N.Y. Education Law § 695-d: Powers of the comptroller

§ 695-d. Powers of the comptroller. 1. The comptroller may implement

the program through use of financial organizations as account

depositories and managers. Under the program, individuals may establish

accounts directly with an account depository.

2. The comptroller may solicit proposals from financial organizations

to act as depositories and managers of the program. Financial

organizations submitting proposals shall describe the investment

instrument which will be held in accounts. The comptroller shall select

as program depositories and managers the financial organization, from

among the bidding financial organizations that demonstrates the most

advantageous combination, both to potential program participants and

this state, of the following factors:

a. Financial stability and integrity of the financial organization;

b. The safety of the investment instrument being offered;

c. The ability of the investment instrument to track increasing costs

of higher education;

d. The ability of the financial organization to satisfy recordkeeping

and reporting requirements;

e. The financial organization's plan for promoting the program and the

investment it is willing to make to promote the program;

f. The fees, if any, proposed to be charged to persons for opening

accounts;

g. The minimum initial deposit and minimum contributions that the

financial organization will require;

h. The ability of banking organizations to accept electronic

withdrawals, including payroll deduction plans; and

i. Other benefits to the state or its residents included in the

proposal, including fees payable to the state to cover expenses of

operation of the program.

3. The comptroller may enter into a contract with a financial

organization. Such financial organization management may provide one or

more types of investment instrument.

4. The comptroller may select more than one financial organization for

the program.

5. A management contract shall include, at a minimum, terms requiring

the financial organization to:

a. Take any action required to keep the program in compliance with

requirements of section six hundred ninety-five-e of this article and

any actions not contrary to its contract to manage the program to

qualify as a "qualified state tuition plan" under section 529 of the

Internal Revenue Code of 1986, as amended;

b. Keep adequate records of each account, keep each account segregated

from each other account, and provide the comptroller with the

information necessary to prepare the statements required by section six

hundred ninety-five-e of this article;

c. Compile and total information contained in statements required to

be prepared under section six hundred ninety-five-e of this article and

provide such compilations to the comptroller;

d. If there is more than one program manager, provide the comptroller

with such information necessary to determine compliance with section six

hundred ninety-five-e of this article;

e. Provide the comptroller or his designee access to the books and

records of the program manager to the extent needed to determine

compliance with the contract;

f. Hold all accounts for the benefit of the account owner;

g. Be audited at least annually by a firm of certified public

accountants selected by the program manager and that the results of such

audit be provided to the comptroller;

h. Provide the comptroller with copies of all regulatory filings and

reports made by it during the term of the management contract or while

it is holding any accounts, other than confidential filings or reports

that will not become part of the program. The program manager shall make

available for review by the comptroller the results of any periodic

examination of such manager by any state or federal banking, insurance,

or securities commission, except to the extent that such report or

reports may not be disclosed under applicable law or the rules of such

commission; and

i. Ensure that any description of the program, whether in writing or

through the use of any media, is consistent with the marketing plan

developed in the memorandum of understanding pursuant to the provisions

of section six hundred ninety-five-c of this article.

6. The comptroller may provide that an audit shall be conducted of the

operations and financial position of the program depository and manager

at any time if the comptroller has any reason to be concerned about the

financial position, the recordkeeping practices, or the status of

accounts of such program depository and manager.

7. During the term of any contract with a program manager, the

comptroller shall conduct an examination of such manager and its

handling of accounts. Such examination shall be conducted at least

biennially if such manager is not otherwise subject to periodic

examination by the superintendent of financial services, the federal

deposit insurance corporation or other similar entity.

8. a. If selection of a financial organization as a program manager or

depository is not renewed, after the end of its term:

(i) Accounts previously established and held in investment instruments

at such financial organization may be terminated;

(ii) Additional contributions may be made to such accounts;

(iii) No new accounts may be placed with such financial organization;

and

(iv) Existing accounts held by such depository shall remain subject to

all oversight and reporting requirements established by the comptroller.

b. If the comptroller terminates a financial organization as a program

manager or depository, he or she shall take custody of accounts held by

such financial organization and shall seek to promptly transfer such

accounts to another financial organization that is selected as a program

manager or depository and into investment instruments as similar to the

original instruments as possible.

9. The comptroller may enter into such contracts as it deems necessary

and proper for the implementation of the program.