DOB: News Bulletin 1962 - September 28, 2001

The Department of Banking News Bulletin 

Bulletin # 1962
Week Ending September 28, 2001

This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to John P. Burke, Commissioner of Banking, at the Connecticut Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800 or via E-mail to john.burke@ct.gov. Written comments will be considered only if they are received within ten days from the date of this bulletin.


STATE BANK ACTIVITY
Branch Activity

Section 36a-145 of the Connecticut General Statutes requires that each application for a branch, or for a limited branch at which loans will be made, be accompanied by a plan detailing how adequate services to meet the banking needs of all community residents will be provided. Plans are submitted when such applications are filed and are available for public inspection and comment at this Department for a period of 30 days. Questions concerning branch activity should be directed to the Bank Examination Division, (860) 240-8180.
Note: dates are listed in month/day/year format.

Date Bank Location Activity
9/25/01 The Milford Bank
Milford
1447 & 1461 Boston Post Road
Milford, CT 06460
filed
9/26/01 Liberty Bank
Middletown
162-166 Washington Avenue
North Haven, CT 06473
approved

Bulletin #1960, for the week ending September 14, 2001, listed the application of Cornerstone Bank for a mobile branch at 550 Summer Street, Stamford. The correct address for the proposed mobile branch is 1071 Post Road East, Westport.

PAYMENT INSTRUMENT AND MONEY TRANSMISSION LICENSE ACTIVITY

On October 1, 2001, Public Act 01-56, "AN ACT CONCERNING MONEY TRANSMISSION", became effective. The Act amended Connecticut's money order, travelers check and money transmitter statutes. Effective immediately, all applications for licensure under the act MUST use the new application form. The new form is available through the agency's Web site, or can be obtained by contacting the Bank Examination Division at (860) 240-8180. Applications received before October 1, 2001 will be processed under the former statutes. Please call Glenn Hayes, Assistant Director, Bank Examination Division, at (860) 240-8183 with any questions. Email inquiries and form requests should be sent to glenn.hayes@ct.gov.

ACQUISITION

On September 28, 2001, pursuant to Section 36a-185 of the Connecticut General Statutes, the Commissioner issued a notice of intent not to disapprove the acquisition by Southern Connecticut Bancorp, Inc. of 100 percent of the to be issued voting securities of The Bank of Southern Connecticut, a Connecticut bank (in organization), New Haven, Connecticut.

ORDER POSTPONES IMPLEMENTATION OF 2001 LEGISLATION
REGULATING CERTAIN BANKS AS BROKER-DEALERS
PENDING FINAL SECURITIES AND EXCHANGE COMMISSION RULE-MAKING

On September 26, 2001, the Commissioner issued an Order Excluding Banks from the Definition of "Broker-dealer" Under Section 36b-3(5) of the Connecticut Uniform Securities Act Until the Effective Date of Final Rules Issued by the Securities and Exchange Commission Providing Definitions and Exemptions from the Definitions of "Broker" and "Dealer" Under the Securities Exchange Act of 1934.

On May 31, 2001, the Governor had signed into law Public Act 01-48 which amended the definition of "broker-dealer" in Section 36b-3(5) of the Connecticut Uniform Securities Act to conform the exclusion for banks to that contained in Sections 3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934 (the "Exchange Act"). Sections 3(a)(4) and 3(a)(5) of the Exchange Act had been amended by the federal Gramm-Leach-Bliley Act, Pub. L. No. 106-202, 113 Stat. 1338 (1999) to include within the definitions of "broker" and "dealer" banks performing certain functions. Public Act 01-48 took effect October 1, 2001.

On July 18, 2001, however, the Securities and Exchange Commission (the "SEC") delayed implementation of interim rules that would have clarified certain terms used in Sections 3(a)(4) and 3(a)(5) of the Exchange Act. Specifically, the July 18, 2001 action exempted banks, savings associations and savings banks from the federal definitions of "broker" and "dealer" under the Exchange Act until May 12, 2002.

Acknowledging the SEC's deferral and the need for regulatory uniformity, the Commissioner's September 26, 2001 order provided that banks, as defined in Section 3(a)(6) of the Exchange Act, would be excluded from the definition of "broker-dealer" under Section 36b-3(5) of the Connecticut Uniform Securities Act until the effective date of any final rules issued by the SEC defining the terms in, and providing specific exemptions from, the definitions of "broker" and "dealer" under Sections 3(a)(4) and 3(a)(5) of the Exchange Act.

The Commissioner's order takes effect October 1, 2001.

Dated: Tuesday, October 2, 2001

John P. Burke
Banking Commissioner

 

 


 

ORDER EXCLUDING BANKS FROM THE DEFINITION OF "BROKER-DEALER" UNDER SECTION 36b-3(5) OF THE CONNECTICUT UNIFORM SECURITIES ACT UNTIL THE EFFECTIVE DATE OF FINAL RULES ISSUED BY THE SECURITIES AND EXCHANGE COMMISSION PROVIDING DEFINITIONS AND EXEMPTIONS FROM THE DEFINITIONS OF "BROKER" AND "DEALER" UNDER THE SECURITIES EXCHANGE ACT OF 1934

WHEREAS the Commissioner of Banking ("Commissioner") is charged with administering Chapter 672a of the Connecticut General Statutes, the Connecticut Uniform Securities Act ("Act") and Sections 36b-31-2 et seq. of the Regulations of Connecticut State Agencies ("Regulations") promulgated under the Act;

