[Federal Register Volume 70, Number 61 (Thursday, March 31, 2005)]
[Rules and Regulations]
[Pages 16398-16400]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-6175]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 335

RIN 3064-AC88


Securities of Nonmember Insured Banks

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Interim final rule; request for comment.

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SUMMARY: The FDIC is revising its securities disclosure regulations 
applicable to state nonmember banks with securities required to be 
registered under section 12 of the Securities Exchange Act of 1934 
(Exchange Act). The interim final rule reflects amendments to the 
Securities Exchange Act of 1934 made by the Sarbanes-Oxley Act of 2002 
(Sarbanes-Oxley Act), and accommodates certain operational changes 
within the FDIC. The rule also incorporates through cross reference 
changes in regulations adopted by the Securities Exchange Commission 
(SEC) into the provisions of the FDIC's securities regulations. 
Incorporation by reference will assure that the FDIC's regulations 
remain substantially similar to the SEC's regulations, as required by 
law.

DATES: These amendments are effective on May 31, 2005. Comments must be 
submitted on or before May 31, 2005.

ADDRESSES: Interested parties are invited to submit written comments to 
the FDIC by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow the instructions for submitting comments 
on the FDIC Web site.
     E-mail: [email protected]. Include ``Part 335--Securities 
of Nonmember Insured Banks'' in the subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th 
Street, NW., Washington, DC 20429.
     Hand Delivery/Courier: Comments may be hand-delivered to 
the guard station located at the rear of the FDIC's 550 17th Street 
building (accessible from F Street) on business days between 7 a.m. and 
5 p.m.
    Instructions: All submissions received must include the agency name 
and use the title ``Part 335--Securities of

[[Page 16399]]

Nonmember Insured Banks.'' The FDIC may post comments on its Internet 
site at: http://www.fdic.gov/regulations/laws/federal/propose.html. 
Comments may be inspected and photocopied in the FDIC Public 
Information Center, Room 100, 801 17th Street, NW., Washington, DC, 
between 9 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Dennis Chapman, Senior Staff 
Accountant, Division of Supervision and Consumer Protection, (202) 898-
8922; Mary Frank, Senior Financial Analyst, Division of Supervision and 
Consumer Protection, (202) 898-8903; or Mark G. Flanigan, Counsel, 
Legal Division, (202) 898-7426, Federal Deposit Insurance Corporation, 
550 17th Street, NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 12(i) of the Exchange Act, as amended (15 U.S.C. 781(i)), 
authorizes the FDIC to issue regulations applicable to the securities 
of state nonmember banks that are substantially similar to those of the 
SEC with respect to its powers, functions, and duties to administer and 
enforce sections 10A(m) (standards relating to audit committees), 12 
(securities registration), 13 (periodic reporting), 14(a) (proxies and 
proxy solicitation), 14(c) (information statements), 14(d) (tender 
offers), 14(f) (arrangements for changes in directors), and 16 
(beneficial ownership and reporting) of the Exchange Act, and sections 
302 (corporate responsibility for financial reports), 303 (improper 
influence on conduct of audits), 304 (forfeiture of certain bonuses and 
profits), 306 (insider trades during blackout periods), 401(b) 
(disclosure of pro forma financial information), 404 (management 
assessment of internal controls), 406 (code of ethics for senior 
financial officers), and 407 (disclosure of audit committee financial 
expert) of the Sarbanes-Oxley Act (codified at 15 U.S.C. 7241, 7242, 
7243, 7244, 7261, 7262, 7264, and 7265), in regard to the depository 
institutions for which it is the primary federal regulator. These 
regulations must be substantially similar to the regulations of the SEC 
under the listed sections of the Exchange Act and the Sarbanes-Oxley 
Act, unless the FDIC publishes its reasons for deviating from the SEC's 
rules. The amendments to this part incorporate amendments to the 
Exchange Act, and changes to the SEC regulations, including the 
adoption of Regulation FD (Fair Disclosure).
    In addition, certain changes to delegations of authority in part 
335 result from FDIC's internal merger of the former Division of 
Supervision and the former Division of Compliance and Consumer Affairs 
into the Division of Supervision and Consumer Protection. The 
reorganization also created area offices in Memphis, Tennessee, and 
Boston, Massachusetts, in place of regional offices in those cities, 
and title changes for officials in the FDIC headquarters and other 
offices.

