6852 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations

for office rent ($24,500), $22,150 for

payroll taxes ($22,150), $20,000 for

employees’ health insurance ($29,500),

$19,150 for depreciation on the office

furniture and automobiles ($19,000),

$14,000 for communications ($12,000),

$12,000 for Committee member travel

($12,000), $9,000 for supplies and

printing ($8,500), $8,000 for insurance

and bonds ($8,000), and $7,000 for

postage ($7,000).

The assessment rate recommended by

the Committee was derived by dividing

anticipated expenses by expected

shipments of Florida tomatoes. Tomato

shipments for the year are estimated at

40,000,000 25-pound containers which

should provide $1,200,000 in

assessment income, which will be

adequate to cover projected expenses.

An interim final rule regarding this

action was published in the November

29, 1996, issue of the Federal Register

(61 FR 60510). That rule provided for a

30-day comment period. No comments

were received.

This action will reduce the

assessment obligation imposed on

handlers. While this rule will impose

some additional costs on handlers, the

costs are in the form of uniform

assessments on all handlers. Some of

the additional costs may be passed on

to producers. However, these costs will

be offset by the benefits derived from

the operation of the marketing order.

Therefore, the AMS has determined that

this rule will not have a significant

economic impact on a substantial

number of small entities.

The assessment rate established in

this rule will continue in effect

indefinitely unless modified,

suspended, or terminated by the

Secretary upon recommendation and

information submitted by the

Committee or other available

information.

Although this assessment rate is

effective for an indefinite period, the

Committee will continue to meet prior

to or during each fiscal period to

recommend a budget of expenses and

consider recommendations for

modification of the assessment rate. The

dates and times of Committee meetings

are available from the Committee or the

Department. Committee meetings are

open to the public and interested

persons may express their views at these

meetings. The Department will evaluate

Committee recommendations and other

available information to determine

whether modification of the assessment

rate is needed. The Committee’s 1996–

97 budget and those for subsequent

fiscal periods will be reviewed and, as

appropriate, approved by the

Department.

After consideration of all relevant

material presented, including the

information and recommendation

submitted by the Committee and other

available information, it is hereby found

that this rule, as hereinafter set forth,

will tend to effectuate the declared

policy of the Act.

Pursuant to 5 U.S.C. 553, it is also

found and determined that good cause

exists for not postponing the effective

date of this rule until 30 days after

publication in the Federal Register

because: (1) The Committee needs to

have sufficient funds to pay its expenses

which are incurred on a continuous

basis; (2) the 1996–97 fiscal period

began on August 1, 1996, and the

marketing order requires that the rate of

assessment for each fiscal period apply

to all assessable tomatoes handled

during such fiscal period; (3) handlers

are aware of this action which was

unanimously recommended by the

Committee at a public meeting and is

similar to other assessment rate actions

issued in past years; and (4) an interim

final rule was published on this action

and provided for a 30-day comment

period; no comments were received.

List of Subjects in 7 CFR Part 966

Marketing agreements, Reporting and

recordkeeping requirements, Tomatoes.

For the reasons set forth in the

preamble, 7 CFR part 966 is amended as

follows:

Note: This action will appear in the Code

of Federal Regulations.

PART 966—TOMATOES GROWN IN

FLORIDA

Accordingly, the interim final rule

amending 7 CFR part 966 which was

published at 61 FR 60510 on November

29, 1996, is adopted as a final rule

without change.

Dated: February 10, 1997.

Robert C. Keeney

Director, Fruit and Vegetable Division.

[FR Doc. 97–3793 Filed 2–13–97; 8:45 am]

BILLING CODE 3410–02–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 335

RIN 3064–AB79

Securities of Nonmember Insured

Banks

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Final rule.

SUMMARY: The Federal Deposit

Insurance Corporation (FDIC) is revising

its regulations which prescribe

registration and reporting requirements

for non-member insured banks with

securities required to be registered

under section 12 of the Securities

Exchange Act of 1934 (Exchange Act).

The final rule incorporates through

cross reference the corresponding

regulations of the Securities and

Exchange Commission (SEC) into the

provisions of the FDIC’s securities

regulations. Incorporation through cross

reference will assure that the FDIC’s

regulations remain substantially similar

to the SEC’s regulations, as required by

law.

DATES: Effective date. These revisions

are effective January 1, 1998, with the

exception of § 335.901, which is

effective July 1, 1997.

Early compliance. These revisions

may be immediately followed by the

affected party, except that the SEC’s

regulation regarding proposals of

security holders (17 CFR 240.14a–8),

which is cross referenced in § 335.401

may not be followed prior to January 1,

1998.

FOR FURTHER INFORMATION CONTACT: M.

Eric Dohm, Staff Accountant, Division

of Supervision (202–898–8921),

Lawrence H. Pierce, Securities

Activities Officer, Division of

Supervision (202–898–8902), or Jamey

G. Basham, Counsel, Legal Division

(202–898–7265), Federal Deposit

Insurance Corporation, 550 17th Street

N.W., Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION:

I. Background

Section 12(i) of the Securities

Exchange Act of 1934 as amended, 15

U.S.C. 78l(i), grants authority to the

FDIC to issue regulations applicable to

the securities of insured banks

(including foreign banks having an

insured branch) which are neither

members of the Federal Reserve System

nor District banks (collectively referred

to as nonmember banks), which are

substantially similar to the SEC’s

regulations under sections 12 (securities

registration), 13 (periodic reporting),

14(a) (proxies and proxy solicitation),

14(c) (information statements), 14(d)

(tender offers), 14(f) (election of

directors contests), and 16 (beneficial

ownership and reporting) of the

Exchange Act. Section 12(i) does not,

however, require the FDIC to issue

substantially similar regulations in the

event that the FDIC finds that

implementation of such regulation is

not necessarily in the public interest or

appropriate for protection of investors
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations 6853

and the FDIC publishes such findings

with detailed reasons therefor in the

Federal Register.

12 CFR part 335 generally applies

only to nonmember banks having one or

more classes of securities required to be

registered under section 12 of the

Exchange Act. To date, in 12 CFR part

335, the FDIC has generally maintained

its own version of regulations pursuant

to sections 12, 13, 14(a), 14(c), 14(d),

and 14(f) of the Exchange Act. In 1989,

the FDIC incorporated by cross

reference the SEC regulations governing

going private transactions and issuer

tender offers (54 FR 53592, 12 CFR

335.409 and 335.521). In 1992, SEC

regulations under section 16 of the

Exchange Act were incorporated by

cross reference (57 FR 4699, 12 CFR

335.410). In 1994, part 335 was

amended to conform with more recent

changes in the comparable SEC

regulations. In connection with its 1994

proposed rule, the FDIC requested

comment on the desirability of

incorporating the SEC rules by cross

reference into its own rules (59 FR

22555 (May 2, 1994)).

The FDIC received six comment

letters in response to its 1994 proposed

rule. Commentators were asked to

comment upon whether the FDIC

should consider proposing a revision to

part 335, to incorporate by cross

reference the comparable rules of the

SEC, rather than continue to maintain

the separate but substantially similar

body of rules contained in part 335 as

was done historically.

