171
‘‘(v)
DERIVATIVE
INSTRUMENTS.—
The bank issues, buys, or sells any deriva-
tive instrument to which the bank is a
party—
‘‘(I) to or from a corporation,
limited liability company, or partner-
ship that owns and invests on a dis-
cretionary
basis,
not
less
than
$10,000,000 in investments, or to or
from a qualified investor, except that
if the instrument provides for the de-
livery of one or more securities (other
than a derivative instrument or gov-
ernment
security),
the
transaction
shall be effected with or through a
registered broker or dealer; or
‘‘(II) to or from other persons,
except that if the derivative instru-
ment provides for the delivery of one
or more securities (other than a deriv-
ative instrument or government secu-
rity), or is a security (other than a
government security), the transaction
shall be effected with or through a
registered broker or dealer; or
172
‘‘(III) to or from any person if
the instrument is neither a security
nor provides for the delivery of one or
more securities (other than a deriva-
tive instrument).’’.
SEC. 203. REGISTRATION FOR SALES OF PRIVATE SECURI-
TIES OFFERINGS.
Section 15A of the Securities Exchange Act of 1934
(15 U.S.C. 78o–3) is amended by inserting after sub-
section (i) the following new subsection:
‘‘(j) REGISTRATION FOR SALES OF PRIVATE SECURI-
TIES OFFERINGS.—A registered securities association
shall create a limited qualification category for any associ-
ated person of a member who effects sales as part of a
primary offering of securities not involving a public offer-
ing, pursuant to section 3(b), 4(2), or 4(6) of the Securi-
ties Act of 1933 and the rules and regulations thereunder,
and shall deem qualified in such limited qualification cat-
egory, without testing, any bank employee who, in the six
month period preceding the date of enactment of this Act,
engaged in effecting such sales.’’.
173
SEC.
204.
SALES
PRACTICES
AND
COMPLAINT
PROCE-
DURES.
Section 18 of the Federal Deposit Insurance Act is
amended by adding at the end the following new sub-
section:
‘‘(s) SALES PRACTICES
AND COMPLAINT PROCE-
DURES WITH RESPECT TO BANK SECURITIES ACTIVI-
TIES.—
‘‘(1) REGULATIONS REQUIRED.—Each Federal
banking agency shall prescribe and publish in final
form, not later than 6 months after the date of en-
actment of the Financial Services Act of 1998, regu-
lations which apply to retail transactions, solicita-
tions, advertising, or offers of any security by any
insured depository institution or any affiliate thereof
other than a registered broker or dealer or an indi-
vidual acting on behalf of such a broker or dealer
who is an associated person of such broker or dealer.
Such regulations shall include—
‘‘(A)
requirements
that
sales
practices
comply with just and equitable principles of
trade that are substantially similar to the Rules
of Fair Practice of the National Association of
Securities Dealers; and
‘‘(B) requirements prohibiting (i) condi-
tioning an extension of credit on the purchase
174
or sale of a security; and (ii) any conduct lead-
ing a customer to believe that an extension of
credit is conditioned upon the purchase or sale
of a security.
‘‘(2)
PROCEDURES
REQUIRED.—The
appro-
priate Federal banking agencies shall jointly estab-
lish procedures and facilities for receiving and expe-
ditiously processing complaints against any bank or
employee of a bank arising in connection with the
purchase or sale of a security by a customer, includ-
ing a complaint alleging a violation of the regula-
tions prescribed under paragraph (1), but excluding
a complaint involving an individual acting on behalf
of such a broker or dealer who is an associated per-
son of such broker or dealer. The use of any such
procedures and facilities by such a customer shall be
at the election of the customer. Such procedures
shall include provisions to refer a complaint alleging
fraud to the Securities and Exchange Commission
and appropriate State securities commissions.
‘‘(3)
REQUIRED
ACTIONS.—The
actions
re-
quired by the Federal banking agencies under para-
graph (2) shall include the following:
175
‘‘(A) establishing a group, unit, or bureau
within each such agency to receive such com-
plaints;
‘‘(B) developing and establishing proce-
dures for investigating, and permitting cus-
tomers to investigate, such complaints;
‘‘(C) developing and establishing proce-
dures for informing customers of the rights
they may have in connection with such com-
plaints;
‘‘(D) developing and establishing proce-
dures that allow customers a period of at least
6 years to make complaints and that do not re-
quire customers to pay the costs of the proceed-
ing; and
‘‘(E) developing and establishing proce-
dures for resolving such complaints, including
procedures for the recovery of losses to the ex-
tent appropriate.
‘‘(4)
CONSULTATION
AND
JOINT
REGULA-
TIONS.—The Federal banking agencies shall consult
with each other and prescribe joint regulations pur-
suant to paragraphs (1) and (2), after consultation
with the Securities and Exchange Commission.
176
‘‘(5) PROCEDURES
IN
ADDITION
TO
OTHER
REMEDIES.—The procedures and remedies provided
under this subsection shall be in addition to, and not
in lieu of, any other remedies available under law.
‘‘(6)
DEFINITION.—As
used
in
this
sub-
section—
‘‘(A) the term ‘security’ has the meaning
provided in section 3(a)(10) of the Securities
Exchange Act of 1934;
‘‘(B) the term ‘registered broker or dealer’
has the meaning provided in section 3(a)(48) of
such Act; and
‘‘(C) the term ‘associated person’ has the
meaning provided in section 3(a)(18) of such
Act.’’.
