77550 Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Proposed Rules 

(1) Selecting and negotiating with a 

borrower and executing, or directing the 

execution of the loan with the borrower; 

(2) Receiving, delivering, or directing 

the receipt or delivery of loaned 

securities; 

(3) Receiving, delivering, or directing 

the receipt or delivery of collateral; 

(4) Providing mark-to-market, 

corporate action, recordkeeping or other 

services incidental to the administration 

of the securities lending transaction; 

(5) Investing, or directing the 

investment of, cash collateral; or 

(6) Indemnifying the lender of 

securities with respect to various 

matters. 

§ll.775 Exemption from the definition 

of ‘‘broker’’ for the way banks effect 

excepted or exempted transactions in 

investment company securities. 

(a) A bank that meets the conditions 

for an exception or exemption from the 

definition of the term ‘‘broker’’ except 

for the condition in section 3(a)(4)(C)(i) 

of the Act (15 U.S.C. 78c(a)(4)(C)(i)), is 

exempt from such condition to the 

extent that it effects transactions in 

securities issued by an open-end 

company that is neither traded on a 

national securities exchange nor 

through the facilities of a national 

securities association or an interdealer 

quotation system, provided that: 

(1) Such transactions are effected 

through the National Securities Clearing 

Corporation’s Mutual Fund Services or 

directly with a transfer agent acting for 

the open-end company; and 

(2) The securities are distributed by a 

registered broker or dealer, or the sales 

charge is no more than the amount a 

registered broker or dealer may charge 

pursuant to the rules of a securities 

association registered under section 15A 

of the Act (15 U.S.C. 78o-3) adopted 

pursuant to section 22(b)(1) of the 

Investment Company Act of 1940 (15 

U.S.C. 80a-22(b)(1)). 

(b) Definitions. For purposes of this 

section: 

(1) Interdealer quotation system has 

the same meaning as in 17 CFR 

240.15c2–11. 

(2) Open-end company has the same 

meaning as in § ll.740. 

§ .ll780 Exemption for banks from 

liability under section 29 of the Securities 

Exchange Act of 1934. 

(a) No contract entered into before 

[date 18 months after effective date of 

the final rule], shall be void or 

considered voidable by reason of section 

29(b) of the Act (15 U.S.C. 78cc(b)) 

because any bank that is a party to the 

contract violated the registration 

requirements of section 15(a) of the Act 

(15 U.S.C. 78o(a)), any other applicable 

provision of the Act, or the rules and 

regulations thereunder based solely on 

the bank’s status as a broker when the 

contract was created. 

(b) No contract shall be void or 

considered voidable by reason of section 

29(b) of the Act (15 U.S.C. 78cc(b)) 

because any bank that is a party to the 

contract violated the registration 

requirements of section 15(a) of the Act 

(15 U.S.C. 78o(a)) or the rules and 

regulations thereunder based solely on 

the bank’s status as a broker when the 

contract was created, if: 

(1) At the time the contract was 

created, the bank acted in good faith and 

had reasonable policies and procedures 

in place to comply with section 

3(a)(4)(B) of the Act (15 U.S.C. 

78c(a)(4)(B)) and the rules and 

regulations thereunder; and 

(2) At the time the contract was 

created, any violation of the registration 

requirements of section 15(a) of the Act 

by the bank did not result in any 

significant harm or financial loss or cost 

to the person seeking to void the 

contract. 

§ll.781 Exemption from the definition 

of ‘‘broker’’ for banks for a limited period 

of time. 

A bank is exempt from the definition 

of the term ‘‘broker’’ under section 

3(a)(4) of the Act (15 U.S.C. 78c(a)(4)) 

until the first day of its first fiscal year 

commencing after June 30, 2008. 

By order of the Board of Governors of the 

Federal Reserve System, December 18, 2006. 

Jennifer J. Johnson, 

Secretary of the Board. 

Dated: December 18, 2006. 

By the Securities and Exchange 

Commission. 

Nancy M. Morris, 

Secretary. 

[FR Doc. 06–9825 Filed 12–22–06; 8:45 am] 

BILLING CODE 6210–01–P; 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Part 240 

[Release No. 34–54947; File No. S7–23–06] 

RIN 3235–AJ77 

Exemptions for Banks Under Section 

3(a)(5) of the Securities Exchange Act 

of 1934 and Related Rules 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The Securities and Exchange 

Commission is publishing for comment 

proposed rules and rule amendments 

regarding exemptions from the 

definitions of ‘‘broker’’ and ‘‘dealer’’

under the Securities Exchange Act of 

1934 (‘‘Exchange Act’’) for banks’’

securities activities. In particular, the 

Commission is re-proposing a 

conditional exemption originally 

proposed in 2004 that would allow 

banks to effect riskless principal 

transactions with non-U.S. persons 

pursuant to Regulation S under the 

Securities Act of 1933 (‘‘Securities 

Act’’). The Commission also is 

proposing to amend and redesignate an 

existing exemption from the definition 

of ‘‘dealer’’ for banks’ securities lending 

activities as a conduit lender. In 

addition, the Commission is proposing 

to amend a rule that grants a limited 

exemption from U.S. broker-dealer 

registration for foreign broker-dealers, 

conforming the rule to amended 

definitions of ‘‘broker’’ and ‘‘dealer’’

under the Exchange Act. Finally, the 

Commission is requesting comment on 

its intention to withdraw a rule defining 

the term ‘‘bank’’ for purposes of 

Sections 3(a)(4) and 3(a)(5) of the 

Exchange Act, because of judicial 

invalidation, a time-limited exemption 

for banks’ securities activities, because 

of the passage of time, and an 

exemption from the definition of 

‘‘broker’’ and ‘‘dealer’’ for savings 

associations and savings banks, an 

exemption no longer necessary because 

of the passage of the Regulatory Relief 

Act. 

DATES: Comments should be received on 

or before March 26, 2007. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments: 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/proposed.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number S7–23–06 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number S7–23–06. This file number 

should be included on the subject line 

if e-mail is used. To help us process and 

review your comments more efficiently, 

please use only one method. The 

Commission will post all comments on 

the Commission’s Internet Web site 

(http://www.sec.gov/rules/ 

proposed.shtml). Comments are also 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Proposed Rules 77551 

1Exchange Act Release No. 54946 (Dec. 18, 2006) 

(‘‘Joint Proposal’’). 

