Broker Permits Proposed for Bank Workers
Federal regulators are proposing that any bank employee who sells mutual funds, stocks or bonds must obtain a basic stockbroker license, a move supported both by bankers and consumer groups.
“The requirements will ensure the investing public that securities salespersons employed by banks have the same level of training as anyone else in the securities marketplace,” Comptroller of the Currency Eugene Ludwig said Tuesday.
Ludwig, who regulates about 2,800 national banks, proposed rules to require bankers to obtain the so-called Series 6 and Series 7 licenses if they sell securities. The rules, if approved, would guarantee a basic level of professional competency for bankers as they expand into selling Wall Street-style investments.
The Federal Reserve Board and the Federal Deposit Insurance Corp. plan to unveil similar rule proposals today at public meetings.
In recent years, regulators have been placing greater emphasis on ensuring consumers aren’t misled about securities sales at banks.
The American Bankers Assn. strongly supported the new licensing requirements for bankers, despite the increased regulatory burden it would place on banks, ABA spokeswoman Sonia Barbara said.
“We want to be able to show the public that bank employees are properly trained,” she said. The rules would provide a convenient standard on broker training for banks, industry officials said.
Currently, some bank employees selling mutual funds have the broker licenses, administered by the National Assn. of Securities Dealers Inc.
But there has been considerable confusion over who is in charge of supervising the mutual fund and securities sales of these bank employees, especially if they work in the commercial bank itself and not its special securities affiliate.
The new regulations are aimed at erasing confusion by allowing the NASD to act as an agent to administer the tests while the FDIC and Fed would police the conduct of the bank employees, industry officials said. Bank employees with the broker licenses would be listed in the Central Registration Depository, the securities industry’s main licensing and enforcement database, and they would have to comply with continuing education requirements.
The rules will be released for public comment, which usually lasts about 60 days.
Barbara Roper, a securities specialist for the Consumer Federation of America, called the proposal “a step in the right direction.” As federal regulators whittle away at the barriers between banks and securities firms, Roper said they also must remove obsolete rules that would impede consumer protection.