All of the six commenters supported

cross referencing to some extent. Two

thought that the FDIC should be careful

to adopt or preserve regulations

different from those of the SEC, where

FDIC drafted regulations would be more

appropriate for banks. None provided an

estimate of cost savings from the cross

referencing procedure. One commenter

indicated that if this cross referencing

procedure is adopted, the FDIC should

provide notice to banks filing under part

335 that the SEC has amended rules

applicable to banks by cross reference.

In the interest of quickly bringing its

rules into similarity with those of the

SEC, the FDIC adopted the rule

amendments in 1994 as they had been

previously proposed. Since the

comprehensive cross referencing

proposal was only described generally

at the time of publication of the 1994

proposed rule, it was necessary to

publish an express cross referencing

proposal for public comment upon the

actual method and language to be used.

Accordingly, on June 28, 1996 (61 FR

33696) the FDIC published a proposed

revision of 12 CFR part 335 which

would incorporate by cross reference

the comparable rules of the SEC, rather

than continue to maintain the separate

but substantially similar body of rules

contained in part 335.

II. Public Comment

The Board requested public

comments on all aspects of the proposed

rule which was published on June 28,

1996 (61 FR 33696). Written comments

were invited to be submitted during a

90-day comment period, and comments

were specifically requested regarding:

(1) The benefits and disadvantages of

cross referencing as a method for

assuring substantial similarity between

FDIC and SEC regulations;

(2) The potential cost savings or cost

burden of cross referencing; Please

include estimates of specific dollar

amounts of any anticipated benefits, as

well as amounts of transitionary and

continuing costs such as purchase of

reference aides, staff training, and any

necessary additional professional

assistance;

(3) Whether the FDIC should provide

any specific exemptions from, or

separate additions to the SEC’s

regulations;

(4) Whether the FDIC should continue

to require disclosure of insider

extensions of credit as it currently does

under its rules in 12 CFR 335.212 Item

7(b);

(5) Whether the FDIC should continue

to make Exchange Act filings available

for inspection at the Federal Reserve

Banks;

(6) The appropriate time frame for

implementation of the final rule,

including the amount of time which

should pass after publication of the final

rule before compliance with the final

rule is required; and

(7) Any other issues regarding the

proposal which commenters believe

would assist in this rulemaking.

The FDIC received two comment

letters in response to its 1996 request for

comments, one from a registered

nonmember bank and the other from a

public accounting firm. Both

commenters generally supported the

cross referencing proposal and indicated

that there should be overall benefits to

incorporation by cross reference. Both

commenters also supported

continuation of the FDIC’s review of

preliminary proxy statements. One

commenter agreed and the other

disagreed with the proposal to adopt or

preserve regulations different from those

of the SEC with respect to insider loan

disclosures. Regarding costs, one

commenter suggested that any

additional costs would be far

outweighed by the benefits of cross

referencing, while the other stated that

there should be no significant cost in

adopting the proposed rule. Neither

commenter provided an estimate of

specific cost increase nor savings

resulting from the cross referencing

procedure. One commenter also

indicated that the FDIC should

discontinue making Exchange Act

filings available at the Federal Reserve

Banks, that the FDIC should host

training seminars to assist nonmember

banks’ transition to and compliance

with the final rule, and that the final

rule should be effective for Exchange

Act filings made after December 31,

1997.

After careful consideration of all

public comments received regarding

incorporation by cross reference, the

FDIC has determined to adopt this final

rule in substantially the same form as

previously proposed (61 FR 33696 (June

28, 1996)). In order to allow ample time

for transition to the cross referenced

SEC regulations, the final rule will be

effective January 1, 1998. Early

compliance with the SEC regulations

will be permitted, except that the SEC’s

regulation regarding proposals of

security holders (17 CFR 240.14a–8),

which is incorporated by cross reference

in section 335.401, may not be followed

prior to January 1, 1998, the effective

date. Permitting early compliance with

17 CFR 240.14a–8 prior to the effective

date of this final rule is not considered

practicable.

III. Revisions to Part 335

The FDIC is revising 12 CFR part 335

by incorporating through cross

reference, the regulations of the SEC

issued under sections 12, 13, 14(a),

14(c), 14(d), and 14(f) of the Exchange

Act. The SEC’s regulations under

section 16 of the Exchange Act were

previously incorporated by cross

reference (57 FR 4699, February 7,

1992). As a result, with the exception of

forms filed pursuant to section 16, the

FDIC’s separate Exchange Act forms are

eliminated and the SEC’s Exchange Act

forms will be utilized in filings with the

FDIC. The cover pages of all forms filed

with the FDIC however, will be required

to contain the name of the FDIC in lieu

of that of the SEC in order to avoid

confusion as to where filings should be

made. The FDIC believes that

incorporation through cross reference

will cause its regulations to remain

substantially similar to those of the SEC,

as well as those of other federal

financial institution regulatory agencies.

This final rule will make appropriate

SEC regulations applicable to persons

subject to part 335, except where part

335 contains a differing or additional
6854 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations

requirement or exception. Incorporation

through cross reference generally makes

all SEC regulations, and amendments

thereto, applicable to registered

nonmember banks, unless the FDIC acts

to vary the SEC’s specific requirements.

The FDIC believes that this is an

effective way to assure that FDIC

regulations issued under the Exchange

Act remain substantially similar to the

SEC’s regulations. However, the FDIC

will retain the ability to exempt

nonmember banks, through a separate

FDIC rulemaking, from any particular

SEC rule it determines should not apply

to such banks. The FDIC also retains its

rulemaking authority to subject

nonmember banks to additional or

different regulations where warranted.

The FDIC believes that issuance of the

final rule will simplify administration

and enforcement of the disclosure

provisions of the Exchange Act. This is

the approach adopted by the Board of

Governors of the Federal Reserve

System (12 CFR 208.16), the Office of

the Comptroller of the Currency (12 CFR

11.2), and the Office of Thrift

Supervision (12 CFR 563d.1). Further,

as registrants, investors, and their

counsel acquire or expand their

familiarity with SEC regulations,

incorporation by cross reference should

help promote uniformity and

consistency of Exchange Act disclosure,

without affecting the quality of the

administration and enforcement of the

provisions of the Exchange Act for

which the FDIC is the appropriate

regulatory agency.

The FDIC’s principal concern with

respect to the elimination of FDIC forms

and subsequent use of SEC forms is that

filers may incorrectly forward the forms

to the SEC. This can create

embarrassment and legal liability on the

part of the filers for unintentional

failure to file the forms. Errors of this

kind can interfere with the smooth and

efficient administration of public filings

under the Exchange Act. For this reason,

the final rule requires that on all forms

to be filed with the FDIC, the cover

pages must prominently display the

name of the FDIC in lieu of that of the

SEC in order to avoid confusion as to

the appropriate filing agency.