2On May 11, 2001, the Commission adopted 

interim final rules (‘‘the Interim Rules’’) regarding 

the Gramm-Leach-Bliley Act (‘‘GLBA’’) definitions 

of broker and dealer. See Exchange Act Release No. 

44291 (May 11, 2001), 66 FR 27760 (May 18, 2001) 

(http://www.sec.gov/rules/final/34-44291.htm). On 

June 17, 2004, the Commission proposed Regulation 

B. See Exchange Act Release No. 49879 (June 17, 

2004), 69 FR 39682 (June 30, 2004) (http:// 

www.sec.gov/rules/proposed/34-49879.htm). Both 

the Interim Rules as they apply to the broker 

activities of banks and Regulation B are superseded 

by the current joint rulemaking. The Regulatory 

Relief Act does not directly affect the operation of 

the rules the Commission adopted concerning 

banks’ dealer activities. See Exchange Act Release 

No. 47364 (Feb.13, 2003), 68 FR 8686 (Feb. 24, 

2003) (http://www.sec.gov/rules/final/34- 

47364.htm). However, we are proposing some 

limited amendments to separate and redesignate 

certain rules that provide exemptions to the 

definitions of both broker and dealer. 

3The rule was proposed in 2004 but no further 

action on the proposed rule was taken by the 

Commission. 

4 17 CFR 240.15a–6. 

5 17 CFR 240.3b–9. 

6 15 U.S.C. 78c(a)(4). 

7 15 U.S.C. 78c(a)(5). 

8 17 CFR 240.15a–8. 

9 17 CFR 240.15a–9. 

10See letter dated May 27, 2004, from Lawrence 

R. Uhlick, Executive Director and General Counsel, 

Institute of International Bankers to Catherine 

McGuire, Chief Counsel, Division of Market 

Regulation, Securities and Exchange Commission 

(http://www.sec.gov/rules/proposed/s72604.shtml). 

Regulation S [17 CFR 230.901, et seq.] specifies the 

requirements for an offer or sale of securities to be 

deemed to occur outside the United States and 

therefore not subject to the registration 

requirements of Section 5 of the Securities Act. 

Regulation S permits the sale of newly issued offshore securities and re-sales of off-shore securities 

from a non-U.S. person to a non-U.S. person. 

11See Exchange Act Release No. 49879, supra 

note 2. The Commission originally proposed this 

exemption to cover both a banks’ broker and dealer 

securities activities. The Commission and the Board 

are jointly are re-proposing this exemption for 

banks’ broker activities in response to passage of the 

Financial Services Regulatory Relief Act of 2006, 

Pub. L. 109–351, 120 Stat. 1966 (2006) (‘‘Regulatory 

Relief Act’’), which requires a joint proposal and 

provides that the final rules will supersede the 

existing bank broker rules. See text at note 36 infra. 

12Persons that conduct a broker or dealer 

business while located in the United States must 

register as broker-dealers (absent an exemption), 

even if they direct all of their selling efforts 

offshore. Exchange Act Release No. 27017 (July 11, 

1989), 54 FR 30013, 30016 (July 19, 1989). Nothing 

in proposed Rule 771 would affect the necessity of 

complying with Regulation S (17 CFR 230.904) or 

any other requirements of or exemptions from the 

Securities Act. Since the original proposal covered 

both agency and riskless principal transactions, an 

exemption for agency (brokerage) transactions is 

being separately proposed as a part of the Joint 

Proposal. 

13Proposed Rule 771 would define an ‘‘eligible 

security’’ as a security not being sold from the 

inventory of the bank or an affiliate of the bank, and 

not being underwritten by the bank or an affiliate 

of the bank on a firm-commitment basis unless the 

bank acquired the security from an unaffiliated 

distributor that did not purchase the security from 

the bank or a bank affiliate. 

14Proposed Rule 771 would define a ‘‘riskless 

principal transaction’’ as a transaction in which, 

after receiving an order to buy from a customer, the 

bank purchased the security from another person to 

offset a contemporaneous sale to such customer or, 

after having received an order to sell from a 

customer, the bank sold the security to another 

person to offset a contemporaneous purchase from 

such customer. 

15Rule 904 of Regulation S (17 CFR 230.904). 

available for public inspection and 

copying in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549. All comments 

received will be posted without change; 

we do not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. 

FOR FURTHER INFORMATION CONTACT: 

Catherine McGuire, Chief Counsel; 

Linda Stamp Sundberg, Senior Special 

Counsel, at (202) 551–5550, Office of the 

Chief Counsel, Division of Market 

Regulation, Securities and Exchange 

Commission, 450 Fifth Street, NW., 

Washington, DC 20549. 

SUPPLEMENTARY INFORMATION: The 

Securities and Exchange Commission is 

requesting public comment on proposed 

Rules 3a5–2, 3a5–3, and 15a-6 under the 

Exchange Act. 

Table of Contents 

I. Introduction and Background 

II. The Proposed Rules and Rule 

Amendments 

A. Regulation S Transactions with NonU.S. Persons 

B. Amendment to Exchange Act Rule 15a6 

C. Securities Lending by Bank Dealers 

D. Proposed Withdrawal of Exchange Act 

Rule 3b-9, Rule 15a-8, and Rule 15a-9 

III. Administrative Law Matters 

A. General Request for Comments 

B. Paperwork Reduction Act Analysis 

C. Consideration of Benefits and Costs 

D. Consideration of Burden on 

Competition, and on Promotion of 

Efficiency, Competition, and Capital 

Formation 

E. Consideration of Impact on the Economy 

F. Regulatory Flexibility Analysis 

IV. Statutory Authority 

V. Text of Proposed Rules and Rule 

Amendments 

I. Introduction and Background 

Today, the Commission and the Board 

of Governors of the Federal Reserve 

System (‘‘Board’’) are requesting 

comment on jointly proposed rules to 

implement the broker exceptions for 

banks relating to third-party networking 

arrangements, trust and fiduciary 

activities, sweep activities, and 

safekeeping and custody activities.1

The proposals in this release are 

intended to complement the Joint 

Proposal.2 In particular, we re-propose 

(and propose to redesignate as Rule 

3a5–2) a conditional exemption from 

the definition of dealer for banks to 

purchase from and sell to non-U.S. 

