[Federal Register Volume 59, Number 247 (Tuesday, December 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31698]
[[Page Unknown]]
[Federal Register: December 27, 1994]
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DEPARTMENT OF THE TREASURY
Office of the Under Secretary for Domestic Finance
17 CFR Part 449
RIN 1505-AA56
Form G-FIN-4
AGENCY: Office of the Under Secretary for Domestic Finance, Treasury.
ACTION: Proposed form amendments.
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SUMMARY: The Department of the Treasury (``Department'') is proposing
amendments to Form G-FIN-4, which is the form that associated persons
of financial institutions that are government securities brokers and
dealers are required to file with such financial institutions, pursuant
to sections 15C(b)(1)(B) and (b)(4) of the Securities Exchange Act of
1934 (the ``Exchange Act'') (15 U.S.C. 78o-5(b)(1)(B) and(b)(4)) and
sections 400.4 and 449.3 of the regulations issued under the Government
Securities Act of 1986 (``GSA'').\1\ The amendments would update the
disciplinary background provisions of the form to reflect amendments to
the federal securities laws, and would provide the financial
institutions of the associated persons and the appropriate regulatory
authorities for the financial institutions with more useful
information.
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\1\Pub. L. 99-571, 100 Stat. 3208 (1986).
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DATES: Comments must be submitted on or before January 26, 1995.
ADDRESSES: Comments should be sent to: Government Securities
Regulations Staff, Bureau of the Public Debt, Department of the
Treasury, 999 E Street NW., room 515, Washington, DC 20239-0001.
Comments received will be available for public inspection and copying
at the Treasury Department Library, room 5030, Main Treasury Building,
1500 Pennsylvania Avenue NW., Washington, DC 20220.
FOR FURTHER INFORMATION CONTACT: Ken Papaj (Director), or Lee Grandy
(Government Securities Specialist) at 202-219-3632. (TDD for hearing
impaired: 202-219-3988.)
SUPPLEMENTARY INFORMATION:
I. Background and Analysis
The Department adopted Form G-FIN-4 (Disclosure Form for Person
Associated with a Financial Institution Government Securities Broker or
Dealer) in the implementing regulations for the GSA issued on July 24,
1987 (52 FR 27910). Sections 400.4 and 449.3\2\ of the GSA regulations
require the form to be used by associated persons of financial
institutions that are government securities brokers and dealers to
provide the financial institution and the appropriate regulatory agency
with certain information concerning employment, residence and statutory
disqualification. Under the GSA regulations, associated persons that
have a current Form U-4 (Uniform Application for Securities Industry
Registration or Transfer) or Form MSD-4 (Uniform Application for
Municipal Securities Principal or Municipal Securities Representative
Associated with a Bank Municipal Securities Dealer) on file with their
financial institution are not required to file Form G-FIN-4. Associated
persons are not required to file G-FIN-4 forms with their financial
institutions that are exempt from filing notice as government
securities brokers or dealers pursuant to part 401 of the GSA
regulations.
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\2\17 CFR 400.4 and 17 CFR 449.3, respectively.
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The proposed changes to the body of Form G-FIN-4 relate to Item 17,
which requests information concerning the disciplinary history of the
associated person. The changes are being made to reflect amendments to
the Exchange Act by the Securities Enforcement Remedies and Penny Stock
Reform Act of 1990 (``Remedies Act'')\3\ and the International
Securities Enforcement Cooperation Act of 1990 (``ISECA'').\4\ The
Remedies Act gave the Securities and Exchange Commission (``SEC'') the
authority to seek civil monetary penalties in court proceedings and to
impose monetary penalties and order disgorgement in administrative
proceedings. The Remedies Act also provided the SEC with both temporary
and permanent cease and desist order authority to prevent violations of
securities laws. The ISECA gave the SEC the authority to bar, suspend
or restrict the activities of broker-dealers and the associated persons
or those persons seeking to become associated with a broker-dealer,
based upon the findings of a foreign court or foreign securities
authority. By amending the GSA, the ISECA also gave similar authority
to the appropriate regulatory agencies for financial institutions that
are government securities brokers or dealers regarding associated
persons or those persons seeking to become associated with such
entities.\5\ The ISECA added a definition of the term ``foreign
financial regulatory authority'' to section 3(a) of the Exchange
Act,\6\ and provided that certain types of actions taken by foreign
financial regulatory authorities will be deemed a statutory
disqualification.
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\3\Pub. L. No. 101-429, 104 Stat. 931 (October 15, 1990).
\4\Pub. L. No. 101-550, 104 Stat. 2713 (November 15, 1990).
\5\15 U.S.C. 78o-5(c).
\6\15 U.S.C. 78c(a)(52).
