Legal Question in Securities Law in California

Re: bank forces employee's spouse to hold stock for 30 days or more

The bank is probably rightfully following Rule 144 under the Exchange Act. Certain stock that is not fully registered is known as restricted stock and must be held for a certain period of time. Interstate commerce has nothing to do with it.

These rules are made to protect both the public and investors: it avoids any insider trading issues and doesn't flood the market with worthless stock.

Re: bank forces employee's spouse to hold stock for 30 days or more

Your issue relating to interstate commerce is not applicable. The rules you are most likely referring to relate to insider trading and the prevention of it. The purpose of the rule and the specifics in general dictate that a person identified as an insider can not conduct the opposite side of a trade in an employers or other company's stock in which they have access to non-public information within 30 days of the trade opening. For example, if you purchase stock on the 1st of Oct then you will not be able to sell that same stock until 30 days later. You may continue to buy, but you couldn't sell. IF you did, and were found to be acting on insider information, and or were convicted or held civilly liable to have conducted insider transactions the penalties are 3x the money lost or profit gained due to the activity.

Since your wife is an employee of a bank, I can see the logic and how it relates to the issue of the bank stock, but you may wish to have the policy reviewed as it should not relate to the transactions in companies that do not have relations with the bank and or its securities unit (if one exists).

Additionally, it is not uncommon that copies of your investment statement would be sent to the banks compliance officer for review to identify such activity.

If you wish, you can contact me to discuss the issue further. If the bank is interfering with your rights to trade, you may be able to hold them liable for the losses.

Re: bank forces employee's spouse to hold stock for 30 days or more

Rule 144 is a possibility, but more likely the bank is concerned about insider trading, or trading on insider information. The reason I don't think it's a 144 concern is that you say the policy appiies to ALL stocks, not just ones that have been involved in a recent IPO or such.

Your wife is probably employed in a capacity where she has access to trading information, recommendations and advice, or something else where she (and therefore you) could gain a trading advantage that would violate a rule under the Securities Exchange Act.

Frankly, you are much better off being forbidden to trade in such a position than being allowed to do so, then having to face the consequences of an enforecment action.

My suggestion is to ask the bank to explain the purpose of the policy, rather than chafing under a belief that the policy is at least unfair and possibly illegal.

I'm almost certain there is no restraint of interstate commerce or civil rights issue here.