Financial Institutions - Industrial Loan Corporations - Discount Securities Brokerage Service by Industrial Loan Corporations

Published: 1997-12-02

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now for only USD$40 per month.

R339. Financial Institutions, Industrial Loan Corporations.

R339-11. Discount Securities Brokerage Service by Industrial Loan Corporations.

R339-11-1. Authority, Scope, and Purpose.

(1) This rule is issued pursuant to Subsection 7-1-301(3).

(2) This rule governs the type of securities brokerage service industrial loan corporations may offer.

(3) The purpose of this rule is to allow securities activities limited to "discount brokerage" services by industrial loan corporations, similar to the discount brokerage services allowed state chartered banks.

R339-11-2. Definitions.

"Discount brokerage" is the practice of executing securities transactions solely at the direction of an industrial loan customer but not providing that customer with any investment advice.

R339-11-3. Discount Brokerage Services.

An industrial loan corporation may enter into a contractual arrangement with unrelated discount brokers where the broker executes securities transactions for industrial loan corporation customers and the industrial loan corporation shares the commissions generated by the transaction. This service is restricted as outlined below:

(1) The industrial loan corporation clearly acts solely at the customer's direction;

(2) The transactions are for the account of the customer and not the account of the industrial loan corporation;

(3) The transactions are without recourse;

(4) The industrial loan corporation makes no warranty as to the performance or quality of any security;

(5) The industrial loan corporation does not advise customers to make any particular investment;

(6) The industrial loan corporation's promotional material clearly explains the industrial loan corporation's limited role in the service; and

(7) The industrial loan corporation's promotional material clearly explains that the transactions are not federally insured.

KEY: financial institutions

Date of Enactment or Last Substantive Amendment: December 2, 1997

Notice of Continuation: September 28, 2017

Authorizing, and Implemented or Interpreted Law: 7-1-301(3)