The FDIC has also made one technical

revision to part 335 which is included

in this final rule, but was not included

in the proposed rule. This results in the

final rule including new § 335.901,

which contains the provisions of

presently existing § 303.8(b) of the FDIC

regulations (12 CFR 303.8(b)) which are

applicable to part 335. New § 335.901

contains the regulations which delegate

authority to act on certain Exchange Act

disclosure matters from the FDIC Board

of Directors to the Director of the

Division of Supervision. This addition

to part 335 is made as part of an agencywide effort to streamline and modify

FDIC regulations and policies as

required by section 303 of the Riegle

Community Development and

Regulatory Improvement Act of 1994 (12

U.S.C. 4803). The FDIC considers the

placement of the related delegation of

authority provisions into part 335 as

more convenient to users, less obscure

and easier to locate, and generally a

more appropriate location than their

current location in 12 CFR 303.8(b). A

technical revision has been made to the

language of the delegation. The 303.8(b)

language covers disclosure matters

under and pursuant to part 335, which

necessarily includes disclosure matters

under and pursuant to section 16 of the

Securities Exchange Act of 1934;

however, where the 303.8(b) language

also refers to sections 12, 13, and 14 of

the Securities Exchange Act of 1934, it

omits reference to section 16. In the

interests of consistency, a reference to

section 16 has been added.

IV. Differences From Current Part 335

Regulations

Following is a discussion of the

significant differences between the

FDIC’s existing regulations and the

SEC’s regulations and procedures which

are incorporated by cross reference

under this final rule. While there are

other differences in the regulations, the

FDIC believes them to be technical or

minor in nature. Upon the FDIC’s

adoption of this final rule, each of these

differences is eliminated.

A. Minimum Asset Test for Registration

The regulations of the SEC and the

existing regulations of the FDIC differ in

establishing the minimum total asset

size of an issuing company. The

company’s asset size is used as one of

the triggering criteria (in addition to the

number of shareholders) for requiring

registration of securities under section

12 of the Exchange Act. Section 12(g) of

the Exchange Act (15 U.S.C. 78l(g))

requires any issuing company with at

least 500 shareholders and minimum

total assets of $1 million to register the

class of securities, subject to limits,

exemptions, and conditions prescribed

by the SEC or other appropriate

regulatory agency. The SEC’s Rule 12g1 (17 CFR 240.12g-1) prescribes the

minimum asset test to be $10 million in

total assets, while current FDIC

regulations do not alter the statutory

standard. This final rule incorporates by

cross reference the SEC’s minimum

asset test threshold of $10 million.

B. Shareholder Proposal Rules

The regulations of the SEC and the

FDIC differ primarily with respect to the

proponent’s ownership requirements in

stock of an issuing company, and the

number of proposals which a proponent

may present. The FDIC’s rules presently

require only that the proponent be a

shareholder of the registrant, and that a

proponent may submit a maximum of

two proposals for inclusion in a

registrant’s annual meeting proxy

statement. The SEC’s Rule 14a-8 (17

CFR 240.14a-8) requires a proponent to

have beneficially ownership of at least

1% or $1,000 in market value of

securities entitled to be voted on the

proposal, requires a proponent to have

held such securities for at least one year,

and permits a proponent to submit only

one proposal for inclusion in a

registrant’s annual meeting proxy

statement. This final rule incorporates

the SEC’s requirements by cross

reference, which include the differences

described above.

C. Certification, Suspension of Trading,

and Removal From Listing by

Exchanges; Unlisted Trading; and

Related Filing Requirements

The SEC’s rules currently require a

national securities exchange to formally

certify that a registrant’s security has

been approved for listing. The SEC’s

rules contain provisions applicable to

suspension of trading on a national

securities exchange, withdrawal, and

striking of a security from listing and

registration. Also, SEC rules prescribe

requirements relative to applications,

changes, termination, suspension, or

exemption of securities admitted to

unlisted trading on a national securities

exchange. The FDIC’s rules currently

also require certification by a national

securities exchange, but do not contain

the additional provisions summarized

above. This final rule incorporates by

cross reference, the SEC’s rules on

Certification By Exchanges (17 CFR

240.12d1–1 through 12d1–6),

Suspension Of Trading, Withdrawal,

And Striking From Listing And

Registration (17 CFR 240.12d2–1

through 12d2–6), and Unlisted Trading

(17 CFR 240.12f–1 through 12f–6).

D. Availability of Exchange Act Filings

at Federal Reserve Banks

FDIC regulations currently require

that copies of all registration statements

and periodic reports required by 12 CFR

335.301 through 335.365 (exclusive of

exhibits), the proxy and information

statements required by 12 CFR 335.201,

and annual reports to security holders

required by 12 CFR 335.203 will be
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations 6855

available for inspection at the Federal

Reserve Bank (FRB) of the District in

which the bank making the submission

is located. The FDIC staff believes that

there has been extremely little public

interest in inspecting these Exchange

Act filings at the Federal Reserve Banks.

It is also believed that it is difficult for

the public to access these filings. This

final rule eliminates the availability of

these Exchange Act filings at the Federal

Reserve Banks. All Exchange Act filings

will remain available for inspection at

and copies may be obtained from the

FDIC in Washington, D.C.

V. Differences Between FDIC and SEC

Regulations (Superseded SEC

Regulations and FDIC Substituted

Regulations)

Following is a discussion of the

significant differences between the

applicable requirements of this final

rule, and the SEC’s regulations and

procedures which will generally be

applicable as a result of incorporation

by cross reference. Unless any particular

provisions of the SEC’s Exchange Act

regulations are specifically superseded

by the FDIC, incorporation by cross

reference would make such provisions

applicable to nonmember banks, related

parties and investors. The FDIC rules

under 12 CFR part 335 currently contain

these provisions or requirements and

retention thereof is considered

warranted. Through the adoption of this

final rule, each of the following

differences between the rules of the

FDIC and the rules of the SEC will

remain in effect.

A. Review of Proxy and Information

Statements

The SEC and the FDIC regulations

differ significantly in the type of proxy

and information statements subject to

regulatory review prior to distribution to

shareholders. The SEC requires

preliminary filings of proxy and

information statements, but only

concerning those shareholder meetings

which are other than ‘‘routine’’ annual

meetings. In such cases, the SEC

requires preliminary filings to be filed

ten days prior to distribution to

shareholders (17 CFR 240.14a-6 and 17

CFR 240.14c-5). The FDIC however,

currently requires preliminary filings for

all shareholder meetings, and requires

that the preliminary filings be made at

least ten days before ‘‘routine’’ meetings

and 15 days before ‘‘non-routine’’

meetings (12 CFR 335.204).

The SEC regulations exempt proxy

statements for ‘‘routine’’ annual

meetings from the requirement of

preliminary filing and advance review.

While the FDIC receives a moderate

number of ‘‘routine’’ meeting filings, the

staff has found that it is this category of

filings where the most fundamental

errors are made. Proxy statements for

‘‘routine’’ annual meetings often contain

more basic errors and omissions than in

the case of ‘‘non-routine’’ meetings. In

the absence of an advance filing, the

FDIC must choose between requiring a

new meeting after the problem is

belatedly discovered or overlooking the

resulting noncompliance until the

following year. A similar problem may

occur in enforcing the regulations with

banks that misread or are negligent in

interpreting the term ‘‘routine.’

Accordingly, this final rule continues

to require the filing of both ‘‘routine’’

and ‘‘non-routine’’ preliminary proxy

materials for FDIC staff review and

comment prior to their distribution to

shareholders. The FDIC staff believes

that the overall benefits resulting from

the current requirement under 12 CFR

part 335 to file ‘‘routine’’ preliminary

proxy statements, exceed the costs

attributed to making those filings.

