position where I should not have access to information which would enable insider trading, although it might be possible under a fairly bizarre set of circumstances.

My understanding is that the primary motivations here are 1) identify the potential for the misuse of government funds 2) identify potential for financial interests to result in research misconduct (e.g. grad student makes a discovery which would undermine the business model of a company I've invested in so I don't let them publish it).

Those are both very bad things. But being in breach because my hypothetical spouse's hypothetical grandmother bought $5,001 worth of stock in a company that is arguably in the same field as I work in and neglected to mention it to me sits poorly.

I should add this is a web form we are required to fill out annually (as well as within 30 days of any new financial conflict) which is entirely lacking in comment fields.

Most of the language seems to have been adopted directly from the US federal code 42 CFR § 50.603. But with my employer's far more expansive definition of "immediate family" substituted for the federal code's definition of "Investigator (or the Investigator's spouse or dependent children)"

And what's your liability if you sign it?

Are you indicating that to the best of your knowledge that your hypothetical father in law has no such investments or are you ensuring that he doesn't?

There's a huge difference between attesting that you asked vs attesting that you have some kind of control over what they invest in.

Again, you can just refuse and see what happens. But for anyone reading, I'm saying that because I know your work circumstances and think you can readily handle whatever consequences they try to throw at you.

[maizefolk]

My understanding is that it's enough to breach the veil of tenure.

And what's your liability if you sign it?

Are you indicating that to the best of your knowledge that your hypothetical father in law has no such investments or are you ensuring that he doesn't?

My understanding would be that failure to disclose such an investment, if it exists, would technically constitute research misconduct. That'd be enough to allow dismissal of even tenured faculty.

Would it actually be used to do so? On its own, my guess is no. If there was some other scandal or bad P.R. that otherwise wouldn't directly justify the dismissal of a tenured faculty member (for example publishing research with politically unpalatable conclusions or becoming the target of a social media meme as was portrayed in The Chair), failure to disclose a financial conflict of interest provides a viable avenue to still get rid of the person in question.

Again, you can just refuse and see what happens. But for anyone reading, I'm saying that because I know your work circumstances and think you can readily handle whatever consequences they try to throw at you.

Yeah. Debating far I want to go down the road of "A laptop battery contains roughly the stored energy of a hand grenade, and if shorted it ... hey!  You can't arrest me if I prove your rules inconsistent!"

Am reminded very much of my own father who once got into a major showdown with the TSA about whether crystalized honey constituted a liquid (and so subject to the <100 mL rule for liquids) or not.

[Metalcat]

My understanding is that it's enough to breach the veil of tenure.

And what's your liability if you sign it?

Are you indicating that to the best of your knowledge that your hypothetical father in law has no such investments or are you ensuring that he doesn't?

My understanding would be that failure to disclose such an investment, if it exists, would technically constitute research misconduct. That'd be enough to allow dismissal of even tenured faculty.

Would it actually be used to do so? On its own, my guess is no. If there was some other scandal or bad P.R. that otherwise wouldn't directly justify the dismissal of a tenured faculty member (for example publishing research with politically unpalatable conclusions or becoming the target of a social media meme as was portrayed in The Chair), failure to disclose a financial conflict of interest provides a viable avenue to still get rid of the person in question.

Again, you can just refuse and see what happens. But for anyone reading, I'm saying that because I know your work circumstances and think you can readily handle whatever consequences they try to throw at you.

Yeah. Debating far I want to go down the road of "A laptop battery contains roughly the stored energy of a hand grenade, and if shorted it ... hey!  You can't arrest me if I prove your rules inconsistent!"

Am reminded very much of my own father who once got into a major showdown with the TSA about whether crystalized honey constituted a liquid (and so subject to the <100 mL rule for liquids) or not.

I would not accept that level of liability.

Under those conditions, you are fully responsible for the behaviours of all of your family members. So if they make a certain type of investment in something vaguely connected to your area of research, and fail to alert you about it, you could lose your job?

Nope, I would not accept that. If I were to take on that level of liability, it would have to be for *very* justifiable reasons.