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353 S-63 BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM washington ADDRESS January OFFICIAL C O R R E S P O N D E N C E TO THE BOARD 1958, Dear Sir: There is attached a copy of a letter which the Securities and Exchange Commission recently referred to the Board from Mr. J. W. Brisiawn, Secretary of the Washington Bankers Association. It will be noted that this letter asked how nonmember banks are informed of rulings under Regulation U, and that the reply, of which a copy is also attached, indicated that arrangements were being considered for bringing such rulings specifically to the attention of nonmember banks. It seems preferable for such advice to come to a nonmember bank from the Federal Reserve bank of its district rather than from the Board of Governors in Washington. Accordingly, it will be appreciated if you will send to each nonmember bank in your district copies of all rulings regarding Regulation U that have been published in the Federal Reserve Bulletin, indicating those superseded by amendments, and arrange to send such banks copies of all such rulings that may be published in the future. For your convenience there is attached a list indicating such rulings that have been published, and also indicating those which have been superseded by amendments. , It is suggested that, in order to avoid any misunderstanding it be made clear to the nonmember banks that copies of the rulings are being sent to them merely in order to assist them in keeping currently informed regarding interpretations of the regulation, copies of the regulation having been forwarded to them when it was last reprinted. You also might take the opportunity to point out that inquiries regarding the regulation should bo submitted to your bank rather than to the Board, and that your bank will be glad to be of assistance in connection with such questions. The Board wishes to leave the procedure in this matter entirely to the discretion of each Federal Reserve bank. However, 354 -2- S-55 if ony Federal Reserve bank should desire, the Board would be glad to mimeograph copies of past or future published rulings regarding Regulation U and forward them to the Reserve bank to be distributed to the nonmember banks in its district. In the case of such rulings published in the future, the Board would be glad to have additional copies printed from the Bulletin type and forwarded to any Reserve bank that would like to use such copies. It will be appreciated if you will advise the Board as to the procedure which you adopt in this connection and as to whether you would like to have the Board supply your bank with any mimeographed or printed copies of rulings. Very truly yours, L. P. Bcthea, Assistant Secretary. Inclosures. TO PRESIDENTS OF ALL FEDERAL RESERVE BANKS C S--65-9. o P Seattle, Washington November 3, 1937 y Mr. Day Carr, Regional Administrator, Securities Exchange Commission, 140V Exchange Building, Seattle, Washington. Dear Mr. Carr: We have before us Regulation U and the Supplement thereto of the Board of Governors of the Federal Reserve System effective November 1, 1937. We are not so much concerned with the subject matter of the Regulation or the Supplement since we believe its terms are fairly understandable to those to whom it applies. The question that is raised and to which we have not thus far found a satisfactory answer is, "Does this Regulation and the Supplement thereto apply to all banks regardless of their not being members of the Federal Reserve System but banks which are chartered by the states?" In the Regulation, as amended to September 1, 1937, page four, there are set forth definitions of certain terms as used in the Securities Exchange Act of 1934. "(6) The term "bank" means (A) a banking institution organized under the laws of the United States, (B) a member bank of the Federal Reserve System, (C) any other banking institution, whether incorporated or not, doing business under the laws of any State or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to national banks under Section 11(k) of the Federal Reserve Act, as amended, and which is supervised and examined by State or Federal authority having supervision over banks, and which is not operated for the purpose of evading the provisions of this title, and (D) a receiver, conservator, or other liquidating agent of any institution or firm included in clauses (A), (B), or (C) of this paragraph." If Regulation U applies to banks that are not members of the Federal Reserve System, from what source shall they receive notice of the rulings applicable to them since ordinarily they would not receive the rulings of the Board of Governors of the Federal Reserve System? 355 S-63-a y -2- * Is it possible that the Securities Exchange Commission maytake upon itself the duty of notifying the non-member banks of the application of the Security Exchange Act and rulings prepared under it to such banks? Respectfully submitted, (Signed) J. W. Brislawn J. W. Brislawn, Secretary. 4 356 357 S-65-b November 30, 1937. Mr. J. W. Brislavm, Secretary, Washington Bankers Association, Seattle, Washington. Dear Mr. Brislavm: Reference is made to your letter of November 3, 1937, which the Securities and Exchange Commission has referred to the Board, with respect to the application of Regulation U to nonmember banks and the distribution to such nonmember banks of rulings regarding this regulation. Regulation U applies to all banks, including State banks as well as national banks and nonmember banks as well as member banks. Each of the twelve Federal Reserve banks is glad to consider any questions regarding the regulation which may be presented by any bank in its district, and is glad to offer all possible assistance in this connection to banks which are not members of the Federal Reserve System as well as to banks which are members. Rulings regarding the various regulations of the Board, including Regulation U, are published from time to time in the Federal Reserve Bulletin. While there has been no arrangement, other than the general facilities offered by the Federal Reserve banks, by which these rulings are brought specifically to the attention of nonmember banks, there have not been a great many such rulings in the past, and arrangements are being considered for directly advising nonmember banks of all such rulings. It is believed that such an arrangement, together with the facilities of the Reserve banks as mentioned above, will enable all banks to keep currently informed regarding the application of Regulation U and any rulings under the regulation. Very truly yours, (Signed) L. P. Bethea L. P. Bethea, Assistant Secretary. 358 S-63-c RULINGS PUBLISHED TO JANIJAEY 1, 1938 REGARDING REGULATION U May 1956 Bulletin, p. 325 - Transfers of loans....In so far as ruling relates to transfers of loans from lenders other than banks, it was superseded by amendment No. 2 of Regulation U, as published at page 550 of the July 1936 Bulletin and included in current reprint of regulation. June 1936 Bulletin, p. 420 - Interpretations of Regulation U.... Part 3 of ruling superseded by amendment No. 2 referred to above. July 1936 Bulletin, p. 549 - Applicability of section 2(c) of Regulation U to security dealers "making a market" in registered stocks or purchasing an inventory of such stocks for resale. July 1936 Bulletin, p. 549 - Applicability to collateral for loans made prior to May 1, 1936, of provisions in Regulation U governing withdrawal or substitution of collateral...Ruling superseded by amendment No. 3 of Regulation U, as published at page 718 of the August 1937 Bulletin and incorporated in current reprint of regulation. July 1936 Bulletin, p. 549 - Applicability of section 2(f) of Regulation U to a loan to a dealer to purchase securities to comply with orders from customers. April 1937 Bulletin, p. 294 - Determination of market value of stock for loan under Regulation U. May 1937 Bulletin, p. 392 - Application of Regulation U to a loan to a securities dealer for the purpose of purchasing both registered and unregistered stocks. August 1937 Bulletin, p. 715 - Transfers of loans under Regulation U....As indicated in footnote to ruling, a portion of ruling was superseded by amendment No. 3 referred to above. August 1937 Bulletin, p. 716 ~ Application of Regulation U to the purchase of debentures. August 1937 Bulletin, p. 717 - Application of Regulation U to a loan to an investment trust to retire debentures. October 1937 Bulletin, p. 995 - Applicability of Regulation U to stock registered after loan is made.
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