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[Federal Register: February 14, 1997 (Volume 62, Number 31)]

[Rules and Regulations]

[Page 6852-6860]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr14fe97-2]


 

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FEDERAL DEPOSIT INSURANCE CORPORATION


 

12 CFR Part 335


 

RIN 3064-AB79



 

Securities of Nonmember Insured Banks


 

AGENCY: Federal Deposit Insurance Corporation (FDIC).


 

ACTION: Final rule.


 

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is revising

its regulations which prescribe registration and reporting requirements

for non-member insured banks with securities required to be registered

under section 12 of the Securities Exchange Act of 1934 (Exchange Act).

The final rule incorporates through cross reference the corresponding

regulations of the Securities and Exchange Commission (SEC) into the

provisions of the FDIC's securities regulations. Incorporation through

cross reference will assure that the FDIC's regulations remain

substantially similar to the SEC's regulations, as required by law.


 

DATES: Effective date. These revisions are effective January 1, 1998,

with the exception of Sec. 335.901, which is effective July 1, 1997.

Early compliance. These revisions may be immediately followed by

the affected party, except that the SEC's regulation regarding

proposals of security holders (17 CFR 240.14a-8), which is cross

referenced in Sec. 335.401 may not be followed prior to January 1,

1998.


 

FOR FURTHER INFORMATION CONTACT: M. Eric Dohm, Staff Accountant,

Division of Supervision (202-898-8921), Lawrence H. Pierce, Securities

Activities Officer, Division of Supervision (202-898-8902), or Jamey G.

Basham, Counsel, Legal Division (202-898-7265), Federal Deposit

Insurance Corporation, 550 17th Street N.W., Washington, D.C. 20429.


 

SUPPLEMENTARY INFORMATION:


 

I. Background


 

Section 12(i) of the Securities Exchange Act of 1934 as amended, 15

U.S.C. 78l(i), grants authority to the FDIC to issue regulations

applicable to the securities of insured banks (including foreign banks

having an insured branch) which are neither members of the Federal

Reserve System nor District banks (collectively referred to as

nonmember banks), which are substantially similar to the SEC's

regulations under sections 12 (securities registration), 13 (periodic

reporting), 14(a) (proxies and proxy solicitation), 14(c) (information

statements), 14(d) (tender offers), 14(f) (election of directors

contests), and 16 (beneficial ownership and reporting) of the Exchange

Act. Section 12(i) does not, however, require the FDIC to issue

substantially similar regulations in the event that the FDIC finds that

implementation of such regulation is not necessarily in the public

interest or appropriate for protection of investors


 

[[Page 6853]]


 

and the FDIC publishes such findings with detailed reasons therefor in

the Federal Register.

12 CFR part 335 generally applies only to nonmember banks having

one or more classes of securities required to be registered under

section 12 of the Exchange Act. To date, in 12 CFR part 335, the FDIC

has generally maintained its own version of regulations pursuant to

sections 12, 13, 14(a), 14(c), 14(d), and 14(f) of the Exchange Act. In

1989, the FDIC incorporated by cross reference the SEC regulations

governing going private transactions and issuer tender offers (54 FR

53592, 12 CFR 335.409 and 335.521). In 1992, SEC regulations under

section 16 of the Exchange Act were incorporated by cross reference (57

FR 4699, 12 CFR 335.410). In 1994, part 335 was amended to conform with

more recent changes in the comparable SEC regulations. In connection

with its 1994 proposed rule, the FDIC requested comment on the

desirability of incorporating the SEC rules by cross reference into its

own rules (59 FR 22555 (May 2, 1994)).

The FDIC received six comment letters in response to its 1994

proposed rule. Commentators were asked to comment upon whether the FDIC

should consider proposing a revision to part 335, to incorporate by

cross reference the comparable rules of the SEC, rather than continue

to maintain the separate but substantially similar body of rules

contained in part 335 as was done historically.

All of the six commenters supported cross referencing to some

extent. Two thought that the FDIC should be careful to adopt or

preserve regulations different from those of the SEC, where FDIC

drafted regulations would be more appropriate for banks. None provided

an estimate of cost savings from the cross referencing procedure. One

commenter indicated that if this cross referencing procedure is

adopted, the FDIC should provide notice to banks filing under part 335

that the SEC has amended rules applicable to banks by cross reference.

In the interest of quickly bringing its rules into similarity with

those of the SEC, the FDIC adopted the rule amendments in 1994 as they

had been previously proposed. Since the comprehensive cross referencing

proposal was only described generally at the time of publication of the

1994 proposed rule, it was necessary to publish an express cross

referencing proposal for public comment upon the actual method and

language to be used.

Accordingly, on June 28, 1996 (61 FR 33696) the FDIC published a

proposed revision of 12 CFR part 335 which would incorporate by cross

reference the comparable rules of the SEC, rather than continue to

maintain the separate but substantially similar body of rules contained

in part 335.


 

II. Public Comment


 

The Board requested public comments on all aspects of the proposed

rule which was published on June 28, 1996 (61 FR 33696). Written

comments were invited to be submitted during a 90-day comment period,

and comments were specifically requested regarding:

(1) The benefits and disadvantages of cross referencing as a method

for assuring substantial similarity between FDIC and SEC regulations;

(2) The potential cost savings or cost burden of cross referencing;

Please include estimates of specific dollar amounts of any anticipated

benefits, as well as amounts of transitionary and continuing costs such

as purchase of reference aides, staff training, and any necessary

additional professional assistance;

(3) Whether the FDIC should provide any specific exemptions from,

or separate additions to the SEC's regulations;

(4) Whether the FDIC should continue to require disclosure of

insider extensions of credit as it currently does under its rules in 12

CFR 335.212 Item 7(b);

(5) Whether the FDIC should continue to make Exchange Act filings

available for inspection at the Federal Reserve Banks;

(6) The appropriate time frame for implementation of the final

rule, including the amount of time which should pass after publication

of the final rule before compliance with the final rule is required;

and

(7) Any other issues regarding the proposal which commenters

believe would assist in this rulemaking.

