June 7, 1994
TO: BANK INVESTMENT MANAGEMENT MEMBERS NO. 22-94
BOARD OF GOVERNORS NO. 49-94
RE: OCC RESPONSE TO INSTITUTE LETTER ON INCONSISTENT DISCLOSURE
__________________________________________________________
As we previously informed you, the Institute corresponded with
the Federal Deposit Insurance Corporation, the Office of Thrift
Supervision, the Office of the Comptroller of the Currency and the
Federal Reserve Board, urging these agencies to resolve
inconsistencies between the disclosure language they would apply
under their guidelines to money market funds and that which is
required by the Securities and Exchange Commission. (See
Memorandum to the Board of Governors No. 12-94, Bank Investment
Management Members No. 8-94, dated February 2, 1994.) The OCC
recently sent the attached response to the Institute. (The FDIC
and OTS had previously responded in letters that also are
attached.)
The OCC's letter states that the delay in responding to the
Institute's letter was "due to the pendency of several OCC
initiatives that were related to the issues raised in" the
Institute's letter. The OCC's letter asserts that, in the
meantime, the agency has "seriously responded to the need for
regulatory coordination and consistency in bank related mutual fund
sales."
The OCC's letter further states that, after receiving the
Institute's letter, the OCC arranged an interagency meeting with
the three other banking agencies and the SEC, and included the
Institute's letter on the agenda. At the meeting, the banking
agencies noted the Interagency Statement on Sales of Nondeposit
Investment Products "and encouraged the SEC to consider consistent
disclosures where appropriate." (The Interagency Statement also
requires disclosure language which, when applied to money market
funds, would be inconsistent with the SEC-required language.)
According to the OCC's letter, at the same meeting the OCC
noted that the SEC's survey of mutual fund consumers last November
indicated a high level of confusion among all mutual fund investors
"regarding the federal government's role in backing mutual fund
investments" and "it may be appropriate to reconsider the
effectiveness of the securities regulatory disclosure requirements
that have been used to-date."
Finally, the OCC's letter notes that its recent orders
approving acquisitions by First Union Bank and Mellon Bank state
that the Interagency Statement does not proscribe the use of
different disclosure language "so long as the customer receives a
disclosure conveying the same information."
We will keep you advised of further developments in this
regard.
Paul Schott Stevens
General Counsel
Attachments