Form G-FIN-4

DEPARTMENT OF THE TREASURY

Office of the Under Secretary for Domestic Finance

17 CFR Part 449

RIN 1505-AA56

Form G-FIN-4

AGENCY: Office of the Under Secretary for Domestic Finance, Treasury.

ACTION: Proposed form amendments.

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SUMMARY: The Department of the Treasury (``Department'') is proposing

amendments to Form G-FIN-4, which is the form that associated persons

of financial institutions that are government securities brokers and

dealers are required to file with such financial institutions, pursuant

to sections 15C(b)(1)(B) and (b)(4) of the Securities Exchange Act of

1934 (the ``Exchange Act'') (15 U.S.C. 78o-5(b)(1)(B) and(b)(4)) and

sections 400.4 and 449.3 of the regulations issued under the Government

Securities Act of 1986 (``GSA'').\1\ The amendments would update the

disciplinary background provisions of the form to reflect amendments to

the federal securities laws, and would provide the financial

institutions of the associated persons and the appropriate regulatory

authorities for the financial institutions with more useful

information.

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\1\Pub. L. 99-571, 100 Stat. 3208 (1986).

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DATES: Comments must be submitted on or before January 26, 1995.

ADDRESSES: Comments should be sent to: Government Securities

Regulations Staff, Bureau of the Public Debt, Department of the

Treasury, 999 E Street NW., room 515, Washington, DC 20239-0001.

Comments received will be available for public inspection and copying

at the Treasury Department Library, room 5030, Main Treasury Building,

1500 Pennsylvania Avenue NW., Washington, DC 20220.

FOR FURTHER INFORMATION CONTACT: Ken Papaj (Director), or Lee Grandy

(Government Securities Specialist) at 202-219-3632. (TDD for hearing

impaired: 202-219-3988.)

SUPPLEMENTARY INFORMATION:

I. Background and Analysis

The Department adopted Form G-FIN-4 (Disclosure Form for Person

Associated with a Financial Institution Government Securities Broker or

Dealer) in the implementing regulations for the GSA issued on July 24,

1987 (52 FR 27910). Sections 400.4 and 449.3\2\ of the GSA regulations

require the form to be used by associated persons of financial

institutions that are government securities brokers and dealers to

provide the financial institution and the appropriate regulatory agency

with certain information concerning employment, residence and statutory

disqualification. Under the GSA regulations, associated persons that

have a current Form U-4 (Uniform Application for Securities Industry

Registration or Transfer) or Form MSD-4 (Uniform Application for

Municipal Securities Principal or Municipal Securities Representative

Associated with a Bank Municipal Securities Dealer) on file with their

financial institution are not required to file Form G-FIN-4. Associated

persons are not required to file G-FIN-4 forms with their financial

institutions that are exempt from filing notice as government

securities brokers or dealers pursuant to part 401 of the GSA

regulations.

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\2\17 CFR 400.4 and 17 CFR 449.3, respectively.

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The proposed changes to the body of Form G-FIN-4 relate to Item 17,

which requests information concerning the disciplinary history of the

associated person. The changes are being made to reflect amendments to

the Exchange Act by the Securities Enforcement Remedies and Penny Stock

Reform Act of 1990 (``Remedies Act'')\3\ and the International

Securities Enforcement Cooperation Act of 1990 (``ISECA'').\4\ The

Remedies Act gave the Securities and Exchange Commission (``SEC'') the

authority to seek civil monetary penalties in court proceedings and to

impose monetary penalties and order disgorgement in administrative

proceedings. The Remedies Act also provided the SEC with both temporary

and permanent cease and desist order authority to prevent violations of

securities laws. The ISECA gave the SEC the authority to bar, suspend

or restrict the activities of broker-dealers and the associated persons

or those persons seeking to become associated with a broker-dealer,

based upon the findings of a foreign court or foreign securities

authority. By amending the GSA, the ISECA also gave similar authority

to the appropriate regulatory agencies for financial institutions that

are government securities brokers or dealers regarding associated

persons or those persons seeking to become associated with such

entities.\5\ The ISECA added a definition of the term ``foreign

financial regulatory authority'' to section 3(a) of the Exchange

Act,\6\ and provided that certain types of actions taken by foreign

financial regulatory authorities will be deemed a statutory

disqualification.

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\3\Pub. L. No. 101-429, 104 Stat. 931 (October 15, 1990).

\4\Pub. L. No. 101-550, 104 Stat. 2713 (November 15, 1990).

\5\15 U.S.C. 78o-5(c).

\6\15 U.S.C. 78c(a)(52).

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Specifically, the amendments to Form G-FIN-4 would amend question C

of Item 17 to add paragraph (5), which would ask the associated person

whether the SEC or the Commodity Futures Trading Commission (``CFTC'')

has ever imposed a civil money penalty on the associated person, or

ordered the associated person to cease and desist from any activity.

