Relief granted to banks to facilitate an orderly and efficient transition of employees from a bank into a broker/dealer to comply with the Financial Modernization Act of 1999.


September 6, 2001

 

Mr. Alan E. Sorcher
Vice President and Assistant General Counsel
Securities Industry Association
1401 Eye Street, NW, 10th Floor
Washington, DC 20005-2225

 

Ms. Sarah Miller
General Counsel
ABA Securities
Director, Center for Securities, Trust and Investments - ABA
1120 Connecticut Avenue, NW
Washington, DC 20036

 

Dear Mr. Sorcher and Ms. Miller:

 

On October 27, 2000, NASD Regulation staff issued a letter regarding the implementation of Title II of the Gramm-Leach-Bliley Act of 1999 (“GLBA”). A copy of the letter is attached. The October 27, 2000 letter grants certain relief to banks to facilitate an orderly and efficient transition of employees from a bank into a broker/dealer to comply with the GLBA. Because the Securities and Exchange Commission (“SEC”) recently delayed the effective date of the relevant provisions of the GLBA, we are issuing this letter to extend the duration of the relief granted in the October 27, 2000 letter.

 

At the time we issued the October 27, 2000 letter, the effective date of the relevant provisions of the GLBA was May 12, 2001. The relief granted by our letter referenced that date in a number of contexts. Subsequently, the SEC delayed the effective date of the relevant provisions of the GLBA to May 12, 2002. In light of the new effective date, we are revising the effective dates in the October 27, 2000 letter. Specifically, in all places where the date May 12, 2001 is listed, we are substituting the date May 12, 2002.

 

As a result of this change, we will toll the grace period for bank employees for whom the two-year grace period would expire between November 12, 1999 (the date the GLBA was enacted) and May 12, 2002 (the date Title II of the GLBA takes effect), subject to the conditions outlined in the October 27, 2000 letter. In addition, until May 12, 2002, we will allow bank-affiliated member firms to continue to sponsor and complete registration for unregistered bank employees in anticipation of moving such employees into a registered broker/dealer, subject to the conditions outlined in the October 27, 2000 letter.

 

Please note that the opinions expressed herein are staff opinions only and have not been reviewed or endorsed by the Board of Directors of NASD Regulation, Inc. This letter responds only to the issues you have raised based on the facts described in your letter to the staff and in subsequent conversations, and does not necessarily address any other rule or interpretation of the NASD or all the possible regulatory and legal issues involved.

 

Sincerely,

 

 

 

Gary L. Goldsholle
Associate General Counsel

 

Enclosure


1 See Letter dated October 27, 2000 to Mr. Alan E. Sorcher, Assistant Vice President and Assistant General Counsel, Securities Industry Association, and Ms. Sarah Miller, General Counsel, ABA Securities, from Gary L. Goldsholle, Associate General Counsel, NASD Regulation, Inc.