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F ederal Reserve Bank o f Dallas
D A L L A S, T E X A S
75222
Circular No. 68-34
February 16, 1968
REGULATION G
To Nonbank Lenders and Others Concerned,
in the Eleventh Federal Reserve District:
The Board of Governors of th e Federal Reserve System has issued, p u rsu a n t to th e Securities
Exchange A ct of 1934, a new Regulation G — C redit by Persons O ther th a n Banks, Brokers, or Dealers
for Purpose of P urchasing or C arrying R egistered E quity Securities. The regulation is effective M arch
11, 1968, b u t certain of its requirem ents apply to loans m ade on or a f t e r F e b ru ary 1, 1968. A copy
is enclosed.
The regulation applies to credit (loans) secured in any way by stocks registered on a national
securities exchange, or debt securities convertible into such stocks (“registered equity securities”, as
defined in th e reg u la tio n ). Persons who have extended or a rranged fo r credit so secured in a total am ount
of $50,000 or m ore d u ring the last calendar q u a rte r of 1967, o r had o u tstanding during such calendar
quarter a total of $100,000 or m ore of such credit, are required to reg iste r by completing and re tu rn in g
two copies of th e enclosed Federal Reserve F orm G -l to th is Bank before April 10, 1968, in th e enclosed
self-addressed prepaid envelope. Persons who m eet th e reg istra tio n requirem ents in any subsequent
calendar q u a rte r a re required to re g is te r w ithin 30 days a f te r th e end of such quarter.
The regulation also requires re g is tra n ts to file q u arterly rep o rts on a form (Federal Reserve Form
G-4) t h a t will be fu rn ish ed later.
No reg istratio n is required a t th is tim e of persons who, during th e last calendar q u a rte r of 1967,
extended, a rranged for, or m aintained credit a g a in st registered equity securities in less th a n the m inimum
amounts described above. In such case, please complete the enclosed sta te m e n t to this effect in place of
Federal Reserve F orm G -l, and re tu rn promptly.
If you r office is a branch of a larg e r organization, th is letter, w ith enclosures, should be forw arded
to th e individual w ithin your organization who would handle such m atters. However, each subsidiary
which is separately incorporated m u st register, if su bject to th e reg istra tio n requirem ents.
A ttention is called to some other provisions of the regulation, including (1) m argin requirem ents
on certain extensions of credit, (2) “rete n tio n ” requirem ents applying to w ithdraw al and substitution
of collateral in certain circumstances, (3) a requirem ent t h a t a sta te m e n t on Federal Reserve F o rm G-3
be obtained from borrow ers whose loan is secured by any registered equity securities, (4) a requirem ent
th at persons acting as ag en t in connection w ith credit t h a t is secured by such collateral obtain and
accept in good f a ith a sta te m e n t from th e principal t h a t he is n o t violating any of th e m argin regulations
of the Board of Governors which m ay apply to him, and (5) a prohibition a g a in st a rra n g in g fo r any
credit which th e a rra n g e r could not extend (with th e exception of arra n g in g fo r credit to be extended
by banks t h a t a re subject to m argin regulations).
A specimen F orm G-3 — purpose s ta te m e n t — reduced in size is bound w ith th e regulation f o r your
information. Full size specimen copies of th is form suitable fo r reproduction a re available upon request
from th is Bank.
I t is im portant t h a t persons subject to th is regulation re g iste r and comply w ith its provisions, since
failure to do so m ay resu lt in criminal penalties.
W e shall be pleased to answ er any question you m ay have regarding Regulation G or th e form s
described above. Please direct your calls to J . O. Russell, Chief E xam iner of th is Bank.
Yours very truly,
P. E. Coldwell
P resident
Enclosures (8)
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
SUPPLEMENT TO REGULATION G
S E C T IO N 207.5— S U P P L E M E N T
I s s u e d b y t h e B oard o f Go v er n o r s o f t h e F ede r a l R ese r v e S y s t e m
Effective M arch 11, 1968
(a) Maximum loan value of registered equity securities.— For
the purpose of section 207.1, the m axim um loan value of any
registered equity security, except convertible securities subject
to section 207.1(d), shall be 30 per cent of its c u rre n t m arket
value, as determ ined by any reasonable method.
{b) Maximum loan value of convertible securities subject to
section 207.1 (rf).— F or the purpose of section 207.1, the m axi
mum loan value of any security a gainst which credit is extended
p u rsu a n t to section 207.1 ( d ) shall be 50 per cent of its current
m arket value, as determ ined by any reasonable method.
(c)
Retention requirement.— For th e purpose of section 207.1,
in th e case of a loan which would exceed th e m axim um loan value
of th e collateral following a w ithdraw al of collateral, the “rete n
tion requirem ent” of a registered equity security and of a
security against which credit is extended pursuant to section
207.1(d) shall be 70 per cent of its current m arket value, as
determined by any reasonable method.
BOARD OF GOVERNORS
of the
FEDERAL RESERVE SYSTEM
CREDIT BY PERSONS OTHER THAN BANKS,
BROKERS, OR DEALERS FOR PURPOSE Ol
PURCHASING OR CARRYING REGISTERED
EQUITY SECURITIES
T
REGULATION G
(1 2 CFR 2 0 7 )
Effective M arch 11, 1968
INQUIRIES REGARDING THIS REGULATION
A n y inquiry relating to this regulation should lie addressed to the
Federal Reserve B a n k of the district in which the inquiry arises.
FORMS
T h e fo rms furnished with this copy of the Regulation have been
reduced in size a n d are for information only. Copies of the forms
for actual use can be obtained f r o m any Federal Reserve Bank.
CONTENTS
Page
S ec.
S ec.
207.1. General R ule ...........................................................................
(a) Registration ..................................................................
(b) Termination of registration .......................................
(c) Definition of lender and applicability of m argin
requirem ents ..............................................................
(d) Credit on convertible securities ..............................
(e) Statem ents as to purpose of c r e d i t ........................
(/) Credit extended to person subject to Regulation T
(g) Combining purpose credit extended to the same
customer ......................................................................
(h) Purpose and nonpurpose credit extended to the
same person ................................................................
(i ) Purpose credit secured both by registered equity
securities and by other collateral ...................
(j) W ithdraw als and substitutions of collateral . .
1
1
1
1
2
3
3
4
4
4
5
207.2. D efin it io n s .................................................................................
(a) person ...............................................................................
(b) in the ordinary course of his business ...............
(c) purpose .............................................................................
(d) registered equity security .........................................
(e) (1) purchase ................................................................
(2) sale ...........................................................................
( /) customer .........................................................................
(g) indirectly secured ........................................................
5
5
6
6
6
6
7
7
7
S ec.
207.3. R eports
7
Sec.
207.4. M iscellaneous P rovisions ....................................................
( а ) Stock option and employee stock purchase plans
( б ) L ist of securities ..........................................................
(c) Extensions and renewals .........................................
(d) Reorganization or recapitalization .....................
(e) Mistakes in good fa ith .............................................
(/) Acting as agent ..........................................................
(g) A rran g in g for credit .................................................
and
R ecords
..........................................................
7
7
9
9
9
9
9
10
A ppendix ...............................................................................................................
11
F orms .....................................................................................................................
19
REGULATION G
(12 CFR 207)
Effective March 11, 1968
CREDIT BY PERSONS OTHER THAN BANKS,
BROKERS, OR DEALERS FOR PURPOSE OF
PURCHASING OR CARRYING REGISTERED
EQUITY SECURITIES
SECTION 207.1— GENERAL RULE
(a) Registration.— E very person who, in th e ordinary course
of his business, during any calendar q u a rte r ended a fte r October
20, 1967, extends or arran g es fo r th e extension of a total of
fifty thousand dollars ($50,000) or more, or has outstanding at
any tim e during the calendar quarter, a total of one hundred
thousand dollars ($100,000) or more, in credit, secured directly
or indirectly, in whole or in p art, by collateral th a t includes any
registered equity securities, unless such person is subject to P a r t
220 (Regulation T) or P a r t 221 (Regulation U) of th is Chapter,
is subject to the reg istratio n requirem ents of th is paragraph and
shall, w ithin 30 days following th e end of th e calendar q u a rte r
during which th e person becomes subject to such registration
requirem ents, reg iste r w ith the Board of Governors of the F ed
eral Reserve System by filing a statem ent in conform ity w ith the
requirem ents of Federal Reserve Form G-l w ith the Federal
Reserve Bank of th e district in which th e principal office of
the lender is located: Provided, T h a t no such statem ent need be
filed w ith respect to credit extended in the calendar q u a rte r th a t
ended December 31, 1967, until April 10, 1968.
( b ) Termination of registration.— Any person so registered
who has not, d u ring the preceding six calendar months, extended
or m aintained or a rra n g e d fo r the extension or m aintenance of
any credit secured directly or indirectly, in whole or in p a rt, by
collateral th a t includes any registered equity securities m ay apply
fo r term ination of such reg istratio n by filing Federal Reserve
F o rm G-2 w ith the Federal Reserve B ank of the district in
which the principal office of the lender is located.
(c) Definition of lender and applicability of margin require
ments.— Any person subject to th e reg istratio n requirem ents of
p a ra g ra p h (a) of this section who, in the ord in ary course of his
business, extends or m aintains or arranges fo r th e extension or
m aintenance of any credit fo r the purpose of purchasing or
1
2
REGULATION G
S e c . 2 0 7 .1
ca rry in g any registered equity s e c u r ity 1 (h ere in a fte r called
“purpose credit”), if such credit is secured directly or indirectly in whole or in p a r t by collateral th a t includes any such security,
is a “lender” subject to this P a r t and shall not a fte r F e b ru ary 1,
1968, except as provided in section 207.4 (« ), extend or a rra n g e
fo r the extension of any purpose credit in an am ount exceeding
th e m axim um loan value of the collateral, as prescribed from
tim e to tim e for registered equity securities in section 207.5 (the
Supplem ent to Regulation G ) , or as determ ined by the lender in
good f a ith fo r any collateral other than registered equity securi
ties: Provided, T h a t any collateral consisting of convertible
securities described in p a ra g ra p h (d) of this section shall have
loan value only as provided in t h a t p a ra g ra p h : A n d provided
fu rth e r, T h a t in respect to a credit extended a fte r F e b ru ary 1,
1968, and before M arch 11, 1968, any reduction in the credit or
deposit of collateral required to m eet this requirem ent shall be
accomplished by A pril 10,1968.
(d)
Credit on convertible securities.— (1) A lender m ay
extend credit for the purpose specified in p a ra g ra p h (c) of this
section on collateral consisting of any security convertible into
a registered equity security or any security c a rry in g a w a rra n t
or rig h t to subscribe to or purchase such a security (sometimes
herein refe rre d to as a “ convertible security” ).
(2) C redit extended under this p a ra g ra p h shall be subject to
the same conditions as any other credit subject to this section
except: (A) the entire am ount of such credit shall be considered
a single credit tre a te d separately from the single credit specified
in p a ra g ra p h (g) of this section and all the collateral securing
such credit shall be considered in determ ining w hether or not
the credit complies w ith th is P a rt, and (B) the m axim um loan
value of the collateral shall be as prescribed fro m tim e to tim e
in section 207.5(6) (the Supplement to Regulation G).
(3) A ny convertible security originally eligible as collateral
fo r a credit extended under this p a ra g ra p h shall be tre a te d as
such as long as continuously held as collateral fo r such credit
even though it ceases to be convertible or to c a rry w a rra n ts or
rights.