The new inquiry would require a yes or no response, and if the response

is yes, details must be provided, as is currently required for any

affirmative response in Item 17. The disclosure of this additional

information would correspond to the SEC's expanded administrative and

civil enforcement authorities under the Remedies Act.

The amendments to Form G-FIN-4 would also add a definition of

``foreign financial regulatory authority'' to Item 17, and would add

this term to question 17.D. Thus, question 17.D would now inquire

whether any federal regulatory agency, any state regulatory agency or

``foreign financial regulatory authority'' has ever found the

associated person to have: made a false statement or omission or been

dishonest, unfair or unethical; been involved in a violation of

investment regulations or statutes; been the cause of an investment-

related business having its authorization to do business denied,

suspended, revoked or restricted; been subject to an order concerning

investment-related activity; had its registration or license denied,

suspended, or revoked, or otherwise been prevented from associating

with an investment-related business, or been disciplined by the

restriction of its activities; or had its license as an attorney,

accountant or federal contractor suspended. The definition of ``foreign

financial regulatory authority'' which would be added to Form G-FIN-4

is essentially the definition the ISECA added to section 3(a)(52) of

the Exchange Act. Questions 17.A and 17.B would be amended to clarify

that the inquiries now apply to information related to foreign as well

as domestic courts.

The amendments would modify Item 5 to reflect the Office of Thrift

Supervision as the successor to the Federal Home Loan Bank Board. Thus,

the ``Director, Office of Thrift Supervision'' would now be listed as

one of the appropriate regulatory agencies with which the financial

institutions may be required to file the form.

In light of the technical changes made by the Government Securities

Act Amendments of 1993 to the definition of ``appropriate regulatory

agency'',\7\ these amendments would also make corresponding changes to

Item 3 of the general instructions for Form G-FIN-4.

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\7\Pub. L. 103-202, 107 Stat. 2344 (1993).

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These amendments would ensure that Form G-FIN-4 will provide a more

complete description of the associated person's disciplinary history.

The amendments to Form G-FIN-4 would also conform to similar changes

made by the National Association of Securities Dealers (``NASD'') to

Form U-4 in November, 1991,\8\ and by the SEC to Form BD (Uniform

Application for Broker-Dealer Registration) in July, 1992.\9\ The

Treasury was unable to propose amendments to Form G-FIN-4 at the same

time the NASD and SEC made changes to their respective forms since its

rulemaking authority under the GSA expired on October 1, 1991, and was

not reauthorized until December 17, 1993.\10\

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\8\National Association of Securities Dealers Notice to Members

No. 91-73 (November, 1991).

\9\Securities Exchange Act Release No. 30958 (July 27, 1992), 57

FR 34028 (July 31, 1992).

\10\See supra note 7.

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If the Department adopts the amendments to Form G-FIN-4 as

proposed, associated persons of financial institutions that are

government securities brokers or dealers would need to file amendments

to their existing Form G-FIN-4 to the extent that any information is

inaccurate or incomplete. Associated persons would need to review their

current Form G-FIN-4 filings to determine whether the forms contain all

the information required by these amendments, and if not, the

associated person would need to file an amendment to their G-FIN-4 with

the updated information. An appropriate transition period would be

provided for associated persons to file any required updates.

II. Special Analysis

Based on the very limited impact of the proposed amendments, it is

the Department's view that the proposed changes to Form G-FIN-4 are not

a ``significant regulatory action'' for the purposes of Executive Order

12866.

In addition, pursuant to the Regulatory Flexibility Act (5 U.S.C.

601, et seq.), it is hereby certified that the amendments to Form G-

FIN-4, if adopted, will not have a significant economic impact on a

substantial number of small entities and, as a result, a regulatory

flexibility analysis is not required.

The collection of information in these proposed amendments to Form

G-FIN-4 is contained in revised Items 5 and 17 of the form. Form G-FIN-

4 is required to be submitted by associated persons of financial

institutions that are government securities brokers and dealers, in

accordance with Secs. 400.4 and 449.3. The collection of information is

intended to give the financial institutions and the appropriate

regulatory authorities of the financial institutions a more complete

and meaningful description of the disciplinary history of the

associated person. The rule applies only to associated persons of

financial institutions that are not exempt from filing notice as

government securities brokers and dealers.

Although the Department is proposing to add a new paragraph to an

existing question and modify several other questions on Form G-FIN-4,

and cannot be certain as to the exact impact on associated persons

completing the form, it does believe that the changes will not have

more than a de minimis effect on the amount of time necessary to

complete the form. The Department's most recent Paperwork Reduction Act

Filing with respect to Form G-FIN-4 shows an annual estimate of 800

respondents filing once per year, with a burden of two hours per

respondent. No modification is projected to the reporting burden.

