Full text of District Notices (Federal Reserve Bank of Dallas) : Possible Criminal Violations Resulting From Sale or Exchange of Securities

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

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)