12 C.F.R. § 225.125 Investment Adviser Activities
| Library | Code of Federal Regulations |
| Edition | 2021 |
| Currency | Current through December 30, 2021 |
| Citation | 12 C.F.R. § 225.125 |
| Year | 2021 |
(a) Effective February 1, 1972, the Board of Governors amended §225.4(a) of Regulation Y to add "serving as investment adviser, as defined in section 2(a)(20) of the Investment Company Act of 1940, to an investment company registered under that Act" to the list of activities it has determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. During the course of the Board's consideration of this amendment several questions arose as to the scope of such activity, particularly in view of certain restrictions imposed by sections 16, 20, 21, and 32 of the Banking Act of 1933 ( 12 U.S.C. 24, 377, 378, 78 ) (sometimes referred to hereinafter as the "Glass-Steagall Act provisions") and the U.S. Supreme Court's decision in Investment Company Institute v. Camp, 401 U.S. 617(1971). The Board's views with respect to some of these questions are set forth below.
(b) It is clear from the legislative history of the Bank Holding Company Act Amendments of 1970 (84 Stat. 1760) that the Glass-Steagall Act provisions were not intended to be affected thereby. Accordingly, the Board regards the Glass-Steagall Act provisions and the Board's prior interpretations thereof as applicable to a holding company's activities as an investment adviser. Consistently with the spirit and purpose of the Glass-Steagall Act, this interpretation applies to all bank holding companies registered under the Bank Holding Company Act irrespective of whether they have subsidiaries that are member banks.
(c) Under §225.4(a)(5), as amended, bank holding companies (which term, as used herein, includes both their bank and nonbank subsidiaries) may, in accordance with the provisions of §225.4 (b), act as investment advisers to various types of investment companies, such as "open-end" investment companies (commonly referred to as "mutual funds") and "closed-end" investment companies. Briefly, a mutual fund is an investment company which, typically, is continuously engaged in the issuance of its shares and stands ready at any time to redeem the securities as to which it is the issuer; a closed-end investment company typically does not issue shares after its initial...
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