Our trust department requires bank directors who serve on the trust committee to sign a form disclosing their securities purchased or sold during the previous quarter involving $10,000 or more. Should this requirement be limited to bank officers and employees, or are bank directors considered employees if their only function is as a director and they are not otherwise employed by the bank? Also, what is the timeframe for submitting the disclosures?

The FDIC’s quarterly reporting requirements for certain officers and employees who purchase or sell securities aggregating more than $10,000 in a calendar quarter do not apply to bank directors. However, directors who also are officers are subject to these requirements.

The FDIC’s Trust Examination Manual confirms that “bank directors are not covered by this provision” requiring quarterly reports “from bank officers and employees who make or participate in the making of investment recommendations or decisions for the accounts of customers, or who obtain information concerning which securities are being purchased or sold.”

Officers and employees subject to reporting “must report to the FDIC-supervised institution, within 30-calendar days after the end of the calendar quarter . . . .” We note that the Trust Examination Manual provides that such transactions must be reported “within 10 business days after the end of the calendar quarter.” However, this section of the Trust Examination Manual has not been updated since 2005, and the FDIC amended its regulation to provide for a 30-calendar-day reporting period in 2007.

For resources related to our guidance, please see:

Recordkeeping and Confirmation Requirements for Securities Transactions, 12 CFR 344.9(b) (“Exempt transactions. Excluded from this reporting requirement are: (1) Transactions for the benefit of the officer or employee over which the officer or employee has no direct or indirect influence or control; (2) Transactions in registered investment company shares; (3) Transactions in government securities; and (4) All transactions involving in the aggregate $10,000 or less during the calendar quarter.”)

FDIC Trust Examination Manual, Officer/ Employee Reporting of Personal Investment Transactions (“Quarterly reports are required from bank officers and employees who make or participate in the making of investment recommendations or decision[s] for the accounts of customers, or who obtain information concerning which securities are being purchased or sold. Bank directors are not covered by this provision. However, bank directors who are also officers of the bank are required to file the reports, when applicable.”)

Recordkeeping and Confirmation Requirements for Securities Transactions, 12 CFR 344.9(a) (“Officers and employees subject to reporting. FDIC-supervised institution officers and employees who: (1) Make investment recommendations or decisions for the accounts of customers; (2) Participate in the determination of such recommendations or decisions; or (3) In connection with their duties, obtain information concerning which securities are being purchased or sold or recommend such action, must report to the FDIC-supervised institution, within 30-calendar days after the end of the calendar quarter, all transactions in securities made by them or on their behalf, either at the FDIC-supervised institution or elsewhere in which they have a beneficial interest. The report shall identify the securities purchased or sold and indicate the dates of the transactions and whether the transactions were purchases or sales.”)

FDIC Trust Examination Manual, Officer/ Employee Reporting of Personal Investment Transactions (“Section 344.9 requires bank officers and employees who make investment recommendations or decisions for the accounts of customers, participate in such determination, or obtain information concerning which securities are being purchased, sold, or recommended must report to the bank within 10 business days after the end of the calendar quarter, all transactions in securities made by them or on their behalf, either at the bank or elsewhere in which they have a beneficial interest. The regulation does not require that the bank or trust department have written policy or procedures to ensure appropriate disclosure and only requires disclosure when transactions meeting the requirements are present. Similar policies and procedures are required for national banks (12 CFR 12) and state member banks [FRB Regulation H, Section 208.8(k)(5)(iv)].”)

Final Rule, Extension of Time Period for Quarterly Reporting of Bank Officers' and Certain Employees' Personal Securities Transactions, 72 Fed. Reg. 60546, 60546 (November 26, 2007) (“The FDIC is amending its regulation governing personal securities trading reporting to extend the time period from 10-business to 30-calendar days after the end of the calendar quarter that officers and all employees of state nonmember banks who make or participate in investment decisions for the accounts of customers have to report their personal securities transactions.”)