Virginia Administrative Code › Title 10 - FINANCE AND FINANCIAL INSTITUTIONS › Agency 5 - STATE CORPORATION COMMISSION › Chapter 190 - COMMON TRUST FUNDS › Section 10VAC5-190-20 - Operating rules

Current through Register Vol. 40, No. 24, July 15, 2024
Common trust funds shall be administered in accordance with
				  the following regulations:
1. Each
				common trust fund shall be established and maintained in accordance with a
				written plan, which shall be approved by a resolution of the bank's board of
				directors and filed with the Commissioner of Financial Institutions. The plan
				shall contain appropriate provisions as to the manner in which the fund is to
				be operated, which provisions shall not be inconsistent with the regulations
				applicable thereto. The plan shall include provisions relating to: the
				investment powers of the maintaining bank; a general statement of the
				investment policy of the bank with respect to the fund; the allocation of
				income, profits and losses; the terms and conditions governing the admission or
				withdrawal of participations in the fund; the auditing of accounts of the bank
				with respect to the fund; the basis and method of valuing assets in the fund,
				setting forth specific criteria for each type of asset; the minimum frequency
				for valuation of assets of the fund; the period following each such valuation
				date during which the valuation may be made (which period in usual
				circumstances should not exceed 10 business days); the basis upon which the
				fund may be terminated; and other such matters as may be necessary to define
				clearly the rights of participants in the fund. Except as otherwise provided in
				subdivision 15 of this chapter, fund assets shall be valued at market value
				unless such value is not readily ascertainable, in which case a fair value
				determined in good faith by the fund trustees may be used. A copy of each such
				plan shall be available at the principal office of the bank for inspection
				during all banking hours, and upon request a copy of that plan shall be
				furnished to any person.
2.
				Property held by a bank in its capacity as trustee of retirement, pension,
				profit sharing, stock bonus, or other trusts which are exempt from federal
				income taxation under any provision of the Internal Revenue Code may be
				invested in fiduciary funds or employee benefit trusts, subject to the
				provisions herein contained pertaining to such funds and may qualify for tax
				exemption pursuant to section 584 of the Internal Revenue Code. Assets of
				retirement, pension, profit-sharing, stock-bonus, or other trusts which are
				exempt from federal income taxation by reason of being described in section 401
				of the Code may be invested in employee benefit trusts if such trust qualifies
				for tax exemption under Revenue Ruling 56-267.
3. Participation in a common trust fund shall
				be on the basis of a proportionate interest in all the assets of the fund. In
				order to determine whether the investment of funds received or held by a bank
				as fiduciary in a participation in a common trust fund is proper, a bank may
				consider the common trust fund as a whole and shall not, for example, be
				prohibited from making such investment because any particular asset of the fund
				is not income-producing.
4. Not
				less frequently than once during each three-month period, a maintaining bank
				shall determine the value of the assets in a common trust fund as of the date
				set for the valuation of assets. No participation shall be admitted to or
				withdrawn from the fund except (i) on the basis of such valuation, and (ii) as
				of such valuation date. No participation shall be admitted to or withdrawn from
				the fund unless a written request for such action or a notice of intention to
				take such action shall have been entered in the fiduciary records of the bank
				on or before the valuation date and approved in a manner prescribed by the
				board of directors. No request or notice may be cancelled or countermanded
				after the valuation date. If an employee benefit trust is to be invested in
				real estate or in some other asset that is not readily marketable, the bank may
				require a prior notice period, not to exceed a year, for withdrawals.
5.
a. A
				bank administering a common trust fund shall at least once during each 12-month
				period cause an adequate audit to be made of the fund by auditors responsible
				only to the board of directors of the bank. In the event such audit is
				performed by independent public accountants, the reasonable expenses of such
				audit may be charged to the fund.
b. A bank administering a common trust fund
				shall at least once during each 12-month period prepare a financial report of
				the fund. This report, based upon the above audit, shall contain:
(i) a list of investments in the fund showing
				the cost and the current market value of each investment; and
(ii) a statement for the period since the
				previous report showing: purchases, with cost; sales, with profit or loss; any
				other investment changes; income and disbursements; and an appropriate notation
				as to any investment in default.
c. The financial report may include a
				description of the fund's value on previous dates, as well as its income and
				disbursements during previous accounting periods. No predictions or
				representations as to future results may be made. In addition, as to fiduciary
				funds (as defined herein), neither the report nor any other publication of the
				bank shall make reference to the performance of funds other than those
				administered by the bank.
d. A copy
				of the financial report shall be furnished, or notice shall be given that a
				copy of such report is available and will be furnished without charge upon
				request, to each person to whom a regular periodic accounting would ordinarily
				be rendered with respect to each participating account. A copy of such
				financial report may be furnished to prospective customers. The cost of
				printing and distribution of these reports shall be borne by the bank. In
				addition, a copy of the report shall be furnished upon request to any person
				for a reasonable charge. The fact of the availability of the report on any
				fiduciary fund may be given publicity solely in connection with the promotion
				of the fiduciary services of the bank.
e. Except as herein provided, the bank shall
				not advertise or publicize its fiduciary funds.