[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Rules and Regulations]
[Pages 8082-8111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30502]
[[Page 8081]]
Vol. 82
Monday,
No. 13
January 23, 2017
Part VI
Department of the Treasury
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Office of the Comptroller of the Currency
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12 CFR Parts 5, 7, 8, et al.
Economic Growth and Regulatory Paperwork Reduction Act of 1996
Amendments; Final Rule
Federal Register / Vol. 82 , No. 13 / Monday, January 23, 2017 /
Rules and Regulations
[[Page 8082]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Parts 5, 7, 8, 9, 10, 11, 12, 16, 18, 31, 150, 151, 155,
162, 163, 193, 194, 197
[Docket ID OCC-2016-0002]
RIN 1557-AD95F
Economic Growth and Regulatory Paperwork Reduction Act of 1996
Amendments
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
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SUMMARY: As part of its review under the Economic Growth and Regulatory
Paperwork Reduction Act of 1996, the Office of the Comptroller of the
Currency (OCC) is revising certain of its rules to remove outdated or
otherwise unnecessary provisions. Specifically, the OCC is: revising
certain licensing rules related to chartering applications, business
combinations involving Federal mutual savings associations, and notices
for changes in permanent capital; clarifying national bank director
oath requirements; revising certain fiduciary activity requirements for
national banks and Federal savings associations; removing certain
financial disclosure regulations for national banks; removing certain
unnecessary regulatory reporting, accounting, and management policy
regulations for Federal savings associations; updating the electronic
activities regulation for Federal savings associations; integrating and
updating OCC regulations for national banks and Federal savings
associations relating to municipal securities dealers, Securities
Exchange Act disclosure rules, and securities offering disclosure
rules; updating and revising recordkeeping and confirmation
requirements for national banks' and Federal savings associations'
securities transactions; integrating and updating regulations relating
to insider and affiliate transactions; and making other technical and
clarifying changes.
DATES: This final rule is effective on April 1, 2017.
FOR FURTHER INFORMATION CONTACT: For additional information, contact
Heidi Thomas, Special Counsel; or Rima Kundnani, Attorney, Legislative
and Regulatory Activities Division, 202-649-5490, for persons who are
deaf or hard of hearing, TTY, 202-649-5597, Office of the Comptroller
of the Currency, 400 7th Street SW., Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Background
Section 2222 of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA) \1\ requires that, at least once every
10 years, the Federal Financial Institutions Examination Council
(FFIEC) and each appropriate Federal banking agency (Agency or,
collectively, Agencies) represented on the FFIEC (the OCC, Federal
Deposit Insurance Corporation (FDIC), and the Board of Governors of the
Federal Reserve System (Federal Reserve Board)) conduct a review of the
regulations prescribed by the FFIEC or Agency. The purpose of this
review is to identify outdated or otherwise unnecessary regulatory
requirements imposed on insured depository institutions.
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\1\ Pub. L 104-208 (1996), codified at 12 U.S.C. 3311(b).
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EGRPRA requires the Agencies to provide public notice and seek
comment on one or more categories of regulations at regular intervals
so that all Agency regulations are published for comment within a 10-
year cycle. EGRPRA also directs the Agencies to categorize their
regulations by type, publish the categories, and invite the public to
identify areas of regulations that are ``outdated, unnecessary, or
unduly burdensome.'' \2\ Once the Agencies have published the
categories of regulations for comment, EGRPRA requires the Agencies to
publish a comment summary and discuss the significant issues raised by
the commenters. The statute also directs the Agencies to ``eliminate
unnecessary regulations to the extent that such action is
appropriate.'' \3\ Finally, EGRPRA requires the FFIEC to submit a
report to Congress summarizing significant issues and their relative
merits. The report also must analyze whether the Agencies can address
these issues through regulatory change or whether legislative action is
required.
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\2\ Id. at 3311(a).
\3\ Id. at 3311(d)(2).
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The Agencies completed the first EGRPRA review in 2006. The
Agencies expect to complete the current EGRPRA review process by the
end of 2016.
As with the first EGRPRA review, the Agencies have elected to
conduct this current review jointly. The Agencies have divided their
regulations into 12 categories and published four Federal Register
notices,\4\ each requesting public comment on three of these
categories. Additionally, the Agencies held a series of six outreach
meetings to provide an opportunity for bankers, consumer and community
groups, and other interested parties to present their views on the
Agencies' regulations directly to Agency principals, senior Agency
management, and Agency staff.\5\
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\4\ See 79 FR 32172 (June 4, 2014); 80 FR 7980 (Feb. 13, 2015);
80 FR 32046 (June 5, 2015), and 80 FR 79724 (Dec. 23, 2015). More
information on the current EGRPRA process, including the Federal
Register notices, outreach meetings, and public comments received,
is available at http://egrpra.ffiec.gov/index.html.
\5\ These public outreach meetings took place in Los Angeles,
California on December 2, 2014; Dallas, Texas on February 4, 2015;
Boston, Massachusetts on May 4, 2015; Kansas City, Missouri on
August 4, 2015 (which focused on rural banking issues), Chicago,
Illinois on October 19, 2015; and Washington, DC on December 2,
2015.
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The OCC believes it is unnecessary to wait until the end of the
EGRPRA process before acting to reduce regulatory burden where
possible.\6\ To this end, the OCC published a Notice of Proposed
Rulemaking (proposed rule or proposal) on March 14, 2016 \7\ that
included amendments in response to some of the comments the OCC
received on its rules to date.\8\ The proposed rule also included
amendments to OCC rules derived from the OCC's most recent internal
review of its rules to identify outdated or unnecessary provisions
beyond those suggested by EGRPRA commenters. Furthermore, the proposed
rule included amendments that would integrate a number of national bank
and Federal savings association rules. These proposed amendments remove
unnecessary or outdated provisions and streamline and simplify OCC
rules, thereby reducing regulatory burden on
[[Page 8083]]
national banks and Federal savings associations.\9\
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\6\ We note that the OCC already has finalized or proposed a
number of changes to our rules, in addition to this EGRPRA
rulemaking. Last year, we incorporated a number of changes suggested
by EGRPRA commenters into a final rule that integrates the OCC's
national bank and Federal savings association licensing rules. (80
FR 28346 (May 18, 2015)). In addition, pursuant to the Fixing
America's Surface Transportation (FAST) Act, the Agencies issued an
interim final rule that provides for an 18-month examination cycle
for qualifying 1- and 2-rated institutions with assets of between
$500 million and $1 billion. This rule provides an 18-month
examination cycle for 1-rated banks up to 1 billion in assets, and
gives the Agencies the authority to provide an 18-month examination
cycle for 2-rated banks with up to $1 billion in assets. (81 FR
10063 (Feb. 29, 2016)). Furthermore, the Agencies, acting through
the FFIEC, have sought comment on proposals to eliminate or revise
several items on the Consolidated Reports of Condition (Call
Report). (See 80 FR 56539 (Sept. 18, 2015)). The Agencies also
published a proposal for a streamlined call report for small
institutions under $1 billion (See 81 FR 54190 (Aug. 15, 2016)).
These Call Report initiatives are consistent with the feedback the
OCC, FDIC, and Federal Reserve Board have received in this EGRPRA
review.
\7\ 81 FR 13607.
\8\ The OCC is continuing to review EGRPRA comments on OCC rules
to determine whether additional amendments are appropriate.
\9\ The amendments included in this rulemaking amend rules
issued only by the OCC and do not reflect comments submitted on
rules the OCC has issued jointly with other agencies. We will
address any modifications to interagency rules through a separate
interagency rulemaking.
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II. Summary of Public Comments
The OCC received four comment letters in response to this proposed
rule. One trade association stated that it had no objection to the
proposed rule.\10\ A financial institution also stated that it had no
objection to the various items in the proposal, but noted that the
proposal does not reduce regulatory burden on the day-to-day servicing
and offering of products to bank customers and consumers, noting as an
example the paperwork burden associated with mortgage loans. It
specifically requested that the OCC consider proposing additional
reforms to simplify the process for consumers.
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\10\ This commenter also addressed the Volcker rule, 12 CFR part
44, Bank Secrecy Act rules, 12 CFR part 21, and the appraisal rule,
12 CFR part 34, which are outside the scope of this rulemaking.
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Another trade association, while noting that the proposed rule is
an early effort by the OCC to remove regulatory burden through the
EGRPRA review, applauded the OCC's effort through this rulemaking to
remove certain outdated and otherwise unnecessarily burdensome
provisions. This commenter also provided specific substantive comments
on the proposed amendments relating to fiduciary activities (12 CFR
parts 9 and 150), recordkeeping and confirmation requirements for
securities transactions (12 CFR parts 12 and 151), and the sale of
securities at a Federal savings association office (12 CFR 163.76).
These comments are discussed in detail, below.\11\
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\11\ The fourth comment letter, from an individual, addressed
the Volcker rule and Community Reinvestment Act. These topics are
outside the scope of this rulemaking.
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As a general response to these commenters, the OCC notes that it
will continue to review our rules under the EGRPRA process to determine
whether further reductions in burden are warranted. We will propose
additional amendments to our rules where appropriate.
II. Description of the Final Rule
The OCC is adopting the amendments as proposed with the removal of
the technical amendments to 12 CFR part 4 and one clarifying change to
12 CFR 9.13 (custody of fiduciary assets). A section-by-section
discussion of the proposed rule, the public comments received, and the
resulting final rule are set forth below.
Organization and Functions, Availability and Release of Information (12
CFR Part 4)
Twelve CFR part 4 describes the organization and functions of the
OCC and sets forth the standards, policies, and procedures that the OCC
applies in administering the Freedom of Information Act (FOIA) and
requests for non-public OCC information, among other things. The
proposed rule included technical amendments to update and correct the
OCC address in several sections and replace ``Licensing Department''
with ``Licensing Division'' and ``Disclosure Officer'' with ``Freedom
of Information Act Officer.'' Additionally, the proposed rule would
have updated the OCC's FOIA rules to remove references to the Office of
Thrift Supervision (OTS) that are no longer necessary.
Since the publication of the proposed rule, Congress enacted the
FOIA Improvement Act of 2016,\12\ which makes a number of changes to
FOIA that necessitate further amendments to the OCC's FOIA rules in 12
CFR part 4. To avoid confusion and to include all OCC FOIA rule changes
in one rulemaking, we have removed the part 4 amendments in this EGRPRA
final rule and will include them in a separate FOIA rulemaking.
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\12\ Public Law 114-185 (2016).
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Rules, Policies, and Procedures for Corporate Activities (12 CFR Part
5)
Twelve CFR part 5 sets forth the OCC's rules for corporate
activities and filings. These rules were included in the first EGRPRA
Federal Register request for comments and, as indicated above, the
OCC's final rule integrating the OCC's national bank and Federal
savings association licensing rules incorporated changes that reflect
some of the comments received in response to that notice. As discussed
below, the proposed rule included a number of additional amendments to
part 5 that reflected further review of these licensing rules by the
OCC since the adoption of this final rule.
Change in charter purpose or type (12 CFR 5.20, 5.53). The OCC
proposed to amend Sec. Sec. 5.20 and 5.53 to clarify what type of
application is to be used when an existing national bank or Federal
savings association proposes to change the purpose and type of charter
under which it operates. The OCC charters national banks and Federal
savings associations that are authorized to conduct any activity
permitted for a national bank or a Federal savings association,
respectively (sometimes called ``full-service charters''). The OCC also
charters national banks and Federal savings associations whose
activities are limited to a special purpose. The most common types of
special purpose institutions are (1) those whose operations are limited
to those of a trust company and activities related thereto, and (2)
those that conduct only a credit card business. Other special purpose
charter types include: Bankers' banks, community development banks, and
cash management banks.
When the OCC grants approval for a special purpose institution, the
approval decision generally includes a condition requiring the
institution to conduct only the limited activity. If the institution
later desires to expand the scope of its business, it must seek OCC
approval. A later expansion to include additional business warrants a
new review to determine if the institution has the financial and
managerial resources to conduct the expanded business. Similarly, when
an institution that has a full-service charter later desires to limit
itself to a special purpose and conduct only one business line, the OCC
reviews the change to ascertain whether the institution could continue
to operate safely and soundly after it narrows its focus and to
evaluate the institution's proposed capital, staffing, business plan,
and risk management systems.
Currently, filings to change the purpose of a charter have no
established framework and the OCC addresses them on a case-by-case
basis when an institution inquires. Recently revised Sec. 5.53 \13\
now covers transactions that are similar to a change in purpose and
type of charter (i.e., transactions that involve substantial changes in
an institution's assets, liabilities, or business lines). Because the
changes to an institution's assets, liabilities, and business lines
that would be involved in a change in the purpose of a charter would
necessitate a filing under Sec. 5.53, we proposed to clarify Sec.
5.53 to expressly add change in charter type to the transactions that
are covered by Sec. 5.53. We also proposed additional provisions to
Sec. 5.20(l), where special purpose charters are discussed, that
describe changes in charter purpose, set out the requirement for an
application, and direct institutions to Sec. 5.53 for the relevant
application.
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\13\ The OCC amended Sec. 5.53 in July 2015. See 80 FR 28346
(May 18, 2015).
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We received no specific comments on these proposed amendments to
Sec. Sec. 5.20 and 5.53 and adopt them as proposed.
[[Page 8084]]
Business combinations involving Federal mutual savings associations
(12 CFR 5.33). Twelve CFR 5.33 sets forth the provisions governing
business combinations involving depository institutions within the
OCC's jurisdiction, including Federal mutual savings associations.
Paragraph (n)(2)(iii) of this section currently provides that if any
combining Federal savings association is a mutual savings association,
the resulting institution must be a mutually held savings association,
unless the transaction is approved under 12 CFR part 192, which governs
mutual to stock conversions, or involves a mutual holding company
reorganization under 12 U.S.C. 1467a(o).\14\ Consequently, unless one
of these two exceptions applies, the resulting institution may not be a
mutually held state-chartered savings bank.\15\
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\14\ Section 10(o) of the HOLA.
\15\ This paragraph is generally consistent with the rule as
issued by the former OTS and originally republished by the OCC as 12
CFR 146.2(a)(4). The OCC moved this provision to Sec. 5.33 in its
licensing integration rule. See 80 FR 28346 (May 18, 2015).
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However, the merger authority set forth in 12 CFR 5.33(n)(2)(iii)
is narrower than the merger authority granted to all Federal savings
associations under the Home Owners' Loan Act (HOLA). Specifically,
section 10(s) of the HOLA \16\ provides that ``[s]ubject to sections
5(d)(3) and 18(c) of the Federal Deposit Insurance Act (FDI Act) and
all other applicable laws, any Federal savings association may acquire
or be acquired by any insured depository institution.'' The statute,
therefore, does not limit the resulting institution in such
transactions to a savings association.\17\
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\16\ 12 U.S.C. 1467a(s).
\17\ Section 5(i) of the HOLA (12 U.S.C. 1464(i)) provides that
transactions involving the conversion of a Federal mutual savings
association to a stock Federal savings association, and vice versa,
must comply with OCC regulations. As indicated above, OCC
regulations relating to mutual to stock conversions are set forth at
12 CFR part 192. By limiting the resulting institution to a mutual
institution, both the current rule and the amendment ensure that
combinations involving Federal mutual savings associations are
consistent with the mutual to stock conversion regulations at 12 CFR
part 192.
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Under Sec. 5.33(n)(2)(iii), Federal mutual savings associations
and mutual state-chartered savings banks that seek to combine must
undertake a multi-step transaction. For example, a Federal mutual
savings association generally may convert to a mutual state-chartered
savings association or a mutual state-chartered savings bank pursuant
to section 5(i)(3) of the HOLA, and thereafter combine with a mutual
state-chartered savings bank. Such a process, while accomplishing the
same purpose as a direct merger, is more expensive and time consuming
than a direct merger and results in unnecessary regulatory burden for
the institutions involved.
Accordingly, the OCC proposed to amend Sec. 5.33(n)(2)(iii) to
permit a mutual depository institution insured by the FDIC, i.e.,
either a mutual savings association or a mutual savings bank, to be the
resulting institution in a combination involving a Federal mutual
savings association. This amendment would simplify combinations
involving mutual savings banks, thereby reducing regulatory burden and
costs associated with such transactions imposed under the current rule.
We note that this amendment would continue to require the resulting
institution to have a mutual charter so as not to implicate the mutual-
to-stock conversion regulations, 12 CFR part 192.
The OCC also proposed to amend 12 CFR 5.33(n)(2)(iii)(B) to allow a
mutual Federal savings association to merge into an FDIC-insured
depository institution subsidiary of a state-chartered mutual holding
company. Currently, under the exception, a mutual Federal savings
association may merge into a subsidiary savings association of a
section 10(o) mutual holding company, provided the depositors of the
resulting association have membership rights in the mutual holding
company.\18\ The exception does not allow the merger of a mutual
Federal savings association into a state savings bank subsidiary of a
mutual holding company that is established under state law. As a
result, in order for the mutual Federal savings association to merge
into a state savings bank subsidiary of a mutual holding company
organized under state law, it must first convert to a state-chartered
savings association or state-chartered savings bank, and then combine
with the state-chartered savings bank.
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\18\ The OCC deems this type of transaction to be one type of
mutual holding company reorganization.
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In addition, we proposed to amend Sec. 5.33(n)(2)(iii)(B) so that
mergers of mutual Federal savings associations into subsidiaries of
section 10(o) and non-section 10(o) mutual holding companies are
treated similarly. As with the amendment to Sec. 5.33(n)(2)(iii)
described above, this amendment would reduce regulatory burden and
costs associated with such transactions imposed under the current rule.
We received no specific comments on these proposed amendments to
Sec. 5.33 and adopt them as proposed.
Changes in permanent capital (12 CFR 5.46). Under 12 CFR 5.46, a
national bank must submit an application to the OCC and receive prior
approval for certain increases or decreases to the bank's permanent
capital accounts. In addition, a national bank must submit an after-
the-fact notice of all increases or decreases to the bank's permanent
capital accounts. Furthermore, pursuant to 12 U.S.C. 57, the OCC must
certify all increases to a national bank's permanent capital accounts
resulting from cash or other assets for the increase to be considered
valid. The purpose of these requirements is to inform the OCC whenever
the bank's board of directors decides to change the capital structure
of the institution, including when accepting additional funds from a
parent holding company, issuing new shares or stock, or redeeming an
existing issue of preferred stock.
The OCC receives a number of applications and notices for changes
to permanent capital that arise solely from applying U.S. generally
accepted accounting principles (GAAP). For example, U.S. GAAP may allow
a national bank to revalue certain balance sheet accounts, including
permanent capital accounts, for a period after the conclusion of a
merger or acquisition. As 12 U.S.C. 1831n generally requires all
insured depository institutions, including national banks, to apply
U.S. GAAP when preparing their financial statements, there is limited
value in requiring licensing filings or certifications solely because
the bank is complying with that statute by applying U.S. GAAP. These
accounting adjustments often are not material and typically are
reviewed by the bank's internal accounting staff and external auditors.
In addition, many of the accounting adjustments relate back to
transactions reviewed or approved by the OCC under other rules, such as
mergers, acquisitions, or divestitures. Furthermore, these accounting
adjustments do not result in increases from cash paid or other assets
and therefore do not require certification by the OCC pursuant to 12
U.S.C. 57.
We proposed to amend Sec. 5.46 to create an exemption for national
banks from the prior approval, notification, and certification
requirements for all changes to permanent capital that result solely
from application of U.S. GAAP, and do not otherwise involve the receipt
of cash or other assets. However, proposed Sec. 5.46 would continue to
require a notice for material accounting adjustments, which the
amendment defines as an increase or decrease greater than 5 percent of
the bank's total
[[Page 8085]]
permanent capital prior to the adjustments in the most recent quarter,
or if the national bank is subject to a letter, order, directive,
written agreement, or otherwise that is related to changes in permanent
capital. The national bank would be required to provide the notice
within 30 days after the end of the quarter in which the material
accounting adjustment occurred, and include the amount of the
adjustment, a description, and a citation to the applicable U.S. GAAP
provision.
The OCC did not propose a similar change to Sec. 5.45, Increases
in permanent capital of a Federal stock savings association. Section
5.45 requires a Federal savings association to submit an application to
the OCC and receive prior approval for increases to its permanent
capital accounts under the same circumstances that national banks are
required to submit an application under Sec. 5.46(g)(1)(ii). However,
unlike the national bank rule, Sec. 5.45 requires an after-the-fact
notice of the increase only if the savings association was required to
obtain prior approval of the increase. In addition, there is no
statutory requirement that the OCC certify the increase in capital. For
these reasons, an amendment similar to the one adopted for Sec. 5.46
is not needed for Sec. 5.45.
The OCC, however, did propose a clarifying change to Sec.
5.45(g)(4)(i). The current wording of that section is unclear to
whether a Federal savings association that increases its permanent
capital account must file a notice for all increases, rather than only
in the circumstances in which the savings association is required to
obtain prior approval. In adopting this provision, the OCC intended the
notice to be filed only in cases in which prior approval was required.
We proposed to amend Sec. 5.45(g)(4)(i) to specifically provide that
an after-the-fact notice is required only if the capital increase was
subject to prior approval by the OCC.
We received no specific comments on the proposed amendments to
Sec. Sec. 5.46 and 5.45 and adopt them as proposed.
Additional technical changes to 12 CFR part 5. The proposed rule
also included additional technical changes to 12 CFR part 5. First, we
proposed to amend Sec. 5.8, Public notice, to provide that the public
notice of a licensing-related filing must include the closing date of
the 30-day public comment period only if this information is available
at the time of publication. We proposed this change because the OCC
treats the comment period differently in business combinations than in
other transactions. For other transactions, the comment period starts
when the public notice is published. For business combinations, the
comment period starts on the latest of the publication date, the date
when the OCC makes the application available in the OCC's FOIA Reading
Room, or the date when the OCC publishes the application in the OCC
Weekly Bulletin. When the national bank or Federal savings association
files the application with the OCC and publishes the notice, it
typically would not know when the other two events will occur, and so
would not know the comment period closing-date for these transactions
at the time the public notice is published. However, in order to assist
the public in determining this date, the proposed rule required that
the notice include a statement indicating that information about the
transaction, including the comment period closing-date, may be found in
the OCC's Weekly Bulletin.
