NCUA Won't Authorize Employee SharingBid

Register now

ALEXANDRIA, Va. - (01/26/05) -- NCUA said a federal credit union isnot permitted to provide investment services to non-members byusing a shared employee with a broker/dealer. In a new legalopinion issued to Linsco/Private Ledger, the credit union regulatorsaid an FCU has no authority to provide investment services tonon-members and using a dual employee does not change that.Linsco/Private Ledger asked NCUA whether it could contract withHughes FCU, rather than the credit union's CUSO, to expand itscustomer base and serve members of other credit unions. But NCUAsaid if the credit union were to engage in this relationship itcould not share in any revenue generated or be reimbursed for itsexpenses for services to non-members. In the same legal opinion,NCUA also said an FCU cannot provide broker/dealer services as acorrespondent service to members of another creditunion.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER