Code of Maine Rules
02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
029 - BUREAU OF FINANCIAL INSTITUTIONS
Chapter 122 - SECURITIES ACTIVITIES OF SUBSIDIARIES OF FINANCIAL INSTITUTIONS (Reg. 22)
Section 029-122-I - AUTHORITY
Current through 2024-38, September 18, 2024
Title 9-B M.R.S.A. Section111 declares that it is a policy of the State to supervise financial institutions in a manner to assure their strength, stability and efficiency and encourage the development and expansion of financial services advantageous to the public welfare.
Title 9-B M.R.S.A. Section131(37) grants to the Superintendent the authority to allow by regulation a service corporation to engage in any activity which has been authorized under federal law for service corporations owned or controlled by federally-chartered savings and loan associations or federally-chartered savings banks.
Title 9-B M.R.S.A. Section416 grants to the Superintendent the authority to allow by regulation a financial institution to engage in any activity which has been authorized under federal law for financial institutions chartered by or otherwise subject to the jurisdiction of the Federal Government.
The Federal Home Loan Bank Board (the "Board") by regulation has authorized service corporations of federally-chartered savings and loan associations and savings banks to engage, inter alia, in:
(1) "providing liquidity, management, investment, advisory and consulting services" primarily for financial institutions ( 12 C.F.R. Section 545.74(c)(2)(vii)); (2) "interest rate futures transactions subject to the provisions of Section 563.17-4 " ( 12 C.F.R. Section 545.74(c)(4)(vi)); and (3) "issuing notes, bonds, debentures, or other obligations or securities: ( 12 C.F.R. Section 545.74(c)(5)(iv)). The FHLBB regulations also allow service corporations to engage in activities "reasonably incident" to those provided for in the regulations and "such other activities reasonably related to the activities of federal associations that the Board may approve" ( 12 C.F.R. Section 545.74(c) and (c)(6)). A 1982 resolution by the Board permitted several savings and loan associations to broker securities, as well as offer investment advice (Resolution No. 82-327 - May 6, 1982). In this resolution, the Board approved the application of Coastal Federal Savings and Loan Association, et. al., to form a service corporation (INVEST) which would "(1) execute purchases and sales or redemptions of debt and equity securities and shares in certain mutual funds on behalf of and for the account of others; and (2) provide investment advisory services to customers utilizing the services of a subscribing savings and loan association."
On August 23, 1982, the FDIC Board of Directors issued a Statement of Policy addressing the applicability of the Glass-Steagall Act to securities activities of subsidiaries of insured non-member banks. This statement concluded that the Glass-Steagall Act "does not prohibit an insured non-member bank from establishing an affiliate relationship with, or organizing or acquiring, a subsidiary corporation that engages in the business of issuing, underwriting, selling or distributing at wholesale or retail, or through syndicate participation, stocks, bonds, debentures, notes, or other securities."
On November 28, 1984, the Board of Directors of the FDIC issued a rule ( 12 C.F.R. Section 337.4) effective December 28, 1984, entitled "Securities Activities of Subsidiaries of Insured Nonmember Banks: Bank Transactions with Affiliated Securities Companies." This rule establishes guidelines for banks to affiliate with a securities company or acquire/establish a securities subsidiary. It also places restrictions on underwriting, limits trust department and lending activities with the securities company, sets investment limitations, and imposes notification requirements.
On September 2, 1983, the Comptroller of the Currency concluded that the Glass-Steagall Act did not preclude a national bank (member bank) from engaging in the business of providing investment advice or providing discount brokerage services, and that national banks were authorized to provide the stated services pursuant to the enabling legislation.
The cumulative effect of the federal statutes, opinions and regulations cited above is to permit federally authorized financial institutions, directly or through subsidiaries, to engage in offering discount brokerage services and investment advice. The federal law also permits the creation or acquisition of subsidiaries to provide the additional services described above.