Second, for a similar reason, we proposed a technical correction to
paragraph (i) of 12 CFR 5.33, Business combinations involving a
national bank or Federal savings association. In general, paragraph (i)
provides that a business reorganization filing or a filing that
qualifies for a streamlined application is deemed approved by the OCC
on the latter of the 45th day after the OCC receives the application or
the 15th day after the close of the public comment period. However,
because the 30-day public comment period for business combinations
starts on the later of the date that the filing is published in the OCC
Weekly Bulletin or the date it is available in the OCC's FOIA Reading
Room, and because this date will always be after the OCC receives the
application, 15 days after the close of the public comment period
always will be later than the 45th day after the OCC receives the
application. Therefore, the reference to the 45-day period in Sec.
5.33(i) is unnecessary and confusing, and we proposed to remove it.
Third, we proposed to correct inaccurate cross-references in
paragraphs (j)(3) and (4) of Sec. 5.21, Federal mutual savings
association charter and bylaws. Specifically, the references to
paragraphs (j)(2) would be changed to paragraph (j)(3).
Fourth, we proposed to correct an inaccurate cross-reference in
Sec. 5.33(o)(3)(i) by replacing the reference to paragraph (n)(3) with
paragraph (o)(3).
Fifth, we proposed to correct an inaccurate cross-reference to the
definition of the term ``tax-qualified employee stock benefit plan'' in
Sec. 5.50(f)(2)(ii)(E) by replacing ``Sec. 192.2(a)(39)'' with
``Sec. 192.25.''
Lastly, we proposed to amend Sec. 5.66, Dividends payable in
property other than cash, to provide that a national bank must submit a
request for prior approval of a non-cash dividend to the appropriate
OCC licensing office. Currently, this section provides that the OCC
must approve a non-cash dividend but does not indicate where a bank
must submit the request for approval. The only direction provided in
OCC dividend rules as to where a dividend application should be filed
is contained in Sec. 5.64(c)(3), which provides that a national bank
must submit its request for prior approval for cash dividends to the
appropriate OCC supervisory office. Because the OCC reviews non-cash
dividends in the appropriate licensing office, and not the appropriate
supervisory office, the amendment to Sec. 5.66 would remove any
confusion as to where a bank must submit non-cash dividend
applications.
We received no specific comments on these proposed technical
amendments and adopt them as proposed.
The OCC also is adopting additional technical and procedural
amendments not included in the proposed rule. First, we are replacing
the term ``main office'' with ``home office'' both in paragraph
(j)(3)(iii) of Sec. 5.21, Federal mutual savings association charter
and bylaws, and in paragraph (j)(2)(iii) of Sec. 5.22, Federal stock
savings association charter and bylaws. ``Main office'' is the
appropriate term for national banks, while ``home office'' is the
appropriate term for Federal savings associations. Second, we are
making a change in OCC procedure in paragraph (e)(2)(ii) of Sec. 5.48,
Voluntary liquidation of a national bank or Federal savings
association. Currently, this provision requires a bank or savings
association to receive the OCC's supervisory non-objection to a
liquidation plan before beginning the liquidation. We are amending this
provision to allow a non-supervisory office of the OCC, such as the OCC
Licensing Division, to provide this non-objection.
National Bank Director Oaths (12 CFR 7.2008).
Twelve U.S.C. 73 sets forth the requirements for national bank
director oaths. Specifically, this statute requires that, when
appointed or elected, each national bank director must take an oath
that he or she (1) will diligently and honestly administer the affairs
of the bank, (2) not knowingly violate or willingly permit to be
violated any applicable laws, and (3) is the owner in good faith of the
requisite shares of stock and that the stock is not pledged as security
for any loan or debt. The statute requires the oath to be notarized and
immediately transmitted to the
[[Page 8086]]
Comptroller and filed in the Comptroller's office for 10 years.
Twelve CFR 7.2008 implements this statutory requirement.
Specifically, Sec. 7.2008 provides that: (1) A notary public,
including one who is a director but not an officer of the national
bank, may administer the oath of directors; (2) each director attending
the organization meeting must execute either a joint or individual
oath, and a director not attending the organization meeting (the first
meeting after the election of the directors) must execute the
individual oath; (3) a director must take another oath upon re-
election, notwithstanding uninterrupted service; and (4) the national
bank must file the original executed oaths of directors with the OCC
and retain a copy in the bank's records in accordance with the
Comptroller's Corporate Manual filing and recordkeeping instructions
for executed oaths of directors. This provision also notes that
appropriate sample oaths are located in the Comptroller's Corporate
Manual.
Twelve CFR 7.2008 was included in the third Federal Register EGRPRA
notice and the OCC did not receive any comments on this provision in
response to this request for comment. However, after conducting its own
internal review, the OCC proposed to amend Sec. 7.2008 to clarify when
the director oath must be taken. As proposed, Sec. 7.2008 would follow
the statute more closely by requiring a director to execute either a
joint or individual oath at the first meeting of the board of directors
that the director attends after the director is appointed or elected.
This proposed amendment also would remove the reference to
``organizational meeting,'' which we believe does not adequately convey
when a director must execute the oath in all cases, including when a
director is appointed.
The OCC also proposed to replace obsolete references to the
Comptroller's Corporate Manual with references to www.occ.gov \19\ and
to correct a spelling error in Sec. 7.2008.
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\19\ The OCC's Web site contains general instructions for filing
the oath of directors and a sample individual oath and joint oath at
http://www.occ.gov/publications/publications-by-type/licensing-manuals/index-licensing-manuals.html.
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We received no specific comments on these proposed amendments to
Sec. 7.2008 and adopt them as proposed.
Fidelity Bonds (12 CFR part 7, Sec. Sec. 163.180, 163.190, and
163.191).
Twelve CFR 7.2013 requires all national bank officers and employees
to have adequate fidelity bond coverage. It also states that the bank's
directors may be liable for losses incurred in the absence of such
bonds and that directors should not serve as bond sureties.
Furthermore, the rule provides that the bank's directors should
determine the appropriate amount of bond coverage, premised on
consideration of the bank's internal auditing safeguards, number of
employees, deposit liabilities, and amount of cash and securities
normally held by the bank.
Twelve CFR 163.180(c), 163.190, and 163.191 contain the fidelity
bond rules applicable to Federal savings associations. While Sec. Sec.
163.190 and 7.2013 are similar, the Federal savings association rules
are more prescriptive and apply not only to officers and employees, but
also to directors and agents. In addition, under Sec. 163.190(b), the
Federal savings association's management must determine the amount of
coverage, based on the potential risk exposure. Section 163.190(c) also
directs the Federal savings association to provide supplemental
coverage beyond that provided by the insurance underwriter industry's
standard forms if the board determines that additional coverage is
warranted. Furthermore, Sec. 163.190(d) requires the Federal savings
association's board of directors to approve the association's bond
coverage, with this approval documented in the board's minutes, and to
review annually the adequacy of coverage. Section 163.191 provides an
alternative means of calculating the bond coverage that is appropriate
for a Federal savings association agent, in lieu of the calculation
provided in Sec. 163.190. Finally, Sec. 163.180(c) states that a
Federal savings association maintaining a bond required by Sec.
163.190 must promptly notify the bond company and file proof of loss
for any covered loss that is greater than twice the bond's deductible
amount.
Twelve CFR 163.180(c), 163.190, and 163.191 were included in the
fourth Federal Register EGRPRA notice, and the OCC did not receive any
comments on these rules in response to this request for comment.
However, after conducting its own internal review, the OCC finds that
some of the requirements are unnecessary or overly detailed, and more
appropriately addressed in guidance or left to the institution's
judgment, as is currently the case for national banks. The OCC also
finds that other provisions in the savings association rules should be
continued and applied, as modified, to national banks. Therefore, the
OCC proposed to remove Sec. Sec. 163.180(c), 163.190 and 163.191 and
apply Sec. 7.2013, as amended and as described below, to Federal
savings associations.
As a result of removing Sec. 163.190, Federal savings associations
would no longer be required to maintain fidelity bonds for directors
who do not also serve as officers or employees. We proposed to remove
this requirement because fidelity bond coverage generally is not
available for directors unless they also are acting as officers or
employees. In addition, the activities in which outside directors
engage generally do not expose financial institutions to the types of
losses covered by fidelity bonds. Furthermore, as a result of this
proposed amendment, the board of directors of a Federal savings
association no longer would be required to assess annually the adequacy
of bond coverage for the association officers and employees.
We also proposed to remove the requirement in Sec. 163.180(c)
because we find that a regulatory requirement that a Federal savings
association notify its bond insurance company and file proof of loss
for certain claims is unnecessary. The terms of a fidelity bond
contract itself require such notification, and it is a prudent business
practice for a financial institution. Furthermore, the Corporate and
Risk Governance booklet of the Comptroller's Handbook states that
``[a]ll fidelity bonds require that a loss be reported to the bonding
company within a specified time after a reportable item comes to the
attention of management. Management should diligently report all
potential claims . . . because failure to file a timely report may
jeopardize coverage for that loss.'' \20\
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\20\ Corporate and Risk Governance booklet of the Comptroller's
Handbook, p. 63 (July 2016).
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In addition, we proposed to modify the treatment of fidelity bond
coverage for certain agents of Federal savings associations. Currently,
Sec. 163.191 requires fidelity bond coverage for any agent who has
control over or access to cash, securities, or other property of a
Federal savings association. There is no comparable requirement for
agents of national banks. Instead of a mandatory requirement for agent
bonding, we proposed to amend Sec. 7.2013 to provide that the boards
of directors of both banks and savings associations should consider
whether agents who have access to assets of a bank or savings
association also should have fidelity bond coverage. The OCC recognizes
that agents providing financial services, such as cash handling or
payment processing, to a financial institution potentially expose that
institution to significant risks. The OCC believes that these risks and
associated risk mitigation strategies, including the scope and size of
fidelity
[[Page 8087]]
bond coverage for agents, are best addressed by the board of directors.
Finally, Sec. 7.2013(b) currently provides that a national bank's
board of directors should determine the appropriate amount of fidelity
bond coverage. This language is in contrast to that in Sec. 163.190,
which makes clear that this determination is mandatory. For safety and
soundness reasons, the OCC believes that both national bank and Federal
savings association boards of directors should be required to determine
the appropriate bond coverage and proposed to amend Sec. 7.2013(b) to
make clear that this determination is a mandatory requirement. We also
proposed to amend this section to allow a board committee, as an
alternative to the entire board, to assess fidelity bond coverage.
We did not received any specific comments on these proposed
amendments to part 7 and Sec. Sec. 163.180, 163.190, and 163.191 and
adopt them as proposed.
Assessments (12 CFR Part 8)
The OCC collects semiannual assessments from national banks,
Federal savings associations, Federal branches, and Federal agencies in
accordance with 12 CFR part 8. The OCC is adopting a technical
amendment to the definition of ``[f]ull-service trust Federal savings
association'' in 12 CFR 8.6(c)(iv) not included in the proposed rule.
The amendment removes the extraneous word ``trust'' from the title,
which corrects a drafting error from an earlier rulemaking in which the
OCC combined certain rules of the OCC and the former OTS.\21\ This
amendment will not affect the method for collecting assessments or the
amount of assessments collected by the OCC.
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\21\ 76 FR 43566 (July 21, 2011).
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Fiduciary Activities (12 CFR Parts 9 and 150)
Twelve CFR parts 9 and 150 set forth the standards that apply to
the fiduciary activities of national banks and Federal savings
associations, respectively. Parts 9 and 150 were included in the first
EGRPRA Federal Register notice, and the OCC proposed revisions to these
rules to reflect some of the public comments received in response to
this notice. One commenter to the proposed rule provided a number of
comments on these revisions. These comments and the revisions as
adopted in this final rule are discussed below.
Custody of fiduciary assets. Sections 9.13 and 150.230 require a
national bank or Federal savings association, respectively, to place
all fiduciary account assets in the joint custody or control of no
fewer than two of the fiduciary officers or employees designated by the
bank's or savings association's board of directors or to maintain
fiduciary investments off premises, if consistent with applicable law
and if the bank maintains adequate safeguards and controls. The OCC
proposed to amend Sec. 9.13 to add a new Sec. 150.245 to provide
relief for arrangements under which a national bank or Federal savings
association is deemed a fiduciary solely because it provides investment
advice for a fee. If, under such an arrangement the bank or savings
association is a fiduciary merely because it provides such advice and
does not have investment discretion, the OCC does not believe that it
should be required to have custody of the fiduciary assets.
Specifically, the OCC proposed to amend Sec. 9.13(a) to provide that a
national bank that is deemed a fiduciary based solely on its provision
of investment advice for a fee, as that capacity is defined in 12 CFR
9.101(a), is not required to serve as custodian when offering those
fiduciary services. Similarly, proposed Sec. 150.245 provides that a
Federal savings association that is deemed a fiduciary based solely on
its provision of investment advice for a fee, as that capacity is
defined in 12 CFR 9.101(a), would not be required to maintain custody
or control of fiduciary assets as set forth in Sec. 150.220 or
150.240.
We received one comment on this proposed change, which suggested
that the proposal does not go far enough in that it leaves many other
arrangements unaddressed and may raise uncertainty about common
scenarios that arise even in traditional fiduciary relationships, such
as when a client does not wish to grant the bank custody of fiduciary
assets. It suggested that the final rule also provide that a national
bank that has not been granted custody of fiduciary assets may still
act as a fiduciary with respect to those assets, if consistent with
applicable law.
The OCC does not agree with the comment. Such arrangements may pose
additional risks to account beneficiaries as well as additional
liabilities to bank fiduciaries. The proposed amendment was
deliberately and narrowly focused on situations where a bank or Federal
savings association is deemed a fiduciary based solely on the provision
of investment advice for a fee, as that capacity is defined in Sec.
9.101(a). Banks that act in any other fiduciary capacity, such as
directed trustees or banks that have sole or shared investment
discretion, still are required to maintain custody of fiduciary assets
in accordance with Sec. 9.13(a).
However, to avoid any confusion about the intent of the amendment
the final rule specifically cross-references the definition of
``investment advisor'' instead of referencing the provision of
investment advice for a fee and states that, in order not to be
required to serve as custodian, the bank may not have any other
specified fiduciary capacity. Specifically, as adopted in the final
rule, this amendment now provides that a bank that is deemed a
fiduciary based solely on its capacity as investment advisor, as that
capacity is defined in Sec. 9.101(a), and has no other fiduciary
capacity as enumerated in Sec. 9.2(e) is not required to serve as
custodian when offering those fiduciary services. This language is
substantively identical to the language in proposed Sec. 9.13 but
provides banks with more clarity regarding their obligations. We have
made corresponding changes to Sec. 150.245.
Deposits of securities with state authorities. Pursuant to 12
U.S.C. 92a(f), Sec. 9.14(a) provides that if a state requires
corporations acting in a fiduciary capacity to deposit securities with
state authorities for the protection of private or court trusts, a
national bank must make a similar deposit with state authorities before
acting as a private or court-appointed trustee in that state. If the
state authorities refuse to accept the deposit, the bank must instead
deposit the securities with the Federal Reserve Bank of the district in
which the national bank is located. Section 150.490 contains a nearly
identical requirement for Federal savings associations, except that
savings associations must deposit the securities with state authorities
or the applicable Federal Home Loan Bank. The OCC proposed to amend
Sec. 9.14(a) to permit national banks to deposit these securities
either with the Federal Home Loan Bank of which the bank is a member or
with the appropriate Federal Reserve Bank. Because Federal savings
associations may not be members of a Federal Reserve Bank, the OCC
cannot make a reciprocal amendment to Sec. 150.490.
One commenter requested that the OCC amend Sec. 9.14 further to
provide that if a bank makes a best effort to comply with this
provision but is unable to meet the deposit requirement because of a
state's refusal or inaction, the bank will be deemed to have complied.
The OCC does not agree with this suggested change. Twelve U.S.C. 92a(f)
specifically requires national banks to make these deposits. Thus,
amending 12 CFR 9.14 to deem a bank
[[Page 8088]]
to have complied when it has not actually made the deposit would be
inconsistent with the plain language of the statute. Furthermore, the
OCC believes that the option of depositing such funds with either a
Federal Reserve Bank or a Federal Home Loan Bank, in the case of
national banks, or with a Federal Home Loan Bank, in the case of
Federal savings associations, provides these entities with a feasible
method of complying with the regulation and statute when a state
refuses to accept the deposit. The OCC therefore adopts the amendment
as proposed.
Collective investment funds. Section 9.18 permits a national bank,
where consistent with applicable law, to invest assets that it holds as
fiduciary in specified collective investment funds. Section 150.260
permits Federal savings associations also to invest funds in a
fiduciary account in collective investment funds, and provides that in
establishing and administering such funds, Federal savings associations
must comply with the requirements of Sec. 9.18. Therefore, the
amendments to Sec. 9.18 made by this rulemaking also apply to Federal
savings associations.
Section 9.18(b)(1) requires a national bank to establish and
maintain each collective investment fund in accordance with a written
plan approved by a resolution of the bank's board of directors or by a
committee authorized by the board. This provision also requires the
bank to make a copy of the plan available for public inspection at its
main office during all banking hours and to provide a copy of the plan
to any person who requests it.
In response to a comment letter received as part of the EGRPRA
review process, the OCC proposed to amend Sec. 9.18(b)(1) to require
instead that the bank make a copy of the investment fund plan available
to the public either at its main office or on its Web site. Although it
is appropriate to provide the public access to this plan, we agree that
requiring a bank to make the plan available for public inspection at
its main office is unnecessarily burdensome and is not the most
efficient method for public inspection in today's electronic
environment. The proposal maintained the option for access to the plan
at a main office for those small banks that may not have a Web site,
and also clarified that a bank may satisfy the requirement to provide a
copy of the plan to any person who requests it by providing it in
either written or electronic form.
The one commenter that discussed this amendment supported it,
noting that it would allow banks to lower distribution costs, while
satisfying participants' requests for the information through
electronic mail or an internet Web site. The OCC adopts this amendment
as proposed.
Section 9.18(c)(2) provides that a national bank may collectively
invest assets that it holds as fiduciary in a mini-fund. A mini-fund is
a fund that a bank maintains for the collective investment of cash
balances received or held by the bank in its capacity as trustee,
executor, administrator, guardian, or custodian under the Uniform Gifts
to Minors Act that the bank considers too small to be invested
separately in an economically efficient manner. This section further
provides that the total assets in a mini-fund must not exceed
$1,000,000 and the number of participating accounts must not exceed
100.
A comment on this rule received as part of the EGRPRA review
process requested that the OCC periodically adjust the asset limit for
mini-funds in Sec. 9.18(c)(2) to account for inflation and economic
growth. This commenter also noted that the current limit of $1 million
was last updated in 1996 \22\ and suggested that the OCC raise the
threshold to at least $1.5 million, which is the inflation-adjusted
value of $1 million in 1996. The OCC agreed with this commenter and
proposed to amend Sec. 9.18(c)(2) to increase the threshold to
$1,500,000, with an annual adjustment for inflation. The OCC believes
this change will continue to make mini-funds a feasible investment
option for national banks.
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\22\ See 61 FR 68554 (Dec. 30, 1996).
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The same commenter supported the increased threshold in the
proposed rule. However, this commenter also noted that this proposed
threshold may be too low to provide a feasible investment option for
many banks and asked that the OCC consider adjustments as needed. The
OCC does not believe that a threshold higher than the one proposed is
necessary at this time, as it reflects the inflation adjusted value of
the original threshold. Furthermore, this amendment provides that the
OCC will adjust this amount to reflect inflation on a yearly basis.
This commenter also recommended a number of additional amendments
to Sec. 9.18. Section 9.18(b)(5)(iii) provides that a bank managing
certain collective investment funds invested primarily in real estate
or other assets that are not readily marketable may require a prior
notice period not to exceed one year for withdrawals. The commenter
requested that the OCC amend this provision to replace references to
``real estate'' with references to ``assets that are illiquid or
otherwise not readily marketable'' so that other illiquid assets such
as guaranteed investment contracts, synthetic investment contracts, or
separate account contracts with limits on transferability, may be
recognized. The commenter also requested that the OCC amend the rule to
permit national banks to require advance withdrawal notices longer than
one year so that banks would not need to request such an extension from
the OCC on a case-by-case basis. The OCC does not agree with either of
these suggestions. The introduction of the term ``assets that are
illiquid'' could be interpreted too broadly and, for example, could
result in national banks denying participants access to funds when a
collective investment fund holds assets that become illiquid due to
adverse market conditions. The OCC also believes that banks should
continue to be required to support, on a case-by-case basis, any
request to extend the advance notice requirement.
Lastly, this commenter requested that the OCC allow flexibility in
the timing of a final audit required by 12 CFR 9.18(b)(6), which
requires a national bank administering a collective investment fund to
prepare a financial audit of the fund once every 12 months. The
commenter specifically recommended allowing a bank that is terminating
a fund within 15 months after the last audit to wait until the fund has
terminated to complete the final audit. The OCC does not agree with
this recommendation. In many cases, banks should be able to plan fund
terminations at or just prior to the end of a plan year. To the extent
that circumstances beyond their control prevent the fund from closing
as planned, those same circumstances may delay the closing beyond 15
months, delaying the audit without reducing expenses.
For the reasons stated above, the OCC adopts the proposed
amendments to Sec. 9.18 as proposed.
Additional suggested amendments. This commenter provided other
suggested amendments to the OCC's fiduciary rules, most of which the
commenter previously included in its response to the first Federal
Register EGRPRA notice. The OCC did not include these amendments in the
proposed rule, and has not included them in the final rule, for the
reasons discussed below.
First, the commenter requested that we amend Sec. 9.8(a), which
requires national banks to maintain fiduciary account records for a
period of three years from the later of the termination
[[Page 8089]]
of the account or the termination of any litigation relating to an
account, to provide instead that these account records be retained for
a ``necessary period'' or to refer to applicable law on the retention
of documents. The term ``necessary period'' is too vague and the OCC
declined to propose this change.
Second, this commenter also requested that the OCC amend 12 CFR
9.10(b)(1), which imposes requirements and restrictions on national
banks that hold fiduciary funds that are awaiting investment or
distribution by the bank. Section 9.10(b) specifically requires a bank
to collateralize funds held in a fiduciary account if the funds are not
insured by the FDIC. The commenter recommended that the OCC not require
a bank to collateralize funds if the funds are directed by a third
party or in the governing instrument. The commenter noted that in these
situations, a third party and not the bank decides how to hold the
funds at the bank, thus eliminating conflict of interest or self-
dealing on the part of the bank. However, national banks are required
to collateralize deposits by statute regardless of whether the bank has
discretion to deposit fiduciary funds at the bank.\23\ This
collateralization is for protection of the trust funds. Customers
providing direction to a bank to self-deposit may not fully understand
the protection that they would forego by doing so. Also, in many cases,
the party that could direct a bank to self-deposit may not be the party
protected by the pledge. The directing party may benefit from foregoing
the pledge, but not share in the risk. For these reasons, the OCC
declined to include this amendment in the proposed rule.
