10VAC5-22-130: Referral of securities transactions

An affiliated trust company may not direct to an affiliated broker-dealer the compensation-producing securities transactions of a trust account, unless:

1. Such action is authorized by the account settlor, the beneficiaries, or a court (depending on the circumstances) by specific written consent or authorization obtained after disclosure of the relationship and the terms of the arrangement;

2. Use of the affiliated broker-dealer is in the best interest of the account;

3. In the case of employee benefit trusts, a reasoned opinion of counsel is obtained to the effect that the proposed use does not violate the Employee Retirement Income Security Act of 1974 (29 USC § 1001 et seq.); and

4. The trust company has established adequate safeguards against potential abuses (e.g., "churning").