CHAPTER 6-05.2FIDUCIARY POWERS6-05.2-01.Policies and procedures on brokerage placement practices.Eachbanking institution exercising investment discretion with respect to an account must adopt and<br>follow written policies and procedures intended to ensure that its brokerage placement practices<br>comply with all applicable laws and regulations.Among other relevant matters, the writtenpolicies and procedures should address when appropriate:1.The selection of persons to effect securities transactions and the evaluation of the<br>reasonableness of any brokerage commissions paid to such persons.2.The acquisition of any services or products, including research services, in return for<br>brokerage commissions.3.The allocation of research or other services among accounts, including those which<br>did not generate commissions to pay for the research or other services.4.The need, in appropriate instances, to make disclosures concerning the policies and<br>procedures to prospective and existing customers.6-05.2-02. Administration of fiduciary powers.1.The board of directors is responsible for the proper exercise of fiduciary powers by<br>the banking institution. All pertinent matters, including the determination of policies,<br>the investment and disposition of property held in a fiduciary capacity, and the<br>direction and review of the actions of all officers, employees, and committees used<br>by the banking institution in the exercise of its fiduciary powers, are the responsibility<br>of the board. In discharging this responsibility, the board of directors may assign, by<br>action duly entered in the minutes, the administration of any of the banking<br>institution's fiduciary powers as it may consider proper to assign to its directors,<br>officers, employees, or committees as it may designate.2.No fiduciary account may be accepted without the prior approval of the board of<br>directors, or of the directors, officers, or committees to whom the board may have<br>designated the performance of that responsibility. A written record must be made of<br>all acceptances and of the relinquishment or closing out of all fiduciary accounts.<br>Upon the acceptance of an account for which the banking institution has investment<br>responsibilities, a prompt review of the assets must be made.The board mustensure that at least once during every calendar year, and within fifteen months of the<br>last review, all the assets held in or for each fiduciary account where the banking<br>institution has investment responsibilities are reviewed to determine the advisability<br>of retaining or disposing of the trust assets.3.All officers and employees taking part in the operating of trust activities must be<br>adequately bonded.4.Every banking institution exercising fiduciary powers must designate, employ, or<br>retain legal counsel who is readily available to pass upon fiduciary matters and to<br>advise the banking institution as to its trust activities.5.Every banking institution exercising fiduciary powers must adopt written policies and<br>procedures to ensure that the federal securities laws are complied with in connection<br>with any decision or recommendation to purchase or sell any security. The policies<br>and procedures, in particular, must ensure the banking institution may not use inside<br>information in connection with any decision or recommendation to purchase or sell<br>any security.Page No. 16-05.2-03. Books and accounts.1.Every banking institution exercising fiduciary powers must keep its fiduciary records<br>separate and distinct from other records of the banking institution.All fiduciaryrecords necessary for reporting purposes must be maintained for such time as to<br>enable the banking institution to furnish such information or reports with the<br>commissioner. The fiduciary records must contain full information relative to each<br>account.2.Every banking institution must keep an adequate record of all pending litigation to<br>which it is a party in concerning its exercise of fiduciary powers.3.A banking institution must retain the records required for a period of three years from<br>the later of the termination of the fiduciary account relationship to which the records<br>relate or of litigation relating to the account.6-05.2-04. Audit of trust activities. A committee of directors, exclusive of any activeofficers of the bank, must, at least once during each calendar year and within fifteen months of<br>the last audit, make suitable audits of the trust activities or cause suitable audits to be made by<br>auditors responsible to the board of directors, and must ascertain whether the trust activities<br>have been administered in accordance with law and sound fiduciary principles. The board of<br>directors may, instead of the periodic audit, adopt an adequate continuous audit system.Areport of the audits and examination required under this section, together with any action taken,<br>must be noted in the minutes of the board of directors.6-05.2-05. Uninvested or undistributed funds. Uninvested or undistributed funds heldby a banking institution in a fiduciary capacity must not be held uninvested or undistributed any<br>longer than is reasonable for the proper management of the account. Each banking institution<br>exercising fiduciary powers must adopt and follow written policies and procedures intended to<br>ensure that the maximum rate of return available for trust-quality, short-term investments is<br>obtained consistent with the requirements of the governing instrument or law. The policies and<br>procedures must take into consideration all relevant factors, including the anticipated return that<br>could be obtained while the cash remains uninvested or undistributed, the cost of investing the<br>funds, and the anticipated need for the funds.6-05.2-06. Self-dealing.1.Funds held by a banking institution as fiduciary may not be invested in stock or<br>obligations of, or property acquired from, the banking institution or its directors,<br>officers, or employees, or individuals with whom there exists such a connection, or<br>organizations in which there exists such an interest, as affects