On Monday, September 24, 2007, the SEC and Federal Reserve issued a press release  announcing final joint rules (originally proposed in December 2006) to implement certain provisions of the Gramm-Leach Bliley Act.  These rules narrow the exemption for banks from the “broker” definition under the 1934 Securities Exchange Act (“Exchange Act”).  Previously, the Exchange Act contained a broad exemption for bank activities, permitting banks to engage in securities transactions without registration.  Now, the final rules specify which activities are exempt from the definition.  The exemptions include: (1) a networking exemption allowing banks to compensate non-registered employees for referrals to insurance producers and NASD registered representatives pursuant to a networking agreement with a registered broker/dealer; (2) a trust and fiduciary exemption allowing banks to perform securities transactions as trustees or fiduciaries; (3) a sweep account exemption allowing sweep deposits into no-load funds; and (4) a custodial exemption allowing transactions in the context of an employee benefit plan or IRA.  The rules go into effect after September 30, 2008, the first day of the banking fiscal year.