12 U.S. Code § 371c–1 - Restrictions on transactions with affiliates
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(a) In general
A member bank and its subsidiaries may engage in any of the transactions described in paragraph (2) only—
(A) on terms and under circumstances, including credit standards, that are substantially the same, or at least as favorable to such bank or its subsidiary, as those prevailing at the time for comparable transactions with or involving other nonaffiliated companies, or
(2) Transactions covered
Paragraph (1) applies to the following:
(B) The sale of securities or other assets to an affiliate, including assets subject to an agreement to repurchase.
(C) The payment of money or the furnishing of services to an affiliate under contract, lease, or otherwise.
(D) Any transaction in which an affiliate acts as an agent or broker or receives a fee for its services to the bank or to any other person.
(3) Transactions that benefit affiliate
For the purpose of this subsection, any transaction by a member bank or its subsidiary with any person shall be deemed to be a transaction with an affiliate of such bank if any of the proceeds of the transaction are used for the benefit of, or transferred to, such affiliate.
(b) Prohibited transactions
(1) In general
A member bank or its subsidiary—
(A) shall not purchase as fiduciary any securities or other assets from any affiliate unless such purchase is permitted—
Subparagraph (B) of paragraph (1) shall not apply if the purchase or acquisition of such securities has been approved, before such securities are initially offered for sale to the public, by a majority of the directors of the bank based on a determination that the purchase is a sound investment for the bank irrespective of the fact that an affiliate of the bank is a principal underwriter of the securities.
For the purpose of this subsection—
(B) the term “principal underwriter” means any underwriter who, in connection with a primary distribution of securities—
(ii) acting alone or in concert with one or more other persons, initiates or directs the formation of an underwriting syndicate; or
(c) Advertising restriction
A member bank or any subsidiary or affiliate of a member bank shall not publish any advertisement or enter into any agreement stating or suggesting that the bank shall in any way be responsible for the obligations of its affiliates.
For the purpose of this section—
(1) the term “affiliate” has the meaning given to such term in section 371c of this title (but does not include any company described in section  (b)(2) of such section or any bank);
(2) the terms “bank”, “subsidiary”, “person”, and “security” (other than security as used in subsection (b) of this section) have the meanings given to such terms in section 371c of this title; and
(3) the term “covered transaction” has the meaning given to such term in section 371c of this title (but does not include any transaction which is exempt from such definition under subsection (d) of such section).
(1) In general
The Board may prescribe regulations to administer and carry out the purposes of this section, including—
(B) subject to paragraph (2), if the Board finds that an exemption or exclusion is in the public interest and is consistent with the purposes of this section, and notifies the Federal Deposit Insurance Corporation of such finding, regulations to—
The Board may grant an exemption or exclusion under this subsection only if, during the 60-day period beginning on the date of receipt of notice of the finding from the Board under paragraph (1)(B), the Federal Deposit Insurance Corporation does not object, in writing, to such exemption or exclusion, based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund.
 So in original. Probably should be “subsection”.
Source(Dec. 23, 1913, ch. 6, § 23B, as added Pub. L. 100–86, title I, § 102(a),Aug. 10, 1987, 101 Stat. 564; amended Pub. L. 106–102, title VII, § 738,Nov. 12, 1999, 113 Stat. 1480; Pub. L. 111–203, title VI, § 608(b),July 21, 2010, 124 Stat. 1610.)
2010—Subsec. (e). Pub. L. 111–203, § 608(b)(1)–(4), designated existing provisions as par. (1) and inserted heading, redesignated former pars. (1) and (2) as subpars. (A) and (B), respectively, of par. (1), redesignated former subpars. (A) and (B) of par. (2) as cls. (i) and (ii), respectively, of par. (1)(B), realigned margins, and struck out concluding provisions which read as follows: “if the Board finds such exemptions or exclusions are in the public interest and are consistent with the purposes of this section.”
Subsec. (e)(1)(B). Pub. L. 111–203, § 608(b)(5)(A), inserted “subject to paragraph (2), if the Board finds that an exemption or exclusion is in the public interest and is consistent with the purposes of this section, and notifies the Federal Deposit Insurance Corporation of such finding,” before “regulations” in introductory provisions.
Subsec. (e)(1)(B)(ii). Pub. L. 111–203, § 608(b)(5)(B), substituted period for comma at end.
Subsec. (e)(2). Pub. L. 111–203, § 608(b)(6), added par. (2).
1999—Subsec. (b)(2). Pub. L. 106–102amended text of par. (2) generally. Prior to amendment, text read as follows: “Subparagraph (B) of paragraph (1) shall not apply if the purchase or acquisition of such securities has been approved, before such securities are initially offered for sale to the public, by a majority of the directors of the bank who are not officers or employees of the bank or any affiliate thereof.”
Effective Date of 2010 Amendment
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