WHEREAS Section 36b-31(c) of the Act states, in pertinent part, that "[t]o encourage uniform interpretation and administration of sections 36b-2 to 36b-33, inclusive, and effective securities regulation and enforcement, the commissioner may cooperate with . . . the Securities and Exchange Commission . . . . The cooperation authorized by this subsection includes, but is not limited to, the following actions: . . . (5) executing joint agreements, memoranda of understanding and orders";

WHEREAS Section 36b-31(b) of the Act states, in pertinent part, that "[n]o . . . order may be made, amended or rescinded unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-33, inclusive. In prescribing . . . orders the commissioner may cooperate with the . . . Securities and Exchange Commission with a view to effectuating the policy of said sections to achieve maximum uniformity in the form and content of registration statements, applications and reports wherever practicable";

WHEREAS on November 12, 1999, the federal Gramm-Leach-Bliley Act ("GLBA"), Pub. L. No. 106-102, 113 Stat. 1338 (1999), was signed into law;

WHEREAS GLBA, among other things, amended Sections 3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934 ("Exchange Act") to limit the exceptions from the definitions of "broker" and "dealer" for banks, as defined in Section 3(a)(6) of the Exchange Act, conducting certain securities-related activities;

WHEREAS the provisions of GLBA affecting the status of banks as "brokers" and "dealers" carried an original effective date of May 12, 2001;

WHEREAS on May 11, 2001, the Securities and Exchange Commission ("SEC") issued interim final rules under the Exchange Act (Release No. 34-44291; File No. S7-12-01), such rules being denominated as Rules 3a4-2 through 3a4-6, 3a5-1, 3b-17, 3b-18 and 15a-7 through 15a-9 ("Interim Rules");

WHEREAS the Interim Rules clarified certain terms used in Sections 3(a)(4) and 3(a)(5) of the Exchange Act, as amended by GLBA, and provided exemptions for certain banks, savings associations and savings banks pursuant to the authority granted to the SEC by Section 36 of the Exchange Act;

WHEREAS Section 36(a)(1) of the Exchange Act provides that: "[e]xcept as provided in subsection (b), but notwithstanding any other provision of this title, the Commission, by rule, regulation or order, may conditionally or unconditionally exempt any person, security, or transaction, or any . . . class or classes of persons, securities, or transactions, from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interst [sic], and is consistent with the protection of investors";

WHEREAS Release No. 34-44291 provided that the Interim Rules were subject to amendment following the close of a comment period;

WHEREAS on July 18, 2001, the SEC issued an Order Extending Temporary Exemption of Banks, Savings Associations, and Savings Banks from the Definitions of "Broker" and "Dealer" Under Sections 3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934 ("July 18, 2001 Extension Order") pursuant to Section 36 of the Exchange Act;

WHEREAS the July 18, 2001 Extension Order delayed implementation of the Interim Rules by exempting banks, savings associations and savings banks from the federal definitions of "broker" and "dealer" under the Exchange Act until May 12, 2002;

WHEREAS in entering the July 18, 2001 Extension Order, the SEC found that the July 18, 2001 Extension Order was necessary and appropriate in the public interest and consistent with the protection of investors; that postponed implementation of the Interim Rules would prevent banks from unnecessarily incurring costs to comply with the statutory scheme based on the Interim Rules rather than the rules as amended; and that delayed implementation would give the SEC time to fully consider comments received on the Interim Rules and amend the Interim Rules as necessary;

WHEREAS on May 31, 2001, the Governor signed into law Public Act 01-48 ("P.A. 01-48") which amended the definition of "broker-dealer" in Section 36b-3(5) of the Act to conform the exclusion for banks to that contained in Sections 3(a)(4) and 3(a)(5) of the Exchange Act, as amended by GLBA;

WHEREAS P.A. 01-48 takes effect October 1, 2001;

WHEREAS Section 36b-3(5) of the Act, as amended by P.A. 01-48, states, in part, that the term "broker-dealer" means "any person engaged in the business of effecting transactions in securities for the account of others or for such person's own account. 'Broker-dealer' does not include . . . (C) a bank, as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, when conducting activities that would except it from the definitions of 'broker' or 'dealer' under Sections 3(a)(4) or 3(a)(5) of the Securities Exchange Act of 1934 . . .";

WHEREAS the temporary nature of the Interim Rules and the conflict in implementation dates created by the July 18, 2001 Extension Order and P.A. 01-48 would undermine the uniform treatment of banks as "broker-dealers", increase the risk of inconsistent interpretations at the state and federal levels and create an unwarranted compliance burden;

AND WHEREAS the Commissioner finds that the entry of this Order, which recognizes the need for state and federal uniformity, is necessary and appropriate in the public interest and consistent with the purposes fairly intended by the policy and provisions of the Act".

NOW THEREFORE, THE COMMISSIONER ORDERS AS FOLLOWS:

(1)
Banks, as defined in Section 3(a)(6) of the Exchange Act, shall be excluded from the definition of "broker-dealer" under Section 36b-3(5) of the Act, as amended, until the effective date of any final rule or rules issued by the SEC defining the terms in, and providing specific exemptions from, the definitions of "broker" and "dealer" under Sections 3(a)(4) and 3(a)(5) of the Exchange Act;
(2)
 
This Order shall be effective on October 1, 2001; and
(3)
 
This Order shall remain in effect until superseded, modified, withdrawn or vacated by the Commissioner or other legal authority.
So ordered at Hartford, Connecticut
this 26th day of September 2001.
John P. Burke
Banking Commissioner