August 11, 1989
TO: SEC RULES MEMBERS NO. 40-89
RE: STAFF DENIES SECOND REQUEST FOR NO-ACTION FOR BANK
COMMON TRUST FUND
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The Staff of the Division of Investment Management has
denied a second request for no-action assurances by a bank that
wished to contribute monies received from unaffiliated bank
common trust funds for which it served as trustee to common trust
funds maintained by the bank. (Northern Trust Corp., pub. avail.
July 21, 1989.) In denying the original request, the staff
stated the proposed arrangement involved the use of a trust
"guise" prohibited by the Federal Reserve Board and that the
bank's intention to advertise its services would be outside the
scope of the common trust fund exception. (See Memorandum to SEC
Rules Members No. 19-89, dated March 21, 1989).
In its request for reconsideration, the bank argued that
its request was consistent with past no-action positions of the
staff. It also stated that it would limit its advertising so
that it would not constitute "general advertising or
solicitation" under Regulation D under the 1933 Act.
The staff replied that the bank's proposal presented
differences with prior no-action letters, including that in the
prior letters, the bank requesting relief was either a trustee or
a co-trustee of the monies in question (The bank in this case
argued that it was an "effective" co-trustee.) In addition, the
staff stated that it had never applied Regulation D standards to
advertising issues under Section 3(c)(3) of the 1940 Act.
Copies of the request and response are attached.
Craig S. Tyle
Assistant General Counsel
Attachment