(a) Fiduciary purchases of assets from an affiliate. A member bank
may not purchase as fiduciary any security or other asset from any
affiliate unless the purchase is permitted—
(1) under the instrument creating the fiduciary
relationship;
(2) by
court order; or
(3)
by law of the jurisdiction governing the fiduciary relationship.
(b) Purchase
of a security underwritten by an affiliate.
(1) A member bank, whether acting as principal
or fiduciary, may not knowingly purchase or otherwise acquire, during
the existence of any underwriting or selling syndicate, any security
if a principal underwriter of that security is an affiliate of the
member bank.
(2) Paragraph
(b)(1) of this section does not apply if the purchase or acquisition
of the security has been approved, before the security is initially
offered for sale to the public, by a majority of the directors of
the member bank based on a determination that the purchase is a sound
investment for the member bank, or for the person on whose behalf
the member bank is acting as fiduciary, as the case may be, irrespective
of the fact that an affiliate of the member bank is a principal underwriter
of the security.
(3)
The approval requirement of paragraph (b)(2) of this section may be
met if—
(i) a majority of the directors of the
member bank approves standards for the member bank’s acquisitions
of securities described in paragraph (b)(1) of this section, based
on the determination set forth in paragraph (b)(2) of this section;
(ii) each acquisition
described in paragraph (b)(1) of this section meets the standards;
and
(iii) a majority
of the directors of the member bank periodically reviews acquisitions
described in paragraph (b)(1) of this section to ensure that they
meet the standards and periodically reviews the standards to ensure
that they continue to meet the criterion set forth in paragraph (b)(2)
of this section.
(4) A U.S. branch, agency, or commercial
lending company of a foreign bank may comply with paragraphs (b)(2)
and (b)(3) of this section by obtaining the approvals and reviews required
by paragraphs (b)(2) and (b)(3) from either—
(i) a majority
of the directors of the foreign bank; or
(ii) a majority of the senior executive
officers of the foreign bank.
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(c) Special definitions. For purposes
of this section:
(1) Principal underwriter means
any underwriter who, in connection with a primary distribution of
securities—
(i) is in privity of contract with the
issuer or an affiliated person of the issuer;
(ii) acting alone or in concert with
one or more other persons, initiates or directs the formation of an
underwriting syndicate; or
(iii) is allowed a rate of gross commission,
spread, or other profit greater than the rate allowed another underwriter
participating in the distribution.
(2) Security has the same meaning
as in section 3(a)(10) of the Securities Exchange Act of 1934 (15
USC 78c(a)(10)).
