explaining the bank broker rules

evince

evince

Truthmatters
http://www.lexology.com/library/detail.aspx?g=4ef49633-131c-4458-a294-dffa4d11ccb7


Regulation R: implementing the bank brokerage “push-out” provisions of the Gramm-Leach-Bliley Act
Cadwalader Wickersham & Taft LLP
Steven Lofchie,Douglas Landy, Maurine Bartlett, Rosalie Yee, Jeffrey Robins
USA

October 2 2007
Cadwalader Wickersham & Taft LLP logo
.

On September 19 and 24, 2007, respectively, the Securities and Exchange Commission (the “SEC”) and the Board of Governors of the Federal Reserve System (the “Board”) voted to adopt new “Regulation R” to implement the “broker” exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934 (the “Exchange Act”).1 The SEC separately issued an accompanying proposal conforming certain other SEC rules to Regulation R.2

Regulation R is intended to define the scope of securities agency activities that banks may conduct without registering with the SEC as a “broker.” The press release issued by the SEC states that Regulation R is intended to give effect to the bank broker exceptions “in a way that accommodates the traditional business practices of banks, ... stimulate greater competition in the financial services industry, and give investors a wider array of services at lower prices.”3 The Board issued a statement by Board Governor Randall S. Kroszner in which he stated that “Congress recognized that banks had been providing securities services to their customers for decades without significant securities-related concerns ... [and] the Board and the other federal banking agencies have a long history of effectively supervising the securities functions of banks through regular on-site examinations, regulations and supervisory guidance.”4
 
Background

Prior to adoption of the Gramm-Leach-Bliley Act of 1999 (the “GLBA”), a “bank” (as defined in Section 3(a)(6) of the Exchange Act) was exempt from registering with the SEC as a “broker.” Accordingly, banks were free to engage in securities brokerage activities to the extent permitted by U.S. banking law and their activities in this regard were solely subject to the regulatory authority of the Federal Banking Agencies.

Section 201 of GLBA eliminated banks’ complete exemption from SEC registration by establishing functional regulation, the theory of which is that securities activities should be supervised and regulated by the SEC, while banking activities should be supervised and regulated by the bank regulators. Nonetheless, banks had long performed many securities agency activities and such activities had become an integral part of their banking services. For example, banks traditionally had acted as a securities broker when serving as custodian or trustee of a client’s assets. Banks wished to continue to offer this mix of banking and securities services. Congress permitted the continuance of this mix of activities by granting banks a continued, albeit only partial, exemption from registration as securities brokers for those securities agency activities in which they had traditionally engaged.

Nonetheless, interpretative disagreement over the scope of Section 201 of GLBA arose immediately over the question of whether the GLBA exemptions should be (i) narrowly drawn, to push bank securities agency activities into SEC-regulated broker-dealers or (ii) broadly understood to allow the continuation of the banks’ traditional activities and ongoing customer relationships. Previous SEC proposals to adopt “Regulation B” narrowly interpreted these exceptions. These narrow interpretations met strong opposition from the banks and Federal Banking Agencies.6 Regulation R takes the broader approach.7

Now that Regulation R has been adopted, securities agency activities performed by banks within the exemptions will be considered “banking” activities, in that they will be performed by banks outside the scope of the securities laws and will be functionally regulated by bank regulators.8 Any discussion of Regulation R must then focus not just on the specifics of what activities can be done in which entity, but also on the future of the supervision and enforcement of the Regulation, including the following questions, among others: How will compliance with the exemptions be enforced? How will future interpretation of Section 3(a)(4)(B) of the Exchange Act be handled among the SEC and the Board and the other Federal Banking Agencies?9 Will the SEC aggressively seek to enforce compliance by banks with the specifics of the exemptions? Will the bank regulators actively share with the SEC the information gathered from their examinations of the banks?10

As well, those securities firms that are affiliated with banks or thrifts should now consider the proper placement among their regulated entities of those securities activities that may be performed either in a registered broker-dealer or a bank/thrift.



http://www.lexology.com/library/detail.aspx?g=4ef49633-131c-4458-a294-dffa4d11ccb7
 
evince said:
http://www.lexology.com/library/detail.aspx?g=4ef49633-131c-4458-a294-dffa4d11ccb7


Regulation R: implementing the bank brokerage “push-out” provisions of the Gramm-Leach-Bliley Act
Cadwalader Wickersham & Taft LLP
Steven Lofchie,Douglas Landy, Maurine Bartlett, Rosalie Yee, Jeffrey Robins
USA

October 2 2007
Cadwalader Wickersham & Taft LLP logo
.

On September 19 and 24, 2007, respectively, the Securities and Exchange Commission (the “SEC”) and the Board of Governors of the Federal Reserve System (the “Board”) voted to adopt new “Regulation R” to implement the “broker” exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934 (the “Exchange Act”).1 The SEC separately issued an accompanying proposal conforming certain other SEC rules to Regulation R.2

Regulation R is intended to define the scope of securities agency activities that banks may conduct without registering with the SEC as a “broker.” The press release issued by the SEC states that Regulation R is intended to give effect to the bank broker exceptions “in a way that accommodates the traditional business practices of banks, ... stimulate greater competition in the financial services industry, and give investors a wider array of services at lower prices.”3 The Board issued a statement by Board Governor Randall S. Kroszner in which he stated that “Congress recognized that banks had been providing securities services to their customers for decades without significant securities-related concerns ... [and] the Board and the other federal banking agencies have a long history of effectively supervising the securities functions of banks through regular on-site examinations, regulations and supervisory guidance.”4
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Wow... you posted links... imagine that.

Now, are you able to discuss them Desh? What do you think they mean? Use your own words. What portion of the rules would have stopped the economic collapse of 2008 had they been in place? Do you even know what they mean by the term 'broker' yet?
 
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