How to Hire from Wall Street Without Compromising Your Government Program
CHIPS built a rigorous ethics machine
Preventing conflicts of interest (or even the mere appearance of them) is one of the many balancing acts of industrial policy. But government intervention in private markets requires real private-sector expertise that can invite those very conflicts — in our case, the CHIPS team needed investment and financial structuring experience and knowledge of the semiconductor industry. We knew we could not send in industry rookies to negotiate multi-billion-dollar deals with TSMC and Samsung.
The expertise that made someone a valuable hire created both real and perceived conflict risk. How we handled that risk would determine whether we spent our tenure focused on the mission or defending the integrity of the program — you can look to the current administration for a strong cautionary tale.
At the CHIPS Program Office, we decided to establish ethics requirements beyond what the law requires. The added friction made hiring harder and was not an easy cost to swallow. But unlike the other implementation burdens we faced, we chose this one, and would choose it again.
The baseline ethics system
The federal government has a mature and robust ethics system. Every executive-branch employee is bound by the criminal conflict-of-interest statute, 18 U.S.C. § 208, which prohibits participating in any matter that could directly and predictably affect their own financial interests, or those of their spouse, dependents, or outside affiliations. The Office of Government Ethics implements this expectation through detailed regulations that establish stock ownership limits, recusal requirements, and divestiture timelines. Other provisions impose constraints on employees seeking private sector jobs while still in government and representing outside interests after they leave. Violations carry both civil and criminal penalties under 18 U.S.C. § 216.
Compliance entails rigorous procedure. New employees must submit financial disclosure forms within 30 days of assuming their role. Ethics officials then review investment portfolios, identify potential conflicts, and issue specific recusal or divestiture instructions.
Although the existing system has real teeth, the Department of Commerce’s senior leadership team decided to implement even more stringent checks. CHIPS was a novel and highly visible program deploying $39 billion in taxpayer dollars — we needed to secure public trust and ensure the program’s success.
How CHIPS expanded ethics requirements
The framework we built went beyond what the law required, and purposefully so. Credit for the design of our ethics architecture belongs largely to our General Counsel, Leslie Kiernan, whose foresight set us up for success.
Here’s what we did differently:
We applied our enhanced standards to everyone. CHIPS staff included a range of position types, including a very small number of Special Government Employees (SGEs), a designation that technically permits some less restrictive treatment than the baseline standards for managing conflicts of interest. We made a deliberate choice to not take advantage of it — our General Counsel recognized early on that subjecting staff to different rules would have been both indefensible under scrutiny and wrong on the merits. Instead, all employees, regardless of position type, were held to the same standards.
We moved vetting upstream. Rather than waiting for someone to join to work through their disclosures, we built a pre-employment vetting process. Candidates had to submit their full investment portfolios to our ethics attorney and pass an additional interview that we introduced to our process. We identified potential conflicts before either side made any commitments. This upfront vetting process was modeled on the one used for Senate-confirmed appointees, which is considered the gold standard but requires significant resources from the General Counsel and HR teams to implement.
We took a comprehensive view of potential conflicts. Because CHIPS would have ripple effects beyond the semiconductor industry, we had to take a comprehensive look at potential conflicts and consider semiconductor customers and the broader ecosystem. We identified a range of technology company stocks beyond the applicants themselves that introduced risk. If job applicants held those positions, they had to divest before joining, or join and be recused from any matter that created a conflict until they could get a Certificate of Divestiture and divest the conflicting asset.
We might have been a little too cautious at first. In one case, a detailee’s husband had to sell a single share of Apple, which is a significant semiconductor customer and was therefore on our list. We later concluded that requiring divestiture of such a small amount of stock was overkill — holding one share of a diversified technology company was neither a legitimate legal nor optics risk. We ultimately recalibrated our requirements a few times as new issues arose.We established ethics compliance as a priority for all new hires. Day-one ethics training covered both the general framework most employees encounter in annual compliance cycles, and the practices we designed for CHIPS, including detailed guidance on the appropriate protocols for engaging with industry. For most federal employees, ethics training is just a task to be checked off in an employee’s first 90 days.
