Regulation 9 Explained: 2025 Guide to National Banks' Fiduciary Roles & Investment Rules

What Is Regulation 9?

Regulation 9 is a federal directive that governs the fiduciary responsibilities of national banks authorized by the Office of the Comptroller of the Currency (OCC) to act as fiduciaries. This regulation permits these banks to manage investments and other financial matters on behalf of third parties, primarily through in-house trust departments.

Key Highlights

• Regulation 9 authorizes national banks to establish and operate trust departments internally, functioning as fiduciaries.
• It mandates strict policies to ensure all investment activities comply with federal standards.
• The regulation explicitly forbids self-dealing and conflicts of interest to protect clients' assets.

How Regulation 9 Operates

Under Regulation 9, national banks can hold and manage stocks, bonds, and other securities as trustees. While the regulation provides federal authorization, banks must also comply with relevant state laws. The OCC enforces Regulation 9 exclusively for national banks, which can operate across multiple states unless restricted by state-specific regulations.

To perform fiduciary duties under Regulation 9, banks must implement comprehensive written policies. These policies govern brokerage practices, prevent misuse of insider information by fiduciary officers and employees, and establish safeguards against self-dealing and conflicts of interest.

Annual Investment Reviews

National banks are required to conduct thorough annual reviews of all fiduciary assets under their investment discretion. These reviews assess whether investment decisions align with clients' best interests and ensure portfolio objectives remain appropriate and current.

• Verification that investment goals are suitable and consistently applied
• Comprehensive portfolio evaluations
• Accurate tracking of exceptions
• Proper asset valuation
• Performance monitoring with procedures for addressing anomalies

Additionally, banks should engage legal counsel specializing in fiduciary law to advise on compliance and governance matters.

Important Considerations

Regulation 9 imposes strict limitations on investments involving fiduciary funds. Without explicit authorization from an appropriate officer, banks cannot invest fiduciary assets in securities or obligations linked to the bank itself, its directors, officers, employees, or related parties who might influence the bank's judgment. This prohibition extends to lending, selling, or transferring fiduciary assets to prevent conflicts of interest and protect client interests.

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