CEO 86-55 -- July 24, 1986
CONFLICT OF INTEREST
TOWN COUNCIL MEMBER STOCKBROKER RECEIVING COMMISSIONS FROM TRANSACTIONS OF TOWN PENSION BOARD
To: Mr. Barry S. Webber, Town Attorney, Town of Davie
No prohibited conflict of interest would be created were a town council member, a licensed stockbroker, to receive commissions from business transactions between an investment company retained by the town's general employees pension board and the stock brokerage house which employs him. Sections 112.313(3) and 112.313(7)(a), Florida Statutes, do not prohibit such business dealings, as the council member's brokerage house provides direct services to the investment company and not to the pension board.
Does a prohibited conflict of interest exist where a Town Council member, who is a licensed stockbroker in the State of Florida, receives commissions from business transactions between an investment company retained by the Town General Employees Pension Board and the stock brokerage firm of which the Council member is an employee?
Your question is answered in the negative.
In your letter of inquiry you advise that Mr. Frank Cannata serves as a member of the Davie Town Council and is a licensed stockbroker in the State of Florida. He does not sit as a member of the Town's General Employees Pension Board. Approximately three years prior to the Council member's election to office, the Pension Board retained an investment company to handle all aspects of selection of the investments of the fund. The stockbroker (now Council member) recommended to the company chosen that they apply for the job assisting the Pension Board in their investment decisions. The company was screened and picked from numerous other applicants by the Pension Board. The Town Council at no time played any part in the selection of the company. The investment company then freely and independently chose the Council member's brokerage house to help execute the security purchase and sales transactions. The Council member has and continues to receive commissions resulting from the transactions between the investment company and the stock brokerage house with which he is employed.
There are two provisions of the Code of Ethics for Public Officers and Employees which may apply in this situation. These provisions state:
DOING BUSINESS WITH ONE'S AGENCY. -- No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or his spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to his own agency, if he is a state officer or employee, or to any political subdivision or any agency thereof, if he is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business. This subsection shall not affect or be construed to prohibit contracts entered into prior to:
(a) October 1, 1975.
(b) Qualification for elective office.
(c) Appointment to public office.
(d) Beginning public employment.
[Section 112.313(3), Florida Statutes (1985).]
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), Florida Statutes (1985).]
Section 112.313(3) does not apply in this case because the services which the Council member provides as a stockbroker are rendered to the investment company retained by the Pension Board. The investment company has a contractual relationship with the Pension Board, but the Council member's stock brokerage house does not have a contractual relationship with the Pension Board. Although this section prohibits the Council member from acting in a private capacity to sell any services to the Town or to any agency of the Town, the services are being provided to another private entity, the investment company. Were the Council member to provide services directly to the Pension Board as an employee of the investment company, a conflict of interest would exist. See CEO 81-32, Question 1. Under the circumstances presented, however, there is no prohibited conflict of interest.
Section 112.313(7)(a) also does not apply in this case, as the brokerage firm for which the Council member works has a contractual relationship with the investment company retained by the Pension Board, and not with the Pension Board. Because the Pension Board is a separate agency from the Town Council, the Council member's involvement is even further removed from being a direct conflict of interest. See CEO 81-32, Question 2. In that case, no prohibited conflict of interest was found where a city commissioner was employed by a brokerage firm doing business with a firefighters pension board.
Accordingly, we find that no prohibited conflict of interest exists where the subject Council member receives commissions from business transactions between an investment company retained by the Pension Board and the brokerage firm of which the Council member is an employee.