Securities Industry Association v. Comptroller of the Currency
United States District Court for the District of Columbia
577 F. Supp. 252 (1983)
- Written by Tanya Munson, JD
Facts
The Comptroller of the Currency (defendant) permitted one national bank to acquire another national bank in order to establish a discount-brokerage subsidiary. Neither was to purchase or sell securities for its own account, engage in underwriting, or give investment advice. Discount brokers charged significantly lower commissions than full-service brokers because full-service brokers traded on behalf of customers and offered investment advice. The Securities Industry Association (SIA) (plaintiff) brought suit in district court and challenged the Comptroller’s decision to approve the applications and argued that the operation of a brokerage business by a national bank or its affiliates violated Sections 16 and 21 of the Glass-Steagall Act of 1933 (Glass-Steagall). Section 16 of Glass-Steagall limited bank-brokerage activity to that “upon the order, and for the account of, customers.” Section 21 prohibited any organization engaged in the business of issuing, underwriting, selling, or distributing securities from simultaneously engaging in the banking business.
Rule of Law
Issue
Holding and Reasoning (Flannery, J.)
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