persons offerings in securities exempt 

under Regulation S.3 In addition, we 

propose a clarifying amendment to 

Exchange Act Rule 15a–6,4 which 

provides a conditional exemption from 

U.S. broker-dealer registration for 

certain foreign broker-dealers. This 

amendment would conform the 

language of Rule 15a–6 to more closely 

track the statutory changes made by the 

GLBA. We also propose to redesignate 

as new Rule 3a5–3 existing Rule 15a–11 

and to amend this exemption from the 

definition of dealer for banks’ conduit 

securities lending activities. Finally, we 

propose to withdraw Exchange Act Rule 

3b–9,5 in which the Commission 

defined the term ‘‘bank’’ for purposes of 

Sections 3(a)(4) 6 and 3(a)(5) 7 of the 

Exchange Act, due to judicial 

invalidation, Exchange Act Rule 15a–8,8

a time-limited exemption for banks’

securities activities, because of the 

passage of time, and Exchange Act Rule 

15a–9,9 an exemption from the 

definitions of ‘‘broker’’ and ‘‘dealer’’ for 

savings associations and savings banks, 

an exemption no longer necessary after 

passage of the Regulatory Relief Act. 

II. The Proposed Rules and Rule 

Amendments 

A. Regulation S Transactions With NonU.S. Persons 

In response to an industry request,10

the Commission proposed Exchange Act 

Rule 771 in 2004.11 We are re-proposing 

at this time the exemption we proposed 

in 2004, as applied to banks’ dealer 

activities, substantially as proposed. As 

originally proposed, this rule would 

provide banks with a conditional 

exemption from the definition of 

‘‘dealer’’ to engage in transactions with 

non-U.S. persons pursuant to Regulation 

S under the Securities Act of 1933.12 In 

particular, a bank could purchase and 

sell ‘‘eligible securities’’ 13 to offshore, 

non-U.S. persons on a ‘‘riskless 

principal’’ basis.14 A bank could also 

resell any eligible Regulation S security, 

after its purchase and after its initial 

issuance, to a non-U.S. person as long 

as the bank continues to comply with 

the requirements of Regulation S.15

After the requirements of Regulation S 

cease to apply to an issuance, a bank 

could resell such a security to another 

non-U.S. person or a broker-dealer, as 

long as the transaction complies with 

another bank broker or dealer exception 

or exemption. 

In explaining the need for an 

exemption, the industry group 

expressed the view to the Commission 


sroberts on PROD1PC70 with PROPOSALS
77552 Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Proposed Rules 

16Exchange Act Release No. 49879, supra note 2, 

69 FR 39720. We also explained that although we 

generally believe that U.S. broker-dealers should be 

subject to the same standards of conduct when 

dealing with non-U.S. persons, this principle is less 

compelling when the foreign person has chosen to 

deal with a U.S. bank with respect to Regulation S 

securities that are designed to be sold to non-U.S. 

persons offshore. 

Moreover, while no rules have been adopted, the 

exemption provided by Exchange Act Section 30(b), 

concerning foreign securities, has been held 

unavailable if the United States is used as a base 

for securities fraud perpetrated on foreigners, 

Arthur Lipper Corp. v. SEC, 547 F.2d 171 (2d Cir. 

1976), reh. denied, 551 F.2d 915 (2d Cir. 1977), cert. 

denied 434 U.S. 1009. 

17See, e.g., letter dated September 1, 2004 from 

Jeffrey P. Neubert, President and CEO, the Clearing 

House (‘‘Clearing House letter’’); letter dated 

September 1, 2004 from Lawrence R. Uhlick, 

Executive Director and Chief Counsel, Institute of 

International Bankers (‘‘IIB letter’’); letter dated 

September 1, 2004 from Agustin Abalo, President, 

Florida International Bankers Association, Inc. 

(‘‘FIBA letter’’); letter dated September 1, 2004 from 

Sarah A. Miller, Director, Center for Securities, 

Trust and Investment, American Bankers 

Association and General Counsel, ABA Securities 

Association (‘‘ABA/ABASA letter’’); and letter 

dated September 1, 2004 from Charles C. Cutrell, III, 

Executive Vice President and General Counsel, 

State Street Bank and Trust Company (‘‘State Street 

letter’’). 

18See, e.g., Clearing House letter, IIB letter. 

19State Street letter. 

20See Clearing House letter; ABA/ABASA letter. 

21 IIB letter, FIBA letter. 

22 IIB letter. 

23 IIB letter. This commenter noted, however, that 

a bank may be able to obtain certain information 

regarding the security from third party information 

vendors or may need to rely on information 

statements or offering memoranda, filings, or other 

third-party sources to determine how the security 

was offered. This commenter said that the bank’s 

exemption should not be jeopardized if this 

information is inaccurate or misleading as long as 

the bank had a reasonable belief that the 

information upon which it was relying was accurate 

and complete. 

24 In addition to adding the reasonable belief 

standard, the re-proposal includes some nonsubstantive clarifying changes to the text of the rule 

as proposed in 2004. 

25Even when the GLBA permits a bank to engage 

in securities-related activities without itself 

registering as a broker-dealer, a broker-dealer 

engaged in the business of effecting transactions for 

such bank still must register—absent an exemption 

or other exclusion from the broker-dealer 

registration requirements of the Exchange Act. For 

instance, a foreign broker-dealer that executes 

trades for a bank under Exchange Act Section 

3(a)(4)(C) would need to register as a U.S. brokerdealer if it does not meet the conditions of 

Exchange Act Rule 15a–6, or it does not otherwise 

qualify for an exemption from registration. Foreign 

banks cannot rely on the GLBA bank exceptions 

because they do not meet the definition of ‘‘bank’’

in Exchange Act Section 3(a)(6). However, U.S. 

branches and agencies of foreign banks would meet 

the definition of bank. See Exchange Act Release 

No. 27017, supra note 12, 54 FR 30015. 