The FDIC received two comment letters in response to its 1996

request for comments, one from a registered nonmember bank and the

other from a public accounting firm. Both commenters generally

supported the cross referencing proposal and indicated that there

should be overall benefits to incorporation by cross reference. Both

commenters also supported continuation of the FDIC's review of

preliminary proxy statements. One commenter agreed and the other

disagreed with the proposal to adopt or preserve regulations different

from those of the SEC with respect to insider loan disclosures.

Regarding costs, one commenter suggested that any additional costs

would be far outweighed by the benefits of cross referencing, while the

other stated that there should be no significant cost in adopting the

proposed rule. Neither commenter provided an estimate of specific cost

increase nor savings resulting from the cross referencing procedure.

One commenter also indicated that the FDIC should discontinue making

Exchange Act filings available at the Federal Reserve Banks, that the

FDIC should host training seminars to assist nonmember banks'

transition to and compliance with the final rule, and that the final

rule should be effective for Exchange Act filings made after December

31, 1997.

After careful consideration of all public comments received

regarding incorporation by cross reference, the FDIC has determined to

adopt this final rule in substantially the same form as previously

proposed (61 FR 33696 (June 28, 1996)). In order to allow ample time

for transition to the cross referenced SEC regulations, the final rule

will be effective January 1, 1998. Early compliance with the SEC

regulations will be permitted, except that the SEC's regulation

regarding proposals of security holders (17 CFR 240.14a-8), which is

incorporated by cross reference in section 335.401, may not be followed

prior to January 1, 1998, the effective date. Permitting early

compliance with 17 CFR 240.14a-8 prior to the effective date of this

final rule is not considered practicable.


 

III. Revisions to Part 335


 

The FDIC is revising 12 CFR part 335 by incorporating through cross

reference, the regulations of the SEC issued under sections 12, 13,

14(a), 14(c), 14(d), and 14(f) of the Exchange Act. The SEC's

regulations under section 16 of the Exchange Act were previously

incorporated by cross reference (57 FR 4699, February 7, 1992). As a

result, with the exception of forms filed pursuant to section 16, the

FDIC's separate Exchange Act forms are eliminated and the SEC's

Exchange Act forms will be utilized in filings with the FDIC. The cover

pages of all forms filed with the FDIC however, will be required to

contain the name of the FDIC in lieu of that of the SEC in order to

avoid confusion as to where filings should be made. The FDIC believes

that incorporation through cross reference will cause its regulations

to remain substantially similar to those of the SEC, as well as those

of other federal financial institution regulatory agencies.

This final rule will make appropriate SEC regulations applicable to

persons subject to part 335, except where part 335 contains a differing

or additional


 

[[Page 6854]]


 

requirement or exception. Incorporation through cross reference

generally makes all SEC regulations, and amendments thereto, applicable

to registered nonmember banks, unless the FDIC acts to vary the SEC's

specific requirements. The FDIC believes that this is an effective way

to assure that FDIC regulations issued under the Exchange Act remain

substantially similar to the SEC's regulations. However, the FDIC will

retain the ability to exempt nonmember banks, through a separate FDIC

rulemaking, from any particular SEC rule it determines should not apply

to such banks. The FDIC also retains its rulemaking authority to

subject nonmember banks to additional or different regulations where

warranted.

The FDIC believes that issuance of the final rule will simplify

administration and enforcement of the disclosure provisions of the

Exchange Act. This is the approach adopted by the Board of Governors of

the Federal Reserve System (12 CFR 208.16), the Office of the

Comptroller of the Currency (12 CFR 11.2), and the Office of Thrift

Supervision (12 CFR 563d.1). Further, as registrants, investors, and

their counsel acquire or expand their familiarity with SEC regulations,

incorporation by cross reference should help promote uniformity and

consistency of Exchange Act disclosure, without affecting the quality

of the administration and enforcement of the provisions of the Exchange

Act for which the FDIC is the appropriate regulatory agency.

The FDIC's principal concern with respect to the elimination of

FDIC forms and subsequent use of SEC forms is that filers may

incorrectly forward the forms to the SEC. This can create embarrassment

and legal liability on the part of the filers for unintentional failure

to file the forms. Errors of this kind can interfere with the smooth

and efficient administration of public filings under the Exchange Act.

For this reason, the final rule requires that on all forms to be filed

with the FDIC, the cover pages must prominently display the name of the

FDIC in lieu of that of the SEC in order to avoid confusion as to the

appropriate filing agency.

The FDIC has also made one technical revision to part 335 which is

included in this final rule, but was not included in the proposed rule.

This results in the final rule including new Sec. 335.901, which

contains the provisions of presently existing Sec. 303.8(b) of the FDIC

regulations (12 CFR 303.8(b)) which are applicable to part 335. New

Sec. 335.901 contains the regulations which delegate authority to act

on certain Exchange Act disclosure matters from the FDIC Board of

Directors to the Director of the Division of Supervision. This addition

to part 335 is made as part of an agency-wide effort to streamline and

modify FDIC regulations and policies as required by section 303 of the

Riegle Community Development and Regulatory Improvement Act of 1994 (12

U.S.C. 4803). The FDIC considers the placement of the related

delegation of authority provisions into part 335 as more convenient to

users, less obscure and easier to locate, and generally a more

appropriate location than their current location in 12 CFR 303.8(b). A

technical revision has been made to the language of the delegation. The

303.8(b) language covers disclosure matters under and pursuant to part

335, which necessarily includes disclosure matters under and pursuant

to section 16 of the Securities Exchange Act of 1934; however, where

the 303.8(b) language also refers to sections 12, 13, and 14 of the

Securities Exchange Act of 1934, it omits reference to section 16. In

the interests of consistency, a reference to section 16 has been added.


