Developments of Note
FRB Issues Opinions on Mutual Fund Capitalization and Data Processing
The FRB issued interpretive rulings declaring that under certain circumstances it may be permissible for a bank holding company (a "BHC") to provide the initial capital to open-end mutual funds it advises, specifying the types of revenue that a data processing subsidiary may include when calculating its financial revenue, and declaring that the anti-tying provisions of Section 106 of the Bank Holding Company Act Amendments of 1970 ("Section 106") do not preclude a bank from issuing a credit card that only could be used to make purchases from an affiliated retailer.
Mutual Fund Capitalization. The FRB determined that under certain circumstances it would not object to a BHC owning 25% or more of the voting shares of affiliated mutual funds for a period not to exceed 6 months after the funds first issue shares. The BHC stated that it advises mutual funds through its subsidiaries, and when it
