U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

SEC Adopts New Rules Addressing the Bank Exceptions to Broker-Dealer Registration in the Gramm-Leach-Bliley Act



Washington, D.C., May 11, 2001 – The Securities and Exchange Commission announced today that it has adopted interim final rules that address the bank exceptions to broker-dealer registration in the Gramm-Leach-Bliley Act. These statutory provisions, which are effective as of May 12, 2001, replace the banks' long-standing full exception from broker-dealer registration with 15 functional exceptions. Banks that limit their securities activities to these 15 functions remain excepted from broker-dealer registration. Banks that engage in additional securities activities, however, either will need to register as broker-dealers or shift those additional activities to registered broker-dealers.

The interim final rules adopted today respond to questions raised in recent months by banks, securities firms, and other interested groups about the application of the broker-dealer exceptions. The Commission is soliciting comments on all aspects of the interim final rules and will amend them as appropriate in response to comments received.

Some of the interim final rules adopted today address interpretive questions received by the Commission by defining key terms used in the 15 new exceptions. Other rules provide targeted exemptions that are consistent with the functional exceptions.

The Commission also is adopting temporary exemptions that give banks additional time to comply with the new statutory requirements. These rules will extend the full exception for banks from broker-dealer registration until October 1, 2001. They also will give banks until January 1, 2002 before their compensation arrangements must meet the conditions of certain statutory exceptions from the definition of broker as well as the compensation provisions of the newly granted exemptions. In addition, the rules give banks a temporary exemption that protects them from rescission actions arising from a failure to correctly determine broker-dealer status.

Finally, the Commission is adopting a rule that will treat savings associations and other thrifts - which are not considered "banks" under the federal securities laws - the same as banks for broker-dealer registration purposes.

The text of the new interim final rules will be available on the Commission's website at http://www.sec.gov/rules/finrindx.htm.


    *   Additional Information:

Definition of Terms in and Specific Exemptions for Banks, Savings Associations, and Savings Banks Under Sections 3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934



Modified: 05/11/2001