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12 USC CHAPTER 22 - TYING ARRANGEMENTS 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

.

-HEAD-

CHAPTER 22 - TYING ARRANGEMENTS

-MISC1-

Sec.

1971. Definitions.

1972. Certain tying arrangements prohibited; correspondent

accounts.

1973. Jurisdiction of courts; duty of United States attorneys;

equitable proceedings; petition; expedition of cases; temporary

restraining orders; bringing in additional parties; subpenas.

1974. Actions by United States; subpenas for witnesses.

1975. Civil actions by persons injured; jurisdiction and venue;

amount of recovery.

1976. Injunctive relief for persons against threatened loss or

damages; equitable proceedings; preliminary injunctions.

1977. Limitation of actions; suspension of limitations.

1978. Actions under other Federal or State laws unaffected;

regulations or orders barred as a defense.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 1843, 1850, 3106 of this

title; title 15 section 6701.

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12 USC Sec. 1971 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

-HEAD-

Sec. 1971. Definitions

-STATUTE-

As used in this chapter, the terms ''bank'', ''bank holding

company'', ''subsidiary'', and ''Board'' have the meaning ascribed

to such terms in section 1841 of this title. For purposes of this

chapter only, the term ''company'', as used in section 1841 of this

title, means any person, estate, trust, partnership, corporation,

association, or similar organization, but does not include any

corporation the majority of the shares of which are owned by the

United States or by any State. The term ''trust service'' means any

service customarily performed by a bank trust department. For

purposes of this chapter, a financial subsidiary of a national bank

engaging in activities pursuant to section 24a(a) of this title

shall be deemed to be a subsidiary of a bank holding company, and

not a subsidiary of a bank.

-SOURCE-

(Pub. L. 91-607, title I, Sec. 106(a), Dec. 31, 1970, 84 Stat.

1766; Pub. L. 106-102, title I, Sec. 121(c), Nov. 12, 1999, 113

Stat. 1380.)

-MISC1-

AMENDMENTS

1999 - Pub. L. 106-102 inserted at end ''For purposes of this

chapter, a financial subsidiary of a national bank engaging in

activities pursuant to section 24a(a) of this title shall be deemed

to be a subsidiary of a bank holding company, and not a subsidiary

of a bank.''

EFFECTIVE DATE OF 1999 AMENDMENT

Amendment by Pub. L. 106-102 effective 120 days after Nov. 12,

1999, see section 161 of Pub. L. 106-102, set out as a note under

section 24 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 7 section 2016.

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12 USC Sec. 1972 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

-HEAD-

Sec. 1972. Certain tying arrangements prohibited; correspondent

accounts

-STATUTE-

(1) A bank shall not in any manner extend credit, lease or sell

property of any kind, or furnish any service, or fix or vary the

consideration for any of the foregoing, on the condition or

requirement -

(A) that the customer shall obtain some additional credit,

property, or service from such bank other than a loan, discount,

deposit, or trust service;

(B) that the customer shall obtain some additional credit,

property, or service from a bank holding company of such bank, or

from any other subsidiary of such bank holding company;

(C) that the customer provide some additional credit, property,

or service to such bank, other than those related to and usually

provided in connection with a loan, discount, deposit, or trust

service;

(D) that the customer provide some additional credit, property,

or service to a bank holding company of such bank, or to any

other subsidiary of such bank holding company; or

(E) that the customer shall not obtain some other credit,

property, or service from a competitor of such bank, a bank

holding company of such bank, or any subsidiary of such bank

holding company, other than a condition or requirement that such

bank shall reasonably impose in a credit transaction to assure

the soundness of the credit.

The Board may by regulation or order permit such exceptions to the

foregoing prohibition and the prohibitions of section 1843(f)(9)

and 1843(h)(2) of this title as it considers will not be contrary

to the purposes of this chapter.

(2)(A) No bank which maintains a correspondent account in the

name of another bank shall make an extension of credit to an

executive officer or director of, or to any person who directly or

indirectly or acting through or in concert with one or more persons

owns, controls, or has the power to vote more than 10 per centum of

any class of voting securities of, such other bank or to any

related interest of such person unless such extension of credit is

made on substantially the same terms, including interest rates and

collateral as those prevailing at the time for comparable

transactions with other persons and does not involve more than the

normal risk of repayment or present other unfavorable features.

