AL 2004-5
OCC Advisory Letter
Subject: Potential Liability of Financial
Institutions for Securities Law Violations
Arising from Deceptive Structured Finance
Products and Transactions
Date: May 14, 2004

TO: Chief Executive Officers and Compliance
Officers of All National Banks, Department
and Division Heads, and All Examining Personnel

PURPOSE

The attached letter dated December 4, 2003,
from Annette L. Nazareth, director for the 
Division of Market Regulation at the U. S.
Securities and Exchange Commission (SEC)
provides guidance to bank regulators on the
potential liability of financial institutions
for securities law violations arising from
deceptive structured finance products and
transactions.  Ms. Nazareth's letter includes
an internal SEC memorandum that discusses (1)
the principal types of securities law violations
that can arise from the use of deceptive structured
finance products and transactions and (2) the
manner in which financial institutions that offer
such deceptive products, or participate in such
transactions, may be liable for these violations.

As the SEC notes in its memorandum, "The types
of securities law violations that may arise from
the use of deceptive structured finance products
and transactions depend upon the unique facts and
circumstances of each case."  While not exhaustive,
the attached SEC memorandum provides a list of the
principal categories of securities laws and violations
that arise from common fact patterns, and this list
includes antifraud violations, reporting violations,
and reporting and internal control violations. 

Office of the Comptroller of the Currency examiners
should be alert to the factors highlighted in the SEC
memorandum when examining structured finance products
and transactions at a national bank.  

Questions concerning this advisory may be directed
to the Securities and Corporate Practices Division
at (202) 874-5110, the Treasury and Market Risk Division
at (202) 874-5670, or the appropriate supervisory office.

Emory W. Rushton
Senior Deputy Comptroller and Chief National Bank Examiner

Douglas W. Roeder
Senior Deputy Comptroller for Large Bank Supervision

Attachment - Letter to Douglas W. Roeder, senior deputy
comptroller for Large Bank Supervision, and Richard
Spillenkothen, director of the Division of Banking
Supervision and Regulation, Board of Governors of
the Federal Reserve System, from Annette L. Nazareth,
director for the Division of Market Regulation, 
SEC, December 4, 2003

http://www.occ.treas.gov/ftp/advisory/2004-5a.pdf