SEC. 205. INFORMATION SHARING.
Section 18 of the Federal Deposit Insurance Act is
amended by adding at the end the following new sub-
section:
‘‘(t) RECORDKEEPING REQUIREMENTS.—
‘‘(1) REQUIREMENTS.—Each appropriate Fed-
eral banking agency, after consultation with and
consideration of the views of the Commission, shall
establish recordkeeping requirements for banks rely-
ing on exceptions contained in paragraphs (4) and
177
(5) of section 3(a) of the Securities Exchange Act of
1934. Such recordkeeping requirements shall be suf-
ficient to demonstrate compliance with the terms of
such exceptions and be designed to facilitate compli-
ance with such exceptions. Each appropriate Federal
banking agency shall make any such information
available to the Commission upon request.
‘‘(2) DEFINITIONS.—As used in this subsection
the term ‘Commission’ means the Securities and Ex-
change Commission.’’.
SEC. 206. DEFINITION AND TREATMENT OF BANKING PROD-
UCTS.
(a) DEFINITION OF TRADITIONAL BANKING PROD-
UCT.—
(1) IN GENERAL.—For purposes of paragraphs
(4) and (5) of section 3(a) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(4), (5)), the
term ‘traditional banking product’ means—
(A) a deposit account, savings account,
certificate of deposit, or other deposit instru-
ment issued by a bank;
(B) a banker’s acceptance;
(C) a letter of credit issued or loan made
by a bank;
178
(D) a debit account at a bank arising from
a credit card or similar arrangement;
(E) a participation in a loan which the
bank or an affiliate of the bank (other than a
broker or dealer) funds, participates in, or owns
that is sold—
(i) to qualified investors; or
(ii) to other persons that—
‘‘(I) have the opportunity to re-
view and assess any material informa-
tion, including information regarding
the borrower’s creditworthiness; and
‘‘(II) based on such factors as fi-
nancial sophistication, net worth, and
knowledge and experience in financial
matters, have the capability to evalu-
ate the information available, as de-
termined under generally applicable
banking standards or guidelines; or
(F) any derivative instrument, whether or
not individually negotiated, involving or relating
to—
(i) foreign currencies, except options
on foreign currencies that trade on a na-
tional securities exchange;
179
(ii) interest rates, except interest rate
derivative instruments: (I) that are based
on a security or a group or index of securi-
ties (other than government securities or a
group or index of government securities);
(II) that provide for the delivery of one or
more securities (other than government se-
curities); or (III) that trade on a national
securities exchange; or
(iii) commodities, other rates, indices,
or other assets, except derivative instru-
ments: (I) that are securities or that are
based on a group or index of securities
(other than government securities or a
group or index of government securities);
(II) that provide for the delivery of one or
more securities (other than government se-
curities); or (III) that trade on a national
securities exchange.
(2)
CLASSIFICATION
LIMITED.—Classification
of a particular product as a traditional banking
product pursuant to this subsection shall not be con-
strued as finding or implying that such product is
or is not a security for any purpose under the secu-
rities laws, or is or is not an account, agreement,
180
contract, or transaction for any purpose under the
Commodity Exchange Act.
(3) DEFINITIONS.—For purposes of this sub-
section—
(A) the term ‘‘bank’’ has the meaning pro-
vided in section 3(a)(6) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(6);
(B) the term ‘‘qualified investor’’ has the
meaning provided in section 3(a)(55) of such
Act;
(C) the term ‘‘government securities’’ has
the meaning provided in section 3(a)(42) of
such Act, and, for purposes of this subsection,
commercial paper, bankers acceptances, and
commercial bills shall be treated in the same
manner as government securities; and
(D) the term ‘‘Federal banking agency’’
has the meaning provided in section 3(z) of the
Federal
Deposit
Insurance
Act
(12
U.S.C.
1813(z)).
(b) TREATMENT OF NEW BANKING PRODUCTS FOR
PURPOSES OF BROKER/DEALER REQUIREMENTS.—Sec-
tion 15 of the Securities Exchange Act of 1934 (15 U.S.C.
78o) is amended by adding at the end the following new
subsection:
432
(H) and (K) of paragraph (4) of section 11(n) of the
Federal Deposit Insurance Act, except that—
‘‘(A) the bridge bank shall be treated as a
wholesale bank for the purpose of this subsection;
and
‘‘(B) any references in any such provision
of law to the Federal Deposit Insurance Corpora-
tion shall be construed to be references to the ap-
pointing agency and that references to deposit
insurance shall be omitted.
‘‘(b) Any reference in this section to transfers of liabil-
ities includes a ratable transfer of liabilities within a prior-
ity class.
‘‘§ 784. Right to be heard
‘‘The Comptroller of the Currency (in the case of a na-
tional wholesale financial institution), the Board (in the
case of any wholesale bank), or a Federal Reserve bank (in
the case of a wholesale bank that is a member of that bank)
may raise and may appear and be heard on any issue in
a case under this subchapter.
‘‘§ 785. Expedited transfers
‘‘The trustee may make a transfer pursuant to section
783 without prior judicial approval, if the Comptroller of
the Currency (in the case of a national wholesale financial
institution for which it appointed the conservator or re-