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Copyrighted Material PAGE  Copyrighted Material Bank Broker-Dealer Compliance Guide Prepared for Federated Investors, Inc. by Melanie L. Fein October 2007 601 Pennsylvania Avenue, N.W. Suite 900 Washington, D.C. 20004 (202) 302-3874 (703) 759-3912  HYPERLINK mailto:mlfein@ mlfein@ CONTENTS  TOC \o 2-3 \h \z \t Heading 1,1,Appendix,1  HYPERLINK \l _Toc179634883 I. Introduction  PAGEREF _Toc179634883 \h 1  HYPERLINK \l _Toc179634884 II. Background  PAGEREF _Toc179634884 \h 1  HYPERLINK \l _Toc179634885 III. Bank “Broker” Exemptions  PAGEREF _Toc179634885 \h 2  HYPERLINK \l _Toc179634886 A. Definition of “Broker”  PAGEREF _Toc179634886 \h 2  HYPERLINK \l _Toc179634887 1. “Engaged in the Business”  PAGEREF _Toc179634887 \h 2  HYPERLINK \l _Toc179634888 2. “Effecting” Securities Transactions  PAGEREF _Toc179634888 \h 3  HYPERLINK \l _Toc179634889 B. Networking Arrangements with Broker-Dealers  PAGEREF _Toc179634889 \h 4  HYPERLINK \l _Toc179634890 1. Incentive Compensation  PAGEREF _Toc179634890 \h 5  HYPERLINK \l _Toc179634891 2. Contingent Compensation  PAGEREF _Toc179634891 \h 6  HYPERLINK \l _Toc179634892 3. Nominal Cash Fee  PAGEREF _Toc179634892 \h 7  HYPERLINK \l _Toc179634893 4. Bonus Plans  PAGEREF _Toc179634893 \h 8  HYPERLINK \l _Toc179634894 5. High Net Worth and Institutional Customers  PAGEREF _Toc179634894 \h 9  HYPERLINK \l _Toc179634895 C. Trust and Fiduciary Activities  PAGEREF _Toc179634895 \h 12  HYPERLINK \l _Toc179634896 1. “Fiduciary Capacity”  PAGEREF _Toc179634896 \h 12  HYPERLINK \l _Toc179634897 2. Chiefly Compensated Test  PAGEREF _Toc179634897 \h 13  HYPERLINK \l _Toc179634898 3. Advertising Restrictions  PAGEREF _Toc179634898 \h 19  HYPERLINK \l _Toc179634899 4. Special Exemptions  PAGEREF _Toc179634899 \h 19  HYPERLINK \l _Toc179634900 5. Execution through Registered Broker-Dealer  PAGEREF _Toc179634900 \h 19  HYPERLINK \l