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\23\ 12 U.S.C. 92a(d).
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Third, 12 CFR 9.10(b)(2) stipulates the types of collateral with
which a bank may satisfy the requirements of 12 CFR 9.10(b)(1). This
commenter requested that the OCC expand the list of acceptable
collateral listed in Sec. 9.10(b)(2) to include other instruments that
provide protection from loss similar to that provided by surety bonds,
and the commenter proposed language that would allow a bank to
determine whether a collateral instrument provides such ``similar
protection.'' The OCC finds that this proposed change is overly broad
and subject to misinterpretation, and, therefore, did not include it in
the proposed rule.
Lastly, this commenter urged the OCC to address electronic
recordkeeping for fiduciary accounts in 12 CFR 9.8, noting that such
guidance would provide clarity when state law is silent as to the
medium of recordkeeping. The commenter noted that many bank fiduciaries
are confused as to which fiduciary documents are covered by the
Electronic Signatures in Global and National Commerce Act (E-Sign
Act).\24\ The commenter requested that the OCC expressly permit the
electronic retention of documents to satisfy regulatory requirements.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 7001 et seq.
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The OCC notes that section 101 of the E-Sign Act provides that
certain records may not be invalidated merely by virtue of being in an
electronic format. However, section 103 of the E-Sign Act exempts from
section 101 contracts or other records to the extent that they are
governed by statutes, regulations, or other rules of law governing the
creation and execution of wills, codicils, or testamentary trusts.\25\
Generally, wills, codicils, and testamentary trusts are governed by
state law. Section 9.8 does not prohibit the electronic recordkeeping
of fiduciary documents. However, in light of the provisions in the E-
Sign Act, the authority to declare that fiduciary records may be kept
electronically if such records are subject to state law is unclear.
Therefore, electronic recordkeeping is permissible for purposes of part
9 if such recordkeeping is permitted by state law, and we decline to
amend our rule specifically to permit electronic retention of such
fiduciary documents.
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\25\ 15 U.S.C. 7003.
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Municipal Securities Dealers (12 CFR Part 10)
Part 10 requires that a national bank (or a separately identifiable
department or division of a national bank) that acts as a municipal
securities dealer, and an associated person that acts as a municipal
securities principal or representative, file certain forms with the
OCC. Specifically, Sec. 10.2 requires national banks to submit to the
OCC Form MSD-4 (Uniform Application for Municipal Securities Principal
or Municipal Securities Representative Associated with a Bank Municipal
Securities Dealer) before associating with a municipal securities
principal or municipal securities representative. Within 30 days of
terminating such person's association with the bank, the bank must file
with the OCC Form MSD-5 (Uniform Termination Notice for Municipal
Securities Principal or Municipal Securities Representative Associated
with a Bank Municipal Securities Dealer). Although there is no
equivalent regulation applicable to Federal savings associations, these
institutions and associated persons currently file these same forms
with the OCC pursuant to Municipal Securities Rulemaking Board (MSRB)
rules, as incorporated in an OTS Chief Counsel Opinion.\26\
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\26\ OTS Chief Counsel Opinion (OTS Op. Oct. 29, 2001) (noting
that a Federal savings association engaged in municipal securities
underwriting and dealing must comply with applicable laws and
regulations, financial reporting requirements, and Municipal
Securities Rulemaking Board (MSRB) rules). MSRB rules include
requirements to file forms with the ``appropriate regulatory
agency.'' See, e.g., MSRB Rule G-7. The Exchange Act provides that
the OCC is the appropriate regulatory agency with respect to a
municipal securities dealer that is a Federal savings association.
15 U.S.C. 78c(a)(34)(A)(i).
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Part 10 was included in the fourth Federal Register EGRPRA notice
and the OCC did not receive any comments on this rule in response to
this request for comment. However, in order to coordinate and harmonize
the requirements applicable to these practices, the OCC proposed to
codify this OTS opinion in OCC regulations by amending part 10 to
include Federal savings associations. In addition, the OCC proposed
minor technical changes to update part 10. First, we proposed to update
the citation to MSRB Rule G-7(b) in Sec. 10.2(a) to reflect MSRB
revisions to this rule. Second, we proposed to amend Sec. 10.2(c) to
allow national banks to obtain Forms MSD-4 and MSD-5 \27\ on http://www.banknet.gov/ instead of by contacting the OCC in writing.\28\
Third, we proposed to replace the street address of the MSRB, provided
to assist institutions in obtaining MSRB rules, with the MSRB's
internet address.
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\27\ We note that Forms MSD-4 and MSD-5 are uniform forms
developed by the Federal Reserve Board, FDIC and OCC and that these
forms expressly state that they be mailed to the appropriate
regulatory agency. Therefore, the OCC cannot amend part 10 to
provide for the electronic filing of these forms until the Federal
Reserve Board, FDIC, and OCC jointly decide to permit electronic
filing.
\28\ BankNet is the OCC's secure Web site for communicating with
and receiving information from national banks and Federal savings
associations. BankNet is only available to OCC-regulated
institutions and is not available to the public.
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We did not receive any specific comments on the proposed
codification and technical amendments and adopt them as proposed. This
codification will not change the requirements applicable to Federal
savings associations. Furthermore, by codifying this filing in OCC
rules instead of referring to it in an opinion letter, this change will
identify more clearly this requirement for Federal savings
associations.
Securities Exchange Act Rules (12 CFR Parts 11 and 194)
Twelve CFR parts 11 and 194 set forth the periodic reporting
requirements for
[[Page 8090]]
national banks and Federal savings associations, respectively, with
securities registered under the Securities Exchange Act of 1934
(Exchange Act). These rules were included in the fourth Federal
Register EGRPRA notice, and the OCC did not receive any specific
comments on these rules in response to this request for comment,
although we previously had received more general comments requesting
that the OCC permit electronic filings. In light of the similar
statutory provisions that apply to national banks and Federal savings
associations as implemented by these parts, the OCC proposed to remove
part 194 and amend part 11 to include Federal savings associations. In
addition, we proposed to amend Sec. 11.2 pursuant to the Jumpstart Our
Business Startups Act (JOBS Act),\29\ to permit the electronic filing
of periodic reporting requirements, and to make technical, non-
substantive edits and clarifications to part 11. These changes would
reduce duplication and create efficiencies by establishing a single set
of rules for all entities supervised by the OCC with respect to the
Exchange Act disclosure rules, while not changing the requirements
applicable to national banks or Federal savings associations. These
specific amendments are discussed below.
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\29\ Public Law 112-106, 126 Stat. 306 (2012).
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Authority and OMB control number (Sec. 11.1). Section 11.1 sets
forth the OCC's authority to issue rules for national banks with
respect to the Exchange Act as well as the Office of Management and
Budget (OMB) control number assigned to part 11 for purposes of the
Paperwork Reduction Act (PRA). The OCC proposed to amend this section
to include its authority with respect to Federal savings associations.
We also proposed to remove the reference to the OMB control number, as
it is not required to be included in regulatory text and the OCC has
generally not included such numbers in recently published regulations.
We did not receive any specific comments on these proposed
amendments to Sec. 11.1 and adopt them as proposed. This removal is
technical and will not affect the OCC's responsibilities under the PRA.
Reporting requirements for registered national banks (Sec. 11.2).
The OCC proposed to add a new paragraph (c) to Sec. 11.2 to state
explicitly that references to registration requirements under the
Securities Act of 1933 (Securities Act) pertain to the registration
requirements under 12 CFR part 16. We did not receive any specific
comments on this proposed amendment and therefore adopt it as proposed.
This change will clarify the applicable requirements for national banks
and Federal savings associations.
Emerging growth company eligibility (Sec. 11.2). The JOBS Act
amended the Exchange Act to create a new class of issuer known as an
emerging growth company.\30\ An emerging growth company is defined
generally as an issuer that had total annual gross revenues of less
than $1 billion during its most recently completed fiscal year.\31\ The
JOBS Act provides scaled disclosure provisions for emerging growth
companies, including, among other things: (1) An exemption from proxy
statement requirements concerning shareholder approval of executive
compensation under section 14A of the Exchange Act; \32\ (2) an
exemption from proxy statement requirements concerning disclosure of
executive compensation versus performance under section 14(i) of the
Exchange Act; \33\ (3) a limitation of applicable time periods for
disclosures required under Regulation S-K \34\ for selected financial
data; \35\ (4) treatment as a smaller reporting company for purposes of
executive compensation disclosures required under Regulation S-K, Item
402; \36\ and (5) an exemption from auditor attestation provisions
concerning internal financial reporting controls required by the
Sarbanes-Oxley Act of 2002.\37\
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\30\ JOBS Act, section 101(b), amending section 3(a) of the
Exchange Act (15 U.S.C. 78c(a)).
\31\ Exchange Act, section 3(a)(80) (15 U.S.C. 78c(a)(80)).
\32\ Exchange Act, section 14A(e) (15 U.S.C. 78n-1(e)).
\33\ Exchange Act, section 14(i) (15 U.S.C. 78n(i)).
\34\ 17 CFR 210.1-01 et seq.
\35\ Exchange Act, section 13(a) (15 U.S.C. 78m(a)).
\36\ 12 CFR 229.402.
\37\ Public Law 107-204, section 404, 116 Stat. 789 (2002) (15
U.S.C. 7262(b)).
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The JOBS Act and the Exchange Act contain exclusions from emerging
growth company eligibility that are based on public offerings that an
issuer makes under the Securities Act. First, the JOBS Act provides
that an issuer is not eligible for emerging growth company status if it
engaged in a public securities offering pursuant to an effective
Securities Act registration statement on or before December 8,
2011.\38\ Second, the Exchange Act, as amended by the JOBS Act,
provides that an issuer may not remain an emerging growth company
beyond the close of the fiscal year following the fifth anniversary of
the issuer's first securities offering under a Securities Act
registration statement.\39\ Because national banks and Federal savings
associations file registration statements under OCC regulations rather
than the Securities Act, these exclusions do not technically apply to
banks and savings associations.
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\38\ JOBS Act, section 101(d) (15 U.S.C. 77b(note)).
\39\ Exchange Act, section 3(a)(80) (15 U.S.C. 78c(a)(80)).
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Section 12(i) of the Exchange Act requires the OCC to issue
substantially similar regulations as the Securities and Exchange
Commission (SEC) for those provisions of the Exchange Act for which it
is vested authority with respect to banks and savings associations.\40\
Parts 11 and 194 generally require national banks and Federal savings
associations, respectively, with securities registered under sections
12(b) or 12(g) of the Exchange Act \41\ to comply with certain Exchange
Act rules. Therefore, pursuant to the JOBS Act, the OCC proposed to add
a new paragraph (d) to Sec. 11.2 to clarify national bank and Federal
savings association eligibility for emerging growth company treatment
for those provisions of the Exchange Act that the OCC administers. The
intent of this amendment is to ensure equivalent treatment of banks and
savings associations with non-bank issuers. This amendment also would
provide that a bank or savings association eligible for emerging growth
company status may choose to forgo such exemption and instead comply
with the requirements that apply to a bank or savings association that
is not an emerging growth company. Furthermore, the amendment would
provide that: (1) A bank or savings association is not an emerging
growth company if it sold common equity securities on or before
December 8, 2011, pursuant to a registration statement or offering
circular filed under 12 CFR part 16 or 197, or under the former OTS
rule at 12 CFR 563g; and (2) emerging growth company status for banks
and savings associations terminates no later than the end of the fiscal
year following the fifth anniversary of the first sale of its common
equity securities pursuant to a registration statement or offering
circular under 12 CFR parts 16, 197 or 563g.\42\
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\40\ 15 U.S.C. 78l(i).
\41\ 15 U.S.C. 78l(b), (g).
\42\ The JOBS Act and the Exchange Act, as amended by the JOBS
Act, contain equivalent restrictions for non-banks. However, these
restrictions are based on when an issuer files a registration
statement under the Securities Act.
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We did not receive any specific comments on this proposed amendment
to Sec. 11.2 and adopt it as proposed.
Filing requirements and inspection of documents (Sec. 11.3).
Several comments
[[Page 8091]]
received during the EGRPRA review process requested that the OCC permit
national banks and Federal savings associations to submit forms and
reports to the OCC electronically. The OCC agrees that electronic
filings are more efficient and less costly for national banks and
Federal savings associations, are more efficient for the OCC to review,
and provide a quicker response time for banks and savings associations.
Therefore, we proposed to amend part 11 to provide for the electronic
submission of required filings.\43\
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\43\ The OCC currently permits the electronic submission of a
number of other filings, for example, Call Reports, and public
welfare investment notifications and proposals.
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Section 11.3(a) currently requires national banks to submit by
mail, fax, or otherwise four copies of all papers required to be filed
with the OCC (pursuant to the Exchange Act or regulations thereunder)
to the Securities and Corporate Practices (SCP) Division of the OCC.
Through incorporation of SEC Rule 12b-11,\44\ part 194 requires Federal
savings associations to file three copies of Exchange Act filings with
the SCP Division. We proposed to amend Sec. 11.3(a)(1) to require
instead that national banks and Federal savings associations submit one
copy of their filings through electronic mail to the OCC at http://www.banknet.gov/.\45\
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\44\ 17 CFR 240.12b-11.
\45\ As described elsewhere in this final rule, the OCC also is
amending part 16, Securities offering disclosure rules, to provide
for electronic submissions.
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The proposed rule also included an amendment to Sec. 11.3 to
provide that documents may be signed electronically using the signature
provision in SEC Rule 12b-11. SEC Rule 12b-11 provides that required
signatures for Exchange Act filings may be signed using typed
signatures or duplicated or facsimile versions of manual signatures.
Where typed, duplicated, or facsimile signatures are used, each
signatory to the filing is required to ``manually sign a signature page
or other document authenticating, acknowledging, or otherwise adopting
his or her signature that appears in the filing.'' \46\ As provided by
Rule 12b-11, the national bank or Federal savings association must
retain this document for five years and, upon request, provide a copy
to the OCC.
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\46\ Id.
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The OCC also proposed an exception to the general electronic filing
requirement to permit the use of paper filings where unanticipated
technical difficulties prevent the use of electronic filings. This
exception is modeled on the SEC's General Rules and Regulations for
Electronic Filings, Regulation S-T, Rule 201,\47\ which provides a
temporary hardship exemption to the SEC's Electronic Data Gathering,
Analysis, and Retrieval system (EDGAR) filing requirements in cases of
unanticipated technical difficulties. Similar to Rule 201, the OCC
notes that use of this exception should be extremely limited and should
be relied upon only when unusual and unexpected circumstances create
technical impediments to the use of electronic filings. However, this
exception would not be available for statements of beneficial ownership
that must be made through the FDICconnect platform, which requires
electronic filings.\48\
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\47\ 17 CFR 232.201.
\48\ See 70 FR 46403 (Aug. 10, 2005). FDICconnect is the secure
internet channel for FDIC-insured institutions to conduct business
and exchange information with the FDIC.
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Current Sec. 11.3(a)(3)(i) provides that the date on which papers
are actually received by the OCC shall be the date of filing, if the
person or bank filing the papers has complied with all applicable
requirements. The OCC proposed to update this provision to conform to
the electronic filing requirement. Specifically, an electronic filing
whose submission is commenced on a nonholiday weekday on or before 5:30
p.m. Eastern Standard or Daylight Savings Time, whichever is currently
in effect, would be deemed received by the OCC on the same business
day. An electronic filing whose submission is commenced after 5:30 p.m.
Eastern Standard or Daylight Savings Time, whichever is currently in
effect, or on a Saturday, Sunday, or Federal holiday would be deemed
received by the OCC on the next business day. The proposal also
included a new paragraph (a)(3)(iii) to Sec. 11.3 to provide that if
an electronic filer in good faith attempts to file a document pursuant
to this part in a timely manner but the filing is delayed due to
technical difficulties beyond the electronic filer's control, the
electronic filer may request that the OCC adjust the filing date. The
OCC may grant the request if it appears that such adjustment is
appropriate and consistent with the public interest and the protection
of investors. These rules for dating an electronic filing, and for
providing a waiver for technical difficulties with the filing, also are
derived from SEC Regulation S-T.\49\
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\49\ 17 CFR part 232.
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Finally, the OCC proposed the following technical amendments to
part 11. First, the OCC proposed to rename the paragraph heading of
Sec. 11.3(a)(3)(ii), which establishes filing dates for statements of
beneficial ownership that must be made through the FDICconnect
platform,\50\ from Electronic filings to Beneficial ownership filings.
This new heading would more accurately reflect the final rule's
application of electronic filing requirements to all part 11 filings,
not just those made under Sec. 11.3(a)(3)(ii).
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\50\ See 70 FR 46403 (Aug. 10, 2005).
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Second, the OCC proposed to delete paragraph (a)(4) of Sec. 11.3.
This paragraph provides a mandatory compliance date of January 1, 2004
for 12 CFR part 11. However, as this date has now passed, this
mandatory compliance date no longer is needed in the rule text.
Third, the OCC proposed to amend Sec. 11.4(b), which currently
provides that filing fees must be paid by check, to reflect the
electronic filing of documents and the additional payment options now
available. Specifically, the amendment would permit filing fees to be
paid by means acceptable to the OCC, in addition to by check. We note
that the OCC currently is not imposing any filing fees for part 11
filings and is not adopting any fees as part of this rulemaking.
As a consequence of proposing to amend part 11 to include Federal
savings associations, the OCC proposed to remove part 194 in its
entirety. The OCC notes that removing Sec. 194.3, which addresses
liability for certain forward-looking statements made by Federal
savings associations, would not change the applicability of the
requirements of this section for Federal savings associations.
Specifically, the text of Sec. 194.3 is substantially similar to the
SEC Rule 3b-6,\51\ which currently applies to national banks by
reference in Sec. 11.2. Therefore, because part 11 (and its cross-
reference to the SEC Rule 3b-6) would apply to Federal savings
associations, the requirements imposed by current Sec. 194.3 would
continue to apply to Federal savings associations.
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\51\ 17 CFR 240.3b-6.
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Furthermore, we note that the removal of Sec. Sec. 194.801 and
194.802, Interpretations for Federal savings associations filing
statements pursuant to the Exchange Act, is not intended to be a
substantive change in how these filings are conducted. The
interpretations included in these sections are now widely accepted and
no longer need to be included in a rule. Therefore, the removal of
these sections would not change how Federal savings associations
prepare their reports.
The OCC did not receive any specific comments on the proposed
amendments to Sec. 11.3 and the removal of part 194
[[Page 8092]]
and adopts the amendments and removal as proposed.
Recordkeeping and Confirmation Requirements for Securities Transactions
(12 CFR Parts 12 and 151)
Twelve CFR parts 12 and 151 establish recordkeeping and
confirmation requirements for national banks and Federal savings
associations, respectively, that engage in securities transactions for
their customers. These rules were included in the fourth Federal
Register EGRPRA notice and the OCC did not receive any comments on them
in response to this request for comment. However, based on our internal
review of these rules, the OCC proposed a number of amendments to both
parts 12 and 151. We received one comment on these amendments, with
respect to 12 CFR 12.102, National bank use of electronic
communications as customer notifications, as discussed below.
Definitions. The OCC proposed to revise the definition of
``municipal security'' at Sec. Sec. 12.2(i)(3) and 151.40 to remove an
outdated citation to the Internal Revenue Code. We are adopting this
change as proposed.
Recordkeeping. Section 12.3 and subpart A of part 151 establish
recordkeeping requirements for securities transactions conducted by
national banks and Federal savings associations, respectively. Section
151.60(b) prescribes more detailed procedures for record maintenance
and storage for Federal savings associations than prescribed for
national banks in Sec. 12.3(b). Specifically, Sec. 12.3(b) provides
that the required records must clearly and accurately reflect the
information required and provide an adequate basis for the audit of the
information, and that record maintenance may include the use of
automated or electronic records provided the records are easily
retrievable, readily available for inspection, and capable of being
reproduced in a hard copy. In addition to what is required for national
banks, Sec. 151.60(b) imposes requirements related to indexing, paper
storage, electronic storage, and the provision of records to examiners.
The OCC proposed to remove Sec. 151.60(b) and revise Sec. 151.60(a)
to include the less detailed maintenance and storage procedures found
in the national bank rule. The OCC believes that this approach would
provide a Federal savings association with more flexibility in making
internal business decisions about record storage and maintenance.
Current Sec. 151.60(c), redesignated in the proposed rule as Sec.
151.60(b), provides that a Federal savings association may use a third-
party service provider to provide record storage or maintenance. The
current national bank rule does not include a similar third-party
provision. The OCC proposed to amend Sec. 12.3 to clarify that a
national bank may use a third-party service provider for record storage
and maintenance provided that the bank maintains effective oversight to
ensure that the records are easily retrievable, are readily available
for inspection, can be reproduced in a hard copy, and follow applicable
OCC guidance.\52\
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\52\ See OCC Bulletin 2013-29, Third-Party Relationships: Risk
Management Guidance (Oct. 30, 2013).
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The OCC did not receive any specific comments on these proposed
amendments to Sec. Sec. 12.3 and 151.60 and adopts them as proposed.
Content and time of notification. Sections 12.4 and 151.70,
respectively, require national banks and Federal savings associations
that effect securities transactions for their customers to provide
notifications of the transactions. Under the current rule, a national
bank or Federal savings association may choose among several types of
notification. Pursuant to Sec. Sec. 12.4(a) and 151.90, a national
bank or Federal savings association, respectively, may provide the
customer a written notice that includes the information set forth in
those sections. Sections 12.5 and 151.100 permit a national bank or
Federal savings association, respectively, to fulfill the notification
requirement through alternative means that vary by the type of account.
For transactions that use a registered broker-dealer, Sec. 151.80(a)
allows the Federal savings association to satisfy the requirement of
Sec. 151.70 by having the registered broker-dealer send the
confirmation statement directly to the customer or by having the
Federal savings association send a copy of the broker-dealer's
confirmation to the customer. If the broker-dealer has the necessary
account level information to send the confirmation directly to the
customer, the Federal savings association need not send out an
additional written notification of the transaction. In contrast, under
Sec. 12.4(b), a national bank may send a copy of the broker-dealer's
confirmation but is not expressly permitted to satisfy the requirement
by having the broker-dealer send the confirmation directly to the
customer.
