[Federal Register Volume 73, Number 45 (Thursday, March 6, 2008)]
[Rules and Regulations]
[Pages 12009-12010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-4382]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 16

[Docket ID OCC-2008-0003]
RIN 1557-AD04


Securities Offering Disclosure Rules

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
amending its securities offering disclosure rules to eliminate the 
general requirement that a national bank in organization include 
audited financial statements as part of a public offering of its 
securities. The OCC has determined that, due to the very limited nature 
of the activities of a bank in the organizational phase, this 
requirement typically adds little information that is of benefit to 
potential investors or of significance in our review of an application 
for a national bank charter. However, the final rule enables the OCC to 
request audited financial statements in circumstances where doing so 
would be in the best interest of investors or would further the safe 
and sound operation of the national bank.

DATES: Effective Date: April 7, 2008.

FOR FURTHER INFORMATION CONTACT: Lee Walzer, Counsel, Legislative and 
Regulatory Activities Division, (202) 874-4487; Stuart Feldstein, 
Assistant Director, Legislative and Regulatory Activities Division, 
(202) 874-5090; Ted Dowd, Senior Attorney, Securities and Corporate 
Practices, Division, (202) 874-5210; Beverly Evans, Director, Licensing 
Activities, (202) 874-5060.

SUPPLEMENTARY INFORMATION:

I. Background

    On October 18, 2007, the OCC published a notice of proposed 
rulemaking (NPRM) to streamline the process for applying for a new 
national bank charter by eliminating, in most cases, the requirement 
that a national bank in organization submit audited financial 
statements as part of a public offering of its securities.\1\ The NPRM 
further provided that the OCC would be able to require such statements 
if their inclusion would be in the best interests of investors or would 
further the safe and sound operation of a national bank.
---------------------------------------------------------------------------

    \1\ 72 FR 59,039 (October 18, 2007).
---------------------------------------------------------------------------

    By reference to rules issued by, and forms required by, the 
Securities and Exchange Commission (SEC), the OCC's securities offering 
disclosure regulations currently require national bank charter 
applicants to provide audited financial statements in connection with 
registration statements filed with the OCC for a public offering of 
securities.\2\ However, as we discussed in the preamble to the NPRM, 
the requirement for a national bank in organization to submit audited 
financial statements is not warranted in most cases.\3\ Obtaining 
audited financial statements can be time-consuming and costly for the 
organizing group without resulting in corresponding benefits. The 
statements usually reflect little more than the bank account of the 
organizing group and its organizational expenses incurred and there is 
no clear need for this information to be subject to an independent 
audit. The OCC also typically does not rely on audited financial 
statements in deciding applications for de novo national bank charters. 
The OCC's process for chartering de novo national banks is 
comprehensive and includes extensive, ongoing review of the proposed 
bank's management, financial resources, and business plan. This process 
provides the OCC the opportunity to carefully consider, on the basis of 
detailed information, whether the organizing group has the expertise 
and resources to operate a viable national bank. Audited financial 
statements typically do not add materially to the information already 
available to the OCC through the application process.
---------------------------------------------------------------------------

    \2\ 12 CFR 16.15 (OCC rule referencing SEC rules governing form 
and content of securities registration statements). See Regulation 
S-X, 17 CFR 210.3-01(a) (SEC requirement to file consolidated 
financial statements); Regulation S-B, 17 CFR 228.310(a) (SEC 
regulations governing financial statements by small business 
issuers); Rule 1-02(h), Regulation S-X, 17 CFR 210.1-02(h) (SEC 
definition of developmental stage company).
    \3\ 72 FR at 59,040.
---------------------------------------------------------------------------

    The OCC received no comments on the NPRM and, accordingly, we are 
adopting the regulatory changes as proposed.

