The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
F E D E R A L R E S E R V E BA N K O F N EW YORK ]" Circular N o. 4 8 1 8 *1 L Decem ber 1, 1959 J AMENDED REGULATION R T o A ll M em ber Banks o f the Second Federal R eserve D istrict: E ffective October 23, 1959, the B oa rd o f G overnors o f the F ederal R eserve System has amended its Regulation R, Relationships W ith D ealers in Securities U nder Section 32 o f the Banking A ct o f 1933, to include obligations o f three additional F ederal agencies in the section that exem pts relationships with firms dealing only in certain types o f obligations. Specifically, section 2 has been amended by striking out the w ords ‘ ‘ debentures issued b y F ederal Interm ediate Credit banks, bonds issued b y F ederal L and banks,” and substituting th erefor “ obligations o f F ederal Interm ediate Credit banks, F ederal L and banks, Central Bank fo r Cooperatives, F ederal H om e L oan Banks, and the F ederal N ational M ortgage A ssocia tion .” A cop y o f the amended regulation is enclosed; additional copies w ill be furnished upon request. A lfred I I ayes, President. BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM RELATIONSHIPS W IT H DEALERS IN SECURITIES UNDER SECTION 3 2 OF TH E BANKING ACT OF 1933 REGULATION R (1 2 CFR 2 1 8 ) As A m e n d e d O cto b e r 2 3 , 1 9 5 9 INQUIRIES REGARDING THIS REGULATION A n y in q u iry rela tin g to th is reg u la tio n sh o u ld b e a d d ressed to the F ed era l R ese rv e b a n k o f the district in w h ich th e in q u iry arises. STATUTORY A U T H O R IT Y Section 32 of the Banking A ct of 1933 (U.S.C., Title 12, sec. 78), as amended by section 307 of the Banking A ct of 1935, effective Jan uary 1, 1936, reads as follows: Sec. 32. N o officer, director, or employee o f any corporation or unincorporated association, no partner or employee of any partnership, and no individual, primarily engaged in the issue, flotation, underwriting, public sale, or distribution, at wholesale or retail, or through syndicate participation, of stocks, bonds, or other similar securities, shall serve the same time as an officer, director, or employee of any member bank except in limited classes of cases in which the Board of Governors o f the Federal Reserve System may allow such service by general regulations when in the judgment of the said Board it would not unduly influence the investment policies of such member bank or the advice it gives its customers regarding investments. REGULATION R (12 C F R 218) A s A m ended O ctober 23, 1959 RELATIONSHIPS W ITH DEALERS IN SECURITIES UNDER SECTION 3 2 OF TH E BANKING AC T OF 1 9 3 3 * S E C T IO N 218.1— P R O H IB IT IO N S Under section 32 of the Banking A ct of 1933 (49 Stat. 709; 12 U.S.C. 78), except as stated in §218.2, no officer, director, or employee of any corporation or unincorporated association, no partner or employee of any partnership, and no individual primarily engaged in the issue, flotation, underwriting, public sale, or distribution, at wholesale or retail, or through syndicate participation, of stocks, bonds, or other similar securities, can legally be at the same time an officer, director, or employee o f any member bank of the Federal Reserve System.1 S E C T IO N 218.2— E X C E P T IO N S Pursuant to the authority vested in it by section 32, the Board of Governors o f the Federal Reserve System hereby permits the following relationships: 2 A ny officer, director, or employee of any corporation or unincor porated association, any partner or employee o f any partnership, or any individual, not engaged in the issue, flotation, underwriting, public * This text corresponds to the Code o f Federal Reguations, Title 12, Chapter II, Part 218; cited as 12 C F R 218. 1 Therefore, b y its terms, section 32 does not apply— (a ) T o a person who is not an officer, director, or employee o f a member bank o f the Federal Reserve System ; ( b ) T o a person (1) who is not an officer, director, or employee o f a corporation or unincor porated association primarily engaged in the issue, flotation, underwriting, public sale, or distri bution, at wholesale o r retail, or through syndicate participation, o f stocks, bonds or other similar securities, (2) who is not a partner or employee o f a partnership primarily so engaged, and (3) who is not, in his individual capacity, primarily so engaged. A broker who is engaged solely in executing orders for the purchase and sale o f securities on behalf o f others in the open market is not engaged in the business referred to in section 32. 3 Under section 32, as amended effective January 1, 1936 (49 Stat. 709; 12 U.S.C. 78), the Board is authorized to except limited classes o f relationships from the prohibitions o f the statute, under certain conditions; but the Board can make such exceptions only by general regulations and is not authorized to issue individual permits. 218.2-218.3 REGULATION R sale, or distribution, at wholesale or retail, or through syndicate par ticipation o f any stocks, bonds, or other similar securities except bonds, notes, certificates o f indebtedness, and Treasury bills o f the United States, obligations fully guaranteed both as to principal and interest by the United States, obligations o f Federal Intermediate Credit banks, Federal Land banks, Central Bank for Cooperatives, Federal Home Loan Banks, and the Federal N ational M ortgage Association, and general obligations of Territories, dependencies and insular possessions o f the United States, may be at the same time an officer, director, or employee o f any member bank o f the Federal Reserve System, except when otherwise prohibited.3 A S ecs. 2 S E C T IO N 218.3— A M E N D M E N T S The right to alter, amend, or repeal this Part, in whole or in part, is expressly reserved. c 3 Section 8 o f the Clayton A ct (38 Stat. 732, 49 Stat. 718; 15 U .S.C. 19) is applicable in certain circumstances to interlocking relationships between member banks and private hankers, and other banks, banking associations, savings banks and trust companies. See Part 212 o f this Chapter. Section 17(c) o f the Public U tility A ct o f 1935 (49 Stat. 831; 15 U.S.C. 7 9q(c)) is applicable in certain circumstances to interlocking relationships between banks and private bankers (and cor porations owned b y banks and private bankers), and public utility companies and public utility holding companies. Inquiries regarding this section should be addressed to the Securities and Exchange Commission and not to the Board o f Governors o f the Federal Reserve System. Section 305(b) o f the Federal Power A ct (49 Stat. 856; 16 U.S.C. 825d(b)) is applicable in certain circumstances to interlocking relationships between public utility companies and banks and bankers that are authorized b y law to underwrite or participate in the marketing o f securities of a public utility. Inquiries regarding this section should be addressed to the Federal Power C om mission and not to the Board o f Governors o f the Federal Reserve System. c
@FedFRASER