Prohibited Financial Interests for FDA Employees
On this page:
- What are Significantly Regulated Organizations (SROs)?
- Who are restricted from holding financial interest in SROs?
- Are there exceptions to these prohibitions?
- What is the SRO List?
- How often is the SRO List updated? How can I see the updates?
- What is the Prohibited Funds List?
- How do I report a newly acquired financial interest in an SRO?
- Who can I contact for more information?
Related page: Fact Sheet: Prohibited Financial Interests for FDA Employees
What are Significantly Regulated Organizations (SROs)?
HHS Supplemental Standards of Ethical Conduct formally defines SRO as "an organization for which the sales of products regulated by the Food and Drug Administration (FDA) constitute ten percent or more of annual gross sales in the organization's previous fiscal year; where an organization does not have a record of sales of FDA-regulated products, it will be deemed to be significantly regulated if its operations are predominately in fields regulated by FDA, or if its research, development, or other business activities are reasonably expected to result in the development of products that are regulated by FDA." See 5 C.F.R. § 5501.101(c)(2).
Who are restricted from holding financial interest in SROs?
FDA employees as well as their spouse and minor children are prohibited from holding financial interests, like stock, in certain businesses regulated by FDA. This includes many companies working in the drug, biologic, medical device, food, and tobacco industries, among others.
In large part, this restriction exists to help FDA employees avoid conflicts of interest under the criminal conflict of interest statute, 18 U.S.C. § 208. This law generally prohibits Federal employees from participating in any official matters that can have a direct and predictable effect on their financial interests or those imputed to them, including those of their spouse or minor children.
The restriction on holding financial interests in SROs is broad, applicable to interests in publicly traded, privately held companies, as well as certain sector funds that have a stated practice of concentrating its investments in SROs.
Are there exceptions to these prohibitions?
Please note that certain limited exceptions to the general prohibition on holding SROs do exist. Further guidance regarding such exceptions is available in § 5501.104 Prohibited financial interests applicable to employees of the Food and Drug Administration. Even if your investment qualifies for an exception to this prohibition, it cannot present a substantial conflict under the criminal conflict of interest law.
What is the SRO list?
To help employees determine whether or not an entity is considered to be an SRO, FDA maintains the List of Significantly Regulated Organizations (SROs). This is a searchable list of publicly-traded companies (traded on U.S. as well as foreign stock exchanges) that it has determined to meet the definition of an SRO.
The SRO list is a comprehensive and important resource to check regularly, however, it is not definitive. There are some situations where a financial interest may constitute a prohibited financial interest in an SRO, even if it is not included on the SRO List. For example, the SRO List does not include:
- Companies that are privately-held;
- Investments in private equity or hedge funds;
- Many new companies, for example those that may not have a record of sales of FDA regulated products, but which operate predominately in fields regulated by FDA
In addition, for companies that have subsidiaries, where the parent company is an SRO, the majority-owned subsidiaries are SROs.
How often is the SRO List updated? How can I see the updates?
The list is updated monthly. To see which organizations have been added or removed each month, go to Monthly Added & Removed Significantly Regulated Organizations (SRO). The monthly added and removed lists have been sorted in reverse alphabetical order - first by Country, then by Exchange Name.
What is the List of Prohibited Investment Funds?
FDA maintains a separate listing called the List of Prohibited Investment Funds. This page lists investment funds that are prohibited for FDA employees because the funds have a stated policy or practice of investing in SROs.
How do I report a newly acquired financial interest in an SRO?
FDA employees are required to submit an HHS 717-2 Report of Prohibited Financial Interests for Employees of the Food and Drug Administration within 30 days of acquiring an SRO, including situations where the SRO was acquired through accidental purchase, marriage, inheritance, gift, or where a previously-held investment as been designated an SRO on the SRO List or Prohibited Funds List. You must submit a completed HHS 717-2 form to your Center's Ethics Liaison Mailbox.
Who can I contact for more information?
Aside from searching the SRO List, you may contact an ethics specialist in FDA’s Office of Ethics and Integrity (OEI), who can help you determine whether or not a particular company or business, publicly-traded or privately-held, constitutes an SRO. Please provide the business name and/or DUNS Number if possible.
You can reach OEI by:
- Sending an e-mail to FDAEthics_Advice@fda.hhs.gov or calling the FDA Ethics Advice Hotline at (240) 402-1111.