 

IV. Differences From Current Part 335 Regulations


 

Following is a discussion of the significant differences between

the FDIC's existing regulations and the SEC's regulations and

procedures which are incorporated by cross reference under this final

rule. While there are other differences in the regulations, the FDIC

believes them to be technical or minor in nature. Upon the FDIC's

adoption of this final rule, each of these differences is eliminated.


 

A. Minimum Asset Test for Registration


 

The regulations of the SEC and the existing regulations of the FDIC

differ in establishing the minimum total asset size of an issuing

company. The company's asset size is used as one of the triggering

criteria (in addition to the number of shareholders) for requiring

registration of securities under section 12 of the Exchange Act.

Section 12(g) of the Exchange Act (15 U.S.C. 78l(g)) requires any

issuing company with at least 500 shareholders and minimum total assets

of $1 million to register the class of securities, subject to limits,

exemptions, and conditions prescribed by the SEC or other appropriate

regulatory agency. The SEC's Rule 12g-1 (17 CFR 240.12g-1) prescribes

the minimum asset test to be $10 million in total assets, while current

FDIC regulations do not alter the statutory standard. This final rule

incorporates by cross reference the SEC's minimum asset test threshold

of $10 million.


 

B. Shareholder Proposal Rules


 

The regulations of the SEC and the FDIC differ primarily with

respect to the proponent's ownership requirements in stock of an

issuing company, and the number of proposals which a proponent may

present. The FDIC's rules presently require only that the proponent be

a shareholder of the registrant, and that a proponent may submit a

maximum of two proposals for inclusion in a registrant's annual meeting

proxy statement. The SEC's Rule 14a-8 (17 CFR 240.14a-8) requires a

proponent to have beneficially ownership of at least 1% or $1,000 in

market value of securities entitled to be voted on the proposal,

requires a proponent to have held such securities for at least one

year, and permits a proponent to submit only one proposal for inclusion

in a registrant's annual meeting proxy statement. This final rule

incorporates the SEC's requirements by cross reference, which include

the differences described above.


 

C. Certification, Suspension of Trading, and Removal From Listing by

Exchanges; Unlisted Trading; and Related Filing Requirements


 

The SEC's rules currently require a national securities exchange to

formally certify that a registrant's security has been approved for

listing. The SEC's rules contain provisions applicable to suspension of

trading on a national securities exchange, withdrawal, and striking of

a security from listing and registration. Also, SEC rules prescribe

requirements relative to applications, changes, termination,

suspension, or exemption of securities admitted to unlisted trading on

a national securities exchange. The FDIC's rules currently also require

certification by a national securities exchange, but do not contain the

additional provisions summarized above. This final rule incorporates by

cross reference, the SEC's rules on Certification By Exchanges (17 CFR

240.12d1-1 through 12d1-6), Suspension Of Trading, Withdrawal, And

Striking From Listing And Registration (17 CFR 240.12d2-1 through 12d2-

6), and Unlisted Trading (17 CFR 240.12f-1 through 12f-6).


 

D. Availability of Exchange Act Filings at Federal Reserve Banks


 

FDIC regulations currently require that copies of all registration

statements and periodic reports required by 12 CFR 335.301 through

335.365 (exclusive of exhibits), the proxy and information statements

required by 12 CFR 335.201, and annual reports to security holders

required by 12 CFR 335.203 will be


 

[[Page 6855]]


 

available for inspection at the Federal Reserve Bank (FRB) of the

District in which the bank making the submission is located. The FDIC

staff believes that there has been extremely little public interest in

inspecting these Exchange Act filings at the Federal Reserve Banks. It

is also believed that it is difficult for the public to access these

filings. This final rule eliminates the availability of these Exchange

Act filings at the Federal Reserve Banks. All Exchange Act filings will

remain available for inspection at and copies may be obtained from the

FDIC in Washington, D.C.


 

V. Differences Between FDIC and SEC Regulations (Superseded SEC

Regulations and FDIC Substituted Regulations)


 

Following is a discussion of the significant differences between

the applicable requirements of this final rule, and the SEC's

regulations and procedures which will generally be applicable as a

result of incorporation by cross reference. Unless any particular

provisions of the SEC's Exchange Act regulations are specifically

superseded by the FDIC, incorporation by cross reference would make

such provisions applicable to nonmember banks, related parties and

investors. The FDIC rules under 12 CFR part 335 currently contain these

provisions or requirements and retention thereof is considered

warranted. Through the adoption of this final rule, each of the

following differences between the rules of the FDIC and the rules of

the SEC will remain in effect.


 

A. Review of Proxy and Information Statements


 

The SEC and the FDIC regulations differ significantly in the type

of proxy and information statements subject to regulatory review prior

to distribution to shareholders. The SEC requires preliminary filings

of proxy and information statements, but only concerning those

shareholder meetings which are other than ``routine'' annual meetings.

In such cases, the SEC requires preliminary filings to be filed ten

days prior to distribution to shareholders (17 CFR 240.14a-6 and 17 CFR

240.14c-5). The FDIC however, currently requires preliminary filings

for all shareholder meetings, and requires that the preliminary filings

be made at least ten days before ``routine'' meetings and 15 days

before ``non-routine'' meetings (12 CFR 335.204).

The SEC regulations exempt proxy statements for ``routine'' annual

meetings from the requirement of preliminary filing and advance review.

While the FDIC receives a moderate number of ``routine'' meeting

filings, the staff has found that it is this category of filings where

the most fundamental errors are made. Proxy statements for ``routine''

annual meetings often contain more basic errors and omissions than in

the case of ``non-routine'' meetings. In the absence of an advance

filing, the FDIC must choose between requiring a new meeting after the

problem is belatedly discovered or overlooking the resulting

noncompliance until the following year. A similar problem may occur in

enforcing the regulations with banks that misread or are negligent in

interpreting the term ``routine.'

Accordingly, this final rule continues to require the filing of

both ``routine'' and ``non-routine'' preliminary proxy materials for

FDIC staff review and comment prior to their distribution to

shareholders. The FDIC staff believes that the overall benefits

resulting from the current requirement under 12 CFR part 335 to file

``routine'' preliminary proxy statements, exceed the costs attributed

to making those filings.


