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Rule 326(c). Unsecured Loans and Advances

This rule is no longer applicable. Incorporated NYSE Rule 326 has been superseded by FINRA Rule 4120. Please consult the appropriate FINRA Rule.

No drawings, unsecured or partly secured loans or advances of funds by a member organization to any partner, director, officer employee, stockholder, subordinated lender, secured demand note contributor or persons or entities related to, controlled by, under common control with such persons or in which such persons are employed, hold office or have a financial interest and no guarantees of obligations of any person shall be made, except with prior written approval of the Exchange, when any of the following conditions exist in a member organization, or if such drawings, loans, advances or guarantees would result in any of the following conditions:

(1) Its net capital is less than 150 percent of its minimum dollar net capital requirement or some greater percentage as may from time to time be designated by the Exchange, or
(2) If subject to this requirement, its aggregate indebtedness is more than 1,000 percent of its net capital, or
(3) If the net capital of a member organization that uses the alternative method of computing net capital pursuant to Exchange Act Rule 15c3-1(a)(1)(ii) in lieu of (2) above is less than five percent of the aggregate debit items in the Formula for Determination of Reserve Requirements for Brokers and Dealers under Exchange Act Rule 15c3-3.
(4) If the net capital of a member organization that is registered as a Futures Commission Merchant pursuant to the Commodity Exchange Act is less than 120% of the minimum risk-based capital requirements of Commodity Exchange Act Rule 1.17.
(5) Capital withdrawals including maturities scheduled during the next six months would result in the condition described in (1), (2) or (3) above.

Note: Applicable state laws should also be reviewed for restrictions on unsecured loans by corporations and partnerships.

Adopted.
December 12, 1974.

Amendment.
October 16, 1975; effective January 1, 1976.
March 29, 2007 (NYSE-2005-03).

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