CEO 79-63 -- October 17, 1979

CONFLICT OF INTEREST

EMPLOYEE OF DEPARTMENT OF BANKING AND FINANCE ALSO OFFICER AND DIRECTOR OF FOREIGN CORPORATION SUBJECT TO REGULATION OF DEPARTMENT OF BUSINESS REGULATION

To: (Name withheld at the person's request.)

Prepared by: Phil Claypool

SUMMARY:

No prohibited conflict of interest would be created were an employee of the Department of Banking and Finance to own an interest in and to serve as officer and director of a foreign corporation inasmuch as the corporation is not subject to the regulation of or doing business with his agency in violation of s. 112.313(7)(a), F. S. Assuming that the employee will be on leave from his state position when engaging in work for the corporation, neither will there be a private relationship which will conflict with or impede the performance of the employee's public duties, in further violation of s. 112.313(7)(a).

QUESTION:

Would a prohibited conflict of interest be created were I, an employee of the Department of Banking and Finance, to own an interest in and to serve as officer and director of a foreign corporation subject to the regulation of the Department of Business Regulation?

Your question is answered in the negative.

In your letter of inquiry and in a telephone conversation with our staff, you advise that you are employed by the Department of Banking and Finance as assistant general counsel. In that position, you handle litigation involving the department's Division of Banking, Division of Finance, and Division of Securities. You also advise that you are contemplating becoming a shareholder, officer, and director in a corporation which would be located outside the state but which would develop and market improved real estate and condominiums in Florida. As a consequence, the foreign corporation would come within the regulatory authority of the Department of Business Regulation, Division of Florida Land Sales and Condominiums, as well as various city and county zoning and building departments.

In addition, you advise that the corporation would raise capital through the sale of securities outside the state, which sales would qualify as a private placement under federal law and under the laws of the foreign state. You will not make any sales of the corporation's securities, you advise, either in Florida or outside the state. Finally, you advise that, as no securities will be sold or offered for sale in or from offices in Florida, the sale of the foreign corporation's securities will not be regulated by the Department of Banking and Finance.

The Code of Ethics for Public Officers and Employees provides in relevant part:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. -- No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee . . . nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), F. S.]

This provision prohibits you from being employed by or having a contractual relationship with a business entity which is subject to the regulation of the Department of Banking and Finance, which is your "agency," as that term is defined in s. 112.312(2), F. S. However, the proposed activities of your corporation would be subject to the regulation of the Department of Business Regulation, Division of Florida Land Sales and Condominiums, under Ch. 718, F. S., relating to the development of condominiums, as well as under Ch. 478, F. S., regarding the sale of subdivided lands. Since even the sale of securities of the foreign corporation would not be subject to review by the Department of Banking and Finance, as they would take place outside the state, it is clear that your proposed corporation would not be subject to the regulation of your agency. Nor does it appear from the facts you have submitted that the corporation would be doing business with the Department of Banking and Finance or that your relationship with the corporation would conflict with or impede the performance of your public duties, assuming that you will be on leave from your state employment when engaging in work for the corporation.

Accordingly, we find that the Code of Ethics would not prohibit your owning an interest in and serving as an officer and director of a foreign corporation involved in land and condominium development while you are employed as Assistant General Counsel to the Department of Banking and Finance.