 

B. Disclosure of Extensions of Credit to Insiders


 

The SEC and the FDIC regulations both contain requirements for

financial institution disclosure of loans to insiders. SEC regulations

generally require the disclosure of certain insider indebtedness in

excess of $60,000, which have preferential terms, were not made in the

ordinary course of business, or which involve more than the normal risk

of collectibility or involve other unfavorable features. In contrast,

since 1965, the FDIC has required: (a) disclosure of insiders''

indebtedness on a basis substantially similar to that of the SEC, but

without the $60,000 threshold; and (b) basic disclosure of relatively

large extensions of credit to insiders and to insiders as a group,

based strictly upon the amount of indebtedness.

Even though loans to insiders are often subject to amount

limitations in banking law and regulation, significant amounts of

insider loans yet occur. This final rule incorporates by reference the

SEC's indebtedness of management disclosure requirements and also adds

a requirement to disclose large extensions of credit to insiders and to

insiders as a group, based solely upon the amount of indebtedness. The

FDIC staff believes that the overall benefit resulting from

continuation of the FDIC's current disclosure requirements under 12 CFR

part 335 is in the public interest and is appropriate to the banking

industry.


 

C. Filing Fees


 

The regulations of SEC include specific requirements for the

payment of filing fees which are applicable to and must be paid by any

person or entity filing reports with the SEC under the Exchange Act.

This final rule does not require filing fees to be paid by any person,

registrant, or entity making Exchange Act filings with the FDIC.


 

D. Electronic Data Gathering Analysis and Retrieval (EDGAR)


 

The SEC's Regulation S-T (17 CFR part 232) requires all registrants

to submit filings in electronic format pursuant to its EDGAR system.

Although the FDIC is studying the feasibility of the acceptance and

administration of electronic filings under the Exchange Act, this final

rule does not permit and the FDIC does not accept electronic filings at

this time.


 

E. Legal Proceedings


 

The SEC and the FDIC regulations currently both require disclosure

of legal proceedings in certain filings under the Exchange Act. The

FDIC generally requires disclosure of all legal proceedings required to

be disclosed by the SEC, and in addition, the FDIC's regulations deem

as material and require disclosure of administrative or judicial

proceedings arising under section 8 of the Federal Deposit Insurance

Act. This final rule incorporates the SEC's legal proceedings

disclosure requirements by cross reference, and in addition, continues

to deem as material and requires disclosure of administrative or

judicial proceedings arising under section 8 of the Federal Deposit

Insurance Act. The FDIC staff believes that the overall benefit

resulting from the explicit requirement to disclose proceedings arising

under section 8 of the Federal Deposit Insurance Act is in the public

interest and is appropriate to the banking industry.


 

VI. Regulatory Flexibility Act


 

Under section 605(b) of the Regulatory Flexibility Act (RFA) (5

U.S.C. 605(b)), the final regulatory flexibility analysis otherwise

required under section 604 of the RFA (5 U.S.C. 604) 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 the agency publishes such certification in the Federal Register

along with its general notice of proposed rulemaking or at the time of

publication of the final rule. Pursuant to section 605(b) of the RFA,

the FDIC certifies that this final rule would apply


 

[[Page 6856]]


 

only to those banks whose securities are publicly held. Other covered

persons include: insiders of banks, large shareholders of banks, and

bidders for bank stock.

There were no significant issues raised by public commenters in

response to the Regulatory Flexibility Act certification contained in

the notice of proposed rulemaking. Accordingly, no related changes have

been made to the regulations as proposed.

The regulations contained in this final rule will incorporate SEC

regulations by cross reference. By statute, any differences must be

specifically justified through the rulemaking process. The SEC and FDIC

regulations are functionally almost identical, they are issued under

the same statutory authority, and they share a common legislative

purpose. The FDIC considers the applicable SEC rule, defining ``small

entities,'' a necessary standard in order to maintain fair and

comparable regulation. The FDIC is comparing FDIC regulated banks and

SEC regulated nonbank entities, including bank holding companies. The

applicable SEC definition of ``small entities'' sets the upper limit at

$5 million. The SEC has delayed raising this limit until it completes

its current and future initiatives in this area. Any SEC revisions in

this area should pass through to entities subject to part 335.

Currently, there are no banks below this limit filing under part 335.

Further, this rulemaking does not substantially change existing filing

requirements for any individual. Based upon this factual background,

the FDIC certifies that the revisions to part 335 contained in this

final rule will have no economic impact on any identifiable small

entities as defined for the class by SEC which is the general regulator

in the area.


 

VII. Small Business Regulatory Enforcement Fairness Act


 

The Small Business Regulatory Enforcement Fairness Act of 1996

(SBREFA) (Pub. L. 104-121) provides generally for agencies to report

rules to Congress and for Congress to review the rules. The reporting

requirement is triggered when agencies issue a final rule as defined by

the Administrative Procedure Act (APA) at 5 U.S.C. 551. Because the

FDIC is issuing a final rule as defined by the APA, the FDIC will file

the reports required by SBREFA.

The Office of Management and Budget has determined that this final

revision to part 335 does not constitute a ``major rule'' as defined by

SBREFA.


 

VIII. Paperwork Reduction Act


 

The collection of information in this final rule has been reviewed

and approved by the Office of Management and Budget (OMB) under control

number 3064-0030 in accordance with the Paperwork Reduction Act of 1980

(44 U.S.C. 3501 et seq.). Comments on the accuracy of the burden

estimate and suggestions for reducing the burden should be directed to

the Office of Management and Budget, Paperwork Reduction Project (3064-

0030), Washington, D.C. 20503, with copies of such comments to be sent

to Steven F. Hanft, Office of the Executive Secretary, room F-400, 550

17th Street, N.W., Washington, D.C. 20429.

