## Facts

- A national bank sought regulatory approval to create a collective investment trust to commingle and invest Individual Retirement Account (IRA) assets.
- The trust would issue “units of beneficial interest” to participating IRA customers whose funds were pooled and invested in a diversified portfolio similar to mutual-fund investing, but within IRA constraints.
- The Comptroller of the Currency approved the trust, characterizing it as a traditional trust-banking service and concluding the units were not “securities” under Glass–Steagall Act §§ 16 and 21.
- The Comptroller relied on IRA-specific limits and restrictions, including annual contribution caps, nontransferability of units, inability to pledge units as collateral, and tax penalties for early withdrawals.
- An investment company trade association challenged the approval, arguing the product was functionally equivalent to a mutual fund and violated Glass–Steagall’s separation of commercial banking and the securities business.
- The district court granted summary judgment for the Comptroller and the bank, and the association appealed.

## Issues

1. Whether units of beneficial interest in a bank-sponsored IRA collective investment trust are “securities” under Glass–Steagall Act §§ 16 and 21.
2. Whether, under Chevron deference, the Comptroller’s interpretation that such units are not “securities” is a reasonable construction of the statute.

## Decision

- The court affirmed summary judgment for the Comptroller and the bank.
- The court held that Glass–Steagall is ambiguous as applied to IRA collective-trust units because “securities” is undefined and precedent did not supply a fixed definition for this context.
- Applying Chevron, the court upheld the Comptroller’s conclusion that the IRA trust units were not “securities” within §§ 16 and 21.
- The court found it reasonable to distinguish prior precedent addressing bank-sponsored products marketed broadly to the general public, given the IRA trust’s statutory contribution limits and restrictions on transferability, collateralization, and withdrawals.
- The court accepted the Comptroller’s view that the IRA trust fit within traditional bank fiduciary services and did not create the hazards Glass–Steagall targeted (such as underwriting-related conflicts and threats to depositor confidence).

## Legal Principles

- When a statutory term central to an agency-administered regime is undefined and ambiguous as applied, courts apply Chevron and uphold the agency’s interpretation if reasonable and consistent with statutory purposes.
- Characterization of an instrument as a Glass–Steagall “security” may turn on functional and contextual factors, including investor eligibility, transferability, collateral use, liquidity constraints, and the risk of the abuses the statute sought to prevent.
- The Comptroller of the Currency, as primary administrator of national banking statutes, receives substantial deference when defining the permissible scope of bank activities at the banking/securities boundary.

## Conclusion

The court upheld the Comptroller’s approval of a national bank’s IRA collective investment trust, deferring under Chevron to the determination that IRA trust units were not Glass–Steagall “securities” because the product operated as a constrained, retirement-focused fiduciary service and did not present the statute’s targeted risks.


Inv. Co. Inst. v. Conover, 790 F.2d 925 (D.C. Cir. 1986)