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#2268390 - 03/30/22 01:09 PM Regulation U
Anonymous
Unregistered

I have a question:

Should the Form U-1 be completed whenever the loan is collateralized by securities?

Or should this be only required only if the client took out a loan to buy more securities?

Thanks

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#2268396 - 03/30/22 01:25 PM Re: Regulation U Anonymous
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,965
Galveston, TX
221.3(c) Purpose statement—

(1) General rule—

(i) Banks. Except for credit extended under paragraph (c)(2) of this section, whenever a bank extends credit secured directly or indirectly by any margin stock, in an amount exceeding $100,000, the bank shall require its customer to execute Form FR U–1 (OMB No. 7100–0115), which shall be signed and accepted by a duly authorized officer of the bank acting in good faith.
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#2268397 - 03/30/22 01:26 PM Re: Regulation U Anonymous
Inherent_Risk Offline
Gold Star
Joined: Jan 2017
Posts: 358
Collateralized by securities and over $100,000 then you need the form. The purpose of the form is to make sure the lender knows whether the purpose is to buy more securities. The LTV requirements are only triggered if it's for the purpose of buying more securities.

Purpose statement -

(1) General rule -

(i) Banks. Except for credit extended under paragraph (c)(2) of this section, whenever a bank extends credit secured directly or indirectly by any margin stock, in an amount exceeding $100,000, the bank shall require its customer to execute Form FR U-1 (OMB No. 7100-0115), which shall be signed and accepted by a duly authorized officer of the bank acting in good faith.

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