26 17 CFR 240.15a–6(a)(4)(i). 

27 15 U.S.C. 78c(a)(4)(B)(vi). 

28Exchange Act Release No. 44291, supra note 2. 

29 Id. If the Commission were to adopt the 

exemptions for Regulation S securities, proposed 

supra, a bank would be permitted to sell Regulation 

S securities to non-U.S. persons, including 

customers of a foreign affiliate, as long as it met the 

conditions of that exemption. 

30Release No. 49879, supra note 2. 

staff that non-U.S. persons expect to 

deal with one private banker, and that 

these customers would not choose to 

deal with a registered broker-dealer to 

conduct securities transactions in 

Regulation S securities, but would 

instead look to foreign banks to effect 

these transactions. 

We are re-proposing this exemption 

for the same reasons we proposed it in 

2004. In proposing this exemption, we 

noted that the limited conditions in the 

proposed rule reflected our belief that 

non-U.S. persons generally will not be 

relying on the protections of the U.S. 

securities laws when purchasing 

Regulation S securities from U.S. 

banks.16 By their terms, these securities 

are not intended to be sold within the 

U.S. We also expressed our 

understanding that non-U.S. persons 

can purchase the same securities from 

banks located outside of the U.S. We 

invited comment on whether U.S. 

broker-dealer registration should be 

required with respect to transactions 

with these non-U.S. persons who are 

purchasing new offering securities 

offshore, or may be selling or 

purchasing seasoned securities. 

We received few comments on this 

proposed exemption.17 Commenters 

generally supported proposed Rule 771, 

stating that it would allow banks to 

compete with foreign banks not subject 

to Commission regulation.18 However, 

several commenters urged the 

Commission to broaden the proposed 

exemption. For example, one 

commenter suggested that the 

Commission modify the proposed 

exemption to include transactions for 

foreign investors in all securities sold in 

the United States.19 Two commenters 

urged the Commission to amend the 

proposed definition of ‘‘eligible 

security’’ to eliminate the restriction on 

banks’ selling securities from the 

inventory of affiliates or those 

underwritten by affiliates.20 Two 

commenters suggested that the 

Commission expand the exemption to 

cover all secondary market trading with 

offshore persons in any ‘‘foreign 

securities’’ not effected on a U.S. 

exchange or Nasdaq, stating that it is 

burdensome for a bank to determine 

whether a security was initially sold in 

compliance with Regulation S.21 One 

commenter also stated that to the extent 

the proposed rule requires a bank to 

make any determination or conduct any 

investigation of the way in which a 

security was initially offered, the rule 

should only require the bank to have a 

‘‘reasonable belief’’ that the eligible 

security was initially sold in 

compliance with Regulation S.22 In this 

commenter’s view, a bank may not have 

direct access to all of the information 

necessary to determine whether a 

security was initially offered under 

Regulation S or part of a class that was 

offered under Regulation S.23

After carefully considering the 

comments, we are proposing the 

exemption for banks’ riskless principal 

transactions in Regulation S securities, 

as new Rule 3a5–2, substantially as 

initially proposed. This proposed rule, 

however, incorporates the reasonable 

belief standard suggested by one of the 

commenters because we are persuaded 

that a bank should not suffer the loss of 

the exemption when due care is taken 

to identify the source of a security, even 

if an error in the identification occurs.24

We request comment on all aspects of 

Proposed Rule 3a5–2. 

B. Amendment to Exchange Act Rule 

15a–6 

In 2004, the Commission also 

proposed a clarifying amendment to 

Exchange Act Rule 15a–6, which 

provides a conditional exemption from 

U.S. broker-dealer registration for 

certain foreign broker-dealers.25

Exchange Act Rule 15a–6(a)(4)(i) allows 

a foreign broker-dealer, without 

registering in the United States, to effect 

transactions in securities with or for a 

U.S.-registered broker-dealer or bank 

acting ‘‘in a broker-dealer capacity as 

permitted by U.S. law.’’ 26 Thus, in 

transactions between a U.S. bank and its 

foreign broker-dealer affiliate, acting as 

principal, the U.S. bank could rely on 

the affiliate transactions exception in 

the GLBA,27 and the foreign affiliate 

could rely on Rule 15a–6(a)(4)(i). As the 

Commission explained in 2001, 

however, Exchange Act Rule 15a–

6(a)(4)(i) does not permit a foreign 

broker-dealer or bank to have direct 

contact with customers of the U.S. 

bank.28 Moreover, the GLBA affiliate 

transactions exception from the 

definition of broker for banks would not 

permit the U.S. bank to effect 

transactions with the bank’s foreign 

affiliate’s customers.29 We received no 

comments on our 2001 discussion of the 

interplay between Exchange Act Rule 

15a–6 and the affiliate transactions 

exemption and we are taking the same 

approach in the current proposal. 

In light of the amended definitions of 

‘‘broker’’ and ‘‘dealer,’’ the Commission 

proposed an amendment to Exchange 

Act Rule 15a–6 in 2004.30 Currently, 

Exchange Act Rule 15a–6(a)(4)(i) refers 

to ‘‘a bank acting in a broker or dealer 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Proposed Rules 77553 

31Nothing in this release should be construed as 

modifying the Exchange Act Section 3(a)(6) 

definition of ‘‘bank’’ as it applies to foreign banks. 

Currently, foreign banks generally would not meet 

this definition and would be considered brokerdealers under the U.S. securities laws. As such, 

foreign banks generally would be required to 

register as U.S. broker-dealers unless they qualify 

for an exemption from registration under Exchange 

Act Rule 15a–6. 32See Exchange Act Release No. 47364, supra 

note 2. 33Under Rule 15a–11 as adopted, as well as 

under the proposed amendment, ‘‘conduit lender’’

would mean a bank that borrows or loans securities, 

as principal, for its own account, and 

contemporaneously loans or borrows the same 

securities, as principal, for its own account. 34 15 U.S.C. 78c(a)(54)(A). 35Under Rule 15a–11 as adopted, as well as 

under the proposed amendment, ‘‘securities lending 

transaction’’ would mean a transaction in which the 

owner of a security lends the security temporarily 

to another party pursuant to a written securities 

lending agreement under which the lender retains 

the economic interests of an owner of such 

securities, and has the right to terminate the 

transaction and to recall the loaned securities on 

terms agreed by the parties. Under the proposal, 

‘‘securities lending services’’ would mean: (1) 

Selecting and negotiating with a borrower and 

executing, or directing the execution of, the loan 

with the borrower; (2) receiving, delivering, or 

directing the receipt or delivery of loaned 

securities; (3) receiving, delivering, or directing the 

receipt or delivery of collateral; (4) providing markto-market, corporate action, recordkeeping or other 

services incidental to the administration of the 

securities lending transaction; (5) investing, or 

directing the investment of, cash collateral; or (6) 

indemnifying the lender of securities with respect 

to various matters. 

