N.Y. Banking Law § 100-c: Common trust funds

§ 100-c. Common trust funds. 1. For the purpose of investment and

reinvestment of moneys received and held by any trust company as

executor, administrator, guardian, trustee, donee of power during

minority to manage property vested in an infant, custodian under any

Uniform Gifts to Minors Act, any Uniform Transfers to Minors Act or The

New York Uniform Transfers to Minors Act, conservator or committee, such

trust company may establish and maintain common trust funds and short

term investment common trust funds. In any case where the instrument or

the order, decree or judgment under which such moneys are held does not

forbid, such trust company, either alone or in conjunction with one or

more other persons acting with it in any fiduciary capacity, may invest

and reinvest such moneys or any part thereof by adding the same to any

such common trust funds and short term investment common trust funds.

Such trust company shall have the same power to invest common trust

funds in securities of any management type investment company or

investment trust, registered pursuant to the federal investment company

act of nineteen hundred forty, as is set forth in, and subject to the

provisions of, sections 11-2.2 and 11-2.3 of the estates, powers and

trusts law.

2. Notwithstanding any other provision of law, a trust company may

deposit securities investments of a common trust fund, or arrange for

the deposit of such investments through a subcustodian, (a) with a

clearing corporation pursuant to EPTL 11-1.9, (b) with a federal reserve

bank pursuant to EPTL 11-1.8, or (c) with a securities depository,

clearing agency, or bank, whether or not subject to the laws of a

jurisdiction other than the United States of America, or any state or

subdivision thereof, for the account of the trust company and such

investments shall be deemed for the purposes of this section to be in

the custody of such trust company.

3. A common trust fund shall not be deemed a separate trust fund on

which commissions or other compensation is allowable and no trust

company maintaining such a fund shall make any charge against such fund

for the management thereof. Provided, however, that in those instances

where a trust company invests common trust funds in securities of any

management type investment company or investment trust pursuant to the

provisions of subdivision one of this section, such trust company may

charge the common trust fund for the fees and expenses of such

securities pursuant to and consistent with the provisions of sections

11-2.2 and 11-2.3 of the estates, powers and trusts law.

4. If money of an estate, trust or fund or any part thereof held by a

trust company in conjunction with one or more other persons in any

fiduciary capacity is invested in a common trust fund, the participating

interest therein so acquired shall be withdrawn therefrom upon the

written request of any such other person acting in such fiduciary

capacity with such trust company.

5. If any investment held in a common trust fund shall cease to be

eligible as a new investment of such common trust fund, the trust

company maintaining the common trust fund, prior to any further

additions to or withdrawals from such fund, either shall sell such

investment or shall set the same apart in a liquidating account for the

benefit ratably of each participant then interested in such common trust

fund.

6. At least once every ten years, each trust company maintaining a

common trust fund shall file an account of its proceedings in respect

thereof either in the office of the clerk of the supreme court or in the

office of the surrogate in any county in which such trust company

maintains an office.

Upon the filing of the petition for the settlement of such account,

the court shall assign a time and place for a hearing on the settlement

of such account and order notice thereof by: (a) one publication not

less than twenty days prior to the date of such hearing, of a notice in

a newspaper to be designated by the court, and (b) mailing on or before

the day of publication a copy of the notice to all persons whose names

and addresses appear, at the close of the period accounted for, upon the

records maintained by the trust company pertaining to the common trust

fund as well as to any estate, trust or fund, any part of which shall

have been invested in the common trust fund and who at the close of the

period accounted for were known by such trust company to be or to claim

to be included in any of the following classes of persons: (i) those who

at any time during the period accounted for were entitled to share in

the income of any estate, trust or fund invested in the common trust

fund at any time during the period accounted for; (ii) those who became

entitled to share in the principal of any estate, trust or fund invested

in the common trust fund which became distributable in whole or in part

during the period accounted for; (iii) those who at the close of the

period accounted for would have been entitled to share in the principal

of any estate, trust or fund invested in the common trust fund if the

event upon which such estate, trust or fund would become distributable

in whole or in part had occurred at the close of the period accounted

for, provided, however, that in the case of a trust which at the close

of the period accounted for can be revoked in its entirety in favor of

and by the grantor, donor, trustor or creator, it shall not be necessary

for such trust company to include the names and addresses of any persons

interested in the principal of such trust other than the grantor, donor,

trustor, or creator; (iv) those living at the close of the period

accounted for who had any interest in the income or principal, or both,

of any estate, trust or fund invested in the common trust fund, and who

prior to the close of the period accounted for shall have notified the

trust company in writing to send a copy of the notice or citation of any

proceeding for the settlement of any account or the trustee of such

common trust fund to such person at an address furnished to the trust

company by such person; (v) those who at any time during the period

accounted for were acting with the trust company in a fiduciary capacity

with respect to any such estate, trust or fund; (vi) the guardian of any

infant, the committee of any incompetent and the conservator of any

conservatee included among the persons hereinbefore described; (vii) the

personal representative of any deceased person included among the

persons hereinbefore described in class (i), (ii), (iii), or (v).

