Washington Administrative Code › Title 208 - Financial Institutions, Department of (See also Titles 50, 419, and 460) › Chapter 208-536 - Administration of trust companies - Investments, etc › Section 208-536-090 - Collective investment funds - Investments and administration

Current through Register Vol. 24-14, July 15, 2024
(1) A trust company
					administering a collective investment fund shall have the exclusive management
					thereof, except as a prudent person might delegate responsibilities to
					others.
(2) No trust company shall
					have any interest in a collective investment fund other than in its fiduciary
					capacity. Except for temporary net cash overdrafts or as otherwise specifically
					provided herein, it may not lend money to a fund, sell property to, or purchase
					property from a fund. No assets of a collective investment fund may be invested
					in stock or obligations, including time or savings deposits, of the bank or any
					of its affiliates: Provided, That such deposits may be made of funds awaiting
					investment or distribution. Subject to all other provisions of this part, funds
					held by a trust company as fiduciary for its own employees may be invested in a
					collective investment fund.
(3) A
					trust company may not make any loan on the security of a participation in a
					fund. If because of a creditor relationship or otherwise the trust company
					acquires an interest in a participation in a fund, the participation shall be
					withdrawn on the first date on which such withdrawal can be effected. However,
					in no case shall an unsecured advance until the time of the next valuation date
					to an account holding a participation be deemed to constitute the acquisition
					of an interest by the bank.
(4) Any
					trust company administering a collective investment fund may purchase for its
					own account from such fund any devaluated fixed income investment held by such
					fund, if in the judgment of the board of directors the cost of segregation of
					such investment would be greater than the difference between its market value
					and its principal amount plus interest and penalty charges due. If the trust
					company elects to so purchase such investment, it must do so at its market
					value or at the sum of cost, accrued unpaid interest, and penalty charges,
					whichever is greater.
(5) Except in
					the case of collective investment funds described in paragraph (b) of WAC
					208-536-040:
(a) No funds or other property shall be
					invested in a participation in a collective investment fund if as a result of
					such investment the participant would have an interest aggregating in excess of
					10 percent of the then market value of the fund: Provided, That in applying
					this limitation if two or more accounts are created by the same person or
					persons and as much as one-half of the income or principal of each account is
					payable or applicable to the use of the same person or persons, such accounts
					shall be considered as one;
(b) No
					investment for a collective investment fund shall be made in stocks, bonds, or
					other obligations of any closely held corporation, as may be determined by the
					director of the department of financial institutions, or, of any one person,
					firm, or corporation if as a result of such investment the total amount
					invested in stocks, bonds, or other obligations issued or guaranteed by such
					person, firm, or corporation would aggregate in excess of 10 percent of the
					then market value of the fund: Provided, That this limitation shall not apply
					to investments in direct obligations of the United States or its agencies or
					other obligations fully guaranteed by the United States or its agencies as to
					principal and interest: And Provided Further, That this limitation shall not
					apply to investments in securities of, or other interests in, an open-end or
					closed-end management type investment company or investment trust registered
					under the Federal Investment Company Act of 1940, as now or hereafter amended,
					if both of the following conditions are met:
(i) The portfolio of the investment company
					or investment trust is limited to such obligations of, or fully guaranteed by,
					the United States or its agencies and to repurchase agreements fully
					collateralized by such obligations; and
(ii) The investment company or investment
					trust takes delivery of the collateral for any repurchase agreement either
					directly or through an authorized custodian;