the exercise of the<br>best judgment of the banking institution in acquiring the property, or in stock or<br>obligations of, or property acquired from, affiliates of the banking institution or their<br>directors, officers, or employees, unless authorized by the instrument creating the<br>relationship or as authorized by law.2.Property held by a banking institution as fiduciary may not be sold or transferred, by<br>loan or otherwise, to the banking institution or its directors, officers, or employees, or<br>to individuals with whom there exists such a connection, or organizations in which<br>there exists such an interest, as affects the exercise of the best judgment of the<br>banking institution in selling or transferring the property, or to affiliates of the banking<br>institution or their directors, officers, or employees except:a.As authorized by the instrument creating the relationship or as authorized by<br>law;b.When the banking institution has been advised in writing by its counsel or<br>auditor that it has incurred as a fiduciary a contingent or potential liability and<br>desires to relieve itself of that liability, a sale or transfer may be made with thePage No. 2approval of the board of directors, provided that the banking institution, upon<br>consummation of the sale or transfer, makes reimbursement in cash at no loss<br>to the account;c.To purchase at market value, defaulted investment funds; ord.Where ordered by the board.3.Funds held by a banking institution as fiduciary may not be invested by the purchase<br>of stock or obligations of the banking institution or its affiliates unless authorized by<br>the instrument or as authorized by law. If the retention of stock or obligations of the<br>banking institution or its affiliates is authorized by the instrument creating the<br>relationship, by court order, or by law it may exercise rights to purchase its own<br>stock or securities convertible into its own stock when offered pro rata to<br>stockholders. When the exercise of rights or receipt of a stock dividend results in<br>fractional share holdings, additional fractional shares may be purchased to<br>complement the fractional shares so acquired.4.A banking institution may sell assets held by it as fiduciary in one account to itself as<br>fiduciary in another account if the transaction is fair to both accounts and if the<br>transaction is not prohibited by the terms of any governing instrument.5.A banking institution may make a loan to an account from the funds belonging to<br>another account when the making of a loan to a designated account is authorized by<br>the instrument creating the account from which the loan is made.6.A banking institution may make a loan to an account and may take, as security for<br>the loan, assets of the account provided the transaction is fair to the account.6-05.2-07. Custody of investments.1.The investment of each account must be kept separate from the assets of the<br>banking institution and must be placed in the joint custody or control of not less than<br>two of the officers or employees of the banking institution designated for that<br>purpose by the board of directors or by one or more officers designated by the<br>board. The banking institution may permit the investments of a fiduciary account to<br>be deposited elsewhere.2.Except for commingled investments, the investments of each account must be kept<br>separate from those of all other accounts or adequately identified as the property of<br>the relevant account.Page No. 3Document Outlinechapter 6-05.2 fiduciary powers
CHAPTER 6-05.2FIDUCIARY POWERS6-05.2-01.Policies and procedures on brokerage placement practices.Eachbanking institution exercising investment discretion with respect to an account must adopt and<br>follow written policies and procedures intended to ensure that its brokerage placement practices<br>comply with all applicable laws and regulations.Among other relevant matters, the writtenpolicies and procedures should address when appropriate:1.The selection of persons to effect securities transactions and the evaluation of the<br>reasonableness of any brokerage commissions paid to such persons.2.The acquisition of any services or products, including research services, in return for<br>brokerage commissions.3.The allocation of research or other services among accounts, including those which<br>did not generate commissions to pay for the research or other services.4.The need, in appropriate instances, to make disclosures concerning the policies and<br>procedures to prospective and existing customers.6-05.2-02. Administration of fiduciary powers.1.The board of directors is responsible for the proper exercise of fiduciary powers by<br>the banking institution. All pertinent matters, including the determination of policies,<br>the investment and disposition of property held in a fiduciary capacity, and the<br>direction and review of the actions of all officers, employees, and committees used<br>by the banking institution in the exercise of its fiduciary powers, are the responsibility<br>of the board. In discharging this responsibility, the board of directors may assign, by<br>action duly entered in the minutes, the administration of any of the banking<br>institution's fiduciary powers as it may consider proper to assign to its directors,<br>officers, employees, or committees as it may designate.2.No fiduciary account may be accepted without the prior approval of the board of<br>directors, or of the directors, officers, or committees to whom the board may have<br>designated the performance of that responsibility. A written record must be made of<br>all acceptances and of the relinquishment or closing out of all fiduciary accounts.