Interlocking relationships between member bank and variable annuity insurance company.

CFR · 2024-01-01 · US · Title 12

(a) The Board has recently been asked to consider whether section 32 of the Banking Act of 1933 (12 U.S.C. 78) and this part prohibit interlocking service between member banks and (1) the board of managers of an accumulation fund, registered under the Investment Company Act of 1940 (15 U.S.C. 80), that sells variable annuities and (2) the board of directors of the insurance company, of which the accumulation fund is a “separate account,” but as to which the insurance company is the sponsor, investment advisor, underwriter, and distributor. Briefly, a variable annuity is one providing for annuity payment varying in accordance with the changing values of a portfolio of securities. (b) Section 32 provides in relevant part that: (c) For many years, the Board's position has been that an open-end investment company (or mutual fund) is “primarily engaged in the issue * * * public sale, or distribution * * * of securities” since the issuance and sale of its stock is essential to the maintenance of the company's size and to the continuance of its operations without substantial contraction, and that section 32 of the Banking Act of 1933 prohibits an officer, director, or employee of any such company from serving at the same time as an officer, director, or employee of any member bank. (1951 Federal Reserve Bulletin 645; § 218.101.) (d) For reasons similar to those stated by the U.S. Supreme Court in Securities and Exchange Commission (e) The Board concluded also that, since the accumul

official document · source cfr-2024 · id 12:§ 250.411