(4) In the event th a t any stock is substituted fo r a convertible
security held as collateral fo r a credit extended under this sec
tion the stock and any credit extended on it in compliance w ith
th is P a r t shall thereupon be tre a te d as subject to p a ra g ra p h (c)
1 See § 207.2(d).
2 See § 207.2 ( g ) .
S e c . 2 0 7 .1
REGULATION G
3
of this section and not to this p a ra g ra p h and the credit extended
under this p a ra g ra p h shall be reduced by an am ount equal to
the m axim um loan value of the convertible security w ith d raw n
less the m axim um loan value of any convertible security de
scribed'in su b p a ra g rap h (d ) (1) deposited as collateral.
(e )
Statements as to purpose of credit.— In connection w ith
any extension of credit secured directly or indirectly, in whole
or in p art, by collateral th a t includes any registered equity se
curity, the lender shall, prior to such extension, obtain a sta te
m ent in conform ity w ith the requirem ents of Federal Reserve
F orm G-3 executed by the custom er and executed and accepted
in good fa ith by the lender. The lender shall retain such sta te
m ent in his records fo r a t least six years a fte r such credit is
extinguished. In determ ining w hether credit is “ purpose c re d it”,
the lender m ay rely on the statem ent executed by the custom er
if accepted in good faith. To accept the custom er’s statem ent in
good faith, the lender m ust (1) be alert to the circum stances
surrounding the credit and (2) if he has any inform aiton which
would cause a pru d en t m an not to accept the statem ent w ithout
inquiry, have investigated and be satisfied th a t the custom er’s
statem ent is tru th fu l. Circum stances which could indicate th a t
the lender has not exercised reasonable diligence in so acquaint
ing himself and so investigating would include, but are not
limited to, facts such as th a t (1) the proceeds of the credit were
paid to a broker or to a bank in connection w ith contem porane
ous delivery of registered equity securities, w hether or not pay
m ent was m ade against delivery, (2) th ere were frequent substi
tutions of registered equity securities serving as collateral fo r the
credit, or (3) the am ount of the credit was disproportionate, or
the term s inappropriate, to the stated purpose.
(/) Credit extended to person subject to Regulation T.—
(1) No lender shall extend or m aintain any credit fo r the
purpose of purchasing or c a rry in g any registered equity security
to any person who is subject to P a r t 220 of this C hapter (Reg
ulation T) w ithout collateral or on collateral consisting of reg
istered securities (other th an exempted securities3). W here the
credit is to be used in the ordinary course of business of such
person, such credit is presumed to be fo r the purpose of p u r
chasing or c a rry in g registered equity securities unless the lender
has in his records statem ents obtained and executed in con
fo rm ity w ith the requirem ents of p a ra g ra p h (e ) of this section.
3 A s defined in 15 U.S.C. 78c (a) (12).
4
REGULATION G
S e c . 2 0 7 .1
(2)
The prohibition of this p a ra g ra p h ( /) shall not apply to
a credit which is unsecured or secured by collateral other than
registered equity securities, and which is (i) m ade to a dealer
(as defined in section 220.2 (a) of Regulation T) to aid in the
distribution of securities to custom ers not th ro u g h the medium
of a national securities exchange, or (ii) subordinated to the
claims of general creditors by a subordination agreem ent ap
proved by an a ppropriate committee of a national securities ex
change or by a “ satisfactory subordination agreem ent” as de
fined in p a ra g ra p h (e) (7) of Rule 240-15c3-l of the Securities
and Exchange Commission.
( g ) Combining purpose credit extended to the same customer.—
F o r the purpose of this P a rt, except fo r a credit subject to
p a ra g ra p h (d ) of this section, the aggregate of all outstanding
purpose credit extended to a person by a lender a fte r F eb ru ary
1, 1968, shall be considered a single credit and, except as pro
vided in p a ra g ra p h s (d) and (t) of this section, all the col
lateral securing such a credit, w hether directly or indirectly, in
whole or in p art, shall be considered in determ ining w hether the
credit complies w ith this P a rt.
( h ) Purpose and nonpurpose credit extended to the same
person.— No lender shall a fte r F e b ru ary 1, 1968, extend or
m aintain or arran g e for the extension of any purpose credit, or
shall a rra n g e for th e m aintenance of any purpose credit ex
tended a fte r F eb ru ary 1, 1968, if the credit is secured directly
or indirectly, in whole or in p art, by collateral t h a t includes
any registered equity security which also secures, directly or
indirectly, in whole or in p art, any other credit extended to the
same custom er; and no lender shall have outstanding a t the
same tim e to the same custom er both purpose credit extended
a fte r F eb ru ary 1, 1968, and any other credit extended a fte r
F e b ru ary 1, 1968.
(i) Purpose credit secured both by registered equity securi
ties and by other collateral.— No lender shall a fte r F eb ru ary 1,
1968, extend or m aintain or arran g e fo r the extension of any
purpose credit, or shall a rra n g e fo r the m aintenance of any
purpose credit extended a fte r F eb ru ary 1, 1968, which is secured
directly or indirectly, in whole or in p art, by collateral t h a t in
cludes any registered equity security, unless a t the tim e such
credit was extended, the lender thereof obtained collateral con
sisting of registered equity securities in an am ount sufficient to
m eet the requirem ents of p a ra g ra p h (c) of this section, and such
credit was th e re a fte r m aintained in accordance w ith the re
S e c s . 2 0 7 .1 — 2 0 7 .2
REGULATION G
5
quirem ents of th is P a rt, and where any such credit is so secured,
no o th er collateral shall have any loan value in respect to such
credit fo r th e purposes of th is P art.
(j) W ithdraw als and substitutions of collateral.— (1) General
rule. Except as perm itted by the next su b p arag rap h and by section
2 0 7 .4 (a), while a lender m aintains any purpose credit extended
a fte r F eb ru ary 1, 1968, the lender shall not a t any tim e perm it
any w ithdraw al or substitution of collateral unless either (i) the
credit would no t exceed th e m axim um loan value of the col
lateral a fte r such w ithdraw al or substitution, or (ii) the credit
is reduced by a t least th e am ount by which th e m axim um loan
value of any collateral deposited is less th a n th e “retention
requirem ent” of any collateral w ithdraw n. The retention re
quirem ent of collateral other th an registered equity securities is
the same as its m axim um loan value and the retention require
m ent of collateral consisting of registered equity securities or
securities convertible into registered equity securities is p re
scribed from tim e to time in section 207.5 (the Supplem ent to
Regulation G ) .
(2)
Same-dciy substitution of collateral. Except as pro
hibited by section 207.4(a) a lender m ay perm it a substitution of
registered equity securities effected by a purchase and sale on
orders executed w ithin the the same day: Provided, T h at (i) if
the proceeds of the sale exceed the total cost of the purchase, the
credit is reduced by a t least an am ount equal to the retention
requirem ent in respect to the sale less the retention requirem ent
in respect to th e purchase, or (ii) if the total cost of the p u r
chase exceeds the proceeds of the sale, the credit m ay be
increased by an am ount no g rea te r th an the m axim um loan value
of the securities purchased less the m axim um loan value of the
securities sold. If the m axim um loan value of th e collateral
securing the credit has become less th a n the am ount of the credit,
the am ount of the credit m ay nonetheless be increased if th ere is
provided additional collateral having m axim um loan value a t
least equal to the am ount of increase, or th e credit is extended
p u rsu a n t to section 207.4(a).
SECTION 207.2— DEFINITIONS
F o r the purpose of this P a rt, unless the context otherwise
requires:
(a)
The te rm “person” m eans an individual, a corporation, a
partn ersh ip , an association, a jo int stock company, a business
tr u s t, or an unincorporated organization.
6
REGULATION G
S e c . 2 0 7 .2
(b) The term “in th e ordinary course of his business” means
occurring or reasonably expected to occur from tim e to tim e in
the course of any activity of the lender for profit or th e m anage
m ent and preservation of property or in addition, in the case of
a lender o th er th a n an individual, carrying out or in furtherance
of any business purpose.
(c) The “purpose” of a credit is determ ined by substance
r a th e r th a n form.
(1) Credit which is fo r th e purpose, w h eth er immediate,
incidental, or ultim ate, of purchasing or c arrying a registered
equity security is “purpose credit” , despite any tem porary ap
plication of funds otherwise.
(2) C redit to enable the custom er to reduce or retire in
debtedness which was originally incurred to purchase a reg
istered equity security is for th e purpose of “c a rry in g ” such a
security.
(3) Credit fo r th e purpose of purchasing or carrying a
security issued by an investm ent company registered pu rsu an t
to section 8 of the Investm ent Company Act of 1940 (15 U.S.C.
80a-8), whose assets custom arily include registered equity secu
rities, is fo r the purpose of purchasing or c arrying such reg
istered equity securities.
(4) Credit fo r th e purpose of purchasing or carrying any
security convertible into a stock registered on a national securi
ties exchange or any security carrying a w a rra n t or rig h t to
subscribe to or purchase a stock registered on a national securi
ties exchange is fo r the purpose of purchasing or carrying such
registered equity securities.
(d ) The term “ registered equity security” m eans any equity
security4 which (1) is registered on a national securities ex
change; or (2) has unlisted tra d in g privileges on a national
securities exchange, or (3) is exempted by the Securities and
E xchange Commission from the operation of section 7 ( c ) ( 2 )
of the Securities Exchange Act of 1934 (15 U.S.C. 78g ( c )(2 ))
only to th e e xtent necessary to render lawful any direct or indi
rect extension or m aintenance of credit on such se curity; or (4)
any security convertible w ith or w ithout consideration into such
registered equity security or c a rry in g any w a r ra n t or rig h t to
subscribe to or purchase such registered equity security, or any
such w a r ra n t or right.
(e) (1) The te rm “purchase” includes any contract to buy,
purchase, or otherwise acquire.
4 A s defined in U .S.C. 78c (a ) 11.
S ecs . 207.2—207.3— 207.4
REGULATION G
7
(2)
The te rm “sale” includes any contract to sell or o th er
wise dispose of.
( /) The te rm “custom er” includes any recipient of the credit
to whom credit is extended directly or indirectly fo r the use of
the customer, and also includes any person engaged in a jo in t
venture, or as a m em ber of a syndicate or a group, w ith the
custom er w ith respect to a purpose loan.
(g ) The te rm “indirectly secured” includes, except as provided
in section 2 0 7 .4 ( a ) ( 3 ), any arran g em en t as to assets of the
custom er which (1) serves to protect the interests of the lender,
(2) serves to make assets of the borrow er more readily available
to th e lender th an to other creditors of the borrow er, or (3)
under which th e borrow er surrenders the rig h t to dispose of
assets so long as the credit rem ains outstanding.
S E C T IO N 207.3— R E P O R T S A N D R E C O R D S
(a) E very person who is registered p u rsu a n t to section
207.1(a) of th is P a r t shall w ithin th ir ty (30) days following
the end of each succeeding calendar q u a rte r file a rep o rt on
Federal Reserve F orm G-4 w ith the Federal Reserve B ank of the
district in which the principal office of the lender is located.
( b ) E very person who has registered p u rsu a n t to section
207.1(a) of this P a r t shall m aintain such records as shall be
prescribed by the Board of Governors of the Federal Reserve
System to enable it to perform the functions conferred upon it
by the Securities Exchange Act of 1934. (15 U.S.C. 78).
