C.F.R. » Title 12 » CHAPTER II—FEDERAL RESERVE SYSTEM › SUBCHAPTER A—BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM › PART 221—CREDIT BY BANKS AND PERSONS OTHER THAN BROKERS OR DEALERS FOR THE PURPOSE OF PURCHASING OR CARRYING MARGIN STOCK (REGULATION U)

12 C.F.R. § 221.1

Authority, purpose, and scope

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(a) Authority. Regulation U (this part) is issued by the Board of Governors of the Federal Reserve System (the Board) pursuant to the Securities Exchange Act of 1934 (the Act) (15 U.S.C. 78a et seq.).

(b) Purpose and scope. (1) This part imposes credit restrictions upon persons other than brokers or dealers (hereinafter lenders) that extend credit for the purpose of buying or carrying margin stock if the credit is secured directly or indirectly by margin stock. Lenders include “banks” (as defined in § 221.2) and other persons who are required to register with the Board under § 221.3(b). Lenders may not extend more than the maximum loan value of the collateral securing such credit, as set by the Board in § 221.7 (the Supplement).

(2) This part does not apply to clearing agencies regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission that accept deposits of margin stock in connection with:

(i) The issuance of, or guarantee of, or the clearance of transactions in, any security (including options on any security, certificate of deposit, securities index or foreign currency); or

(ii) The guarantee of contracts for the purchase or sale of a commodity for future delivery or options on such contracts.

(3) This part does not apply to credit extended to an exempted borrower.

(c) Availability of forms. The forms referenced in this part are available from the Federal Reserve Banks.

Notes of Decisions
Cited in 44 cases (1 in the last 5 years), 1964–2021 · leading case: Calderon-Serra v. Banco Santander Puerto Rico, 747 F.3d 1 (1st Cir. 2014).
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Calderon-Serra v. Banco Santander Puerto Rico, 747 F.3d 1 (1st Cir. 2014). · cites it 2× “3 See 12 C.F.R. § 221.1 (a). By its express terms, Regulation U “imposes credit restrictions upon persons other than brokers or dealers (hereinafter lenders) that extend credit for the purpose of buying or carrying margin stock if the credit is secured directly or indirectly by…”
Fed. Sec. L. Rep. P 97,842 Joseph Vigman v. Cmty. Nat'l Bank & Trust Co., 635 F.2d 455 (5th Cir. 1981). · cites it 2× “12 C.F.R. § 221.1 et seq. (1980). 5 . Section 7 provides in pertinent part: It shall be unlawful for any person .”
Fed. Sec. L. Rep. P 98,300 Seymour Gilman & Wife, Rosalind K. Gilman, Cross-Appellants v. Fed. Deposit Ins. Corp., Cross-Appellee, 660 F.2d 688 (6th Cir. 1981). · cites it 2× “This appeal requires us to decide whether section 7 of the Securities Exchange Act of 1934 and Regulation U, 12 C.F.R. § 221.1 (a) create a private federal cause of action for borrowers who have received bank loans, secured by stock, in violation of federal margin requirements.”
Fed. Sec. L. Rep. P 95,823 Samuel Mallis & Franklyn Kupferman v. Fed. Deposit Ins. Corp., 568 F.2d 824 (2d Cir. 1978). · cites it 2× “” 12 C.F.R. § 221.1 (a) (1976). 5 The only definition of “margin stock” set forth in Regulation U which even approaches applicability to the instant shares is that of “a stock registered on a national securities exchange”.”
Richard D. BENNETT & Carole A. Bennett, Plaintiffs-Appellants, v. UNITED STATES TRUST Co. OF NEW YORK, Defendant-Appellee, 770 F.2d 308 (2d Cir. 1985). “12 C.F.R. § 221.1 (a)(1) (1983). According to the Bennetts, an innocent, good faith investor has a private right of action against a bank that violates Regulation U.”
Fed. Sec. L. Rep. P 95,800 Gordon F. B. Ondis v. Fred H. Barrows, Jr., 538 F.2d 904 (1st Cir. 1976). · cites it 2× “12 C.F.R. § 221.1 (a).” Daley v. Capitol Bank & Trust Co.”
Stonehill v. Sec. Nat'l Bank, 68 F.R.D. 24 (S.D.N.Y. 1975). · cites it 5× “This action concerns a series of loans which allegedly violated the margin requirements of Regulation U, 12 C.F.R. § 221.1 et seq., promulgated by the Federal Reserve Board pursuant to § 7 of the Securities Exchange Act of 1934, 15 U.”
Daniel L. SHULL, Appellant, v. DAIN, KALMAN & QUAIL, INC., a Corp., & Harry Ware, Appellees, 561 F.2d 152 (8th Cir. 1977). “1 When Regulation “T” and Regulation “U” are read together, it appears that while a stock broker may to a limited extent give credit to his margin customers or arrange for an extension of credit to them by others, a broker violates Regulation “T” if he “arranges” for a bank to…”
Cooper v. North Jersey Trust Co. of Ridgewood, NJ, 226 F. Supp. 972 (S.D.N.Y. 1964). · cites it 2× “This section makes it unlawful for any person to extend credit for the purpose of purchasing stock registered on a national exchange in contravention of regulations laid down by the Federal Reserve Board. Regulation U, 12 C.F.R. 221.1(a) provides: “No bank shall make any loan…”
Fed. Sec. L. Rep. P 95,351 Billie Jean Woodward v. Metro Bank of Dallas, 522 F.2d 84 (5th Cir. 1975). “§ 78g (1970); 12 CFR §§ 221.1 et seq. (1975); Federal Reserve Form U-l.”
In Re Olympia Brewing Co. Sec. Litig., 674 F. Supp. 597 (N.D. Ill. 1987). “12 C.F.R. §§ 221.1 etseq., 224.1 et seq.; (h) obtaining extensions of time to pay for the securities by fraudulently misrepresenting to Loeb Rhoades and others that payment for the securities was forthcoming; (i) placing or ratifying orders for large quantities of the Securities…”
Sec. & Exch. Comm'n, Appellant, v. William K. Warren, Jr., & Warren Fund, 583 F.2d 115 (3rd Cir. 1978). “12 C.F.R. § 221.1 (a). 3 . Regulation U only applied to lending banks at the time of the alleged misconduct.”
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— 12 C.F.R. § 221.1(a) — 5 cases
Cooper v. North Jersey Trust Co. of Ridgewood, NJ, 226 F. Supp. 972 (S.D.N.Y. 1964). “This section makes it unlawful for any person to extend credit for the purpose of purchasing stock registered on a national exchange in contravention of regulations laid down by the Federal Reserve Board. Regulation U, 12 C.F.R. 221.1(a) provides: “No bank shall make any loan…”
John R. Freeman, Appellant, v. Marine Midland Bank-new York, Appellee, 494 F.2d 1334 (2d Cir. 1974).
Goldman v. Bank of the Commonwealth, 332 F. Supp. 699 (E.D. Mich. 1971).
United States v. Van De Carr, 343 F. Supp. 993 (C.D. Cal. 1972).
Sec. & Exch. Comm'n v. Warren, 76 F.R.D. 405 (W.D. Pa. 1977).
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