The American Bankers Association and the Bank Policy Institute filed a comment letter on two proposals issued recently by the Securities and Exchange Commission concerning insider trading and share repurchase disclosure modernization. The groups expressed concern about the interplay between the two proposals and the extensive capital and capital planning regulatory requirements that already apply to large bank holding companies and savings and loan holding companies.
Specifically, the groups noted that certain elements of the proposals would adversely and disproportionately affect banks and would contradict longstanding U.S. bank regulatory policy to encourage them to use share repurchases rather than dividend distributions as the preferred mechanism for returning capital to shareholders. The trade groups urged the SEC to consult with the Federal Reserve, which is the primary agency responsible for administering bank capital requirements, prior to finalizing the two proposals.
The groups emphasized that coordination with the Fed is particularly important to ensure that banks that frequently engage in share repurchases according to their capital plans will not be penalized under the SEC proposals with respect to inappropriate and opportunistic use of share repurchases.