Securities Lawyer's Deskbook
                         published by The University of Cincinnati College of Law
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General Rules and Regulations
promulgated
under the
Securities Exchange Act of 1934





Rule 3b-18 -- Definitions of Terms Used in Section 3(a)(5) of the Act


For purposes of Section 3(a)(5)(C) of the Act:

  1. The term affiliate means any company that controls, is controlled by, or is under common control with another company.

  2. The term consumer-related receivable means any obligation incurred by any natural person to pay money arising out of a transaction in which the money, property, insurance, or services (being purchased) are primarily for personal, family, or household purposes.

  3. The term member as it relates to the term "syndicate of banks" means a bank that is a participant in a syndicate of banks and together with its affiliates, other than its broker or dealer affiliates, originates no less than 10% of the value of the obligations in a pool of obligations used to back the securities issued through a grantor trust or other separate entity.

  4. The term obligation means any note, draft, acceptance, loan, lease, receivable, or other evidence of indebtedness that is not a security issued by a person other than the bank.

  5. The term originated means:

    1. Funding an obligation at the time that the obligation is created; or

    2. Initially approving and underwriting the obligation, or initially agreeing to purchase the obligation, provided that:

      1. The obligation conforms to the underwriting standards or is evidenced by the loan documents of the bank or its affiliates, other than its broker or dealer affiliates; and

      2. The bank or its affiliates, other than its broker or dealer affiliates, fund the obligation in a timely manner, not to exceed six months after the obligation is created.

  6. The term pool means more than one obligation or type of obligation grouped together to provide collateral for a securities offering.

  7. The term predominantly originated means that no less than 85% of the value of the obligations in any pool were originated by:

    1. The bank or its affiliates, other than its broker or dealer affiliates; or

    2. Banks that are members of a syndicate of banks and affiliates of such banks, other than their broker or dealer affiliates, if the obligations or pool of obligations consist of mortgage obligations or consumer-related receivables.

    3. For this purpose, the bank and its affiliates include any financial institution with which the bank or its affiliates have merged but does not include the purchase of a pool of obligations or the purchase of a line of business.

  8. The term syndicate of banks means a group of banks that acts jointly, on a temporary basis, to issue through a grantor trust or other separate entity, securities backed by obligations originated by each of the individual banks or their affiliates, other than their broker or dealer affiliates.


Regulatory History


66 FR 27760, 27799, May 18, 2001; 68 FR 8686, 8700, Feb. 24, 2003.

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