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tionally equivalent accounts of a bank) un-
less the bank—
‘‘(I) publicly solicits brokerage
business, other than by advertising
that it effects transactions in securi-
ties in conjunction with advertising its
other trust activities; or
‘‘(II) 
receives 
incentive 
com-
pensation for such brokerage activi-
ties.
‘‘(iii) 
PERMISSIBLE
SECURITIES
TRANSACTIONS.—The bank effects trans-
actions in exempted securities, other than
municipal securities, or in commercial
paper, bankers acceptances, commercial
bills, qualified Canadian Government obli-
gations as defined in section 5136 of the
Revised Statutes, obligations of the Wash-
ington Metropolitan Area Transit Author-
ity which are guaranteed by the Secretary
of Transportation under section 9 of the
National Capital Transportation Act of
1969, obligations of the North American
Development Bank, and obligations of any
local public agency (as defined in section
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110(h) of the Housing Act of 1949) or any
public housing agency (as defined in the
United States Housing Act of 1937) that
are expressly specified by section 5136 of
the Revised statutes as permissible for a
national bank to underwrite or deal in.
‘‘(iv) MUNICIPAL
SECURITIES.—The
bank effects transactions in municipal se-
curities, and has not been affiliated with a
securities affiliate under section 10 of the
Bank Holding Company Act of 1956 for
more than 1 year.
‘‘(v) EMPLOYEE
AND
SHAREHOLDER
BENEFIT PLANS.—The bank effects trans-
actions as part of any bonus, profit-shar-
ing, pension, retirement, thrift, savings, in-
centive, stock purchase, stock ownership,
stock appreciation, stock option, dividend
reinvestment, or similar plan for employees
or shareholders of an issuer or its subsidi-
aries.
‘‘(vi) SWEEP
ACCOUNTS.—The bank
effects transactions as part of a program
for the investment or reinvestment of bank
deposit funds into any no-loan, open-end
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management investment company reg-
istered under the Investment Company Act
of 1940 that holds itself out as a money
market fund.
‘‘(vii) AFFILIATE
TRANSACTIONS.—
The bank effects transactions for the ac-
count of any affiliate of the bank, as de-
fined in section 2 of the Bank Holding
Company Act of 1956.
‘‘(viii) PRIVATE
SECURITIES
OFFER-
INGS.—The bank—
‘‘(I) effects sales as part of a pri-
mary offering of securities by an is-
suer, not involving a public offering,
pursuant to section 3(b), 4(2), or 4(6)
of the Securities Act of 1933 and the
rules and regulations issued there-
under, other than securities backed by
or representing an interest in obliga-
tions originated or purchased by the
bank, its affiliates, or its subsidiaries
unless those securities are described
in section 3(a)(5)(B)(ii)(IV) (aa) or
(bb);
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‘‘(II) effects such sales exclu-
sively to an accredited investor, as de-
fined in section 3 of the Securities Act
of 1933; and
‘‘(III) if affiliated with a securi-
ties affiliate, as provided under sec-
tion 10 of the Bank Holding Company
Act of 1956, has not been so affiliated
for more than 1 year.
‘‘(ix) DE MINIMIS EXEMPTION.—If the
bank does not have a subsidiary or affiliate
registered as a broker or dealer under sec-
tion 15, the bank effects, other than in
transactions referenced in clauses (i)
through (viii), not more than—
‘‘(I) 800 transactions in any cal-
endar year in securities for which a
ready market exists, and
‘‘(II) 200 other transactions in
securities in any calendar year.
‘‘(D) EXEMPTION FOR ENTITIES SUBJECT
TO SECTION 15(e).—The term ‘broker’ does not
include a bank that is subject to—
‘‘(i) section 15(e); and
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‘‘(ii) such restrictions and require-
ments as the Commission deems appro-
priate.’’.
SEC. 121. DEFINITION OF DEALER.
