M E M O R A N D U M
|To:||File No. S7-12-01|
|From:|| Mary S. Head|
Counsel to Commissioner Cynthia A. Glassman
|Date:||March 25, 2002|
|Re:||Meeting held February 14, 2002, with the American Bankers Association and the American Bankers Association Securities Association regarding the Commission's Interim Final Rules under Gramm-Leach-Bliley|
Representatives of the American Bankers Association ("ABA") and the American Bankers Association Securities Association ("ABASA") met with Commissioner Cynthia A. Glassman on February 14, 2002, to present their views on the Commission's final interim rules for the implementation of the Gramm-Leach-Bliley Act of 1999 ("GLB"). Sarah A. Miller, James D. McLaughlin, Edward Yingling, and Donna Fisher participated in the meeting.
Ms. Miller expressed concern regarding banks' ability to comply with the May 12, 2002, compliance date for banks under GLB.1 She and Mr. McLaughlin also expressed concern regarding the Commission's interpretations of certain of the exceptions from the definitions of "broker" and "dealer" contained in GLB as reflected in the interim final rules. Issues discussed at the meeting included the scope of the trust and fiduciary exemptions, the related "chiefly compensated" test and the exclusion of Rule 12b-1 fees from calculations of incentive compensation, referral fees and bonus plans for bank employees, sweep accounts, the applicability of NASD Rule 3040 to dual employees of banks and broker-dealers, and issues relating to bank safekeeping and custody activities.
Ms. Miller stated her understanding that the staff of the Division of Market Regulation was working on term sheets outlining possible modifications to the interim final rules that would be shared with the banking industry and bank regulators, to be followed by a notice of proposed rulemaking and comment period. She expressed appreciation for the staff's willingness to consider ABA's and ABASA's views, and indicated an interest in participating in the process going forward.
|1||On May 8, 2002, the Commission extended the temporary exemption of banks from the definition of "broker" under Section 3(a)(4) of the Securities Exchange Act of 1934 until May 12, 2003, and from the definition of "dealer" under Section 3(a)(5) of the Exchange Act until November 12, 2002. See Release No. 34-45897 (May 8, 2002).|