Pennsylvania Code › Title 10 - BANKING AND SECURITIES › Part III - Savings Association Bureau › Chapter 34a - CONSUMER LOANS, COMMERCIAL PAPER AND CORPORATE DEBT SECURITIES › Section 34a.3 - Commercial paper and corporate debt securities

Current through Register Vol. 54, No. 28, July 13, 2024
(a) An association may invest in, sell, or
				hold commercial paper and corporate debt securities, including corporate debt
				securities convertible into stock, subject to the limitations set forth in
				subsection (b); however, at any one time, the total investment made under this
				section and §
									34a.2 (relating to consumer loans)
				added together shall not exceed 20% of an association's assets. An investment
				under this section includes the investing in, redeeming, or holding of shares
				in any open-end management investment company which is registered with the
				Securities and Exchange Commission under the Investment Company Act of 1940 and
				whose portfolio is restricted by such management company's investment policy,
				changeable only if authorized by shareholder vote, solely to the investments
				that an association is authorized to invest in under other regulations or
				statute.
(b) The following are the
				limitations for investing in, selling, or holding corporate debt securities,
				including corporate debt securities convertible into stock:
(1) As of the date of purchase, as shown by
				the most recently published rating made of such investments by at least one
				nationally recognized investment rating service: the commercial paper must be
				rated in either one of the two highest grades, and the corporate debt
				securities must be rated in one of the four highest grades.
(2) The commercial paper or corporate debt
				securities shall be denominated in dollars, and the issuer shall be domiciled
				in the United States.
(3) At any
				one time, an association's total investment in the commercial paper and
				corporate debt securities of any one issuer or issued by any person or entity
				affiliated with such issuer shall not exceed 1% of the association's assets;
				however, this provision shall not apply to investments in the shares of an
				open-end management investment company. In such cases, an association's total
				investment in the shares of any one such company shall not exceed 5.0% of the
				association's assets.
(4)
				Investments in corporate debt securities convertible into stock are subject to
				the following additional limitations:
(i)
				Purchase of securities convertible into stock at the option of the issuer is
				prohibited.
(ii) At the time of
				purchase, the cost of such securities shall be written down to an amount which
				represents the investment value of the securities considered independently of
				the conversion feature.
(iii) Such
				securities must be treated on a national securities exchange.
(iv) Associations are prohibited from
				exercising the conversion feature.
(5) At any one time, the average maturity of
				an association's portfolio of corporate debt securities may not exceed 6
				years.
(6) An association shall
				maintain information in its files adequate to demonstrate that it has exercised
				prudent judgment in making investments under this section.