S E C T IO N 207.4— M IS C E L L A N E O U S P R O V IS IO N S
(a)
Stock option and employee stock purchase plans.— In re
spect to any credit extended and m aintained by a corporation or
by a lender wholly controlled by such corporation (such cor
porations and such lenders are both sometimes referred to as
“ plan-lenders” ), to an officer or employee of the corporation or
subsidiary thereof to finance the exercise of rig h ts g ranted such
officer or employee under a stock option plan or employee stock
purchase plan adopted by the corporation and approved by a
m ajo rity of its stockholders to purchase registered equity securi
ties of such corporation or subsidiary,
(1)
Sections 207.1(c), ( d ) , ( / ) , ( g ) , ( h ) , and (i ) of this
P a r t shall not apply to any such credit extended to finance the
exercise of such rig h ts g ran te d to any nam ed officer or employee
p rio r to F e b ru a ry 1, 1968, and effectively exercised by such
8
REGULATION G
S ec . 207.4
officer or employee prior to F e b ru a ry 1, 1969, n o r to any credit
extended, p rio r to F e b ru a ry 1, 1969, to a plan-lender p u rsu a n t
to a bona fide w ritte n com m itm ent in existence on F e b ru a ry
1,1968, to finance the exercise of such rights;
(2)
The restrictions imposed by section 207.1(c) and (d )
and section 207.5 (the Supplement to this P a r t) on the m axim um
loan value of registered equity securities serving as collateral fo r
purpose credit shall not apply to securities purchased, and serv
ing as direct or indirect collateral fo r credit extended, p u rsu a n t
to such a plan, Provided, T h a t :
(i) The entire am ount of credit extended to any officer
or employee p u rsu a n t to this p a ra g ra p h in connection w ith the
exercise of rights under such plan or plans shall be considered
a single credit;
(ii) A t the tim e when credit is extended under a plan sub
jec t to this p a ra g ra p h , (A) the plan-lender computes the
am ount by which the credit exceeds the m axim um loan value
of the collateral as prescribed by section 207.5 (the Supple
m ent to Regulation G ), (the “ deficiency” ), and (B) the agree
m ent under which the credit is extended provides th a t except
as perm itted by the proviso in su b p a ra g rap h (iii) the officer
or employee shall, in respect to such deficiency, make equal
repaym ents to the plan-lender a t least quarterly and equivalent
to a t least 20 per cent of such deficiency per annum, or such
lesser am ount as the Board of Governors, upon application,
m ay perm it, fo r a t least th ree years from the extension of the
credit;
(iii) The officer or employee is not perm itted under such
plan or agreem ent to sell, w ithdraw , pledge, or otherwise dis
pose of all or any p a rt of such collateral until (A) all rep a y
m ents have been m ade fo r a t least the three-year period p ro
vided in su b p a ra g rap h (ii) and the deficiency has been repaid,
or (B) the m axim um loan value of the collateral, as prescribed
by section 207.5 (the Supplem ent to Regulation G ), is a t least
equal to the credit which rem ains owing from the officer or
employee to the plan-lender, whichever shall occur first:
Provided, T h at this restriction need not apply where such
collateral is required to be sold to m eet emergency expenses
arisin g from circumstances not reasonably foreseeable a t th e
tim e of the extension of the credit (fo r th is purpose such
em ergency expenses shall include the death, disability, o r
involuntary term ination of employment of the officer or
employee or some other change in his circumstances, involving
S e c . 2 0 7 .4
REGULATION G
9
extrem e hardship, not reasonably foreseeable at the tim e the
credit is extended. The opportunity to realize m onetary gain
is not a “change in his circum stances” fo r this p u rp o s e ); and
(iv)
At such tim e as either of the conditions w ith respect
to sale, w ithdraw al, pledge, or other disposition of collateral
specified in su b p arag rap h (iii) are satisfied, the credit is
th e re a fte r treated as a credit subject to all the requirem ents
of this P a rt.
(3)
No extension of credit to a plan-lender to finance such
a plan shall be deemed to be indirectly secured by a registered
equity security purchased p u rsu a n t to the plan provided such
security is not repledged by the plan-lender to secure such ex
tension of credit to the plan-lender and the am ount of the credit
does not exceed the total am ount of credit currently extended
by such plan-lender p u rsu a n t to such plan.
(b ) List of securities.— In determ ining w hether a security is a
registered equity security or a security convertible into
such security, or a security of the kind described in section
2 0 7 .2 (c )(3 ), a lender may rely upon the latest list of equity
securities registered on a national securities exchange and securi
ties of the kind described in section 207.2(c) (3) issued by the
Board of Governors of the Federal Reserve System.
(c) Extensions and renewals.— The renewal or extension of
m a tu rity of a credit need not be treated as the extension of a
credit if the am ount of the credit is not increased except by the
addition of in terest or service charges on the credit or of taxes
on transactions in connection w ith the credit.
(d ) Reorganization or recapitalization.— Nothing in this P a r t
shall be construed to prohibit w ithdraw al or substitution of se
curities to enable a custom er to participate in a reorganization
or recapitalization.
(e) Mistakes in good faith.— Failure to comply w ith this P a r t
due to a mechanical m istake made in good fa ith in determ ining,
recording, or calculating any credit, balance, m arket price or
loan value, or other sim ilar mechanical m istake, shall not con
stitu te a violation of this P a r t if prom ptly a fte r discovery of the
m istake the lender takes w hatever action is practicable to remedy
the noncompliance.
( /) Acting as agent.— No person shall act as agent fo r any
lender, bank, or creditor subject to P a r ts 207, 220, or 221 of this
C hapter (Regulation G, T, or U) extending, m aintaining, or a r
ra n g in g for any credit which the agent knows, or should know,
10
REGULATION G
S e c . 2 0 7 .4
is secured directly or indirectly by any registered security unless
the agent obtains and accepts in good fa ith a statem ent signed by
such lender, bank, or creditor t h a t he does not extend or m ain
tain credit to or for custom ers in violation of such P a rt.
F o r this purpose such activities of an “ ag en t” include, but are
not lim ited to receiving securities to be used as collateral fo r
such credit, determ ining w hether the m ark e t value of the col
lateral fo r such credit is adequate, and requiring the deposit
of additional collateral or the reduction of such credit. In
determ ining w hether there has been an extension of credit
subject to th e provisions of P a rts 207,220, or 221 of th is Chapter,
and w hether he can rely in good fa ith on the statem ent de
scribed herein, the person shall (1) be ale rt to th e circumstances
surrounding the credit and (2) if he has any inform ation which
would cause a prudent m an not to accept the statem ent w ithout
inquiry, m ust have investigated and be satisfied th a t the credit
either is not subject to such P a rt, or is extended and m aintained
in conform ity w ith such P a rt.
(g) Arranging for credit.— A lender m ay a rra n g e for the ex
tension or m aintenance of credit by any person upon th e sam e
term s and conditions as those upon which the lender, under the
provisions of this P a rt, m ay him self extend or m aintain such
credit, b u t only upon such term s and conditions, except th a t this
lim itation shall not apply w ith respect to the a rra n g in g by a
lender fo r a bank subject to P a r t 221 of this C hapter (Regula
tion U) to extend or m aintain credit on registered securities or
exempted securities.
APPENDIX
There a re p rin te d below certain provisions of the Securities
Exchange Act of 1934: (15 U.S.C., 78) :
D E F IN IT IO N S
Sec. 3. (a)
*
*
*
(3) The term “ m em ber” w hen used w ith respect to an
exchange m eans any person who is perm itted either to effect
transactions on the exchange w ithout the services of another
person acting as broker, or to make use of the facilities of
an exchange fo r transactions thereon w ithout paym ent of
a commission or fee or w ith the paym ent of a commission
or fee which is less th a n th a t charged the general public,
and includes any firm tra n sa c tin g a business as broker or
dealer of which a m em ber is a p a rtn e r, and any p a rtn e r of
any such firm.
(4) The te rm “ b roker” means any person engaged in the
business of effecting transactions in securities fo r the ac
count of others, b u t does not include a bank.
(5) The te rm “ dealer” means any person engaged in the
business of buying and selling securities fo r his own account,
through a broker or otherwise, bu t does not include a bank,
or any person insofar as he buys or sells securities fo r his
own account, either individually or in some fiduciary ca
pacity, b u t not as a p a rt of a reg u la r business.
(6) The te rm “ban k ” means (A) a banking institution
organized under the laws of the U nited States, (B) a m em
ber bank of the Federal Reserve System, (C) any other
banking institution, w hether incorporated or not, doing
business u nder the laws of any State or of the U nited States,
a substantial portion of the business of which consists of
receiving deposits or exercising fiduciary powers sim ilar
to those perm itted to national banks under section 11 (k) of
the Federal Reserve Act, as amended, and which is super
vised and examined by S tate or Federal au th o rity having
supervision over banks, and which is not operated f o r the
purpose of evading the provisions of th is title, and (D) a
receiver, conservator, or other liquidating agent of any in11
REGULATION G APPENDIX
stitution or firm included in clauses (A ), (B ), or (C) of
this paragraph.
* * *
(9) The te rm “person” m eans an individual, a corpora
tion, a partn ersh ip , an association, a joint-stock company, a
business tru st, or an unincorporated organization.
(10) The te rm “security” means any note, stock, tre a su ry
stock, bond, debenture, certificate of in te rest o r participa
tion in any profit-sharing agreem ent or in any oil, gas, or
other m ineral royalty or lease, any c ollateral-trust certificate,
preorganization certificate or subscription, tra n sfe ra b le
share, investm ent contract, voting-trust certificate, certifi
cate of deposit, fo r a security, or in general, any instru m en t
commonly known as a “ security” ; or any certificate of in
te re s t or participation in, tem porary or interim certificate
for, receipt for, or w a r r a n t or rig h t to subscribe to or p u r
chase, any of the foregoing; but shall not include currency
or any note, draft, bill of exchange, or b a n k e r’s acceptance
which has a m a tu rity a t the tim e of issuance of not exceed
ing nine months, exclusive of days of grace, or any renew al
thereof the m atu rity of which is likewise limited.
(11) The term “ equity security” m eans any stock or
sim ilar security; or any security convertible, w ith or w ith
out consideration, into such a security; or c a rry in g any w a r
r a n t or rig h t to subscribe to or purchase such a security; or
any such w a rra n t or right; or any other security which th e
Commission shall deem to be of sim ilar n a tu re and consider
necessary or appropriate, by such rules and regulations as
it m ay prescribe in the public in te rest or fo r the protection
of investors, to tre a t as an equity security.
* * *
(13) The term s “ buy” and “ purchase” each include any
contract to buy, purchase, or otherwise acquire.
(14) The term s “ sale” and “sell” each include any con
tr a c t to sell or otherwise dispose of.
* * *
M A R G IN R E Q U IR E M E N T S
Sec. 7. (a) F o r the purpose of preventing the excessive
use of credit fo r the purchase or carry in g of securities, the
B oard of Governors of the Federal Reserve System shall,
REGULATION G APPENDIX
13
p rio r to the effective date of th is section and fro m tim e to
tim e th ere a fte r, prescribe rules and regulations w ith respect
to the am ount of credit th a t m ay be initially extended and
subsequently m aintained on any security (other th a n an
exempted security) registered on a national securities ex
change. F o r th e initial extension of credit, such rules and
regulations shall be based upon the following standard: An
am ount not g re a te r th a n whichever is the higher of—
(1) 55 per centum of the c u rre n t m ark e t price of the
security, or
(2) 100 p er centum of the lowest m ark e t price of the
security d u ring the preceding thirty-six calendar m onths,
b u t not m ore th a n 75 per centum of th e c u rre n t m ark e t
price.
Such rules and regulations m ay m ake a ppropriate provision
w ith respect to the c a rry in g of underm argined accounts for
limited periods and under specified conditions; th e w ith
draw al of funds or securities; the substitution or additional
purchases of securities; the tra n s fe r of accounts fro m one
lender to another; special or different m arg in requirem ents
fo r delayed deliveries, sh o rt sales, a rb itra g e transactions,
and securities to which p a ra g ra p h (2) of th is subsection
does not apply; the bases and th e methods to be used in cal
culating loans, and m argins and m ark e t prices; and sim ilar
adm inistrative adjustm ents and details. F o r the purposes
of p a ra g ra p h (2) of this subsection, until July 1, 1936, the
lowest price a t which a security has sold on or a fte r July 1,
1933, shall be considered as the lowest price a t which such
security has sold d u rin g th e preceding thirty-six calendar
m onths.