B. Disclosure of Extensions of Credit to

Insiders

The SEC and the FDIC regulations

both contain requirements for financial

institution disclosure of loans to

insiders. SEC regulations generally

require the disclosure of certain insider

indebtedness in excess of $60,000,

which have preferential terms, were not

made in the ordinary course of business,

or which involve more than the normal

risk of collectibility or involve other

unfavorable features. In contrast, since

1965, the FDIC has required: (a)

disclosure of insiders’’ indebtedness on

a basis substantially similar to that of

the SEC, but without the $60,000

threshold; and (b) basic disclosure of

relatively large extensions of credit to

insiders and to insiders as a group,

based strictly upon the amount of

indebtedness.

Even though loans to insiders are

often subject to amount limitations in

banking law and regulation, significant

amounts of insider loans yet occur. This

final rule incorporates by reference the

SEC’s indebtedness of management

disclosure requirements and also adds a

requirement to disclose large extensions

of credit to insiders and to insiders as

a group, based solely upon the amount

of indebtedness. The FDIC staff believes

that the overall benefit resulting from

continuation of the FDIC’s current

disclosure requirements under 12 CFR

part 335 is in the public interest and is

appropriate to the banking industry.

C. Filing Fees

The regulations of SEC include

specific requirements for the payment of

filing fees which are applicable to and

must be paid by any person or entity

filing reports with the SEC under the

Exchange Act. This final rule does not

require filing fees to be paid by any

person, registrant, or entity making

Exchange Act filings with the FDIC.

D. Electronic Data Gathering Analysis

and Retrieval (EDGAR)

The SEC’s Regulation S–T (17 CFR

part 232) requires all registrants to

submit filings in electronic format

pursuant to its EDGAR system.

Although the FDIC is studying the

feasibility of the acceptance and

administration of electronic filings

under the Exchange Act, this final rule

does not permit and the FDIC does not

accept electronic filings at this time.

E. Legal Proceedings

The SEC and the FDIC regulations

currently both require disclosure of

legal proceedings in certain filings

under the Exchange Act. The FDIC

generally requires disclosure of all legal

proceedings required to be disclosed by

the SEC, and in addition, the FDIC’s

regulations deem as material and

require disclosure of administrative or

judicial proceedings arising under

section 8 of the Federal Deposit

Insurance Act. This final rule

incorporates the SEC’s legal proceedings

disclosure requirements by cross

reference, and in addition, continues to

deem as material and requires

disclosure of administrative or judicial

proceedings arising under section 8 of

the Federal Deposit Insurance Act. The

FDIC staff believes that the overall

benefit resulting from the explicit

requirement to disclose proceedings

arising under section 8 of the Federal

Deposit Insurance Act is in the public

interest and is appropriate to the

banking industry.

VI. Regulatory Flexibility Act

Under section 605(b) of the

Regulatory Flexibility Act (RFA) (5

U.S.C. 605(b)), the final regulatory

flexibility analysis otherwise required

under section 604 of the RFA (5 U.S.C.

604) is not required if the head of the

agency certifies that the rule will not

have a significant economic impact on

a substantial number of small entities

and the agency publishes such

certification in the Federal Register

along with its general notice of

proposed rulemaking or at the time of

publication of the final rule. Pursuant to

section 605(b) of the RFA, the FDIC

certifies that this final rule would apply
6856 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations

only to those banks whose securities are

publicly held. Other covered persons

include: insiders of banks, large

shareholders of banks, and bidders for

bank stock.

There were no significant issues

raised by public commenters in

response to the Regulatory Flexibility

Act certification contained in the notice

of proposed rulemaking. Accordingly,

no related changes have been made to

the regulations as proposed.

The regulations contained in this final

rule will incorporate SEC regulations by

cross reference. By statute, any

differences must be specifically justified

through the rulemaking process. The

SEC and FDIC regulations are

functionally almost identical, they are

issued under the same statutory

authority, and they share a common

legislative purpose. The FDIC considers

the applicable SEC rule, defining ‘‘small

entities,’’ a necessary standard in order

to maintain fair and comparable

regulation. The FDIC is comparing FDIC

regulated banks and SEC regulated

nonbank entities, including bank

holding companies. The applicable SEC

definition of ‘‘small entities’’ sets the

upper limit at $5 million. The SEC has

delayed raising this limit until it

completes its current and future

initiatives in this area. Any SEC

revisions in this area should pass

through to entities subject to part 335.

Currently, there are no banks below this

limit filing under part 335. Further, this

rulemaking does not substantially

change existing filing requirements for

any individual. Based upon this factual

background, the FDIC certifies that the

revisions to part 335 contained in this

final rule will have no economic impact

on any identifiable small entities as

defined for the class by SEC which is

the general regulator in the area.

VII. Small Business Regulatory

Enforcement Fairness Act

The Small Business Regulatory

Enforcement Fairness Act of 1996

(SBREFA) (Pub. L. 104–121) provides

generally for agencies to report rules to

Congress and for Congress to review the

rules. The reporting requirement is

triggered when agencies issue a final

rule as defined by the Administrative

Procedure Act (APA) at 5 U.S.C. 551.

Because the FDIC is issuing a final rule

as defined by the APA, the FDIC will

file the reports required by SBREFA.

The Office of Management and Budget

has determined that this final revision

to part 335 does not constitute a ‘‘major

rule’’ as defined by SBREFA.

VIII. Paperwork Reduction Act

The collection of information in this

final rule has been reviewed and

approved by the Office of Management

and Budget (OMB) under control

number 3064–0030 in accordance with

the Paperwork Reduction Act of 1980

(44 U.S.C. 3501 et seq.). Comments on

the accuracy of the burden estimate and

suggestions for reducing the burden

should be directed to the Office of

Management and Budget, Paperwork

Reduction Project (3064–0030),

Washington, D.C. 20503, with copies of

such comments to be sent to Steven F.

Hanft, Office of the Executive Secretary,

room F–400, 550 17th Street, N.W.,

Washington, D.C. 20429.

This information is needed to assure

compliance with the Exchange Act and

to provide information to investors and

the public about the condition of

registered nonmember banks. The likely

respondents are for-profit financial

institutions— registered nonmember

banks, as well as their directors,

executive officers and principal

shareholders. The total reporting burden

as most recently approved by OMB for

all collections of information in this

regulation is as follows:

Number of Respondents: 4,368.

Number of Responses Per

Respondent: 1.42.

Total Annual Responses: 6,214.

Hours Per Response: 8.90.

Total Annual Burden Hours: 55,276.

The estimated annual burden per

respondent varies from 30 minutes to

200 hours, depending on the particular

form and individual circumstances,

with an estimated average of 8.90 hours.

IX. Cost Benefit Analysis

This final rule is generally not

expected to result in material increases

in costs and burden to respondents.

Some filers, however, may realize an

increase in costs due to an increased

need for professional guidance in order

to facilitate the making of filings under

the Exchange Act. Any overall increase

in costs resulting from this final rule

should be moderate, however, due to

the existing general familiarity with the

SEC’s regulations on the part of

registrants, investors, and their counsel.

Any such increase in overall costs

should be offset by elimination of the

need for potential filers to become

familiar with two separate sets of

regulations implementing the filing

requirements of the Exchange Act.