This information is needed to assure compliance with the Exchange

Act and to provide information to investors and the public about the

condition of registered nonmember banks. The likely respondents are

for-profit financial institutions-- registered nonmember banks, as well

as their directors, executive officers and principal shareholders. The

total reporting burden as most recently approved by OMB for all

collections of information in this regulation is as follows:

Number of Respondents: 4,368.

Number of Responses Per Respondent: 1.42.

Total Annual Responses: 6,214.

Hours Per Response: 8.90.

Total Annual Burden Hours: 55,276.

The estimated annual burden per respondent varies from 30 minutes

to 200 hours, depending on the particular form and individual

circumstances, with an estimated average of 8.90 hours.


 

IX. Cost Benefit Analysis


 

This final rule is generally not expected to result in material

increases in costs and burden to respondents. Some filers, however, may

realize an increase in costs due to an increased need for professional

guidance in order to facilitate the making of filings under the

Exchange Act. Any overall increase in costs resulting from this final

rule should be moderate, however, due to the existing general

familiarity with the SEC's regulations on the part of registrants,

investors, and their counsel. Any such increase in overall costs should

be offset by elimination of the need for potential filers to become

familiar with two separate sets of regulations implementing the filing

requirements of the Exchange Act.


 

X. Statutory Basis


 

The revisions to the FDIC's regulation under sections 12, 13,

14(a), 14(c), 14(d), 14(f) and 16 of the Exchange Act, are being

adopted by the FDIC pursuant to Exchange Act section 12(i).


 

List of Subjects in 12 CFR Part 335


 

Accounting, Banks, banking, Confidential business information,

Reporting and recordkeeping requirements, Securities.


 

For the reasons set forth in the preamble, the FDIC revises part

335 to read as follows:


 

PART 335--SECURITIES OF NONMEMBER INSURED BANKS


 

Sec.

335.101 Scope of part, authority and OMB control number.

335.111 Forms and schedules.

335.201 Securities exempted from registration.

335.211 Registration and reporting.

335.221 Forms for registration of securities and similar matters.

335.231 Certification, suspension of trading, and removal from

listing by exchanges.

335.241 Unlisted trading.

335.251 Forms for notification of action taken by national

securities exchanges.

335.261 Exemptions; terminations; and definitions.

335.301 Reports of issuers of securities registered pursuant to

section 12.

335.311 Forms for annual, quarterly, current, and other reports of

issuers.

335.321 Maintenance of records and issuer's representations in

connection with required reports.

335.331 Acquisition statements and acquisitions of securities by

issuers.

335.401 Solicitations of proxies.

335.501 Tender offers.

335.601 Requirements of section 16 of the Securities Exchange Act

of 1934.

335.611 Initial statements of beneficial ownership of securities

(Form F-7).

335.612 Statement of changes in beneficial ownership of securities

(Form F-8).

335.613 Annual statement of beneficial ownership of securities

(Form F-8A).

335.701 Filing requirements, public reference, and

confidentiality.

335.801 Inapplicable SEC regulations; FDIC substituted

regulations; additional information.

335.901 Delegation of authority to the Director (DOS) and to the

associate directors, regional directors and deputy regional

directors to act on matters with respect to disclosure laws and

regulations.

Authority: 15 U.S.C. 78l(i).


 

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


 

(a) This part is issued by the Federal Deposit Insurance

Corporation (the FDIC) under section 12(i) of the Securities Exchange

Act of 1934, as amended (15 U.S.C. 78) (the Exchange Act) and applies

to all securities of FDIC insured banks (including foreign banks having

an insured branch) which are


 

[[Page 6857]]


 

neither a member of the Federal Reserve System nor a District bank

(collectively referred to as nonmember banks) that are subject to the

registration requirements of section 12(b) or section 12(g) of the

Exchange Act (registered nonmember banks). The FDIC is vested with the

powers, functions, and duties vested in the Securities and Exchange

Commission (the Commission or SEC) to administer and enforce the

provisions of sections 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of

the Securities Exchange Act of 1934, as amended (the Exchange Act) (15

U.S.C. 78l, 78m, 78n(a), 78n(c), 78n(d), 78n(f), and 78(p)), regarding

nonmember banks with one or more classes of securities subject to the

registration provisions of sections 12(b) and 12(g).

(b) This part 335 generally incorporates through cross reference

the regulations of the SEC issued under sections 12, 13, 14(a), 14(c),

14(d), 14(f), and 16 of the Exchange Act. References to the Commission

are deemed to refer to the FDIC unless the context otherwise requires.

(c) The Office of Management and Budget has reviewed and approved

the recordkeeping and reporting required by this part (OMB control

number 3064-0030).


 

Sec. 335.111 Forms and schedules.


 

The Exchange Act regulations of the SEC, which are incorporated by

cross reference under this part, require the filing of forms and

schedules as applicable. Reference is made to SEC Exchange Act

regulation 17 CFR 249.0-1 regarding the availability of all applicable

SEC Exchange Act forms. Required schedules are codified and are found

within the context of the SEC's regulations. The filings of all

applicable SEC forms and schedules shall be made with the FDIC at the

address in this section. They shall be titled with the name of the FDIC

in substitution for the name of the SEC. Forms F-7 (Sec. 335.611), F-8

(Sec. 335.612), F-8A (Sec. 335.613), are FDIC forms which are issued

under section 16 of the Exchange Act and can be obtained from the

Registration and Disclosure Section, Division of Supervision, Federal

Deposit Insurance Corporation, 550 17th Street N.W., Washington, D.C.

20429. Reference is also made to Sec. 335.701 for general filing

requirements, public reference, and confidentiality provisions.


 

Sec. 335.201 Securities exempted from registration.


 

Persons generally subject to registration requirements under

Exchange Act section 12 and subject to this part shall follow the

applicable and currently effective SEC regulations relative to

exemptions from registration issued under sections 3 and 12 of the

Exchange Act as codified at 17 CFR 240.3a12-1 through 240.3a12-11,

240.12a-4 through 240.12a-7, 240.12g-1 through 240.12h-4.