Section 3(a)(5) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(5)) is amended to read as follows:
‘‘(5) ‘DEALER’.—
‘‘(A) IN
GENERAL.—The term ‘dealer’
means any person engaged in the business of
buying and selling securities for his own ac-
count through a broker or otherwise.
‘‘(B) EXCEPTIONS.—Such term does not
include—
‘‘(i) a person that buys or sells securi-
ties for his or her own account, either indi-
vidually or in a fiduciary capacity, but not
as a part of a regular business; or
‘‘(ii) a bank, to the extent that the
bank—
‘‘(I) buys and sells commercial
paper, bankers acceptances, exempted
securities (other than municipal secu-
rities), qualified Canadian Govern-
ment obligations as defined in section
5136 of the Revised Statutes, obliga-
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tions of the Washington Metropolitan
Area Transit Authority which are
guaranteed by the Secretary of Trans-
portation under section 9 of the Na-
tional Capital Transportation Act of
1969, obligations of the North Amer-
ican Development Bank, and obliga-
tions of any local public agency (as
defined in section 110(h) of the Hous-
ing Act of 1949) or any public hous-
ing agency (as defined in the United
States Housing Act of 1937) that are
expressly specified by section 5136 of
the Revised Statutes as permissible
for a national bank to underwrite or
deal in;
‘‘(II) buys and sells municipal se-
curities and has not been affiliated
with a securities affiliate, as provided
under section 10 of the Bank Holding
Company Act of 1956 for more than
1 year;
‘‘(III) buys and sells securities
for investment purposes for the bank
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or for accounts for which the bank
acts as a trustee or fiduciary; or
‘‘(IV) has not been affiliated with
a securities affiliate under section 10
of the Bank Holding Company Act of
1956 for more than 1 year and en-
gages in the issuance or sale through
a grantor trust or otherwise of—
‘‘(aa) securities backed by or
representing an interest in 1–4
family 
residential 
mortgages
originated or purchased by the
bank, its affiliates, or its subsidi-
aries; or
‘‘(bb) securities backed by or
representing 
an 
interest 
in
consumer 
receivables 
or
consumer leases originated or
purchased by the bank, its affili-
ates, or its subsidiaries.’’.
SEC. 122. POWER TO EXEMPT FROM THE DEFINITIONS OF
BROKER AND DEALER.
Section 3 of the Securities Exchange Act of 1934 (15
U.S.C. 78c) is amended by adding at the end the
following:
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‘‘(e) EXEMPTION FROM DEFINITION OF BROKER OR
DEALER.—The Commission, by regulation or order, upon
its own motion or upon application, may conditionally or
unconditionally exclude any person or class of persons
from the definitions of ‘broker’ or ‘dealer’, if the Commis-
sion finds that such exclusion is consistent with the public
interest, the protection of investors, and the purposes of
this title.’’.
SEC. 123. MARGIN REQUIREMENTS.
(a) Section 7(d) of the Securities Exchange Act of
1934 (15 U.S.C. 15g(d)) is amended by:
(1) deleting the word ‘‘or’’ after clause (D);
(2) redesignating clause (E) as clause (F); and
(3) inserting a new clause (E) as follows:
‘‘(E) to a loan to a broker or dealer by a
member bank or any other person that has en-
tered into an agreement pursuant to section
8(a) hereof if the proceeds of the loan are to be
used in the ordinary course of the broker’s or
dealer’s business other than for the purpose of
funding the purchase of securities for the ac-
count of such broker or dealer, or’’.
(b) Section 8(a) of the Securities and Exchange Act
of 1934 is amended:
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(1) by deleting the phrase ‘‘nonmember bank’’
in clause (2) and replacing it with the phrase ‘‘per-
son other than a member bank’’; and
(2) by deleting the phrase ‘‘such bank’’ in the
second sentence and replacing it with the phrase
‘‘such person’’.
SEC. 124. EFFECTIVE DATE.
This subtitle shall become effective 270 days after the
date of enactment of this Act.
