Advisory Opinion No. 2001-13

Interpretation Of The Conn. Gen. Stat. §1-83 Securities Disclosure Requirement

By statute, the State Ethics Commission is responsible for collecting Statements Of Financial Interests (SFIs) filed annually by approximately 1,400 senior state servants. Conn. Gen. Stat. §1-83. Filers are either listed by position in the statute (e.g., the members of the General Assembly) or are designated under the Governor’s statutory authority. Id. at (a).

The SFIs disclose for the public record, in the case of the filer, filer’s spouse and dependent children residing in the household: businesses with which associated; category or type of all sources of income in excess of $1,000 per year; names of securities owned which had a fair market value in excess of $5,000; real property interests; and leases and contracts with the State.

A designated filer has now asked the Commission whether the SFI securities disclosure requirement applies to securities held at any time during the reporting year or only to securities held on December thirty-first.

For both legal and public policy reasons, the disclosure requirement applies to securities with a fair market value in excess of $5,000 held at any time during the reporting year. Legally, §1-83(a)(1) requires "…a statement of financial interests for the preceding calendar year…" Clearly, under this statutory language, a Statement capturing only those interests held at the end of the year is insufficient. Furthermore, a fundamental public policy consideration underlying the statutory requirement, disclosure of holdings creating the potential for conflicts of interests, would be thwarted by such a construction.

For example, a state regulatory official responsible for approving a proposed merger of two corporation may not, under §§1-84(b) and (c) of the Code, simultaneously trade in the stock of the companies. However, if securities disclosure was limited to holdings as of December thirty-first, he or she could do so, without detection, by simply disposing of the stock before that date.

In issuing this Ruling, the Commission is not unmindful that, particularly with the advent of online trading, an individual may buy and sell numerous securities valued at over $5,000 during the year. Thereby, substantially increasing the effort necessary to comply with the disclosure requirement. However, the appropriate method for addressing this and related compliance issues is by legislative enactment; not by Ethics Commission Advisory Opinion. As a consequence, as part of its 2002 legislative package, the Commission will consider proposing that the various dollar thresholds for SFI categories of disclosure (which have remained unchanged since 1978) be increased.

By order of the Commission,

Rosemary Giuliano
Chairperson