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Federal Register / Vol. 86, No. 174 / Monday, September 13, 2021 / Rules and Regulations
We have changed the definition of family, which was discussed above in III.B.1f of the preamble. In response to comments, we have also changed the reporting requirements for family and reportable business entities to those you know or have reason to know and included a timeframe of the current year. In response to other comments, the final rule modifies the reporting requirements for family to resemble that of the current rules in 612.2145b and 612.2155b. Reportable transactions by family are those occurring in the current year with the directors or employees System institution or any supervised or supervising institution. We have chosen not to limit the requirement to immediate family, preferring to use the definition of family found in 612.2130.
We believe the changes to that definition provide sufficient limits while still addressing potentials for conflict to arise.

institution or supervising institution.
However, you may not be directly involved in transactions with family members or reportable business entities.
Therefore, the final rule applies a know or have reason to know standard for reporting on family and reportable business entities transactions with the System. The other reportable items do not have a similar qualifier.

vi Persons known To Do Business With the SystemParagraphs b3 and 4
The proposed standard for what to disclose as a real or potential conflict of interest was to the best of your knowledge and belief. When reporting for family, the proposed standard was supplemented to require reporting the name of those family members you know or have reason to know have business with the System. The Council, CoBank and some others asked for clarification of whether the proposed reporting requirement for family was intended to be more or less restrictive and if this same requirement poses a duty to inquire. The Council, FCB of Texas and some commenters remarked that combining a knowledge standard with a reason to know standard is contradictory and suggested using an actual knowledge standard for this provision or at least clarifying the same standard used for all reporting areas.
The Council and a few others also asked if the reason to know standard was restricted to family reporting. FCB of Texas, CoBank and some other commenters recommended we use the existing rules actual knowledge standard. A couple of commenters suggested using to the best of knowledge as not all directors and employees know the financial activities of family. The majority of commenters expressed a preference for the same standard to be used in all of the proposed reporting items.
As a director or employee, you should know what interests you have in business matters or loan applications that are being considered by your
The proposed rule would have required all directors and employees to make the disclosures required under 12
CFR 620.6f. The part 620 provision currently only applies to directors and senior officers. The proposal also inadvertently omitted paragraphs a and e of 12 CFR 620.6 from this requirement. A few commenters asked that we keep the term senior officer to clarify that reporting on part 620
disclosures is not being extended to all employees. A few asked if institutions have the authority to limit reporting under this provision to senior officers and directors and if so, asked that the rule text reflect that.
We agree with comments that the part 620 disclosures only apply to directors and officers and make appropriate changes in the final rule. The final rule also moves references to reports made under 12 CFR 620.6 to a new paragraph c since those disclosures are only required of directors and officers. In conformance with final provisions on the SOCO duties discussed in this preamble at III.B.6b, 612.2145c requires directors and officers give the SOCO disclosures required under 620.6a, e, and f. We note that the 612.2130 definition of officer is substantially similar to that of senior officer as used in part 620 and defined in 619.9310. The final rule leaves it to the institution to determine the timing of these disclosures, but specifies they must at least occur annually in connection with filing the institutions annual report and when the institution issues an Annual Meeting Information Statement under FCA regulations 620.21a3.

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vii Reporting GiftsParagraph b5
FCB of Texas asked that gift reporting requirements from the SOC program elements be moved to this section. We are not moving the gift requirements as suggested but have modified the rule to explain the report must include reportable gifts received or disposed of that are reportable under the institutions SOC program policies and procedures.
4c. Making Part 620 Disclosures.
612.2145c
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5. Prohibited Conduct. 612.2150
We proposed consolidating the current prohibited activities for directors, employees and joint employees into one section. We also proposed incorporating the existing prohibitions on purchasing System obligations into this same section. In the process, we proposed clarifications and elaborations to existing rule text. We received 45 comments on the proposed changes to prohibited conduct and the related consolidation, including comments from the Council and two FC
banks. Outside of general comments to keep the existing rule, all the comments for this section were directed at a few specific provisions. We make some changes to the proposed provisions on prohibited conduct in response to comments and to reconcile provisions with changes elsewhere, which we discuss in the subsections that follow.
We also make small changes to improve readability and align the format of the rule, such as adding headings to main paragraphs and clarifying language.
Those changes include:
Consolidating proposed paragraph a1 into the main portion of paragraph a, renumbering the remaining subordinate paragraphs, and adding a new lead to paragraph a for the list of prohibited activities.
Adding clarifying language that you refers to both directors and employees.
Clarifying that the subordinate paragraph on gifts refers to prohibited gifts.
Using consistent language to identify supervising and supervised institutions.
Numbering provisions containing exceptions for ease of reference; and Only using the term family since the additional language on persons residing in the home is now captured in the definition of family.
In response to general requests that we keep existing section numbering where possible, we do not final the proposal to number these provisions as 612.2139. Instead, we have consolidated and moved prohibited conduct provisions to the existing section on employee prohibited conduct in 612.2150. The current 612.2140
director prohibited conduct numbering is removed and reserved.
5a. Using Position for Personal Gain.
612.2150a1
As proposed, the current director and employee prohibitions on participation in matters affecting certain financial interests would be retained. The final rule clarifies this prohibition includes
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