(a) Organizing
and offering a covered fund in general. Notwithstanding section
248.10(a) of this subpart, a banking entity is not prohibited from
acquiring or retaining an ownership interest in, or acting as sponsor
to, a covered fund in connection with, directly or indirectly, organizing
and offering a covered fund, including serving as a general partner,
managing member, trustee, or commodity pool operator of the covered
fund and in any manner selecting or controlling (or having employees,
officers, directors, or agents who constitute) a majority of the directors,
trustees, or management of the covered fund, including any necessary
expenses for the foregoing, only if:
(1) The banking entity (or an affiliate
thereof) provides bona fide trust, fiduciary, investment advisory,
or commodity trading advisory services;
(2) The covered fund is organized and offered
only in connection with the provision of bona fide trust, fiduciary,
investment advisory, or commodity trading advisory services and only
to persons that are customers of such services of the banking entity
(or an affiliate thereof), pursuant to a written plan or similar documentation
outlining how the banking entity or such affiliate intends to provide
advisory or similar services to its customers through organizing and
offering such fund;
(3) The banking
entity and its affiliates do not acquire or retain an ownership interest
in the covered fund except as permitted under section 248.12 of this
subpart;
(4) The banking entity
and its affiliates comply with the requirements of section 248.14
of this subpart;
(5) The banking
entity and its affiliates do not, directly or indirectly, guarantee,
assume, or otherwise insure the obligations or performance of the
covered fund or of any covered fund in which such covered fund invests;
(6) The covered fund, for corporate,
marketing, promotional, or other purposes:
(i) Does not share the same name or
a variation of the same name with the banking entity (or an affiliate
thereof) except that a covered fund may share the same name or a variation
of the same name with a banking entity that is an investment adviser
to the covered fund if:
(A) The investment adviser is not an insured depository institution,
a company that controls an insured depository institution, or a company
that is treated as a bank holding company for purposes of section
8 of the International Banking Act of 1978 (12 U.S.C. 3106); and
(B) The investment adviser does not share
the same name or a variation of the same name as an insured depository
institution, a company that controls an insured depository institution,
or a company that is treated as a bank holding company for purposes
of section 8 of the International Banking Act of 1978 (12 U.S.C. 3106);
and
(ii) Does
not use the word “bank” in its name;
(7) No director or employee of the banking
entity (or an affiliate thereof) takes or retains an ownership interest
in the covered fund, except for any director or employee of the banking
entity or such affiliate who is directly engaged in providing investment advisory,
commodity trading advisory, or other services to the covered fund
at the time the director or employee takes the ownership interest;
and
(8) The banking entity:
(i) Clearly and conspicuously discloses,
in writing, to any prospective and actual investor in the covered
fund (such as through disclosure in the covered fund’s offering documents):
(A) That “any losses in
[such covered fund] will be borne solely by investors in [the covered
fund] and not by [the banking entity] or its affiliates; therefore,
[the banking entity’s] losses in [such covered fund] will be limited
to losses attributable to the ownership interests in the covered fund
held by [the banking entity] and any affiliate in its capacity as
investor in the [covered fund] or as beneficiary of a restricted profit
interest held by [the banking entity] or any affiliate”;
(B) That such investor should read the fund
offering documents before investing in the covered fund;
(C) That the “ownership interests in the covered
fund are not insured by the FDIC, and are not deposits, obligations
of, or endorsed or guaranteed in any way, by any banking entity” (unless
that happens to be the case); and
(D)
The role of the banking entity and its affiliates and employees in
sponsoring or providing any services to the covered fund; and
(ii) Complies with any additional
rules of the appropriate Federal banking agencies, the SEC, or the
CFTC, as provided in section 13(b)(2) of the BHC Act, designed to
ensure that losses in such covered fund are borne solely by investors
in the covered fund and not by the covered banking entity and its
affiliates.
(b) Organizing and offering an issuing entity of asset-backed securities.
(1) Notwithstanding
section 248.10(a) of this subpart, a banking entity is not prohibited
from acquiring or retaining an ownership interest in, or acting as
sponsor to, a covered fund that is an issuing entity of asset-backed
securities in connection with, directly or indirectly, organizing
and offering that issuing entity, so long as the banking entity and
its affiliates comply with all of the requirements of paragraph (a)(3)
through (8) of this section.
(2)
For purposes of this paragraph (b), organizing and offering a covered
fund that is an issuing entity of asset-backed securities means acting
as the securitizer, as that term is used in section 15G(a)(3) of the
Exchange Act (15 U.S.C. 78o-11(a)(3)) of the issuing entity, or acquiring
or retaining an ownership interest in the issuing entity as required
by section 15G of that Act (15 U.S.C.78o-11) and the implementing
regulations issued thereunder.
(c) Underwriting and market making in ownership
interests of a covered fund. The prohibition contained in section
248.10(a) does not apply to a banking entity’s underwriting activities
or market making-related activities involving a covered fund so long
as:
(1) Those activities
are conducted in accordance with the requirements of section 248.4(a)
or (b), respectively; and
(2) With
respect to any banking entity (or any affiliate thereof) that: Acts
as a sponsor, investment adviser or commodity trading advisor to a
particular covered fund or otherwise acquires and retains an ownership
interest in such covered fund in reliance on paragraph (a) of this
section; or acquires and retains an ownership interest in such covered
fund and is either a securitizer, as that term is used in section
15G(a)(3) of the Exchange Act (15 U.S.C. 78o-11(a)(3)), or
is acquiring and retaining an ownership interest in such covered fund
in compliance with section 15G of that Act (15 U.S.C.78o-11)
and the implementing regulations issued thereunder each as permitted
by paragraph (b) of this section, then in each such case any ownership
interests acquired or retained by the banking entity and its affiliates
in connection with underwriting and market making related activities
for that particular covered fund are included in the calculation
of ownership interests permitted to be held by the banking entity
and its affiliates under the limitations of section 248.12(a)(2)(ii)
and (iii) and (d).