The OCC believes that most national banks and Federal savings
associations, particularly community institutions, effect securities
transactions for customers through registered broker-dealers. To avoid
duplicative reporting to customers and to reduce burden on
institutions, the OCC proposed to amend Sec. 12.4(b) to follow the
approach of Sec. 151.80. With this amendment, both national banks and
Federal savings associations could direct a broker-dealer to mail
confirmations to customers without requiring that a duplicate be sent
by the bank or savings association, thereby reducing regulatory burden
for national banks. This approach also would reduce confusion that may
result when a customer receives duplicate confirmations for the same
transaction from two different parties.
In addition, the OCC proposed to amend Sec. 151.80 to reduce
regulatory burden on Federal savings associations. Currently, Sec.
151.80(b) requires a Federal savings association that receives or will
receive remuneration from any source, including the customer, in
connection with the transaction to provide the customer a statement of
the source and amount of the remuneration in addition to the registered
broker-dealer confirmation. The OCC proposed to amend this provision to
provide that, when such remuneration is determined by a written
agreement between the Federal savings association and the customer, the
savings association does not need to provide this remuneration
statement for each securities transaction. This change is consistent
with Sec. 12.4(b), which does not require a national bank to provide a
statement of the source and amount of remuneration in these
circumstances.
The OCC did not receive any specific comments on these proposed
amendments to Sec. Sec. 12.4 and 151.70 and adopts them as proposed.
National bank disclosure of remuneration for mutual fund
transactions. The OCC proposed to remove the interpretation in Sec.
12.101, national bank disclosure of remuneration for mutual fund
transactions. The OCC does not intend to change any existing practices
with this amendment. Instead, the OCC believes that this issue is
obsolete because of recent SEC actions.\53\ The OCC did not receive any
specific comments on this proposed removal and adopts it as proposed.
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\53\ For example, the SEC now requires all mutual funds to
disclose their fee structures in registration statements. http://www.sec.gov/about/forms/formn-1a.pdf.
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National bank use of electronic communications as customer
notifications. Section 12.102 allows national banks, in appropriate
situations, to comply with the written customer notification
requirements in
[[Page 8093]]
Sec. Sec. 12.4 and 12.5 by using electronic communications or, if a
customer has a facsimile machine, through facsimile transmission. To
satisfy the notification delivery requirement by other electronic
communication, the parties must agree to use electronic instead of
hard-copy notifications, the parties must have the ability to print or
download the electronic notification, the recipient must be able to
affirm or reject trades through electronic notification, the system
cannot automatically delete the electronic notification, and both
parties must have the capacity to receive electronic messages. Federal
savings associations are subject to a similar provision at Sec.
151.110. The OCC finds that the use of electronic communications has
become widespread and is provided for in state and Federal law, such as
the E-Sign Act, which allows for electronic communications with
customers. Therefore, Sec. Sec. 12.102 and 151.110 are outdated and
duplicative of existing law, and we proposed to remove them.
We received one comment on this proposed amendment, which was
critical of removing this guidance for banks on the use of electronic
communications. However, the OCC continues to believe that these
provisions are outdated and not necessary in the current electronic
environment. We therefore adopt the amendment as proposed.
Securities Offering Disclosures (12 CFR Parts 16 and 197)
Twelve CFR parts 16 and 197 set forth securities offering
disclosure rules for national banks and Federal savings associations,
respectively. These rules are based on the Securities Act \54\ and
certain Securities Act rules, to the extent appropriate for banks.\55\
These rules were included in the fourth Federal Register EGRPRA notice,
and the OCC did not receive any specific comments in response to this
request for comment, although, as indicated above, we previously had
received comments requesting that the OCC permit electronic filings.
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\54\ National bank and Federal savings association securities
are generally exempt from the Securities Act. Securities Act,
sections 3(a)(2) and (5) (15 U.S.C. 77c(a)(2) and (5)).
\55\ 59 FR 54789 (Nov. 2, 1994) (``[Part 16] generally requires
national bank securities offering documents to conform to the form
for registration that the bank would use if it had to register the
securities under the Securities Act. Accordingly, the final rule
cross-references a number of provisions of the Securities Act and a
number of SEC rules.'')
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In light of the similar provisions that apply to national banks and
Federal savings associations, the OCC proposed to amend part 16 to
include Federal savings associations and to remove part 197. In
addition, the OCC proposed to incorporate some provisions of part 197
into part 16, to provide for the electronic submission of filings
required under part 16, and to update the part 16 filing fees
provision. The OCC also proposed technical changes throughout part 16
to update citations to SEC rules and to replace all references to
``Commission'' with ``SEC.'' The OCC believes that these amendments
would reduce duplication and create efficiencies by establishing a
single set of rules for all entities supervised by the OCC with respect
to securities offerings. In addition, integrating savings associations
into part 16 would clarify disclosure requirements for these
institutions and provide them with additional exemptions, as described
below. Furthermore, providing for the electronic submission of
securities filings would reduce burden for both national banks and
Federal savings associations.
These specific amendments are discussed below.
The JOBS Act, addressed above in the discussion of part 11, amended
the Securities Act and directed the SEC both to amend existing
Securities Act rules and to write new rules to implement certain JOBS
Act provisions. Generally, the JOBS Act seeks to ease securities
offering disclosure requirements and periodic reporting obligations for
certain issuers, including emerging growth companies.\56\ It also
creates new Securities Act private placement exemptions for
crowdfunding \57\ and small company capital formation.\58\ In addition,
the JOBS Act includes provisions that reduce restrictions on certain
research and communications concerning emerging growth company
securities offerings.\59\ The OCC generally intends for part 16 to
remain consistent with the Securities Act, including those provisions
amended under the JOBS Act, and SEC rules. Part 16 incorporates through
cross-references various SEC rules that the JOBS Act directs the SEC to
amend. Therefore, amendments to these SEC rules are incorporated into
part 16 by virtue of these cross-references.\60\
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\56\ As indicated in the discussion of part 11, above, an
emerging growth company is a new category of issuer created under
the JOBS Act. Generally, an emerging growth company is an issuer
that had total annual gross revenues of less than $1 billion during
its most recently completed fiscal year. Securities Act section
2(a)(19) (15 U.S.C. 77b(a)(19)). An emerging growth company is
eligible to rely on certain scaled disclosure requirements for
registration statements filed under the Securities Act. For example,
an emerging growth company need not present more than two years of
audited financial statements in a registration statement for an
initial public offering. Securities Act section 7(a) (15 U.S.C.
77g(a)). C.f. SEC Regulation S-X, Rule 3-02 (17 CFR 210.3-02)
(requiring three years of audited financial statements). We note
that under 12 CFR 16.15(e), the OCC does not generally require
audited financial statements in securities offering documents for
national banks in organization. An emerging growth company also is
eligible for scaled disclosure requirements in the context of
Exchange Act periodic reporting. A detailed discussion of this
relief is set forth above in the discussion of part 11.
\57\ Securities Act, section 4(a)(6) (15 U.S.C. 77d(a)(6))
(crowdfunding creates a registration exemption for offerings of up
to $1 million, provided that individual investments do not exceed
certain thresholds and the issuer satisfies other conditions in the
JOBS Act).
\58\ Securities Act, section 3(b) (15 U.S.C. 77c(b)) (directing
the SEC to create a registration exemption for securities offerings
of up to $50 million).
\59\ Securities Act, sections 2(a)(3) and 5(d) (15 U.S.C.
77b(a)(3) and 77e(d)).
\60\ The SEC has adopted amendments to Regulation A under the
Securities Act to implement section 401 of the JOBS Act. 80 FR 21806
(Apr. 20, 2015). The SEC also has adopted amendments to Rule 506 of
Regulation D and Rule 144A under the Securities Act to implement
section 201(a) of the JOBS Act. 78 FR 44771 (July 24, 2013).
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Registration statement: form and content. The OCC proposed to
replace the offering circular currently required under Sec. 197.2 and
the corresponding form and content requirements of Sec. 197.7 with a
registration statement and prospectus required by Sec. Sec. 16.3 and
16.15 for national banks. We received no comments on this proposed
change and adopt it as proposed. Requiring the use of the same form by
both national banks and Federal savings associations will provide a
consistent set of disclosure standards and format for investors. The
OCC believes that this change will not impose any undue regulatory
burden on Federal savings associations because these forms provide
similar information to potential investors.
Communications not deemed an offer. Both Sec. Sec. 16.4 and
197.2(b) provide that certain communications by national banks or
Federal savings associations about their securities are not deemed to
be offers. However, Sec. 16.4 more closely follows SEC regulations by
additionally exempting summary prospectuses covered by SEC Rule
431,\61\ notices of certain proposed unregistered offerings covered by
SEC Rule 135c,\62\ publications or distributions of research reports by
brokers or dealers covered by SEC Rules 138 and 139,\63\ and certain
communications made after providing a prospectus. Amending part 16 to
include Federal savings associations would afford them the additional
communication exemptions under the
[[Page 8094]]
SEC rules currently available to national banks. The OCC received no
comments on this change and adopts it as proposed.
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\61\ 17 CFR 230.431.
\62\ 17 CFR 230.135c.
\63\ 17 CFR 230.138 and 230.139.
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Exemptions. Section 16.5 provides exemptions to the general
registration requirements for national bank securities under Sec.
16.3. These exemptions significantly overlap with the Sec. 197.3
exemptions to the registration requirements for Federal savings
associations. However, Sec. 16.5 applies SEC Rules 152 \64\ (private
placement exemption), 152a \65\ (exemption for sales of certain
fractional interests) to transactions exempt under section 4 of the
Securities Act \66\), and 236 \67\ (offerings to shareholders in
connection with a stock dividend, stock split, conversion, or merger)
while Sec. 197.3(b) does not. By amending Sec. 16.5 to include
Federal savings associations, the additional exemptions provided by
these two SEC rules would apply to transactions by Federal savings
associations.
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\64\ 17 CFR 230.152.
\65\ 17 CFR 230.152a.
\66\ 15 U.S.C. 77d.
\67\ 17 CFR 230.236.
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Section 16.5(f) specifically exempts transactions that satisfy the
requirements of SEC Rule 701 \68\ regarding offers and sales of
securities pursuant to certain compensatory benefit plans and contracts
relating to compensation. Section 197.3 does not cross-reference SEC
Rule 701 but rather provides in Sec. 197.3(g) a narrower exemption for
sales only to officers, directors, or employees through an employee
benefit plan or a dividend or interest reinvestment plan that has been
approved by shareholders. In particular, Sec. 197.3(g) does not exempt
sales made through compensatory benefit plans for consultants,
advisors, and family members, as does SEC Rule 701.
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\68\ 17 CFR 230.701.
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By amending Sec. 16.5 to include Federal savings associations, the
exemption available for savings associations would be expanded to cover
all such sales exempted by SEC Rule 701. Although the OCC did not
propose to incorporate the Sec. 197.3(g) requirement regarding
shareholder approval of compensation plans, Federal savings
associations still must follow all applicable corporate governance
requirements under their charter provisions. Additionally, national
banks and Federal savings associations that are subject to the Federal
proxy rules must comply with SEC rules issued under Exchange Act
Section 14A \69\ concerning shareholder approval of executive
compensation and golden parachute payments.
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\69\ 15 U.S.C. 78n-1. Section 951 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank Act) added section
14A to the Exchange Act.
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The OCC notes that under paragraph (e) of Sec. 197.3 certain
collateralized securities issued by Federal savings associations
currently are exempt from registration. Federal savings associations
also rely upon SEC Regulation D \70\ in addition to Sec. 197.3(e) for
this exemption.\71\ Therefore, the OCC did not propose to maintain the
exemption in Sec. 197.3(e) because of the availability of the
Regulation D private placement exemption in part 16.
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\70\ 17 CFR 230.501 et seq.
\71\ 12 CFR 197.4(a).
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We received no comments on these proposed changes to exemptions and
adopt them as proposed. We believe that these changes will provide
savings associations with additional flexibility when issuing
securities, resulting in reduced costs and less regulatory burden for
such issuances.\72\
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\72\ The OCC notes that the JOBS Act amended section 4 of the
Securities Act to create a private placement exemption for
crowdfunding (Securities Act, section 4(a)(6), 15 U.S.C. 77d(a)(6)),
and the SEC has adopted rules to implement this exemption (80 FR
71387 (Nov. 16, 2015)). National banks and Federal savings
associations may not rely on the private placement exemption for
crowdfunding in Securities Act section 4(a)(6) unless and until the
OCC adopts rules implementing this provision for national banks and
Federal savings associations or affirmatively adopts SEC rules that
implement this provision. At this time, the OCC is not proposing to
amend its rules to permit the private placement exemption for
crowdfunding.
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Sales of nonconvertible debt. The OCC proposed to apply Sec. 16.6,
sales of nonconvertible debt, to Federal savings associations. While
Federal savings associations have previously sold nonconvertible debt
under similar restrictions through various interpretive letters, the
OCC believes that adopting a single set of requirements is simpler and
more efficient for Federal savings associations. We received no
comments on this proposed change and adopt it as proposed.
Small issues. Section 16.8 provides an exemption for small issues
of national bank securities under the SEC's Regulation A.\73\
Currently, Federal savings associations do not have a Regulation A
exemption for small issuances. The OCC proposed to amend Sec. 16.8 to
include savings associations. We received no comments on this proposed
change and adopt it as proposed. As a result of this amendment, Federal
savings associations will be able to issue small amounts of securities
and remain exempt from filing registration statements and prospectuses,
thereby reducing regulatory burden.
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\73\ 17 CFR 230.251 et seq.
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Securities offered and sold in holding company dissolution. Section
16.9 provides an exemption for securities offered and sold in a holding
company dissolution. Part 197 does not contain a similar provision;
however, Federal savings associations have relied on SEC rules for
these transactions pursuant to informal OTS staff guidance. The OCC
proposed to apply Sec. 16.9 to securities issued by Federal savings
associations to provide more certainty as to the applicability of the
Sec. 16.9 exemption to these transactions. We received no comments on
this proposed change and adopt it as proposed.
Effectiveness. Section 16.16 provides that a registration statement
and amendments will become effective in accordance with Sec. 8(a) and
(c) of the Securities Act and SEC Regulation C, 17 CFR part 230, which
is the 20th day after filing or sooner if so determined by the OCC.
Section 197.6 contains the same effective date but does not reference
Regulation C. The Federal savings association rule also contains other
provisions regarding a delay in effectiveness and provides that the OCC
may pursue any remedy under section 5(d) of the HOLA if it appears that
the offering circular contains any material misstatement or omission.
The OCC proposed to apply Sec. 16.16 to Federal savings associations.
We received no comments on this proposed change and adopt it as
proposed. As a result, SEC regulation C now applies to Federal savings
associations instead of these additional provisions in Sec. 197.6.
Sales of securities at an office of a savings association. Section
197.17 provides that the sale of securities of a Federal savings
association or its affiliates at an office of the savings association
may only be made in accordance with the provisions of Sec. 163.76.\74\
Section 163.76 generally prohibits the offer or sale of debt or equity
securities issued by a Federal savings association or an affiliate at
an office of the association, unless the equity securities are issued
by the association or the affiliate in connection with the
association's conversion from the mutual to stock form of organization
and certain conditions are met. The OCC proposed to amend part 16 by
adding a new Sec. 16.10 to maintain this restriction on the sale of a
Federal
[[Page 8095]]
savings association's or affiliate's securities.
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\74\ Section 197.17 includes an inaccurate cross-reference to
Sec. 197.76. We have provided the correct cross-reference in the
discussion above and in the proposed rule. See proposed Sec. 16.10.
---------------------------------------------------------------------------
The OCC specifically requested in the proposed rule that commenters
opine on whether the OCC should remove the limitations on the offer or
sale of debt or equity securities at an office of a Federal savings
association in light of amendments to the Exchange Act made by the
Gramm-Leach-Bliley Act,\75\ rules promulgated by the Financial Industry
Regulatory Authority,\76\ and the Interagency Statement on Retail Sales
of Nondeposit Investment Products, all of which govern securities
activities conducted on the premises of OCC-regulated financial
institutions \77\ In the alternative, the OCC asked whether we should
amend part 16 to prohibit a national bank from offering or selling debt
or equity securities issued by the bank or an affiliate at an office of
the bank.
---------------------------------------------------------------------------
\75\ See 15 U.S.C. 78c(a)(4). See also Regulation R, 17 CFR
247.100 et seq.
\76\ See FINRA Rule 3160.
\77\ See OCC Bulletin 94-13, Non deposit Investment Sales
Examination Procedures (Feb. 24, 1994) and OCC Bulletin 95-52,
Retail Sales of Nondeposit Investment Products (Sept. 22, 1995).
---------------------------------------------------------------------------
We received one comment on new Sec. 16.10. This commenter did not
agree with the suggestion to apply this restriction to national banks
as it would be an increase in regulatory burden. In addition, this
commenter suggested that the OCC remove this restriction for Federal
savings associations. After further review of this provision, the OCC
has decided to adopt the provision as proposed and maintain the
restriction on Federal savings associations but not apply it to
national banks. This provision was enacted in response to the savings
and loan crisis of the 1980s, which had a devastating effect on the
thrift industry as well as on its customers. This provision has
prevented the recurrence of similar events and we believe that the
benefit of this restriction outweighs any burden the restriction
imposes on Federal savings associations. As there is no historical
rationale for this restriction to be placed on national banks, and
because we do not see a current need for this restriction to apply to
national banks, we have not expanded it to cover these institutions.
Filing requirements and inspection of documents. Current Sec. Sec.
16.17 and 197.5 require national banks and Federal savings
associations, respectively, to submit by mail or otherwise four copies
of all registration statements, offering documents, amendments,
notices, or other documents to the SCP Division or, if related to a
bank in organization or a de novo Federal savings association, to the
appropriate district office. Similar to the amendment to Sec. 11.3,
the OCC proposed to amend Sec. 16.17 to require instead that banks and
savings associations submit one copy of their filings electronically to
the SCP Division or the appropriate district office, as applicable,
through http://www.banknet.gov/. Pursuant to proposed Sec. 16.17(g),
any filing of amendments or revisions to previously filed documents
must include two copies, one of which must be marked to indicate
clearly and precisely, by underlining or in some other appropriate
manner, the changes made. Current Sec. 16.17(e) requires a total of
four copies of amendments or revisions.
The amendments to Sec. 16.17 also provide that documents may be
signed electronically using the signature provision in SEC Rule
402.\78\ As indicated in the discussion of part 11, above, this SEC
rule provides that required signatures may be typed or may be
duplicated or facsimile versions of manual signatures. Where typed,
duplicated, or facsimile signatures are used, each signatory to the
filing is required to ``manually sign a signature page or other
document authenticating, acknowledging, or otherwise adopting his or
her signature that appears in the filing.'' \79\ As provided by Rule
402, this document must be retained for five years and, upon request, a
copy must be provided to the OCC.
---------------------------------------------------------------------------
\78\ 17 CFR 230.402.
\79\ Id.
---------------------------------------------------------------------------
Current Sec. Sec. 16.17(d) and 197.1 provide the date on which
papers are actually received by the OCC shall be the date of filing, if
the person or bank filing the papers has complied with all applicable
requirements. As with the amendment to Sec. 11.3(a)(3)(i), the OCC
proposed to update Sec. 16.17(d) to conform to the electronic filing
requirement. Specifically, we proposed that an electronic filing that
is commenced on a nonholiday weekday on or before 5:30 p.m. Eastern
Standard or Daylight Savings Time, whichever is currently in effect,
would be deemed received by the OCC on the same business day. An
electronic filing whose submission is commenced after 5:30 p.m. Eastern
Standard or Daylight Savings Time, whichever is currently in effect, or
on a Saturday, Sunday, or Federal holiday would be deemed received by
the OCC on the next business day. We note, however, that paragraph (e)
provides that with respect to any registration statement or any post-
effective amendment filed pursuant to SEC Rule 462(b),\80\ the cut-off
time is 10 p.m. to be consistent with corresponding SEC rules.
---------------------------------------------------------------------------
\80\ 17 CFR 230.462(b).
---------------------------------------------------------------------------
As with section Sec. 11.3(a)(3)(iii), proposed Sec. 16.17(d)
provided that if an electronic filer in good faith attempts to file a
document pursuant to this part in a timely manner but the filing is
delayed due to technical difficulties beyond the electronic filer's
control, the electronic filer may request that the OCC adjust the
filing date. The OCC may grant the request if it appears that such
adjustment is appropriate and consistent with the public interest and
the protection of investors. As indicated above, these rules for dating
an electronic filing, and for providing a waiver for technical
difficulties with the filing, are derived from SEC Regulation S-T.\81\
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\81\ 17 CFR 232.
---------------------------------------------------------------------------
The OCC also proposed a new Sec. 16.17(f) to establish an
exception to the general electronic filing requirements that permits
the use of paper filings where unanticipated technical difficulties
prevent the use of electronic filings. This exception is modeled on SEC
Regulation S-T, Rule 201,\82\ which provides a temporary hardship
exemption to the SEC's EDGAR filing requirements in cases of
unanticipated technical difficulties. Similar to Rule 201, the OCC
notes that the use of this exception should be extremely limited and
should be relied upon only when unusual and unexpected circumstances
create technical impediments to the use of electronic filings.
---------------------------------------------------------------------------
\82\ 17 CFR 232.201.
---------------------------------------------------------------------------
Finally, the OCC proposed technical changes to Sec. 16.17(h),
currently Sec. 16.17(f), to update a cross-reference to 12 CFR part 4.
The OCC did not receive any comments on these proposed changes to
the filing requirements in Sec. 16.17 and we adopt them as proposed.
Use of prospectus. Section 16.18 provides that no person may use a
prospectus or amendment declared effective by the OCC more than nine
months after the effective date unless the information contained in the
prospectus or amendment is as of a date not more than 16 months prior
to the date of use. Furthermore, this section provides that no person
may use a prospectus if an event arises or fact changes after the
effective date that causes the prospectus to contain an untrue
statement of material fact or to omit a material fact that causes the
prospectus to be misleading until an amendment reflecting the event or
change has been filed with and declared effective by the OCC. The OCC
proposed
[[Page 8096]]
to apply Sec. 16.18 to Federal savings associations. We received no
comments on this proposed change and adopt it as proposed. Because
Sec. 197.8 contains similar provisions, this amendment will not result
in any changes for Federal savings associations.
Withdrawal or abandonment. In general, Sec. 16.19 provides that a
registration statement, amendment, or exhibit may be withdrawn prior to
its effective date. Furthermore, this section provides that the OCC may
deem abandoned a registration statement or amendment that has been on
file with the OCC for nine months and has not become effective. The OCC
proposed to apply Sec. 16.19 to Federal savings associations. We
received no comments on this proposed change and adopt it as proposed.
Because Sec. 197.11 contains the same provisions as Sec. 16.19,
applying Sec. 16.19 to Federal savings associations will not result in
any changes for Federal savings associations.
