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In June of 2004, the Securities and Exchange Commission (“the SEC”) voted to publish Proposed Regulation B (“Regulation B”), which will implement provisions of the…
In June of 2004, the Securities and Exchange Commission (“the SEC”) voted to publish Proposed Regulation B (“Regulation B”), which will implement provisions of the Gramm‐Leach‐Blily Act of 1999 (“GLBA”) that identify activities which banks may engage in without registering as brokers or dealers under The Securities and Exchange Act of 1934 (“The Exchange Act”); effectively governing the manner in which banks, savings associations and savings banks effect securities transactions. By enacting the GLBA, Congress repealed most of the remaining vestiges of the ownership restrictions that prevented banks, securities and insurance firms from combining, thereby allowing them to adopt the universal banking model through the creation of financial conglomerates known as “financial holding companies.” Proposed Regulation B (“Regulation B”) supercedes the SEC's final interim rules issued in May of 2001 with respect to banking and brokering activities. In general, banks and their regulators have found Regulation B to be far more acceptable than the final interim rules of 2001. On a practical level, Regulation B results in considerably more work for banks. This article will examine the existing law as it pertains to banks engaging in broker‐dealer activities and highlight the key provisions of Regulation B.