FDIC Law, Regulations, Related Acts
4000 - Advisory Opinions
Bank Employee Who Sells Commercial Checking Accounts and Is Paid Solely by Commission Must Register as Deposit Broker
August 6, 1992
Valerie J. Best, Counsel
This is in response to your July 23, 1992 letter concerning deposit broker registration requirements. In your letter, you indicated that [Bank] intends to hire salespersons in order to sell commercial checking accounts. You stated that these salespersons, paid solely by commission, would only solicit deposits for accounts which would pay no interest. You asked whether such persons need be registered as deposit brokers.
The term "deposit broker" is broadly defined in section 29 of the FDI Act to mean "[a]ny person engaged in the business of placing deposits, or facilitating the placement of deposits, of third parties with insured depository institutions or the business of placing deposits with insured depository institutions for the purpose of selling interests in those deposits to third parties."1 The statute further provides that a deposit broker does not include "[a]n employee of an insured depository institution, with respect to funds placed with the employing depository institution."2 However, to be considered an employee, such a person must (1) be employed exclusively by the institution, (2) be compensated primarily in the form of a salary, (3) not share his or her compensation with a deposit broker, and (4) occupy office space which is used exclusively for the benefit of the insured depository institution which employs that individual.3 In common usage, the word "salary" means a fixed and periodical payment payable without regard to actual results achieved as distinguished from "commission" which means compensation based on percentage of amount collected, received or agreed to be paid for results accomplished.
From the information you have provided, it appears that persons hired to obtain commercial checking accounts would not satisfy all the requirements of the employee definition. Specifically, since those persons would be paid solely by commission, they clearly would not be paid primarily in the form of salary as required by the statute. Since they are not "employees" as that term is defined in the FDI Act, they may not avail themselves of the exception available to "employees."
The fact that the salespersons will only offer non-interest bearing accounts does not exempt them from the statue. Section 29 of the FDI Act simply refers to "deposits"; it does not distinguish between interest-bearing accounts and non-interest-bearing accounts. Regulations implementing section 29 provide that the term "deposit" has the same meaning as provided in section 3(1) of the FDI Act.4 The definition of deposit in section 3(1) does not distinguish interest-bearing accounts from non-interest-bearing accounts.
Under the arrangement you outlined, the salespersons would be required to register as deposit brokers. It is the FDIC's view that a company may file a single notice on behalf of all of its employees and/or agents, although the FDIC reserves the right to require individual information at any time.
I trust this has been responsive to your inquiry. If you have additional questions, please contact me at the above address.
112 U.S.C. § 1831f(g)(1)(A). Go back to Text
212 U.S.C. § 1831f(g)(2)(B); 12 C.F.R. § 337.6(a)(2). Go back to Text
312 U.S.C. § 1831f(g)(4); 12 C.F.R. § 337.6(a)(3). Go back to Text
412 U.S.C. § 1813(1). Go back to Text