We adopted conflict of interest standards typically used in grantmaking processes. Though we were issuing Other Transactions and not grants, we adopted the NIST grants management practice of requiring Conflict of Interest forms. Everyone involved in reviewing applications or evaluating investments signed acknowledgment forms to affirm that they had no known conflicts and would disclose any newly identified conflicts as they arose.
While these measures were frustrating, time-consuming, and, in some cases, quite expensive to those who had to divest, they protected the program, and gave our team clarity on the rules of the road. That clarity also had an unexpected operational benefit: it eliminated daily guesswork. When someone didn’t have to manage complex recusals and check whether participation in a particular conversation or meeting was acceptable, they could focus on the core work.
Costs and benefits
CHIPS was not required to take these additional measures, but we understood that both actual and perceived conflicts of interest would get in the way of our work. Our choices mostly shielded us from that risk, but they came with costs.
Pre-employment vetting added friction when we were most desperate for talent. Candidates who had spent careers in industries where equity compensation was routine were surprised by the divestiture requirements. Some found the clearance process slow, invasive, or inflexible, and it was complicated and expensive to divest their holdings to comply with our standards. Several priority recruits decided it wasn’t worth the hassle and financial sacrifice. In one instance, we were recruiting a former CEO with deep industry ties to lead engagement with major chip customers, but the candidate backed out of the process because of challenges working through conflicts.
Ethics systems like ours can also have a subtle selection effect: stringent financial requirements can end up favoring candidates from professions with built-in conflict structures, such as banking and consulting, where compensation skews toward salary rather than equity. That has implications for the talent pool and may discourage applicants from the industries that government is seeking to support if typical compensation packages make divestment complicated or unattractive. We think this likely affected our candidate pool; future program builders should be aware of that as they build their requirements.
While it came with costs, baking ethics compliance into our operating system let us focus on what mattered. Frontloading vetting meant we were not constantly managing recusals and reassignments mid-stream, which streamlined operations. Having the assurance that we had meaningfully limited risk of conflict also gave the team the latitude to engage more fulsomely with industry in a way that was atypical for a government program.
Our approach was ultimately validated. In January 2024, Senator Elizabeth Warren and Representative Pramila Jayapal sent a letter to the Secretary of Commerce expressing concern about our investment team. They cited press coverage that said CHIPS was staffed by “a handful of bankers” and questioned whether the structure risked favoring our staff’s former colleagues and future employers. They assumed that we used the SGE loophole to get this talent in the door and allowed them to operate under looser ethics requirements.
We had done the opposite. When we scheduled a call with their staff to discuss our ethics system, it was short — there simply wasn’t a there there. We explained that we had few SGEs on staff and had applied consistent ethics standards across the team. We presented our pre-employment vetting, disclosure requirements, training, and conflict acknowledgment forms. When we sent a written follow-up, we never heard back.
That episode illustrated the value of what we had built — we had receipts and could respond factually and quickly to any perception of conflict.
Lessons for future programs
Industrial policy is becoming a standard feature of the government toolkit, and that intervention in industries often means hiring private sector talent. This invites more risk of conflict, and programs should invest in their ethics infrastructure upfront to allow themselves to focus on their core work.
Our implementation provides a template. Consider requiring portfolio disclosure before you make a final offer, whether to require divestiture of certain categories of stock, and make the rules explicit on day one. When relying on the SGEs or other alternative hiring pathways, apply the same ethics standards you would apply to anyone else. Where exactly to draw the line is not a precise science and will require iteration.
To be clear, I am not endorsing CHIPS’ approach as a universal standard or a change to statute. The details matter, and the scale of the federal enterprise too often means that a ruleset defaults to the lowest common denominator, which can do more harm than good. Agencies should retain the discretion to craft and calibrate ethics procedures to a program’s mission, and it’s worth treating that work as a priority.
Based on recent headlines, it may be tempting to conclude that we are in a post-ethics moment — that the current administration has shifted what is politically acceptable, and that programs can calibrate accordingly. I do not take that view. I have spent my career in public service, and the standard for how we conduct ourselves should not be based on what we can get away with — it should be set by what public trust requires, irrespective of who is in office. Regardless of what current headlines suggest, ethics is not something to shift the Overton window on. Abiding your principles and operating a program with a clean conscience frees you to focus on the task at hand. Doing the right thing pays off.