FDIC Law, Regulations, Related Acts
4000 - Advisory Opinions
Notice of Acquisition of Control
October 21, 1987
J. William Via, Jr., Counsel
The person who would own a majority of the shares of the subject nonmember insured bank and serve as the chairman of its board of directors is, and would remain, an employee of a company engaged solely in brokerage activities. The question has been raised whether, given section 103 of the Competitive Equality Banking Act of 1987, the proposal might transgress the Glass-Steagall Act, section 20 (12 U.S.C. § 377) (affiliations of banks with securities companies) or section 32 (12 U.S.C. § 78) (interlocks of banks and securities companies).
You are advised that (as we understand the facts) the proposal does not bring into play either section 20 or section 32 of the Glass-Steagall Act. These provisions apply, respectively, to affiliations and interlocks between a bank and an entity that is engaged in the underwriting of securities; they do not encompass pure brokerage activity, that is the business of buying and selling securities in the open market upon the orders of others, as their agent. See Securities Industry Association v. Board of Governors of the Federal Reserve System, 468 U.S. 207 (1984) (Schwab). Also, there would, in any case, be no affiliation in the sense of section 20 between the bank and the company here involved as a result of the proposal.