Securities Activities of Banks in the GLB Era - Cleary Gottlieb Steen ...

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c. Transactions Outside a Safe Harbor The Proposed Anti-tying Interpretation made clear that transactions that fall outside of the combined-balance discount or foreign transaction safe harbors may nonetheless be permitted under the Anti-tying Statute if they qualify for another exemption, or (in the case of the foreign transaction safe harbor) the transactions involved are so foreign in nature that they do not raise the competitive concerns that the Statute was designed to address. Transactions that fall outside a safe-harbor require a customerby-customer evaluation, while 12 C.F.R. § 225.7(b) exceptions (i.e., the safe-harbor exceptions) do not. D. Definition of “Bank” for Purposes of the Anti-tying Statute 1. A “bank” for purposes of the Anti-tying Statute includes virtually any U.S. depository institution, including commercial banks and savings banks, as well as “non-bank banks”, limited-purpose trust companies, credit card banks, Edge Act and Agreement corporations, industrial loan companies and similar institutions (collectively “non-bank depository institutions”). 2. The Anti-tying Statute also applies to any U.S. branch, agency or commercial lending subsidiary of a foreign bank. See 12 U.S.C. § 3106; 12 C.F.R. § 225.7. a. The term “bank” does not include foreign banks as such, even if the bank maintains one or more U.S. banking offices. Accordingly, the Anti-tying Statute does not apply to non-U.S. branches or offices of foreign banks. b. Although the Board has not made a formal statement on the matter, it would appear that a foreign bank’s offshore managed branch/booking center (see 12 C.F.R. § 211.24(g)) should be treated as a non-U.S. branch for this purpose even if it is managed by a U.S. branch. 28
3. Although affiliates of a bank generally are not subject to the Antitying Statute, an affiliate of a non-bank bank or a non-bank depository institution is subject to the Statute in connection with any transaction involving the products of both the affiliate and the non-bank as if the affiliate were the bank and the institution were an affiliate. See 12 U.S.C. §§ 1843(f)(9)(B) and (h)(2). 4. The Proposed Anti-tying Interpretation states that the Anti-tying Statute also applies to all subsidiaries of a bank -- other than a “financial subsidiary” of a national bank or a state-chartered Federal Reserve System member bank (a “state member bank”) under the Gramm-Leach-Bliley Act (the “GLBA”) -- in the same manner as it applies to the bank itself. A “financial subsidiary” of a national bank or a state member bank, however, is treated as an affiliate of the bank, and not as a subsidiary of the bank, for purposes of the Statute. The Proposed Financial Subsidiary Anti-tying Exception would provide that a financial subsidiary of a state non-member bank would likewise be treated as an affiliate of the bank, and not as a subsidiary of the bank, for purposes of the Anti-tying Statute. Accordingly, if adopted, the Exception would equalize the treatment of financial subsidiaries of all U.S. banks under the Statute. See 12 U.S.C. § 1971 (national bank); 12 C.F.R. § 208.73(e) (state member bank). 5. Under 12 C.F.R. § 225.7, the Anti-tying Statute does not apply to tying arrangements entered into by any BHC non-bank subsidiary. 6. Savings associations are subject to anti-tying restrictions under the Home Owners Loan Act that are virtually identical to those applicable to banks under the Anti-tying Statute. See 12 U.S.C. § 1464(q); 12 C.F.R. § 536.30. E. Definition of “Affiliate” for Purposes of the Anti-tying Statute 1. The term “affiliate” with respect to a bank under the Anti-tying Statute generally means any company or natural person that controls the bank, and any company that is controlled by such company or person (other than the bank itself). 29
Page 1 and 2: SIA COMPLIANCE AND LEGAL DIVISION A
Page 3 and 4: of the Comptroller of the Currency
Page 5 and 6: circumstances where products includ
Page 7 and 8: strongly criticize the Board for pu
Page 9 and 10: standard of bank “coercion” req
Page 11 and 12: ank can show that a customer has on
Page 13 and 14: (iv) A study on the tying of lendin
Page 15 and 16: (i) A prospective borrower to provi
Page 17 and 18: a reward for previously providing c
Page 19 and 20: C. Exceptions to the Anti-Tying Pro
Page 21 and 22: (14) Asset management services prov
Page 23 and 24: (B) in accordance with this policy,
Page 25 and 26: where the tied product is to be pro
Page 27: . Foreign Transactions Safe Harbor
Page 31 and 32: the bridge loan is made to purchase
Page 33 and 34: dealer affiliate is purportedly inv
Page 35 and 36: . The Proposed Anti-tying Interpret
Page 37 and 38: G. NASD Developments mixed-product
Page 39 and 40: (B) financial institutions with bet
Page 41 and 42: a. National regulators will still n
Page 43 and 44: 2. There is a key relationship betw
Page 45 and 46: C. Complex Structured Finance Trans
Page 47 and 48: eview. “Higher risk transactions
Page 49 and 50: (i) Written policies and procedures
Page 51 and 52: d. In an apparent divergence from t
Page 53 and 54: “reporting up” rules under Sect
Page 55 and 56: incurring fiduciary obligations, ad
Page 57 and 58: intraday extension of credit at the
Page 59 and 60: merchants, money transmitters, chec
Page 61 and 62: 9. Review/evaluation of outsourcing
Page 63 and 64: (i) Conflicts of interest, includin
Page 65 and 66: (i) Whether the access of senior le
Page 67 and 68: and payments involving use of clien
Page 69 and 70: eports and are promptly addressed,
Page 71: NEW YORK One Liberty Plaza New York

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