(B) No bank shall open a correspondent account at another bank

while such bank has outstanding an extension of credit to an

executive officer or director of, or other person who directly or

indirectly or acting through or in concert with one or more persons

owns, controls, or has the power to vote more than 10 per centum of

any class of voting securities of, the bank desiring to open the

account or to any related interest of such person, unless such

extension of credit was made on substantially the same terms,

including interest rates and collateral as those prevailing at the

time for comparable transactions with other persons and does not

involve more than the normal risk of repayment or present other

unfavorable features.

(C) No bank which maintains a correspondent account at another

bank shall make an extension of credit to an executive officer or

director of, or to any person who directly or indirectly acting

through or in concert with one or more persons owns, controls, or

has the power to vote more than 10 per centum of any class of

voting securities of, such other bank or to any related interest of

such person, unless such extension of credit is made on

substantially the same terms, including interest rates and

collateral as those prevailing at the time for comparable

transactions with other persons and does not involve more than the

normal risk of repayment or present other unfavorable features.

(D) No bank which has outstanding an extension of credit to an

executive officer or director of, or to any person who directly or

indirectly or acting through or in concert with one or more persons

owns, controls, or has the power to vote more than 10 per centum of

any class of voting securities of, another bank or to any related

interest of such person shall open a correspondent account at such

other bank, unless such extension of credit was made on

substantially the same terms, including interest rates and

collateral as those prevailing at the time for comparable

transactions with other persons and does not involve more than the

normal risk of repayment or present other unfavorable features.

(E) For purposes of this paragraph, the term ''extension of

credit'' shall have the meaning prescribed by the Board pursuant to

section 375b of this title, and the term ''executive officer''

shall have the same meaning given it under section 375a of this

title.

(F) Civil money penalty. -

(i) First tier. - Any bank which, and any

institution-affiliated party (within the meaning of section

1813(u) of this title) with respect to such bank who, violates

any provision of this paragraph shall forfeit and pay a civil

penalty of not more than $5,000 for each day during which such

violation continues.

(ii) Second tier. - Notwithstanding clause (i), any bank which,

and any institution-affiliated party (within the meaning of

section 1813(u) of this title) with respect to such bank who -

(I)(aa) commits any violation described in clause (i);

(bb) recklessly engages in an unsafe or unsound practice in

conducting the affairs of such bank; or

(cc) breaches any fiduciary duty;

(II) which violation, practice, or breach -

(aa) is part of a pattern of misconduct;

(bb) causes or is likely to cause more than a minimal loss

to such bank; or

(cc) results in pecuniary gain or other benefit to such

party,

shall forfeit and pay a civil penalty of not more than $25,000

for each day during which such violation, practice, or breach

continues.

(iii) Third tier. - Notwithstanding clauses (i) and (ii), any

bank which, and any institution-affiliated party (within the

meaning of section 1813(u) of this title) with respect to such

bank who -

(I) knowingly -

(aa) commits any violation described in clause (i);

(bb) engages in any unsafe or unsound practice in

conducting the affairs of such bank; or

(cc) breaches any fiduciary duty; and

(II) knowingly or recklessly causes a substantial loss to

such bank or a substantial pecuniary gain or other benefit to

such party by reason of such violation, practice, or breach,

shall forfeit and pay a civil penalty in an amount not to exceed

the applicable maximum amount determined under clause (iv) for

each day during which such violation, practice, or breach

continues.

(iv) Maximum amounts of penalties for any violation described

in clause (iii). - The maximum daily amount of any civil penalty

which may be assessed pursuant to clause (iii) for any violation,

practice, or breach described in such clause is -

(I) in the case of any person other than a bank, an amount to

not exceed $1,000,000; and

(II) in the case of a bank, an amount not to exceed the

lesser of -

(aa) $1,000,000; or

(bb) 1 percent of the total assets of such bank.

(v) Assessment; etc. - Any penalty imposed under clause (i),

(ii), or (iii) may be assessed and collected -

(I) in the case of a national bank, by the Comptroller of the

Currency;

(II) in the case of a State member bank, by the Board; and

(III) in the case of an insured nonmember State bank, by the

Federal Deposit Insurance Corporation,

in the manner provided in subparagraphs (E), (F), (G), and (I) of

section 1818(i)(2) of this title for penalties imposed (under

such section) and any such assessment shall be subject to the

provisions of such section.

(vi) Hearing. - The bank or other person against whom any

penalty is assessed under this subparagraph shall be afforded an

agency hearing if such bank or person submits a request for such

hearing within 20 days after the issuance of the notice of

assessment. Section 1818(h) of this title shall apply to any

proceeding under this subparagraph.

