## Facts

- Two national banks applied to the Comptroller of the Currency in 1982 to offer discount securities brokerage through operating subsidiaries.
- Union Planters National Bank sought approval to acquire a discount broker and provide brokerage services at certain bank branches, affiliated banks, and correspondent banks in multiple states.
- Security Pacific National Bank sought approval to create a new operating subsidiary to offer discount brokerage at certain bank branches and potentially at non-branch locations.
- The proposed subsidiaries would execute securities trades solely as agents for customers and would not underwrite, deal for their own accounts, or provide investment advice.
- The Comptroller approved both applications.
- The Securities Industry Association (SIA), a trade association of securities firms, sued to set aside the approvals as violating (1) Glass–Steagall Act §§ 16 and 21 and (2) the McFadden Act and related National Bank Act limits on branching and where a national bank may conduct its general business.
- The case was decided on cross-motions for summary judgment.

## Issues

1. Whether SIA had standing to challenge the Comptroller’s approvals based on competitive injury and the statutes’ zone of interests.
2. Whether national banks, through operating subsidiaries, may provide discount brokerage services consistent with Glass–Steagall Act §§ 16 and 21.
3. Whether offering discount brokerage from locations other than a national bank’s main office and authorized branches violates the McFadden Act and related National Bank Act provisions governing branching and where a bank may conduct its general business.

## Decision

- The court held SIA had standing because its members alleged competitive injury and were within the zone of interests protected by the federal banking statutes invoked.
- The court held the proposed discount brokerage, limited to agency execution of customer orders and excluding underwriting, dealing, and investment advice, did not violate Glass–Steagall Act §§ 16 or 21.
- The court held the Comptroller’s approvals were unlawful to the extent they permitted discount brokerage operations at locations other than the banks’ main offices and authorized branches under the McFadden Act and related provisions.
- Summary judgment was granted to SIA in part, and the Comptroller’s approvals were reversed in part.

## Legal Principles

- Competitors may have standing to challenge federal banking regulator actions when they plausibly allege competitive injury and their interests fall within the relevant statutes’ zone of interests.
- Glass–Steagall Act § 16 permits national banks to buy and sell securities as agent “upon the order, and for the account, of customers,” and a discount brokerage limited to agency execution may fall within that authority.
- Glass–Steagall Act § 21’s prohibition on combining deposit-taking with the “business of issuing, underwriting, selling, or distributing” securities does not bar bank-affiliated brokerage that does not engage in underwriting or dealing.
- The McFadden Act and related National Bank Act provisions restrict where a national bank may conduct its general business and limit the establishment of additional offices beyond the main office and authorized branches; regulator approvals may be set aside if they allow expansion inconsistent with those limits.

## Conclusion

The court permitted national banks to conduct customer-order discount brokerage through subsidiaries under Glass–Steagall’s agency-trading limits, but it invalidated the Comptroller’s approvals insofar as they authorized brokerage operations from non-branch locations prohibited by federal branching and location restrictions.


Securities Indus. Ass’n v. Comptroller of the Currency, 577 F. Supp. 252 (D.D.C. 1983)