(a) A bank that meets the conditions
for an exception or exemption from the definition of the term broker except for the condition in section 3(a)(4)(C)(i) of the act (15
USC 78c(a)(4)(C)(i)), is exempt from such condition to the extent
that it effects a transaction in a covered security, if—
(1) any such security is neither traded
on a national securities exchange nor through the facilities of a
national securities association or an interdealer quotation system;
(2) the security is distributed
by a registered broker or dealer, or the sales charge is no more than
the amount permissible for a security sold by a registered broker
or dealer pursuant to any applicable rules adopted pursuant to section
22(b)(1) of the Investment Company Act of 1940 (15 USC 80a-22(b)(1))
by a securities association registered under section 15A of the act
(15 USC 78o-3); and
(3) any such transaction is effected—
(i) through the National
Securities Clearing Corporation; or
(ii) directly with a transfer agent
or with an insurance company or separate account that is excluded
from the definition of transfer agent in section 3(a)(25) of the act.
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(b) Definitions. For purposes of this section:
(1) Covered security means—
(i) any
security issued by an open-end company, as defined by section 5(a)(1)
of the Investment Company Act (15 USC 80a-5(a)(1)), that is registered
under that act; and
(ii) any variable insurance contract funded by a separate account,
as defined by section 2(a)(37) of the Investment Company Act (15 USC
80a-2(a)(37)), that is registered under that act.
(2) Interdealer quotation system has the same meaning as in 17 CFR
240.15c2-11.
(3) Insurance company has the same meaning as in 15 USC 77b(a)(13).