II. Description of the Final Rule

    The final rule is substantively identical to the proposal, with 
minor wording changes to improve technical descriptions. Specifically, 
part 16 is amended to provide a waiver from the requirement to use 
audited financial statements as part of a registration statement for 
the offering of securities for a national bank in organization.
    Under the final rule, the OCC will retain the authority to require 
audited financial statements if the OCC determines that factors 
particular to the proposal indicate that such statements would be in 
the interest of investors or would further the safe and sound operation 
of a national bank. For example, the OCC may require audited financial 
statements where review of the registration statement, or any other 
aspect of the application to charter a national bank, uncovers 
incomplete or inaccurate information about the proposed bank's finances 
or capital, or other material inaccuracies or misstatements.
    This final rule is part of the OCC's ongoing effort to reduce 
unnecessary regulatory burden on national banks, including applicants 
for national bank charters. These efforts include an internal review of 
OCC regulations, which soon will be issued in final form.\4\ In 
addition, the OCC together with the other Federal banking, thrift, and 
credit union regulators recently concluded an interagency review of 
regulations pursuant to the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (EGRPRA), the results of which are described in 
detail in a report submitted to the Congress late last year.\5 \
---------------------------------------------------------------------------

    \4\ See proposed rule at 74 FR 36,550 (July 3, 2007).
    \5\ Section 2222 of the EGRPRA directed the OCC, together with 
the Board of Governors of the Federal Reserve System, the Federal 
Deposit Insurance Corporation, the Office of Thrift Supervision, and 
the National Credit Union Administration to review their rules, to 
identify those that were outdated, unnecessary, or unduly 
burdensome, and to eliminate them if appropriate. See 12 U.S.C. 
3311. For the text of the agencies' Report to Congress, see 72 FR 
62,036 (November 1, 2007).

---------------------------------------------------------------------------

[[Page 12010]]

III. Regulatory Analysis

Regulatory Flexibility Act

    Pursuant to Section 605(b) of the Regulatory Flexibility Act, 5 
U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise 
required under Section 604 of the RFA is not required if the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities and publishes its certification 
and a short, explanatory statement in the Federal Register along with 
its rule.
    This change would reduce the costs and expenses associated with the 
formation of a national bank and will not have a significant economic 
impact. Therefore, pursuant to Section 605(b) of the RFA, the OCC 
hereby certifies that this proposal will not have a significant 
economic impact on a substantial number of small entities. Accordingly, 
a regulatory flexibility analysis is not needed.

Executive Order 12866

    The OCC has determined that this rule is not a significant 
regulatory action under Executive Order 12866. We have concluded that 
the changes made by this rule will not have an annual effect on the 
economy of $100 million or more. The OCC further concludes that this 
proposal does not meet any of the other standards for a significant 
regulatory action set forth in Executive Order 12866

Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA), the Agencies may not conduct or sponsor, and the 
respondent is not required to respond to, an information collection 
unless it displays a currently valid Office of Management and Budget 
(OMB) control number.
    The information collection requirements contained in this final 
rule have been submitted to, and pre-approved by, OMB for review and 
approval under OMB control number 1557-0120 (Securities Offering 
Disclosure Rules). Following publication of this final rule, OMB's pre-
approval will become final.

Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency 
prepare a budgetary impact statement before promulgating any rule 
likely to result in a Federal mandate that may result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year. If a 
budgetary impact statement is required, Section 205 of the Unfunded 
Mandates Act also requires an agency to identify and consider a 
reasonable number of regulatory alternatives before promulgating a 
rule. The OCC has determined that this final rule will not result in 
expenditures by State, local, and tribal governments, or by the private 
sector, of $100 million or more in any one year. Accordingly, this 
final rule is not subject to Section 202 of the Unfunded Mandates Act.

List of Subjects in 12 CFR Part 16

    National banks, Reporting and recordkeeping requirements, 
Securities.

Authority and Issuance

0
For the reasons set forth in the preamble, chapter I of title 12 of the 
Code of Federal Regulations is amended as follows:

PART 16--SECURITIES OFFERING DISCLOSURE RULES

0
1. The authority citation for part 16 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq. and 93a.


0
2. Add Sec.  16.15(e) to read as follows:


Sec.  16.15  Form and content.

* * * * *
    (e) Notwithstanding paragraph (a) of this section, a national bank 
in organization pursuant to Sec.  5.20 of this chapter shall not be 
required to include audited financial statements as part of its 
registration statement for the offer and sale of its securities, unless 
the OCC determines that factors particular to the proposal indicate 
that inclusion of such statements would be in the interest of investors 
or would further the safe and sound operation of a national bank.

    Dated: February 28, 2008.
John C. Dugan,
Comptroller of the Currency.
[FR Doc. E8-4382 Filed 3-5-08; 8:45 am]
BILLING CODE 4810-33-P