CLO Employee's Handbook - Appendix 12/02 (Pages 131-145)
(Extracted from CLO Manual Dated 6/29/04)

Activities and/or enterprises deemed to fall in these categories shall include, but not be limited to, all of the following:
  1. Holding beyond ten (10) days after the start of employment with the CLO any license or permit issued under the Insurance Code.
  2. Being an officer, agent or employee of an insurer or directly or indirectly interested in any insurer or licensee under the Insurance Code, except (a) as a policyholder, or, (b) by virtue of relationship by blood or marriage to any person interested in an insurer or licensee.
  3. Soliciting business from any licensee, permitee, certificate holder, or registrant under the Insurance Code or any applicant for such license, permit, certificate, or registration.
  4. In a representative or official capacity, negotiating with any licensee, permitee, certificate holder or registrant under the Insurance Code when such negotiating is outside the scope of the employee's CLO responsibilities.
  5. Using CLO time, facilities, equipment, or supplies for private gain or advantage.
  6. Engaging in any outside employment, activity, or enterprise which involves the use of CLO time, records, equipment, facilities, or personnel.
  7. Accepting any fee or other consideration, in addition to the salary paid by the CLO, for advising or providing information regarding laws and regulations administered by the CDI and the CLO.
  8. Engaging in any outside auditing, accounting, practice of law, or other outside activity or employment in which it is reasonably foreseeable that such activity is or may later be subject to the direct or indirect control, inspection, review, audit, or regulation by the CDI.
  9. Any employment with, or for, a trade journal in the insurance field, or without prior approval of the Commissioner, the writing for publication of any article which involves the use of CLO facilities or the prestige of CLO employment.
  10. Using, or having/gaining access to, confidential information available by virtue of CLO employment for private gain or advantage or providing confidential information to persons to whom issuance of this information has not been authorized.
  11. Providing, or using without authorization or without receiving proper payment, the names of persons from office records or from mailing lists of the CDI or the CLO when such names or lists are private or confidential, or when the provision and use require the payment of a statutory fee, e.g., documents provided in response to a California Public Records Act request.
  12. Receiving a salary or other consideration (reimbursement for per diem and travel expenses are excepted) for teaching or giving instruction in schools or classes which are intended or advertised to allow students to obtain a license from the CDI or to meet continuing professional Department of Insurance education requirements.
  13. Suggesting or referring anyone to any specific person or agency for the purpose of securing or purchasing insurance, except in those instances where it is common knowledge that facilities and sources for writing of specific types of insurance risks are limited and revelation of such facilities and sources is for the sole purpose of rendering assistance to the public.
  14. In a representative or official capacity, suggesting or referring a person to any specific attorneys-at-law or law firms on any insurance matter whatsoever.
  15. Using the prestige or influence of the CLO, CDI or the state for the officer's or employee's private gain or advantage or the private gain or advantage of another.
  16. Receiving or accepting money or any other consideration from anyone other than the CLO for the performance of his or her duties as a CLO officer or employee.
  17. Performance of an act in other than his or her capacity as a CLO officer or employee knowing that the act may later be subject, directly or indirectly, to the control, inspection, review, audit, or enforcement by the officer or employee.
  18. Receiving or accepting, directly or indirectly (e.g., by family or friends), any gift, including money, or any service, gratuity, favor, entertainment, hospitality, loan, or any other thing of value from anyone (or those acting on their behalf) who is doing or is seeking to do business of any kind with the CDI or CLO or whose activities are regulated or controlled by the CDI or CLO under circumstances from which it reasonably could be substantiated or reasonably inferred that the gift was intended to influence the officer or employee in his or her official duties or was intended as a reward for any official actions performed by the officer or employee.
  19. Subject to any other laws, rules, or regulations as pertain thereto, not devoting his or her full time, attention, and efforts to his or her state office or employment during his or her hours of duty as a CLO officer or employee.
  20. Representing and/or selling, directly or indirectly, insurance instruments, e.g., insurance policies, surety bonds, etc.
  21. In a representative or official capacity, endorsing, promoting, or contributing to political campaigns or candidates.

The activities stated above do not attempt to specify every possible limitation on officers' and employees' activities that might be determined to fall within the scope and proscriptions of Government Code Section 19990. If later experience indicates a need for amendments to the above list, the Insurance Commissioner shall request approval from the Department of Personnel Administration in making the changes. Nothing in this statement or listing should be construed by any person as the sole provisions of the law and administrative rules that must be observed by each CLO officer and employee.

It is not the intent of the CLO to inquire into the private affairs of its officers or employees, or to limit the rights granted by the laws of the United States and the State of California.

