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.

Notes of Decisions

Cited in 44 cases (1 in the last 5 years), 1964–2021 · leading case: Calderon-Serra v. Banco Santander Puerto Rico

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Calderon-Serra v. Banco Santander Puerto Rico (2014) ca1 · 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. Community National Bank & Trust Co. (1981) ca5 · 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 and Wife, Rosalind K. Gilman, Cross-Appellants v. Federal Deposit Insurance Co (1981) ca6 · 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 and Franklyn Kupferman v. Federal Deposit Insurance Corporation (1978) ca2 · 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 and Carole A. Bennett, Plaintiffs-Appellants, v. UNITED STATES TRUST COMPANY OF NEW YORK, Defendant-A (1985) ca2 “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. (1976) ca1 · cites it 2× “12 C.F.R. § 221.1 (a).” Daley v. Capitol Bank & Trust Co.”

Stonehill v. Security National Bank (1975) nysd · 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 Corporation, and Harry Ware, Appellees (1977) ca8 “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 Company of Ridgewood, NJ (1964) nysd · 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 (1975) ca5 “§ 78g (1970); 12 CFR §§ 221.1 et seq. (1975); Federal Reserve Form U-l.”

In Re Olympia Brewing Co. Securities Litigation (1987) ilnd “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…”

SECURITIES AND EXCHANGE COMMISSION, Appellant, v. William K. WARREN, Jr., and Warren Fund (1978) ca3 “12 C.F.R. § 221.1 (a). 3 . Regulation U only applied to lending banks at the time of the alleged misconduct.”

Show all 44 citing cases →

— 12 C.F.R. § 221.1(a) — 5 cases

Cooper v. North Jersey Trust Company of Ridgewood, NJ (1964) nysd “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 (1974) ca2

Goldman v. Bank of the Commonwealth (1971) mied

United States v. Van De Carr (1972) cacd

Securities & Exchange Commission v. Warren (1977) pawd

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