Form G-FIN-4

DEPARTMENT OF THE TREASURY

17 CFR Part 449

Form G-FIN-4

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

ACTION: Adoption of form amendments.

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SUMMARY: The Department of the Treasury (``Department'' or

``Treasury'') is adopting 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(a), (b)(1)(B) and (b)(4) of the

Securities Exchange Act of 1934 (the ``Exchange Act'') (15 U.S.C. 78o-

5(a), (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''). The amendments update the disciplinary background provisions

of the form to reflect amendments to the federal securities laws, and

provide the financial institutions of the associated persons and the

appropriate regulatory authorities for the financial institutions with

more useful information. The Department is adopting the amendments

unchanged from their proposed form.

EFFECTIVE DATE: June 12, 1995.

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 449.31 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 institutions and the appropriate

regulatory agencies 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

[[Page 18735]]

G-FIN-4. Associated persons are not required to file G-FIN-4 forms with

their financial institutions if the institutions are exempt from filing

notice as government securities brokers or dealers pursuant to Part 401

of the GSA regulations.

\1\17 CFR 400.4 and 17 CFR 449.3, respectively.

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The Department published the amendments to Form G-FIN-4 in proposed

form on December 27, 1994,2 and the comment period closed on

January 26, 1995. Treasury received no comments in response to the

proposed changes.

\2\59 FR 66496 (December 27, 1994).

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The 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 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

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

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

ISECA gave the SEC the authority to bar, suspend or restrict the

activities of broker-dealers and 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. The ISECA also provided that certain types of actions

taken by foreign financial regulatory authorities will be deemed a

statutory disqualification.

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

Item 17 to add paragraph (5), which asks 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 disclosure

of this additional information corresponds to the SEC's expanded

administrative and civil enforcement authorities under the Remedies

Act.

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

financial regulatory authority''5 to Item 17, and add this term to

question 17.D. Thus, question 17.D. now inquires whether the associated

person has ever been the subject of a finding by any federal regulatory

agency, any state regulatory agency or ``foreign financial regulatory

authority''. The definition of ``foreign financial regulatory

authority'' 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. have been amended to clarify that the inquiries now apply to

information related to foreign as well as domestic courts.

\5\15 U.S.C. 78c(a)(52).

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Any associated person that determines that additional disclosure is

required under revised Item 17 will need to file an amendment to Form

G-FIN-4 on or promptly after the effective date of the Form amendments.

See part II below for discussion of new filing requirements.

The amendments also 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'' is now 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'',6 the amendments also make corresponding changes to Item

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

\6\Pub. L. No. 103-202, 107 Stat. 2344 (1993).

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These amendments 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 also conform to similar changes made by

the National Association of Securities Dealers (``NASD'') to Form U-4

in November 1991,7 and by the SEC to Form BD (Uniform Application

for Broker-Dealer Registration) in July 1992.8

\7\National Association of Securities Dealers Notice to Members

No. 91-73 (November, 1991).

\8\Securities Exchange Act Release No. 34-30958 (July 27, 1992),

57 FR 34028 (July 31, 1992).

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II. Filing Instructions

The amendments to Form G-FIN-4 become effective June 12, 1995.

Thus, all new associated persons of financial institutions that are

government securities brokers and dealers filing on or after that date

will be required to file the revised Form G-FIN-4 with their

institutions, though those filing before the effective date are

encouraged to use the revised form. In addition, associated persons

that have previously filed a G-FIN-4 should review their G-FIN-4

filings to determine whether they contain all of the information

required by amended Item 17. To the extent that revisions to Form G-

FIN-4 result in an affirmative answer to a question in Item 17,

associated persons will be required to file with their institution an

amendment to their Form G-FIN-4 by June 12, 1995 (or as soon as

possible after that date). Financial institution government securities

brokers or dealers are required to file the new or revised G-FIN-4

forms with their appropriate regulatory agency in accordance with

section 400.4(d)(1). Associated persons who answer ``no'' to all of the

questions in amended Item 17 will not be required to file an updated

Form G-FIN-4 at that time.

In consultations with the appropriate regulatory agencies on the

implementation of the form changes, the Department understands that the

agencies will distribute the revised Form G-FIN-4 to their financial

institutions that are government securities brokers and dealers so that

the institutions can provide the form to their associated persons.

Copies of the G-FIN-4 may also be obtained by contacting the

appropriate regulatory agencies for financial institutions.

III. Special Analysis

It has been determined that these amendments are not a

``significant regulatory action'' as defined in Executive Order 12866.

Therefore, a Regulatory Assessment is not required.

In the preamble to the proposal, pursuant to the Regulatory

Flexibility Act (5 U.S.C. 601, et seq.), the Department certified that

these amendments to Form G-FIN-4, if adopted, would not have a

significant economic impact on a substantial number of small entities.

Accordingly, a regulatory flexibility analysis was not prepared. In

reviewing the final form amendment herein and in light of the fact that

no comments were received, the Department has concluded that there is

no reason to alter the previous certification.

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, 17 CFR Part 449 is amended

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

[[Page 18736]]

2. Form G-FIN-4 is amended 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'' is deleted and

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

modified question reads: ``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'' is 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'' is added so that the

modified question reads: ``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'' is added so that the modified

question reads: ``Has any domestic or foreign court ever:''

Item 17.C.(5) is 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'' is added so

that the modified question reads: ``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.'' is

added so that the modified question reads: ``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. are 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: April 3, 1995.

Frank N. Newman,

Deputy Secretary.

[FR Doc. 95-9056 Filed 4-12-95; 8:45 am]

BILLING CODE 4810-39-W