frsbog_mim_v10_0144.pdf
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X-1431
REGULATION
F
Series
of 1919.
TRUST PO'-RS OF NATIONAL BANKS.
I - .Sta tu tory Provis ions ,
The Federal Reserve Act as amended by the Act of.September 26,1918,
provides i n par t :
( Q U O T E )
I I . Applications..
A
national bank desiring
t o
exercise
an y o r a l l of t h e
powers
a u -
thor ized
by
Section
1 1 ,
Subjection
( k ) , o f the
Federal Reserve
Ac t , as
amended
by th e A ct of
September 26,1918, shall make application
t o t h e
Federal Reserve Board, on a form approved by said Board, f o r a special
permit authorizing i t t o exercise such powers. I n t h e case of an or iginal
appl ica t ion , tha t i s , where t h e applying bank h a s never been granted
t h e
r ight
t o
exercise
any of the
powers authorized
by
Section 11,(k),
t h e
application should
be
made
on
Form 61-A.
I n t h e
case
of a
supplemental
appl ica t ion , tha t
i s ,
where
t h e
applying bank
h a s
already been granted
t h e r ight t o exerc i se one or more of the powers authorized by Section 11
( k ) , t h e application should be made on Form 6 1 - b , Both forms a r e made
a par t of th i s regula t ion .
I l l -
Sep ara te Departments.
Every na ti on al bank perm itte d t o a c t under this section shall estab-
l i s h
a
separate trust department*
and
shall place such department under
t h e
management
cf an
o f f i c e r
o r
off icers , whose dut ies shal l
be
prescribed
by the
board
of
d i r e c t o r s
of the
bank.
IV .
Custody
of
Trust Securi t ies
and Investments,
The s e c u r i t i e s and investments held i n each t r u s t sh all be kept
separate and di s t in ct f rom t h e general funds and s e c u r i t i e s of the bank
and
separate
and
d i s t i n c t
one
from another . Trust se cu r i t i es
and
inves t -
ments shall
be
placed
i n t h e
joint custody
of two or
more off icers
o r
other employees designated
by the
board
of
d i r ec to r s
of the
bank
a n d a l l
such off icers
and
employees shall
be
bonded.
V.
Deposit
of
Funds Awaiting Investment
o r Dis t r ibut ion .
Funds received o r held i n t h e trust department of a national bank
awaiting investment
o r
d i s t r i b u t i o n
may be
deposited
i n t h e
commercial
department
of the
bank
t o t h e
credi t
of the
trust department, provided,
t ha t
t h e
bank f i rs t del ivers
t o t h e
trust department United States bonds,
o r
other securities owned
by the
bank,
of the
kinds e l ig ib le
f o r
investment
by the
trust department,
in an
amount equal
t o t h e
amount
of the
funds
so deposited.
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X1431
4
V I .
Investment
of
Trust Funds,
A.
Private Tru sts :
Funds held
i n
trust must
be
invested
i n
s t r i c t accordance with
t h e
terms
o f the
wi l l , deed,or other instrument crea ting
t h e
t rus t*
Where
t h e
instrument creating
t h e
t r u s t contains provis ions author-
iz ing
t h e
bank,
i t s
o f f i c e r s ,
o r i t s
d i rec tors
t o
exercise
an
unre-
s t r i c t ed d i s c r e t i on
i n the
matter '
of
investm ents, funds he ld
in
t rus t
may be invested only in those classes of securi t ies which a r e approved
by the
d i r ec to r s
of the
bank. Where
t h e
instrument creating
t h e
trust
does
n o t
specify
t h e
character
o r
c lass
of
investments
to be
made
and
does
n o t
expressly vest
i n t h e
bank , i t s o f f ice rs ,
o r i t s
d i r ec to r s
an
unres t r ic ted d i sc re t ion
i n the
matter
of
investmen ts, funds held
i n
t rus t
sha l l
be
invested
in any
secur i t i es*
in
which corporate fiduciaries
in the
State
in
which
t h e
bank
i s
located
a r e
authorized
t o
invest under
t h e
laws
of
that State
o r
under
t h e
decisions
o f i t s
cour t s .
