# O

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| ## Comptroller of the Currency                                        |
|                                                                       |
| > Administrator of National Banks                                     |
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Washington, DC 20219

##### Interpretive Letter #1029

May 23, 2005 **June 2005**

##### 12 CFR 12

Subject: **( )** ("***Bank***")

Dear **( )**:

#### I. Introduction

This relates to your various written submissions and our telephone
conversations, concerning **( *Bank* )**. Pursuant to 12 C.F.R. § 12.8,
**( *Bank* )** requests that the Office of the Comptroller of the
Currency ("OCC") waive certain transaction notification requirements of
Part 12 as they relate to its administration of various stock purchase
and sale plans. The OCC grants **( *Bank* )**'s waiver request as
described below.

#### II. Background 

**( *Bank* )** is a limited-purpose trust company chartered under the
National Bank Act and registered with the OCC as a transfer agent under
section 17A of the Securities Exchange Act of 1934 ("Exchange Act"). Its
activities include effecting transactions and performing a variety of
other services for dividend reinvestment, stock purchase and employee
stock purchase plans of companies for which it acts as transfer agent
("Plans").

In effecting purchase and sales transactions for Plans, **( *Bank* )**
routinely aggregates orders for many customers into a single order, and
sends the order to a broker for execution. The broker, in turn, may
execute the order as a single transaction in the market, or may execute
the order in a number of trades, sometimes over multiple days. In light
of these procedures, **( *Bank* )** is proposing several variations in
content and timing from the standard notification of 12 C.F.R. §
12.4(a). The OCC has considered **( *Bank* )**'s request and decided to
allow certain variations from the standard transaction notification
requirements of Part 12 requested by **( *Bank* )**, as discussed
below.[^1]

III\. [Standard Notification Procedure]{.underline}

The standard notification procedure of 12 C.F.R. § 12.4(a) requires **(
*Bank* )** to give or send to the customer a notification, at or before
completion of a purchase or sale transaction, containing (1) the name of
the bank (**( *Bank* )**); (2) the name of the customer (the
employee/account holder); (3) the capacity in which the bank acts; (4)
the date and time of execution and the identity, price and number of
shares or units of the security purchased or sold by the customer; (5)
remuneration (direct or indirect) of the customer to the broker/dealer;
(6) remuneration of the customer to the bank, and other remuneration the
bank has received or will receive in connection with the transaction;
(7) the name of the registered broker/dealer utilized or person from
whom or to whom the security was purchased or sold; and (8) certain
disclosures in the case of certain types of debt securities (not at
issue in this request).

#### IV. Specifics of the Confirmation Request Proposed by **( *Bank* )** and OCC Response

#### (A) Name of Bank and Customer and Capacity in which Bank Acts 

**( *Bank* )** proposes to give or send to a customer a notification
containing the name of the bank (**( *Bank* )**), the name of the
customer and the capacity in which the bank acts, which are required by
12 C.F.R. § 12.4(a)(1)-(3).

#### (B) Date and Time of Execution and Identity, Price and Number of Shares

####  Purchased or Sold

Section 12.4(a)(4) requires the notification to disclose the date and
time of execution and the identity, price and number of shares or units
of the security purchased or sold by the customer.

**( *Bank* )** proposes that where a broker fills an aggregate order for
many customers by executing multiple trades, it will not disclose the
time of execution because the rules do not specify how to disclose time
of execution where multiple trades are executed for a single aggregate
order. **( *Bank* )** also explains that all customers whose
transactions are so aggregated will be accorded the weighted average
price for all shares sold or purchased by the broker in executing that
order. **( *Bank* )** proposes that the weighted average price be the
price disclosed in the notification.

To facilitate cost-effective and efficient transactions, the OCC will
waive the requirement for **( *Bank* )** to disclose the time of the
transaction pursuant to 12 C.F.R. § 12.4(a)(4) where multiple trades are
executed for a single aggregate order, and permit **( *Bank* )** to
disclose the weighted average price in the notifications.

#### (C) Remuneration of the Customer to the Broker/Dealer

**( *Bank* )** proposes that the transaction notification not disclose
brokerage fees paid by **( *Bank* )** even though such amounts might
constitute indirect remuneration from the customer to the broker under
12 C.F.R. § 12.4(a)(5). OCC will not require **( *Bank* )** to disclose
the brokerage fees paid by **( *Bank* )**. The remuneration of the
customer to **( *Bank* )** disclosed in the Plan materials, see
subsection (D) below, is the important disclosure for customers under
the circumstances.

