Sec. 218.722 Exemption allowing banks to
calculate trust and fiduciary compensation
on a bank-wide basis.
(a) General. A bank is exempt from
meeting the ‘‘chiefly compensated’’
condition in section 3(a)(4)(B)(ii)(I) of
the Act (15 U.S.C. 78c(a)(4)(B)(ii)(I)) to
the extent that it effects transactions in
securities for any account in a trustee or
fiduciary capacity within the scope of
section 3(a)(4)(D) of the Act (15 U.S.C.
78c(a)(4)(D)) if:
(1) The bank meets the other
conditions for the exception from the
definition of the term ‘‘broker’’ under
sections 3(a)(4)(B)(ii) and 3(a)(4)(C) of
the Act (15 U.S.C. 78c(a)(4)(B)(ii) and 15
U.S.C. 78c(a)(4)(C)), including the
advertising restrictions in section
3(a)(4)(B)(ii)(II) of the Act (15 U.S.C.
78c(a)(4)(B)(ii)(II) as implemented by
§l.721(c); and
(2) The aggregate relationship-total
compensation percentage for the bank’s
trust and fiduciary business is at least
70 percent.
(b) Aggregate relationship-total
compensation percentage. For purposes
of this section, the aggregate
relationship-total compensation
percentage for a bank’s trust and
fiduciary business shall be the mean of
the bank’s yearly bank-wide
compensation percentage for the
immediately preceding year and the
bank’s yearly bank-wide compensation
percentage for the year immediately
preceding that year.
(c) Yearly bank-wide compensation
percentage. For purposes of this section,
a bank’s yearly bank-wide compensation
percentage for a year shall be
(1) Equal to the relationship
compensation attributable to the bank’s
trust and fiduciary business as a whole
during the year divided by the total
compensation attributable to the bank’s
trust and fiduciary business as a whole
during that year, with the quotient
expressed as a percentage; and
(2) Calculated within 60 days of the
end of the year.
(d) Revenues derived from
transactions conducted under other
exceptions or exemptions. For purposes
of calculating the yearly compensation
percentage for a trust or fiduciary
account, a bank may at its election
exclude the compensation associated
with any securities transaction
conducted in accordance with the
exceptions in section 3(a)(4)(B)(i) or
sections 3(a)(4)(B)(iii)–(xi) of the Act (15
U.S.C. 78c(a)(4)(B)(i) or 78c(a)(4)(B)(iii)–
(xi)) and the rules issued thereunder,
including any exemption related to such
sections jointly adopted by the
Commission and the Board, provided
that if the bank elects to exclude such
compensation, the bank must exclude
the compensation from both the
relationship compensation (if
applicable) and total compensation of
the bank.
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