The Paperwork Reduction Act (44 U.S.C. 3504(h)) requires that

collections of information prescribed in proposed rules be submitted to

the Office of Management and Budget for review and approval. Since

these proposed amendments result in no increase in burden hours to

complete Form G-FIN-4 and more importantly do not represent any program

change, the submission described in the Paperwork Reduction Act is

inapplicable.

List of Subjects in 17 CFR Part 449

Banks, Banking, Brokers, Government securities, Reporting and

recordkeeping requirements.

For the reasons set out in the preamble, it is proposed to amend 17

CFR part 449 as follows:

PART 449--FORMS, SECTION 15C OF THE SECURITIES EXCHANGE ACT OF 1934

1. The authority citation for part 449 is revised to read as

follows:

Authority: Sec. 101, Pub. L. 99-571, 100 Stat. 3208; Sec. 4(b),

Pub. L. 101-432, 104 Stat. 963; Sec. 102, Sec. 106, Pub. L. 103-202,

107 Stat. 2344 (15 U.S.C. 78o-5(a), (b)(1)(B), (b)(4)).

2. By amending Form G-FIN-4 to revise Item 5, Item 17 and the

general instructions to read as follows:

Note: The text of Form G-FIN-4 does not appear in the Code of

Federal Regulations.

Form G-FIN-4--Disclosure Form for Person Associated with a Financial

Institution Government Securities Broker or Dealer

Item 5

Item 17

General Instructions

* * * * *

In Item 5, ``Federal Home Loan Bank Board'' would be deleted and

``Director, Office of Thrift Supervision'' would be added so that the

modified question would read: ``To be filed with the following

(indicate one): Board of Governors of the Federal Reserve System * * *

Comptroller of the Currency * * * Federal Deposit Insurance Corporation

* * * Director, Office of Thrift Supervision * * * Securities and

Exchange Commission.''

In Item 17, Definitions, the term ``Foreign Financial Regulatory

Authority'' would be added with the following meaning: ``Foreign

Financial Regulatory Authority--Includes any (A) foreign securities

authority; (B) other governmental body or foreign equivalent of a self-

regulatory organization empowered by a foreign government to administer

or enforce its laws relating to the regulation of investment or

investment-related activities; or (C) membership organization, a

function of which is to regulate the participation of its members in

the activities listed above.''

Item 17.A., ``in a domestic or foreign court'' would be added so

that the modified question would read: ``Have you, within the 10 years

preceding the date of this filing, been convicted of or plead guilty or

nolo contendere (``no contest'') in a domestic or foreign court to:''

Item 17.B., ``domestic or foreign'' would be added so that the

modified question would read: ``Has any domestic or foreign court

ever:''

Item 17.C.(5) would be added to read as follows: ``(5) imposed a

civil money penalty on you, or ordered you to cease and desist from any

activity?''

Item 17.D., ``foreign financial regulatory authority'' would be

added so that the modified question would read: ``Has any other federal

regulatory agency, any state regulatory agency or foreign financial

regulatory authority ever:''

Item 17.F., ``other than as reported in Items 17.A., B., or D.''

would be added so that the modified question would read: ``Has any

foreign government, court, regulatory agency, or exchange ever entered

an order against you related to investments or fraud other than as

reported in Items 17.A., B., or D.?''

In the general instructions to Form G-FIN-4, Items 3.b., 3.c., and

3.d. would be revised to read as follows:

3.b. ``The Board of Governors of the Federal Reserve System, in the

case of a State member bank of the Federal Reserve System, a foreign

bank, an uninsured State branch or State agency of a foreign bank, a

commercial lending company owned or controlled by a foreign bank (as

such terms are used in the International Banking Act of 1978), or a

corporation organized or having an agreement with the Board of

Governors of the Federal Reserve System pursuant to section 25 or

section 25A of the Federal Reserve Act;''

3.c. ``The Federal Deposit Insurance Corporation, in the case of a

bank insured by the Federal Deposit Insurance Corporation (other than a

member of the Federal Reserve System or a Federal savings bank) or an

insured State branch of a foreign bank (as such terms are used in the

International Banking Act of 1978);''

3.d. ``The Director of the Office of Thrift Supervision, in the

case of a savings association (as defined in section 3(b) of the

Federal Deposit Insurance Act) the deposits of which are insured by the

Federal Deposit Insurance Corporation; and''

Dated: November 18, 1994.

Frank N. Newman,

Deputy Secretary.

[FR Doc. 94-31698 Filed 12-23-94; 8:45 am]

BILLING CODE 4810-39-W