#### (D) Remuneration of the Customer to the Bank and Other Remuneration to the Bank

Section 12.4(a)(6) requires the notification to disclose remuneration of
the customer to the bank, and other remuneration the bank has received
or will receive in connection with the transaction.

**( *Bank* )** proposes that the aggregate amount of fees a customer
will pay to **( *Bank* )** in connection with a transaction will be
disclosed in Plan materials. However, the notification might not
identify remuneration received by **( *Bank* )** from the issuer with
respect to maintaining the Plan and providing various related services
thereunder.

The OCC is granting **( *Bank* )**'s request not to disclose
remuneration **( *Bank* )** receives from issuers for maintaining and
providing various services for Plans. OCC believes that **( *Bank* )**
should continue to inform Plan participants that it will disclose its
remuneration from other third parties upon the written request of Plan
participants, as required by 12 C.F.R. § 12.4(a)(6)(ii).[^2]

#### (E) Name of Broker/Dealer

Section 12.4(a)(7) requires the notification to disclose the name of the
registered broker/dealer utilized or person from whom or to whom the
security was purchased or sold or to state that the bank will provide
this information within a reasonable time upon written request. **(
*Bank* )** states that the notification might not disclose the name of
the broker used in executing the transaction.

The OCC is waiving the requirement of 12 C.F.R. § 12.4(a)(7) that **(
*Bank* )** name the executing broker/dealer. However, **( *Bank* )**
must notify Plan participants that it will provide the name of the
broker/dealer, or the name of the counterparty if there is no
broker/dealer, upon request.

#### (F) Timing of Notification

**( *Bank* )** proposes to send a confirmation containing specified
details \"promptly\" after the transaction is executed, rather than \"at
or before completion of the transaction\" as specified in

12 C.F.R. § 12.4. **( *Bank* )** claims sending the confirmation at or
before completion of the transaction can be burdensome and impracticable
for a sizable plan administrator when many customers are involved in a
market transaction, because the administrator must subdivide the
transaction into individual participant components before notifications
can be prepared.

The OCC will allow notifications to be sent "promptly" after
transactions, rather than at or before completion of each transaction as
specified in 12 C.F.R. § 12.4. However, such notifications shall be sent
no later than four trading days after the last transaction effected in
the aggregated batch.

(G) [Telephone Enrollments]{.underline}

**( *Bank* )** asks that participants who enroll by telephone not be
required to sign a subsequent agreement in writing prior to receiving
Plan services, and be allowed to receive the modified standard
notifications as discussed above. **( *Bank* )** notes that customers
who enroll by telephone will receive written Plan materials in addition
to the written confirmation statements. OCC will permit customers who
enroll by telephone to receive the modified standard notifications and
written materials as discussed above pursuant to 12 C.F.R. § 12.8, and
will not require such participants to sign a subsequent agreement in
writing prior to receiving Plan services.

I hope that this letter is responsive to your request. Please note that
the relief granted herein is based on our understanding of the facts as
discussed above, and that OCC reserves the right to change its position
if different facts come to our attention, or as may be necessary in the
interests of customer protection. If you have further questions or
concerns, please contact Michael Dugas, Senior Attorney, Securities and
Corporate Practices Division, at 202-874-4497.

Sincerely,

/s/ Daniel P. Stipano

Daniel P. Stipano

Acting Chief Counsel

[^1]: The OCC's confirmation regulations at 12 C.F.R. Part 12 are
    modeled closely on the SEC's confirmation rules under Exchange Act
    Rule 10b-10 (17 C.F.R. § 240.10b-10). The OCC intends to administer
    Part 12 in a fashion consistent with the SEC's rules in order to
    facilitate comparable investor protection. Accordingly, the OCC
    consulted closely with SEC staff in processing this waiver request.

[^2]: 12 C.F.R. § 12.4(a)(6)(ii) provides in part: "If the bank elects
    not to disclose the source and amount of remuneration it has \[sic\]
    or will receive from a party other than the customer pursuant to
    paragraph (a)(6)(i) of this section, the written notification must
    disclose whether the bank has received or will receive remuneration
    from a party other than the customer, and that the bank will furnish
    within a reasonable time the source and amount of this remuneration
    upon written request of the customer."