Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 029 - BUREAU OF FINANCIAL INSTITUTIONS › Chapter 129 - FINANCIAL INSTITUTIONS AND BROKER-DEALERS ENGAGING IN THIRD PARTY BROKERAGE ARRANGEMENTS (REG. 29) › Section 029-129-6 - Disclosures, advertising and physical setting

Current through 2024-29, July 17, 2024
This section applies to all third party broker-dealer
				  arrangements, whether with a financial institution or a financial institution
				  authorized to do business in this State. In order for a financial institution
				  authorized to do business in this State to qualify for the exclusion from the
				  definition of "broker-dealer" in
				   32 M.R.S.A.
				  §16102(4), that
				  financial institution authorized to do business in this State must comply with
				  all provisions of this section that are applicable to financial
				  institutions.
1.
Separated
				space.
The space utilized by the third party broker-dealer to transact
				business with the public must be separated, to the extent practicable, from the
				retail area of the financial institution and in such a manner as to prevent
				confusion in the public's mind between the financial institution and the
				broker-dealer. When certain considerations, such as the staffing level, size or
				design of a particular facility of a financial institution, prevent sales from
				being conducted in a location distinct from the retail area, the institution
				shall make every reasonable effort to minimize customer confusion through an
				appropriate combination of signage, disclosure and physical location within the
				retail area. In no event, however, may the sale of securities be conducted at
				the retail deposit-taking stations of an institution (the "teller line" or
				"teller window").
2.
Clarity
				of signage.
Any space utilized by the third party broker-dealer to
				transact business with the public must be separately identified with signs or
				other means so that customers of the third party broker-dealer will understand
				that they are doing business with a broker-dealer and not with the financial
				institution.
3.
Clarity in
				marketing.
The marketing activities of the third party broker-dealer
				should be designed to ensure that the customer understands the difference
				between the broker-dealer and the financial institution and the difference
				between the securities offered by the broker-dealer and the deposit products
				offered by the financial institution. The broker-dealer may not market any
				security in a manner which suggests that it is insured by the Federal Deposit
				Insurance Corporation ("FDIC") or National Credit Union Administration ("NCUA")
				or guaranteed or endorsed by the financial institution.
4.
Securities issued by the financial
				institution.
Unless the transaction is solicited by the customer, the
				third party broker-dealer may not offer or sell any security issued by the
				financial institution or an affiliate of the financial institution. This
				sub-section does not apply to shares in a mutual fund holding in its portfolio
				securities issued by the financial institution or an affiliate of the financial
				institution.
5.
Advertising.
Advertisements prepared by the financial institution
				must be limited to the availability of services or a list of generic products
				and may not contain details about specific products. All advertising for
				securities transactions or services shall be conducted in the name of the third
				party broker-dealer or a "doing business as" name for the broker-dealer
				approved by the Office of Securities and in accordance with NASD advertising
				rules. Prior to using a name that contains a restricted term as defined in
				 9-B M.R.S.A.
				§241(9), the Bureau of
				Financial Institutions shall be consulted.
6.
Telephone protocol.
If the
				third party broker-dealer has its own telephone line(s) into the premises of
				the financial institution or if the broker-dealer regularly receives calls on
				an extension that is part of the financial institution's telephone system,
				calls received on said line(s) or extension(s) shall be answered with the name
				of the broker-dealer or may be answered in the name of its approved "doing
				business as" name.
7.
Written
				disclosure.
The third party broker-dealer shall provide each customer,
				at the time an account is opened or before the initial securities transaction
				is effected, whichever comes first, with a written disclosure, to be signed by
				the customer, acknowledging that the customer has received and understands the
				disclosures required by this section, and providing the following information:
A. At a minimum, the written disclosure
				should inform the customer that the securities being offered and sold by the
				broker-dealer are:
(1) Not insured by the
				FDIC or NCUA;
(2) Not a deposit or
				other obligation of, or guaranteed by, the financial institution; and
(3) Subject to investment risks, including
				possible loss of the principal amount invested.