12 U.S.C. § 374a — Acting as agent for nonbanking borrower in making loans on securities to dealers in stocks, bonds, etc.; penalties

submitted 113 years ago by ch. 6 to r/title-12-BANKS-AND-BANKING · 97 words · no verdicts yet

in plain englishAI-generated · not legal advice

Member banks cannot act as agents for outside lenders making loans to stock or bond dealers. The loans must be secured by stocks, bonds, or similar securities. Breaking this rule costs up to $100 per day, collected by the district's Federal Reserve Bank.

A "member bank" (a bank that belongs to the Federal Reserve System) cannot act as the go-between for a nonbank — a corporation, partnership, association, business trust, or individual — that wants to lend money to stock or bond brokers or dealers, using stocks, bonds, or other investment securities as collateral. If a member bank breaks this rule, it can be fined up to $100 for each day the violation continues. The Federal Reserve Bank in the district where the member bank is located can collect that fine, by lawsuit or other means.

the actual law source: uscode.house.gov ↗public domain

No member bank shall act as the medium or agent of any nonbanking corporation, partnership, association, business trust, or individual in making loans on the security of stocks, bonds, and other investment securities to brokers or dealers in stocks, bonds, and other investment securities. Every violation of this provision by any member bank shall be punishable by a fine of not more than $100 per day during the continuance of such violation; and such fine may be collected, by suit or otherwise, by the Federal reserve bank of the district in which such member bank is located.

Source credit: (Dec. 23, 1913, ch. 6, § 19(d), formerly § 19 (par. 7), as added June 16, 1933, ch. 89, § 11(a), 48 Stat. 181; renumbered § 19(d), Pub. L. 89–597, § 2(b), Sept. 21, 1966, 80 Stat. 824.)

history & why it existsrecord from the source credit

1913Enacted · Act of Dec. 23, 1913, ch. 6 · 48 Stat. 181
1966Amended · Pub. L. 89-597 · 80 Stat. 824

A history note hasn’t been published yet. The record shows enactment by ch. 6 on 1913-12-23.

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