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Specifically, the amendments to Form G-FIN-4 would amend question C
of Item 17 to add paragraph (5), which would ask the associated person
whether the SEC or the Commodity Futures Trading Commission (``CFTC'')
has ever imposed a civil money penalty on the associated person, or
ordered the associated person to cease and desist from any activity.
The new inquiry would require a yes or no response, and if the response
is yes, details must be provided, as is currently required for any
affirmative response in Item 17. The disclosure of this additional
information would correspond to the SEC's expanded administrative and
civil enforcement authorities under the Remedies Act.
The amendments to Form G-FIN-4 would also add a definition of
``foreign financial regulatory authority'' to Item 17, and would add
this term to question 17.D. Thus, question 17.D would now inquire
whether any federal regulatory agency, any state regulatory agency or
``foreign financial regulatory authority'' has ever found the
associated person to have: made a false statement or omission or been
dishonest, unfair or unethical; been involved in a violation of
investment regulations or statutes; been the cause of an investment-
related business having its authorization to do business denied,
suspended, revoked or restricted; been subject to an order concerning
investment-related activity; had its registration or license denied,
suspended, or revoked, or otherwise been prevented from associating
with an investment-related business, or been disciplined by the
restriction of its activities; or had its license as an attorney,
accountant or federal contractor suspended. The definition of ``foreign
financial regulatory authority'' which would be added to Form G-FIN-4
is essentially the definition the ISECA added to section 3(a)(52) of
the Exchange Act. Questions 17.A and 17.B would be amended to clarify
that the inquiries now apply to information related to foreign as well
as domestic courts.
The amendments would modify Item 5 to reflect the Office of Thrift
Supervision as the successor to the Federal Home Loan Bank Board. Thus,
the ``Director, Office of Thrift Supervision'' would now be listed as
one of the appropriate regulatory agencies with which the financial
institutions may be required to file the form.
In light of the technical changes made by the Government Securities
Act Amendments of 1993 to the definition of ``appropriate regulatory
agency'',\7\ these amendments would also make corresponding changes to
Item 3 of the general instructions for Form G-FIN-4.
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\7\Pub. L. 103-202, 107 Stat. 2344 (1993).
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These amendments would ensure that Form G-FIN-4 will provide a more
complete description of the associated person's disciplinary history.
The amendments to Form G-FIN-4 would also conform to similar changes
made by the National Association of Securities Dealers (``NASD'') to
Form U-4 in November, 1991,\8\ and by the SEC to Form BD (Uniform
Application for Broker-Dealer Registration) in July, 1992.\9\ The
Treasury was unable to propose amendments to Form G-FIN-4 at the same
time the NASD and SEC made changes to their respective forms since its
rulemaking authority under the GSA expired on October 1, 1991, and was
not reauthorized until December 17, 1993.\10\
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\8\National Association of Securities Dealers Notice to Members
No. 91-73 (November, 1991).
\9\Securities Exchange Act Release No. 30958 (July 27, 1992), 57
FR 34028 (July 31, 1992).
\10\See supra note 7.
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If the Department adopts the amendments to Form G-FIN-4 as
proposed, associated persons of financial institutions that are
government securities brokers or dealers would need to file amendments
to their existing Form G-FIN-4 to the extent that any information is
inaccurate or incomplete. Associated persons would need to review their
current Form G-FIN-4 filings to determine whether the forms contain all
the information required by these amendments, and if not, the
associated person would need to file an amendment to their G-FIN-4 with
the updated information. An appropriate transition period would be
provided for associated persons to file any required updates.
II. Special Analysis
Based on the very limited impact of the proposed amendments, it is
the Department's view that the proposed changes to Form G-FIN-4 are not
a ``significant regulatory action'' for the purposes of Executive Order
12866.
In addition, pursuant to the Regulatory Flexibility Act (5 U.S.C.
601, et seq.), it is hereby certified that the amendments to Form G-
FIN-4, if adopted, will not have a significant economic impact on a
substantial number of small entities and, as a result, a regulatory
flexibility analysis is not required.
The collection of information in these proposed amendments to Form
G-FIN-4 is contained in revised Items 5 and 17 of the form. Form G-FIN-
4 is required to be submitted by associated persons of financial
institutions that are government securities brokers and dealers, in
accordance with Secs. 400.4 and 449.3. The collection of information is
intended to give the financial institutions and the appropriate
regulatory authorities of the financial institutions a more complete
and meaningful description of the disciplinary history of the
associated person. The rule applies only to associated persons of
financial institutions that are not exempt from filing notice as
government securities brokers and dealers.
Although the Department is proposing to add a new paragraph to an
existing question and modify several other questions on Form G-FIN-4,
and cannot be certain as to the exact impact on associated persons
completing the form, it does believe that the changes will not have
more than a de minimis effect on the amount of time necessary to
complete the form. The Department's most recent Paperwork Reduction Act
Filing with respect to Form G-FIN-4 shows an annual estimate of 800
respondents filing once per year, with a burden of two hours per
respondent. No modification is projected to the reporting burden.