Request for interpretive advice or no-objection letter. As
proposed, the OCC is adopting the amendment to Sec. 16.30 that updates
the cross-reference to where the address for filing a request for
interpretive advice or a no-objection letter may be found.
Escrow requirement. For national banks, Sec. 16.31 provides the
OCC with discretion to require the establishment of an escrow account,
while Sec. 197.9 automatically requires an escrow account for Federal
savings associations. By amending part 16 to include Federal savings
associations and deleting Sec. 197.9, the OCC proposed to remove the
mandatory escrow requirement for Federal savings associations. We
received no comments on this proposed change and adopt it as proposed.
Fraudulent transactions/unsafe or unsound practices. Section 16.32
prohibits fraudulent transactions in the offer or sale of bank
securities and deems such transactions to be an unsafe or unsound
practice under 12 U.S.C. 1818. Section 197.10 contains a similar
prohibition. However, Sec. 16.32 specifically cross-references the
investor protections under section 17 of the Securities Act \83\ and
references SEC Rule 175 \84\ on forward-looking statements. Although
section 17 by its terms applies to Federal savings associations
regardless of the OCC rule, neither it nor SEC Rule 175 is referenced
in Sec. 197.10. The OCC proposed to amend Sec. 16.32 to include
Federal savings associations. As a result, part 16 would put Federal
savings associations on notice that the Securities Act section 17
investor protections apply. Furthermore, Federal savings associations
would have the additional clarifying guidance on the liability of
forward-looking statements provided by SEC Rule 175. We received no
comments on this proposed change and adopt it as proposed.
---------------------------------------------------------------------------
\83\ 15 U.S.C. 77q.
\84\ 17 CFR 230.175.
---------------------------------------------------------------------------
Filing fees. Section 16.33 provides that the required filing fees,
as provided for in the Notice of Comptroller of the Currency Fees
published pursuant to 12 CFR 8.8, must accompany filings made pursuant
to part 16. The OCC proposed to amend Sec. 16.33(a) to clarify that
the OCC may require filing fees before it may accept a filing. In
addition, as with Sec. 11.4, we proposed to amend Sec. 16.33(b) to
provide that such fees may be paid by means acceptable to the OCC, in
addition to by check, to reflect the additional payment options now
available. We received no comments on these proposed filing fee changes
and adopt them as proposed. We note that the OCC is not currently
imposing any filing fees for part 16 filings and is not imposing any
new fees as part of this rulemaking.
Waiver and interpretive advice requests. The proposed rule did not
include the blanket waiver provisions contained in Sec. Sec. 197.14
and 197.15. Commenters did not discuss these provisions and the final
rule as adopted does not contain these blanket waivers. However, we
note that the OCC will continue to provide interpretive advice or no-
objection letters under the terms provided in Sec. 16.30. We also note
that 12 CFR 100.2 provides that the Comptroller may, for good cause and
to the extent permitted by statute, waive the applicability of any
provision of 12 CFR parts 1 through 197, with respect to Federal
savings associations.
Current and periodic reports. Section 197.18 requires a Federal
savings association to file certain periodic reports with the OCC after
its offering circular becomes effective, even if the savings
association is not otherwise required to register its securities with
the OCC under the Exchange Act. This filing requirement applies to
Federal savings associations until the securities to which the savings
association's offering circular relates are held of record by fewer
than 300 persons in any fiscal year other than the fiscal year in which
the offering circular becomes effective. The FDIC and the Federal
Reserve Board have not imposed a comparable obligation on state banks,
and the OCC removed this obligation on national banks in 2008.\85\
Instead, a state or national bank is subject to Exchange Act periodic
and current reporting requirements if the bank's total assets exceed
$10,000,000 and it has a class of equity security (other than an
exempted security) held of record by 2,000 or more persons.\86\
---------------------------------------------------------------------------
\85\ 73 FR 22216 (Apr. 24, 2008).
\86\ Exchange Act, section 12(g) (15 U.S.C. 78l(g)), as amended
by section 601(a) of the JOBS Act.
---------------------------------------------------------------------------
The proposed rule did not include filing requirement contained in
Sec. 197.18. As a result, a Federal savings association instead would
be subject to Exchange Act periodic and current reporting requirements
if it has total assets exceeding $10,000,000 and a class of equity
security (other than an exempted security) held of record by 2,000 or
more persons.\87\ Commenters did not discuss the removal of this filing
requirement and we adopt this change as proposed. As a result of this
final rule, current and periodic reporting requirements for national
banks and Federal savings associations will be identical. In addition,
regulatory burden will be reduced by eliminating such filing
requirements for Federal savings associations with fewer than 1,200
holders of record.\88\ Financial information about a savings
association will continue to be publicly available to investors through
quarterly financial information, including balance sheets and
statements of income, which is part of a savings association's Call
Reports and is available at https://cdr.ffiec.gov/public/.
---------------------------------------------------------------------------
\87\ Id.
\88\ Id. National banks and Federal savings associations that
are currently registered under section 12(g) of the Exchange Act and
have 1,200 or more holders of record for a class of securities must
continue to comply with current and periodic reporting requirements.
---------------------------------------------------------------------------
Periodic sales reports. Under Sec. 197.12 Federal savings
associations must file periodic reports on the sales of securities that
are registered under Sec. 197.2 or that are otherwise exempt from
registration under Sec. 197.4 (non-public offerings, including
Regulation D and sales to 35 or more persons). National banks do not
have to file similar reports. Institutions generally sell securities
for the purpose of increasing their capital. The OCC can review any
increases to a Federal savings association's capital through the
institution's quarterly Call Report, and therefore the periodic sales
report provides limited additional value for supervision. Furthermore,
Sec. 5.45 requires Federal savings associations subject to capital
plans or other regulatory actions to file reports for increases in
permanent capital, so the Securities Sales Report is redundant in cases
that present the most supervisory
[[Page 8097]]
risk.\89\ Therefore, the OCC proposed to not include in part 16 the
Sec. 197.12 requirement that Federal savings associations file reports
on sales of securities. We did not receive any comments on the removal
of the periodic sales report requirement and adopt this change as
proposed.
---------------------------------------------------------------------------
\89\ Section 5.46 requires national banks to file reports for
increases in permanent capital.
---------------------------------------------------------------------------
Disclosure of Financial and Other Information by National Banks (12 CFR
Part 18)
Twelve CFR part 18 sets forth annual financial disclosure
requirements for national banks. Specifically, part 18 requires
national banks to prepare annual disclosure statements as of December
31 to be made available to bank security holders by March 31 of the
following year. The rule specifies the types of information that must
be included in the disclosure statements, which includes, at a minimum,
certain information from the bank's Call Report. The Comptroller may
require the inclusion of other information and the bank may include an
optional narrative. Section 18.5 provides alternative ways a bank may
meet the disclosure statement requirement. These alternatives include
allowing Exchange Act registered banks to use the bank's annual report
and allowing banks with audited financial statements to use those
statements provided the statements include certain required
information.
Although we did not receive any specific comments on part 18 during
the EGRPRA review process, the OCC proposed to remove this rule to
reduce unnecessary burden. The information part 18 requires a national
bank to disclose is contained in other publicly available documents,
such as the Call Report and the Uniform Bank Performance Report. Part
18 is therefore duplicative and unnecessary. We note that the Federal
Reserve Board and the former OTS rescinded similar regulations for
state member banks and savings associations, respectively. The OTS
repealed 12 CFR 562.3 in December 1995 and the Federal Reserve Board
eliminated 12 CFR 208.17 in 1998.\90\
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\90\ 60 FR 66866 (Dec. 27, 1995); 63 FR 37630 (July 13, 1998).
---------------------------------------------------------------------------
We did not receive any specific comments on the removal of part 18
and, therefore, adopt the removal as proposed.
Extensions of Credit to Insiders and Affiliate Transactions (12 CFR
Part 31, Sec. Sec. 163.41 and 163.43
National banks and Federal savings associations must comply with
rules of the Federal Reserve Board regarding extensions of credit to
insiders, 12 CFR part 215 (Regulation O), which implements sections
22(g) and 22(h) of the Federal Reserve Act, and transactions with
affiliates, 12 CFR part 223 (Regulation W), which implements sections
23A and 23B of the Federal Reserve Act.\91\ Twelve CFR part 31 and 12
CFR 163.41 and 163.43 address these transactions for national banks and
Federal savings associations, respectively. Specifically, Sec. 31.2
requires national banks to comply with Regulation O. Appendix A to part
31 provides interpretive guidance on the application of Regulation W to
deposits between affiliated banks. Sections 163.41 and 163.43 contain
general statements that refer Federal savings associations to
applicable regulations of the Federal Reserve Board, i.e., Regulation O
and Regulation W.
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\91\ 12 U.S.C. 371c, 371c-1, 375a, and 375b. In general, section
11 of the HOLA, 12 U.S.C. 1468, applies sections 22(g), 22(h), 23A
and 23B of the Federal Reserve Act to savings associations in the
same manner and to the same extent as if the savings association
were a member bank.
---------------------------------------------------------------------------
The OCC proposed to consolidate its rules that address insider
lending and affiliate transactions by amending part 31 to state clearly
that both national banks and Federal savings associations must comply
with Regulation O and Regulation W and by removing Sec. Sec. 163.41
and 163.43. Moreover, the OCC proposed to amend part 31 to add the
statutory standards for authorizing an exemption from section 23A in
accordance with section 608 of the Dodd-Frank Act.
Specifically, we proposed to add ``Federal savings associations''
to the text of Sec. 31.2, Insider lending restrictions and reporting
requirements, and to add a new Sec. 31.3 to require both national
banks and Federal savings associations to comply with the affiliate
transaction requirements contained in Regulation W. Proposed Sec.
31.3(b) clarified that the OCC administers and enforces affiliate
transaction requirements as they apply to national banks and Federal
savings associations.
Furthermore, proposed Sec. 31.3(c) implemented the standards for
authorizing an exemption from section 23A, as provided by section 608
of the Dodd-Frank Act. Section 608 amends section 23A and section 11 of
the HOLA to authorize the OCC to exempt, by order, a transaction of a
national bank or Federal savings association, respectively, from the
affiliate transaction requirements of section 23A and section 11 of the
HOLA if: (1) The OCC and the Federal Reserve Board jointly find the
exemption to be in the public interest and consistent with the purposes
of section 23A and section 11, as applicable, and (2) within 60 days of
receiving notice of such finding, the FDIC does not object in writing
to the finding based on a determination that the exemption presents an
unacceptable risk to the Deposit Insurance Fund.\92\ Proposed Sec.
31.3(d) described the procedures that a national bank and Federal
savings association must follow for requesting such an exemption. These
procedures are modeled after the Federal Reserve Board's existing
procedures in Regulation W.
---------------------------------------------------------------------------
\92\ See section 608(a)(4)(A)(iv) of the Dodd-Frank Act
(exemption authority for national banks) and section 608(c) of the
Dodd-Frank Act (exemption authority for Federal savings
associations).
---------------------------------------------------------------------------
Under the proposal, appendix A to part 31, which is specific to
national banks, remains unchanged. However, the proposal amended
appendix B, which contains a comparison between selected provisions of
Regulation O and the OCC's lending limits rule, 12 CFR part 32, to
include Federal savings associations and to make technical changes.
Lastly, the proposal updated the authority provision in Sec. 31.1
to reference the appropriate statutory cite for Federal savings
association, 12 U.S.C. 1463 and 1468, and to correct a duplicative
reference to 12 U.S.C. 1817(k).
The OCC did not receive any specific comments on these proposed
amendments to Part 31 and the removal of Sec. Sec. 163.41 and 163.43,
and we therefore adopt these changes as proposed.
It should be noted that the OCC may impose additional restrictions
on any transaction between a Federal savings association or national
bank and its affiliates that the OCC determines to be necessary to
protect the safety and soundness of the institution.\93\ This authority
is unaffected by and not addressed in this final rule.
---------------------------------------------------------------------------
\93\ See, e.g., 12 U.S.C. 93a, 371c(f)(2)(B)(i), 481,
1468(a)(4), 1468(b)(2), and 1831p-1.
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Electronic Operations and Activities of Federal Savings Associations
(12 CFR Part 155)
Twelve CFR part 155 addresses the use of technology by Federal
savings associations to deliver products and services. Specifically,
Sec. 155.200 provides that a Federal savings association may use
electronic means or facilities to perform any function, or provide any
product or service, as part of an otherwise authorized activity. In
addition, Sec. 155.200 permits Federal savings associations to use, or
participate with others to use, electronic
[[Page 8098]]
means or facilities to perform any function, or provide any product or
service, as part of an authorized activity; and to market and sell, or
participate with others to market and sell, electronic capacities and
by-products to third parties in order to optimize the use of resources,
if the savings association acquired or developed these capacities and
by-products in good faith as part of providing financial services.
These authorizations are similar to what is provided for national banks
in 12 CFR part 7, subpart E.
Section 155.210 requires management of the savings association to
take steps to identify, assess and mitigate potential risks, establish
prudent internal controls, and implement security measures designed to
prevent unauthorized access, prevent fraud, and comply with applicable
security device requirements of part 168.
Paragraph (a) of Sec. 155.300 provides that Federal savings
associations are not required to inform the OCC before using electronic
means or facilities, except as provided in paragraphs (b) and (c) and
encourages Federal savings associations to discuss any planned new
products or services that will use electronic means or facilities with
their assigned OCC supervisory office. Paragraph (b) of Sec. 155.300
requires a Federal savings association to file a written notice with
the OCC prior to establishing a transactional Web site. Paragraph (c)
of Sec. 155.300 requires a Federal savings association to follow any
written procedures the OCC imposes with respect to any supervisory or
compliance concerns regarding its use of electronic means or
facilities. Finally, Sec. 155.310 provides the procedures for filing
the transactional Web site notice.
Part 155 was included in the first EGRPRA Federal Register request
for comment. In response to this request, we received comments
recommending that the OCC remove the transactional Web site prior
notice requirement in Sec. 155.300(b). The OCC agrees that this notice
is no longer necessary and proposed to remove it, along with the
related procedural requirements in Sec. 155.310.
Furthermore, the OCC proposed to remove the remaining paragraphs of
Sec. 155.300. Paragraph (a) is no longer relevant without the
requirement for a transactional Web site notice. Paragraph (c) is
unnecessary as, pursuant to the OCC's safety and soundness authority,
Federal savings associations are required to comply with any written
procedures the OCC imposes for supervisory or compliance reasons.
Finally, the OCC proposed other non-substantive changes to update
the rule and to present the regulatory provisions in a format more
consistent with the OCC's other rules.
We received no specific comments on the removal of these provisions
and the OCC adopts the amendments as proposed. Nonetheless, the OCC
encourages Federal savings associations to discuss any planned new
products or services that will use electronic means or facilities with
their assigned OCC supervisory office.
Regulatory Reporting Requirements for Federal Savings Associations (12
CFR Part 162 and Sec. 163.180)
Twelve CFR part 162 and Sec. 163.180(a) set forth regulatory
reporting and auditing standards and requirements for Federal savings
associations. These rules were included in the first EGRPRA Federal
Register notice and the OCC did not receive any comments on these rules
in response to this request for comment. However, after conducting its
own review of these rules, the OCC proposed to revise 12 CFR part 162
and remove Sec. 163.180(a) in order to eliminate duplicative
requirements.
Various Federal statutes impose reporting and audit requirements on
Federal savings associations and national banks. Specifically, 12
U.S.C. 161(a) provides that national banks must submit reports of
condition to the Comptroller in accordance with the requirements of the
FDI Act. Twelve U.S.C. 1464(v)(1) is the comparable statute for Federal
savings associations. In addition, 12 U.S.C. 1831m and FDIC
implementing regulations at 12 CFR part 363 require insured depository
institutions above a specified asset threshold to have annual
independent audits and to submit annual reports and audited financial
statements to the FDIC and the appropriate Federal banking agency.\94\
These financial statements must be prepared in accordance with GAAP and
such other disclosure requirements as the FDIC and the appropriate
Federal banking agency may prescribe.\95\ The Interagency Policy
Statement on External Audit Programs of Banks and Savings Associations
(1999 Interagency Policy Statement) \96\ provides unified interagency
guidance regarding independent external auditing programs of community
banks and savings associations that are exempt from 12 CFR part 363
(i.e., institutions with less than $500 million in total assets) or
that are not otherwise subject to audit requirements by order,
agreement, statute, or agency regulations. Furthermore, 12 U.S.C.
1463(b)(1) requires the Comptroller, by regulation, to prescribe
uniform accounting and disclosure standards for Federal savings
associations' compliance with all applicable regulations.
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\94\ Among other requirements, 12 CFR part 363 requires insured
depository institutions with total assets above certain thresholds
to assess the effectiveness of internal controls over financial
reporting, to establish independent audit committees, and to comply
with related reporting requirements.
\95\ Other statutes further clarify the use of GAAP by insured
depository institutions. See, e.g., 12 U.S.C. 1831n(a)(2)(A) (the
accounting principles applicable to reports or statements required
to be filed with Federal banking agencies by insured depository
institutions shall be uniform and consistent with GAAP) and 12
U.S.C. 1831n(a)(2)(B) (in certain circumstances, the appropriate
Federal banking agency or the FDIC may, with respect to such reports
or statements, prescribe an accounting principle applicable to such
institutions that is no less stringent than GAAP).
\96\ See OCC Bulletin 99-37, Interagency Policy Statement on
External Auditing Programs (Oct. 7, 1999) and 64 FR 52319 (Sept. 28,
1999).
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As indicated above, 12 CFR part 162 and Sec. 163.180(a) also
contain regulatory reporting and auditing requirements for Federal
savings associations. Specifically, Sec. 162.1 requires Federal
savings associations to use forms prescribed by the OCC and to follow
such regulatory reporting requirements as the OCC may require. This
section also requires Federal savings associations and their affiliates
to maintain accurate and complete records of all business transactions
that support the regulatory reports submitted to the OCC and any
financial reports prepared in accordance with GAAP. These records must
be maintained in the United States and must be readily accessible by
the OCC for examination and other supervisory purposes within five
business days upon request by the OCC, at a location acceptable to the
OCC.
Section 162.2 sets forth the minimum requirements to be included in
all reports to the OCC, including Call Reports. In general, these
reports must incorporate GAAP, as well as additional safety and
soundness requirements more stringent than GAAP that the Comptroller
prescribes. Section 163.180(a) provides that Federal savings
associations and their service corporations must submit periodic and
other reports as required by the appropriate Federal banking agency.
Both Sec. Sec. 162.1 and 162.2 implement the 12 U.S.C. 1463(b)(1)
requirement, described above, that the OCC issue regulations
prescribing uniform accounting and disclosure standards for Federal
savings associations' compliance with all applicable regulations.
Section 162.4 sets forth requirements and standards for audits of
Federal
[[Page 8099]]
savings associations. It generally provides that the OCC may require,
at any time, an independent audit of a Federal savings association's
financial statements when necessary for safety and soundness reasons.
It further requires an independent audit if a Federal savings
association receives a CAMELS rating of 3, 4, or 5, specifies
qualifications for independent public accountants, and states that
audit engagement letters provide the OCC with access to and copies of
any work papers, policies, and procedures relating to the services
performed.
There are no comparable OCC regulations for national banks.
However, the OCC applies and enforces the above-referenced statutory
requirements, as well as the applicable FDIC reporting and auditing
requirements, with respect to both national banks and Federal savings
associations.
The OCC proposed to remove the requirements contained in Sec. Sec.
162.1 and 162.2. The OCC has adequate authority pursuant to its general
examination authority to obtain records and reports from Federal
savings associations, as well as national banks.\97\ Furthermore, the
frequently changing nature of accounting standards and disclosures
makes it impractical to codify detailed standards in a regulation.
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\97\ See 12 U.S.C. 1464(d)(1)(B) (Federal savings associations)
and 12 U.S.C. 481 (national banks). See also 12 U.S.C. 1817.
---------------------------------------------------------------------------
The OCC also proposed to remove the audit requirements of Sec.
162.4 and the reporting requirements of Sec. 163.180(a) because they
are unnecessarily repetitive of other requirements. The OCC has
adequate statutory authority to require reports and 12 CFR 363 already
specifies requirements for independent audits and auditors for both
Federal savings associations and national banks. In addition, as with
national banks, the OCC does not believe that it is necessary to
articulate this authority for Federal savings associations in a
regulation.\98\
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\98\ See, e.g., 12 U.S.C. 1817(a)(3) and 12 CFR part 304 with
respect to reports and 12 CFR part 363 and the Interagency Policy
Statement on External Audit Programs of Banks and Savings
Associations (64 FR 52319, Sept. 28, 1999) with respect to audits.
---------------------------------------------------------------------------
Because 12 U.S.C. 1463(b)(1) requires the Comptroller to prescribe
by regulation uniform accounting and disclosure standards for Federal
savings associations, the proposal included a provision requiring that
a Federal savings association incorporate U.S. GAAP and the disclosure
standards included therein when complying with all applicable
regulations, unless otherwise specified by statute or regulation or by
the OCC. We believe that this guidance satisfies the statutory
requirement while being flexible enough to accommodate the evolving
nature of the standards and disclosures. With respect to national
banks, a similar regulation is not required by statute and would be
redundant with other provisions that require compliance with GAAP, such
as 12 U.S.C. 1831m and 1831n(a)(2), discussed above. We note that we
proposed to reference GAAP as ``U.S. GAAP'' in this provision to
clarify that the reference is to GAAP as used in the United States, in
light of evolving global accounting standards.
We did not receive any specific comments on these proposed
amendments to part 162 and Sec. 163.180 and adopt them as proposed. We
note that rescission of Sec. Sec. 162.4 and 163.180(a) will not affect
the OCC's ability, pursuant to our safety and soundness authority, to
require at any time an independent audit of a Federal savings
association, or to access work papers and related documents prepared in
connection with any audit of a Federal savings association.\99\
---------------------------------------------------------------------------
\99\ See 12 U.S.C. 1831p-1.
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Furthermore, the OCC reminds Federal savings associations that
rescinding Sec. 162.4 does not eliminate or affect the requirement
that a savings association with $500 million or more in assets obtain
an annual audit pursuant to 12 U.S.C. 1831m and 12 CFR part 363, nor
does it minimize the importance of administering an external audit
program. The OCC encourages all national banks and Federal savings
associations, regardless of size, to have independent external reviews
of their operations and financial statements and to establish audit
committees made up entirely of outside directors. The form of that
review can range from financial statement audits by independent public
accountants to agreed-upon procedures (i.e., directors' examinations)
performed by other independent and qualified persons. In particular,
Federal savings associations should be familiar with 12 CFR part 363
and the 1999 Interagency Policy Statement, which apply to all insured
depository institutions.