(b)
N otw ithstanding the provisions of subsection (a) of
this section, the Board of Governors of the Federal Reserve
System, may, fro m tim e to time, w ith respect to all or
specified securities or transactions, or classes of securities,
or classes of transactions, by such rules and regulations (1)
prescribe such lower m argin requirem ents fo r the initial
extension or m aintenance of credit as it deems necessary or
a p p ro p riate fo r the accommodation of commerce and in
dustry, having due reg ard to the general credit situation of
th e country, and (2) prescribe such higher m argin require
m ents fo r the initial extension or m aintenance of credit as
it m ay deem necessary or ap p ro p riate to prevent the ex
cessive use of credit to finance transactions in securities.
REGULATION G APPENDIX
(c) It shall be unlawful fo r any m em ber of a national
securities exchange or any broker or dealer who tran sacts
a business in securities th rough the medium of any such
member, directly or indirectly to extend or m aintain credit
or a rra n g e fo r the extension or m aintenance of credit to or
fo r any custom er—
(1) On any security (other than an exempted security)
registered on a national securities exchange, in contra
vention of the rules and regulations w hich the Board of
Governors of the Federal Reserve System shall prescribe
under subsections (a) and (b) of this section.
(2) W ithout collateral or on any collateral other th an
exempted securities a n d /o r securities registered upon a
national securities exchange, except in accordance w ith
such rules and regulations as the Board of Governors of
the Federal Reserve System m ay prescribe (A) to perm it
under specified conditions and for a limited period any
such member, broker, or dealer to m aintain a credit
initially extended in conform ity with the rules and regu
lations of the Board of Governors of the Federal Reserve
System, and (B) to p erm it the extension or m aintenance
of credit in cases where the extension or m aintenance of
credit is not fo r the purpose of purchasing or carry in g
securities or of evading or circum venting the provisions
of p a ra g ra p h (1) of this subsection.
(d) It shall be unlawful fo r any person not subject to
subsection (c) to extend or m aintain credit or to a rra n g e
fo r the extension or m aintenance of credit fo r the purpose
of purchasing or c arrying any security registered on a
national securities exchange, in contravention of such rules
and regulations as the Board of Governors of the Federal
Reserve System shall prescribe to prevent the excessive use
of credit for the purchasing or c arrying of or tra d in g in
securities in circumvention of the other provisions of this
section. Such rules and regulations m ay impose upon all
loans made fo r the purpose of purchasing or carry in g secu
rities registered on national securities exchanges lim itations
sim ilar to those imposed upon members, brokers, or dealers
by subsection (c) of this section and th e rules and reg u
lations thereunder. This subsection and the rules and re g
ulations thereunder shall not apply (A) to a loan made by a
person not in the ordinary course of his business, (B) to a
loan on an exempted security, (C) to a loan to a dealer to
REGULATION G APPENDIX
15
aid in the financing of the distribution of securities to cus
tom ers not th ro u g h th e medium of a national securities
exchange, (D) to a loan by a bank on a security other than
an equity security, or (E) to such o th er loans as the Board
of Governors of the Federal Reserve System shall, by such
rules and regulations as it m ay deem necessary or appro
pria te in th e public in te rest or fo r the protection of in
vestors, exempt, eith er unconditionally or upon specified
term s and conditions o r for stated periods, fro m the opera
tion of this subsection and th e rules and regulations th e re
under.
R E S T R IC T IO N S O N B O R R O W IN G BY M E M B E R S ,
BROKERS, AND D EA LER S
Sec. 8. I t shall be unlawful for any m em ber of a n a
tional securities exchange, or any broker or dealer who
tra n sa cts a business in securities th rough the medium of
any such member, directly or indirectly—
(a)
To borrow in the ordinary course of business as a
broker or dealer on any security (other th an an exempted
security) registered on a national securities exchange except
(1) fro m or th rough a m em ber bank of the Federal Reserve
System, (2) from any nonmember bank which shall have
filed w ith the Board of Governors of the Federal Reserve
System an agreem ent, which is still in force and which is
in the form prescribed by the Board, und ertak in g to comply
w ith all provisions of this Act, the Federal Reserve Act,
as amended, and the Banking Act of 1933, which are
applicable to m em ber banks and which relate to the use of
credit to finance transactions in securities, and w ith such
rules and regulations as m ay be prescribed p u rsu a n t to such
provisions of law or fo r the purpose of preventing evasions
thereof, or (3) in accordance w ith such rules and regula
tions as the Board of Governors of the Federal Reserve
System m ay prescribe to p erm it loans between such m em
bers a n d /o r brokers a n d /o r dealers, or to perm it loans to
m eet emergency needs. Any such ag reem ent filed w ith the
Board of Governors of the Federal Reserve System shall be
subject to term ination a t any time by order of the Board,
a fte r a ppropriate notice and opportunity fo r h e a rin g be
cause of any failure by such bank to comply w ith the provi
sions thereof or w ith such provisions of law or rules or
REGULATION G APPENDIX
regulation; and, fo r any willful violation of such agreem ent,
such bank shall be subject to the penalties provided fo r
violations of rules and regulations prescribed under this
title. The provisions of sections 21 and 25 of this title shall
apply in the case of any such proceeding or order of the
Board of Governors of the Federal Reserve System in the
same m anner as such provisions apply in the case of p ro
ceedings and orders of the Commission.
(b) To perm it in the o rdinary course of business as a
broker his aggregate indebtedness to all o th er persons,
including custom ers’ credit balances (b u t excluding in
debtedness secured by exempted securities), to exceed such
percentage of the net capital (exclusive of fixed assets and
value of exchange m em bership) employed in the business,
b u t not exceeding in any case, 2,000 p er centum, as the
Commission m ay by rules and regulations prescribe as neces
sa ry or a ppropriate in the public interest or fo r the protec
tion of investors.
(c) In contravention of such rules and regulations as
th e Commission shall prescribe for the protection of in
vestors to hypothecate o r a rra n g e fo r the hypothecation
of any securities carried for the account of any customer
under circumstances (1) th a t will perm it the commingling
of his securities w ithout his w ritten consent w ith the secu
rities of any other customer, (2) th a t will perm it such
securities to be commingled w ith the securities of any p er
son other th an a bona fide customer, or (3) th a t will perm it
such securities to be hypothecated, or subjected to any lien
or claim of the pledgee, fo r a sum in excess of the aggregate
indebtedness of such custom ers in respect of such securities.
(d) To lend or a rra n g e fo r the lending of any securities
carried fo r the account of any custom er w ithout the w ritten
consent of such customer.
ACCOUNTS AND RECORDS, REPORTS, EXAM INATIONS
Sec. 17. (b) Any broker, dealer, or other person extend
ing credit who is subject to the rules and regulations p re
scribed by the Board of Governors of the Federal Reserve
System p u rsu a n t to this title shall make such reports to the
Board as it m ay require as necessary or a ppropriate to en
REGULATION G APPENDIX
17
able it to p erfo rm the functions conferred upon it by this
title. I f any such broker, dealer, or other person shall fail
to make any such rep o rt or fail to fu rn ish full in fo rm a
tion therein, or, if in the judgm ent of the Board it is other
wise necessary, such broker, dealer, or other person shall
p e rm it such inspections to be made by the Board w ith
respect to the business operations of such broker, dealer, or
other person as the Board m ay deem necessary to enable it
to obtain the required information.
V A L ID IT Y O F C O N T R A C T S
Sec. 29. (a) A ny condition, stipulation, or provision bind
ing any person to waive compliance w ith any provision of
this title or of any rule or regulation thereunder, or of any
rule of an exchange required thereby shall be void.
(b) E very contract made in violation of any provision of
this title or of any rule or regulation thereunder, and every
contract (including any contract fo r listing a security on
an exchange) heretofore or h e re a fte r m ade the perform ance
of which involves the violation of, or th e continuance of
any relationship or practice in violation of, any provision of
this title or any rule or regulation thereunder, shall be void
(1) as regards the rig h ts of any person who, in violation of
a n y such provision, rule, or regulation, shall have made or
engaged in the perform ance of any such contract, and (2)
as regards the rig h ts of any person who, not being a p a rty to
such contract, shall have acquired any rig h t thereunder with
actual knowledge of the facts by reason of which the m aking
o r perform ance of such contract was in violation of any
such provision, rule or regulation.
* :l: *
(c) N othing in th is title shall be construed (1) to affect
th e validity of any loan or extension of credit (or any ex
tension or renew al thereof) m ade or of any lien created
p rio r or subsequent to the enactm ent of this title, unless a t
the tim e of the m aking of such loan or extension of credit
(or extension o r renew al thereof) or the creating of such
lien, the person m aking such loan or extension of credit
(or extension or renew al thereof) or acquiring such lien
shall have actual knowledge of facts by reason of which the
m ak in g of such loan or extension of credit (or extension or
REGULATION G APPENDIX
renewal thereof ) or the acquisition of such lien is a viola
tion of the provisions of th is title or any rule or regulation
thereunder, or (2) to afford a defense to the collection of
any debt or obligation or the enforcem ent of any lien by any
person who shall have acquired such debt, obligation, or lien
in good faith fo r value and w ithout actual knowledge of the
violation of any provision of this title o r any rule or regula
tion thereu n d er affecting the legality of such debt, obliga
tion, or lien.
P E N A L T IE S
Sec. 32. (a) Any person who willfully violates any pro
vision of this title, or any rule or regulation thereunder the
violation of which is made unlaw ful or the observance of
which is required under the term s of this title, or any person
who willfully and knowingly makes, or causes to be made,
any statem ent in any application, report, or document re
quired to be filed under this title or any rule or regulation
th ereunder or any undertaking contained in a registration
statem ent as provided in subsection (d) of section 15 of
this title, which statem ent was false or m isleading w ith re
spect to any m aterial fact, shall upon conviction be fined
not m ore th an $10,000, or imprisoned not m ore than two
years, or both, except th a t when such person is an exchange,
a fine of not exceeding $500,000 m ay be imposed; bu t no
person shall be subject to im prisonm ent under this section
fo r th e violation of any rule or regulation if he proves th a t
he had no knowledge of such rule or regulation.
(Federal Reserve
Form G-l)
S P E C IM E N O N LY
19
BOARD OF GOVERNORS OF THE F E D E R A L RE SER V E SYSTEM
REGISTRATION STATEMENT FOR LENDERS OTHER THAN
COMMERCIAL BANKS AND BROKERS THAT EXTEND CREDIT
SECURED BY REGISTERED EQUITY SECURITIES
(Pursuant to Section 207.1(a) of Federal Reserve Regulation G)
Registration Requirem ent '
Every person not subject to Federal Reserve Regulations T and U, who, in the ordinary course of business, during- the
calendar quarter ended December 31, 1967, extended or arranged for the extension of a total of $50,000 or more, or had
outstanding at any time during such calendar quarter a total of $100,000 or more, in credit, against collateral that included
registered equity securities shall prior to April 10, 1968 register with the Board of Governors by filing Form G-l with the
Federal Reserve Bank of the district in which the principal office of the lender is located. Thereafter, any such person not
already registered who during any calendar quarter (a) extends or arranges for the extension of $50,000 or more of such
credit, or (b) has outstanding $100,000 or more of such credit, shall register within 30 days after the end of that quarter.
General Instructions
All persons subject to the preceding registration requirem ent should (1) supply th e background
information specified below; (2) complete Schedules A and B; and (3) file a balance sheet (as of th e end
of th e r e g is tr a n t’s latest fiscal year).