Subtitle C—Bank Investment Company
Activities
SEC. 130. CUSTODY OF INVESTMENT COMPANY ASSETS BY
AFFILIATED BANK.
(a) MANAGEMENT COMPANIES.—Section 17(f) of the
Investment Company Act of 1940 (15 U.S.C. 80a–17(f))
is amended—
(1) by redesignating paragraphs (1), (2), and
(3) as subparagraphs (A), (B), and (C), respectively;
(2) by designating the five sentences of such
subsection as paragraphs (1) through (5), respec-
tively, and by indenting those paragraphs appro-
priately; and
(3) by adding at the end the following new
paragraph:
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‘‘(6) Notwithstanding paragraph (1)(A), if a
bank described in paragraph (1) or an affiliated per-
son of such bank is an affiliated person, promoter,
organizer, or sponsor of, or principal underwriter for
the registered company, such bank may serve as cus-
todian under this subsection in accordance with such
rules, regulations, or orders as the Commission may
prescribe, consistent with the protection of investors,
after consulting in writing with the appropriate Fed-
eral banking agency, as defined in section 3 of the
Federal Deposit Insurance Act.’’.
(b) UNIT INVESTMENT TRUSTS.—Section 26(a)(1) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
26(a)(1)) is amended by inserting after ‘‘bank’’ the follow-
ing: ‘‘not affiliated with such underwriter or depositor, or
if such bank is so affiliated, only in accordance with such
regulations or orders as the Commission may prescribe,
consistent with the protection of investors, after consulting
in writing with the appropriate Federal banking agency,
as defined in section 3 of the Federal Deposit Insurance
Act’’.
(c) FIDUCIARY DUTY OF CUSTODIAN.—Section 36(a)
of the Investment Company Act of 1940 (15 U.S.C. 80a–
35(a)) is amended—
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(1) in paragraph (1), by striking ‘‘or’’ at the
end;
(2) in paragraph (2), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by inserting after paragraph (2) the follow-
ing:
‘‘(3) as custodian.’’.
SEC. 131. AFFILIATED TRANSACTIONS.
(a) INDEBTEDNESS TO AFFILIATED PERSON.—Sec-
tion 10(f) of the Investment Company Act of 1940 (15
U.S.C. 80a–10(f)) is amended in the first sentence—
(1) by inserting ‘‘(1)’’ before ‘‘a principal un-
derwriter’’; and
(2) by inserting before the period ‘‘, or (2) the
proceeds of which will be used to retire an indebted-
ness owed to an affiliated person of such registered
company’’.
(b) AFFILIATED PERSON
OF INVESTMENT COM-
PANY.—Section 10(f) of the Investment Company Act of
1940 is amended by adding at the end the following: ‘‘For
purposes of this subsection, a person that is under com-
mon control with an investment adviser shall be deemed
to be an affiliated person of the registered investment
company advised by such investment adviser.’’.
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SEC. 132. BORROWING FROM AN AFFILIATED BANK.
Section 18(f) of the Investment Company Act of
1940 (15 U.S.C. 80a–18(f)) is amended by adding at the
end the following:
‘‘(3) Notwithstanding the provisions of paragraph
(1), it shall be unlawful for any registered investment com-
pany to borrow from any bank if such bank or any affili-
ated person thereof is an affiliated person, promoter, orga-
nizer, or sponsor of, or principal underwriter for, such
company, except that the Commission may, by rule, regu-
lation, or order, permit such borrowing that the Commis-
sion finds to be in the public interest and consistent with
the protection of investors.’’.
SEC. 133. INDEPENDENT DIRECTORS.
(a) INTERESTED PERSON.—Section 2(a)(19)(A)(v)
of the Investment Company Act of 1940 (15 U.S.C. 80a–
2(a)(19)(A)(v)) is amended by striking ‘‘1934 or any af-
filiated person of such a broker or dealer, and’’ and insert-
ing ‘‘1934 or any person that, at any time during the pre-
ceding 6 months, has acted as custodian or transfer agent
or has executed any portfolio transactions for, engaged in
any principal transactions with, or loaned money to, the
investment company, or any other investment company
having the same investment adviser, principal underwriter,
sponsor, or promoter, or any affiliated person of such a
broker, dealer, or person, and’’.