X. Statutory Basis

The revisions to the FDIC’s regulation

under sections 12, 13, 14(a), 14(c), 14(d),

14(f) and 16 of the Exchange Act, are

being adopted by the FDIC pursuant to

Exchange Act section 12(i).

List of Subjects in 12 CFR Part 335

Accounting, Banks, banking,

Confidential business information,

Reporting and recordkeeping

requirements, Securities.

For the reasons set forth in the

preamble, the FDIC revises part 335 to

read as follows:

PART 335—SECURITIES OF

NONMEMBER INSURED BANKS

Sec.

335.101 Scope of part, authority and OMB

control number.

335.111 Forms and schedules.

335.201 Securities exempted from

registration.

335.211 Registration and reporting.

335.221 Forms for registration of securities

and similar matters.

335.231 Certification, suspension of

trading, and removal from listing by

exchanges.

335.241 Unlisted trading.

335.251 Forms for notification of action

taken by national securities exchanges.

335.261 Exemptions; terminations; and

definitions.

335.301 Reports of issuers of securities

registered pursuant to section 12.

335.311 Forms for annual, quarterly,

current, and other reports of issuers.

335.321 Maintenance of records and

issuer’s representations in connection

with required reports.

335.331 Acquisition statements and

acquisitions of securities by issuers.

335.401 Solicitations of proxies.

335.501 Tender offers.

335.601 Requirements of section 16 of the

Securities Exchange Act of 1934.

335.611 Initial statements of beneficial

ownership of securities (Form F–7).

335.612 Statement of changes in beneficial

ownership of securities (Form F–8).

335.613 Annual statement of beneficial

ownership of securities (Form F–8A).

335.701 Filing requirements, public

reference, and confidentiality.

335.801 Inapplicable SEC regulations; FDIC

substituted regulations; additional

information.

335.901 Delegation of authority to the

Director (DOS) and to the associate

directors, regional directors and deputy

regional directors to act on matters with

respect to disclosure laws and

regulations.

Authority: 15 U.S.C. 78l(i).

§ 335.101 Scope of part, authority and

OMB control number.

(a) This part is issued by the Federal

Deposit Insurance Corporation (the

FDIC) under section 12(i) of the

Securities Exchange Act of 1934, as

amended (15 U.S.C. 78) (the Exchange

Act) and applies to all securities of FDIC

insured banks (including foreign banks

having an insured branch) which are
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations 6857

neither a member of the Federal Reserve

System nor a District bank (collectively

referred to as nonmember banks) that

are subject to the registration

requirements of section 12(b) or section

12(g) of the Exchange Act (registered

nonmember banks). The FDIC is vested

with the powers, functions, and duties

vested in the Securities and Exchange

Commission (the Commission or SEC) to

administer and enforce the provisions of

sections 12, 13, 14(a), 14(c), 14(d), 14(f),

and 16 of the Securities Exchange Act

of 1934, as amended (the Exchange Act)

(15 U.S.C. 78l, 78m, 78n(a), 78n(c),

78n(d), 78n(f), and 78(p)), regarding

nonmember banks with one or more

classes of securities subject to the

registration provisions of sections 12(b)

and 12(g).

(b) This part 335 generally

incorporates through cross reference the

regulations of the SEC issued under

sections 12, 13, 14(a), 14(c), 14(d), 14(f),

and 16 of the Exchange Act. References

to the Commission are deemed to refer

to the FDIC unless the context otherwise

requires.

(c) The Office of Management and

Budget has reviewed and approved the

recordkeeping and reporting required by

this part (OMB control number 3064–

0030).

§ 335.111 Forms and schedules.

The Exchange Act regulations of the

SEC, which are incorporated by cross

reference under this part, require the

filing of forms and schedules as

applicable. Reference is made to SEC

Exchange Act regulation 17 CFR 249.0–

1 regarding the availability of all

applicable SEC Exchange Act forms.

Required schedules are codified and are

found within the context of the SEC’s

regulations. The filings of all applicable

SEC forms and schedules shall be made

with the FDIC at the address in this

section. They shall be titled with the

name of the FDIC in substitution for the

name of the SEC. Forms F–7 (§ 335.611),

F–8 (§ 335.612), F–8A (§ 335.613), are

FDIC forms which are issued under

section 16 of the Exchange Act and can

be obtained from the Registration and

Disclosure Section, Division of

Supervision, Federal Deposit Insurance

Corporation, 550 17th Street N.W.,

Washington, D.C. 20429. Reference is

also made to § 335.701 for general filing

requirements, public reference, and

confidentiality provisions.

§ 335.201 Securities exempted from

registration.

Persons generally subject to

registration requirements under

Exchange Act section 12 and subject to

this part shall follow the applicable and

currently effective SEC regulations

relative to exemptions from registration

issued under sections 3 and 12 of the

Exchange Act as codified at 17 CFR

240.3a12–1 through 240.3a12–11,

240.12a–4 through 240.12a–7, 240.12g–

1 through 240.12h–4.

§ 335.211 Registration and reporting.

Persons with securities subject to

registration under Exchange Act

sections 12(b) and 12(g), required to

report under Exchange Act section 13,

and subject to this part shall follow the

applicable and currently effective SEC

regulations issued under section 12(b) of

the Exchange Act as codified at 17 CFR

240.12b–1 through 240.12b–36.

§ 335.221 Forms for registration of

securities and similar matters.

(a) The applicable forms for

registration of securities and similar

matters are codified in subpart C of 17

CFR part 249. All forms shall be filed

with the FDIC as appropriate and shall

be titled with the name of the FDIC

instead of the SEC.

(b) The requirements for Financial

Statements can generally be found in

Regulation S–X (17 CFR part 210).

Banks may also refer to the instructions

for FFIEC Reports of Income and

Reports of Condition when preparing

unaudited interim statements. The

requirements for Management’s

Discussion and Analysis of Financial

Condition and Results of Operations can

be found in at 17 CFR 229.300. Industry

Guide 3, Statistical Disclosure by Bank

Holding Companies, is codified at 17

CFR 229.802.

(c) A ‘‘small business issuer,’’ as

defined under 17 CFR 240.12b–2, has

the option of filing Small Business (SB)

Forms (as codified in 17 CFR part 249)

in lieu of the Exchange Act forms

otherwise required to be filed, which

provide for financial and other item

disclosures in conformance with

Regulation S–B of the Securities and

Exchange Commission (17 CFR part

228). The definition of ‘‘small business

issuer,’’ generally includes banks with

annual revenues of less than $25

million, whose voting stock does not

have a public float of $25 million or

more.

§ 335.231 Certification, suspension of

trading, and removal from listing by

exchanges.

The provisions of the applicable and

currently effective SEC regulations

under section 12(d) of the Exchange Act

shall be followed as codified at 17 CFR

240.12d1–1 through 240.12d2–2.

§ 335.241 Unlisted trading.

The provisions of the applicable and

currently effective SEC regulations

under section 12(f) of the Exchange Act

shall be followed as codified at 17 CFR

240.12f–1 through 240.12f–6.

§ 335.251 Forms for notification of action

taken by national securities exchanges.

The applicable forms for notification

of action taken by national securities

exchanges are codified in subpart A of

17 CFR part 249. All forms shall be filed

with the FDIC as appropriate and shall

be titled with the name of the FDIC

instead of the SEC.