R e g istrants should subm it, if available, a balance sheet certified by an independent public accountant
which is accompanied by th e accountant’s opinion and related explanatory notes. If the re g istra n t is sub
ject to supervision by a S tate or Federal regulatory authority, the balance sheet last filed with such
regulatory au th o rity m ay be used. If n either of th e tw o preceding types o f balance sheets is available,
reg istran ts should complete Schedule C. Balance sheets fo r an y date prior to June 30, 1967 will not be
acceptable.
R egistration form s will be return ed to reg istran ts for corrections if not all item s have been answered
in th e m anner required or if th e form s a re otherw ise unacceptable fo r filing.
1 The following definitions of terms may help to clarify the meaning of this requirement; for additional definitions, see Sec
tion 207.2 of Regulation G.
Person (as used in the registration requirement): An individual, a corporation, a partnership, an association, a joint
stock company, a business trust, or an unincorporated organization.
In the ordinary course of business: Occurring or reasonably expected to occur from time to time in the course of any
activity of the lender for profit or the management and preservation of property or in addition, in the case of a lender
other than an individual, carrying out or in furtherance of any business purpose.
Registered equity security: Any equity security which (1) is registered on a national securities exchange, (2) has
unlisted trading privileges on a national securities exchange, or (3) any security convertible with or without consideration
into such registered equity security or carrying any warrant or right to subscribe to or purchase or carry such regis
tered equity security, or any such warrant or right.
BACK GROUND INFORM ATION
IRS Employee Identification No.
1.
Full name of r e g i s t r a n t :
2.
N am e under which business is conducted, if different th an a s stated in No. 1:
3a. Address of principal place of business: (Do not use P.O. Box No.)
b. Mailing address, if different than as stated in “ a ” :
4.
Principal lines of business:
5.
R egistran t is (check one)
Sole p ro p rie to rsh ip ___________
P artn ersh ip -----------------C orpo ratio n ------------------
Other (specify) -
6. If re g istra n t is sole proprietor, state full residence address:
7.
If re g istra n t is a partnersh ip, list names and n a tu re of interest of all general p a rtn e rs and those
limited p a rtn e rs th a t have a m ore th a n 10 per cent interest in the partn ership :
P a r tn e r
N a tu re of In te re s t
8.
If re g istra n t is a corporation,
a. S tate date and place of incorporation:
D a t e _______________________
P l a c e -----------------------------------b. F u rn is h names and titles of all principal officers:
Officer
Title
BA CKGROUND IN FO RM A TIO N ( c o n t i n u e d )
9.
If r e g istra n t is other than a sole proprietor, p artn ership , or corporation, indicate nam es of principals:
10a. Does any person not nam ed in Items 1 and 6 through 9, inclusive, directly or indirectly, through stock
ownership, agreem ent, o r otherwise, exercise or have power to exercise a controlling influence over
the m anagem ent or policies of re g istra n t?
Yes ____________ No ____________
b. I f an sw er to “a ” is yes, sta te the nam e of each such person and describe the agreem ent or other
basis thro ugh which such person exercises a controlling influence:
11. If re g istra n t has any a rra n g em en t w ith any o ther person, firm, o r organization under which any of
the accounts or records of r e g istra n t are k ep t or m aintained by such other person, firm or organiza
tion, fu rn ish th e nam e and address of the other person, firm, o r organization:
If additional space is needed to answer any of the above items, supplemental sheets should be attached.
SIGNATURE
The R egistrant filing this F o rm and its attachm ents and the person by whom i t is executed rep re
sent hereby t h a t all inform ation contained therein is tru e and complete. It is understood t h a t all appli
cable item s and schedules are considered integral p a r ts of this form.
Dated t h i s _________________________________ day o f ________________________________
, 19____
( N a m e o f Co rp oration , P a r tn e r s h ip , o r oth er o r g a n i z a tio n )
(M a n ua l s ig n a t u r e o f Sole P ro p rie to r, General P a r tn e r , M a n a g in g Aprent o r P r in c ip a l Officer)
(Title )
A FALSE OR DISHONEST STATEMENT ON THIS FORM MAY BE
PUNISHABLE B Y FINE OR IMPRISONMENT (U .S. CODE, TITLE 15,
SECTION 78ff AND TITLE 18. SECTION 1 0 0 1 .)
Schedule A
SE C U R IT IE S CREDIT O U T ST A N D IN G A T E N D
OF L A TEST FISC A L QU A R TER
(In dollars)
( D a t e ____________ )
A.
Credit E xtended to P urchase or Carry R egistered
E quit y S ecurities
1. Secured directly
a. In whole o r in p a r t by registered equity securities
_____________________________
b. Wholly by other collateral
____________________________
2. Secured indirectly 1
a.
In whole or in p a rt by registered equity s e
c
u
r i t i e
s ____________________________
b. Wholly by other collateral
B.
____________________________
O th e r E x t e n sio n s of Credit S ecured in W hole or i n P art
by R egistered E quit y S ecurities
1. Secured directly
______________________________ _
2. Secured indirectly '
________________________________
Schedule 15
VOLUME OF SE C U R IT IE S CREDIT E X T E N D E D
IN LA TEST FISCAL QU A R TER
(Fiscal Q uarter e n d e d ___________________)
N um ber of
loans
A.
Volume
(In dollars)
Credit E xtended to P urchase or Carry R egistered
E quit y S ecurities
1. Secured directly
a. In whole or in p a r t by registered equity securities
____________________________
b. Wholly by other collateral
____________
____________ __
2. Secured indirectly 1
B.
a. In whole or in p a r t by registered equity securities
____________ ________________
b. Wholly by other collateral
____________
____________ __
Oth e r E x t e n s io n s of Credit S ecured i n W hole or i n P art
by R egistered E quity S ecurities
1. Secured directly
_____________ _________________
2. Secured indirectly 1
_____________ _________________
' For purposes of these schedules registrants should exclude loans made pursuant to loan agreements containing negative
pledge or other similar provisions. However, indicate in the boxes that follow whether your loan agreements normally
contain such provisions. □ yes □ no
For specific instructions in com pleting th ese schedules see n e x t page
Instructions for Schedules A and B
(1)
R egistra n ts need supply d ata only on the lines indicated; summ ations
will be made by th e Federal Reserve.
(2)
D ata on credits o utstanding (Schedule A) and the volume of credits
extended (Schedule B) should be reported in even d ollars; cents
should be omitted.
(3)
“ Registered equity securities,” as indicated by the definition set fo rth
a t the bottom of page 1 of th is registration statem ent, include bonds
or debentures convertible into stocks registered on national securities
exchanges as well as th e stocks themselves. A list containing th e
names of all registered stocks can be obtained from your nearest
Federal Reserve Bank.
(4)
Credit extensions included under Section A of Schedules A and B are
“ purpose” credits, as defined in section 207.2(c) of Regulation G;
and those included under Section B of th e schedules are “ non
purpose” credits.
(5)
T he te rm “o th er collateral” in lines A ( l ) b and A ( 2 )b of both sched
ules includes— in addition to non-registered equity securities, non
convertible bonds, and oth er financial assets— any nonfinancial assets
pledged against th e loan.
(6)
F o r purposes of completing lines A (2) and B (2 ), th e term “secured
indirectly” m eans any arra ng em en t as to assets of th e borrower
which (1) serves to protect the in terest of th e lender in insuring
t h a t th e credit is repaid, or (2) serves to m ake assets of the
borrower m ore readily available to th e lender th an to other creditors
of th e borrower.
(7)
A “negative pledge” is a covenant signed by th e borrower agreeing
not to sell, encumber, or otherwise dispose of any of his assets w ithout
first obtaining th e consent of the lender.
Schedule C
BALANCE SHEET AT END OP LATEST FISCAL YEAR1
(As o f ___________________)
Date
ASSETS
(To the Nearest
Dollar)
1. Cash, deposits, and owned securities m atu rin g
in one year or l e s s 2
2. Notes and accounts receivable (net of allowance
fo r bad debts of $___________ )
3. P lant, equipment and other fixed a ssets (net of
depreciation and depletion am ounting to
$------------------)
4. Inventories
5. E quity in non-consolidated subsidiaries s
6. All other assets
7. Total Assets
LIA B IL IT IES
8. B ank loans m atu ring in one y ear or less 2
9. O ther notes and accounts payable m atu ring
in one y ear or less 2
10. Long-term debt
11. O ther liabilities
12. Total Liabilities
N E T WORTH
13. Paid-in capital, and paid-in surplus
14. E arned surplus a n d /o r undivided profits
15. Total N et W orth
16. Total Liabilities and N et W orth
1 To be completed o n ly by firms
not submitting corporate balance sheets
certified by an
independent public accountant or used to meet reporting requirements of supervisory
agencies.
2 Items maturing in one year or
less include those that have shortened with the passage
of time as well as items with original maturities of one year or less.
3 Includes the parent company's share of earnings retained in the non-consolidated
subsidiary as well as its direct contributions of capital.
* Registrants for which items 13 and 14 are not relevant should still fill in item 15.
SPECIMEN ONLY
BOARD O F GOVERNORS OF T H E F E D E R A L RE SER V E SYSTEM
D E R E G IS T R A T IO N S T A T E M E N T FOR L E N D E R S R E G IS T E R E D PU R S U A N T TO REG U L A TIO N G
(F E D E R A L R E S E R V E FORM G-2)
A. F or use by N on-Corporate Lenders.
Certificate
I (W e), doing business under th e n a m e ,______________________________ , hereby certify t h a t I (we)
have not extended or m aintained, o r arran ged for th e extension or m aintenance of any credit secured, di
rectly o r indirectly, in whole or in p a rt by collateral t h a t includes any registered equity securities during
th e six calendar m onths prior to th e date hereof.
I (We) understand th a t if I (w e), in the future, extend o r arra n g e fo r the extension of a total of fifty
thousand dollars ($50,000) o r more during an y calendar q uarter, or have outstanding a t an y tim e during
a calendar q u a rte r a total of one hundred thousand dollars ($100,000) or more, in credit secured, directly
or indirectly, in whole o r in p art, by collateral th a t includes a n y registered equity securities, I (we) shall
within 30 days following th e end of such calendar q u a r te r re-reg iste r with the Board of Governors of the
th e Federal Reserve System by filing Federal Reserve Form G -l w ith th e Federal Reserve Bank of the
d istrict in which m y (our) principal office is located.
This certification is given in connection with an application fo r term ination of registration p u rsu an t
to section 207.1(b) of Regulation G of the Board of Governors of the Federal Reserve System (12 CFR
207).
Date .— -________________________
Signature
(N a m e o f F irm )
(T y p e of o rg a n iz a tio n , e.g.
individ ual pro prieto rsh ip ,
p a r tn e r s h ip )
A FALSE OR DISHONEST STATEMENT ON THIS FORM MAY HE
PUNISHABLE BY FINE OR IMPRISONMENT (U. S. CODE, TITLE
15, SECTION 78H AND TITLE 18, SECTION 1001).
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
D E R E G IS T R A T IO N S T A T E M E N T FOR L E N D E R S R E G IS T E R E D P U R S U A N T TO REG U L A TIO N G
(F E D E R A L R E S E R V E FORM G-2)
B. F o r use by Corporate Lenders.
Officer's Certificate
of (N am e)
(T itle )
( N a m e o f Corp ora tion)
a _________________________corporation, do hereby certify t h a t ______________________________ ______h a s
( S ta t e of In c o r p o r a tio n )
( N a m e o f C orpo ra tion)
not extended o r m aintained, or arrang ed fo r the extension or maintenance of any credit secured, directly
or indirectly, by collateral t h a t includes any registered equity securities during th e six calendar m onths
p rio r to th e d ate hereof.