36As applicable to banks’ broker activities, the 

Rule 15a–11 exemption was never operable because 

of the temporary exemption applicable to all bank 

broker activities. 

37American Bankers Association v. SEC, 804 

F.2d 739 (1986). 

38We note that, as a practical matter, banks likely 

already keep records that could be used to show 

they meet the terms of the proposed exemption. We 

also note that Section 203 of the GLBA specifically 

requires the bank regulators to promulgate 

recordkeeping requirements. 

capacity as permitted by U.S. law.’’ As 

amended, however, the definitions of 

‘broker’ and ‘dealer’ in Exchange Act 

Section 3(a)(4) and 3(a)(5), respectively, 

provide that banks engaging in the 

activities permitted under the 

conditional exceptions in those 

definitions ‘‘shall not be considered to 

be’’ brokers or dealers. To reflect this 

change, we proposed to amend 

Exchange Act Rule 15a–6(a)(4)(i) by 

replacing the phrase ‘‘in a broker or 

dealer capacity as permitted by U.S. 

law’’ with the phrase ‘‘pursuant to an 

exception or exemption from the 

definition of ‘broker’ or ‘dealer’ in 

Sections 3(a)(4)(B) or 3(a)(5)(C) of the 

Act.’’ 31 We are now proposing to 

conform Rule 15a–6 to the changes 

made by the GLBA by incorporating the 

rules applicable to banks’ broker and 

dealer activities as well as the statutory 

provisions with the addition of the 

phrase, ‘‘or the rules thereunder.’’ We 

are therefore re-proposing this modified 

clarifying amendment to Rule 15a–6. 

We request comment on all aspects of 

this proposal. 

C. Securities Lending by Bank Dealers 

In 2003, the Commission adopted 

Exchange Act Rule 15a–11, which 

provides a conditional exemption from 

the definitions of both ‘‘broker’’ and 

‘‘dealer’’ for banks engaging in securities 

lending transactions.32 Rule 15a–11 

provides that a bank is exempt from the 

definition of ‘‘broker’’ and ‘‘dealer’’

under Sections 3(a)(4) and 3(a)(5) of the 

Exchange Act to the extent that, as a 

conduit lender,33 it engages in securities 

lending transactions and any securities 

lending services in connection with 

such transactions, with or on behalf of 

a person the bank reasonably believes to 

be: (1) A qualified investor as defined in 

Section 3(a)(54)(A) of the Exchange 

Act; 34 or (2) any employee benefit plan 

that owns and invests, on a 

discretionary basis, not less than 

$25,000,000 in investments.35

As explained in the Joint Proposal, 

the exemption as applied to banks’

broker activities was voided by the 

Regulatory Relief Act. The Commission 

and the Board are proposing to 

reinstate—as Rule 772—this exemption 

with respect to the definition of 

‘‘broker’’ in the Joint Proposal.36 We are 

proposing in this release to redesignate 

what was Rule 15a–11 as Rule 3a5–3 

and to amend former Rule 15a–11 to 

eliminate its applicability to a bank’s 

‘‘broker’’ activities, while proposing to 

maintain its ongoing availability for a 

bank’s ‘‘dealer’’ activities. We request 

comment on all aspects of these 

changes. 

D. Proposed Withdrawal of Exchange 

Act Rule 3b–9, Rule 15a–8, and Rule 

15a–9 

We intend to withdraw Exchange Act 

Rule 3b–9, in which the Commission 

defined the term ‘‘bank’’ for purposes of 

Section 3(a)(4) and 3(a)(5) of the 

Exchange Act. Rule 3b–9 was 

invalidated by the U.S. Court of Appeals 

for the District of Columbia Circuit.37

We also intend to withdraw Rule 15a–

8, which provided a temporary 

exemption from Exchange Act Section 

29 liability for banks’ securities 

activities. This exemption expired. In 

addition, we intend to withdraw Rule 

15a–9, an exemption from the definition 

of ‘‘broker’’ and ‘‘dealer’’ for savings 

associations and savings banks. The 

Regulatory Relief Act caused savings 

associations and savings banks to be 

treated as ‘‘banks,’’ eliminating the need 

to differentiate between these entities 

for the purposes of the Exchange Act. As 

a result, current Rule 15a–9 is no longer 

necessary. We request comment on all 

aspects of withdrawing Rule 3b–9, Rule 

15a–8, and Rule 15a–9. 

III. Administrative Law Matters 

A. General Request for Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning this proposal. 

The Commission will consider the 

comments we previously received. 

Commenters may reiterate or crossreference previously submitted 

comments. 

B. Paperwork Reduction Act Analysis 

These proposed amendments to two 

rules and this re-proposal of a new rule 

would not impose recordkeeping or 

information collection requirements, or 

other collections of information that 

require approval of the Office of 

Management and Budget under 44 

U.S.C. 3501, et seq. Accordingly, the 

Paperwork Reduction Act does not 

apply.38

C. Consideration of Benefits and Costs 

We believe that these two proposed 

rule amendments and the re-proposal of 

a new rule would be consistent with 

Congress’s intent in enacting the GLBA 

and would provide banks with greater 

legal certainty regarding their conduct 

with respect to securities transactions. 