(vii) Disbursement. - All penalties collected under authority

of this subsection shall be deposited into the Treasury.

(viii) ''Violate'' defined. - For purposes of this paragraph,

the term ''violate'' includes any action (alone or with another

or others) for or toward causing, bringing about, participating

in, counseling, or aiding or abetting a violation.

(ix) Regulations. - The Comptroller of the Currency, the Board,

and the Federal Deposit Insurance Corporation shall prescribe

regulations establishing such procedures as may be necessary to

carry out this subparagraph.

(G)(i) Each executive officer and each stockholder of record who

directly or indirectly owns, controls, or has the power to vote

more than 10 per centum of any class of voting securities of an

insured bank shall make a written report to the board of directors

of such bank for any year during which such executive officer or

shareholder has outstanding an extension of credit from a bank

which maintains a corresponding account in the name of such bank.

Such report shall include the following information:

(1) the maximum amount of indebtedness to the bank maintaining

the correspondent account during such year of (a) such executive

officer or stockholder of record, (b) each company controlled by

such executive officer or stockholder, or (c) each political or

campaign committee the funds or services of which will benefit

such executive officer or stockholder, or which is controlled by

such executive officer or stockholder;

(2) the amount of indebtedness to the bank maintaining the

correspondent account outstanding as of a date not more than ten

days prior to the date of filing of such report of (a) such

executive officer or stockholder of record, (b) each company

controlled by such executive officer or stockholder, or (c) each

political or campaign committee the funds or services of which

will benefit such executive officer or stockholder;

(3) the range of interest rates charged on such indebtedness of

such executive officer or stockholder of record; and

(4) the terms and conditions of such indebtedness of such

executive officer or stockholder of record.

(ii) The appropriate Federal banking agencies are authorized to

issue rules and regulations, including definitions of terms, to

require the reporting and public disclosure of information by any

bank or executive officer or principal shareholder thereof

concerning any extension of credit by a correspondent bank to the

reporting bank's executive officers or principal shareholders, or

the related interests of such persons.

(H) For the purpose of this paragraph -

(i) the term ''bank'' includes a mutual savings bank, a savings

bank, and a savings association (as those terms are defined in

section 1813 of this title);

(ii) the term ''related interests of such persons'' includes

any company controlled by such executive officer, director, or

person, or any political or campaign committee the funds or

services of which will benefit such executive officer, director,

or person or which is controlled by such executive officer,

director, or person; and

(iii) the terms ''control of a company'' and ''company'' have

the same meaning as under section 375b of this title.

(I) Notice Under This Section After Separation From Service. -

The resignation, termination of employment or participation, or

separation of an institution-affiliated party (within the meaning

of section 1813(u) of this title) with respect to such a bank

(including a separation caused by the closing of such a bank) shall

not affect the jurisdiction and authority of the appropriate

Federal banking agency to issue any notice and proceed under this

section against any such party, if such notice is served before the

end of the 6-year period beginning on the date such party ceased to

be such a party with respect to such bank (whether such date occurs

before, on, or after August 9, 1989).

-SOURCE-

(Pub. L. 91-607, title I, Sec. 106(b), Dec. 31, 1970, 84 Stat.

1766; Pub. L. 95-630, title VIII, Sec. 801, Nov. 10, 1978, 92 Stat.

3690; Pub. L. 97-320, title IV, Sec. 410(f), 424(c), (d)(11), (e),

428, Oct. 15, 1982, 96 Stat. 1520, 1523, 1526; Pub. L. 101-73,

title IX, Sec. 905(h), 907(i), Aug. 9, 1989, 103 Stat. 461, 473;

Pub. L. 102-242, title III, Sec. 306(j), Dec. 19, 1991, 105 Stat.

2359; Pub. L. 104-208, div. A, title II, Sec. 2216(a), Sept. 30,

1996, 110 Stat. 3009-413.)

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AMENDMENTS

1996 - Par. (1). Pub. L. 104-208, in concluding provisions,

inserted ''and the prohibitions of section 1843(f)(9) and

1843(h)(2) of this title'' after ''prohibition''.

1991 - Par. (2)(H)(i). Pub. L. 102-242 inserted before semicolon

at end '', a savings bank, and a savings association (as those

terms are defined in section 1813 of this title)''.

1989 - Par. (2)(F). Pub. L. 101-73, Sec. 907(i), amended subpar.

