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

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laws (e.g., Sections 23A/23B, the Anti-tying Statute, “crossmarketing” restrictions, reporting requirements, etc.). 7. Identification and monitoring of key risk indicators with respect to derivatives transactions and other trading activities, 37 including: a. Addressing any legal risk that a derivative contract could be unenforceable if challenged. b. Completion of “appropriateness” or “suitability” reviews of derivative clients. c. Providing ongoing training as to legal/compliance-related responsibilities in derivatives structuring, marketing and trading. d. Assuring appropriate policies and procedures with respect to reporting and accounting, responsibility and authority, transaction processing, compliance-related supervision and reputational risk evaluation. 8. Evaluation of issues with respect to the identification and treatment of material non-public information in the context of loan, credit derivative and related markets, as well as in the context of “traditional” securities trading. 38 37 See Bank Activities Guide at Part II.E. 38 See Bank Activities Guide at Part V.A.3.d. See also, e.g., Joint Market Practices Forum Statement of Principles and Recommendations Regarding the Handling of Material Non-public Information by Credit Market Participants (October 2003) and European Supplement (May 2005). 60
9. Review/evaluation of outsourcing contracts. 39 10. Focus on compliance with banking and securities law requirements in connection with international securities transactions/linkages, 40 in terms of (a) licensing, 41 and (b) supervision. 42 39 See, e.g., NASD Notice to Members 05-48 (July 2005) (broker-dealer due diligence and supervisory responsibilities when outsourcing activities to third-party service providers, and prohibition on outsourcing activities requiring registration or qualification, or supervisory or compliance responsibilities); New York Stock Exchange (“NYSE”) proposed Rule 340 (see SEC Release No. 34-51240 (March 16, 2005) (solicitation of public comments) (procedures with respect to the outsourcing of services and functions by NYSE members)); Basel Committee/International Organization of Securities Commissions (“IOSCO”)/International Association of Insurance Supervisors Report: Outsourcing in Financial Services (February 2005). See also Bank Activities Guide at Part I.B.6.f and Part IX.B.2. 40 See Bank Activities Guide at Part XI.D. 41 See, e.g., CIBC Mellon Trust, SEC Admin. Proc. No. 3-11839 (March 2, 2005) (settled administrative action against CIBC Mellon Trust for failing to register as a transfer agent or as a broker-dealer in connection with its activities as administrator of employee stock plans for issuers for which CIBC Mellon acted as transfer agent); SEC v. CIBC Mellon Trust, SEC Litigation Release No. 19081 (February 16, 2005) (charge of employee participation in fraudulent scheme to promote, sell and distribute stock of non-U.S. company through illegal issuance of stock certificates; CIBC Mellon charged with having failed to train its employees with respect to U.S. securities laws, or create systems to assure compliance with U.S. securities laws despite providing transfer agent services to U.S. publicly-traded companies). 42 See, e.g., CSFB, SEC Admin. Proc. No. 19081 (February 16, 2005) (failure (i) to supervise an employee who engaged in improper trading on behalf of a non-U.S. subsidiary which CSFB failed to detect since the employee’s only supervisor was an employee of the non-U.S. subsidiary located outside of the U.S., and was not properly licensed as a supervisor at CSFB; and (ii) to establish systems to implement supervisory procedures to track and monitor supervisory appointments to ensure that all registered representatives in the U.S. were assigned to a properly licensed supervisor). 61
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SIA COMPLIANCE AND LEGAL DIVISION A
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of the Comptroller of the Currency
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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 and 28: . Foreign Transactions Safe Harbor
Page 29 and 30: 3. Although affiliates of a bank ge
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: merchants, money transmitters, chec
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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