Management and Financial Policies (12 CFR 163.161)
Twelve CFR 163.161(a)(1) generally requires each Federal savings
association and each service corporation to be well-managed, to operate
in a safe and sound manner, and to pursue financial policies that are
safe and consistent with economical home financing and the purposes of
savings associations. Section 163.161(a)(2) requires each Federal
savings association and service corporation to maintain sufficient
liquidity to ensure its safe and sound operations. Section 163.161(b)
addresses the compensation of Federal savings association and service
corporation officers, directors, and employees.
Federal savings associations and national banks are subject to many
other regulations and guidance that require sound management and
financial policies. Part 30 of the OCC's regulations contain guidelines
establishing operational and managerial standards for safety and
soundness applicable to national banks and Federal savings
associations. Among other things, these safety and soundness
guidelines, which implement the statutory safety and soundness
provisions at section 39 of the FDI Act,\100\ address executive
compensation.\101\ Furthermore, the OCC, along with the other Federal
banking agencies, issued a joint policy statement in 2010 that provides
guidance for the sound management of liquidity risk.\102\ This policy
statement is both more detailed and more current than the provisions of
the regulation and is applicable to both national banks and Federal
savings associations.
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\100\ 12 U.S.C. 1831p-1.
\101\ 12 CFR part 30, appendix A. The OCC, FDIC, and Federal
Reserve Board also issued joint agency guidance on incentive
compensation in 2010. See 75 FR 36395 (June 25, 2010).
\102\ Interagency Policy Statement on Funding and Liquidity Risk
Management, 75 FR 13656 (Mar. 13, 2010).
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Section 163.161 was included in the third EGRPRA Federal Register
notice. Although we did not receive any comments on this section in
response to this request for comment, we determined that Sec. 163.161
duplicates the provisions discussed above. Therefore, the OCC proposed
to delete Sec. 163.161 in its entirety. We did not receive any
specific comments on this deletion, and adopt the amendment as
proposed.
Financial Derivatives Transactions by Federal Savings Associations (12
CFR 163.172)
Twelve CFR 163.172 states that a Federal savings association may
engage in a transaction involving a financial derivative provided that
the association is authorized to invest in the assets underlying the
derivative, the transaction is safe and sound, and the savings
association's board of directors and management satisfy certain
prudential requirements. It also states that, in general, if a Federal
savings association should engage in a financial derivative
transaction, it should do so to reduce its risk exposure.
[[Page 8100]]
Section 163.172(a) defines ``financial derivative'' as a financial
contract whose value depends on the value of one or more underlying
assets, indices, or reference rates. It states that the most common
types of financial derivatives are futures, forward commitments,
options, and swaps.
We note that the OCC does not have a comparable regulation
governing national bank derivative transactions, but has addressed
these activities through interpretive letters.
Section 163.172 was included in the fourth EGRPRA Federal Register
notice and we did not receive any comments on this section in response
to this request for comment. However, to clarify any confusion caused
by the wording of the current rule, the OCC proposed to replace the
term ``forward commitment'' with ``forward contract.'' A ``forward
commitment'' generally refers to an agreement to loan funds in the
future and is not a financial derivative. In contrast, a ``forward
contract'' is a well-known type of financial derivative to which this
rule should apply. We do not expect this change to have a material
effect on Federal savings associations or the securities marketplace.
The OCC also proposed other non-substantive changes to clarify the rule
further and to present the regulatory provisions in a format more
consistent with the OCC's other rules.
We did not receive any specific comments on these amendments and
adopt them as proposed.
Accounting Requirements (12 CFR Part 193)
Twelve U.S.C. 1463(b)(2)(A) requires savings associations to use
U.S. GAAP in preparing reports to regulators. Part 193 requires Federal
savings associations to make disclosures in financial statements filed
in conversion applications or under the Exchange Act. These disclosures
are in addition to those required under U.S. GAAP.
Part 193 was included in the fourth EGRPRA Federal Register notice
and we did not receive any comments on this rule in response to this
request for comment. The OCC determined, however, that the additional
financial disclosures required by part 193 are, in most cases,
substantially similar to and largely repetitive of otherwise applicable
public disclosure requirements that a Federal savings association or
its holding company must satisfy under the Securities Act, the Exchange
Act, or OCC regulations. Therefore, the OCC proposed to delete part
193. We did not receive any specific comments on the removal of part
193, and we adopt this removal as proposed. We note that Federal
savings associations still are required to follow U.S. GAAP reporting
and disclosure requirements.
III. Regulatory Analysis
Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (RFA), an agency must
prepare a regulatory flexibility analysis for all proposed and final
rules that describes the impact of the rule on small entities.\103\
Under section 605(b) of the RFA, this analysis is not required if the
head of 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.
---------------------------------------------------------------------------
\103\ See 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
The OCC currently supervises approximately 1,032 small
entities.\104\ Because some of the rule's provisions could affect any
national bank and other provisions could affect any Federal savings
association, the rule could have an impact on a substantial number of
OCC-supervised small entities.
---------------------------------------------------------------------------
\104\ We base our estimate of the number of small entities on
the Small Business Administration's size thresholds for commercial
banks and savings institutions, and trust companies, which are $550
million and $38.5 million, respectively. Consistent with the General
Principles of Affiliation 13 CFR 121.103(a), we count the assets of
affiliated financial institutions when determining if we should
classify a bank or savings association as a small entity. We use
December 31, 2015, to determine size because a ``financial
institution's assets are determined by averaging the assets reported
on its four quarterly financial statements for the preceding year.''
See footnote 8 of the U.S. Small Business Administration's Table of
Size Standards.
---------------------------------------------------------------------------
We believe that substantially all of national banks' and Federal
savings associations' direct costs will be associated with reviewing
the amendments and, when necessary, modifying policies and procedures
to correct any inconsistencies between banks' internal policies and the
modified rules. Once the bank has implemented the amendments, these
costs will dissipate. We estimate that the monetized direct cost per
bank or savings association will range from a low of approximately $1
thousand to a high of approximately $8 thousand. Using the upper bound
average direct cost per entity, we believe the rule might have a
significant economic impact on approximately three OCC-supervised small
entities, which is not a substantial number. In other words, although
the rule could have an impact on a substantial number of small
entities, this impact might be significant for only a few small
entities. Therefore the OCC certifies that this final rule does not
have a significant economic impact on a substantial number of small
entities supervised by the OCC. Accordingly, a regulatory flexibility
analysis is not required.
We note that in determining this compliance cost, we do not offset
the direct cost imposed by the rulemaking with savings that certain
banks and savings associations will realize as a result of the
rulemaking. Therefore, the cost described here does not include
offsetting reductions in regulatory cost and burden.
Unfunded Mandates Reform Act of 1995
The OCC has analyzed the final rule under the factors in the
Unfunded Mandates Reform Act of 1995 (UMRA).\105\ Under this analysis,
the OCC considered whether the proposed rule includes 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 (adjusted annually for inflation). The
UMRA does not apply to regulations that incorporate requirements
specifically set forth in law.
---------------------------------------------------------------------------
\105\ 2 U.S.C. 1531 et seq.
---------------------------------------------------------------------------
The OCC finds that the rule does not trigger the UMRA cost
threshold because we estimate that the UMRA cost is nil. The OCC
believes that substantially all of banks' and savings associations'
direct costs will be implementation costs associated with reviewing the
amendments and, when necessary, modifying policies and procedures to
correct any inconsistencies between banks' internal policies and the
modified rules. Because these costs are not associated with mandates,
they are not UMRA costs. Accordingly, the OCC has not prepared the
written statement described in section 202 of the UMRA.
IV. Administrative Law Matters
Notice and Comment
Pursuant to the Administrative Procedure Act (APA), at 5 U.S.C.
553(b)(B), notice and comment are required prior to the issuance of a
final rule unless an agency, for good cause, finds that ``notice and
public procedure thereon are impracticable, unnecessary, or contrary to
the public interest.'' This final rule includes four amendments not
originally included in the proposed rule published on March 14, 2016.
Three of these amendments replace inaccurate terms in 12 CFR 5.21,
5.22, and 8.6(c)(3)(iv) and are purely technical in
[[Page 8101]]
nature. The fourth amendment modifies a reference in 12 CFR 5.48 to an
internal agency procedure that does not affect a national bank, a
Federal savings association, or other non-OCC party. Because these
amendments are either technical changes or only affect the OCC, the OCC
has good cause to conclude that advance notice and comment under the
APA are not necessary prior to their issuance.
Effective Date
The APA requires that a substantive rule must be published not less
than 30 days before its effective date, unless, among other things, the
rule grants or recognizes an exemption or relieves a restriction.\106\
Section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994 (RCDRIA) requires that regulations imposing
additional reporting, disclosure, or other requirements on insured
depository institutions take effect on the first day of the calendar
quarter after publication of the final rule, unless, among other
things, the agency determines for good cause that the regulations
should become effective before such time.\107\ The April 1, 2017
effective date of this final rule meets both the APA and RCDRIA
effective date requirements, as it will take effect at least 30 days
after its publication date of January 23, 2017 and on the first day of
the calendar quarter following publication, April 1, 2017.
---------------------------------------------------------------------------
\106\ 5 U.S.C. 553(d)(1).
\107\ 12 U.S.C. 4802.
---------------------------------------------------------------------------
Section 302 of the RCDRIA also requires the OCC to consider,
consistent with the principles of safety and soundness and the public
interest, any administrative burdens the final rule would place on
insured depository institutions, including small depository
institutions, and their customers as well as the benefits of such
regulations when determining the effective date and administrative
compliance requirements of new regulations that impose new reporting,
disclosure, or other requirements on insured depository
institutions.\108\ The OCC has considered the changes made by this
final rule and believes that the effective date of April 1, 2017 should
provide national banks and Federal savings associations with adequate
time to comply with these changes as they do not involve major
revisions to bank or savings association operations. Furthermore, many
of the changes will reduce burden on banks and savings associations or
clarify requirements, which will lessen the administrative compliance
burden of our regulations on these institutions. Some of these changes
also will also benefit bank and savings association customers in that
they eliminate unnecessary mailings or provide additional methods to
access bank services or information.
---------------------------------------------------------------------------
\108\ 12 U.S.C. 4802.
---------------------------------------------------------------------------
Paperwork Reduction Act
Under the PRA of 1995,\109\ the OCC may not conduct or sponsor, and
a person is not required to respond to, an information collection
unless the information collection displays a valid OMB control number.
The OCC has submitted the information collection requirements imposed
by this final rule to OMB for review.
---------------------------------------------------------------------------
\109\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
The OCC also submitted the information collection requirements
imposed by the proposed rule to OMB at the time the proposed rule was
published. OMB filed comments on the information collections,
instructing the OCC to examine public comment in response to the
proposed rule and include in the supporting statement of the next
submission, to be submitted to OMB at the final rule stage, a
description of how the OCC has responded to any public comments on the
collection, including comments on maximizing the practical utility of
the collection and minimizing the burden. The OCC received no comments
regarding the information collections and has resubmitted them to OMB
for review in connection with the final rule.
The final rule amends Sec. 5.20, where special purpose charters
are discussed, to describe changes in charter purpose, set out the
requirement for an application, and direct institutions to Sec. 5.53
for the relevant application. A nonmaterial change has been filed with
OMB for these revisions.
Section 9.18(b)(1) has been revised to replace the requirement that
a national bank make a copy of any collective investment fund plan
available for public inspection at its main office with the requirement
that the plan could instead be available to the public on its Web site.
A nonmaterial change has been filed with OMB for this revision.
Part 194 is removed and Federal savings associations would follow
part 11. Section 11.3 has been revised to require that fewer copies be
filed and to allow electronic signatures. A nonmaterial change has been
filed with OMB for these revisions.
Section 12.4(b) has been amended to allow institutions to direct a
broker-dealer to mail confirmations to customers without requiring a
duplicate or other form of notification specified in Sec. 12.4 or
Sec. 12.5 to be sent by the institution. Sections 12.101 and 12.102,
which require the disclosure of remuneration for mutual fund
transactions and electronic communications, have been removed. Section
151.60(a) and (b) have been amended to include the less detailed
maintenance and storage procedures for customer securities transaction
records found in part 12. Section 151.60(b) also has been amended to
allow use of a third-party service provider for records storage and
maintenance. Section 151.80 has been amended to provide that a Federal
savings association that has previously determined compensation in a
written agreement with the customer would not need to provide a
remuneration statement for each securities transaction. The
Recordkeeping Requirements for Securities Transactions information
collection covering parts 12 and 151 has been submitted to OMB for
review:
Title: Recordkeeping Requirements for Securities Transactions.
OMB Control No.: 1557-0142.
Frequency of Response: On occasion.
Affected Public: Businesses or other for-profit organizations.
Estimated Number of Respondents:
Current: 399.
Revised: 399.
Estimated Total Annual Burden:
Current: 2,315 hours.
Revised: 1,916 hours.
Part 197 has been removed and Federal savings associations will
follow part 16. In addition, Sec. 16.5 has been amended to provide
additional exemptions for private placements and sales of certain
fractional interests for Federal savings associations. The filing
requirement in Sec. 197.18 for periodic reports on sales of securities
has been removed and Federal savings associations with total assets
exceeding $10,000,000 and a class of equity security (other than
exempted security) held of record by 2,000 or more persons are subject
to Exchange Act periodic and current reporting requirements. Section
16.17 has been revised to (i) reduce from four paper copies to one
electronic copy the number of copies of documents required to be filed
for banks and Federal savings associations and banks and Federal
savings associations in organization, with certain paper submission
exceptions; and (ii) reduces from four to two the number of paper
copies of amendments that must be filed. In addition, documents may be
signed electronically using the signature provision in SEC Rule 402.
The Securities Offering Disclosure information collection covering
parts 16
[[Page 8102]]
and 197 has been submitted to OMB for review:
Title: Securities Offering Disclosure Rules.
OMB Control No.: 1557-0120.
Frequency of Response: On occasion.
Affected Public: Businesses or other for-profit organizations.
Estimated Number of Respondents:
Current: 61.
Revised: 37.
Estimated Total Burden:
Current: 1,310 hours.
Revised: 814 hours.
Part 18 is removed and the related information collection, OMB
Control No. 1557-0182, has been discontinued.
Section 31.3(d) is added to provide procedures to be followed when
seeking exemption from 23A of the Federal Reserve Act. A request for a
new control number for this collection has been submitted to OMB:
Title: Extensions of Credit to Insiders and Transactions with
Affiliates.
OMB Control No.: 1557-NEW.
Frequency of Response: On occasion.
Affected Public: Businesses or other for-profit organizations.
Estimated Number of Respondents: 1 respondent.
Estimated Total Annual Burden: 10 hours.
The notice requirement in Sec. 155.310, requiring a Federal
savings association to file a written notice with the OCC at least 30
days prior to establishing a transactional Web site, has been removed.
Therefore, OMB Control No. 1557-0301, covering Sec. 155.310, has been
discontinued.
The duplicative reporting requirements found in Sec. Sec. 162.1
and 162.4 have been removed. The General Reporting and Recordkeeping
information collection covering part 162 has been submitted to OMB for
review:
Title: General Reporting and Recordkeeping.
OMB Control No.: 1557-0266.
Frequency of Response: On occasion.
Affected Public: Businesses or other for-profit organizations.
Estimated Number of Respondents:
Current: 500.
Revised: 500.
Estimated Total Annual Burden:
Current: 68,345 hours.
Revised: 67,845 hours.
Comments continue to be invited on:
(a) Whether the collections of information are necessary for the
proper performance of the functions of the OCC, including whether the
information has practical utility;
(b) The accuracy of the OCC's estimates of the burden of the
collections of information;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the collections on respondents,
including through the use of automated collection techniques or other
forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
IV. Redesignation Tables
------------------------------------------------------------------------
Subject Current rule Final rule
------------------------------------------------------------------------
Electronic Notice for Securities 12 CFR 151.110.... Removed.
Transactions.
Transactions with Affiliates.... 163.41............ Sec. 31.3.
Loans by savings associations to 163.43............ Sec. 31.2.
their executive officers,
directors and principal
shareholders.
Management and Financial 163.161........... Removed.
Policies.
Periodic Reports................ 12 CFR 163.180(a). Removed.
Notification of Loss and Reports 12 CFR 163.180(c). Sec. 7.2013.
of Increase in Deductible
Amount of Bond.
Bonds for Directors, Officers, 12 CFR 163.190.... Sec. 7.2013.
Employees, and Agents; Form of
and Amount of Bonds.
Bonds for Agents................ 12 CFR 163.191.... Sec. 7.2013.
Accounting Requirements......... 12 CFR part 193... Removed.
Securities of Federal Savings 12 CFR part 194... 12 CFR part 11.
Associations.
Requirements under certain Sec. 194.1...... Sec. 11.2, Sec.
sections of the Securities 11.3, Sec.
Exchange Act of 1934. 11.4.
Liability for certain Sec. 194.3. ..................
statements by Federal
savings associations.
Form and content of Sec. 194.210.... Sec. 11.2.
financial statements.
Application of this subpart. Sec. 194.801. ..................
Description of business..... Sec. 194.802. ..................
Securities Offerings............ 12 CFR part 197... 12 CFR part 16.
Definitions................. Sec. 197.1...... Sec. 16.2.
Offering circular Sec. 197.2(a)... Sec.
requirement. 16.3(a).ROW>
--In General............
--Communications not Sec. 197.2(b)... Sec. 16.4.
deemed an offer.
--Preliminary offering Sec. 197.2(c)... Sec. 16.3(b).
circular.
Exemptions.................. Sec. 197.3...... Sec. 16.5.
Non-public offering......... Sec. 197.4...... Sec. 16.7.
Filing and signature Sec. 197.5...... Sec. 16.17.
requirements.
Effective date.............. Sec. 197.6...... Sec. 16.16.
Form, content, and Sec. 197.7...... Sec. 16.15.
accounting.
Use of the offering circular Sec. 197.8...... Sec. 16.18.
Escrow requirement.......... Sec. 197.9...... Sec. 16.31.
Unsafe or unsound practices. Sec. 197.10..... Sec. 16.32.
Withdrawal or abandonment... Sec. 197.11..... Sec. 16.19.
Securities sale report...... Sec. 197.12..... ..................
Public disclosure and Sec. 197.13..... Sec. 16.17(f).
confidential treatment.
Waiver...................... Sec. 197.14.....
Requests for interpretive Sec. 197.15..... Sec. 16.30.
advice or waiver.
Delayed or continuous Sec. 197.16. ..................
offering and sale of
securities.
Sales of securities at an Sec. 197.17..... Sec. 16.10.
office of a savings
association.
Current and periodic reports Sec. 197.18. ..................
Approval of the security.... Sec. 197.19. ..................
Filing of copies of offering Sec. 197.21. ..................
circulars in certain exempt
offerings.
Form for Securities Sale Sec. 197, ..................
Report (Appendix A). Appendix A.
------------------------------------------------------------------------
[[Page 8103]]
List of Subjects
12 CFR Part 5
Administrative practice and procedure, Federal savings
associations, National banks, Reporting and recordkeeping requirements,
Securities.
12 CFR Part 7
Computer technology, Credit, Insurance, Investments, Federal
savings associations, National banks, Reporting and recordkeeping
requirements, Securities, Surety bonds.
12 CFR Part 8
Assessments, National banks, Reporting and recordkeeping
requirements, Savings associations.
12 CFR Part 9
Estates, Investments, National banks, Reporting and recordkeeping
requirements, Trusts and trustees.
12 CFR Part 10
Federal savings associations, National banks, Reporting and
recordkeeping requirements, Securities.
12 CFR Part 11
Confidential business information, Federal savings associations,
National banks, Reporting and recordkeeping requirements, Securities.
12 CFR Part 12
National banks, Reporting and recordkeeping requirements,
Securities.
12 CFR Part 16
Federal savings associations, National banks, Reporting and
recordkeeping requirements, Securities.
12 CFR Part 18
National banks, Reporting and recordkeeping requirements.
12 CFR Part 31
Credit, Federal savings associations, National banks, Reporting and
recordkeeping requirements.
12 CFR Part 150
Administrative practice and procedure, Reporting and recordkeeping
requirements, Federal savings associations, Trusts and trustees.
12 CFR Part 151
Reporting and recordkeeping requirements, Federal savings
associations, Securities, Trusts and trustees.
12 CFR Part 155
Accounting, Consumer protection, Electronic funds transfers,
Reporting and recordkeeping requirements, Federal savings associations.
12 CFR Part 162
Accounting, Reporting and recordkeeping requirements, Federal
savings associations.
12 CFR Part 163
Accounting, Administrative practice and procedure, Advertising,
Conflict of interests, Crime, Currency, Investments, Mortgages,
Reporting and recordkeeping requirements, Savings associations,
Securities.
12 CFR Part 193
Accounting, Federal savings associations, Securities.
12 CFR Part 194
Authority delegations (Government agencies), Reporting and
recordkeeping requirements.
12 CFR Part 197
Reporting and recordkeeping requirements, Federal savings
associations, Securities.
For the reasons set forth in the preamble, and under the authority
of 12 U.S.C. 93a and 5412(b)(2)(B), chapter I of title 12 of the Code
of Federal Regulations is amended as follows:
PART 5--RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES
0
1. The authority citation for part 5 continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 24a, 93a, 215a-2, 215a-3, 481,
1462a, 1463, 1464, 2901 et seq., 3907, and 5412(b)(2)(B).
Sec. 5.8 [Amended]
0
2. Section 5.8 is amended in paragraph (b) by:
0
a. Adding the phrase ``(if known at the time of publication of the
notice)'' after the phrase ``the closing date of the public comment
period''; and
0
b. Adding the phrase ``that the public may find information about the
filing (including the closing date of the comment period) in the OCC's
Weekly Bulletin available at www.occ.gov,'' before the phrase ``and any
other information that the OCC requires''.
0
3. Section 5.20 is amended by:
0
a. Adding a sentence at the end of paragraph (b);
0
b. Adding a sentence at the end of paragraph (c);
0
c. Redesignating the text in paragraph (l) as paragraph (l)(1) and
adding a heading to newly redesignated paragraph (l)(1); and
0
d. Adding paragraph (l)(2).
The revisions and additions read as follows:
Sec. 5.20 Organizing a national bank or Federal savings association.
* * * * *
(b) * * * An existing national bank or Federal savings association
desiring to change the purpose of its charter shall submit an
application and obtain prior OCC approval.
