WASHINGTON - SEC Commissioner Richard Roberts has called for the securities industry to press regulators for enforcement of rules against bank "tying" of services to issuers of municipal bonds.
In a shift, Mr. Roberts said that banking regulators such as the Office of the Comptroller of the Currency and the Federal Reserve Board should take the lead in cracking down on tying.
He spoke Monday night at a Securities Industry Association meeting in Washington.
Complaints Cited
Bank tying, barred under the Bank Holding Company Act of 1970, can occur when a bank links one service to another.
In the municipal bond arena, it can occur when a bank says it will not provide a credit enhancement unless made an underwriter of a deal.
Mr. Roberts has received complaints from municipal bond dealers about bank tying. In speeches earlier this year, he had said that the Securities and Exchange Commission should consider enacting a rule to block the practice. The agency had proposed a rule in 1974 but withdrew it.
On Monday, however, the commissioner said:
"I am not interested in second-guessing the [Federal Reserve] Board. The SEC has enough rulemaking problems of its own."
Current law gives banking regulators the jurisdiction to tackle bank-tying abuses, he said, and the SEC does not need a new enforcement weapon in that area.
"I do not foresee any legislative broadening of SEC jurisdiction that will enable the commission to reach bank tying through rulemaking proceedings, inspections, or enforcement actions," he said.
|Window of Opportunity'
The securities industry should push for more action by banking regulators and the courts, Mr. Roberts said. "The securities industry has a window of opportunity to, in effect, put up or shut up," he said.
He repeated an earlier statement that he has been referring tying complaints to the Comptroller's office at the request of that agency.
"I have been most impressed with the OCC's interest in pursuing potential tying violations," he said.
Owen Carney, senior adviser for investments at the Comptroller's office, confirmed in a recent interview that the office is investigating tying in the municipal arena and that violations may be occurring.