(F) generally, revising and restating as cls. (i) to (ix)

provisions of former cls. (i) to (vii).

Par. (2)(I). Pub. L. 101-73, Sec. 905(h), added subpar. (I).

1982 - Par. (2)(A) to (D). Pub. L. 97-320, Sec. 428(a)(1)-(4),

inserted ''or to any related interest of such person'' after ''such

other bank'' in subpar. (A), ''desiring to open the account'' in

subpar. (B), ''such other bank'' in subpar. (C), and ''another

bank'' in subpar. (D).

Par. (2)(E). Pub. L. 97-320, Sec. 410(f), substituted ''the

meaning prescribed by the Board pursuant to section 375b of this

title'' for ''the same meaning given it in section 371c of this

title''.

Par. (2)(F)(i). Pub. L. 97-320, Sec. 424(c), (d)(11), inserted

proviso giving agency discretionary authority to compromise, etc.,

any civil money penalty imposed under such authority, and

substituted ''may be assessed'' for ''shall be assessed''.

Par. (2)(F)(iv). Pub. L. 97-320, Sec. 424(e), substituted

''twenty days from the service'' for ''ten days from the date''.

Par. (2)(G)(ii). Pub. L. 97-320, Sec. 428(b)(1), substituted

''(ii) The appropriate Federal banking agencies are authorized to

issue rules and regulations, including definitions of terms, to

require the reporting and public disclosure of information by any

bank or executive officer or principal shareholder thereof

concerning any extension of credit by a correspondent bank to the

reporting bank's executive officers or principal shareholders, or

the related interests of such persons.'' for ''(ii) Each insured

bank shall compile the reports filed pursuant to subparagraph

(G)(i) and forward such compilation to the Comptroller of the

Currency in the case of a national bank, the Board in the case of a

State member bank, and the Federal Deposit Insurance Corporation in

the case of an insured nonmember State bank.''

Par. (2)(G)(iii). Pub. L. 97-320, Sec. 428(b)(2), struck out cl.

(iii) which required insured banks to include in their section

1817(k)(1) report a list of names of executive officers or

stockholders of record owning, controlling, or having more than a

10 per centum voting control of any class of voting securities of

the bank who file information required by subpar. (G)(i) and

aggregate amount of extensions of credit by correspondent banks to

such executive officers or stockholders of record, any company

controlled by such persons, and any political or campaign committee

the funds or services of which will benefit such persons, or which

is controlled by such persons.

Par. (2)(H). Pub. L. 97-320, Sec. 428(c), added subpar. (H).

1978 - Pub. L. 95-630 designated existing provisions as par. (1),

redesignated former pars. (1) to (5) as subpars. (A) to (E), and

added par. (2).

EFFECTIVE DATE OF 1991 AMENDMENT

Amendment by Pub. L. 102-242 effective upon earlier of date on

which final regulations under section 306(m)(1) of Pub. L. 102-242

become effective or 150 days after Dec. 19, 1991, see section

306(l) of Pub. L. 102-242, set out as a note under section 375b of

this title.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by section 907(i) of Pub. L. 101-73 applicable to

conduct engaged in after Aug. 9, 1989, except that increased

maximum penalties of $5,000 and $25,000 may apply to conduct

engaged in before such date if such conduct is not already subject

to a notice issued by the appropriate agency and occurred after

completion of the last report of the examination of the institution

by the appropriate agency occurring before Aug. 9, 1989, see

section 907(l) of Pub. L. 101-73, set out as a note under section

93 of this title.

EFFECTIVE DATE OF 1982 AMENDMENT

Amendment by section 428(b) of Pub. L. 97-320 effective when

regulations referred to in the amendment become effective as

provided in section 430 of Pub. L. 97-320, set out as a note under

section 1817 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-630 effective on expiration of 120 days

after Nov. 10, 1978, see section 2101 of Pub. L. 95-630, set out as

an Effective Date note under section 375b of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1464, 1831x, 1973, 1974,

1975, 1976 of this title.

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12 USC Sec. 1973 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

-HEAD-

Sec. 1973. Jurisdiction of courts; duty of United States attorneys;

equitable proceedings; petition; expedition of cases; temporary

restraining orders; bringing in additional parties; subpenas

-STATUTE-

The district courts of the United States have jurisdiction to

prevent and restrain violations of section 1972 of this title and

it is the duty of the United States attorneys, under the direction

of the Attorney General, to institute proceedings in equity to

prevent and restrain such violations. The proceedings may be by

way of a petition setting forth the case and praying that the

violation be enjoined or otherwise prohibited. When the parties

complained of have been duly notified of the petition, the court

shall proceed, as soon as possible, to the hearing and

determination of the case. While the petition is pending, and

before final decree, the court may at any time make such temporary

restraining order or prohibition as it deems just. Whenever it

appears to the court that the ends of justice require that other

parties be brought before it, the court may cause them to be

summoned whether or not they reside in the district in which the

court is held, and subpenas to that end may be served in any

district by the marshal thereof.

