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S-459
Reg. T-97
185
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
•
April 1, 1942
Mr.------
•
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~~------------'
Atlanta, Georgia.
Dear iV!r.
Reference is made to your letter of March 11, 1942 regarding th~ question whether a member firm of the New York Stock Exchange
may extend credit to a general partner of the firm for the purpose of
enabling the partner to make a contribution of capital to the firm,
and whether if such a loan is made it may be secured partly b,v securities that are not registered on any national securities exchange.
For your information there is enclosed a copy of Regulation
T which relates to this subject, and you will find that section 4(f)(2)
of the regulation on page 9 deals particularly with the point. It is
the view of the Board that a loan of the kind described is permitted
under section 4(f)(2){B) with the approval of an appropriate committee o.f a national securities exchange, or is permitted under section
4(f)(2)(A) without the necessity for such approval. If the loan is
made under either provision there is no requirement as to how the
loan must be secured, or whether it must be secured at all, except
that in the case of a loan under section 4(f)(2)(B) there must, of
course, be compliance with any requirements imposed b,y the committee
as a condition to its approval.
You will note from the inside cover page of the regulation
that it is suggested that any inquiry relating·to the regulation
should be addressed to a national securities exchange of which the
person making the inquiry is a member or, if this is not practicable,
that it should be addressed to the Federal Reserve Bank of the district in which the inquiry arises. Accordingly, if you should have
any further question with respect to the matter, it is suggested that
you communicate with either the New York Stock Exchange or the Federal Reserve Bank of Atlanta.
Very truly yours,
(Signed)
L. P. Bethea
L. P. Bethea,
Assistant Secretary.
@FedFRASER