 

Sec. 335.211 Registration and reporting.


 

Persons with securities subject to registration under Exchange Act

sections 12(b) and 12(g), required to report under Exchange Act section

13, and subject to this part shall follow the applicable and currently

effective SEC regulations issued under section 12(b) of the Exchange

Act as codified at 17 CFR 240.12b-1 through 240.12b-36.


 

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


 

(a) The applicable forms for registration of securities and similar

matters are codified in subpart C of 17 CFR part 249. All forms shall

be filed with the FDIC as appropriate and shall be titled with the name

of the FDIC instead of the SEC.

(b) The requirements for Financial Statements can generally be

found in Regulation S-X (17 CFR part 210). Banks may also refer to the

instructions for FFIEC Reports of Income and Reports of Condition when

preparing unaudited interim statements. The requirements for

Management's Discussion and Analysis of Financial Condition and Results

of Operations can be found in at 17 CFR 229.300. Industry Guide 3,

Statistical Disclosure by Bank Holding Companies, is codified at 17 CFR

229.802.

(c) A ``small business issuer,'' as defined under 17 CFR 240.12b-2,

has the option of filing Small Business (SB) Forms (as codified in 17

CFR part 249) in lieu of the Exchange Act forms otherwise required to

be filed, which provide for financial and other item disclosures in

conformance with Regulation S-B of the Securities and Exchange

Commission (17 CFR part 228). The definition of ``small business

issuer,'' generally includes banks with annual revenues of less than

$25 million, whose voting stock does not have a public float of $25

million or more.


 

Sec. 335.231 Certification, suspension of trading, and removal from

listing by exchanges.


 

The provisions of the applicable and currently effective SEC

regulations under section 12(d) of the Exchange Act shall be followed

as codified at 17 CFR 240.12d1-1 through 240.12d2-2.


 

Sec. 335.241 Unlisted trading.


 

The provisions of the applicable and currently effective SEC

regulations under section 12(f) of the Exchange Act shall be followed

as codified at 17 CFR 240.12f-1 through 240.12f-6.


 

Sec. 335.251 Forms for notification of action taken by national

securities exchanges.


 

The applicable forms for notification of action taken by national

securities exchanges are codified in subpart A of 17 CFR part 249. All

forms shall be filed with the FDIC as appropriate and shall be titled

with the name of the FDIC instead of the SEC.


 

Sec. 335.261 Exemptions; terminations; and definitions.


 

The provisions of the applicable and currently effective SEC

regulations under sections 12(g) and 12(h) of the Exchange Act shall be

followed as codified at 17 CFR 240.12g-1 through 240.12h-4.


 

Sec. 335.301 Reports of issuers of securities registered pursuant to

section 12.


 

The provisions of the applicable and currently effective SEC

regulations under section 13(a) of the Exchange Act shall be followed

as codified at 17 CFR 240.13a-1 through 240.13a-17.


 

Sec. 335.311 Forms for annual, quarterly, current, and other reports

of issuers.


 

(a) The applicable forms for annual, quarterly, current, and other

reports are codified in subpart D of 17 CFR part 249. All forms shall

be filed with the FDIC as appropriate and shall be titled with the name

of the FDIC instead of the SEC.

(b) The requirements for Financial Statements can generally be

found in Regulation S-X (17 CFR part 210). Banks may also refer to the

instructions for FFIEC Reports of Income and Reports of Condition when

preparing unaudited interim reports. The requirements for Management's

Discussion and Analysis of Financial Condition and Results of

Operations can be found at 17 CFR 229.300. Industry Guide 3,

Statistical Disclosure by Bank Holding Companies, is codified at 17 CFR

229.802.

(c) A ``small business issuer,'' as defined under 17 CFR 240.12b-2,

has the option of filing Small Business (SB) Forms (as codified in 17

CFR part 249) in lieu of the Exchange Act forms otherwise required to

be filed, which provide for financial and other item disclosures in

conformance with Regulation S-B of the Securities and Exchange

Commission (17 CFR part 228). The definition of ``small business

issuer,'' generally includes banks with annual revenues of less than

$25


 

[[Page 6858]]


 

million, whose voting stock does not have a public float of $25 million

or more.


 

Sec. 335.321 Maintenance of records and issuer's representations in

connection with required reports.


 

The provisions of the applicable and currently effective SEC

regulations under section 13(b) of the Exchange Act shall be followed

as codified at 17 CFR 240.13b2-1 through 240.13b2-2.


 

Sec. 335.331 Acquisition statements and acquisitions of securities by

issuers.


 

The provisions of the applicable and currently effective SEC

regulations under section 13(d) and 13(e) of the Exchange Act shall be

followed as codified at 17 CFR 240.13d-1 through 240.13e-102.


 

Sec. 335.401 Solicitations of proxies.


 

The provisions of the applicable and currently effective SEC

regulations under section 14(a) and 14(c) of the Exchange Act shall be

followed as codified at 17 CFR 240.14a-1 through 240.14a-103 and

240.14c-1 through 240.14c-101.


 

Sec. 335.501 Tender offers.


 

The provisions of the applicable and currently effective SEC

regulations under section 14(d), 14(e), and 14(f) of the Exchange Act

shall be followed as codified at 17 CFR 240.14d-1 through 240.14f-1.


 

335.601 Requirements of section 16 of the Securities Exchange Act of

1934.


 

Persons subject to section 16 of the Act with respect to securities

registered under this part shall follow the applicable and currently

effective SEC regulations issued under section 16 of the Act (17 CFR

240.16a-1 through 240.16e-1(1), except that the forms described in

Sec. 335.611 (Form F-7), Sec. 335.612 (Form F-8), and Sec. 335.613

(Form F-8A) shall be used in lieu of SEC Form 3 (17 CFR 249.103), Form

4 (17 CFR 249.104), or Form 5 (17 CFR 249.105), respectively. Copies of

Forms F-7, F-8, F-8A and the instructions thereto can be obtained from

the Registration, Disclosure, and Securities Operations Unit, Division

of Supervision, Federal Deposit Insurance Corporation, 550 17th Street

N.W., Washington, D.C. 20429.