Upon the filing of such petition, the court shall appoint a person to

appear as guardian ad litem for each person who has or who may

thereafter have any interest in the income of such common trust fund and

a person to appear as guardian ad litem for each person who has or who

may thereafter have any interest in the principal of such common trust

fund. Each such interested person may appear in such accounting

proceeding and on his failure to appear shall be deemed to be

represented in such proceeding by the person designated respectively as

such guardian ad litem.

Except as otherwise herein provided, such proceeding shall be

conducted in the same manner as any other proceeding for the voluntary

judicial settlement of the account of a testamentary trustee. The decree

in such proceeding shall be thereafter binding and conclusive in respect

of any matter embraced in the account or in such decree upon all persons

having or who may thereafter have any interest in such common trust fund

or in any participating estate, trust or fund.

7. As used in this section, subject to subdivision eight of this

section the term "trust company" shall mean any trust company, any bank

duly authorized to exercise fiduciary powers and any national bank

having a principal, branch or trust office in this state and duly

authorized to exercise fiduciary powers; the term "estate" shall mean

the assets held by an executor or an administrator, with or without the

will annexed, of the goods, chattels and credits of a decedent, but not

a temporary administrator; the term "trust" shall mean the assets of any

trust however created held by the trustee thereof, including, but

without limitation, any assets held by a fiduciary as donee of a power

during minority to manage property vested in an infant; the term "fund"

shall include the assets of an infant held by the guardian thereof, the

assets of an incompetent person held by the committee thereof, and the

assets of a conservatee held by the conservator thereof. The term "donee

of a power during minority to manage property vested in an infant" shall

for the purposes of this section include only a fiduciary who has power

during a period measured by a minority to hold and invest moneys under

the terms of an instrument under which the fiduciary had theretofore

held such moneys as executor or as personal or testamentary trustee.

8. (a) A trust company, at least ninety per centum of the capital

stock of which is directly or indirectly, or through a subsidiary or

subsidiaries, owned, controlled or held with power to vote by a bank

holding company may establish and maintain one or more common trust

funds and short term investment common trust funds, or may utilize one

or more common trust funds and short term investment common trust funds

previously established by it, for funds held in any of the fiduciary

capacities mentioned in subdivision one of this section, by itself and

by other trust companies at least ninety per centum of the capital stock

of each of which is directly or indirectly, or through a subsidiary or

subsidiaries, owned, controlled or held with power to vote by such bank

holding company. Each trust company, the capital stock of which is so

owned, controlled or held, may invest and reinvest in one or more of

such common trust funds and short term investment common trust funds

moneys held in any of the fiduciary capacities mentioned in subdivision

one of this section. The trust company establishing, maintaining, or so

utilizing any such common trust funds and short term investment common

trust funds shall comply with, and be subject to, all of the provisions

of this section as though such trust company and the other trust

companies participating in such fund were one and the same corporate

entity.

(b) For the purpose of this subdivision, (i) the term "bank holding

company" shall be given the same meaning as is contained in the

definition of such term in section one hundred forty-one of this

chapter, and (ii) the term "trust company" shall be given the same

meaning as is contained in the definition of such term in subdivision

seven of this section, except that such term shall be deemed to include,

in addition to the entities listed in such subdivision, any banking,

trust or financial company, corporation or association, organized under

the laws of the United States, whether or not having its principal

office outside this state, or of any state of the United States, which

is duly authorized to exercise fiduciary powers.

9. (a) As used in this subdivision, unless the context otherwise

required:

(i) "Short term investment common trust fund" means a common trust

fund maintained and administered by a trust company exclusively for the

collective investment and reinvestment of moneys contributed thereto

which are invested and reinvested in any short term investment by a

trust company, in its capacity as a fiduciary or co-fiduciary.

(ii) "Short term investment" means bonds, notes or other evidences of

indebtedness which are payable upon demand (including variable amount

notes) or which have a maturity date of one year or less from the date

of purchase, or which may be prescribed, from time to time, by rules or

regulations promulgated by the superintendent of financial services, and

which are acquired or held by a trust company in a short term investment

common trust fund.

(iii) "Participant" means any estate, trust, donee of a power during

minority, guardianship, committeeship, conservatorship, or custodian

under any Uniform Transfers to Minors Act administered by a trust

company, as fiduciary or co-fiduciary, having a participation.

(iv) "Participation" means the interest of a participant in a short

term investment common trust fund.

(b) Any trust company may administer one or more short term investment

common trust funds.

(c) Any trust company shall, at least once each year, cause an audit

of each short term investment common trust fund administered by the

trust company to be made by auditors who are independent certified

public accountants. A copy of such audit shall be available at the

office of the trust company maintained for the transaction of trust

business, during all regular business hours, for inspection by any

person having an interest in any participant, and upon request a copy of

any such audit shall be furnished without any cost to such person. The

reasonable expenses of any such audit made by independent certified

public accounts or of any examination by the superintendent may be

charged to the income of the short term investment common trust fund.

(d) A trust company administering a short term investment common trust

fund shall not be required to render a court accounting with regard to

such fund.

10. The superintendent of financial services shall promulgate such

regulations and rules as he or she considers appropriate to govern the

administration of common trust funds and short term investment common

trust funds.