-SOURCE-

(Pub. L. 91-607, title I, Sec. 106(c), Dec. 31, 1970, 84 Stat.

1767.)

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12 USC Sec. 1974 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

-HEAD-

Sec. 1974. Actions by United States; subpenas for witnesses

-STATUTE-

In any action brought by or on behalf of the United States under

section 1972 of this title, subpenas for witnesses may run into any

district, but no writ of subpena may issue for witnesses living out

of the district in which the court is held at a greater distance

than one hundred miles from the place of holding the same without

the prior permission of the trial court upon proper application and

cause shown.

-SOURCE-

(Pub. L. 91-607, title I, Sec. 106(d), Dec. 31, 1970, 84 Stat.

1767.)

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12 USC Sec. 1975 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

-HEAD-

Sec. 1975. Civil actions by persons injured; jurisdiction and

venue; amount of recovery

-STATUTE-

Any person who is injured in his business or property by reason

of anything forbidden in section 1972 of this title may sue

therefor in any district court of the United States in which the

defendant resides or is found or has an agent, without regard to

the amount in controversy, and shall be entitled to recover three

times the amount of the damages sustained by him, and the cost of

suit, including a reasonable attorney's fee.

-SOURCE-

(Pub. L. 91-607, title I, Sec. 106(e), Dec. 31, 1970, 84 Stat.

1767.)

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12 USC Sec. 1976 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

-HEAD-

Sec. 1976. Injunctive relief for persons against threatened loss or

damages; equitable proceedings; preliminary injunctions

-STATUTE-

Any person may sue for and have injunctive relief, in any court

of the United States having jurisdiction over the parties, against

threatened loss or damage by reason of a violation of section 1972

of this title, under the same conditions and principles as

injunctive relief against threatened conduct that will cause loss

or damage is granted by courts of equity and under the rules

governing such proceedings. Upon the execution of proper bond

against damages for an injunction improvidently granted and a

showing that the danger of irreparable loss or damage is immediate,

a preliminary injunction may issue.

-SOURCE-

(Pub. L. 91-607, title I, Sec. 106(f), Dec. 31, 1970, 84 Stat.

1767.)

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12 USC Sec. 1977 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

-HEAD-

Sec. 1977. Limitation of actions; suspension of limitations

-STATUTE-

(1) Subject to paragraph (2) of this section, any action to

enforce any cause of action under this chapter shall be forever

barred unless commenced within four years after the cause of action

accrued.

(2) Whenever any enforcement action is instituted by or on behalf

of the United States with respect to any matter which is or could

be the subject of a private right of action under this chapter, the

running of the statute of limitations in respect of every private

right of action arising under this chapter and based in whole or in

part on such matter shall be suspended during the pendency of the

enforcement action so instituted and for one year thereafter:

Provided, That whenever the running of the statute of limitations

in respect of a cause of action arising under this chapter is

suspended under this paragraph, any action to enforce such cause of

action shall be forever barred unless commenced either within the

period of suspension or within the four-year period referred to in

paragraph (1) of this section.

-SOURCE-

(Pub. L. 91-607, title I, Sec. 106(g), Dec. 31, 1970, 84 Stat.

1768.)

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12 USC Sec. 1978 01/06/03

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TITLE 12 - BANKS AND BANKING

CHAPTER 22 - TYING ARRANGEMENTS

-HEAD-

Sec. 1978. Actions under other Federal or State laws unaffected;

regulations or orders barred as a defense

-STATUTE-

Nothing contained in this chapter shall be construed as affecting

in any manner the right of the United States or any other party to

bring an action under any other law of the United States or of any

State, including any right which may exist in addition to specific

statutory authority, challenging the legality of any act or

practice which may be proscribed by this chapter. No regulation or

order issued by the Board under this chapter shall in any manner

constitute a defense to such action.

-SOURCE-

(Pub. L. 91-607, title I, Sec. 106(h), Dec. 31, 1970, 84 Stat.

1768.)

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