II. Section-by-Section Analysis

    Part 335 will be amended throughout to reflect the addition of 
section 10A(m) to the Exchange Act and sections 302, 303, 304, 306, 
401(b), 404, 406, and 407 of the Sarbanes-Oxley Act in addition to 
those sections that the FDIC is currently required to administer and 
enforce under section 12(i) of the Exchange Act.
    Section 335.101(b) will be amended to clarify that part 335 
generally incorporates through cross reference the regulations of the 
SEC as these regulations are routinely issued, revised, or updated from 
time to time by the SEC under sections 10A(m), 12, 13, 14, and 16 of 
the Exchange Act and sections 302, 303, 304, 306, 401(b), 404, 406, and 
407 of the Sarbanes-Oxley Act, except as provided at section 335.801 of 
this part.
    New section 335.121 (Listing standards relating to audit 
committees) will specifically incorporate by reference the SEC rule 
10A-3 (17 CFR 240.10A-3), adopted pursuant to section 10(A)(m) of the 
Exchange Act and Section 301 of the Sarbanes-Oxley Act, which prohibits 
any national securities exchange and national securities association 
from listing the securities of an issuer that fails to comply with 
specific audit committee requirements including member independence, 
oversight, complaint procedures, engagement of counsel and other 
advisors, and funding.
    Section 335.201 (Securities exempted from registration) and section 
335.261 (Exemptions; terminations and definitions) will add SEC Rule 
12h-5 (Exemption for subsidiary issuers of guaranteed securities and 
subsidiary guarantors) (17 CFR 240.12h-5).
    Section 335.211 (Registration and reporting) will add SEC Rule 17 
CFR 240.12b-37 (Satisfaction of filing requirements).
    Section 335.221 (Forms for registration of securities and similar 
matters) adds new subparagraph (d) to adopt the requirements of SEC 
Regulation FD (Fair Disclosure) (17 CFR 243.100 through 243.103), which 
is designed to address problems of selective disclosure of material 
information by reporting entities.
    Section 335.331 (Acquisition statements, acquisition of securities 
by issuers, and other matters) is amended to add SEC Rule 13k-1 
(Foreign bank exemption from the insider lending prohibition under 
Section 13(k) of the Exchange Act) (17 CFR 240.13k-1) and to change the 
title.
    Section 335.801 (Inapplicable SEC regulations; FDIC substituted 
regulations; additional information) is amended to add section 10A(m) 
of the Exchange Act and sections 302, 303, 304, 306, 401(b), 404, 406, 
and 407 of the Sarbanes-Oxley Act.
    Section 335.901 (Delegation of authority to act on matters with 
respect to disclosure laws and regulations) is amended to reflect 
certain changes in the organizational structure of the FDIC and to 
shorten the title.

III. Request for Comments

    The FDIC requests comments on all aspects of the rule changes. 
Commenters who suggest that the FDIC modify the requirements of the 
SEC's rules, regulations, and forms for state nonmember banks should 
support their request by demonstrating how such modification would 
satisfy the requirements of section 12(i) of the Exchange Act.
    Comments are also welcome on the general organization of part 335.

IV. Regulatory Analysis and Procedure

a. Administrative Procedure Act

    Public Comment Waiver and Effective Date. Pursuant to the 
Administrative Procedure Act, 5 U.S.C. 553(b) (APA), the FDIC finds 
good cause to issue this interim final rule without first seeking 
public comment. Section 553(b) of the APA does not apply to rules of 
agency organization, procedure, or practice, or when the agency for 
good cause finds that notice and public comment on the rules being 
promulgated are impractical or unnecessary. The Exchange Act requires 
that the FDIC issue regulations substantially similar to those of the 
SEC or publish its reasons for not doing so. Certain portions of 12 CFR 
335 that are being amended are organizational; other portions result 
from amendments to section 12(i) of the Exchange Act or the adoption of 
regulations by the SEC that were published in proposed form by the SEC. 
For these reasons, the FDIC finds that providing notice and an 
opportunity for public comment on these rules is unnecessary.
    Although notice and comment are not required, we are nonetheless 
interested in receiving any comments that may improve these rules. We 
therefore request comments on all aspects of this interim final rule. 
Following the comment period, the FDIC will consider

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any comments, make any necessary changes, and finalize the amendments.

b. Paperwork Reduction Act

    This rule contains no new collections of information as defined by 
the Paperwork Reduction Act.

c. Regulatory Flexibility Act

    A regulatory flexibility analysis is required only when the agency 
must publish a notice of proposed rulemaking (5 U.S.C. 603, 604). 
Because the revisions to part 335 are published in interim final form 
without a notice of proposed rulemaking, no regulatory flexibility 
analysis is required.

d. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 
801 et seq.) (SBREFA) provides generally for agencies to report rules 
to Congress and for Congress to review these rules. The reporting 
requirement is triggered in instances where the FDIC issues a final 
rule as defined by the Administrative Procedure Act (APA). Because the 
FDIC is issuing a final rule as defined by the APA, the FDIC will file 
the reports required by SBREFA.

List of Subjects in 12 CFR 335

    Accounting, Banks, Banking, Confidential business information, 
Reporting and recordkeeping requirements, Securities.