§ 335.261 Exemptions; terminations; and

definitions.

The provisions of the applicable and

currently effective SEC regulations

under sections 12(g) and 12(h) of the

Exchange Act shall be followed as

codified at 17 CFR 240.12g–1 through

240.12h–4.

§ 335.301 Reports of issuers of securities

registered pursuant to section 12.

The provisions of the applicable and

currently effective SEC regulations

under section 13(a) of the Exchange Act

shall be followed as codified at 17 CFR

240.13a–1 through 240.13a–17.

§ 335.311 Forms for annual, quarterly,

current, and other reports of issuers.

(a) The applicable forms for annual,

quarterly, current, and other reports are

codified in subpart D of 17 CFR part

249. All forms shall be filed with the

FDIC as appropriate and shall be titled

with the name of the FDIC instead of the

SEC.

(b) The requirements for Financial

Statements can generally be found in

Regulation S–X (17 CFR part 210).

Banks may also refer to the instructions

for FFIEC Reports of Income and

Reports of Condition when preparing

unaudited interim reports. The

requirements for Management’s

Discussion and Analysis of Financial

Condition and Results of Operations can

be found at 17 CFR 229.300. Industry

Guide 3, Statistical Disclosure by Bank

Holding Companies, is codified at 17

CFR 229.802.

(c) A ‘‘small business issuer,’’ as

defined under 17 CFR 240.12b–2, has

the option of filing Small Business (SB)

Forms (as codified in 17 CFR part 249)

in lieu of the Exchange Act forms

otherwise required to be filed, which

provide for financial and other item

disclosures in conformance with

Regulation S–B of the Securities and

Exchange Commission (17 CFR part

228). The definition of ‘‘small business

issuer,’’ generally includes banks with

annual revenues of less than $25
6858 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations

million, whose voting stock does not

have a public float of $25 million or

more.

§ 335.321 Maintenance of records and

issuer’s representations in connection with

required reports.

The provisions of the applicable and

currently effective SEC regulations

under section 13(b) of the Exchange Act

shall be followed as codified at 17 CFR

240.13b2–1 through 240.13b2–2.

§ 335.331 Acquisition statements and

acquisitions of securities by issuers.

The provisions of the applicable and

currently effective SEC regulations

under section 13(d) and 13(e) of the

Exchange Act shall be followed as

codified at 17 CFR 240.13d–1 through

240.13e–102.

§ 335.401 Solicitations of proxies.

The provisions of the applicable and

currently effective SEC regulations

under section 14(a) and 14(c) of the

Exchange Act shall be followed as

codified at 17 CFR 240.14a–1 through

240.14a–103 and 240.14c–1 through

240.14c–101.

§ 335.501 Tender offers.

The provisions of the applicable and

currently effective SEC regulations

under section 14(d), 14(e), and 14(f) of

the Exchange Act shall be followed as

codified at 17 CFR 240.14d–1 through

240.14f–1.

335.601 Requirements of section 16 of the

Securities Exchange Act of 1934.

Persons subject to section 16 of the

Act with respect to securities registered

under this part shall follow the

applicable and currently effective SEC

regulations issued under section 16 of

the Act (17 CFR 240.16a–1 through

240.16e–1(1), except that the forms

described in § 335.611 (Form F–7),

§ 335.612 (Form F–8), and § 335.613

(Form F–8A) shall be used in lieu of

SEC Form 3 (17 CFR 249.103), Form 4

(17 CFR 249.104), or Form 5 (17 CFR

249.105), respectively. Copies of Forms

F–7, F–8, F–8A and the instructions

thereto can be obtained from the

Registration, Disclosure, and Securities

Operations Unit, Division of

Supervision, Federal Deposit Insurance

Corporation, 550 17th Street N.W.,

Washington, D.C. 20429.

§ 335.611 Initial statement of beneficial

ownership of securities (Form F–7).

This form shall be filed in lieu of SEC

Form 3 pursuant to SEC rule 16a–3 (17

CFR 240.16a–3) for initial statements of

beneficial ownership of securities. The

FDIC is authorized to solicit the

information required by this form

pursuant to sections 16(a) and 23(a) of

the Securities Exchange Act of 1934 (15

U.S.C. 78p and 78w) and the rules and

regulations thereunder. SEC regulations

referenced in this form are codified at

17 CFR 240.16a–1 through 240.16e–1.

§ 335.612 Statement of changes in

beneficial ownership of securities (Form F–

8).

This form shall be filed pursuant to

SEC rule 16a–3 (17 CFR 240.16a–3) for

statements of changes in beneficial

ownership of securities. The FDIC is

authorized to solicit the information

required by this form pursuant to

sections 16(a) and 23(a) of the Securities

Exchange Act of 1934 (15 U.S.C. 78p

and 78w) and the rules and regulations

thereunder. SEC regulations referenced

in this form are codified at 17 CFR

240.16a–1 through 240.16e–1.

§ 335.613 Annual statement of beneficial

ownership of securities (Form F–8A).

This form shall be filed pursuant to

SEC rule 16a–3 (17 CFR 240.16a–3) for

annual statements of beneficial

ownership of securities. The FDIC is

authorized to solicit the information

required by this form pursuant to

sections 16(a) and 23(a) of the Securities

Exchange Act of 1934 (15 U.S.C. 78p

and 78w), and the rules and regulations

thereunder. SEC regulations referenced

in this form are codified at 17 CFR

240.16a–1 through 240.16e–1.

§ 335.701 Filing requirements, public

reference, and confidentiality.

(a) Filing requirements. Unless

otherwise indicated in this part, one

original and four conformed copies of

all papers required to be filed with the

FDIC under the Exchange Act or

regulations thereunder shall be filed at

its office in Washington, D.C. Official

filings made at the FDIC’s office in

Washington, D.C. should be addressed

as follows: Attention: Registration,

Disclosure, and Securities Operations

Unit, Division of Supervision, Federal

Deposit Insurance Corporation, 550 17th

Street N.W., Washington, D.C. 20429.

Material may be filed by delivery to the

FDIC through the mails or otherwise.

The date on which papers are actually

received by the designated FDIC office

shall be the date of filing thereof if all

of the requirements with respect to the

filing have been complied with.

(b) Inspection. Except as provided in

paragraph (c) of this section, all

information filed regarding a security

registered with the FDIC will be

available for inspection at the Federal

Deposit Insurance Corporation, 550 17th

Street N.W., Washington, D.C.

(c) Nondisclosure of certain

information filed. Any person filing any

statement, report, or document under

the Act may make a written objection to

the public disclosure of any information

contained therein in accordance with

the procedure set forth in this paragraph

(c).

(1) The person shall omit from the

statement, report, or document, when it

is filed, the portion thereof that it

desires to keep undisclosed (hereinafter

called the confidential portion). In lieu

thereof, it shall indicate at the

appropriate place in the statement,

report, or document that the

confidential portion has been so omitted

and filed separately with the FDIC.