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(b) AFFILIATION OF DIRECTORS.—Section 10(c) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
10(c)) is amended by striking ‘‘bank, except’’ and insert-
ing ‘‘bank (and its subsidiaries) or any single bank holding
company (and its affiliates and subsidiaries), as those
terms are defined in the Bank Holding Company Act of
1956, except’’.
(c) EFFECTIVE DATE.—The provisions of subsection
(a) of this section shall become effective 1 year after the
date of enactment of this subtitle.
SEC. 134. ADDITIONAL SEC DISCLOSURE AUTHORITY.
(a) MISREPRESENTATION.—Section 35(a) of the In-
vestment Company Act of 1940 (15 U.S.C. 80a–34(a)) is
amended to read as follows:
‘‘SEC. 35. MISREPRESENTATIONS.
‘‘(a) MISREPRESENTATIONS OF GUARANTEES.—
‘‘(1) IN GENERAL.—It shall be unlawful for any
person, in issuing or selling any security of which a
registered investment company is the issuer, to rep-
resent or imply in any manner whatsoever that such
security or company—
‘‘(A) has been guaranteed, sponsored, rec-
ommended, or approved by the United States,
or any agency, instrumentality or officer there-
of,
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‘‘(B) has been insured by the Federal De-
posit Insurance Corporation; or
‘‘(C) is guaranteed by or is otherwise an
obligation of any bank or insured institution.
‘‘(2) DISCLOSURES.—The Commission shall re-
quire the person issuing or selling the securities of
a registered investment company to prominently dis-
close, in writing or orally, as appropriate, that the
investment company or any security issued by it is
not insured by the Federal Deposit Insurance Cor-
poration and is not guaranteed by an affiliated de-
pository institution, and is not otherwise an obliga-
tion of such a bank or insured institution, in any
case where—
‘‘(A) a bank holding company, bank, or
separately identifiable division or department of
a bank, or any affiliate or subsidiary thereof is
an investment adviser, organizer, sponsor, pro-
moter, principal underwriter, or an affiliated
person of the investment company; or
‘‘(B) a bank or an affiliated person of a
bank is offering or selling securities of the in-
vestment company.
The requirement of any disclosures referred to above
shall be subject to regulations adopted by the Com-
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mission, after consultation with the appropriate Fed-
eral banking agencies (as defined in section 3 of the
Federal Deposit Insurance Act).’’.
(b) DECEPTIVE USE OF NAMES.—Section 35(d) of
the Investment Company Act of 1940 (15 U.S.C. 80a–
34(d)) is amended by inserting after the first sentence the
following: ‘‘It shall be deceptive and misleading for any
registered investment company which has an insured de-
pository institution (as defined in section 3 of the Federal
Deposit Insurance Act) or any affiliated person thereof as
an affiliated person, promoter, or principal underwriter,
to adopt, as part of the name or title of such company,
or of any security of which it is the issuer, any word which
is the same as or similar to, or a variation of, the name
or title of such insured depository institution or affiliate
thereof. The Commission, by rules or regulations upon its
own motion or by order upon application, may condi-
tionally or unconditionally exempt an investment company
from the preceding sentence if the Commission finds that
such exemption is consistent with the public interest, the
protection of investors, and the purposes of this title.’’.
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SEC. 135. DEFINITION OF BROKER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(6) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(6)) is amended to read as
follows:
‘‘(6) ‘Broker’ has the same meaning as in the
Securities Exchange Act of 1934, except that it does
not include any person solely by reason of the fact
that such person is an underwriter for 1 or more in-
vestment companies.’’.
SEC. 136. DEFINITION OF DEALER UNDER THE INVEST-
MENT COMPANY ACT OF 1940.