The Paperwork Reduction Act (44 U.S.C. 3504(h)) requires that
collections of information prescribed in proposed rules be submitted to
the Office of Management and Budget for review and approval. Since
these proposed amendments result in no increase in burden hours to
complete Form G-FIN-4 and more importantly do not represent any program
change, the submission described in the Paperwork Reduction Act is
inapplicable.
List of Subjects in 17 CFR Part 449
Banks, Banking, Brokers, Government securities, Reporting and
recordkeeping requirements.
For the reasons set out in the preamble, it is proposed to amend 17
CFR part 449 as follows:
PART 449--FORMS, SECTION 15C OF THE SECURITIES EXCHANGE ACT OF 1934
1. The authority citation for part 449 is revised to read as
follows:
Authority: Sec. 101, Pub. L. 99-571, 100 Stat. 3208; Sec. 4(b),
Pub. L. 101-432, 104 Stat. 963; Sec. 102, Sec. 106, Pub. L. 103-202,
107 Stat. 2344 (15 U.S.C. 78o-5(a), (b)(1)(B), (b)(4)).
2. By amending Form G-FIN-4 to revise Item 5, Item 17 and the
general instructions to read as follows:
Note: The text of Form G-FIN-4 does not appear in the Code of
Federal Regulations.
Form G-FIN-4--Disclosure Form for Person Associated with a Financial
Institution Government Securities Broker or Dealer
Item 5
Item 17
General Instructions
* * * * *
In Item 5, ``Federal Home Loan Bank Board'' would be deleted and
``Director, Office of Thrift Supervision'' would be added so that the
modified question would read: ``To be filed with the following
(indicate one): Board of Governors of the Federal Reserve System * * *
Comptroller of the Currency * * * Federal Deposit Insurance Corporation
* * * Director, Office of Thrift Supervision * * * Securities and
Exchange Commission.''
In Item 17, Definitions, the term ``Foreign Financial Regulatory
Authority'' would be added with the following meaning: ``Foreign
Financial Regulatory Authority--Includes any (A) foreign securities
authority; (B) other governmental body or foreign equivalent of a self-
regulatory organization empowered by a foreign government to administer
or enforce its laws relating to the regulation of investment or
investment-related activities; or (C) membership organization, a
function of which is to regulate the participation of its members in
the activities listed above.''
Item 17.A., ``in a domestic or foreign court'' would be added so
that the modified question would read: ``Have you, within the 10 years
preceding the date of this filing, been convicted of or plead guilty or
nolo contendere (``no contest'') in a domestic or foreign court to:''
Item 17.B., ``domestic or foreign'' would be added so that the
modified question would read: ``Has any domestic or foreign court
ever:''
Item 17.C.(5) would be added to read as follows: ``(5) imposed a
civil money penalty on you, or ordered you to cease and desist from any
activity?''
Item 17.D., ``foreign financial regulatory authority'' would be
added so that the modified question would read: ``Has any other federal
regulatory agency, any state regulatory agency or foreign financial
regulatory authority ever:''
Item 17.F., ``other than as reported in Items 17.A., B., or D.''
would be added so that the modified question would read: ``Has any
foreign government, court, regulatory agency, or exchange ever entered
an order against you related to investments or fraud other than as
reported in Items 17.A., B., or D.?''
In the general instructions to Form G-FIN-4, Items 3.b., 3.c., and
3.d. would be revised to read as follows:
3.b. ``The Board of Governors of the Federal Reserve System, in the
case of a State member bank of the Federal Reserve System, a foreign
bank, an uninsured State branch or State agency of a foreign bank, a
commercial lending company owned or controlled by a foreign bank (as
such terms are used in the International Banking Act of 1978), or a
corporation organized or having an agreement with the Board of
Governors of the Federal Reserve System pursuant to section 25 or
section 25A of the Federal Reserve Act;''
3.c. ``The Federal Deposit Insurance Corporation, in the case of a
bank insured by the Federal Deposit Insurance Corporation (other than a
member of the Federal Reserve System or a Federal savings bank) or an
insured State branch of a foreign bank (as such terms are used in the
International Banking Act of 1978);''
3.d. ``The Director of the Office of Thrift Supervision, in the
case of a savings association (as defined in section 3(b) of the
Federal Deposit Insurance Act) the deposits of which are insured by the
Federal Deposit Insurance Corporation; and''
Dated: November 18, 1994.
Frank N. Newman,
Deputy Secretary.
[FR Doc. 94-31698 Filed 12-23-94; 8:45 am]
BILLING CODE 4810-39-W