January 16, 2017

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Presidential Appointees Can Take Advantage of 2014 OGE Guidance on Hedge Funds

As President-elect Trump begins to nominate individuals for Senate-confirmed positions in his administration, one of the major hurdles these individuals face is the statutory requirement that the Director of the Office of Government Ethics (“OGE”) review and certify a public disclosure of each source of income exceeding $200 and each property interest exceeding $1,000 in value.  While for many classes of assets, identifying and disclosing the relevant assets is relatively straightforward, it is often much more difficult to file a compliant report for pooled investment fund assets, such as hedge funds, since the details of the underlying assets are often undisclosed to the investor by the fund manager or subject to a confidentiality agreement between the investor and the fund manager. 

Prior to 2014, OGE maintained a strict “disclose or divest” policy, requiring a nominee to divest their undisclosed assets—regardless of whether or not the filer had access to information about the fund’s underlying holdings—unless the fund qualified as an “excepted investment fund.” This strict policy, OGE recognized, “can conflict, for no substantive reason, with the goal of attracting and placing talented professionals in public service.” Thus, in 2014, OGE issued revised guidance clarifying that the investor may not be required to “disclose or divest” if either (1) a fund is an “excepted investment fund” or (2) if the investor has no access to information on certain underlying assets, which allows OGE to certify that the investor may report only what is known about the fund.

© 2017 Covington & Burling LLP

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Rob Kelner, Governmental Affairs Attorney, Covington Law Firm
Partner

Robert Kelner is the chair of Covington’s nationally recognized Election and Political Law Practice Group.  He counsels clients on the full range of political law compliance matters, and defends clients in civil and criminal law enforcement investigations concerning political activity. He also leads the firm’s prominent congressional investigations practice. 

202.662.5503
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Robert Lenhard, Election and Political Law Attorney, Covington Law Firm
Partner

Robert Lenhard is a member of the firm’s Election & Political Law practice group and advises corporations, trade associations, not-for-profit organizations, and high-net-worth individuals on compliance with federal and state campaign finance, lobbying, and government ethics laws.

Mr. Lenhard routinely assists clients in establishing and operating federal and state PACs, compliance programs associated with campaign finance and pay-to-play laws; advises advocacy groups and their donors; conducts compliance trainings and audits of federal and state lobbying and political programs; and counsels clients on compliance with congressional gift and travel rules.

202-662-5940
Derek Lawlor, Election and Political Law Attorney, Covington Law Firm
Associate

Derek Lawlor is an associate in the firm’s Washington office and a member of the firm’s Election & Political Law and White Collar practice groups.  He assists corporations, nonprofit organizations, and trade associations with federal and state lobbying, campaign finance, and government ethics issues.  Mr. Lawlor also represents clients in government investigations and inquiries conducted by the Federal Election Commission, Office of Congressional Ethics, and Congressional Committees and Commissions.

Prior to receiving his law degree, Mr. Lawlor worked in the Office of...

202-662-5091
Matthew S. Shapanka, Covington Burling, Governmental Regulation Attorney, Political Matters Lawyer
Associate

Matthew Shapanka leverages his experience in government and politics to represent corporate, political, and individual clients in criminal, regulatory, and legislative matters before government agencies and Congress. He also advises candidates, companies, PACs, nonprofits, and high net worth individuals on compliance with federal and state campaign finance, election, and lobbying laws.

Prior to attending law school, Mr. Shapanka worked as a research analyst in the Massachusetts Recovery & Reinvestment Office, where he worked on all aspects...

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