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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)


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