New Regulatory Developments Affecting Banks - SEC Votes to Propose Regulations Implementing Gramm-Leach- Bliley Bank Broker Rules

The SEC voted on June 2, 2004 to publish proposed Regulation B ("Proposed Regulation B") which will implement provisions of the Gramm-Leach-Bliley Act of 1999 ("GLBA") that identify the securities activities that banks may engage in without registering as "brokers" under the Securities Exchange Act of 1934, as amended ("Exchange Act"). The GLBA replaced the blanket exemption from the definition of "broker" previously enjoyed by banks with eleven exemptions. (See the December 12, 2000 issue of the Alert for a description of the exemptions.) Proposed Regulation B builds on interim rules that were adopted by the SEC in 2001 but suspended after banks and their regulators raised objections. As a general matter, Proposed Regulation B seeks to further elucidate the eleven statutory exemptions, adds a few new exemptions, and applies them as appropriate to banks and thrifts.