0
The Board of Directors of the Federal Deposit Insurance Corporation 
hereby amends part 335 to title 12 of the Code of Federal Regulations 
as follows:

PART 335--SECURITIES OF NON MEMBER INSURED BANKS

0
1. The authority citation for part 335 is revised to read as follows:

    Authority: 12 U.S.C. 1819; 15 U.S.C. 78l(i), 78m, 78n, 78p, 78w, 
7241, 7242, 7243, 7244, 7261, 7262, 7264, and 7265.


0
2. Section 335.101 is amended by revising paragraph (b) to read as 
follows:


Sec.  335.101  Scope of part, authority, and OMB control number.

    (b) Part 335 generally incorporates through cross reference the 
regulations of the SEC as these regulations are issued, revised, or 
updated from time to time under sections 10A(m), 12, 13, 14(a), 14(c), 
14(d), 14(f), and 16 of the Exchange Act and sections 302, 303, 304, 
306, 401(b), 404, 406, and 407 of the Sarbanes-Oxley Act of 2002 
(Sarbanes-Oxley Act), except as provided at Sec.  335.801 of this part. 
References to the Commission in the regulations of the SEC are deemed 
to refer to the FDIC unless the context otherwise requires.

0
3. Section 335.121 is added to read as follows:


Sec.  335.121  Listing standards related to audit committees.

    The provisions of the applicable SEC regulation under section 
10(A)(m) of the Exchange Act shall be followed as codified at 17 CFR 
240.10A-3.


0
4. Section 335.201 is revised to read as follows:


Sec.  335.201  Securities exempted from registration.

    Persons subject to registration requirements under Exchange Act 
section 12 and subject to this part shall follow the applicable and 
currently effective SEC regulations relative to exemptions from 
registration issued under sections 3 and 12 of the Exchange Act as 
codified at 17 CFR 240.3a12-1 through 240.3a12-11, 240.12a-4 through 
240.12a-9, and 240.12g-1 through 240.12h-5.
0
5. Section 335.211 is revised to read as follows:


Sec.  335.211  Registration and reporting.

    Persons with securities subject to registration under Exchange Act 
sections 12(b) and 12(g), required to report under Exchange Act section 
13, and subject to this part shall follow the applicable and currently 
effective SEC regulations issued under section 12(b) of the Exchange 
Act as codified at 17 CFR 240.12b-1 through 240.12b-37.

0
6. Section 335.221 is amended by adding a new paragraph (d) to read as 
follows:


Sec.  335.221  Forms for registration of securities and similar 
matters.

* * * * *
    (d) The provisions of the applicable and currently effective SEC 
regulation FD shall be followed as codified at 17 CFR 243.100 through 
243.103.

0
7. Section 335.261 is revised to read as follows:


Sec.  335.261  Exemptions; terminations; and definitions.

    The provisions of the applicable and currently effective SEC 
regulations under sections 12(g) and 12(h) of the Exchange Act shall be 
followed as codified at 17 CFR 240.12g-1 through 240.12h-5.
0
8. Section 335.331 is revised to read as follows:


Sec.  335.331  Acquisition statements, acquisition of securities by 
issuers, and other matters.

    The provisions of the applicable and currently effective SEC 
regulations under sections 13(d) and 13(e) of the Exchange Act shall be 
followed as codified at 17 CFR 240.13d-1 through 240.13e-102 and 
240.13k-1.

0
9. Section 335.801 is amended by revising paragraph (a) to read as 
follows:


Sec.  335.801  Inapplicable SEC regulations; FDIC substituted 
regulations; additional information.

    (a) Filing fees. Filing fees will not be charged relative to any 
filings or submissions of materials made with the FDIC pursuant to the 
cross reference to regulations of the SEC issued under sections 10A(m), 
12, 13, 14, and 16 of the Securities Exchange Act of 1934 (15 U.S.C. 
78), sections 302, 303, 304, 306, 401(b), 404, 406, and 407 of the 
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 7242, 7243, 7244, 7261, 
7262, 7264, and 7265), and this part.
* * * * *

0
10. Section 335.901 is amended by revising the section heading and 
paragraph (a) as follows:


Sec.  335.901  Delegation of authority to act on matters with respect 
to disclosure laws and regulations.

    (a) Except as provided in paragraph (b) of this section, authority 
is delegated to the Director, Division of Supervision and Consumer 
Protection (DSC), and where confirmed in writing by the director, to a 
deputy director or an associate director, or to the appropriate 
regional director or deputy regional director or area director, to act 
on disclosure matters under and pursuant to sections 10A(m), 12, 13, 
14(a), 14(c), 14(d), 14(f) and 16 of the Securities Exchange Act of 
1934 (15 U.S.C. 78), sections 302, 303, 304, 306, 401(b), 404, 406, and 
407 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7241, 7242, 7243, 
7244, 7261, 7262, 7264, and 7265), and this part.
* * * * *

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, this 18th day of March, 2005.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 05-6175 Filed 3-30-05; 8:45 am]
BILLING CODE 6714-01-P