 

Sec. 335.611 Initial statement of beneficial ownership of securities

(Form F-7).


 

This form shall be filed in lieu of SEC Form 3 pursuant to SEC rule

16a-3 (17 CFR 240.16a-3) for initial statements of beneficial ownership

of securities. The FDIC is authorized to solicit the information

required by this form pursuant to sections 16(a) and 23(a) of the

Securities Exchange Act of 1934 (15 U.S.C. 78p and 78w) and the rules

and regulations thereunder. SEC regulations referenced in this form are

codified at 17 CFR 240.16a-1 through 240.16e-1.


 

Sec. 335.612 Statement of changes in beneficial ownership of

securities (Form F-8).


 

This form shall be filed pursuant to SEC rule 16a-3 (17 CFR

240.16a-3) for statements of changes in beneficial ownership of

securities. The FDIC is authorized to solicit the information required

by this form pursuant to sections 16(a) and 23(a) of the Securities

Exchange Act of 1934 (15 U.S.C. 78p and 78w) and the rules and

regulations thereunder. SEC regulations referenced in this form are

codified at 17 CFR 240.16a-1 through 240.16e-1.


 

Sec. 335.613 Annual statement of beneficial ownership of securities

(Form F-8A).


 

This form shall be filed pursuant to SEC rule 16a-3 (17 CFR

240.16a-3) for annual statements of beneficial ownership of securities.

The FDIC is authorized to solicit the information required by this form

pursuant to sections 16(a) and 23(a) of the Securities Exchange Act of

1934 (15 U.S.C. 78p and 78w), and the rules and regulations thereunder.

SEC regulations referenced in this form are codified at 17 CFR 240.16a-

1 through 240.16e-1.


 

Sec. 335.701 Filing requirements, public reference, and

confidentiality.


 

(a) Filing requirements. Unless otherwise indicated in this part,

one original and four conformed copies of all papers required to be

filed with the FDIC under the Exchange Act or regulations thereunder

shall be filed at its office in Washington, D.C. Official filings made

at the FDIC's office in Washington, D.C. should be addressed as

follows: Attention: Registration, Disclosure, and Securities Operations

Unit, Division of Supervision, Federal Deposit Insurance Corporation,

550 17th Street N.W., Washington, D.C. 20429. Material may be filed by

delivery to the FDIC through the mails or otherwise. The date on which

papers are actually received by the designated FDIC office shall be the

date of filing thereof if all of the requirements with respect to the

filing have been complied with.

(b) Inspection. Except as provided in paragraph (c) of this

section, all information filed regarding a security registered with the

FDIC will be available for inspection at the Federal Deposit Insurance

Corporation, 550 17th Street N.W., Washington, D.C.

(c) Nondisclosure of certain information filed. Any person filing

any statement, report, or document under the Act may make a written

objection to the public disclosure of any information contained therein

in accordance with the procedure set forth in this paragraph (c).

(1) The person shall omit from the statement, report, or document,

when it is filed, the portion thereof that it desires to keep

undisclosed (hereinafter called the confidential portion). In lieu

thereof, it shall indicate at the appropriate place in the statement,

report, or document that the confidential portion has been so omitted

and filed separately with the FDIC.

(2) The person shall file with the copies of the statement, report,

or document filed with the FDIC:

(i) As many copies of the confidential portion, each clearly marked

``Confidential Treatment,'' as there are copies of the statement,

report, or document filed with the FDIC and with each exchange, if any.

Each copy shall contain the complete text of the item and,

notwithstanding that the confidential portion does not constitute the

whole of the answer, the entire answer thereto; except that in the case

where the confidential portion is part of a financial statement or

schedule, only the particular financial statement or schedule need be

included. All copies of the confidential portion shall be in the same

form as the remainder of the statement, report, or document;

(ii) An application making objection to the disclosure of the

confidential portion. Such application shall be on a sheet or sheets

separate from the confidential portion, and shall contain:

(A) An identification of the portion of the statement, report, or

document that has been omitted;

(B) A statement of the grounds of objection;

(C) Consent that the FDIC may determine the question of public

disclosure upon the basis of the application, subject to proper

judicial reviews;

(D) The name of each exchange, if any, with which the statement,

report, or document is filed;

(iii) The copies of the confidential portion and the application

filed in accordance with this paragraph shall be enclosed in a separate

envelope marked ``Confidential Treatment'' and addressed to Executive

Secretary, Federal Deposit Insurance Corporation, Washington, D.C.

20429.

(3) Pending the determination by the FDIC as to the objection filed

in accordance with paragraph (c)(2)(ii) of this section, the

confidential portion will not be disclosed by FDIC.


 

[[Page 6859]]


 

(4) If the FDIC determines that the objection shall be sustained, a

notation to that effect will be made at the appropriate place in the

statement, report, or document.

(5) If the FDIC shall have determined that disclosure of the

confidential portion is in the public interest, a finding and

determination to that effect will be entered and notice of the finding

and determination will be sent by registered or certified mail to the

person.

(6) The confidential portion shall be made available to the public:

(i) Upon the lapse of 15 days after the dispatch of notice by

registered or certified mail of the finding and determination of the

FDIC described in paragraph (c)(5) of this section, if prior to the

lapse of such 15 days the person shall not have filed a written

statement that he intends in good faith to seek judicial review of the

finding and determination;

(ii) Upon the lapse of 60 days after the dispatch of notice by

registered or certified mail of the finding and determination of the

FDIC, if the statement described in paragraph (c)(6)(i) of this section

shall have been filed and if a petition for judicial review shall not

have been filed within such 60 days; or

(iii) If such petition for judicial review shall have been filed

within such 60 days upon final disposition, adverse to the person, of

the judicial proceedings.

