Exemption from the definition of “broker” for certain institutional referrals.

CFR · 2024-01-01 · US · Title 12

(a) (1) (A) Not registered or approved, or otherwise required to be registered or approved, in accordance with the qualification standards established by the rules of any self-regulatory organization; (B) Predominantly engaged in banking activities other than making referrals to a broker or dealer; and (C) Not subject to statutory disqualification, as that term is defined in section 3(a)(39) of the Act (15 U.S.C. 78c(a)(39)), except subparagraph (E) of that section; and (ii) The high net worth customer or institutional customer is encountered by the bank employee in the ordinary course of the employee's assigned duties for the bank. (2) (A) In writing prior to or at the time of the referral; or (B) Orally prior to or at the time of the referral and ( ( (ii) (B) In the case of a customer that is a natural person, the bank has a reasonable basis to believe that the customer is a high net worth customer prior to or at the time of the referral. (iii) (iv) (A) Takes reasonable and prompt steps to remedy the error (such as, for example, by promptly making the required determination or promptly providing the broker or dealer the required information); and (B) Makes reasonable efforts to reclaim the portion of the referral fee paid to the bank employee for the referral that does not, following any required remedial action, meet the requirements of this section and that exceeds the amount otherwise permitted under section 3(a)(4)(B)(i)(VI) of the Act (15 U.S.C. 78c(a)(4)(B)(i)(VI)) an

official document · source cfr-2024 · id 12:§ 218.701