I f th e
laws
of the
State
do not
spec i fy
o r
describe
t h e
investments that
may be
made
of
funds
held i n t ru s t by corpora te f iduc ia r ies , and if there is no decision of
t h e courts of that State describing such investments, such funds may be
invested
in
those classes
of
securit ies which
a r e
approved
by the
d i r ec to r s
o f the
bank.
The Federal Reserve Board reserves t h e r igh t in any case, however,
t o
require
a
national bank acting
in any
f iduciary capaci ty
t o
.dispose
of any
trust fund investments, other than those made
i n
accordance with
t h e terms of the instrument creating t h e trust , which/d$es n o t believe
to be
compatible with
t h e
bes t in te res t s
of the
benef ic ia r ies under
t h e
t r u s t .
B.
Court Trusts:
Except a s hereinaf ter provided, a national bank acting a s executor,
adminis t ra tor ,
o r in any
other fiduciary capacity, under appointment
by a
court
of
competent ju ri sd ic ti on , s ha ll make
a l l
investments under
an
order
of
that court
and
copies
o f a l l
such orders should
be
f i l e d
and
preserved
with t h e records o f the trust department o f the bank* I f th e court by
general order vests
an
unqua l i f ied d i sc re t ion
i n t h e
national bank
t o i n -
vest
and
re- inv est funds held
i n
t r u s t ,
o r , i f
under
t h e
laws
o f the
State
in which t h e bank i s located corporate fiduciaries appointed b y t h e court
a r e permitted t o ex ercise such unq uali fie d di sc re ti on , nat ion al banks so
appointed
may
invest
i n
those classes
of
sec uri t ie s which
a r e
approved
by the
d i r e c t o r s
of the
bank»
VII• Books
and
Accounts.
A l l
books
and
records
o f the
Trust Department shall
be
kept seperate
.
and
d i st in ct from ot her books
and
records
o f the
bank,
A l l
accounts opened
should be so kept a s t o enable t h e national bank a t any time t o furnish
information
o r
reports required
by the
S ta t e au tho r i t i e s ,
and
such books
and records shall be open t o t h e inspection of such State au th or i t ie s .
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X-1431
146
VIII, Examinations.
Examiners appointed by the Comptroller o f the Currency o r
designated by the Federal Reserve Board will be ins t ruc ted t o
make thorough and complete audits o f the cash, securit ies, accounts,
and investments o f the trust department o f the bank a t t h e same time
that examination
i s
made
of t he
banking department.
IX .
Conformity wi th St at e Laws*
Nothing
i n
these regulations shall
be
construed
t o
give
a
national bank exercising
t h e
powers permitted under
t h e
provisions
of Section 11 (k) of the Federal Reserve Act as amended any r ights
o r
pr iv i leges
in
contravention
of the
laws
o f the
State
i n
which
t h e
bank
i s
lovated within
t h e
meaning
of
tha t
A c t .
X. Revocation of Permits.
The
Federal Reserve Board reserves
t h e
r igh t
t o
revoke permits
granted under t h e provisions of Section 11 (k ) , a s amended, in any
case where
i n t h e
opinion
of the
Board
a
bank
h a s
wi l l fu l ly v io la ted
t h e
provisions
o f the
Federal Reserve
Act or of
these regulations
o r t h e
laws
of any
State re la t ing
t o t h e
operations
of
such bank when
ac t ing
in any of the
capacities permitted under
t h e
provisions
of
Section
11 (k) as
amended.
X I.
Changes
i n
Rules,
These regulations
a r e
subject
t o
change
by the
Federal Reserve
Board; provided, however, that
no
such change shall prejudice
any
obligation undertaken
i n
good faith under regulations
i n
e f f e c t
a t
t h e
time
t h e
obl igat ion
was
assumed*
March
20 , 1919.