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Univ. of Toledo College of Law

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Wednesday, September 19, 2007

SEC Staff Recommends Adoption of Reg R

Excerpt from Opening Remarks at SEC Open Meeting: Adoption of Regulation R — The Bank Broker Provisions of the Securities Exchange Act of 1934, by Erik R. Sirri, Director, Division of Market Regulation, September 19, 2007:

The Agencies received approximately 60 comments on proposed Regulation R. Staff from the Commission and the banking agencies have worked closely together to consider the comments and draft the final rules that we recommend today. This collaborative process has resulted in a set of rules that — while largely similar to those proposed — have been modified and clarified to address commenters' concerns. The revised rules are consistent with the language of the bank broker exceptions established by the GLBA and the underlying policies of functional regulation and investor protection. They also take into account banking industry implementation and compliance concerns.

The rules define terms used in the exceptions relating to networking, trust and fiduciary activities, safekeeping and custody, and sweep accounts. They also provide conditional exemptions from certain of the statutory requirements of these exceptions. In addition, they provide banks with the targeted exemptions for particular securities activities that were proposed as well as one new exemption pertaining to employee stock plans. Finally, these rules provide banks with additional time to come into compliance with the GLBA, and grant limited relief for banks from possible third-party rescission rights.

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