I t is understood t h a t i f ___________________________________ shall, in th e futu re, extend or a rra n g e f o r
( N a m e o f C o rpora tion )
the extension of a total of fifty thousand dollars ($50,000) o r more during any calendar quarter, o r h as
outstanding a t any tim e durin g a calendar quarter, a total of one hundred thousand dollars ($100,000) or
more, in credit th a t is secured, directly o r indirectly, in whole o r in p art, by collateral th a t includes an y
registered equity se c u ritie s ,___________________________________ shall w ithin 30 days following the end of
(N n m u of C o rp ora tio n)
such calendar q u a rte r re-registe r w ith th e Board of Governors of th e Federal Reserve System, by filing
Federal Reserve F orm G-l w ith the Federal Reserve Bank of th e D istrict in which the principal office of
the corporation is located.
This certification is given in connection with an application fo r term ination of registration p u rsu an t to
section 207.1(b) of Regulation G of the Board of Governors of the F ederal Reserve System (12 C F R
207).
In witness whereof 1 have hereunto set my hand and affixed the seal of th e corporation th is
___________________day o f ________________________ , 19_____
SEA L
Signature*
( P r i n t o r ty p e n a m e a n d title
below s in n n tu re )
A TTEST:
(C o rp o r a te Secreta ry)
* To be executed by a duly authorized president or vice president of th e corporation.
A FALSE OR DISHONEST STATEMENT ON THIS FORM MAY BE
PUNISHABLE BY FINE OR IMPRISONMENT (II. S. CODE, TITLE
15, SECTION 78ff AND TITLE 18. SECTION 1001).
SPECIMEN ONLY
BOARD OF GOVERNORS OF T H E F E D E R A L R E S E R V E SYSTEM
ST A T E M E N T O F P U R P O S E O F T H E PR O C EE D S O F A N E X T E N S IO N O F C R E D IT BY A
PER SO N OTHER TH A N A BANK, BROKER, OR D E A L E R SECURED BY REGISTERED
E Q U IT Y S E C U R IT IE S. (F E D E R A L R E S E R V E FORM G -3)
A FALSE OR DISHONEST STATEMENT 11Y THE CUSTOMER OR THE LENDER ON THIS FORM MAY
BE PUNISHABLE BY FINE OR IMPRISONMENT (U.S. ( ODE, TITLE 15, SECTION 78ff, AND TITLE 18,
SECTION 1001).
Please p rin t o r type (if space is inadequate attach separate sheet).
I (w e ),.
------------ , have applied fo r an extension of credit from
in the am ount of $_______________ secured in whole
( n a m e o f le nder)
or in p a r t by registered equity securities as follows:
P a r t I.
Registered E quity Security Collateral
Source o f va lu ation
P a r t II.
Maxim um loan valu e u n d e r
Rejrulation G *
Other Collateral
Source o f v alu ation
TO B E COM F1,ETIOD BY T H E L E N D E R
M a rk e t value
So urce of valu ntion
(in S>
M a r k e t value
(in $)
Source o f valuntion
Total amount of credit granted $ -
P a r t III.
1. The proceeds of this credit a re to be used for
(d esc rib e in detail)
2. X (we) have owned th e registered equity securities securing this cred it continuously for (check one)
□ six m onths or more
□ less th a n six months.
I (W E ) HA V E R E A D T H IS FORM A ND H E R E B Y C E R T IF Y AND A F F IR M T H A T TO T H E B E S T
O F MY (OUR) K NOW LED GE AND B E L IE F T H E S T A T E M E N T S R E Q U IR E D OF ME (US) A R E
T R U E , ACCURATE, AND COM PLETE.
Manual signature of customer ( s):
D A T E _________________________________ (SIG N E D ) ______________________________________________ _
( P r i n t n a m e u n d e r each mjcnature)
( S tr e e t addre ss)
(City, sta te )
P a r t IV.
TO BE COMPLETED BY LENDER
1.
S tate am ount of any other credit extended to th e custom e r(s) (a) secured
in whole or in p art, d i
rectly o r indirectly, by any portion of collateral listed in P a r ts I and II: $___________________
and (b) unsecured credit in excess of $5,000 in the aggregate $__________________
2.
Is the collateral listed in P a r t I to be delivered or has the collateral been
delivered fro m a bank ,
broker, dealer, or a person other th an the custom er?_______________ A gainst p a y m e n t? _________ ..
I H A V E S U P P L IE D T H E INFO RM A TIO N R E Q U IR E D O F T H E L E N D E R AND A C C E P T T H E
CUSTOM ER’S S T A T E M E N T ON T H IS FORM IN GOOD F A IT H A S D E F IN E D BELOW.* I AM
F A M IL IA R W IT H T H E PROVISIO NS OF R E GULATION G.
D A T E _________________________________
( S I G N E D ) ________________________________________
(N a m e o f lender)
( S tr e e t addr ess)
(City, sta te)
* Regulation G requires that the customer’s statement on this form be accepted by the lender acting in good faith. Good faith
requires that such lender (1) must be alert to the circumstances surrounding the credit, and (2) if he has any information
which would cause a prudent man not to accept the statement without inquiry, has investigated and is satisfied th a t the
statement is truthful.
This form m u st be retain ed by the lender fo r a t least six years a fte r the term ination of the credit.
( F e d e ra l R eserve
F o rm G -l)
BOARD OF GOVERNORS OF TH E F E D E R A L R ESERV E SYSTEM
R E G IS T R A T IO N S T A T E M E N T FO R L E N D E R S O T H E R T H A N
C O M M ER C IA L B A N K S A N D B R O K E R S T H A T E X T E N D C R E D IT
S E C U R E D BY R E G IS T E R E D E Q U IT Y S E C U R IT IE S
( P u r s u a n t to Section 2 0 7 .1 (a) of F e d e ra l R eserv e R eg u latio n G)
Registration Requirement1
E v e ry person n o t s u b je c t to F ed eral R eserve R e g u latio n s T an d U, who, in th e o rd in a ry course of business, d u rin g th e
calendar q u a r te r ended D ecem b er 31, 1967, ex ten d ed o r a rra n g e d f o r th e extensio n of a to ta l o f $50,000 o r m ore, o r h ad
outstan d in g a t an y tim e d u rin g such calen d ar q u a r te r a to ta l of $100,000 o r m ore, in credit, a g a in s t c o lla te ra l t h a t included
registered equity secu rities sh all p rio r to A p ril 10, 1968 re g is te r w ith th e B oard of G overnors by filing F o rm G -l w ith th e
Federal R eserv e B ank of th e d is tric t in w hich th e p rin cip al office of th e le n d er is located. T h e re a fte r, an y such perso n n o t
already re g iste re d w ho d u r in g a n y c a le n d a r q u a r t e r ( a ) ex ten d s o r a r r a n g e s fo r th e extension o f $50,000 o r m ore o f such
credit, o r (b ) h a s o u ts ta n d in g $100,000 o r m ore of such credit, sh all r e g is te r w ith in 30 day s a f t e r th e end of t h a t q u a rte r.
General Instructions
All persons subject to the preceding reg istra tio n requirem ent should (1) supply the background
information specified below; (2) complete Schedules A and B ; and (3) file a balance sheet (as of the end
of th e re g is tra n t’s late st fiscal y ear).
R egistrants should submit, if available, a balance sheet certified by an independent public accountant
which is accompanied by th e accountant’s opinion and related explanatory notes. If the re g is tra n t is sub
ject to supervision by a State or Federal regulatory authority, the balance sheet last filed w ith such
regulatory a u th o rity m ay be used. If neither of th e tw o preceding types of balance sheets is available,
registrants should complete Schedule C. Balance sheets for any date prior to June 30, 1967 will not be
acceptable.
Registration form s will be returned to reg istra n ts fo r corrections if not all item s have been answered
in th e m anner required or if the form s are otherw ise unacceptable for filing.
1 The fo llo w ing definitions o f te rm s m a y help to c la rify th e m e an in g o f th is re q u ire m e n t; fo r ad d itio n a l definitions, see S ec
tion 207.2 o f R eg u latio n G.
P erso n (as u sed in th e re g is tra tio n re q u ire m e n t): A n individual, a co rp o ratio n , a p a rtn e rs h ip , a n a sso ciatio n , a jo in t
stock com pany, a b u siness tr u s t, o r an u n in c o rp o rated o rg an izatio n .
In th e o rd in a ry course o f b u sin ess: O ccu rrin g o r reaso n ab ly exp ected to occur fro m tim e to tim e in th e cou rse of any
activity o f th e le n d er f o r p ro fit or th e m a n a g e m e n t a n d p re s e rv a tio n o f p ro p e rty o r in ad d itio n , in th e case of a lender
other th a n a n individual, c a rry in g o u t o r in fu rth e ra n c e o f an y b u sin ess purpose.
R e g iste re d e q u ity se c u rity : A ny equ ity s e c u rity w hich (1) is re g iste re d on a n a tio n a l secu rities ex ch an g e, (2) h as
unlisted tr a d in g p riv ile g e s on a n a tio n a l secu rities ex c h a n g e , o r (3) an y s e c u rity convertible w ith o r w ith o u t consideration
into su ch re g iste re d e q u ity s e c u rity o r c a rry in g a n y w a r r a n t o r r ig h t to subscribe to o r p u rch ase o r c a r r y such r e g is
tered e q u ity secu rity , o r a n y such w a r r a n t o r rig h t.
BACKGROUND INFORMATION
1.
Full name of r e g i s tr a n t :
IRS Employee Identification No.
2.
N am e under which business is conducted, if different th a n as stated in No. 1:
3a. A ddress of principal place of business: (Do not use P.O. Box No.)
b. M ailing address, if different th an as stated in “ a ” :
4.
Principal lines of business:
5.
R e gistrant is (check one)
Sole p r o p rie to rs h ip ___________
P a r tn e r s h ip ___________
C orp o ratio n ____________
Other (specify)
6. If re g is tra n t is sole proprietor, state full residence address:
7.
If re g is tra n t is a partn ersh ip , list names and n ature of in terest of all general p a rtn e rs and those
limited p a rtn e rs th a t have a more th a n 10 per cent interest in the partn ersh ip :
P a r tn e r
N a tu re of In terest
If re g is tra n t is a corporation,
a. S tate date and place of incorporation:
D a t e _______________________
Place
b. F u rn is h names and titles of all principal officers:
Officer
Title
BACKGROUND IN FORMATION (c o n t in u e d )
9.
If re g is tra n t is other th an a sole proprietor, partnership, or corporation, indicate nam es of principals:
10a. Does any person not nam ed in Item s 1 and 6 th ro u g h 9, inclusive, directly or indirectly, th ro u g h stock
ownership, agreem ent, or otherwise, exercise or have power to exercise a controlling influence over
the m anagem ent or policies of re g is tra n t?
Yes ___________
No ___________
b. If answ er to “a ” is yes, state the name of each such person and describe the agreem ent or other
basis th ro u g h which such person exercises a controlling influence:
11. If re g is tra n t has any arra n g e m e n t w ith any other person, firm, or organization under which a n y of
the accounts or records of re g is tra n t are kept or m aintained by such other person, firm or organiza
tion, fu rn ish the nam e and address of the other person, firm, or o rg an iz a tio n :
If a d d itio n a l space is needed to a n sw er a n y o f th e above item s, su p p lem en tal sh eets should be attach ed .
SIGNATURE
The R e g istra n t filing this F o rm and its attachm ents and the person by whom it is executed re p r e
sent hereby th a t all inform ation contained th ere in is tru e and complete. It is understood th a t all ap p li
cable item s and schedules a re considered integral p a rts of this form.