Section 2(a)(11) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(11)) is amended to read as fol-
lows:
‘‘(11) ‘Dealer’ has the same meaning as in the
Securities Exchange Act of 1934, but does not in-
clude an insurance company or investment com-
pany.’’.
SEC. 137. REMOVAL OF THE EXCLUSION FROM THE DEFINI-
TION OF INVESTMENT ADVISER FOR BANKS
THAT ADVISE INVESTMENT COMPANIES.
(a) INVESTMENT ADVISER.—Section 202(a)(11) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b–
2(a)(11)) is amended in subparagraph (A), by striking
‘‘investment company’’ and inserting ‘‘investment com-
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pany, except that the term ‘investment adviser’ includes
any bank or bank holding company to the extent that such
bank or bank holding company acts as an investment ad-
viser to a registered investment company, or if, in the case
of a bank, such services are performed through a sepa-
rately identifiable department or division, the department
or division, and not the bank itself shall be deemed to be
the ‘investment adviser’ ’’; and
(b) SEPARATELY IDENTIFIABLE DEPARTMENT
OR
DIVISION.—Section 202(a) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–2(a)) is amended by adding at
the end the following:
‘‘(25) ‘Separately identifiable department or di-
vision’ of a bank means a unit—
‘‘(A) that is under the direct supervision of
an officer or officers designated by the board of
directors of the bank as responsible for the day-
to-day conduct of the bank’s investment adviser
activities for 1 or more investment companies,
including the supervision of all bank employees
engaged in the performance of such activities;
and
‘‘(B) for which all of the records relating
to its investment adviser activities, are sepa-
rately maintained in or extractable from such
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unit’s own facilities or the facilities of the bank,
and such records are so maintained or other-
wise accessible as to permit independent exam-
ination and enforcement of this Act and rules
and regulations promulgated under this Act.’’.
SEC. 138. DEFINITION OF BROKER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(3) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(3)) is amended to read as
follows:
‘‘(3) ‘Broker’ has the same meaning as in the
Securities Exchange Act of 1934.’’.
SEC. 139. DEFINITION OF DEALER UNDER THE INVEST-
MENT ADVISERS ACT OF 1940.
Section 202(a)(7) of the Investment Advisers Act of
1940 (15 U.S.C. 80b–2(a)(7)) is amended to read as
follows:
‘‘(7) ‘Dealer’ has the same meaning as in the
Securities Exchange Act of 1934, but does not in-
clude an insurance company or investment com-
pany.’’.
SEC. 140. INTERAGENCY CONSULTATION.
The Investment Advisers Act of 1940 (15 U.S.C.
80b–1 et seq.) is amended by inserting after section 210
the following new section:
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‘‘SEC. 210A. CONSULTATION.
‘‘(a) EXAMINATION RESULTS AND OTHER INFORMA-
TION.—
‘‘(1) The appropriate Federal banking agency
shall provide the Commission upon request the re-
sults of any examination, reports, records, or other
information as each may have with respect to the in-
vestment advisory activities of any bank holding
company, bank, or department or division of a bank,
any of which is registered under section 203 of this
title, or, in the case of a bank holding company or
bank, has a subsidiary, department, or division reg-
istered under that section, to the extent necessary
for the Commission to carry out its statutory re-
sponsibilities.
‘‘(2) The Commission shall provide to the ap-
propriate Federal banking agency upon request the
results of any examination, reports, records, or other
information with respect to the investment advisory
activities of any bank holding company, bank, or de-
partment or division of a bank, any of which is reg-
istered under section 203 of this title, to the extent
necessary for the agency to carry out its statutory
responsibilities.
‘‘(b) EFFECT
ON
OTHER
AUTHORITY.—Nothing
herein shall limit in any respect the authority of the appro-
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priate Federal banking agency with respect to such bank
holding company, bank, or department or division under
any provision of law.
‘‘(c) DEFINITION.—For purposes of this section, the
term ‘appropriate Federal banking agency’ shall have the
same meaning as in section 3 of the Federal Deposit In-
surance Act.’’.