The rule amendments and the reproposal are very limited in scope. The 

Commission is re-proposing an 

exemption that would permit banks to 

purchase from and sell to non-U.S. 

persons securities exempt under 

Regulation S. The proposed rule would 

facilitate banks’ compliance with the 

federal securities laws and provide 

banks greater legal certainty regarding 

such conduct. The proposed addition of 

the reasonable belief standard would 

prevent banks from losing the 

exemption due to inadvertent errors in 

identifying the source of securities sold 

under the exemption, so long as the 

other conditions of the rule were met. 

We do not expect banks to incur any 

costs related to the re-proposal. The 

proposed clarifying amendment to 

Exchange Act Rule 15a–6 would 

conform the rule to the revised statutory 

definition of ‘‘broker’’ and ‘‘dealer’’

under the Exchange Act as well as to the 

rules adopted thereunder. With regard 

to securities lending activities, the 

Commission proposes to amend existing 

Exchange Act Rule 15a–11, and to 

redesignate it as Rule 3a5–3, to 


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77554 Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Proposed Rules 

39See text at note 37 supra. 

40 15 U.S.C. 78w(a)(2). ‘‘Whenever pursuant to 

this title the Commission is engaged in rulemaking 

* * * and is required to consider or determine 

whether an action is necessary or appropriate in the 

public interest, the Commission shall also consider, 

in addition to the protection of investors, whether 

the action will promote efficiency, competition, and 

capital formation.’’

41 15 U.S.C. 78c(f). 

42Pub. L. 104–121, Title II, 110 Stat. 857 (1996) 

(codified in various sections of 5 U.S.C., 15 U.S.C. 

and as a note to 5 U.S.C. 601). 43 5 U.S.C. 603. 

eliminate the rule’s reference to banks’

‘‘broker’’ activities, and to clarify the 

rule’s continued availability for banks’

‘‘dealer’’ activities. We do not expect 

banks to incur any costs related to these 

proposed amendments. The proposed 

withdrawal of Exchange Act Rules 3b–

9 and 15a–8 reflects the invalidation of 

Rule 3b–9 by the U.S. Court of Appeals 

for the District of Columbia Circuit,39

and the expiration of the 15a–8 

exemption, respectively. Similarly, the 

proposed withdrawal of Exchange Act 

Rule 15a–9 is proposed because the 

exemption is no longer necessary after 

passage of the Regulatory Relief Act. 

Withdrawing these rules would provide 

administrative certainty and clarity, as 

rules no longer in effect would be 

removed from the Code of Federal 

Regulations. The withdrawals are 

administrative in effect, and thus would 

impose no costs. We request comments 

generally on the costs and benefits 

associated with the re-proposal, the 

proposed amendments, and the 

proposed rule withdrawals. 

D. Consideration of Burden on 

Competition, and on Promotion of 

Efficiency, Competition, and Capital 

Formation 

In accordance with our 

responsibilities under Section 3(f) of the 

Exchange Act,40 we have considered 

both the protection of investors and 

whether these rule amendments and the 

re-proposal would promote efficiency, 

competition, and capital formation and 

have determined that they are consistent 

with the public interest.41 In addition, 

Section 23(a)(2) of the Exchange Act 

requires us, in adopting rules under the 

Exchange Act, to consider the 

anticompetitive effects of such rules, if 

any, and to refrain from adopting a rule 

that will impose a burden on 

competition not necessary or 

appropriate in furthering the purpose of 

the Exchange Act. 

We do not believe that the 

amendments and the re-proposal, as 

well as the elimination of Rules 3b–9, 

15a–8, and 15a–9, would result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act. 

The proposed amendments and the reproposal would provide guidance to 

banks regarding the scope of exceptions 

added to the Exchange Act by Congress 

in the GLBA. The rule amendments and 

re-proposal also would not impose any 

additional competitive burdens on 

banks engaging in a securities business, 

other than those imposed by Congress 

through functional regulation in the 

GLBA. Further, the proposed 

elimination of Rules 3b–9, 15a–8, and 

15a–9 is administrative in nature. 

Because the types of activities that are 

the subject of these amendments are not 

the types of activities in which small 

banks or small broker-dealers directly 

participate, there should be no 

competitive costs to small banks or 

small broker-dealers. 

We do not believe that those rules 

impose any adverse effects on 

efficiency, competition, or capital 

formation that are not a consequence of 

the GLBA statutory provisions. The 

exemptive rules would make it easier 

for banks to conduct their securities 

lending and sales of Regulation S 

securities after the GLBA changes to the 

federal securities laws. These proposed 

rules also would give banks enhanced 

legal certainty for these securities 

activities. We do not believe that those 

rules impose any adverse effects on 

efficiency, competition, or capital 

formation that are not a result of the 

GLBA statute. When Congress passed 

the GLBA, it effectively determined that 

regulation of banks conducting a 

securities operation outside of certain 

exceptions was necessary, appropriate, 

and in the public interest. Further, we 

believe that the proposed elimination of 

Rules 3b–9, 15a–8, and 15a–9 would not 

have any impact on efficiency, 

competition, or capital formation. 

The Commission requests comment 

on whether the proposed amendments 

would promote efficiency, competition, 

and capital formation. The Commission 

is particularly interested in hearing 

whether the existence of any of the 

proposed bank exemptions would have 

a negative impact on competition. 

Please provide detailed information and 

data on exactly how banks and brokerdealers compete and how the particular 

exemptions would impact brokerdealers’ business. 

E. Consideration of Impact on the 

Economy 

For purposes of the Small Business 

Regulatory Enforcement Fairness Act of 

1996, or ‘‘SBREFA,’’ 42 the Commission 

must advise the Office of Management 

and Budget as to whether the proposed 

amendments and the re-proposal 

constitute a ‘‘major’’ rule. Under 

SBREFA, a rule is considered ‘‘major’’

where, if adopted, it results or is likely 

to result in: An annual effect on the 

economy of $100 million or more (either 

in the form of an increase or a decrease); 

a major increase in costs or prices for 

consumers or individual industries; or a 

significant adverse effect on 

competition, investment, or innovation. 

If a rule is ‘‘major,’’ its effectiveness will 

generally be delayed for 60 days 

pending Congressional review. We 

request comment on the potential 

impact of the proposed amendments, 

the re-proposal, and the rule 

withdrawals on the economy on an 

annual basis. Commenters are requested 

to provide empirical data and other 

factual support for their views to the 

extent possible. 

