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FEDERAL RESERVE BANK OF DALLAS M ay 16, 1934. POSSIBLE C R IM IN A L V IO LATIO N S RESU LTIN G FROM SA LE OR E X C H A N G E OF SECURITIES To the Member State Bank Addressed: The A ttorn ey General o f the United States has advised the office o f the Comp troller o f the Currency that, in the future, all transactions in which a national bank sells bonds at their m arket value, which is less than the figure at which they were carried on the books o f the bank, and purchases with the proceeds realized thereby other bonds which are set up on the books o f the bank at a figure in excess o f their m arket value should be reported to the Departm ent o f Justice fo r possible criminal prosecution, on the theory that the transactions m ay involve false entries made with the intent to deceive the bank examiners and the Comptroller and to defraud the public in general. The A ttorn ey General advised fu rth er that, even though the trans actions are regarded as an exchange, a report o f such m atters should be made to his Department, since the new bonds are entered on the books o f the bank at an amount in excess o f their known m arket value. The A ttorn ey General requested that the Com ptroller advise his exam iners and the officials o f the national banks generally o f the view s entertained by the Departm ent o f Justice with regard to transactions o f this kind. B y direction o f the Federal Reserve Board I am taking this means o f your attention to the position taken by the Attorney. General o f the United with regard to transactions o f the kind described above, inasmuch as State which are m em bers o f the Federal Reserve System are subject to the same sions o f Federal law relating to false entries as are national banks. calling States banks provi Y ours very truly, € --------------Federal Reserve Agent. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)