(2) The person shall file with the

copies of the statement, report, or

document filed with the FDIC:

(i) As many copies of the confidential

portion, each clearly marked

‘‘Confidential Treatment,’’ as there are

copies of the statement, report, or

document filed with the FDIC and with

each exchange, if any. Each copy shall

contain the complete text of the item

and, notwithstanding that the

confidential portion does not constitute

the whole of the answer, the entire

answer thereto; except that in the case

where the confidential portion is part of

a financial statement or schedule, only

the particular financial statement or

schedule need be included. All copies

of the confidential portion shall be in

the same form as the remainder of the

statement, report, or document;

(ii) An application making objection

to the disclosure of the confidential

portion. Such application shall be on a

sheet or sheets separate from the

confidential portion, and shall contain:

(A) An identification of the portion of

the statement, report, or document that

has been omitted;

(B) A statement of the grounds of

objection;

(C) Consent that the FDIC may

determine the question of public

disclosure upon the basis of the

application, subject to proper judicial

reviews;

(D) The name of each exchange, if

any, with which the statement, report,

or document is filed;

(iii) The copies of the confidential

portion and the application filed in

accordance with this paragraph shall be

enclosed in a separate envelope marked

‘‘Confidential Treatment’’ and

addressed to Executive Secretary,

Federal Deposit Insurance Corporation,

Washington, D.C. 20429.

(3) Pending the determination by the

FDIC as to the objection filed in

accordance with paragraph (c)(2)(ii) of

this section, the confidential portion

will not be disclosed by FDIC.
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations 6859

(4) If the FDIC determines that the

objection shall be sustained, a notation

to that effect will be made at the

appropriate place in the statement,

report, or document.

(5) If the FDIC shall have determined

that disclosure of the confidential

portion is in the public interest, a

finding and determination to that effect

will be entered and notice of the finding

and determination will be sent by

registered or certified mail to the

person.

(6) The confidential portion shall be

made available to the public:

(i) Upon the lapse of 15 days after the

dispatch of notice by registered or

certified mail of the finding and

determination of the FDIC described in

paragraph (c)(5) of this section, if prior

to the lapse of such 15 days the person

shall not have filed a written statement

that he intends in good faith to seek

judicial review of the finding and

determination;

(ii) Upon the lapse of 60 days after the

dispatch of notice by registered or

certified mail of the finding and

determination of the FDIC, if the

statement described in paragraph

(c)(6)(i) of this section shall have been

filed and if a petition for judicial review

shall not have been filed within such 60

days; or

(iii) If such petition for judicial review

shall have been filed within such 60

days upon final disposition, adverse to

the person, of the judicial proceedings.

(7) If the confidential portion is made

available to the public, a copy thereof

shall be attached to each copy of the

statement, report, or document filed

with the FDIC and with each exchange

concerned.

§ 335.801 Inapplicable SEC regulations;

FDIC substituted regulations; additional

information.

(a) Filing fees. Filing fees will not be

charged relative to any filings or

submissions of materials made with the

FDIC pursuant to the cross reference to

regulations of the SEC issued under

sections 12, 13, 14(a), 14(c), 14(d), 14(f),

and 16 of the Exchange Act, and this

part.

(b) Electronic filings. The FDIC does

not participate in the SEC’s EDGAR

(Electronic Data Gathering Analysis and

Retrieval) electronic filing program (17

CFR part 232), and does not permit

electronically transmitted filings or

submissions of materials in electronic

format to the FDIC.

(c) Legal proceedings. Whenever this

part or cross referenced provisions of

the SEC regulations require disclosure

of legal proceedings, administrative or

judicial proceedings arising under

section 8 of the Federal Deposit

Insurance Act shall be deemed material

and shall be described.

(d) Indebtedness of management.

Whenever this part or cross referenced

provisions of the SEC regulations

require disclosure of indebtedness of

management, extensions of credit to

specified persons in excess of ten (10)

percent of the equity capital accounts of

the bank or $5 million, whichever is

less, shall be deemed material and shall

be disclosed in addition to any other

required disclosure. The disclosure of

this material indebtedness shall include

the largest aggregate amount of

indebtedness (in dollar amounts, and as

a percentage of total equity capital

accounts at the time), including

extensions of credit or overdrafts,

endorsements and guarantees

outstanding at any time since the

beginning of the bank’s last fiscal year,

and as of the latest practicable date.

(1) If aggregate extensions of credit to

all specified persons as a group

exceeded 20 percent of the equity

capital accounts of the bank at any time

since the beginning of the last fiscal

year, the aggregate amount of such

extensions of credit shall also be

disclosed.

(2) Other loans are deemed material

and shall be disclosed where:

(i) The extension(s) of credit was not

made on substantially the same terms,

including interest rates, collateral and

repayment terms as those prevailing at

the time for comparable transactions

with other than the specified persons;

(ii) The extension(s) of credit was not

made in the ordinary course of business;

or

(iii) The extension(s) of credit has

involved or presently involves more

than a normal risk of collectibility or

other unfavorable features including the

restructuring of an extension of credit,

or a delinquency as to payment of

interest or principal.

(e) Proxy material required to be filed.

(1) Three preliminary copies of each

information statement, proxy statement,

form of proxy, and other item of

soliciting material to be furnished to

security holders concurrently therewith,

shall be filed with the FDIC by the bank

or any other person making a

solicitation subject to 12 CFR 335.401 at

least ten calendar days (or 15 calendar

days in the case of other than routine

meetings, as defined in paragraph (e)(2)

of this section) prior to the date such

item is first sent or given to any security

holders, or such shorter date as may be

authorized.

(2) For the purposes of this paragraph

(e), a routine meeting means:

(i) A meeting with respect to which

no one is soliciting proxies subject to

§ 335.401 other than on behalf of the

bank, and at which the bank intends to

present no matters other than:

(A) The election of directors;

(B) The election, approval or

ratification of accountants;

(C) A Security holder proposal

included pursuant to SEC Rule 14(a)-8

(17 CFR 240.14a-8); and

(D) The approval or ratification of a

plan as defined in paragraph (a)(7)(ii) of

Item 402 of SEC Regulation S–K (17 CFR

229.402(a)(7)(ii)) or amendments to such

a plan; and

(ii) The bank does not comment upon

or refer to a solicitation in opposition

(as defined in 17 CFR 240.14a-6) in

connection with the meeting in its

proxy material.

(3) Where preliminary copies of

material are filed with the FDIC under

this section, the printing of definitive

copies for distribution to security

holders should be deferred until the

comments of the FDIC’s staff have been

received and considered.

(f) Additional information; filing of

other statements in certain cases. (1) In

addition to the information expressly

required to be included in a statement,

form, schedule or report, there shall be

added such further material

information, if any, as may be necessary

to make the required statements, in light

of the circumstances under which they

are made, not misleading.

(2) The FDIC may, upon the written

request of the bank, and where

consistent with the protection of

investors, permit the omission of one or

more of the statements or disclosures

herein required, or the filing in

substitution therefor of appropriate

statements or disclosures of comparable

character.

(3) The FDIC may also require the

filing of other statements or disclosures

in addition to, or in substitution for

those herein required in any case where

such statements are necessary or

appropriate for an adequate presentation

of the financial condition of any person

whose financial statements are required,

or disclosure about which is otherwise

necessary for the protection of investors.

§ 335.901 Delegation of authority to the

Director (DOS) and to the associate

directors, regional directors and deputy

regional directors to act on matters with

respect to disclosure laws and regulations.

