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FDIC Federal Register Citations


June 10, 2004

Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429

Re: Securities of Nonmember Insured Banks
RIN 3064-AC79; 69 FR 19085 (April 12, 2004)

Dear Mr. Feldman:

America’s Community Bankers (“ACB”)1 is pleased to comment on the interim final rule issued by the Federal Deposit Insurance Corporation (“FDIC”) to implement for state non-member banks section 403 of the Sarbanes-Oxley Act of 20022mandating the electronic filing of beneficial ownership reports.3

The FDIC proposal requires that all notices of stock ownership and trading by corporate insiders of publicly held banks filed on or after June 11, 2004 be submitted electronically through the FDICconnect Business Center. The rule follows a pilot program run by the FDIC and mirrors the requirements imposed on other public companies by the Securities and Exchange Commission (the “SEC”).

ACB Position

The SEC rules provide that an individual filing beneficial ownership reports electronically would not be subject to the liability and the anti-fraud provisions of the federal securities laws with respect to an error or omission in an electronic filing resulting solely from electronic transmission errors beyond the control of the filer if the filer corrects the error or omission by filing an amendment in electronic format as soon as reasonably practicable after the electronic filer becomes aware of the error or omission.4 The FDIC believes that this protection from liability is a reasonable approach to transmission errors and that it applies to electronic filings of beneficial ownership reports made with the FDIC because of a cross-reference to SEC regulations in section 335.101(b) of the FDIC’s Part 335 regulations. The FDIC has requested comment on whether it is necessary or appropriate for the FDIC to add a similar provision to its own rule, and if so, the appropriate scope of such a provision.

ACB believes that protection from liability for transmission errors and omissions in electronic filings that are beyond the control of the filer is reasonable and appropriate for corporate insiders of public banks. We believe that the FDIC should include specific language to this effect in its Part 335 for public bank insiders because it is not clear that the cross-reference in section 335.101(b) would provide complete protection.

The cross-reference in section 335.101(b) is a general cross-reference to SEC regulations issued under sections 12, 13, 14(a), 14(c), 14(d), 14(f) and 16 of the Securities Exchange Act. While insider reporting requirements are addressed in section 16 of the Securities Exchange Act, and SEC rules 16a-1 through 16e-1, the protection against liability for electronic submission errors and omissions is contained in the SEC’s regulation S-T, which is a general regulation that deals with a variety of electronic filing matters involving the SEC’s Electronic Data Gathering, Analysis and Retrieval system (popularly known as “EDGAR”). It is not clear that corporate insiders of public banks who file beneficial ownership reports under section 16 of the Securities Exchange Act would be covered by the protections in regulation S-T through the cross-reference in section 335.101(b). Therefore, the FDIC should include in Part 335 specific language protecting these insiders from liability for transmission errors and omissions to the same degree that protection is accorded insiders of other public companies in section 103 of regulation S-T.

ACB appreciates the opportunity to comment on this important matter. If you have any questions, please contact the undersigned at (202) 857-3121 or via e-mail at, or Diane Koonjy at (202) 857-3144 or via e-mail at


Charlotte M. Bahin
Senior Vice President, Regulatory Affairs


1 ACB represents the nation's community banks. ACB members, whose aggregate assets total more than $1 trillion, pursue progressive, entrepreneurial and service-oriented strategies in providing financial services to benefit their customers and communities.
2 Pub. L. 107-204 (2002).
3 69 Fed. Reg. 19085 (April 12, 2004).
4 Section 103 of Regulation S-T, 17 C.F.R. § 232.103.

Last Updated 06/10/2004

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