Banks may extend and maintain purpose credit without complying with Regulation U if the credit is extended:
A.
To a bank auditor
B.
To a qualified employee stock ownership plan running previously but not now
C.
To any customer, other than a broker or dealer, to temporarily finance the purchase or sale of securities for prompt delivery, if the credit is to be repaid in the ordinary course of business on the completion of the transaction
D.
To enable a customer to meet emergency expenses not reasonably foreseen and if the bank obtains a good faith statement from the customer. Emergency expenses are ones related to unforeseen death or disability, not a chance to make a profit.
This option describes a scenario where banks can extend credit without complying with Regulation U's requirements. Regulation U sets forth certain restrictions on the amount of credit that banks can extend for the purpose of buying or carrying margin stock, but it allows for exceptions, such as temporary financing for the purchase or sale of securities for prompt delivery with the understanding that the credit will be repaid promptly upon the completion of the transaction.
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Cam22
4 months ago