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#471024 - 12/15/05 10:54 PM Trust question
Dottie Offline
100 Club
Joined: Oct 2004
Posts: 113
I am very unfamiliar in this area and received a question that threw me for a loop. Has anyone heard of a 407-b form on a trust acct? One of our bank officers is a trustee on a family trust at our bank that has investment accts with another bank (actually its affiliate). The affiliate asked if they needed to send 407-b forms to us. Is this something we need to have on file? We have always had to report bank employees who are signers on trust accts, but we have never been asked to produce this form before.

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Operations Compliance
#471025 - 12/16/05 04:07 PM Re: Trust question
downstown Offline
Gold Star
Joined: Aug 2001
Posts: 295
St. Louis, MO
Quote:

I am very unfamiliar in this area and received a question that threw me for a loop. Has anyone heard of a 407-b form on a trust acct? One of our bank officers is a trustee on a family trust at our bank that has investment accts with another bank (actually its affiliate). The affiliate asked if they needed to send 407-b forms to us. Is this something we need to have on file? We have always had to report bank employees who are signers on trust accts, but we have never been asked to produce this form before.




Sounds like this pertains to NYSE Rule 407.
(b) No member (associated with a member or member organization), allied member or employee associated with a member or member organization shall establish or maintain any securities or commodities account or enter into any private securities transaction with respect to which such person has any financial interest or the power, directly or indirectly, to make investment decisions, at another member or member organization, or a domestic or foreign non-member broker-dealer, investment adviser, bank, other financial institution, or otherwise without the prior written consent of another person designated by the member or member organization under Rule 342(b)(1) to sign such consents and review such accounts.

Persons having accounts or transactions referred to above shall arrange for duplicate confirmations and statements (or their equivalents) relating to the foregoing to be sent to another person designated by the member or member organization under Rule 342(b)(1) to review such accounts and transactions. All such accounts and transactions periodically shall be reviewed by the member or member organization employer (see also Rule 342.21).

When asked in these types of cases, we normally send a letter indicating that we are aware of the account and we request duplicate statements and confirms.

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#471026 - 12/16/05 05:11 PM Re: Trust question
Dottie Offline
100 Club
Joined: Oct 2004
Posts: 113
Would this only apply if we are publicly traded or a member of the NYSE? Which we are not.

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#471027 - 12/16/05 05:47 PM Re: Trust question
downstown Offline
Gold Star
Joined: Aug 2001
Posts: 295
St. Louis, MO
If the company where the investment accounts are held is a NYSE member, they would have to follow this rule. I don't think that this would impose any requirments on you. I would speak to the company and clarify what they are asking for. If they are asking for the typical "407 letter" (our employee has our permission to hold this account at your firm) I have found that it is easier to send the letter than to try an convince them you are not required to comply with this rule.

If you have any doubts or concerns, please consult your attorney.

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#471028 - 12/19/05 03:08 PM Re: Trust question
Dottie Offline
100 Club
Joined: Oct 2004
Posts: 113
Thank you for your help. They were asking if we needed them to send copies of the form to us. I told our employee that they could send them if they wanted to, but we don't really need them since we aren't a NYSE member.

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