F. Regulatory Flexibility Analysis 

The Commission has prepared an 

Initial Regulatory Flexibility Analysis 

(‘‘IRFA’’), in accordance with the 

provisions of the Regulatory Flexibility 

Act (‘‘RFA’’),43 regarding the proposed 

amendments and the re-proposal. 

1. Reasons for the Proposed Action 

The Commission is proposing the 

amendments to address issues raised by 

the passage of the GLBA and the 

Regulatory Relief Act. In addition, the 

exemption in proposed Rule 3a5–2 is 

being re-proposed to permit banks to 

purchase from and sell to non-U.S. 

persons securities exempt under 

Regulation S. Finally, we are proposing 

the elimination of Rules 3b–9, 15a–8, 

and 15a–9 for administrative clarity and 

in conformance with the Regulatory 

Relief Act. 

2. Objectives 

The proposed amendments, the reproposal, and the proposed rule 

withdrawals are intended to provide 

legal certainty to the industry with 

respect to the GLBA requirements. The 

Commission also seeks to make the 

restrictions imposed by the GLBA more 

accommodating of current securities 

activities carried out by banks while 

preserving investor protection 

principles. 

3. Legal Basis 

Pursuant to the Exchange Act and, 

particularly, Sections 3(a)(4), 3(b), 15, 

17, 23(a), and 36 thereof, the 

Commission proposes to adopt the 

amendments and the re-proposal and to 

eliminate the obsolete or unnecessary 

rules. 


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44 5 U.S.C. 603(c). 

4. Small Entities Subject to the Rule 

Congress did not exempt small entity 

banks from the application of the GLBA. 

Moreover, because amendments and the 

re-proposal are intended to provide 

guidance to all banks that are subject to 

the GBLA, the Commission determined 

that it would not be appropriate to 

exempt small entity banks from their 

operation. Therefore, the amendments 

and the re-proposal generally apply to 

banks that would be considered small 

entities. Nonetheless, as noted above, 

the types of activities that are the 

subject of the amendments are not the 

types of activities in which small banks 

or small broker-dealers generally 

directly participate. 

5. Reporting, Recordkeeping and Other 

Compliance Requirements 

The proposed amendments would not 

impose any new reporting, 

recordkeeping, or other compliance 

requirements on banks that are small 

entities. 

6. Duplicative, Overlapping, or 

Conflicting Federal Rules 

The Commission believes that there 

are no rules that duplicate, overlap, or 

conflict with the proposed amendments. 

7. Significant Alternatives 

Pursuant to Section 3(a) of the RFA,44

the Commission must consider the 

following types of alternatives: (a) The 

establishment of differing compliance or 

reporting requirements or timetables 

that take into account the resources 

available to small entities; (b) the 

clarification, consolidation, or 

simplification of compliance and 

reporting requirements under the 

proposed rule for small entities; (c) the 

use of performance rather than design 

standards; and (d) an exemption from 

coverage of the proposed rule, or any 

part thereof, for small entities. 

As discussed above, the GLBA does 

not exempt small banks from the 

Exchange Act broker-dealer registration 

requirements, and the Commission does 

not believe that an unconditional 

exemption would be consistent with the 

investor protection principles of the 

GLBA. Moreover, such an exemption 

could place broker-dealers at a 

competitive disadvantage versus small 

banks. 

The proposed amendments, the reproposal and the proposed rule 

withdrawals are intended to clarify and 

simplify compliance with the GLBA. As 

such, the proposals should ease 

compliance on banks of all sizes, 

including smaller entities. 

The Commission does not believe that 

it is necessary to consider whether small 

entities should be permitted to use 

performance rather than design 

standards to comply with the proposed 

amendments because they already 

propose performance standards and do 

not dictate for entities of any size any 

particular design standards (e.g., 

technology) that must be employed to 

achieve the objectives of the proposed 

amendments. 

8. Request for Comments 

The Commission encourages written 

comments on matters discussed in the 

IRFA. In particular, the Commission 

requests comments on: (a) The number 

of small entities that would be affected 

by the proposed amendments; (b) the 

nature of any impact the proposed 

amendments would have on small 

entities and empirical data supporting 

the extent of the impact; and (c) how to 

quantify the number of small entities 

that would be affected by and/or how to 

quantify the impact of the proposed 

amendments. Such comments will be 

considered in the preparation of the 

Final Regulatory Flexibility Analysis, if 

the proposed rule is adopted, and will 

be placed in the same public file as 

comments on the proposed rule itself. 

Persons wishing to submit written 

comments should refer to the 

instructions for submitting comments in 

the front of this release. 

IV. Statutory Authority 

Pursuant to authority set forth in the 

Exchange Act and particularly Sections 

3(a)(4), 3(b), 15, 17, 23(a), and 36 thereof 

(15 U.S.C. 78c(a)(4), 78c(b), 78o, 78q, 

78w(a), and 78mm, respectively) the 

Commission proposes to repeal current 

Rules 3b–9, 15a–8, and 15a–9 

(§§ 240.3b–9, 240.15a–8, and 240.15a–9, 

respectively). The Commission also is 

re–proposing Exchange Act Rule 3a5–2 

(§ 240.3a5–2), proposing to amend 

Exchange Act Rule 15a–6 (§ 240.15a–6), 

and proposing to amend and redesignate 

Exchange Act Rule 15a–11 as Rule 3a5–

3 (§ 240.15a–11 and § 240.3a5–3, 

respectively). 

V. Text of Proposed Rules and Rule 

Amendments 

List of Subjects in 17 CFR Part 240 

Broker–dealers, Reporting and 

recordkeeping requirements, Securities. 

For the reasons set forth in the 

preamble, Title 17, Chapter II of the 

Code of Federal Regulations is proposed 

to be amended as follows: 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

1. The authority citation for Part 240 

continues to read, in part, as follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 

78j–1, 78k, 78k–1, 78l, 78m, 78n, 78o, 78p, 

78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a–

20, 80a–23, 80a–29, 80a–37, 80b–3, 80b–4, 

80b–11, and 7201 et seq.; and 18 U.S.C. 1350, 

unless otherwise noted. 

