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Rating:SEC Proposes Bank Regulations Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, June 02, 2004

SEC Proposes Bank Regulations

Reported by Theresa Sim

The SEC just wants to help banks. In a Wednesday morning meeting, commissioners voted unanimously to publish for comment Regulation B, a proposal intended to clarify what banks that dabble in securities can and cannot do, as non-SEC registered entities.

Interested parties can comment on the proposal until August 1; the agency will then consider comments and issue a final ruling by the end of this year. Banks will likely have to comply by the end of 2005, said Catherine McGuire, chief counsel of the agency's Division of Market Regulation.

The proposal is a part of the SEC's continuing effort to implement the 1999 Gramm-Leach-Bliley Act, which let banks offer diversified financial services products.

The Gramm-Leach-Bliley (GLB) Act lists eleven exceptions to the Securities Act of 1934's definition of a broker that allow banks to provide securities-related services without registering with the SEC.

In pursuit of implementing the GLB Act, the SEC issued a set of interim rules in 2001, and the agency's Division of Market Regulation has been working with the banking industry, at some points meeting quarterly, to develop Regulation B.

At one point during the meeting, SEC chairman William Donaldson questioned "why have we taken so long [on the regulation]...I don't mean [the question] in a mean spirit."

The clarifications to the GLBA include clarifying bank partnerships with broker dealers, defining small banks (that fall under one of the Act's exemptions), and expanding the exemptions where a bank, acting as a trust or a fiduciary, can receive "sales compensation."

The SEC's proposal also includes a provision to extend the exemptions to thrifts and credit unions.

Donaldson said in a statement "I do not believe that our dialogue [with the banking industry] is over."

The agency's chairman also stressed that the staff needs feedback, in the form of "hard data" from banks, small ones in particular: "We need to know in practical, concrete, dollars-and-cents terms how these proposed rules would affect the banking business - money-center banks as well as local banks in small towns, thrifts and credit unions."

During the meeting, commissioners emphasized that their goal is to regulate similar products in a similar manner, even if they fall under different regulatory agencies. Banks are regulated by the Office of the Comptroller of the Currency. 

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