<br>Upon the acceptance of an account for which the banking institution has investment<br>responsibilities, a prompt review of the assets must be made.The board mustensure that at least once during every calendar year, and within fifteen months of the<br>last review, all the assets held in or for each fiduciary account where the banking<br>institution has investment responsibilities are reviewed to determine the advisability<br>of retaining or disposing of the trust assets.3.All officers and employees taking part in the operating of trust activities must be<br>adequately bonded.4.Every banking institution exercising fiduciary powers must designate, employ, or<br>retain legal counsel who is readily available to pass upon fiduciary matters and to<br>advise the banking institution as to its trust activities.5.Every banking institution exercising fiduciary powers must adopt written policies and<br>procedures to ensure that the federal securities laws are complied with in connection<br>with any decision or recommendation to purchase or sell any security. The policies<br>and procedures, in particular, must ensure the banking institution may not use inside<br>information in connection with any decision or recommendation to purchase or sell<br>any security.Page No. 16-05.2-03. Books and accounts.1.Every banking institution exercising fiduciary powers must keep its fiduciary records<br>separate and distinct from other records of the banking institution.All fiduciaryrecords necessary for reporting purposes must be maintained for such time as to<br>enable the banking institution to furnish such information or reports with the<br>commissioner. The fiduciary records must contain full information relative to each<br>account.2.Every banking institution must keep an adequate record of all pending litigation to<br>which it is a party in concerning its exercise of fiduciary powers.3.A banking institution must retain the records required for a period of three years from<br>the later of the termination of the fiduciary account relationship to which the records<br>relate or of litigation relating to the account.6-05.2-04. Audit of trust activities. A committee of directors, exclusive of any activeofficers of the bank, must, at least once during each calendar year and within fifteen months of<br>the last audit, make suitable audits of the trust activities or cause suitable audits to be made by<br>auditors responsible to the board of directors, and must ascertain whether the trust activities<br>have been administered in accordance with law and sound fiduciary principles. The board of<br>directors may, instead of the periodic audit, adopt an adequate continuous audit system.Areport of the audits and examination required under this section, together with any action taken,<br>must be noted in the minutes of the board of directors.6-05.2-05. Uninvested or undistributed funds. Uninvested or undistributed funds heldby a banking institution in a fiduciary capacity must not be held uninvested or undistributed any<br>longer than is reasonable for the proper management of the account. Each banking institution<br>exercising fiduciary powers must adopt and follow written policies and procedures intended to<br>ensure that the maximum rate of return available for trust-quality, short-term investments is<br>obtained consistent with the requirements of the governing instrument or law. The policies and<br>procedures must take into consideration all relevant factors, including the anticipated return that<br>could be obtained while the cash remains uninvested or undistributed, the cost of investing the<br>funds, and the anticipated need for the funds.6-05.2-06. Self-dealing.1.Funds held by a banking institution as fiduciary may not be invested in stock or<br>obligations of, or property acquired from, the banking institution or its directors,<br>officers, or employees, or individuals with whom there exists such a connection, or<br>organizations in which there exists such an interest, as affects the exercise of the<br>best judgment of the banking institution in acquiring the property, or in stock or<br>obligations of, or property acquired from, affiliates of the banking institution or their<br>directors, officers, or employees, unless authorized by the instrument creating the<br>relationship or as authorized by law.2.Property held by a banking institution as fiduciary may not be sold or transferred, by<br>loan or otherwise, to the banking institution or its directors, officers, or employees, or<br>to individuals with whom there exists such a connection, or organizations in which<br>there exists such an interest, as affects the exercise of the best judgment of the<br>banking institution in selling or transferring the property, or to affiliates of the banking<br>institution or their directors, officers, or employees except:a.As authorized by the instrument creating the relationship or as authorized by<br>law;b.When the banking institution has been advised in writing by its counsel or<br>auditor that it has incurred as a fiduciary a contingent or potential liability and<br>desires to relieve itself of that liability, a sale or transfer may be made with thePage No. 2approval of the board of directors, provided that the banking institution, upon<br>consummation of the sale or transfer, makes reimbursement in cash at no loss<br>to the account;c.To purchase at market value, defaulted investment funds; ord.Where ordered by the board.3.Funds held by a banking institution as fiduciary may not be invested by the purchase<br>of stock or obligations of the banking institution or its affiliates unless authorized by<br>the instrument or as authorized by law. If the retention of stock or obligations of the<br>banking institution or its affiliates is authorized by the instrument creating the<br>relationship, by court order, or by law it may exercise rights to purchase its own<br>stock or securities convertible into its own stock when offered pro rata to<br>stockholders. When the exercise of rights or receipt of a stock dividend results in<br>fractional share holdings, additional fractional shares may be purchased to<br>complement the fractional shares so acquired.4.A banking institution may sell assets held by it as fiduciary in one account to itself as<br>fiduciary in another account if the transaction is fair to both accounts and if the<br>transaction is not prohibited by the terms of any governing instrument.5.A banking institution may make a loan to an account from the funds belonging to<br>another account when the making of a loan to a designated account is authorized