Capital One 2005 Annual Report Download - page 23

permanently, although the law authorizes states to enact identity theft laws that are not inconsistent with the conduct required
by the provisions of the FACT Act. If financial institutions and credit bureaus fail to alleviate the costs and consumer
frustration associated with the growing crime of identity theft, financial institutions could face increased
legislative/regulatory and litigation risks. In addition, federal regulators are still in the process of promulgating regulations
under the FACT Act; there can be no assurance that such regulations, when enacted, will not have an adverse impact on the
Company.
In
vestment in the Corporation and the Banks
Certain acquisitions of capital stock may be subject to regulatory approval or notice under federal or state law. Investors are
responsible for ensuring that they do not, directly or indirectly, acquire shares of capital stock of the Corporation in excess of
the amount which can be acquired without regulatory approval. Each of the Banks is an “insured depository institution”
within the meaning of the Change in Bank Control Act. Consequently, federal law and regulations prohibit any person or
company from acquiring control of the Corporation without, in most cases, prior written approval of the Federal Reserve, the
OCC or the OTS, as applicable. Control is conclusively presumed if, among other things, a person or company acquires more
than 25% of any class of voting stock of the Corporation. A rebuttable presumption of control arises if a person or company
acquires more than 10% of any class of voting stock and is subject to any of a number of specified “control factors” as set
forth in the applicable regulations. Additionallly, the Bank is a “bank” within the meaning of Chapter 13 of Title 6.1 of the
Code of Virginia governing the acquisition of interests in Virginia financial institutions (the “Financial Institution Holding
Company Act”). The Financial Institution Holding Company Act prohibits any person or entity from acquiring, or making
any public offer to acquire, control of a Virginia financial institution or its holding company without making application to,
and receiving prior approval from, the Bureau of Financial Institutions.
Non-Bank Activities
The Corporation’ s non-bank subsidiaries are subject to supervision and regulation by various other federal and state
authorities. Insurance agency subsidiaries are regulated by state insurance regulatory agencies in the states in which they
operate. Hibernia Asset Management, L.L.C. and Hibernia Investments, L.L.C. are registered investment advisers regulated
under the Investment Advisers Act of 1940. Hibernia Asset Management provides investment advice to investment
companies subject to regulation under the Investment Company Act of 1940.
Hibernia Investments and Hibernia Southcoast Capital, Inc. are registered broker-dealers regulated by the Securities and
Exchange Commission (the “SEC”), the National Association of Securities Dealers, Inc., and the Louisiana Office of
Financial Institutions through the Deputy Commissioner of Securities. The Company’ s broker-dealer subsidiaries are subject
to, among other things, net capital rules designed to measure the general financial condition and liquidity of a broker-dealer.
Under these rules, broker-dealers are required to maintain the minimum net capital deemed necessary to meet their
continuing commitments to customers and others, and are required to keep a substantial portion of their assets in relatively
liquid form. These rules also limit the ability of broker-dealers to transfer large amounts of capital to parent companies and
other affiliates. Broker-dealers are also subject to other regulations covering their business operations, including sales and
trading practices, public offerings, publication of research reports, use and safekeeping of client funds and securities, capital
ructure, record-keeping and the conduct of directors, officers and employees. st
U
SA PATRIOT Act of 2001
On October 26, 2001, the President signed into law the USA PATRIOT Act of 2001 (the “Patriot Act”). The Patriot Act
contains sweeping anti-money laundering and financial transparency laws as well as enhanced information collection tools
and enforcement mechanics for the U.S. government, including: due diligence requirements for financial institutions that
administer, maintain, or manage private bank accounts or correspondent accounts for non-U.S. persons; standards for
verifying customer identification at account opening; rules to promote cooperation among financial institutions, regulators,
and law enforcement entities in identifying parties that may be involved in terrorism or money laundering; reports by
nonfinancial trades and businesses filed with the Treasury Department’ s Financial Crimes Enforcement Network for
transactions exceeding $10,000; and filing suspicious activities reports by brokers and dealers if they believe a customer may
be violating U.S. laws and regulations.
The Department of Treasury in consultation with the Federal Reserve and other federal financial institution regulators has
promulgated rules and regulations implementing the Patriot Act which: prohibit U.S. correspondent accounts with foreign
banks that have no physical presence in any jurisdiction; require financial institutions to maintain certain records for
correspondent accounts of foreign banks; require financial institutions to produce certain records relating to anti-money
laundering compliance upon request of the appropriate federal banking agency; require due diligence with respect to private
banking and correspondent banking accounts; facilitate information sharing between government and financial institutions;
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