* * * * * 

2. Sections 240.3a5–2 and 240.3a5–3 

are added to read as follows: 

§ 240.3a5–2 Exemption from the definition 

of ‘‘dealer’’ for banks effecting transactions 

in securities issued pursuant to Regulation 

S. 

(a) A bank is exempt from the 

definition of the term ‘‘dealer’’ under 

section 3(a)(5) of the Act (15 U.S.C. 

78c(a)(5)), to the extent that, in a riskless 

principal transaction, the bank: 

(1) Sells an eligible security in 

compliance with the requirements of 17 

CFR 230.903 to a purchaser who is 

outside of the United States within the 

meaning of 17 CFR 230.903 or to a 

registered broker or dealer, provided 

that if the sale is made prior to the 

expiration of the distribution 

compliance period specified in 17 CFR 

230.903(b)(2) or (b)(3), the sale is made 

in compliance with the requirements of 

17 CFR 230.904. 

(2) Purchases from a person who is 

not a U.S. person under 17 CFR 

230.902(k) an eligible security after its 

initial sale with a reasonable belief that 

the eligible security was initially sold 

outside of the United States within the 

meaning of and in compliance with the 

requirements of 17 CFR 230.903. 

(3) Purchases from a registered broker 

or dealer an eligible security after its 

initial sale outside of the United States 

within the meaning of and in 

compliance with the requirements of 17 

CFR 230.903, and sells to a purchaser 

who is outside the United States within 

the meaning of 17 CFR 230.903. 

(b) Definitions. For purposes of this 

section: 

(1) Distributor has the same meaning 

as in 17 CFR 230.902(d). 

(2) Eligible security means a security 

that: 

(i) Is not being sold from the 

inventory of the bank or an affiliate of 

the bank; and 

(ii) Is not being underwritten by the 

bank or an affiliate of the bank on a 

firm–commitment basis, unless the bank 

acquired the security from an 

unaffiliated distributor that did not 


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77556 Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Proposed Rules 

purchase the security from the bank or 

an affiliate of the bank. 

(3) Purchaser means a person who 

purchases an eligible security and who 

is not a U.S. person under 17 CFR 

230.902(k). 

(4) Riskless principal transaction 

means a transaction in which, after 

having received an order to buy from a 

customer, the bank purchased the 

security from another person to offset a 

contemporaneous sale to such customer 

or, after having received an order to sell 

from a customer, the bank sold the 

security to another person to offset a 

contemporaneous purchase from such 

customer. 

§ 240.3a5–3 Exemptionfrom the definition 

of ‘‘dealer’’ for banks engaging in securities 

lending transactions. 

(a) A bank is exempt from the 

definition of the term ‘‘dealer’’ under 

section 3(a)(5) of the Act (15 U.S.C. 

78c(a)(5)), to the extent that, as a 

conduit lender, it engages in or effects 

securities lending transactions, and any 

securities lending services in 

connection with such transactions, with 

or on behalf of a person the bank 

reasonably believes to be: 

(1) A qualified investor as defined in 

section 3(a)(54)(A) of the Act (15 U.S.C. 

78c(a)(54)(A)); or 

(2) Any employee benefit plan that 

owns and invests, on a discretionary 

basis, not less than $25,000,000 in 

investments. 

(b) Securities lending transaction 

means a transaction in which the owner 

of a security lends the security 

temporarily to another party pursuant to 

a written securities lending agreement 

under which the lender retains the 

economic interests of an owner of such 

securities, and has the right to terminate 

the transaction and to recall the loaned 

securities on terms agreed by the 

parties. 

(c) Securities lending services means: 

(1) Selecting and negotiating with a 

borrower and executing, or directing the 

execution of the loan with the borrower; 

(2) Receiving, delivering, or directing 

the receipt or delivery of loaned 

securities; 

(3) Receiving, delivering, or directing 

the receipt or delivery of collateral; 

(4) Providing mark-to-market, 

corporate action, recordkeeping or other 

services incidental to the administration 

of the securities lending transaction; 

(5) Investing, or directing the 

investment of, cash collateral; or 

(6) Indemnifying the lender of 

securities with respect to various 

matters. 

(d) For the purposes of this section, 

the term conduit lender means a bank 

that borrows or loans securities, as 

principal, for its own account, and 

contemporaneously loans or borrows 

the same securities, as principal, for its 

own account. A bank that qualifies 

under this definition as a conduit lender 

at the commencement of a transaction 

will continue to qualify, 

notwithstanding whether: 

(1) The lending or borrowing 

transaction terminates and so long as 

the transaction is replaced within one 

business day by another lending or 

borrowing transaction involving the 

same securities; and 

(2) Any substitutions of collateral 

occur. 

§ 240.3b–9 [Removed and Reserved] 

3. Section 240.3b–9 is removed and 

reserved. 

4. Section 240.15a–6 is amended by 

revising paragraph (a)(4)(i) to read as 

follows: 

§ 240.15a–6 Exemption of certain foreign 

brokers or dealers. 

(a) * * * 

(4) * * * 

(i) A registered broker or dealer, 

whether the registered broker or dealer 

is acting as principal for its own account 

or as agent for others, or a bank acting 

pursuant to an exception or exemption 

from the definition of ‘‘broker’’ or 

‘‘dealer’’ in sections 3(a)(4)(B), 

3(a)(4)(E), or 3(a)(5)(C) of the Act (15 

U.S.C. 78c(a)(4)(B), 15 U.S.C. 

78c(a)(4)(E), or 15 U.S.C. 78c(a)(5)(C)) or 

the rules thereunder; 

* * * * * 

§ 240.15a–8 [Removed and Reserved] 

5. Section 240.15a–8 is removed and 

reserved. 

§ 240.15a–9 [Removed and Reserved] 

6. Section 240.15a-9 is removed and 

reserved. 

§ 240.15a–11 [Removed and Reserved] 

7. Section 240.15a–11 is removed and 

reserved. 

Dated: December 18, 2006. 

By the Commission. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–9842 Filed 12–22–06; 8:45 am] 

BILLING CODE 8011–01–P 


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