(a) Defined terms for chiefly compensated test. For purposes of
this part and section 3(a)(4)(B)(ii) of the act (15 USC 78c(a)(4)(B)(ii)),
the following terms shall have the meaning provided:
(1) Chiefly compensated—account-by-account
test. Chiefly compensated shall mean the relationship-total
compensation percentage for each trust or fiduciary account of the bank is greater than 50 percent.
(2) The relationship-total compensation
percentage for a trust or fiduciary account shall be the
mean of the yearly compensation percentage for the account
for the immediately preceding year and the yearly compensation
percentage for the account for the year immediately preceding
that year.
(3) The yearly compensation percentage for a trust or fiduciary account shall be—
(i) equal to the relationship compensation
attributable to the trust or fiduciary account during the
year divided by the total compensation attributable to the trust
or fiduciary account during that year, with the quotient expressed
as a percentage; and
(ii) calculated within 60 days of the end of the year.
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(4) Relationship compensation means
any compensation a bank receives attributable to a trust or fiduciary
account that consists of—
(i) an administration fee, including,
without limitation, a fee paid—
(A) for personal services, tax
preparation, or real estate settlement services;
(B) for disbursing funds from, or for recording
receipt of payments to, a trust or fiduciary account;
(C) in connection with securities
lending or borrowing transactions;
(D) for custody services; or
(E) in connection with an investment in shares
of an investment company for personal service, the maintenance of
shareholder accounts or any service described in paragraph (a)(4)(iii)(C)
of this section;
(ii) an annual fee (payable on a monthly,
quarterly, or other basis), including, without limitation, a fee paid
for assessing investment performance or for reviewing compliance with
applicable investment guidelines or restrictions;
(iii) a fee based on a percentage of
assets under management, including, without limitation, a fee paid—
(A) pursuant to a plan under 17 CFR 270.12b-1;
(B) in connection with an investment in shares
of an investment company for personal service or the maintenance of
shareholder accounts;
(C) based on a percentage of assets under management for any of the
following services:
(I) providing transfer agent or sub-transfer agent services for beneficial
owners of investment company shares;
(II) aggregating and processing purchase
and redemption orders for investment company shares;
(III) providing beneficial owners with account
statements showing their purchases, sales, and positions in the investment
company;
(IV) processing
dividend payments for the investment company;
(V) providing sub-accounting services to
the investment company for shares held beneficially;
(VI) forwarding communications from the investment
company to the beneficial owners, including proxies, shareholder reports,
dividend and tax notices, and updated prospectuses; or
(VII) receiving, tabulating,
and transmitting proxies executed by beneficial owners of investment
company shares;
(D) based on the financial performance of
the assets in an account; or
(E) for the types of services described in paragraph (a)(4)(i)(C)
or (D) of this section if paid based on a percentage of assets under
management;
(iv) a flat or capped per-order processing
fee, paid by or on behalf of a customer or beneficiary, that is equal
to not more than the cost incurred by the bank in connection with
executing securities transactions for trust or fiduciary accounts;
or
(v) any combination
of such fees.
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(5) Trust or fiduciary account means
an account for which the bank acts in a trustee or fiduciary capacity
as defined in section 3(a)(4)(D) of the act (15 USC 78c(a)(4)(D)).
(6) Year means
a calendar year, or fiscal year consistently used by the bank for
recordkeeping and reporting purposes.
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(b) Revenues derived from transactions
conducted under other exceptions or exemptions. For purposes
of calculating the yearly compensation percentage for a trust or fiduciary
account, a bank may at its election exclude the compensation associated
with any securities transaction conducted in accordance with the exceptions
in section 3(a)(4)(B)(i) or sec tion 3(a)(4)(B)(iii)-(xi) of
the act (15 USC 78c(a)(4)(B)(i) or 78c(a)(4)(B)(iii)-(xi)) and the
rules issued thereunder, including any exemption related to such exceptions
jointly adopted by the Commission and the Board, provided that if
the bank elects to exclude such compensation, the bank must exclude
the compensation from both the relationship compensation (if applicable)
and total compensation for the account.
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(c) Advertising restrictions.
(1) In general. A bank complies with the advertising restriction in section 3(a)(4)(B)(ii)(II)
of the act (15 USC 78c(a)(4)(B)(ii)(II)) if advertisements by or on
behalf of the bank do not advertise—
(i) that the bank provides
securities brokerage services for trust or fiduciary accounts except
as part of advertising the bank’s broader trust or fiduciary services;
and
(ii) the securities
brokerage services provided by the bank to trust or fiduciary accounts
more prominently than the other aspects of the trust or fiduciary
services provided to such accounts.
(2) Advertisement. For purposes of this section, the term advertisement has
the same meaning as in section 218.760(h)(2).
