N.Y. Banking Law § 509: Restrictions on powers of investment companies

§ 509. Restrictions on powers of investment companies. An investment

company shall not:

1. Exercise within this state the powers conferred by subdivision two

of section five hundred eight of this chapter, unless it shall have a

paid-up capital stock of at least two million dollars.

2. Deposit any of its funds with any other moneyed corporation unless

such other corporation has been designated as such depositary by a vote

of a majority of the directors of the investment company, exclusive of

any director who is an officer, director or trustee of the depositary so

designated; provided, however, that this limitation shall not apply to

the deposit of funds by an investment company with another moneyed

corporation, which owns all or a majority of the capital stock of such

investment company.

3. Be the holder of any shares of its own capital stock unless such

stock shall have been taken to prevent loss upon a debt previously

contracted in good faith, and stock so acquired shall, within six months

from the time of its acquisition, be sold or disposed of at public or

private sale; nor shall it, either directly or indirectly, make any

discount to any person for the purpose of enabling him to pay for or

hold shares of its stock either subscribed for or purchased by him. Any

investment company making any such discount shall forfeit to the people

of the state twice the amount of such discount.

4. Except as provided in section five hundred eight of this article,

engage in the business of receiving deposits; provided, however, that

nothing contained in this article shall prevent an investment company

from maintaining for the account of others credit balances incidental

to, or arising out of, the exercise of its lawful powers, but the

superintendent of financial services shall have power to prescribe, by

specific or general regulation, the extent to which, and the conditions

upon which, such credit balances may be established, maintained and paid

out.