(a) Except as provided in paragraph

(b) of this section, authority is delegated

to the Director, Division of Supervision

(DOS), and where confirmed in writing

by the director, to an associate director,

or to the appropriate regional director or
6860 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Rules and Regulations

deputy regional director, to act on

disclosure matters under and pursuant

to sections 12, 13, 14 and 16 of the

Securities Exchange Act of 1934 (15

U.S.C. 78) or this part.

(b) Authority to act on disclosure

matters is retained by the FDIC Board of

Directors when such matters involve:

(1) Exemption from disclosure

requirements pursuant to section 12(h)

of the Securities Exchange Act of 1934

(15 U.S.C. 78l(h)); or

(2) Exemption from tender offer

requirements pursuant to section

14(d)(8) of the Securities Exchange Act

of 1934 (15 U.S.C. 78n(d)(8)).

By Order of the Board of Directors.

Dated at Washington, D.C. this 4th day of

February, 1997.

Federal Deposit Insurance Corporation.

Jerry L. Langley,

Executive Secretary.

[FR Doc. 97–3596 Filed 2–13–97; 8:45 am]

BILLING CODE 6714–01–P

FEDERAL HOUSING FINANCE BOARD

12 CFR Part 931

[No. 97–3]

Technical Amendment to Definition of

Deposits in Banks or Trust Companies

AGENCY: Federal Housing Finance

Board.

ACTION: Interim final rule with request

for comments.

SUMMARY: The Federal Housing Finance

Board (Finance Board) is amending the

definition of the term ‘‘deposits in banks

or trust companies’’ to expressly include

a deposit in, or a sale of federal funds

to, a branch or agency of a foreign bank

located in the United States that is

subject to the supervision of the Board

of Governors of the Federal Reserve

System (Board of Governors), as an

investment eligible to fulfill the

liquidity requirement imposed on the

Federal Home Loan Banks (FHLBanks)

by section 11(g) of the Federal Home

Loan Bank Act (Bank Act).

DATES: The interim final rule will

become effective on February 14, 1997.

The Finance Board will accept

comments on the interim final rule in

writing on or before March 17, 1997.

ADDRESSES: Mail comments to Elaine L.

Baker, Executive Secretary, Federal

Housing Finance Board, 1777 F Street,

NW, Washington, DC 20006. Comments

will be available for public inspection at

this address.

FOR FURTHER INFORMATION CONTACT:

Janice A. Kaye, Attorney-Advisor, Office

of General Counsel, 202/408–2505, or

Christine M. Freidel, Assistant Director,

Financial Management Division, Office

of Policy, 202/408–2976, Federal

Housing Finance Board, 1777 F Street,

NW, Washington, DC 20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

Under section 11(e)(1) of the Bank

Act, the FHLBanks have the power to

accept deposits from their members,

other FHLBanks, or instrumentalities of

the United States. See 12 U.S.C.

1431(e)(1). To ensure that each

FHLBank has sufficient liquid assets to

meet deposit withdrawal demands,

section 11(g) of the Bank Act imposes a

liquidity requirement. See id. 1431(g).

The liquidity requirement provides that

each FHLBank must invest, upon such

terms and conditions as the Finance

Board may prescribe, an amount equal

to the current deposits the FHLBank

holds in specified types of assets. Id.

Among the assets specified in the Bank

Act are ‘‘deposits in banks or trust

companies.’’ Id. 1431(g)(2).

In 1978, the Finance Board’s

predecessor, the former Federal Home

Loan Bank Board (FHLBB), defined by

regulation the phrase ‘‘deposits in banks

or trust companies’’ to include a deposit

in another FHLBank, a demand account

with a Federal Reserve Bank, or a

deposit in a depository designated by a

FHLBank’s board of directors that is a

member of either the Federal Reserve

System (FRS) or the Federal Deposit

Insurance Corporation (FDIC). See 43 FR

46835, 46836 (Oct. 11, 1978), codified at

12 CFR 521.5 (superseded). When

Congress abolished the FHLBB in 1989,

see Financial Institutions Reform,

Recovery, and Enforcement Act of 1989,

Pub. L. 101–73, sec. 401, 103 Stat. 183

(Aug. 9, 1989), the Finance Board

transferred the definition, without any

change in substantive or technical

matters, to § 931.5 of its regulations. See

54 FR 36757 (Aug. 28, 1989), codified at

12 CFR 931.5. This definition remained

unchanged until July 3, 1996, when the

Finance Board adopted a final rule

modifying the definition of ‘‘deposits in

banks or trust companies.’’ The final

rule was published in the Federal

Register on August 2, 1996, and became

effective on September 3, 1996. See 61

FR 40311 (Aug. 2, 1996), codified at 12

CFR 931.5. The final rule made clear

that the term ‘‘banks’’ includes savings

associations, and included federal funds

transactions as eligible to fulfill the

liquidity requirement imposed on the

FHLBanks by section 11(g) of the Bank

Act. See 12 U.S.C. 1431(g).

II. Analysis of the Interim Final Rule

In revising the definition of ‘‘deposits

in banks or trust companies,’’ the

Finance Board inadvertently omitted as

an eligible investment deposits in

certain U.S. branches and agencies of

foreign banks. A foreign bank may

establish a U.S. branch or agency only

with the prior approval of the Board of

Governors and an appropriate licensing

authority, i.e., either the Comptroller of

the Currency or a state banking

regulator. U.S. branches and agencies of

foreign banks are subject to the

supervision of the Board of Governors

and must meet many of the rules and

regulations applicable to domestic

commercial banks.

U.S. branches of foreign banks

principally accept wholesale deposits,

that is, deposits greater than the

$100,000 FDIC insurance limit. U.S.

agencies of foreign banks typically do

not accept deposits, although under the

laws of some states an agency may have

authority to do so. Since December 19,

1991, federal banking laws require

foreign banks located in the United

States that accept retail deposits

(generally, deposits of less than

$100,000), to do so only through a

subsidiary bank the deposits of which

are insured by the FDIC. See FDIC

Improvement Act of 1991, Pub. L. 102–

242, Title II, sec. 214(a), 105 Stat. 2303,

codified at 12 U.S.C. 3104(d). Although

U.S. branches of foreign banks are not

subsidiary banks, the statute permits

branches that had FDIC insurance prior

to that date to continue to accept or

maintain retail deposits. See id. Thus,

with the exception of branches whose

deposits were insured by the FDIC prior

to December 19, 1991, U.S. branches

and agencies of foreign banks do not

accept retail deposits.

Under both the current and previous

definitions of the term ‘‘deposits in

banks or trust companies,’’ FHLBank

deposits in the small number of U.S.

branches the deposits of which are

insured by the FDIC, are eligible

investments for purposes of section

11(g) of the Bank Act since the

definitions include deposits in FDICinsured depository institutions. See 12

CFR 931.5 (1995 superseded); 12 CFR

931.5 (1996). FHLBank deposits in the

U.S. branches and agencies whose

deposits are not insured by the FDIC are

not eligible investments. See Id.

Since all U.S. branches and agencies

of foreign banks operate in a similar

manner regardless of their FDICinsurance status, and all are subject to

the same legal requirements and the

supervision of the Board of Governors,

the Finance Board believes that the