‘Huge Red Flag': The Case of the Redacted SEC Conflict of Interest Waiver

Ethics officials granted a conflict of interest waiver to an unnamed official at the Securities and Exchange Commission, allowing them to hold on to stocks in Alphabet, Meta and Microsoft despite their work on an investigation that could involve the companies.

The waiver, which has not been previously reported, grants the SEC official permission to maintain the stocks even though they “likely” need to send subpoenas and document requests to the companies as part of an investigation into “an unrelated party.”

Federal law bars government employees from participating in official matters that could be compromised by their financial interests. They can secure a waiver, however, if their financial interest is deemed “too remote or too inconsequential” to compromise the integrity of their work.

Since President Donald Trump took office, agencies across the federal government have issued more than 250 conflict of interest waivers, according to the Office of Government Ethics database, which has waivers going back to September 2024. But this is the only waiver that redacts the name and position of the official, which is highly unusual.

And it takes a particularly lenient stance on conflicts of interest: The waiver acknowledges that the stock holdings, which make up 10% of the individual’s non-real estate assets, could be “disqualifying,” but concludes it is “not so substantial” as to impact their work in the agency’s Office of the Inspector General.

It raises a “huge red flag,” said Craig Holman, a government affairs lobbyist at Public Citizen.

The stocks make up a significant portion of the individual’s assets, which “alone can be a serious potential conflict of interest that could affect the official’s decisionmaking,” Holman wrote in an email. And because the tech companies are “directly and intimately affected by public policies,” Holman added, the investments affect both the personal financial income of the official and the “integrity of government regulation.”

When ethics officials see a potential conflict of interest, a federal employee would typically divest from the asset in question or be disqualified from working on the matter.

“The only element I see correct in this waiver is a recognition that the official could not adequately perform his or her duties if subject to the conflict of interest law. The solution is to make the official divest of these investments or find someone else to do the job who is not so conflicted,” Holman wrote.

The conflict of interest waiver, which is dated May 28, was signed by David Reinhold, the director of the SEC’s office of human resources.

“I believe that the disqualifying financial interest that will arise in certain particular matters directly and predictably affecting your holdings in these technology companies is not so substantial as to affect the integrity of the services which the government may expect from you,” Reinhold wrote.

He said that the waiver did not cover any interaction with the companies, which he described as “repositories of records concerning their users,” beyond third-party documents or information requests.

It’s rare for an agency to redact an official’s name or title in public disclosures. Of the more than 16,600 ethics disclosures — including conflict of interest waivers, financial disclosures and transaction reports — on file with the OGE, this is only one of two forms where the name has been withheld, according to a NOTUS analysis of the database. The CIA also redacted the name of an employee on a certificate of divestiture issued in 2021.

Danae Serrano, the ethics counsel copied on the conflict of interest waiver, told NOTUS in an email that “certain information may be redacted if it would otherwise be exempt from disclosure under FOIA.”

She pointed to the final paragraph in the waiver, which cites a federal statute that allows an agency to withhold any information about an individual’s financial interest that is “more extensive” than what is legally required to be disclosed in their financial report.

An SEC spokesperson declined to comment.