Dated this _________________________________ day o f ____________________________________ , 19.____
(N a m e of C orp oratio n, P a rtn e rs h ip , o r o the r o rg a n iz a tio n )
(M anual s ig n a tu re o f Sole P ro p rie to r, General P a r tn e r , Managing: A tfent o r P r in c ip a l Officer)
(T itle)
A FALSE OR DISHONEST STATEMENT ON THIS FORM MAY BE
PUNISHABLE BY FINE OR IMPRISONMENT (U.S. CODE, TITLE 15,
SECTION 78ff AND TITLE 18, SECTION 1001.)
Schedule A
SECURITIES CREDIT OUTSTANDING AT END
OF LA TEST FISCAL QUARTER
(In dollars)
( D a te ____________)
A.
C r e d it E x t e n d e d t o P u r c h a s e or C a r r y R e g is t e r e d
E q u it y S e c u r it ie s
1. Secured directly
a. In whole or in p a r t by registered equity securities
__________________________
b. Wholly by other collateral
_____________ _______________
2. Secured indirectly 1
a. In whole or in p a rt by registered equity s e
c
u
r i t i e
s __________________________
_________ ___________________
b. Wholly by other collateral
B.
O t h e r E x t e n s io n s o f C r e d it S e c u r e d i n W h o l e o r i n P a r t
by
R e g is t e r e d E q u it y S e c u r it ie s
1. Secured directly
_______________________ _____
2. Secured indirectly 1
______________________ ______
Schedule B
VOLUME OF SECURITIES CREDIT EX TEN D ED
IN LA TEST FISCAL QUARTER
(Fiscal Q uarter e n d e d ___________________)
A.
N um ber of
loans
Volume
(In dollars)
____________
______________
____________
______________
____________
______________
____________
______________
1. Secured directly
____________
______________
2. Secured indirectly 1
____________
______________
C r e d it E x t e n d e d to P u r c h a s e or C a r r y R e g is t e r e d
E q u it y S e c u r it ie s
1. Secured directly
a. In whole or in p a r t by registered equity securities
b. Wholly by other collateral
2. Secured indirectly 1
a. In whole or in p a rt by registered equity securities
b. Wholly by other collateral
B.
O th e r E x te n s io n s o f C re d it S e c u re d in W h o le o r in
P art
b y R e g is te re d E q u ity S e c u ritie s
1 For p u rp o s e s of th e se schedules re g is tr a n ts should exclude loans m ade p u r s u a n t to loan a g re e m e n ts co n tain in g n egativ e
pledge o r o th e r s im ila r provisions. H ow ever, indicate in th e boxes t h a t follow w h e th e r y o u r loan a g re e m e n ts no rm ally
contain su ch provisions. Q yes [ J no
F or specific instructions in completing these schedules see next page
Instructions for Schedules A and B
(1)
R eg istran ts need supply data only on the lines indicated; summ ations
will be made by th e Federal Reserve.
(2)
D ata on credits outstanding (Schedule A) and th e volume of credits
extended (Schedule B) should be reported in even d o llars; cents
should be omitted.
(3)
“Registered equity securities,” as indicated by the definition set fo rth
a t the bottom of page 1 of this registration statem ent, include bonds
or debentures convertible into stocks registered on national securities
exchanges as well as th e stocks themselves. A list containing the
nam es of all registered stocks can be obtained from your nearest
Federal Reserve Bank.
(4)
Credit extensions included under Section A of Schedules A and B are
“purpose” credits, as defined in section 207.2(c) of Regulation G;
and those included under Section B of th e schedules are “non
purpose” credits.
(5)
The term “other collateral” in lines A ( l ) b and A (2 )b of both sched
ules includes— in addition to non-registered equity securities, non
convertible bonds, and other financial assets— any nonfinancial assets
pledged a gainst th e loan.
(6)
F or purposes of completing lines A (2) and B (2 ), the term “secured
indirectly” means any a rra n g e m e n t as to assets of th e borrow er
which (1) serves to protect the in terest of th e lender in insuring
th a t the credit is repaid, or (2) serves to m ake assets of the
borrow er more readily available to th e lender th a n to other creditors
of th e borrower.
(7)
A “negative pledge” is a covenant signed by th e borrower agreeing
not to sell, encumber, or otherw ise dispose of any of his assets w ithout
first obtaining the consent of the lender.
Schedule C
BALANCE SHEET AT END OF LATEST FISCAL Y E A R 1
(As o f ___________________)
D ate
ASSETS
(To the Nearest
Dollar)
1. Cash, deposits, and owned securities m atu rin g
in one year or less 2
2. Notes and accounts receivable (net of allowance
fo r bad debts of $___________ )
3. Plant, equipm ent and other fixed assets (net of
depreciation and depletion am ounting to
$------------------)
4. Inventories
5. E quity in non-consolidated subsidiaries ’
6. All o th er assets
7. Total A ssets
LIA B ILITIES
8. Bank loans m atu rin g in one year or less 9. O ther notes and accounts payable m atu rin g
in one y e a r or less 10. Long-term debt
11. O ther liabilities
12. Total Liabilities
N E T WORTH
13. Paid-in capital, and paid-in surplus
14. E arned surplus a n d /o r undivided profits
15. Total N et W orth
16. Total Liabilities and N et W orth
1 To be com pleted only by firm s not su b m ittin g co rp o ra te b alance sh eets certified by an
in d e p en d en t public ac c o u n ta n t o r u sed to m eet re p o r tin g re q u ire m e n ts of su p erv iso ry
agencies.
- Ite m s m a tu r i n g in one y e a r o r less includ e those t h a t h av e sh o rten ed w ith th e p assag e
of tim e a s well as item s w ith o rig in a l m a tu ritie s of one y e a r o r less.
3 In cludes th e p a r e n t co m pany ’s s h a r e o f e a rn in g s re ta in e d in th e non-consolidated
su b sid ia ry as well as its d ire c t c o n trib u tio n s of cap ital.
4 R e g is tra n ts f o r w hich item s 13 an d 14 a r e n o t re le v a n t should still fill in item 15.
S ta te m e n t t o be r e tu r n e d t o th e F e d e r a l R e s e r v e Bank o f D a l l a s
by p e r s o n s n o t r e g i s t e r i n g under R e g u l a t i o n G i n r e s p e c t to l a s t
c a l e n d a r q u a r t e r o f 1967.
___________________________ has n o t extend ed or arranged f o r
(Name o f firm )
t h e e x t e n s i o n o f c r e d i t t o t a l i n g $ 5 0 ,0 0 0 or more, se c u r e d d i r e c t l y
or i n d i r e c t l y by any r e g i s t e r e d e q u i t y s e c u r i t i e s , d u r in g th e
c a l e n d a r q u a r t e r ended December 31,
1967, and did n o t have o u t s t a n d
i n g d u r in g such c a l e n d a r q u a r t e r a t o t a l o f $ 1 0 0 ,0 0 0 or more i n such
cred it.
Date______________________
S i g n a t u r e _______________________________________
( P r i n t or typ e name and t i t l e ,
i f any, below s i g n a t u r e )
Name o f f ir m
Type o f O r g a n iz a t io n
Address o f P r i n c i p a l P l a c e
of bu sin ess
M a il i n g a d d r e s s , i f d i f f e r e n t than
s t a t e d above
•C O
'
FEDERAL
press
RESERVE
release
f/lA L
For immediate r e l e a s e .
February 1, 1968.
The Board o f Governors o f t h e F e d e r a l R e s e r v e System announced
today t h a t i t h a s adopted a number o f c hanges t o broaden th e c o v e r a g e o f ,
and, i n most r e s p e c t s , t o t i g h t e n i t s r e g u l a t i o n s g o v e r n in g the u s e o f
c r e d i t i n s t o c k market t r a n s a c t i o n s .
These c hanges a r e b ase d on p r o p o s a l s
which were p u b l i s h e d f o r comment on October 20, 1967.
I n te r e s te d persons
were asked t o submit t h e i r comments i n w r i t i n g by November 2 0 , 1967.
The
p r o p o s a l s have been r e v i s e d e x t e n s i v e l y i n t h e l i g h t o f numerous comments
r e c e i v e d i n r e s p o n s e to t h e B o a r d ' s i n v i t a t i o n .
As a d o p t e d , t h e c hanges
w ill:
1.
Extend th e p e r i o d i n which a b r ok e r or d e a l e r must o b t a i n
th e c u s t o m e r ' s margin d e p o s i t on a margin t r a n s a c t i o n by one d ay, to
f i v e f u l l b u s i n e s s days a f t e r t h e t r a n s a c t i o n .
e f f e c t i v e on February 5, 1 9 6 8 .
This change w i l l become
The purpose o f t h i s l i b e r a l i z i n g p r o p o s a l
i s to r e d u c e t h e c u r r e n t p r e s s u r e s on b ookk eeping d e p ar tm e n ts o f b r o k e r a g e
f ir m s by i n s u r i n g t h a t a weekend w i l l alw a y s be i n c l u d e d i n th e p e r io d
o f time w i t h i n which th e d e p o s i t must be o b t a i n e d .
The margin r e q u i r e d on s t o c k t r a n s a c t i o n s rem ains unchanged a t
70 per c e n t .
This means i n e f f e c t t h a t anyone b u yin g a $100 s t o c k on
c r e d i t must d e p o s i t i n h i s margin a c c o u n t a t l e a s t $70 i n c a s h , or
s e c u r i t i e s w i t h an e q u i v a l e n t lo a n v a l u e r
-2
2.
Impose a new m argin r e q u ire m e n t on l o a n s made by banks f o r
t h e purpose o f p u r c h a s i n g or c a r r y i n g s e c u r i t i e s c o n v e r t i b l e i n t o r e g i s
tered stock .
T h is r e q u ir e m e n t w i l l be s e t i n d e p e n d e n t l y o f t h e margin
r e q u ir e m e n t f o r l o a n s t o p u r c h a s e or c a r r y r e g i s t e r e d s t o c k , and i s f i x e d
i n i t i a l l y a t 50 p e r c e n t i n r e c o g n i t i o n o f th e f a c t t h a t c o n v e r t i b l e
s e c u r i t i e s combine c h a r a c t e r i s t i c s o f both s t o c k s and b on d s.
The same
r e q u ir e m e n t a p p l i e s t o l o a n s by b r o k e r s and d e a l e r s on r e g i s t e r e d c o n
v ertib le secu rities,
i n s t e a d o f t h e p r e s e n t 70 p e r c e n t , but margin r e q u i r e
m ents a r e removed from l o a n s t h e y make on non- c o n v e r t i b l e bond s.
In c o n se
q u e n c e , banks, b r o k e r s and d e a l e r s w i l l be on s u b s t a n t i a l l y t h e same
fo o tin g in these r e sp e c ts.
B e g i n n i n g March 11,
t h e 50 per c e n t i n i t i a l r e q u ir e m e n t w i l l a p p l y
t o a l l new l o a n s on c o n v e r t i b l e s by banks, b r o k e r s and d e a l e r s , or o t h e r
len ders.
On l o a n s made by banks betw een October 20, 1967, and March 11, 1 9 6 8 ,
a f u l l y margined s t a t u s must be a c h i e v e d by A p r i l 10; bank l o a n s made b e f o r e
O ctobe r 20, 1967, a r e n o t a f f e c t e d u n l e s s t h e r e have been s u b s e q u e n t s u b s t i
t u t i o n s o f c o l l a t e r a l or c o n v e r s i o n s i n t o s t o c k .
On l o a n s made by l e n d e r s
o t h e r than banks or b r o k e r s and d e a l e r s be tw e e n February 1, 1968, and March 11,
19 6 8 , a f u l l y margined s t a t u s must a l s o be a c h i e v e d by A p r i l 10, 1968.
