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June 29, 1992
TO: INSTITUTIONAL FUNDS COMMITTEE NO. 13-92
BANK INVESTMENT MANAGEMENT MEMBERS NO. 1-92
RE: RECENT OCC INTERPRETATIONS
__________________________________________________________
Attached are two recent interpretive letters issued by the
staff of the Comptroller of the Currency that may be of interest
to Institute members.
Acceptance of Benefits
Trust Interpretation No. 267 concerns the ability of bank
trust departments to be reimbursed for travel expenses related to
attending seminars offered by investment company sponsors. The
OCC staff’s letter addressed a situation in which a mutual fund
sponsor offered to pay travel and lodging expenses related to the
seminar and recommended, in its seminar materials, that bank
trust departments discuss the seminar with their trust committees
and bank presidents in order to ensure that the acceptance of
such expenses would not result in a conflict of interest. The
fund sponsor also recommended that discussions of the seminar be
included in the minutes of meetings of the trust committee.
The OCC staff stated that, pursuant to Trust Interpretation
No. 222, bank trust departments could accept reimbursement for
travel expenses only if authorized by the governing trust
instrument, court order or local law. The staff stated that the
fund sponsor’s seminar materials inaccurately implied that
acceptance of such benefits in other circumstances might be
consistent with OCC regulations. The staff requested that the
fund sponsor modify its seminar materials to reflect the OCC’s
position and provide seminar attendees with a copy of Trust
Interpretation No. 222 "in order to avoid causing, or aiding or
abetting violations of 12 C.F.R. 9.12(a)". The sponsor also was
requested to affirmatively advise any banks that had already
agreed to attend its seminar of the OCC’s position and to furnish
them with a copy of Trust Interpretation No. 222, as well as this
letter. The staff noted that the OCC may take appropriate
remedial actions against banks for violations of 12 C.F.R.
9.12(a).
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While the OCC staff’s conclusions did not expressly rely on
the specific nature of the seminar in question, the letter notes
that the program consisted of a dinner, followed by a 90 minute
session the next morning, followed by two days that involved
"exclusively golf, trout fishing, eating and drinking."
Line Item Disclosure
Investment Securities Letter No. 62 was issued in response
to a request for clarification of the OCC staff’s position on
line item disclosure of management fees charged to collective
investment funds sold to qualified retirement plans. (Line item
disclosure involves the setting forth of such fees on a per
account basis.) The staff stated that the views expressed in
Trust Interpretation No. 242, which indicated that the OCC did
not require line-item disclosure on a per se basis, applied in
this case. (Trust Interpretation No. 242 represented a
liberalization as compared to past OCC pronouncements, which
implied that failure to make line item disclosure constituted a
breach of fiduciary duties.) However, the staff noted that it
did not intend through this letter "to minimize a bank’s
fiduciary duty . . . to make understandable disclosure of
relevant fees" and further stated that banks would be subject to
any requirement under local law to make line item disclosure of
fees.
Craig S. Tyle
Vice President - Securities
Attachment