Consultation With Chief Executive Officer
An officer or employee who, on the effective date of this incompatible activities statement, is currently engaged in, or later plans to engage in, any employment, activity, or enterprise which may be incompatible, in conflict with, or inimical, in any way, with his/her duties as a CLO officer or employee, is urged to consult with the Chief Executive Officer before continuing, or engaging in, such employment, activity, or enterprise.

An officer or employee who has consulted in good faith with the Chief Executive Officer, and who has received approval to engage in the employment, activity, or enterprise for which advice was sought, shall not be subject to any disciplinary action by the CLO for violation of this Incompatible Activities Statement, provided the facts concerning the employment, activity, or enterprise were fairly represented.

Failure to conform to this Code of Ethics may result in removal from office, termination of employment, or other action as the situation may warrant.

Appeal Process
Employees may appeal the application of an "incompatible activity" determination as applied to him/her by appealing, in writing, to the Chief Executive Officer.

Distribution of the CLO's Incompatible Activities Statement

  1. Every CLO Officer;
  2. Every CLO Employee;
  3. Every new CLO Officer or Employee from this date forward.

Insurance Code Section 1035.2 requires the California Department of Insurance ("CDI") to promulgate and adopt a Conflict of Interest Code pursuant to the provisions of Article 3 (commencing with Section 87300) of Chapter 7 of Title 9 of the Government Code pertaining to the officers and employees of the CDI's Conservation & Liquidation Office. The Fair Political Practices Commission ("FPPC") has adopted a regulation (Title 2 California Code of Regulations Section 18730) containing the terms of a standard Conflict of Interest Code which may be incorporated by reference in an agency's code. After public notice and hearing, it may be amended by the FPPC to conform to amendments in the Political Reform Act (Government Code Sections 81000, et seq.). Therefore, the terms of Title 2 California Code of Regulations Section 18730 and any amendments to it duly adopted by the FPPC are hereby incorporated by reference. This regulation together with the attached Appendix designating officers and employees and establishing disclosure categories shall constitute the Conflict of Interest Code of the CDI's Conservation & Liquidation Office.

Designated employees shall file their statements with the Department of Insurance's Conservation and Liquidation Office who will make the statements available for public inspection. (Gov. Code Section 81008.) Upon receipt of the statement for the Chief Executive Officer, the agency shall make and retain a copy and forward the original to the Fair Political Practices Commission. Statements for all other designated employees will be retained by the agency.

2699.1 Appendix - Designated Employees
Designated Employees Disclosure Category
Chief Executive Officer 1
Deputy Chief Executive Officer      1
Chief Financial Officer 1
Reinsurance Officer 1
Chief Information Officer 1
Claims Officer 1
Controller 1
Estate Trust Manager 1
All Consultants* 1
Human Resources Manager 2
Administration Manager 2
Claims Manager 3
Estate Reinsurance Supervisor 3

Executives of Conserved/Liquidated
Insurance Company

Same as CLO counterpart, e.g., CFO of
conserved/liquidated company is in Disclosure Category 1

* With respect to Consultants, the Chief Executive Officer may determine in writing that a particular consultant, although a "designated person," is hired to perform a range of duties that are limited in scope and thus is not required to comply with the disclosure requirements described in this Section. Such determination shall include a description of the consultant's duties and, based upon that description, a statement of the extent of disclosure requirements shall be retained in the Department of Insurance, Conservation and Liquidation Office's files. Nothing herein excuses any such consultant from any other provision of the Conflict of Interest Code.

Disclosure Categories
Designated employees in Category 1 shall report the following:

  1. Any investment in a business entity.
  2. Any interest in real property.
  3. Income from any source.
  4. Any business positions.
Designated employees in Category 2 shall report the following:
  1. Any investment in a business entity, or income from any source of the type which, within the preceding 24 months, has provided directly or indirectly, goods, services, or equipment to the CLO or to any CLO estate.
  2. Any interest in real property which, within the preceding 24 months, has been purchased, leased, or rented by the CLO or by any CLO estate.
  3. His or her status as a director, officer, partner, trustee or holder of a position of management in any business entity which is of the type which, within the preceding 24 months, has provided directly or indirectly, goods, services or equipment to the CLO or to any CLO estate.
Designated employees in Category 3 shall report the following:
  1. Any investment in a business entity which, within the preceding 24 months, has been subject to regulation by or under the jurisdiction of the CDI or the CLO.
  2. Income from any source, provided that the income was furnished by or on behalf of any person who, within the preceding 24 months, has been subject to regulation by or under the jurisdiction of the CDI or the CLO.
NOTE: Authority: Government Code Section 87300; Insurance Code Section 1035.2 References: Government Code Section 87300-87302; 87306; California Code of Regulations, Title 2, Section 18730, et seq.