Topic: Regulation R
-
Does Regulation R apply to our bank? We have a trust department and use outside broker/dealers to effectuate purchases and sales of securities. We usually have fewer than 500 trades per year, qualifying us for the de minimis exception. But if we exceeded that threshold, would we be subject to Regulation R?
—
by
Yes, your bank would be subject to Regulation R if it exceeds the transaction threshold under the de minimis exception, but it is possible that another exception will apply. The de minimis exception is just one of many exceptions from the definition of “broker” under the Securities Exchange Act of 1934 and Regulation R. If…
-
We have adopted a new incentive system for bank employees. We calculate incentive payments using a spreadsheet with a number of sales goals. A very small portion of the total is based on brokerage referrals. Based on my calculations, no one would earn more than $25 for the brokerage referral portion of the incentive. Is that permissible?
—
by
While this incentive system likely will pass regulatory muster (since it will not result in payments over $25 for referrals), we recommend revising the spreadsheet to expressly state that the portion awarded for brokerage referrals will not exceed the permissible “nominal” amounts for brokerage referrals. (It also is important to note that referral fees for…