February 7, 1995
TO: BANK INVESTMENT MANAGEMENT MEMBERS No. 5-95
BOARD OF GOVERNORS No. 21-95
INSTITUTIONAL FUNDS COMMITTEE No. 3-95
RE: SEC RESPONSE TO INSTITUTE LETTER ON OCC COMMON TRUST FUND
REGULATION
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As we previously reported, the Institute recently submitted the attached letter to SEC
Chairman Levitt concerning the Office of the Comptroller of the Currency’s review of its
Regulation 9.18 and other rules relating to the fiduciary activities of national banks. The
Institute’s letter expressed concern that as a result of this review process the OCC might amend
its rules so that common trust funds, for the first time, could operate as mutual funds without
being subject to the investor protection provisions of the federal securities laws.
Chairman Levitt recently sent the attached response to the Institute’s letter. In his
response, Chairman Levitt stated, "The Commission views a bank’s advertisement or
promotion of a common trust fund (apart from the promotion of the bank’s general fiduciary
services) as indicating that the fund is established primarily as a vehicle for general investment
by the public, and that it is therefore not exempt from registration under the federal securities
laws."
Chairman Levitt’s letter also states that the Commission has discussed with the OCC
whether it is contemplating any revision to Regulation 9.18 "that would expand a bank’s ability
to advertise or market common trust funds." The Commission has been told that "the OCC is
not currently revisiting its common trust fund rules as they relate to advertising and has no
plans to do so in the future." Chairman Levitt indicated the Commission will be in contact with
the OCC periodically about its review of other rules pertaining to the operation of common
trust funds.
Paul Schott Stevens
General Counsel
Attachment