SEC. 141. TREATMENT OF BANK COMMON TRUST FUNDS.
(a) SECURITIES ACT OF 1933.—Section 3(a)(2) of
the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is
amended by striking ‘‘or any interest or participation in
any common trust fund or similar fund maintained by a
bank exclusively for the collective investment and reinvest-
ment of assets contributed thereto by a bank in its capac-
ity as trustee, executor, administrator, or guardian’’ and
inserting ‘‘or any interest or participation in any common
trust fund or similar fund that is excluded from the defini-
tion of the term ‘investment company’ under section
3(c)(3) of the Investment Company Act of 1940’’.
(b) SECURITIES EXCHANGE ACT OF 1934.—Section
3(a)(12)(A)(iii) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(12)(A)(iii)) is amended to read as fol-
lows:
‘‘(iii) any interest or participation in
any common trust fund or similar fund
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that is excluded from the definition of the
term ‘investment company’ under section
3(c)(3) of the Investment Company Act of
1940.’’.
(c) INVESTMENT COMPANY ACT OF 1940.—Section
3(c)(3) of the Investment Company Act of 1940 (15
U.S.C. 80a–3(c)(3)) is amended by inserting before the
period the following: ‘‘, if—
‘‘(A) such fund is employed by the bank
solely as an aid to the administration of trusts,
estates, or other accounts created and main-
tained for a fiduciary purpose;
‘‘(B) except in connection with the ordi-
nary advertising of the bank’s fiduciary serv-
ices, interests in such fund are not—
‘‘(i) advertised; or
‘‘(ii) offered for sale to the general
public; and
‘‘(C) such fund is not charged any fees or
expenses that, when added to any other com-
pensation charged by the bank to a participa-
tion account, would exceed the total amount of
compensation that would have been charged to
such participant account if no assets of the ac-
count had been invested in interests in the
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fund, except that any reasonable and necessary
expenses related to the prudent operation of the
fund, as determined by the appropriate Federal
banking agency (as defined in section 3(q) of
the Federal Deposit Insurance Act), shall be
permitted to be charged directly to the fund.’’.
(d) TAX EFFECT.—It is the sense of the Congress
that the public interest would be furthered by enacting
legislation to amend section 584 of the Internal Revenue
Code of 1986 by inserting after subsection (g) the follow-
ing new subsection:
‘‘(h) CONVERSION, MERGERS, OR REORGANIZATION
OF COMMON TRUST FUNDS.—Notwithstanding any other
provision of the Internal Revenue Code, any transfer of
all or substantially all of the assets of a common trust
fund taxable under this section to a registered investment
company taxable under subchapter M shall not result in
a gain or loss to the participants in such common trust
fund where the transfer is a result of a merger, conversion,
reorganization, transfer, or other similar transaction or se-
ries of transactions.’’.
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SEC. 142. INVESTMENT ADVISERS PROHIBITED FROM HAV-
ING 
CONTROLLING 
INTEREST 
IN 
REG-
ISTERED INVESTMENT COMPANY.
Section 15 of the Investment Company Act of 1940
(15 U.S.C. 80a–15) is amended by adding at the end the
following new subsection:
‘‘(g) CONTROLLING INTEREST IN INVESTMENT COM-
PANY PROHIBITED.—
‘‘(1) IN GENERAL.—If any investment adviser
to a registered investment company, or an affiliated
person of that investment adviser, also holds shares
of the investment company in a trustee or fiduciary
capacity, that investment adviser or affiliated person
may own, directly or indirectly, a controlling interest
in that registered investment company only—
‘‘(A) if it passes the power to vote the
shares of the investment company through to—
‘‘(i) the beneficial owners of the
shares;
‘‘(ii) any person acting in a fiduciary
capacity who is not an affiliated person of
that investment adviser or any affiliated
person thereof; or
‘‘(iii) any person authorized to receive
statements and information with respect to
the trust who is not an affiliated person of
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that investment adviser or any affiliated
person thereof;
‘‘(B) if it votes the shares of the invest-
ment company held by it in the same proportion
as shares held by all other shareholders of the
investment company; or
‘‘(C) as otherwise permitted under such
rules, regulations, or orders as the Commission
may prescribe for the protection of investors.
