Press Release: Agencies Adopt Final Rules to Implement the Bank 'Broker' Provisions of the Gramm-Leach-Bliley Act
The SEC and Federal Reserve adopted final rules to clarify permissible securities activities for banks under the Gramm-Leach-Bliley Act, allowing trust, custodial, sweep, and referral functions without broker registration, with no fraud, charges, or penalties involved.
The SEC and Board of Governors of the Federal Reserve jointly adopted final rules implementing broker exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934, as mandated by the Gramm-Leach-Bliley Act of 1999. These rules permit banks to conduct securities transactions in connection with trust, fiduciary, custodial, and deposit 'sweep' functions, and to refer customers to broker-dealers via networking arrangements, without registering as brokers. The rules, finalized after public comment and modifications to reduce burden, require compliance only beginning on the first day of a bank’s fiscal year after September 30, 2008, with no enforcement actions or monetary penalties imposed.
The Securities and Exchange Commission and the Board of Governors of the Federal Reserve System jointly adopted final rules on September 24, 2007, to implement the 'broker' exceptions for banks under the Gramm-Leach-Bliley Act of 1999. These rules define the scope of securities activities banks may perform without registering as broker-dealers, including trust and fiduciary services, custodial functions, deposit 'sweep' arrangements, and customer referrals under networking agreements with broker-dealers. The agencies revised the proposed rules based on public feedback to enhance workability and reduce regulatory burden while preserving investor protections. The final rules were approved at separate meetings on September 19 and 24, 2007, following consultation with the OCC, FDIC, and OTS. Compliance is not required until the first day of a bank’s fiscal year beginning after September 30, 2008. No allegations of fraud, misconduct, or enforcement actions are present in the release; this was purely a regulatory clarification to harmonize bank activities with statutory exemptions. The rules aim to accommodate longstanding banking practices while ensuring appropriate safeguards for customers engaging in securities transactions through their banks.
Exhibits & Attached Documents (2)
Extracted insights
- person deborah lagomarsino
- person federal reserve
- person final rules
- person kevin callahan
- agency sec and board
- agency Securities and Exchange Commission
- SEC adopted Final Rules to Implement Bank Broker Provisions of Gramm-Leach-Bliley Act
- Board of Governors of the Federal Reserve System adopted Final Rules to Implement Bank Broker Provisions of Gramm-Leach-Bliley Act
- SEC approved Final Rules on September 19, 2007
- Board of Governors of the Federal Reserve System approved Final Rules on September 24, 2007
- SEC and Board issued Proposed Rules for Comment in December 2006
- Final Rules implement Broker Exceptions for Banks under Section 3(a)(4) of Securities Exchange Act of 1934
- Gramm-Leach-Bliley Act of 1999 adopted Broker Exceptions for Banks
- Banks may conduct Securities Transactions for Customers as Part of Trust, Fiduciary, Custodial and Deposit Sweep Functions
- Banks may refer Customers to Securities Broker-Dealer Pursuant to Networking Arrangement
- Banks must comply Rules by First Day of Fiscal Year Commencing After September 30, 2008
- Agencies consulted with Office of the Comptroller of the Currency, FDIC, and Office of Thrift Supervision
- Kevin Callahan is media contact for SEC
- Deborah Lagomarsino is media contact for Federal Reserve
Joint Release Securities and Exchange Commission Board of Governors of the Federal Reserve System 2007-198 FOR IMMEDIATE RELEASE Agencies Adopt Final Rules to Implement the Bank 'Broker' Provisions of the Gramm-Leach-Bliley Act Washington, D.C., Sept. 24, 2007 - The Securities and Exchange Commission (SEC) and Board of Governors of the Federal Reserve System (Board) on Monday announced the adoption of final joint rules to implement the "broker" exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934. These exceptions were adopted as part of the Gramm-Leach-Bliley Act of 1999 (GLB Act). The SEC and the Board approved the final rules at separate open meetings held on September 19, 2007, and September 24, 2007, respectively. The Board and SEC issued proposed rules for comment in December 2006. The final rules are similar to the proposed rules in overall scope and approach. In response to comments, the agencies also have modified the rules in several important respects to make the rules more workable and less burdensome. These changes are discussed in detail in the attached notice, which will be published in the Federal Register shortly. The rules define the scope of securities activities that banks may conduct without registering with the SEC as a securities broker and implement the most important "broker" exceptions for banks adopted by the GLB Act. Specifically, the rules implement the statutory exceptions that allow a bank, subject to certain conditions, to continue to conduct securities transactions for its customers as part of the bank's trust and fiduciary, custodial and deposit "sweep" functions, and to refer customers to a securities broker-dealer pursuant to a networking arrangement with the broker-dealer. The rules are designed to accommodate the business practices of banks and to protect investors. In developing these rules, the agencies consulted extensively with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision. Banks do not have to start complying with the rules until the first day of their fiscal year commencing after September 30, 2008. # # # Media contacts: SEC Kevin Callahan (202) 551-4120 Federal Reserve Deborah Lagomarsino (202) 452-2955 Additional materials: Final Rule Release Nos. 34-56501 and 34-56502 http://www.sec.gov/news/press/2007/2007-198.htm Home | Previous Page Modified: 09/24/2007
Joint Release Securities and Exchange Commission Board of Governors of the Federal Reserve System 2007-198 FOR IMMEDIATE RELEASE Agencies Adopt Final Rules to Implement the Bank 'Broker' Provisions of the Gramm-Leach-Bliley Act Washington, D.C., Sept. 24, 2007 - The Securities and Exchange Commission (SEC) and Board of Governors of the Federal Reserve System (Board) on Monday announced the adoption of final joint rules to implement the "broker" exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934. These exceptions were adopted as part of the Gramm-Leach-Bliley Act of 1999 (GLB Act). The SEC and the Board approved the final rules at separate open meetings held on September 19, 2007, and September 24, 2007, respectively. The Board and SEC issued proposed rules for comment in December 2006. The final rules are similar to the proposed rules in overall scope and approach. In response to comments, the agencies also have modified the rules in several important respects to make the rules more workable and less burdensome. These changes are discussed in detail in the attached notice, which will be published in the Federal Register shortly. The rules define the scope of securities activities that banks may conduct without registering with the SEC as a securities broker and implement the most important "broker" exceptions for banks adopted by the GLB Act. Specifically, the rules implement the statutory exceptions that allow a bank, subject to certain conditions, to continue to conduct securities transactions for its customers as part of the bank's trust and fiduciary, custodial and deposit "sweep" functions, and to refer customers to a securities broker-dealer pursuant to a networking arrangement with the broker-dealer. The rules are designed to accommodate the business practices of banks and to protect investors. In developing these rules, the agencies consulted extensively with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision. Banks do not have to start complying with the rules until the first day of their fiscal year commencing after September 30, 2008. # # # Media contacts: SEC Kevin Callahan (202) 551-4120 Federal Reserve Deborah Lagomarsino (202) 452-2955 Additional materials: Final Rule Release Nos. 34-56501 and 34-56502 http://www.sec.gov/news/press/2007/2007-198.htm Home | Previous Page Modified: 09/24/2007