C.F.R. » Title 12 » CHAPTER I—COMPTROLLER OF THE CURRENCY, DEPARTMENT OF THE TREASURY › PART 9—FIDUCIARY ACTIVITIES OF NATIONAL BANKS

12 C.F.R. § 9.12

Self-dealing and conflicts of interest

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(a) Investments for fiduciary accounts—(1) In general. Unless authorized by applicable law, a national bank may not invest funds of a fiduciary account for which a national bank has investment discretion in the stock or obligations of, or in assets acquired from: the bank or any of its directors, officers, or employees; affiliates of the bank or any of their directors, officers, or employees; or individuals or organizations with whom there exists an interest that might affect the exercise of the best judgment of the bank.

(2) Additional securities investments. If retention of stock or obligations of the bank or its affiliates in a fiduciary account is consistent with applicable law, the bank may:

(i) Exercise rights to purchase additional stock (or securities convertible into additional stock) when offered pro rata to stockholders; and

(ii) Purchase fractional shares to complement fractional shares acquired through the exercise of rights or the receipt of a stock dividend resulting in fractional share holdings.

(b) Loans, sales, or other transfers from fiduciary accounts—(1) In general. A national bank may not lend, sell, or otherwise transfer assets of a fiduciary account for which a national bank has investment discretion to the bank or any of its directors, officers, or employees, or to affiliates of the bank or any of their directors, officers, or employees, or to individuals or organizations with whom there exists an interest that might affect the exercise of the best judgment of the bank, unless:

(i) The transaction is authorized by applicable law;

(ii) Legal counsel advises the bank in writing that the bank has incurred, in its fiduciary capacity, a contingent or potential liability, in which case the bank, upon the sale or transfer of assets, shall reimburse the fiduciary account in cash at the greater of book or market value of the assets;

(iii) As provided in § 9.18(b)(8)(iii) for defaulted investments; or

(iv) Required in writing by the OCC.

(2) Loans of funds held as trustee. Notwithstanding paragraph (b)(1) of this section, a national bank may not lend to any of its directors, officers, or employees any funds held in trust, except with respect to employee benefit plans in accordance with the exemptions found in section 408 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108).

(c) Loans to fiduciary accounts. A national bank may make a loan to a fiduciary account and may hold a security interest in assets of the account if the transaction is fair to the account and is not prohibited by applicable law.

(d) Sales between fiduciary accounts. A national bank may sell assets between any of its fiduciary accounts if the transaction is fair to both accounts and is not prohibited by applicable law.

(e) Loans between fiduciary accounts. A national bank may make a loan between any of its fiduciary accounts if the transaction is fair to both accounts and is not prohibited by applicable law.

Notes of Decisions
Cited in 15 cases (1 in the last 5 years), 1975–2024 · leading case: Fed. Sec. L. Rep. P 96,780 Harold J. O'Brien v. Cont'l Illinois Nat'l Bank & Trust Co. of Chicago, a Nat'l Banking Ass'n, 593 F.2d 54 (7th Cir. 1979).
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Fed. Sec. L. Rep. P 96,780 Harold J. O'Brien v. Cont'l Illinois Nat'l Bank & Trust Co. of Chicago, a Nat'l Banking Ass'n, 593 F.2d 54 (7th Cir. 1979). “See 12 C.F.R. § 9.12 (1978). In the absence of such a conflict, the primary jurisdiction doctrine is inapplicable.”
In Re the Jud. Settlement of the Intermediate Account of HSBC Bank USA, N.A., 98 A.D.3d 300 (N.Y. App. Div. 2012). “, 219 AD2d at 270 ; see 12 CFR 9.12 [a] [1]), and it is undisputed that petitioner’s own guidelines prohibited petitioner, when acting as a corporate trustee, from investing in its own stock.”
In re Bankers Trust Co., 219 A.D.2d 266 (N.Y. App. Div. 1995). · cites it 2× “In 1962, authority over trust powers of national banks was transferred to the Comptroller of the Currency, and Regulation F was replaced by Regulation 9 (12 USC § 92a; 12 CFR 9.12 et seq.). Regulation 9 (12 CFR 9.”
Birmingham Trust Nat. Bank v. Henley, 371 So. 2d 883 (Ala. 1979). · cites it 2× “12 C.F.R. § 9.12 (a). In fact, Title 12, § 83, U.”
First Nat'l Bank v. Slade, 399 N.E.2d 1047 (Mass. 1979). “The facts do not warrant a claim that the bank acted unfairly in violation of Federal banking regulations ( 12 C.F.R. § 9.12 [f] [1979]) in demanding and obtaining the guaranty.”
Bd. of Trs. of the Aftra Ret. Fund v. JPMorgan Chase Bank, N.A., 806 F. Supp. 2d 662 (S.D.N.Y. 2011). “12 C.F.R. § 9.12 (c) ("Self-dealing and conflicts of interest”) (“A national bank may make a loan to a fiduciary account and may hold a security interest in assets of the account if the transaction is fair to the account and is not prohibited by applicable law.”
Henley v. Birmingham Trust Nat'l Bank, 322 So. 2d 688 (Ala. 1975). · cites it 2× “See, 12 C.F.R., § 9.12 . I believe that when a trustee bank acts in good faith, and follows the procedures required by federal law, this Court should not find that the trustee bank breached its duty.”
In Re Est. of Lindberg, 388 N.E.2d 148 (Ill. App. Ct. 1979). “" Petitioners then cite, as a pertinent Federal law, 12 C.F.R. § 9.12 (b) (1975), which provides inter alia that property held by a national bank shall not be sold to the bank's officers, with exceptions not applicable here.”
Martin v. Nat'l Bank of Alaska, 828 F. Supp. 1427 (D. Alaska 1993). “18 ) and self-dealing ( 12 C.F.R. § 9.12 ). NBA argues that the OCC should have exclusive jurisdiction because the OCC has promulgated regulations.”
Lincoln Nat'l Bank & Trust Co. v. Shriner's Hospitals for Crippled Child., 588 N.E.2d 597 (Ind. Ct. App. 1992). “Lincoln was notified that it had violated 12 C.F.R. § 9.12 entitled "self-dealing" for having a conflict of interest in the sale of the trust real estate.”
Lindberg v. Beverly Bank, 388 N.E.2d 148 (Ill. App. Ct. 1979). “” Petitioners then cite, as a pertinent Federal law, 12 C.F.R. §9.12 (b) (1975), which provides inter alia that property held by a national bank shall not be sold to the bank’s officers, with exceptions not applicable here.”
First Nat'l Bank v. Comm'r, 64 T.C. 1001 (Tax Ct. 1975). · cites it 2× “12(f) , provide: (f) A national bank may make a loan to [a fiduciary] account and may take as security therefore assets of the account, provided such transaction is fair to such account and is not prohibited by local law.”
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