‘‘(2) EXEMPTION.—Paragraph (1) shall not
apply to any investment adviser to a registered in-
vestment company, or an affiliated person of that in-
vestment adviser, holding shares of the investment
company in a trustee or fiduciary capacity if that
registered investment company consists solely of as-
sets of—
‘‘(A) any common trust fund or similar
fund described in section 3(c)(3) of the Invest-
ment Company Act of 1940;
‘‘(B) any employees’ stock bonus, pension,
or profit-sharing trust that qualifies under sec-
tion 401 of the Internal Revenue Code of 1986;
‘‘(C) any governmental plan described in
section 3(a)(2)(C) of the Securities Act of
1933; or
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‘‘(D) any collective trust fund maintained
by a bank and consisting solely of assets of
trusts or governmental plans described in sub-
paragraph (B) or (C).’’.
SEC. 143. PURCHASE OF INVESTMENT COMPANY SECURI-
TIES AS FIDUCIARY.
(a) IN GENERAL.—Section 17 of the Investment
Company Act of 1940 (15 U.S.C. 80a–17) is amended by
adding at the end the following:
‘‘(k) PURCHASE OF INVESTMENT COMPANY SECURI-
TIES AS FIDUCIARY.—
‘‘(1) IN GENERAL.—An investment adviser to a
registered investment company, or an affiliated per-
son of the investment adviser, promoter, organizer,
or sponsor of the registered investment company, or
principal underwriter for the registered company
may purchase securities issued by such investment
company for the account of a beneficiary as fidu-
ciary, only if disclosure of such information as the
Commission shall prescribe under paragraph (2) has
been provided to the person (other than to the in-
vestment advisor to the registered investment com-
pany, or an affiliated person of the investment advi-
sor, promoter, organizer, or sponsor of the registered
investment company, or principal underwriter for the
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registered company who may purchase securities of
the registered company as fiduciary for the account)
to whom periodic financial statements are customar-
ily provided.
‘‘(2) DISCLOSURE
RULES.—The Commission
shall prescribe, by rule, regulation, or order, the
manner, form, and content of the information re-
quired to be disclosed under paragraph (1), as the
Commission determines necessary or appropriate in
the public interest and for the protection of inves-
tors.
‘‘(3) PROSPECTIVE
EFFECT.—This subsection
shall be effective for purchase for fiduciary accounts
made after the effective date of this subtitle.’’.
(b) EXAMINATION OF TRUST DEPARTMENT SECURI-
TIES PURCHASES.—Section 10(d) of the Federal Deposit
Insurance Act (12 U.S.C. 1820(d)) is amended by adding
at the end the following:
‘‘(6) TRUST
DEPARTMENT
EXAMINATION.—In
performing an examination under this subsection,
the appropriate Federal banking agency shall exam-
ine purchases by an insured depository institution’s
trust department or division of the securities of an
affiliated investment company, or an investment
company that is an affiliated person of an affiliated
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person of the institution (as those terms are defined
in sections 2 and 3 of the Investment Company Act
of 1940), to assure compliance with applicable Fed-
eral and State trust laws.’’.
SEC. 144. CONFORMING CHANGE IN DEFINITION.
Section 2(a)(5) of the Investment Company Act of
1940 (15 U.S.C. 80a–2(a)(5)) is amended by striking
‘‘(A) a banking organization organized under the laws of
the United States’’ and inserting ‘‘(A) a depository insti-
tution, as that term is defined in section 3 of the Federal
Deposit Insurance Act or a U.S. branch or agency of a
foreign bank’’.
SEC. 145. EFFECTIVE DATE.
This subtitle shall become effective 270 days after the
date of enactment of this Act.
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