(c) * * * This section also describes the requirements for an
existing national bank or Federal savings association to change the
purpose of its charter and refers such institutions to Sec. 5.53 for
the procedures to follow.
* * * * *
(l) Special purpose institutions--(1) In general. * * *
(2) Changes in charter purpose. An existing national bank or
Federal savings association whose activities are limited to a special
purpose that desires to change to another special purpose, to add
another special purpose, or to no longer be limited to a special
purpose charter shall submit an application and obtain prior OCC
approval under Sec. 5.53. An existing national bank or Federal savings
association whose activities are not limited that desires to limit its
activities and become a special purpose institution shall submit an
application and obtain prior OCC approval under Sec. 5.53.
Sec. 5.21 [Amended]
0
4. Section 5.21 is amended by:
0
a. In paragraph (j)(3)(i)(B), removing the phrase ``paragraph (j)(2)''
and adding in its place the phrase ``paragraph (j)(3)'';
0
b. In paragraph (j)(3)(ii), removing the phrase ``paragraph
(j)(2)(i)(A)'' and adding in its place the phrase ``paragraph
(j)(3)(i)(A)'';
0
c. In paragraph (j)(3)(iii):
0
i. Removing the phrase ``main office'' and adding in its place the
phrase ``home office''; and
0
ii. Removing the phrase ``paragraph (j)(2)(i)(A)'' wherever it appears
and adding in its place the phrase ``paragraph (j)(3)(i)(A)''; and
0
d. In paragraph (j)(4):
0
i. Removing the phrase ``paragraph (j)(2)(ii)'' and adding in its place
the phrase ``paragraph (j)(3)(ii)''; and
0
ii. Removing the phrase ``paragraph (j)(2)(i)'' and adding in its place
the phrase ``paragraph (j)(3)(i)''.
Sec. 5.22 [Amended]
0
5. Section 5.22 is amended in paragraph (j)(2)(iii) by removing the
phrase ``main office'' and adding in its place the phrase ``home
office''.
Sec. 5.33 [Amended]
0
6. Section 5.33 is amended by:
[[Page 8104]]
0
a. In paragraph (i), removing the phrase ``the 45th day after the
application is received by the OCC, or the 15th day after the close of
the comment period, whichever is later,'' and adding in its place the
phrase ``the 15th day after the close of the comment period,'';
0
b. In paragraph (n)(2)(iii) introductory text, removing the phrase
``mutually held savings association,'' and adding in its place the
phrase ``mutually held depository institution that is insured by the
FDIC,'';
0
c. In paragraph (n)(2)(iii)(B), adding the phrase ``or a similar
transaction under state law'' at the end of the sentence; and
0
d. In paragraph (o)(3)(i), removing the phrase ``paragraph (n)(3)'' and
adding in its place the phrase ``paragraph (o)(3)''.
Sec. 5.45 [Amended]
0
7. Section 5.45 is amended in paragraph (g)(4)(i) introductory text by
removing the word ``After'' and adding in its place the phrase ``If
prior approval is required pursuant to this paragraph (g), after''.
0
8. Section 5.46 is amended by adding paragraph (i)(6) to read as
follows:
Sec. 5.46 Changes in permanent capital of a national bank.
* * * * *
(i) * * *
(6) Exception for accounting adjustments. (i) Changes to the
permanent capital accounts that result solely from application of U.S.
generally accepted accounting principles are not subject to the prior
approval or notice requirements in paragraph (i)(1), (3), or (4) of
this section, as applicable.
(ii) Within 30 days after the end of the quarter in which the
adjustment occurred, a bank must notify the OCC if the accounting
adjustment resulted in an increase or decrease to permanent capital in
an amount greater than 5% of the bank's total permanent capital prior
to the adjustments; or, if the bank is subject to a letter, order,
directive, written agreement, or otherwise related to changes in
permanent capital. The notification must include the amount and
description of the adjustment, including the applicable provision of
U.S. GAAP.
* * * * *
Sec. 5.48 [Amended]
0
9. Section 5.48 is amended in paragraph (e)(2)(ii) by removing the word
``supervisory''.
Sec. 5.50 [Amended]
0
10. Section 5.50 is amended in paragraph (f)(2)(ii)(E) by removing
``Sec. 192.2(a)(39)'' and adding in its place ``Sec. 192.25''.
0
11. Section 5.53 is amended by:
0
a. Removing the word ``or'' at the end of paragraph (c)(1)(iii);
0
b. Removing the period at the end of paragraph (c)(1)(iv) and adding in
its place ``; or''; and
0
c. Adding a paragraph (c)(1)(v); and
0
d. Revising paragraph (d)(3)(ii).
The addition and revision read as follows:
Sec. 5.53 Substantial asset change by a national bank or Federal
savings association.
* * * * *
(c) * * *
(1) * * *
(v) Any change in the purpose of the charter of the national bank
or Federal savings association as described in Sec. 5.20(l)(2).
(d) * * *
(3) * * *
(ii) Additional factors. The OCC's review of any substantial asset
change that involves the purchase or other acquisition or other
expansions of the bank's or savings association's operations or that
involves a change in the purpose of the bank's or association's
charter, as described in Sec. 5.20(l)(2), will include, in addition to
the foregoing factors, the factors governing the organization of a bank
or savings association under Sec. 5.20.
* * * * *
0
12. Section 5.66 is amended by adding a sentence between the first and
second sentences to read as follows:
Sec. 5.66 Dividends payable in property other than cash.
* * * A national bank shall submit a request for prior approval of
a noncash dividend to the appropriate OCC licensing office. * * *
PART 7--ACTIVITIES AND OPERATIONS
0
13. The authority citation for part 7 is revised to read as follows:
Authority: 12 U.S.C. 1 et seq., 25b, 29, 71, 71a, 92, 92a, 93,
93a, 95(b)(1), 371, 371d, 481, 484, 1463, 1464, 1465, 1818, 1828(m)
and 5412(b)(2)(B).
0
14. Section 7.2008 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 7.2008 Oath of directors.
* * * * *
(b) Execution of the oath. Each director shall execute either a
joint or individual oath at the first meeting of the board of directors
that the director attends after the director is appointed or elected. A
director shall take another oath upon re-election, notwithstanding
uninterrupted service. Appropriate sample oaths may be found in the
Charter Booklet of the Comptroller's Licensing Manual available at
www.occ.gov.
(c) Filing and recordkeeping. A national bank must file the
original executed oaths of directors with the appropriate OCC licensing
office, as defined in 12 CFR 5.3(c), and retain a copy in the bank's
records.
0
15. Section 7.2013 is amended by:
0
a. Revising paragraph (a) and paragraph (b) introductory text; and
0
b. In paragraph (b)(4), by adding the phrase ``or savings association''
after the word ``bank''.
The revisions read as follows:
Sec. 7.2013 Fidelity bonds covering officers and employees.
(a) Adequate coverage. All officers and employees of a national
bank or Federal savings association must have adequate fidelity bond
coverage. The failure of directors to require bonds with adequate
sureties and in sufficient amount may make the directors liable for any
losses that the bank or savings association sustains because of the
absence of such bonds. Directors should not serve as sureties on such
bonds. Directors should consider whether agents who have access to
assets of the bank or savings association should also have fidelity
bond coverage.
(b) Factors. The board of directors of the national bank or Federal
savings association, or a committee thereof, must determine the amount
of such coverage, premised upon a consideration of factors, including:
* * * * *
PART 8--ASSESSMENT OF FEES
0
16. The authority citation for part 8 is revised to read as follows:
Authority: 12 U.S.C. 16, 93a, 481, 482, 1467, 1831c, 1867, 3102,
3108, and 5412(b)(2)(B); and 15 U.S.C. 78c and 78l.
0
17. Section 8.6 is amended by revising paragraph (c)(3)(iv) to read as
follows:
Sec. 8.6 Fees for special examinations and investigations.
* * * * *
(c) * * *
(3) * * *
(iv) Full-service Federal savings association is a Federal savings
association that generates more than 50% of its interest and non-
interest income from activities other than credit card operations or
trust activities and is authorized according to its charter to engage
in all types of activities
[[Page 8105]]
permissible for Federal savings associations.
* * * * *
PART 9--FIDUCIARY ACTIVITIES OF NATIONAL BANKS
0
18. The authority citation for part 9 continues to read as follows:
Authority: 12 U.S.C. 24 (Seventh), 92a, and 93a; 15 U.S.C. 78q,
78q-1, and 78w.
0
19. Section 9.13 is amended by adding a sentence at the end of
paragraph (a) to read as follows:
Sec. 9.13 Custody of fiduciary assets.
(a) * * * A bank that is deemed a fiduciary based solely on its
capacity as investment advisor, as that capacity is defined in Sec.
9.101(a), and has no other fiduciary capacity as enumerated in Sec.
9.2(e) is not required to serve as custodian when offering those
fiduciary services.
* * * * *
Sec. 9.14 [Amended]
0
20. Section 9.14 is amended in paragraph (a) by adding the phrase ``or
Federal Home Loan Bank'' after the phrase ``with the Federal Reserve
Bank''.
0
21. Section 9.18 is amended:
0
a. In paragraph (b)(1) by revising the second sentence; and
0
b. In paragraph (c)(2) by:
0
i. Removing ``$1,000,000'' and adding in its place ``$1,500,000''; and
0
ii. Adding a sentence at the end.
The revision and addition reads as follows:
Sec. 9.18 Collective investment funds.
* * * * *
(b) * * *
(1) * * * The bank shall make a copy of the Plan available either
for public inspection at its main office during all banking hours or on
its Web site and shall provide a written or electronic copy of the Plan
to any person who requests it. * * *
* * * * *
(c) * * *
(2) * * * The OCC shall adjust this $1,500,000 threshold amount on
January 1 of every year by the percentage increase in the Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that
was in effect on the preceding June 1, rounded to the nearest $100
increment, and make this adjusted amount available to the public.
* * * * *
PART 10--MUNICIPAL SECURITIES DEALERS
0
22. The authority citation for part 10 is revised to read as follows:
Authority: 12 U.S.C. 93a, 481, 1462a, 1463, 1464(c), 1818, and
5412(b)(2)(B); 15 U.S.C. 78o-4(c)(5) and 78q-78w.
0
23. Amend Sec. 10.1 by:
0
a. Adding the phrase ``or Federal savings association'' after the word
``bank'', wherever it appears;
0
b. In paragraph (b), removing the phrase ``to be'' and adding in its
place the phrase ``will be'';
0
c. In paragraph (b), removing footnote 1; and
0
d. Adding a sentence at the end of paragraph (b).
The addition reads as follows.
Sec. 10.1 Scope.
* * * * *
(b) * * * MSRB rules may be obtained at www.msrb.org.
Sec. 10.2 [Amended]
0
24. Amend Sec. 10.2 by:
0
a. In paragraph (a):
0
i. Adding ``or Federal savings association'' after the phrase
``national bank'', wherever it appears; and
0
ii. Removing the phrase ``Rule G-7(b)(i)-(x)'' and adding in its place
the phrase ``Rule G-7(b)'';
0
b. In paragraph (b):
0
i. Removing the word ``must'' and adding in its place the phrase ``or
Federal savings association shall''; and
0
ii. Removing the phrase ``the bank as a municipal'' and adding in its
place the phrase ``the national bank or Federal savings association as
a municipal''; and
0
c. In paragraph (c), removing the phrase ``by contacting the OCC at 400
7th Street, SW., Washington, DC 20219, Attention: Bank Dealer
Activities'' and adding in its place ``at http://www.banknet.gov/''.
PART 11--SECURITIES EXCHANGE ACT DISCLOSURE RULES
0
25. The authority citation for part 11 is revised to read as follows:
Authority: 12 U.S.C. 93a, 1462a, 1463, 1464 and 5412(b)(2)(B);
15 U.S.C. 78j-1(m), 78m, 78n, 78p, 78w, 78l, 7241, 7242, 7243, 7244,
7261, 7262, 7264, and 7265.
0
26. Section 11.1 is revised to read as follows:
Sec. 11.1 Authority.
The Office of the Comptroller of the Currency (OCC) is vested with
the powers, functions, and duties otherwise vested in the Securities
and Exchange Commission (SEC) to administer and enforce the provisions
of sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of the
Securities Exchange Act of 1934, as amended (Exchange Act) (15 U.S.C.
78j-1(m), 78l, 78m, 78n(a), 78n(c), 78n(d), 78n(f), and 78p), and
sections 302, 303, 304, 306, 401(b), 404, 406, and 407 of the Sarbanes-
Oxley Act of 2002 (Sarbanes-Oxley Act), as amended (15 U.S.C. 7241,
7242, 7243, 7244, 7261, 7262, 7264, and 7265), for national banks and
Federal savings associations with one or more classes of securities
subject to the registration provisions of sections 12(b) and (g) of the
Exchange Act (registered national banks or registered Federal savings
associations). Further, the OCC has general rulemaking authority under
12 U.S.C. 93a, 1462a, 1463, and 1464, to promulgate rules and
regulations concerning the activities of national banks and Federal
savings associations.
0
27. Section 11.2 is revised to read as follows:
Sec. 11.2 Reporting requirements for registered national banks and
Federal savings associations.
(a) Filing, disclosure and other requirements--(1) General. Except
as otherwise provided in this section, a national bank or Federal
savings association whose securities are subject to registration
pursuant to section 12(b) or section 12(g) of the Exchange Act (15
U.S.C. 78l(b) and (g)) shall comply with the rules, regulations, and
forms adopted by the SEC pursuant to:
(i) Sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of
the Exchange Act (15 U.S.C. 78j-1(m), 78l, 78m, 78n(a), (c), (d) and
(f), and 78p); and
(ii) Sections 302, 303, 304, 306, 401(b), 404, 406, and 407 of the
Sarbanes-Oxley Act (codified at 15 U.S.C. 7241, 7242, 7243, 7244, 7261,
7262, 7264, and 7265).
(2) [Reserved]
(b) References to the Securities Exchange Commission, SEC, or
Commission. Any references to the ``Securities and Exchange
Commission,'' the ``SEC,'' or the ``Commission'' in the rules,
regulations and forms described in paragraph (a)(1) of this section
with respect to securities issued by registered national banks or
registered Federal savings associations shall be deemed to refer to the
OCC unless the context otherwise requires.
(c) References to registration requirements. For national banks and
Federal savings associations, any references to registration
requirements under the Securities Act of 1933 and its accompanying
rules in the rules, regulations, and forms described in paragraph
(a)(1) of this section mean the
[[Page 8106]]
registration requirements in 12 CFR part 16.
(d) Emerging growth company eligibility--(1) General. A national
bank or Federal savings association that meets the criteria to qualify
as an emerging growth company under section 3(a)(80) of the Exchange
Act (15 U.S.C. 78c(a)(80)) shall be eligible for treatment as an
emerging growth company for purposes of any rule, regulation or form
described in paragraph (a)(1) of this section, except as provided in
paragraph (d)(3) of this section.
(2) Opt-in right. With respect to an exemption provided to a
national bank or Federal savings association that is an emerging growth
company under this part, the bank or savings association may choose to
forgo such exemption and instead comply with the requirements that
apply to a bank or savings association that is not an emerging growth
company.
(3) Exclusions. A national bank or Federal savings association that
otherwise meets the definition of emerging growth company in section
3(a)(80) of the Exchange Act (15 U.S.C. 78c(a)(80)) shall not be
considered an emerging growth company for purposes of this part if:
(i) The first sale of its common equity securities pursuant to an
effective registration statement or offering circular occurred on or
before December 8, 2011; or
(ii) It has reached the last day of its fiscal year following the
fifth anniversary of the date of the first sale of its common equity
securities pursuant to an effective registration statement or offering
circular.
0
28. Section 11.3 is amended by:
0
a. Revising paragraphs (a)(1) and (a)(3)(i) and the heading to
paragraph (a)(3)(ii);
0
b. Adding a paragraph (a)(3)(iii);
0
c. Removing paragraph (a)(4); and
0
d. Removing the phrase ``, at the address listed in paragraph (a) of
this section'' in paragraph (b) and adding in its place the phrase ``,
at the address listed on www.occ.gov.''.
The revisions read as follows:
Sec. 11.3 Filing requirements and inspection of documents.
(a) Filing requirements--(1)(i) In general. Except as otherwise
provided in this section, all papers required to be filed with the OCC
pursuant to the Exchange Act or regulations thereunder shall be
submitted to the Securities and Corporate Practices Division of the OCC
electronically at http://www.banknet.gov/. Documents may be signed
electronically using the signature provision in SEC Rule 12b-11 (17 CFR
240.12b-11).
(ii) Electronic filing exception. If a national bank or Federal
savings association experiences unanticipated technical difficulties
preventing the timely preparation and submission of an electronic
filing, other than the filings described in paragraph (a)(3)(ii) of
this section, the bank may, upon notice to the OCC's Securities and
Corporate Practices Division, file the subject filing in paper format
no later than one business day after the date on which the filing was
to be made. Paper filings should be submitted to the Securities and
Corporate Practices Division, Office of the Comptroller of the Currency
at the address provided at www.occ.gov.
* * * * *
(3) Date of filing--(i) General. The date of filing is the date the
OCC receives the filing, provided the person, bank, or savings
association submitting the filing has complied with all applicable
requirements. An electronic filing that is submitted on a business day
by direct transmission commencing on or before 5:30 p.m. Eastern
Standard or Daylight Savings Time, whichever is currently in effect,
would be deemed received by the OCC on the same business day. An
electronic filing that is submitted by direct transmission commencing
after 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is
currently in effect, or on a Saturday, Sunday, or Federal holiday,
would be deemed received by the OCC on the next business day.
(ii) Beneficial ownership filings. * * *
(iii) Adjustment of filing date. If an electronic filer in good
faith attempts to file a document pursuant to this part in a timely
manner but the filing is delayed due to technical difficulties beyond
the electronic filer's control, the electronic filer may request that
the OCC adjust the filing date of such document. The OCC may grant the
request if it appears that such adjustment is appropriate and
consistent with the public interest and the protection of investors.
* * * * *
0
29. Section 11.4 is amended by revising paragraph (b) to read as
follows:
Sec. 11.4 Filing fees.
* * * * *
(b) Fees must be paid by check payable to the Comptroller of the
Currency or by other means acceptable to the OCC.
PART 12--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES
TRANSACTIONS
0
30. The authority citation for part 12 continues to read as follows:
Authority: 12 U.S.C. 24, 92a, and 93a.
Sec. 12.1 [Amended]
0
31. Section 12.1 is amended:
0
a. In paragraph (c)(1) by removing the phrase ``Securities and Exchange
Commission'' and adding in its place the phrase ``Securities and
Exchange Commission (SEC)''; and
0
b. By removing the phrase ``Securities and Exchange Commission'' in
paragraph (c)(2)(iii) and the phrase ``Securities and Exchange
Commission (SEC)'' in paragraph (c)(2)(v) and adding ``SEC'' in their
place.
0
32. Section 12.2 is amended by:
0
a. In paragraph (g)(3), removing the phrase ``Securities and Exchange
Commission'' and adding in its place ``SEC''; and
0
b. Revising paragraph (i)(3).
The revision reads as follows.
Sec. 12.2 Definitions.
* * * * *
(i) * * *
(3) A security that is an industrial development bond.
* * * * *
0
33. Section 12.3 is amended by adding a sentence at the end of
paragraph (b) to read as follows:
Sec. 12.3 Recordkeeping.
* * * * *
(b) * * * A national bank may contract with a third-party service
provider to maintain the records, provided that the bank maintains
effective oversight of the third-party service provider to ensure the
records meet the requirements of this section.
0
34. Section 12.4 is amended by revising paragraph (b) to read as
follows:
Sec. 12.4 Content and time of notification.
* * * * *
(b) Copy of the registered broker/dealer's confirmation. A copy of
the confirmation of a registered broker/dealer relating to the
securities transaction, which the bank may direct the registered
broker/dealer to send directly to the customer; and, if the customer or
any other source will provide remuneration to the bank in connection
with the transaction and a written agreement between the bank and the
customer does not determine the remuneration, a statement of the source
and amount of any remuneration that the customer or any other source is
to provide the bank.
[[Page 8107]]
Sec. 12.7 [Amended]
0
35. Section 12.7(d) is amended by removing the phrase ``Securities and
Exchange Commission (SEC)'' adding in its place ``SEC''.
Sec. 12.9 [Amended]
0
36. Section 12.9(b)(2) is amended by removing the phrase ``Securities
and Exchange Commission (SEC)'' and adding in their place ``SEC''.
Sec. Sec. 12.101 through 12.102 [Removed]
0
37. The undesignated center heading ``Interpretations'' and Sec. Sec.
12.101 and12.102 are removed.
PART 16--SECURITIES OFFERING DISCLOSURE RULES
0
38. The authority citation for part 16 is revised to read as follows:
Authority: 12 U.S.C. 1 et seq., 93a, 1462a, 1463, 1464, and
5412(b)(2)(B).
0
39. Section 16.1 is amended by:
0
a. Revising paragraph (a); and
0
b. In paragraphs (b) and (c), removing the word ``bank'' wherever it
appears and adding in its place the phrase ``national bank or Federal
savings association''.
The revision reads as follows:
Sec. 16.1 Authority, purpose, and scope.
(a) Authority. This part is issued under the rulemaking authority
of the Comptroller of the Currency (OCC) for national banks in 12
U.S.C. 1 et seq., and 93a, and for Federal savings associations in 12
U.S.C. 1462a, 1463, 1464, and 5412(b)(2)(B).
* * * * *
0
40. Section 16.2 is amended by:
0
a. In paragraph (a), removing the phrase ``Commission Rule'' and adding
in its place ``SEC Rule'';
0
b. Removing paragraphs (b), (c), and (j) and redesignating paragraphs
(d) through (f) as paragraphs (b) through (d), respectively;
redesignating paragraphs (g) and (h) as paragraphs (f) and (g),
respectively; and redesignating paragraphs (k) through (n) as
paragraphs (j) through (m), respectively;
0
c. In newly designated paragraph (b), removing ``2(12)'' and
``77b(12))'' and adding ``2(a)(12)'' and ``77b(a)(12))'', respectively,
in their places;
0
d. In newly redesignated paragraph (c), removing ``78a through 78jj''
and adding ``78a et seq.'' in its place;
0
e. Adding new paragraphs (e), (h), and (n);
0
f. In newly redesignated paragraph (g) and paragraph (i), removing the
word ``bank'' and adding in its place the phrase ``national bank or
Federal savings association'';
0
g. In newly redesignated paragraph (j):
0
i. Removing ``2(2)'' and ``77b(2))'' and adding ``2(a)(2)'' and
``77b(a)(2))'', respectively, in their places; and
0
ii. Removing the word ``bank'' and adding in its place the phrase
``national bank and a Federal savings association'';
0
h. In newly redesignated paragraph (m), removing ``2(3)'' and
``77b(3))'' and adding ``2(a)(3)'' and ``77b(a)(3))'', respectively, in
their places;
0
i. In paragraph (o), removing ``through 77aa'' and adding ``et seq.''
in its place;
0
j. In paragraph (p), removing ``2(1)'' and ``77b(1))'' and adding
``2(a)(1)'' and ``77b(a)(1))'', respectively, in their places; and
0
k. In paragraph (q):
0
i. Removing ``77b(11))'' and adding ``77b(a)(11))'' in its place;
0
ii. Removing ``2(11)'' wherever it appears and adding ``2(a)(11)'' in
its place; and
0
iii. Removing the phrase ``Commission Rules'' and adding in its place
``SEC Rules''.
