Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 029 - BUREAU OF FINANCIAL INSTITUTIONS › Chapter 122 - SECURITIES ACTIVITIES OF SUBSIDIARIES OF FINANCIAL INSTITUTIONS (Reg. 22) › Section 029-122-I - AUTHORITY

Current through 2024-29, July 17, 2024
Title
				   9-B M.R.S.A.
				  Section111 declares that it is a policy of
				  the State to supervise financial institutions in a manner to assure their
				  strength, stability and efficiency and encourage the development and expansion
				  of financial services advantageous to the public welfare.
Title
				   9-B M.R.S.A.
				  Section131(37) grants to the
				  Superintendent the authority to allow by regulation a service corporation to
				  engage in any activity which has been authorized under federal law for service
				  corporations owned or controlled by federally-chartered savings and loan
				  associations or federally-chartered savings banks.
Title
				   9-B M.R.S.A.
				  Section416 grants to the Superintendent the
				  authority to allow by regulation a financial institution to engage in any
				  activity which has been authorized under federal law for financial institutions
				  chartered by or otherwise subject to the jurisdiction of the Federal
				  Government.
The Federal Home Loan Bank Board (the "Board") by regulation
				  has authorized service corporations of federally-chartered savings and loan
				  associations and savings banks to engage, inter alia, in:
(1) "providing liquidity, management,
				investment, advisory and consulting services" primarily for financial
				institutions ( 12 C.F.R. Section 545.74(c)(2)(vii) ); (2) "interest rate
				futures transactions subject to the provisions of Section 563.17-4 " ( 12
				C.F.R. Section 545.74(c)(4)(vi) ); and (3) "issuing notes, bonds, debentures,
				or other obligations or securities: ( 12 C.F.R. Section 545.74(c)(5)(iv) ). The
				FHLBB regulations also allow service corporations to engage in activities
				"reasonably incident" to those provided for in the regulations and "such other
				activities reasonably related to the activities of federal associations that
				the Board may approve" ( 12 C.F.R. Section 545.74(c) and (c)(6) ). A 1982
				resolution by the Board permitted several savings and loan associations to
				broker securities, as well as offer investment advice (Resolution No. 82-327 -
				May 6, 1982). In this resolution, the Board approved the application of Coastal
				Federal Savings and Loan Association, et. al., to form a service corporation
				(INVEST) which would "(1) execute purchases and sales or redemptions of debt
				and equity securities and shares in certain mutual funds on behalf of and for
				the account of others; and (2) provide investment advisory services to
				customers utilizing the services of a subscribing savings and loan
				association."
On August 23, 1982, the FDIC Board of Directors issued a
				  Statement of Policy addressing the applicability of the Glass-Steagall Act to
				  securities activities of subsidiaries of insured non-member banks. This
				  statement concluded that the Glass-Steagall Act "does not prohibit an insured
				  non-member bank from establishing an affiliate relationship with, or organizing
				  or acquiring, a subsidiary corporation that engages in the business of issuing,
				  underwriting, selling or distributing at wholesale or retail, or through
				  syndicate participation, stocks, bonds, debentures, notes, or other
				  securities."
On November 28, 1984, the Board of Directors of the FDIC
				  issued a rule (
				  12
				  C.F.R. Section 337.4 ) effective December 28,
				  1984, entitled "Securities Activities of Subsidiaries of Insured Nonmember
				  Banks: Bank Transactions with Affiliated Securities Companies." This rule
				  establishes guidelines for banks to affiliate with a securities company or
				  acquire/establish a securities subsidiary. It also places restrictions on
				  underwriting, limits trust department and lending activities with the
				  securities company, sets investment limitations, and imposes notification
				  requirements.
On September 2, 1983, the Comptroller of the Currency
				  concluded that the Glass-Steagall Act did not preclude a national bank (member
				  bank) from engaging in the business of providing investment advice or providing
				  discount brokerage services, and that national banks were authorized to provide
				  the stated services pursuant to the enabling legislation.
The cumulative effect of the federal statutes, opinions and
				  regulations cited above is to permit federally authorized financial
				  institutions, directly or through subsidiaries, to engage in offering discount
				  brokerage services and investment advice. The federal law also permits the
				  creation or acquisition of subsidiaries to provide the additional services
				  described above.