Sec. 218.775 Exemption from the definition
of ‘‘broker’’ for banks effecting certain
excepted or exempted transactions in
investment company securities.
(a) A bank that meets the conditions
for an exception or exemption from the
definition of the term ‘‘broker’’ except
for the condition in section 3(a)(4)(C)(i)
of the Act (15 U.S.C. 78c(a)(4)(C)(i)), is
exempt from such condition to the
extent that it effects a transaction in a
covered security, if:
(1) Any such security is neither traded
on a national securities exchange nor
through the facilities of a national
securities association or an interdealer
quotation system;
(2) The security is distributed by a
registered broker or dealer, or the sales
charge is no more than the amount
permissible for a security sold by a
registered broker or dealer pursuant to
any applicable rules adopted pursuant
to section 22(b)(1) of the Investment
Company Act of 1940 (15 U.S.C. 80a–
22(b)(1)) by a securities association
registered under section 15A of the Act
(15 U.S.C. 78o–3); and
(3) Any such transaction is effected:
(i) Through the National Securities
Clearing Corporation; or
(ii) Directly with a transfer agent or
with an insurance company or separate
account that is excluded from the
definition of transfer agent in Section
3(a)(25) of the Act.
(b) Definitions. For purposes of this
section:
(1) Covered security means:
(i) Any security issued by an open-end
company, as defined by section
5(a)(1) of the Investment Company Act
(15 U.S.C. 80a–5(a)(1)), that is registered
under that Act; and
(ii) Any variable insurance contract
funded by a separate account, as defined
by section 2(a)(37) of the Investment
Company Act (15 U.S.C. 80a–2(a)(37)),
that is registered under that Act.
(2) Interdealer quotation system has
the same meaning as in 17 CFR
240.15c2–11.
(3) Insurance company has the same
meaning as in 15 U.S.C. 77b(a)(13).
Amended effective 4/17/2008, 73 Federal Register 20779
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