The additions read as follows:
Sec. 16.2 Definitions.
* * * * *
(e) Federal savings association means an existing Federal savings
association chartered under section 5 of the Home Owners' Loan Act
(HOLA) (12 U.S.C. 1464 et seq.) or a Federal savings association in
organization.
* * * * *
(h) National bank means an existing national bank, a national bank
in organization, or a Federal branch or agency of a foreign bank.
* * * * *
(n) SEC means the Securities and Exchange Commission. When used in
the rules, regulations, or forms of the SEC referred to in this part,
the term ``SEC'' shall be deemed to refer to the OCC.
* * * * *
Sec. 16.3 [Amended]
0
41. Section 16.3 is amended by:
0
a. In paragraphs (a) introductory text and (b) introductory text,
removing the word ``bank'' and adding in its place the phrase
``national bank or Federal savings association''; and
0
b. In paragraph (c):
0
i. Removing ``Commission Rule'' and adding in its place ``SEC Rule'';
0
ii. Removing the citation ``section 4(3)'' and adding in its place the
citation ``section 4(a)(3)''; and
0
iii. Removing the word ``bank'' and adding in its place the phrase
``national bank and Federal savings association''.
Sec. 16.4 [Amended]
0
42. Section 16.4 is amended by removing the phrase ``Commission Rule''
and adding in its place the phrase ``SEC Rule'' wherever it occurs.
0
43. Section 16.5 is amended by:
0
a. Revising the introductory text and paragraphs (a), (b), and (e);
0
b. In paragraph (f), removing the phrase ``Commission Rule'' and adding
in its place the phrase ``SEC Rule''; and
0
c. In paragraph (g), removing the phrase ``Commission Regulation'' and
adding in its place the phrase ``SEC Regulation''.
The revisions read as follows.
Sec. 16.5 Exemptions.
The registration statement and prospectus requirements of Sec.
16.3 do not apply to an offer or sale of national bank or Federal
savings association securities:
(a) If the securities are exempt from registration under section 3
of the Securities Act (15 U.S.C. 77c), but only by reason of an
exemption other than section 3(a)(2) (exemption for bank securities),
section 3(a)(5) (exemption for savings association securities), section
3(a)(11) (exemption for intrastate offerings), and section 3(a)(12)
(exemption for bank holding company formation) of the Securities Act.
(b) In a transaction exempt from registration under section 4 of
the Securities Act (15 U.S.C. 77d). SEC Rules 152 and 152a (17 CFR
230.152 and 230.152a) (which apply to sections 4(a)(2) and 4(a)(1) of
the Securities Act) apply to this part;
* * * * *
(e) In a transaction that satisfies the requirements of SEC Rule
144, 144A, or 236 (17 CFR 230.144, 230.144A, or 230.236);
* * * * *
0
44. Section 16.6 is amended by:
0
a. In paragraph (a) introductory text, removing the word ``bank'' and
adding in its place the phrase ``national bank or Federal savings
association'';
0
b. Revising paragraphs (a)(1) and (5);
0
c. In paragraph (a)(3), removing the word ``bank'' and adding in its
place the phrase ``national bank or Federal savings association''; and
0
d. In paragraph (b), removing the phrase ``Commission Rule'' and adding
in its place the phrase ``SEC Rule'', wherever it appears.
The revisions read as follows:
Sec. 16.6 Sales of nonconvertible debt.
(a) * * *
(1) The national bank or Federal savings association issuing the
debt has securities registered under the Exchange Act or is a
subsidiary of a holding
[[Page 8108]]
company that has securities registered under the Exchange Act;
* * * * *
(5) Prior to or simultaneously with the sale of the debt, each
purchaser receives an offering document that contains a description of
the terms of the debt, the use of proceeds, and method of distribution,
and incorporates the national bank's or Federal savings association's
latest Consolidated Reports of Condition and Income (Call Report) and
the national bank's, Federal savings association's, or the holding
company's Forms 10-K, 10-Q, and 8-K (17 CFR part 249) filed under the
Exchange Act; and
* * * * *
Sec. 16.7 [Amended]
0
45. Section 16.7 is amended by:
0
a. Removing the phrase ``Commission Regulation'' and adding in its
place the phrase ``SEC Regulation'', wherever it appears;
0
b. In paragraphs (a) introductory text, removing the word ``bank'' and
adding in its place the phrase ``national bank or Federal savings
association'';
0
c. In paragraph (b):
0
i. Removing the word ``bank'' and adding in its place the phrase
``national bank or Federal savings association''; and
0
ii. Removing the phrase ``Commission Rule'' and adding in its place the
phrase ``SEC Rule''; and
0
d. In paragraph (c), removing the word ``bank'' and adding in its place
the phrase ``national bank or Federal savings association''.
Sec. 16.8 [Amended]
0
46. Section 16.8 is amended:
0
a. By removing the phrase ``Commission Regulation'' and adding in its
place the phrase ``SEC Regulation'', wherever it appears;
0
b. In paragraph (a), by removing the word ``bank'' and adding in its
place the phrase ``national bank or Federal savings association''; and
0
c. In paragraph (b), by removing the word ``Commission's'' and adding
in its place the word ``SEC's''.
0
47. Section 16.9 is amended by:
0
a. Revising paragraph (a); and
0
b. In the introductory text and paragraphs (b) through (d), removing
the word ``bank'' and adding in its place the phrase ``national bank or
Federal savings association'', wherever it appears.
The revision reads as follows:
Sec. 16.9 Securities offered and sold in holding company
dissolution.
* * * * *
(a) The offer and sale of national bank or Federal savings
association issued securities occurs solely as part of a dissolution in
which the security holders exchange their shares of stock in a holding
company that had no significant assets other than securities of the
bank or savings association, for bank or savings association stock;
* * * * *
0
48. Section 16.10 is added to read as follows:
Sec. 16.10 Sales of securities at an office of a Federal savings
association.
Sales of securities of a Federal savings association or its
affiliates at an office of a Federal savings association may be made
only in accordance with the provisions of 12 CFR 163.76. For the
purpose of this section, ``affiliate'' has the same meaning as in 12
CFR 161.4.
Sec. 16.15 [Amended]
0
49. Section 16.15 is amended by:
0
a. In paragraph (a):
0
i. Removing the word ``Commission's'' and adding in its place the word
``SEC's'';
0
ii. Removing the phrase ``Commission regulations'' and adding in its
place the phrase ``SEC regulations''; and
0
iii. Removing the word ``bank'' and adding in its place the phrase
``national bank or Federal savings association'';
0
b. In paragraph (b), removing the phrase ``Commission Regulation'' and
adding in its place the phrase ``SEC Regulation'';
0
c. In paragraph (d), removing the word ``bank'' and adding in its place
the phrase ``national bank or Federal savings association''; and
0
d. In paragraph (e), adding the phrase ``or Federal savings
association'' after the word ``bank'', wherever it appears.
Sec. 16.16 [Amended]
0
50. Section 16.16 is amended in paragraph (a) by removing the phrase
``Commission Regulation'' and adding in its place the phrase ``SEC
Regulation''.
0
51. Section 16.17 is revised to read as follows:
Sec. 16.17 Filing requirements and inspection of documents.
(a) Except as otherwise provided in this section, all registration
statements, offering documents, amendments, notices, or other documents
must be filed with the OCC's Securities and Corporate Practices
Division electronically at http://www.banknet.gov/. Documents may be
signed electronically using the signature provision in SEC Rule 402 (17
CFR 230.402).
(b) All registration statements, offering documents, amendments,
notices, or other documents relating to a national bank or Federal
savings association in organization must be filed with the appropriate
district office of the OCC at http://www.banknet.gov/.
(c) Where this part refers to a section of the Securities Act or
the Exchange Act or an SEC rule that requires the filing of a notice or
other document with the SEC, that notice or other document must be
filed with the OCC.
(d) Provided the person filing the document has complied with all
requirements regarding the filing, including the submission of any fee
required under Sec. 16.33, the date of filing of the document is the
date the OCC receives the filing. An electronic filing that is
submitted on a business day by direct transmission commencing on or
before 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever
is currently in effect, would be deemed received by the OCC on the same
business day. An electronic filing that is submitted by direct
transmission commencing after 5:30 p.m. Eastern Standard or Daylight
Savings Time, whichever is currently in effect, or on a Saturday,
Sunday, or Federal holiday, would be deemed received by the OCC on the
next business day. If an electronic filer in good faith attempts to
file a document with the OCC in a timely manner but the filing is
delayed due to technical difficulties beyond the electronic filer's
control, the electronic filer may request that the OCC adjust the
filing date of such document. The OCC may grant the request if it
appears that such adjustment is appropriate and consistent with the
public interest and the protection of investors.
(e) Notwithstanding paragraph (d) of this section, any registration
statement or any post-effective amendment thereto filed pursuant to SEC
Rule 462(b) (17 CFR 230.462(b)) shall be deemed received by the OCC on
the same business day if its submission commenced on or before 10 p.m.
Eastern Standard Time or Eastern Daylight Savings Time, whichever is
currently in effect, and on the next business day if its submission
commenced after 10 p.m. Eastern Standard or Daylight Savings Time,
whichever is currently in effect, or any time on a Saturday, Sunday, or
Federal holiday.
(f) If a national bank or Federal savings association experiences
unanticipated technical difficulties preventing the timely preparation
and submission of an electronic filing, the bank or savings association
may, upon notice to the OCC's Securities and
[[Page 8109]]
Corporate Practices Division or district office, as appropriate, file
the subject filing in paper format no later than one business day after
the date on which the filing was to be made. Paper filings should be
submitted to the OCC's Securities and Corporate Practices Division or
appropriate district office, at the address provided at www.occ.gov.
(g) Any filing of amendments or revisions must include two copies,
one of which must be marked to indicate clearly and precisely, by
underlining or in some other appropriate manner, the changes made.
(h) The OCC will make available for public inspection copies of the
registration statements, offering documents, amendments, exhibits,
notices or reports filed pursuant to this part at the address
identified in Sec. 4.14 of this chapter.
0
52. Section 16.30 is amended by revising paragraph (a) to read as
follows:
Sec. 16.30 Request for interpretive advice or no-objection letter.
* * * * *
(a) File a copy of the request, including any supporting
attachments, with the OCC's Securities and Corporate Practices Division
at the address provided at www.occ.gov;
* * * * *
0
53. Section 16.32 is amended:
0
a. By revising the section heading;
0
b. In paragraphs (a) introductory text and (a)(3), removing the word
``bank'' and adding in its place the phrase ``national bank or Federal
savings association''; and
0
c. In paragraph (d), removing the phrase ``Commission Rule'' and adding
in its place the phrase ``SEC Rule''.
The revision reads as follows.
Sec. 16.32 Fraudulent transactions and unsafe or unsound practices.
* * * * *
0
54. Section 16.33 is revised to read as follows:
Sec. 16.33 Filing fees.
(a) The OCC may require filing fees to accompany certain filings
made under this part before it will accept those filings. The OCC
provides an applicable fee schedule in the Notice of Comptroller of the
Currency Fees published pursuant to Sec. 8.8 of this chapter.
(b) Filing fees must be paid by check payable to the Comptroller of
the Currency or by other means acceptable to the OCC.
PART 18 [REMOVED]
0
55. Remove part 18.
PART 31--EXTENSIONS OF CREDIT TO INSIDERS AND TRANSACTIONS WITH
AFFILIATES
0
56. The authority citation for part 31 is revised to read as follows:
Authority: 12 U.S.C. 93a, 375a(4), 375b(3), 1463, 1467a(d),
1468, 1817(k), and 5412(b)(2)(B).
0
57. Section 31.1 is revised to read as follows:
Sec. 31.1 Authority.
This part is issued pursuant to 12 U.S.C. 93a, 375a(4), 375b(3),
1463, 1467a(d), 1468, 1817(k), and 5412(b)(2)(B), as amended.
Sec. 31.2 [Amended]
0
58. Section 31.2 is amended by:
0
a. In paragraph (a):
0
i. Removing the phrase ``A national bank and its'' and adding in its
place the phrase ``National banks, Federal savings associations, and
their''; and
0
ii. Adding ``(Regulation O)'' to the end of the sentence; and
0
b. In paragraph (b), adding ``, Federal savings associations,'' after
the word ``banks''.
0
59. Add Sec. 31.3 to read as follows:
Sec. 31.3 Affiliate transactions requirements.
(a) General rule. National banks and Federal savings associations
shall comply with the provisions contained in 12 CFR part 223
(Regulation W).
(b) Enforcement. The Comptroller of the Currency administers and
enforces affiliate transactions requirements as they apply to national
banks and Federal savings associations.
(c) Standard for exemptions. The OCC may, by order, exempt
transactions or relationships of a national bank or Federal savings
association from the requirements of section 23A and section 11 of the
Home Owners' Loan Act (HOLA), as applicable, and 12 CFR part 223 if:
(1) The OCC, jointly with the Federal Reserve Board, finds the
exemption to be in the public interest and consistent with the purposes
of section 23A or section 11 of the HOLA, as applicable; and
(2) The FDIC, within 60 days of receiving notice of such joint
finding, does not object in writing to the finding based on a
determination that the exemption presents an unacceptable risk to the
Deposit Insurance Fund.
(d) Procedures for exemptions. A national bank or Federal savings
association may request an exemption from the requirements of section
23A or section 11 of the HOLA, as applicable, and 12 CFR part 223 for a
national bank or Federal savings association by submitting a written
request to the Deputy Comptroller for Licensing with a copy to the
appropriate Federal Reserve Bank. Such a request must:
(1) Describe in detail the transaction or relationship for which
the national bank or Federal savings association seeks exemption;
(2) Explain why the OCC should exempt the transaction or
relationship;
(3) Explain how the exemption would be in the public interest and
consistent with the purposes of section 23A or section 11 of the HOLA,
as applicable; and
(4) Explain why the exemption does not present an unacceptable risk
to the Deposit Insurance Fund.
60. Appendix B to part 31 is amended by:
a. Revising the appendix heading and introductory note;
b. Removing the references ``part 31'', ``Part 31'', and ``Parts 31
and 32'' and adding in their place the references ``part 215'', ``Part
215'', and ``parts 32 and 215'', respectively, wherever they appear;
c. Under the heading ``Definition of `Loan or Extension of
Credit''', in the first sentence under ``Renewals'', removing the
phrase ``will be applied in the same manner'' and adding in its place
the phrase ``are equivalent''; and
d. Under the heading ``Combination/Attribution Rules'', in the
fourth sentence, under ``Loans to corporate groups'', removing the word
``until'' and adding in its place the word ``unless''.
The revisions read as follows:
Appendix B to Part 31--Comparison of Selected Provisions of Parts 32
and 215
Note: This appendix compares certain provisions of 12 CFR part
32 with those of 12 CFR part 215. As used in this appendix, the term
``bank'' refers to both national banks and Federal savings
associations.
* * * * *
PART 150--FIDUCIARY POWERS OF FEDERAL SAVINGS ASSOCIATIONS
0
61. The authority citation for part 150 continues to read as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).
0
62. Section 150.245 is added to read as follows:
Sec. 150.245 When is a fiduciary not required to maintain custody or
control of fiduciary assets?
If you are deemed a fiduciary based solely on your capacity as
investment advisor, as that capacity is defined in Sec. 9.101(a) of
this chapter, and have no other fiduciary capacity as enumerated in
Sec. 150.30, you are not required to
[[Page 8110]]
maintain custody or control of fiduciary assets as set forth in Sec.
150.220 or Sec. 150.240.
PART 151--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR
SECURITIES TRANSACTIONS
0
63. The authority citation for part 151 continues to read as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).
0
64. Section 151.40 is amended by revising paragraph (3) of the
definition of Municipal security to read as follows:
Sec. 151.40 What definitions apply to this part?
* * * * *
Municipal security * * *
(3) A security that is an industrial development bond.
* * * * *
0
65. Section 151.60 is revised to read as follows:
Sec. 151.60 How must I maintain my records?
(a) In general. The records required by Sec. 151.50 must clearly
and accurately reflect the information required and provide an adequate
basis for the audit of the information. Record maintenance may include
the use of automated or electronic records provided the records are
easily retrievable, readily available for inspection, and capable of
being reproduced in a hard copy.
(b) Use of third party. You may contract with third-party service
providers to maintain the records required by this section, provided
that you maintain effective oversight of the third-party vendor to
ensure records meet the requirements of Sec. 150.50 and this section.
0
66. Revise Sec. 151.80(b) to read as follows:
Sec. 151.80 How do I provide a registered broker-dealer
confirmation?
* * * * *
(b) Unless you have determined remuneration in a written agreement
with the customer, if you have received or will receive remuneration
from any source, including the customer, in connection with the
transaction, you must provide a statement of the source and amount of
the remuneration in addition to the registered broker-dealer
confirmation described in paragraph (a) of this section.
Sec. 151.110 [Removed]
0
67. Section 151.110 is removed.
0
68. Part 155 is revised to read as follows:
PART 155--ELECTRONIC OPERATIONS OF FEDERAL SAVINGS ASSOCIATIONS
Sec.
155.100 Scope.
155.200 Use of electronic means and facilities.
155.210 Requirements for using electronic means and facilities.
Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).
Sec. 155.100 Scope.
This part describes how a Federal savings association may provide
products and services through electronic means and facilities.
Sec. 155.200 Use of electronic means and facilities.
(a) General. A Federal savings association may use, or participate
with others to use, electronic means or facilities to perform any
function, or provide any product or service, as part of an authorized
activity. Electronic means or facilities include, but are not limited
to, automated teller machines, automated loan machines, personal
computers, the internet, telephones, and other similar electronic
devices.
(b) Other. To optimize the use of resources, a Federal savings
association may market and sell, or participate with others to market
and sell, electronic capacities and by-products to third-parties, if
the savings association acquired or developed these capacities and by-
products in good faith as part of providing financial services.
Sec. 155.210 Requirements for using electronic means and facilities.
To use electronic means and facilities under this subpart, a
Federal savings association's management must:
(a) Identify, assess, and mitigate potential risks and establish
prudent internal controls; and
(b) Implement security measures designed to ensure secure
operations. Such measures must be adequate to:
(1) Prevent unauthorized access to the savings association's
records and its customers' records;
(2) Prevent financial fraud through the use of electronic means or
facilities; and
(3) Comply with applicable security devices requirements of part
168 of this chapter.
0
69. Part 162 is revised to read as follows:
PART 162--ACCOUNTING AND DISCLOSURE STANDARDS
Sec.
162.1 Accounting and disclosure standards.
Authority: 12 U.S.C. 1463, 5412(b)(2)(B).
Sec. 162.1 Accounting and disclosure standards.
A Federal savings association shall follow U.S. generally accepted
accounting principles (GAAP) and the disclosure standards included
therein when complying with all applicable regulations, unless
otherwise required by statute, regulation, or the OCC.
PART 163--SAVINGS ASSOCIATIONS--OPERATIONS
0
70. The authority citation for part 163 continues to read as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1817, 1820, 1828,
1831o, 3806, 5101 et seq., 5412(b)(2)(B); 31 U.S.C. 5318; 42 U.S.C.
4106.
Sec. 163.41 [Removed]
0
71. Remove Sec. 163.41.
Sec. 163.43 [Removed]
0
72. Remove Sec. 163.43.
Sec. 163.161 [Removed]
0
73. Remove Sec. 163.161.
0
74. Section 163.172 is amended by:
0
a. In paragraph (a), revising the paragraph heading and removing the
word ``commitments'' and adding the word ``contracts'' in its place;
0
b. Revising paragraph (b), the heading to paragraph (c) and paragraph
(c)(1);
0
c. In paragraph (c)(2):
0
i. Removing the word ``you'' and adding in its place the phrase ``a
savings association''; and
0
ii. Removing the word ``Your'' and adding in its place the word
``The'';
0
d. In paragraphs (c)(3) introductory text and (c)(4), removing the word
``Your'' wherever it appears and adding in its place the word ``The'';
0
e. In paragraph (c)(3)(ii), removing the word ``your'' and adding in
its place the phrase ``the savings association's'';
0
f. Revising the heading to paragraph (d);
0
g. In paragraph (d)(1), removing the word ``Management'' and adding in
its place the phrase ``The management of a Federal savings
association''; and
0
h. Revising paragraph (e).
The revisions read as follows.
Sec. 163.172 Financial derivatives.
(a) Definition. * * *
(b) Permissible financial derivatives transactions. A Federal
savings association may engage in a transaction involving a financial
derivative if the savings association is authorized to invest in the
assets underlying the financial derivative, the transaction is safe and
sound, and the requirements in paragraphs (c) through (e) of this
section are met. In general, a Federal savings
[[Page 8111]]
association that engages in a transaction involving a financial
derivative should do so to reduce its risk exposure.
(c) Board of directors' responsibilities. (1) A Federal savings
association's board of directors is responsible for effective oversight
of financial derivatives activities.
* * * * *
(d) Management responsibilities. * * *
(e) Recordkeeping requirement. A Federal savings association must
maintain records adequate to demonstrate compliance with this section
and with its board of directors' policies and procedures on financial
derivatives.
Sec. 163.180 [Amended]
0
75. Section 163.180 is amended by removing and reserving paragraphs (a)
and (c).
Sec. 163.190 [Removed]
0
76. Remove Sec. 163.190.
Sec. 163.191 [Removed]
0
77. Remove Sec. 163.191.
PART 193 [REMOVED]
0
78. Remove part 193.
PART 194--[REMOVED]
0
79. Remove part 194.
PART 197 [REMOVED]
0
80. Remove part 197.
Dated: December 13, 2016.
Thomas J. Curry,
Comptroller of the Currency.
[FR Doc. 2016-30502 Filed 1-19-17; 8:45 am]
BILLING CODE P