Insider Activities

Management Information Systems and Financial Reporting

Banks should have sound information systems that produce the information necessary to assess compliance with insider laws, regulations, and policies. The information gathered through these systems should fully support regulatory and board reporting. In addition, the systems should aggregate extensions of credit to insiders and their related interests to help maintain compliance with statutory limitations.

Proper record keeping is essential for the board and management to effectively monitor insider relationships and lending and to file accurate call reports. Schedule RC-M of the call report requires banks to report extensions of credit to executive officers, directors, principal shareholders, and their related interests. In addition, each bank must furnish a report of all loans or extensions of credit it has made to executive officers since the previous call report date.

National banks registered with the OCC and national bank holding companies that have securities registered with the SEC are also subject to accelerated reporting of insider securities transactions. Registered banks or bank holding companies must file reports with the appropriate federal banking regulator within two business days following the date on which the insider transaction was executed. Institutions with Web sites are also required to disclose the reports on the Web sites.

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