7-3-3.2 - Securities business permitted -- Activities conducted by subsidiary -- Disclosure statements required.
7-3-3.2. Securities business permitted -- Activities conducted by subsidiary --Disclosure statements required.
(1) A bank has all necessary and incidental powers to engage in the business ofpurchasing, selling, underwriting, and dealing in securities, whether as a principal for its ownaccount or as agent or broker for a customer, subject to the limitations in this section.
(2) The securities business that a bank may conduct as a principal for its own account islimited to the activities specified in Subsections (2)(a) through (d). A bank does not otherwisehave power to enter securities underwriting or act as a principal in issuance or marketing ofsecurities.
(a) A bank may purchase for investment and subsequently resell those types of securitiesauthorized by statute or rule of the commissioner, including, without limitation, shares purchasedin accordance with Section 7-3-21 and government or other securities lawfully acquired for theinvestment or trading portfolio of the bank or any of its subsidiaries or affiliates in accordancewith any limitation established by any other federal or state statute, regulation, or rule.
(b) A bank may sell securities of any kind acquired in the ordinary course of business,including, without limitation, through foreclosure on pledged securities.
(c) A bank may underwrite or deal in securities issued by a municipality, county, or otherlocal governmental entity or an agency of any such governmental entity, securities issued by astate or any of its agencies, or securities issued by the federal government or any of its agencies.
(d) A bank may establish or underwrite the securities of registered investment companiesthat are limited to operating or investing in money market funds or other short-term governmentor corporate debt instruments.
(3) This section may not be interpreted to alter the traditional rights and powers of banksto issue deposit instruments or similar instruments that acknowledge receipt of money forcustomers, even though the instruments may for some purposes be considered securities.
(4) Securities activities under this section, except those activities described inSubsections (2)(a) and (b), shall be conducted only through a subsidiary. Any such subsidiaryshall be established pursuant to rules that the commissioner may adopt after notice and hearing. Any such rules shall further define the standards by which a securities subsidiary of a bank maybe established and operated, including the requirement for registration, if required, as abroker-dealer with state, federal, and self-regulatory agencies. In addition to other standards thatmay be established by these rules, a bank may not invest more than 10% of its total capital in asecurities subsidiary. For purposes of that determination, total capital shall be calculated inaccordance with all other applicable statutes and rules of the commissioner, including the effectof loans from the bank to the subsidiary, together with capital standards established by theFederal Deposit Insurance Corporation. Every loan made by the bank to a securities subsidiaryshall comply with applicable state and federal laws. In all cases, each subsidiary shall maintainseparate corporate and financial records.
(5) Notwithstanding Subsection (4), a bank may enter into a networking agreement witha registered broker-dealer for the provision of brokerage services to the bank's customers on thebank's premises without the need to comply with Subsection (4), (6), or (7).
(6) The securities activities authorized by this section may be conducted from anauthorized banking office or from a separate office of a subsidiary, and may be offered tocustomers in this state or in any other state, territory, or country, except to the extent suchactivities are limited or prohibited by the laws of the other state, territory, or country.
(7) Before undertaking any of the direct or indirect securities activities permitted underthis section, except those authorized by Subsection (2)(a), a bank shall apply to thecommissioner. The commissioner shall render a decision of approval, conditional approval, ordisapproval within 60 days from the date of receiving the application. Public notice is notrequired for any hearing on the application that may be held. The commissioner shall satisfyhimself before approving the application that the bank possesses the managerial and financialresources necessary to conduct the securities activities safely and soundly.
(8) In conducting securities activities, a bank shall in all respects comply, and cause itssecurities subsidiary to comply, with the Utah Uniform Securities Act, the Securities Act of1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and otherapplicable statutes, regulations, and rules.
(9) In connection with each customer for which a bank or its securities subsidiary shallact as agent or broker, the bank or the subsidiary, as applicable, shall give a written disclosure toits customer prior to closing any single transaction or establishment of an account contemplatinga series of transactions. The disclosure statement shall be in legible print and shall be insubstantially the form shown in Subsection (9)(a) with respect to the bank and in Subsection(9)(b) with respect to any securities subsidiary.
(a)
The services offered by the securities department of this bank are offered to its customerswithout regard to any other banking relationship. By signing below the customer acknowledgesreceipt of this Disclosure Statement and agrees that any contract for securities services iscompletely voluntary, and the selection of this bank for securities services has not been requiredby any other business relationship or account with the bank.
__________(month/day/year).
CUSTOMER:
(b)
_________________ (name of securities agency subsidiary) is a subsidiary of______________ (name of bank). The services offered by _________________ (name ofsubsidiary) are offered to its customers without regard to any separate banking relationship with_______________ (name of bank). By signing below the customer acknowledges receipt of thisDisclosure Statement and agrees that any contract for services with _______________ (name ofsubsidiary) is completely voluntary and the selection of _______________ (name of subsidiary)for securities services has not been required by any business relationship with its parent bank.
__________(month/day/year).
CUSTOMER:
Amended by Chapter 75, 2000 General Session