For a l l l e n d e r s - - b a n k s , b r o k e r s and o t h e r s - - l o a n s on c o n v e r t i b l e s
t h a t have a margin s t a t u s b e lo w t h e p r e s c r i b e d 50 p e r c e n t w i l l be s u b j e c t
t o a 70 p e r c e n t "r e t e n t i o n r e q u i r e m e n t " :
that i s ,
70 per c e n t o f t h e p r o
c e e d s from a s a l e o f t h e s e s e c u r i t i e s w i l l have t o be r e t a i n e d t o improve
t h e s t a t u s o f t h e l o a n u n t i l i t i s margined a t t h e f u l l 50 p e r c e n t .
3.
(e .g .,
R e q u ir e t h a t n o n - c o n v e r t i b l e bonds and exempted s e c u r i t i e s
Government s e c u r i t i e s )
on t h e one hand, and c o n v e r t i b l e s e c u r i t i e s
on t h e o t h e r , be s e g r e g a t e d i n two new a c c o u n t s ,
s e p a r a t e from t h e o r d i n a r y
margin a c c o u n t i n which o n l y s t o c k may be h e l d .
The purpose o f r e q u i r i n g
se p a r a te accounts i s to f o r e c l o s e use o f the " sa m e-d a y -su b stitu tio n "
p r i v i l e g e t o c ir c u m v e n t t h e r e t e n t i o n r e q u ire m e n t f o r a c c o u n t s t h a t a r e
b e lo w t h e p r e s c r i b e d m argin.
account w i l l a l s o ,
P lacin g c o n v e r tib le s e c u r i t i e s
in a separate
i t i s b e l i e v e d , a v o i d some b ookk eeping and o t h e r
m e c h a n ic a l problems which would r e s u l t from h a v in g i n t h e same margin
account s e c u r i t i e s w ith d i f f e r e n t loan v a l u e s .
4.
that i s ,
Require t h a t c o l l a t e r a l i n s p e c i a l s u b s c r i p t i o n a c c o u n t s - -
s e c u r i t i e s a c q u i r e d by t h e e x e r c i s e o f s u b s c r i p t i o n r i g h t s on
t h e p r e f e r e n t i a l 25 p e r c e n t i n i t i a l margin p r e s e n t l y a l l o w e d f o r such
a c q u i s i t i o n s - - b e brought i n t o " f u l l y margined" s t a t u s by payments i n f o u r
equal q u a r te rly in sta lm e n ts.
T h i s . p r o v i s i o n , as a d o p t e d , r e q u i r e s t h a t
when a payment i s not made, t h e bank, b r o k e r or d e a l e r s e l l enough c o l l a t e r a l
s o t h a t t h e r e m a in in g c r e d i t w i l l be r o u g h l y i n t h e same p r o p o r t i o n t o t h e
c o l l a t e r a l r e m ain in g i n t h e a c c o u n t as i f t h e payment had be e n made.
As
o r i g i n a l l y p r o p o s e d , t h e changes would have r e q u i r e d a l l t h e c o l l a t e r a l i n
t h e a c c o u n t t o be s o l d , and t h e l o a n paid o f f ,
5.
i f a payment were m i s s e d .
I n t r o d u c e a new r e g u l a t i o n ( d e s i g n a t e d " R e g u l a t io n G") t o
e x te n d t o o t h e r l e n d e r s margin r e q u ir e m e n ts c o r r e s p o n d i n g t o t h o s e lo n g
a p p l i c a b l e t o b r o k e r s , d e a l e r s , and banks on c r e d i t e x te n d e d f o r t h e purpose
o f p u r c h a s i n g or c a r r y i n g r e g i s t e r e d e q u i t y s e c u r i t i e s .
The " o th e r l e n d e r s " whose s e c u r i t y l o a n s a r e th u s put on a
c o r r e s p o n d i n g f o o t i n g w i t h t h o s e o f banks and b r o k e r s i n c l u d e t h e f o l l o w
ing:
" f a c t o r s , " " c o l l a t e r a l l e n d e r s , " and o t h e r s whose s t o c k lo a n s u s u a l l y
r i s e d u r i n g p e r i o d s when b p th margin r e q u i r e m e n ts and s t o c k market a c t i v i t y
a r e h i g h ; i n s u r a n c e com p anies; t a x -e x e m p t o r g a n i z a t i o n s ; c r e d i t u n i o n s ;
f i n a n c e c om panie s; t h o s e S t a t e - c h a r t e r e d s a v i n g s and l» a n a s s o c i a t i o n s
a u t h o r i z e d t o make s u c h l o a n s ; and anyone a c t i n g as a g e n t f o r a l e n d e r -
f o r e i g n o r d o m e s t i c - - i n h a n d li n g s e c u r i t i e s l o a n s .
The new R e g u l a t i o n G does not a p p ly t o any c r e d i t e x te n d e d b e f o r e
February 1, 1968, and p e r s o n s e x t e n d i n g c r e d i t i n r e l a t i v e l y s m a l l amounts
w i l l n o t be s u b j e c t t o i t s r e q u i r e m e n t s .
secu rities
Only c r e d i t on r e g i s t e r e d e q u i t y
( s t o c k s and s e c u r i t i e s c o n v e r t i b l e i n t o s t o c k ) w i l l be s u b j e c t
t o t h e r e g u l a t i o n (as c o n t r a s t e d w i t h t h e p r o p o s a l s , which a p p l i e d to
c r e d i t on a l l r e g i s t e r e d s e c u r i t i e s ) .
Lenders e x t e n d i n g more th a n $ 5 0 , 0 0 0
i n c r e d i t i n any c a l e n d a r q u a r t e r a g a i n s t r e g i s t e r e d e q u i t y s e c u r i t i e s , or
whose l o a n s a g a i n s t such s e c u r i t i e s amount to $ 1 0 0 ,0 0 0 a t any tim e d u r in g
t h e q u a r t e r , must r e g i s t e r w i t h th e Board by t h e end o f the month f o l l o w i n g
the c l o s e o f the q u a rter.
Margin r e q u ir e m e n ts w i l l a p p ly t o any l o a n made
f o r t h e purpose o f p u r c h a s i n g or c a r r y i n g r e g i s t e r e d e q u i t y s e c u r i t i e s by
a p e r s o n s u b j e c t t o t h e r e g i s t r a t i o n r e q u i r e m e n t, and a l l r e g i s t e r e d
l e n d e r s must f i l e q u a r t e r l y r e p o r t s .
An e x c e p t i o n from i n i t i a l margin r e q u ir e m e n ts i s p r o v i d e d f o r
c r e d i t e x te n d e d by c o r p o r a t i o n s t o f i n a n c e t h e e x e r c i s e o f s t o c k p u rchase
r i g h t s g r a n ted o f f i c e r s and em p loyees under c o r p o r a t e p l a n s t h a t c o n t a i n
c e r t a i n s a f e g u a r d s d e s i g n e d t o make i t l e s s l i k e l y t h a t th e c r e d i t w i l l be
r e p a id w i t h p r o c e e d s o f t h e s a l e o f the s e c u r i t i e s .
E xceptions are a ls o
made f o r bor r ow ing t o f i n a n c e p l a n s o f t h i s k i n d , and f o r r i g h t s t h a t were
g r a n t e d p r i o r t o Februar
6.
1, 1968.
Requir e t h a t banks and o t h e r p e r s o n s p e r fo r m in g c e r t a i n
s e r v i c e s "as a g e n t " f o r f o r e i g n and o t h e r s t o c k market l e n d e r s o b t a i n a
s i g n e d s t a t e m e n t from t h e i r p r i n c i p a l s to t h e e f f e c t t h a t t h e a c t i v i t i e s o f
t h e p r i n c i p a l conform t o t h e a p p l i c a b l e margin r e g u l a t i o n s .
The a g e n t may
-5a c t i n r e l i a n c e on such a s t a t e m e n t .
A s i m i l a r r e q u ire m e n t has be e n
i n s e r t e d i n t o R e g u l a t i o n T, as t o s e r v i c e s by b r o k e r s and d e a l e r s .
A lso,
banks and o t h e r l e n d e r s w i l l be f o r b i d d e n t o a r r a n g e f o r c r e d i t on lo w e r
margin th a n t h e y can e x te n d t h e m s e l v e s ; b r o k e r s and d e a l e r s have lon g
be e n s u b j e c t t o t h i s r u l e .
7.
Require t h a t banks and o t h e r l e n d e r s o b t a i n from t h e
borrow er a s i g n e d s t a t e m e n t o f t h e purpose o f any s t o c k - s e c u r e d l o a n , on
a form p r e s c r i b e d by t h e Board, d e t e r m in e i n good f a i t h t h a t th e s t a t e m e n t
i s c o r r e c t , and s i g n i t as so a c c e p t e d .
be p u n i s h a b l e by f i n e or im prisonm ent.
A f a l s e s t a t e m e n t on t h e form may
The forms w i l l have t o be k e p t i n
t h e r e c o r d s o f t h e bank or l e n d e r f o r a t l e a s t s i x y e a r s a f t e r t h e c r e d i t
is extinguished.
Loans by b r o k e r s and d e a l e r s a r e g e n e r a l l y f o r t h e pur
p o s e o f p u r c h a s i n g or c a r r y i n g s e c u r i t i e s , and no s t a t e m e n t o f purpose i s
o r d i n a r i l y r e q u i r e d i n c o n n e c t i o n w i t h such l o a n s .
In a d o p t i n g t h e new p r o v i s i o n s r e l a t i n g t o c o n v e r t i b l e s e c u r i t i e s ,
t h e Board a l s o p u b l i s h e d f o r comment a p r o p o s a l t o exempt from margin
r e q u ir e m e n ts l o a n s made by banks t o d e a l e r s t o f i n a n c e t h e i r market-making
a ctiv ities
in con vertib le s e c u r i t ie s .
I f a d o p t e d , t h i s exe m p tion would
become e f f e c t i v e not l a t e r than March 11, 1968.
D e a l e r s who w i s h t o be
e l i g i b l e f o r t h e e xe m p tion s h o u l d b e g i n t o f i l e r e p o r t s prom ptly on
F e d e r a l R e se r ve Form U - 3 , c o p i e s o f which w i l l be a v a i l a b l e from any
F e d e r a l R e s e r v e Bank.
I n f o r m a t io n s u p p l i e d on such r e p o r t s w i l l be
ac c o rd ed c o n f i d e n t i a l t r e a t m e n t , i n c o n f o r m i t y w i t h th e B o a r d 's r u l e s .
Margin r e q u ir e m e n ts were e s t a b l i s h e d i n i t i a l l y
i n O c t o b e r , 1934,
under a u t h o r i t y Congress g r a n ted t h e F e d e r a l R e se r ve Board i n t h e S e c u r i t i e s
Exchange Act o f 1934 " f o r t h e purpose o f p r e v e n t i n g t h e e x c e s s i v e u s e o f
c r e d i t f o r t h e p u r c h a se o r c a r r y i n g o f s e c u r i t i e s . "
Under p r e s e n t la w , margin r e q u ir e m e n ts can be a p p l i e d o n l y t o
l o a n s f o r t h e purpose o f p u r c h a s i n g or c a r r y i n g s e c u r i t i e s r e g i s t e r e d on
a n a t io n a l s e c u r i t i e s exchange.
The R e s e r v e Board h a s , how ever, s u b m it t e d
to Congress a l e g i s l a t i v e p r o p o s a l t h a t would p r o v i d e a u t h o r i t y t o a p p ly
margin r e g u l a t i o n s a l s o t o s e c u r i t i e s t h a t a r e a c t i v e l y t ra d ed i n t h e o v e r t h e - c o u n t e r m ark et.