For Third Time, SEC Extends Broker Compliance Deadline for Banks

WASHINGTON – The SEC has again extended the deadline for banks to comply with broker registration requirements found in the Gramm-Leach-Bliley Act (GLBA). The SEC has pushed the compliance deadline to Sept. 30, 2006. In June 2004, the agency issued Regulation B, which would require banks to conduct certain securities and trust activities through SEC-regulated affiliates. Regulation B also extended exemptions to credit unions that include engaging in third-party networking, sweep accounts and trust and fiduciary services without having to register with the SEC. This is the third time the SEC has extended the compliance deadline with the first set for March 31, 2005 and then Sept. 30, 2005. CUNA, through its CUNA Brokerage Activities Task Force, has been working with the SEC on guidance that could impact credit unions. The new deadline was expected, CUNA said. “We have anticipated further delays, given the level of opposition from the banks regarding how the SEC proposed to implement the bank exemptions,” said Mary Dunn, CUNA senior vice president and associate general counsel. “We will continue to pursue favorable treatment for credit unions and credit union service organizations with the SEC under Reg B.” The deadline does not apply to credit unions. The SEC’s action follows objections from the Federal Reserve and other banking regulators regarding the agency’s proposal to implement the provisions of GLBA that exempt banks from SEC registration requirements for certain activities. The Fed, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency said the SEC’s proposal to regulate the securities provisions would interfere with banks’ ability to offer more products. Banking regulators also have said the SEC oversight would force the banks and related companies to examine individual customer accounts, which would be expensive. Last year, the House Financial Services Committee wrote to the SEC, criticizing the proposal and encouraging the commission to coordinate with the banking regulators on a new plan. The committee asked the SEC and banking regulators to enter into a joint rulemaking on the issue. [email protected]