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federal reserve

B a n k o f D alla s

PALLAS. TEXAS

78222

Circular No. 82-134
O ctober 20, 1982

INFORMAL HEARING
SWEEP ACCOUNTS

TO ALL MEMBER BANKS AND OTHERS CONCERNED
IN THE ELEVENTH FEDERAL RESERVE DISTRICT:
The Board o f Governors o f the F ed eral R e se r v e S ystem has announced
that it is scheduling an inform al hearing in order to giv e in te r e ste d p arties an
opportunity to express their v iew s in con n ection with a p e titio n to the Board by
the S e c u r ities Industry A ssociation to prohibit the operation o f sw e e p a c cou n ts by
mem ber banks.
The inform al hearing is scheduled at the Federal R ese r v e Board,
Washington, D .C ., on N ovem ber 3 and 4, 1982, com m en cin g at 9:30 a.m , Interested
p arties may also submit w ritten c o m m e n ts to the Secretary, Board o f Governors
o f the Federal R ese r v e System , Washington, D .C .,
20551, not later than
N ovem ber 4, 1982, Written c o m m e n ts should re fe r to D o c k e t number R -0422.
A tta c h e d are c o p ies o f the press r e le a se and the m aterial as subm itted
for publication in the Federal R e ig s te r .
Q uestions regarding the m aterial
con tain ed in this circular should be d ir e c te d to this Bank's L egal D epartm ent,
E xtension 6171.
Additional c o p ies o f this circular will be furnished upon request to the
D ep artm en t o f Com m unications, Financial and Com m unity A ffairs, Extension 6289.
Sincerely yours,

William H. Wallace
First Vice P resident

Banks and others are encouraged to use the following incoming W ATS numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extension referred to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

FEDERAL RESERVE press release
RE^I

For immediate release

October 5, 1982

The Federal Reserve Board today announced that it is
scheduling an informal hearing before the Board's staff to gather
information and give interested parties an opportunity to express their
views in connection with a petition to the Board by the Securities
Industry Association to prohibit the operation of sweep accounts by
member banks.
Comment may also be submitted in writing.
The hearing is scheduled for November 3 and 4, 1982, at
the Board's offices in Washington, D.C.
The Board's announcement is attached.
-0 -

Attachment

FEDERAL RESERVE SYSTEM

Petition Regarding Sweep Arrangements
Notice of Informal Hearing

Docket No. R-0422
The Securities Industry Association has petitioned the Board
to prohibit the operation of sweep accounts by member banks.
Such sweep
accounts typically involve an agreement between a depository institution
and one or more investment companies registered with the Securities
and Exchange Commission under the Investment Company Act of 1940.
Generally under these arrangements, funds deposited with the depository
institution in a demand deposit or N OW account in excess of a pre-determined
balance would be swept into the investment company by the purchase of
shares or securities of the investment company.
The balances maintained
by the customer with the investment company may then be subject to an
agreement that provides for the automatic or preauthorized transfer
back to the customer's checking account of the depository institution
or to some other account of the depository institution.
The Securities Industry Association has asserted that such
sweep arrangements involve underwriting the public distribution of securities
by the participating depository institution in violation of the GlassSteagall Act.
A copy of the Securities Industry Association's petition
may be obtained from the Hoard's Freedom of Information Office (202/452­
3684) .
To solicit further factual information concerning the operation
o f sweep arrangements and to give interested parties an opportunity
to express their views, the B o a r d has scheduled an informal public
hearing before the Board's staff to be held at the Federal Reserve
Board, Washington, D.C., on November 3 and 4, 1982, commencing at 9:30
a.m.
In addressing this issue, interested parties may comment on sweep
arrangements in connection with the Glass-Steagall Act and the issues
raised by the Securities Industry Association in its petition.
The presiding officer at the hearing shall be authorized to
administer oaths and to establish time limits for persons wishing to
be heard.
A person wishing to present evidence at this informal hearing
should file with the Secretary of the Board a request to appear at the
hearing.
All requests should refer to Docket number R-0422.
The request
to present evidence should be received at the Secretary's office in
Washington, D.C., 20551, no later than October 25, 1982, and should
specify the names of the persons who desire to present evidence, the
interest of those persons in the proceeding, and the matters concerning
which those persons desire to present evidence.

Interested parties who do not wish to participate in tha informal
hearing may submit written comments to the Secretary, Board of Governors
of the Federal Reserve System, Washington, D.C., 20551, not later than
November 4, 1982. All such submissions should refer to Docket number
R-0422* For further information regarding this matter, oontact Robert G. fallen,
Attorney, Board of Governors of the Federal Reserve System, Washington,
D»C •, 20551 (202/452-3265).
Board of Governors of the Federal Reserve System, October 1,

1982.
(signed) William W, Wiles

william w. Wiles
Secretary of the Board
[SEAL]


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102