(7) If the confidential portion is made available to the public, a

copy thereof shall be attached to each copy of the statement, report,

or document filed with the FDIC and with each exchange concerned.


 

Sec. 335.801 Inapplicable SEC regulations; FDIC substituted

regulations; additional information.


 

(a) Filing fees. Filing fees will not be charged relative to any

filings or submissions of materials made with the FDIC pursuant to the

cross reference to regulations of the SEC issued under sections 12, 13,

14(a), 14(c), 14(d), 14(f), and 16 of the Exchange Act, and this part.

(b) Electronic filings. The FDIC does not participate in the SEC's

EDGAR (Electronic Data Gathering Analysis and Retrieval) electronic

filing program (17 CFR part 232), and does not permit electronically

transmitted filings or submissions of materials in electronic format to

the FDIC.

(c) Legal proceedings. Whenever this part or cross referenced

provisions of the SEC regulations require disclosure of legal

proceedings, administrative or judicial proceedings arising under

section 8 of the Federal Deposit Insurance Act shall be deemed material

and shall be described.

(d) Indebtedness of management. Whenever this part or cross

referenced provisions of the SEC regulations require disclosure of

indebtedness of management, extensions of credit to specified persons

in excess of ten (10) percent of the equity capital accounts of the

bank or $5 million, whichever is less, shall be deemed material and

shall be disclosed in addition to any other required disclosure. The

disclosure of this material indebtedness shall include the largest

aggregate amount of indebtedness (in dollar amounts, and as a

percentage of total equity capital accounts at the time), including

extensions of credit or overdrafts, endorsements and guarantees

outstanding at any time since the beginning of the bank's last fiscal

year, and as of the latest practicable date.

(1) If aggregate extensions of credit to all specified persons as a

group exceeded 20 percent of the equity capital accounts of the bank at

any time since the beginning of the last fiscal year, the aggregate

amount of such extensions of credit shall also be disclosed.

(2) Other loans are deemed material and shall be disclosed where:

(i) The extension(s) of credit was not made on substantially the

same terms, including interest rates, collateral and repayment terms as

those prevailing at the time for comparable transactions with other

than the specified persons;

(ii) The extension(s) of credit was not made in the ordinary course

of business; or

(iii) The extension(s) of credit has involved or presently involves

more than a normal risk of collectibility or other unfavorable features

including the restructuring of an extension of credit, or a delinquency

as to payment of interest or principal.

(e) Proxy material required to be filed. (1) Three preliminary

copies of each information statement, proxy statement, form of proxy,

and other item of soliciting material to be furnished to security

holders concurrently therewith, shall be filed with the FDIC by the

bank or any other person making a solicitation subject to 12 CFR

335.401 at least ten calendar days (or 15 calendar days in the case of

other than routine meetings, as defined in paragraph (e)(2) of this

section) prior to the date such item is first sent or given to any

security holders, or such shorter date as may be authorized.

(2) For the purposes of this paragraph (e), a routine meeting

means:

(i) A meeting with respect to which no one is soliciting proxies

subject to Sec. 335.401 other than on behalf of the bank, and at which

the bank intends to present no matters other than:

(A) The election of directors;

(B) The election, approval or ratification of accountants;

(C) A Security holder proposal included pursuant to SEC Rule 14(a)-

8 (17 CFR 240.14a-8); and

(D) The approval or ratification of a plan as defined in paragraph

(a)(7)(ii) of Item 402 of SEC Regulation S-K (17 CFR 229.402(a)(7)(ii))

or amendments to such a plan; and

(ii) The bank does not comment upon or refer to a solicitation in

opposition (as defined in 17 CFR 240.14a-6) in connection with the

meeting in its proxy material.

(3) Where preliminary copies of material are filed with the FDIC

under this section, the printing of definitive copies for distribution

to security holders should be deferred until the comments of the FDIC's

staff have been received and considered.

(f) Additional information; filing of other statements in certain

cases. (1) In addition to the information expressly required to be

included in a statement, form, schedule or report, there shall be added

such further material information, if any, as may be necessary to make

the required statements, in light of the circumstances under which they

are made, not misleading.

(2) The FDIC may, upon the written request of the bank, and where

consistent with the protection of investors, permit the omission of one

or more of the statements or disclosures herein required, or the filing

in substitution therefor of appropriate statements or disclosures of

comparable character.

(3) The FDIC may also require the filing of other statements or

disclosures in addition to, or in substitution for those herein

required in any case where such statements are necessary or appropriate

for an adequate presentation of the financial condition of any person

whose financial statements are required, or disclosure about which is

otherwise necessary for the protection of investors.


 

Sec. 335.901 Delegation of authority to the Director (DOS) and to the

associate directors, regional directors and deputy regional directors

to act on matters with respect to disclosure laws and regulations.


 

(a) Except as provided in paragraph (b) of this section, authority

is delegated to the Director, Division of Supervision (DOS), and where

confirmed in writing by the director, to an associate director, or to

the appropriate regional director or


 

[[Page 6860]]


 

deputy regional director, to act on disclosure matters under and

pursuant to sections 12, 13, 14 and 16 of the Securities Exchange Act

of 1934 (15 U.S.C. 78) or this part.

(b) Authority to act on disclosure matters is retained by the FDIC

Board of Directors when such matters involve:

(1) Exemption from disclosure requirements pursuant to section

12(h) of the Securities Exchange Act of 1934 (15 U.S.C. 78l(h)); or

(2) Exemption from tender offer requirements pursuant to section

14(d)(8) of the Securities Exchange Act of 1934 (15 U.S.C. 78n(d)(8)).


 

By Order of the Board of Directors.


 

Dated at Washington, D.C. this 4th day of February, 1997.


 

Federal Deposit Insurance Corporation.

Jerry L. Langley,

Executive Secretary.

[FR Doc. 97-3596 Filed 2-13-97; 8:45 am]

BILLING CODE 6714-01-P