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4000 - Advisory Opinions

Management Official Interlock Due to Representative or Nominee


July 19, 1980

Pamela E. F. LeCren, Attorney

The following is in response to your June 26, 1980 request for a ruling on whether or not a management official interlock exists between *** and *** Savings and Loan Association, ***, as a result of the fact that *** is serving as vice president of the latter and his wife *** is serving as a director of the former. *** has been associated with the savings and loan association since 1969. *** was elected to the board of *** Bank on January 27, 1969.

The Depository Institution Management Interlocks Act (12 U.S.C. 3201 et seq., "Interlocks Act") prohibits, in part, two depository institutions located in the same Standard Metropolitan Statistical Area ("SMSA") from sharing a common management official. Section 202(4) of the Interlocks Act defines the term management official to include any person who has a "representative or nominee" serving in the capacity of an employee or officer with management functions, a director, an advisory director, an honorary director, or a trustee of a business organization under the control of trustees. The Interlocks Act therefore not only prohibits the same person from serving two depository institutions located in the same SMSA but also treats anyone who has a representative or nominee serving a depository institution in the capacity of a management official as a management official of that institution in his or her own right. Thus a management official of one depository institution who has a representative or nominee who is serving as a management official at another institution is considered to be a management official of both. If the institutions are located in the same SMSA, as in the instance case, a prohibited interlock would result.

Section 348.2(k) of FDIC's regulations, which implements the Interlocks Act, defines the term "representative or nominee" as a person:

who serves as a management official and has an express or implied obligation to act on behalf of another person with respect to management responsibilities. Whether a person is a "representative or nominee" depends upon the facts in individual cases. The appropriate Federal supervisory agency or agencies will determine, after giving the affected persons the opportunity to respond, whether a person is a "representative or nominee". Certain relationships (including family, employment, and agency relationships), or the ability and exercise of ability by a shareholder of a depository organization to elect a director, may be evidence of such an express or implied obligation.

The definition in effect establishes an initial presumption that a family relationship between management officials of two different institutions may indicate an express or implied obligation for one to act on the other's behalf with respect to management responsibilities. A final determination would be made after review of the surrounding circumstances and any information or arguments presented by the affected person or persons.

We have reviewed the material submitted by you on behalf of *** and find that both individuals are well qualified to serve as management officials. We have no reason to believe that *** was elected to office because of her relationship to *** or because of any influence exercised by him. (*** owns no stock in *** Bank.) Nor can we find, based upon voting patterns, actions of the institutions or other indicia, that either is acting at the direction, or under the influence, of the other. Based on the above, we conclude that no representative or nominee relationship exists between *** and her husband, ***. We therefore find there to be no management official interlock between the two institutions.

This opinion is based upon the facts as known to us at the present time. Should new information become available or the facts change, the substance of this opinion may change.

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