Law School Case Brief
Securities Industry Assoc. v. Comptroller of Currency - 577 F. Supp. 252 (D.D.C. 1983)
A court gives great weight to the Comptroller of the Currency's ruling. Reasonable constructions of regulatory statutes by the agencies charged with enforcement of those statutes are to be respected by reviewing courts.
In June 1982, Union Planters National Bank of Memphis ("Union Planters") applied to defendant , C.T. Conover, the Comptroller of the Currency ("Comptroller"), for approval of the acquisition by Union Planters of Brenner Steed and Associates, Inc., a discount brokerage business. In July 1982, Security Pacific National Bank ("Security Pacific") applied to the Comptroller for approval of its proposed establishment of a new operating subsidiary to provide discount brokerage services. Both discount brokerages would buy and sell securities solely as agent, on the order and for the account of customers. The Comptroller approved the applications. Thereafter, plaintiff Securities Industry Association ("SIA"), a national trade association representing hundreds of securities brokers, dealers and underwriters, filed a lawsuit against the Comptroller in federal district court challenging the decisions to approve the applications. The parties filed cross-motions for summary judgment.
Did the Comptroller violate the McFadden Act when he approved the establishment of securities brokerage businesses of Union Planters and Security Pacific?
The court granted in part SIA's motion for summary judgment and reversed the Comptroller's decision. The court first rejected SIA's claim that the Glass-Steagall Act permitted banks to provide brokerage services only to pre-existing, bona fide bank customers. The acquisition and operation of a discount brokerage service by a member bank was consistent with both the language and purpose of the Glass-Steagall Act. The court agreed with SIA, however, that the Comptroller violated the "branching restrictions" of McFadden Act by allowing Union Planters and Security Pacific to operate a brokerage business at offices other than those previously authorized. The court rejected the Comptroller's claim that SIA lacked standing to file the lawsuit. The court ruled SIA had standing to sue because SIA alleged sufficient injury, and SIA was within zone of interests protected by McFadden Act.
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