Regions Bank 2009 Annual Report Download - page 30

Under the FDIA, insurance of deposits may be terminated by the FDIC upon a finding that the institution
has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has
violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
Depositor Preference. The Omnibus Budget Reconciliation Act of 1993 provides that deposits and certain
claims for administrative expenses and employee compensation against an insured depository institution would
be afforded a priority over other general unsecured claims against such an institution in the “liquidation or other
resolution” of such an institution by any receiver.
Regulation of Morgan Keegan. As a registered investment adviser and broker-dealer, Morgan Keegan is
subject to regulation and examination by the Securities and Exchange Commission (“SEC”), the Financial
Industry Regulatory Authority (“FINRA”), the New York Stock Exchange (“NYSE”) and other self-regulatory
organizations (“SROs”), which may affect its manner of operation and profitability. Such regulations cover a
broad range of subject matter. Rules and regulations for registered broker-dealers cover such issues as: capital
requirements; sales and trading practices; use of client funds and securities; the conduct of directors, officers and
employees; record-keeping and recording; supervisory procedures to prevent improper trading on material
non-public information; qualification and licensing of sales personnel; and limitations on the extension of credit
in securities transactions. Rules and regulations for registered investment advisers include limitations on the
ability of investment advisers to charge performance-based or non-refundable fees to clients, record-keeping and
reporting requirements, disclosure requirements, limitations on principal transactions between an adviser or its
affiliates and advisory clients, and anti-fraud standards.
Morgan Keegan is subject to the net capital requirements set forth in Rule 15c3-1 of the Securities Exchange
Act of 1934. The net capital requirements measure the general financial condition and liquidity of a broker-dealer
by specifying a minimum level of net capital that a broker-dealer must maintain, and by requiring that a
significant portion of its assets be kept liquid. If Morgan Keegan failed to maintain its minimum required net
capital, it would be required to cease executing customer transactions until it came back into compliance. This
could also result in Morgan Keegan losing its FINRA membership, its registration with the SEC or require a
complete liquidation.
The SEC’s risk assessment rules also apply to Morgan Keegan as a registered broker-dealer. These rules
require broker-dealers to maintain and preserve records and certain information, describe risk management
policies and procedures, and report on the financial condition of affiliates whose financial and securities activities
are reasonably likely to have a material impact on the financial and operational condition of the broker-dealer.
Certain “material associated persons” of Morgan Keegan, as defined in the risk assessment rules, may also be
subject to SEC regulation.
In addition to federal registration, state securities commissions require the registration of certain broker-
dealers and investment advisers. Morgan Keegan is registered as a broker-dealer with every state, the District of
Columbia, and Puerto Rico. Morgan Keegan is registered as an investment adviser in over 40 states and the
District of Columbia.
Violations of federal, state and SRO rules or regulations may result in the revocation of broker-dealer or
investment adviser licenses, imposition of censures or fines, the issuance of cease and desist orders, and the
suspension or expulsion of officers and employees from the securities business firm. In addition, Morgan
Keegan’s business may be materially affected by new rules and regulations issued by the SEC or SROs as well as
any changes in the enforcement of existing laws and rules that affect its securities business.
Regulation of Insurers and Insurance Brokers. Regions’ operations in the areas of insurance brokerage
and reinsurance of credit life insurance are subject to regulation and supervision by various state insurance
regulatory authorities. Although the scope of regulation and form of supervision may vary from state to state,
insurance laws generally grant broad discretion to regulatory authorities in adopting regulations and supervising
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