Lapas attēli

provided these protections both through existing internal policies and procedures as well as through the Policy Statement. we also note that the Investment Company Act of 1940, as well as other federal securities laws, provide an extensive array of protections for mutual fund shareholders from potential conflicts of interest. The following is a summary of the principal conflicts of interest identified by MBC and MBC's plans to deal with them.

Trading on Material Nonpublic Information

IBC has adopted extensive policies and procedures to prevent the nisuse of material nonpublic information by MBC, Mellon Bank and their subsidiaries and affiliates, which misuse is prohibited by the Investment Company Act of 1940, as well as by the Securities Exchange Act of 1934. These policies and procedures are designed, among other things, to limit access to material

nonpublic information.

A copy of MBC's Confidential Information

and Securities Trading Policy (the "MBC Securities Trading Policy") has previously been furnished to the Subcommittee. The MBC Securities Trading Policy will be incorporated by reference into the Policy Statement.

In addition, Dreyfus has extensive policies and procedures designed to prevent the nisuse of material nonpublic information, which are codified in a Code of Ethics (a copy of which has previously been furnished to the Subcommittee). Use of material

nonpublic information in the possession of a Mellon bank by any Dreyfus or Dreyfus Fund would be strictly prohibited by both the Mellon Securities Trading Policy and the Dreyfus Code of Ethics.

[ocr errors]

Sharing of customer Information

We recognize that there is concern about unauthorized sharing of customer information, and we have attempted to deal with that issue by providing in the Policy Statement that no Mellon bank will share confidential customer information with any MBC entity (including Dreyfus after the merger), other than (a) pursuant to the customer's consent or (b) information of a type that the MBC entity could receive in a credit bureau or similar report.

Independence of Mutual Funds

In order to reduce the potential for conflicts of interest, MBC has voluntarily committed in the Policy Statement to ensure the independence of any mutual fund advised by any MBC entity, including the Dreyfus Funds after the merger ("Mellon-Advised Funds"). These commitments go beyond those which are already in

place in the Investment Company Act of 1940, and are consistent

with the provisions of H.R. 3447. In particular, no director, officer or employee of an MBC entity will serve as a director of any Mellon-Advised Fund, and MBC has committed in the Policy Statement not to control a Mellon-Advised Fund in any other manner, including by reason of owning in a fiduciary capacity with the power to vote more than 25% of the shares of a Mellon

Advised Pund. This commitment is consistent with the purposes behind Section 113 of H.R. 3447.

Restrictions on Certain transactions with Mellon-advised Funde HBC has identified in the Policy Statement certain transactions which aight pose conflicts of interest. In order to ensure the safety and soundness of the banking system, MBC has voluntarily restricted such transactions. Similar "firewalls" appear in H.R. 3447, and are aimed at minimizing concerns over conflicts of interest and other so-called "subtle hazards."

Among the transactions which have been voluntarily restricted in the Policy Statement so as to avoid potential conflicts of interest are: (a) loans between an MBC entity and a MellonAdvised Pund; (b) purchases by an MBC entity for its own account fron, or sales of portfolio securities from its own account to, a

Mellon-Advised Fund; (c) sales of securities to a Mellon-Advised

Fund which are being underwritten or placed by an MBC entity; (d) purchases by a Mellon-Advised Fund of securities in the process of issuance if an employee in an MBC entity advising such Fund has actual knowledge that the proceeds of an issuance of securities will be used to retire indebtedness to an MBC entity; and (e) purchases by an MBC entity for any third party account over which it has discretionary authority of a security issued by

a Mellon-Advised Fund.

compensation of Sales Personnel

Mellon Bank's compensation structure for branch personnel is specifically designed so as not to provide a financial incentive to sell specific investment products. Indeed, Mellon Bank does not pay branch personnel on a per-item basis for any financial service or product which is referred or sold. This procedure is

in contrast to a number of banks which pay a specific fee to

branch personnel for referrals to an investment sales area.


MBC fully intends to abide by the spirit as well as the letter of

the commitments made in the Policy Statement. Accordingly, we are willing to have the commitments set forth therein converted into conditions of regulatory approval should the occ so desire. We have also committed to prior notice to the occ of any change in the Policy Statement in order to ensure that Mellon Bank remained in compliance with the terms of the OCC's approval order. We would emphasize that MBC's Policy Statement goes beyond current law and is consistent in purposes with H.R. 3447.

In particular, MBC anticipates that application of Sections 23A and 23B to transactions between Mellon Bank and Dreyfus, as

provided for in the Policy Statement, would also be incorporated

as a condition of any approval of the merger (if granted) by the OCC. Accordingly, the OCC would examine for, and enforce compliance with, these two sections to the same extent as the occ

examines for and enforces compliance with these two sections in the context of national bank transactions with affiliates other than operating subsidiaries.

Anna A


Ancore Bank

A South Bancorporation
Bancohio National Bank

Bancoklahoma Trust


Bank of America

Bank of Boston Corp.

Bank of California

Bank of New York Co., Inc.

Bankers Trust co.

BayBanks Inc.

Bessener Group, Inc.

Boatnen's Bancshares, Inc.

Boulevard Bank

Branch Banking & Trust co.

Brown Brothers Harriman & Co.

Central Bancshares of the South, Inc.

Central Carolina Bank & Trust Co.

Central Fidelity Banks, Inc.

Chase Manhattan Corporation
Chemical Banking Corporation


Comerica, Inc.

« iepriekšējāTurpināt »