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 13, 2002, with Bank of America and Banc of America Investment Services, Inc. regarding the Commission's Interim Final Rules under Gramm-Leach-Bliley|
Representatives of Bank of America and Banc of America Investment Services, Inc. met with Commissioner Cynthia A. Glassman on February 13, 2002, to present their views on the Commission's final interim rules for the implementation of the Gramm-Leach-Bliley Act of 1999 ("GLB"). Mark Leggett and Edward Hill of Bank of America, and Barry Harris, Esq., and Vicky Ayers, Esq., of Banc of America Investment Securities, Inc., participated in the meeting.
The bank representatives expressed concern regarding banks' ability to comply with the May 12, 2002, compliance date for banks under GLB.1 They 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 exceptions, 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.
The representatives stated their 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. They expressed appreciation for the staff's willingness to consider their views, and indicated their interest in continuing to participate 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).|