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4000 - Advisory Opinions
.
Bank Employee Who Sells Commercial Checking Accounts and Is Paid
Solely by Commission Must Register as Deposit Broker
FDIC-92-56
August 6, 1992
Valerie J. Best, Counsel
This is in response to your July 23, 1992 letter concerning deposit
broker registration requirements. In your letter, you indicated that
[Bank] intends to hire salespersons in order to sell commercial
checking accounts. You stated that these salespersons, paid solely by
commission, would only solicit deposits for accounts which would pay no
interest. You asked whether such persons need be registered as deposit
brokers.
The term "deposit broker" is broadly defined in section 29 of
the FDI Act to mean "[a]ny person engaged in the business of
placing deposits, or facilitating the placement of deposits, of third
parties with insured depository institutions or the business of placing
deposits with insured depository institutions for the purpose of
selling interests in those deposits to third
parties." 1
The statute further provides that a deposit broker does not include
"[a]n employee of an insured depository institution, with respect
to funds placed with the employing depository
institution." 2
However, to be considered an employee, such a person must (1) be
employed exclusively by the institution, (2) be compensated
primarily
{{10-30-92 p.4666}}in the form of a salary, (3) not
share his or her compensation with a deposit broker, and (4) occupy
office space which is used exclusively for the benefit of the insured
depository institution which employs that
individual. 3
In common usage, the word "salary" means a fixed and periodical
payment payable without regard to actual results achieved as
distinguished from "commission" which means compensation based on
percentage of amount collected, received or agreed to be paid for
results accomplished.
From the information you have provided, it appears that persons
hired to obtain commercial checking accounts would not satisfy all the
requirements of the employee definition. Specifically, since those
persons would be paid solely by commission, they clearly would not be
paid primarily in the form of salary as required by the statute. Since
they are not "employees" as that term is defined in the FDI Act,
they may not avail themselves of the exception available to
"employees."
The fact that the salespersons will only offer non-interest bearing
accounts does not exempt them from the statue. Section 29 of the FDI
Act simply refers to "deposits"; it does not distinguish between
interest-bearing accounts and non-interest-bearing accounts.
Regulations implementing section 29 provide that the term
"deposit" has the same meaning as provided in section
3(1) of the FDI Act. 4
The definition of deposit in section 3(1) does not
distinguish interest-bearing accounts from non-interest-bearing
accounts.
Under the arrangement you outlined, the salespersons would be
required to register as deposit brokers. It is the FDIC's view that a
company may file a single notice on behalf of all of its employees
and/or agents, although the FDIC reserves the right to require
individual information at any time.
I trust this has been responsive to your inquiry. If you have
additional questions, please contact me at the above
address.
112 U.S.C. § 1831f(g)(1)(A). Go Back to Text
212 U.S.C. § 1831f(g)(2)(B); 12 C.F.R. § 337.6(a)(2). Go Back to Text
312 U.S.C. § 1831f(g)(4); 12 C.F.R. § 337.6(a)(3). Go Back to Text
412 U.S.C. § 1813(1). Go Back to Text
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