by<br>the instrument creating the account from which the loan is made.6.A banking institution may make a loan to an account and may take, as security for<br>the loan, assets of the account provided the transaction is fair to the account.6-05.2-07. Custody of investments.1.The investment of each account must be kept separate from the assets of the<br>banking institution and must be placed in the joint custody or control of not less than<br>two of the officers or employees of the banking institution designated for that<br>purpose by the board of directors or by one or more officers designated by the<br>board. The banking institution may permit the investments of a fiduciary account to<br>be deposited elsewhere.2.Except for commingled investments, the investments of each account must be kept<br>separate from those of all other accounts or adequately identified as the property of<br>the relevant account.Page No. 3Document Outlinechapter 6-05.2 fiduciary powers
CHAPTER 6-05.2FIDUCIARY POWERS6-05.2-01.Policies and procedures on brokerage placement practices.Eachbanking institution exercising investment discretion with respect to an account must adopt and<br>follow written policies and procedures intended to ensure that its brokerage placement practices<br>comply with all applicable laws and regulations.Among other relevant matters, the writtenpolicies and procedures should address when appropriate:1.The selection of persons to effect securities transactions and the evaluation of the<br>reasonableness of any brokerage commissions paid to such persons.2.The acquisition of any services or products, including research services, in return for<br>brokerage commissions.3.The allocation of research or other services among accounts, including those which<br>did not generate commissions to pay for the research or other services.4.The need, in appropriate instances, to make disclosures concerning the policies and<br>procedures to prospective and existing customers.6-05.2-02. Administration of fiduciary powers.1.The board of directors is responsible for the proper exercise of fiduciary powers by<br>the banking institution. All pertinent matters, including the determination of policies,<br>the investment and disposition of property held in a fiduciary capacity, and the<br>direction and review of the actions of all officers, employees, and committees used<br>by the banking institution in the exercise of its fiduciary powers, are the responsibility<br>of the board. In discharging this responsibility, the board of directors may assign, by<br>action duly entered in the minutes, the administration of any of the banking<br>institution's fiduciary powers as it may consider proper to assign to its directors,<br>officers, employees, or committees as it may designate.2.No fiduciary account may be accepted without the prior approval of the board of<br>directors, or of the directors, officers, or committees to whom the board may have<br>designated the performance of that responsibility. A written record must be made of<br>all acceptances and of the relinquishment or closing out of all fiduciary accounts.<br>Upon the acceptance of an account for which the banking institution has investment<br>responsibilities, a prompt review of the assets must be made.The board mustensure that at least once during every calendar year, and within fifteen months of the<br>last review, all the assets held in or for each fiduciary account where the banking<br>institution has investment responsibilities are reviewed to determine the advisability<br>of retaining or disposing of the trust assets.3.All officers and employees taking part in the operating of trust activities must be<br>adequately bonded.4.Every banking institution exercising fiduciary powers must designate, employ, or<br>retain legal counsel who is readily available to pass upon fiduciary matters and to<br>advise the banking institution as to its trust activities.5.Every banking institution exercising fiduciary powers must adopt written policies and<br>procedures to ensure that the federal securities laws are complied with in connection<br>with any decision or recommendation to purchase or sell any security. The policies<br>and procedures, in particular, must ensure the banking institution may not use inside<br>information in connection with any decision or recommendation to purchase or sell<br>any security.Page No. 16-05.2-03. Books and accounts.1.Every banking institution exercising fiduciary powers must keep its fiduciary records<br>separate and distinct from other records of the banking institution.All fiduciaryrecords necessary for reporting purposes must be maintained for such time as to<br>enable the banking institution to furnish such information or reports with the<br>commissioner. The fiduciary records must contain full information relative to each<br>account.2.Every banking institution must keep an adequate record of all pending litigation to<br>which it is a party in concerning its exercise of fiduciary powers.3.A banking institution must retain the records required for a period of three years from<br>the later of the termination of the fiduciary account relationship to which the records<br>relate or of litigation relating to the account.6-05.2-04. Audit of trust activities. A committee of directors, exclusive of any activeofficers of the bank, must, at least once during each calendar year and within fifteen months of<br>the last audit, make suitable audits of the trust activities or cause suitable audits to be made by<br>auditors responsible to the board of directors, and must ascertain whether the trust activities<br>have been administered in accordance with law and sound fiduciary principles. The board of<br>directors may, instead of the periodic audit, adopt an adequate continuous audit system.Areport of the audits and examination required under this section, together with any action taken,<br>must be noted in the minutes of the board of directors.6-05.2-05. Uninvested or undistributed funds. Uninvested or undistributed funds heldby a banking institution in a fiduciary capacity must not be held uninvested or undistributed any<br>longer than is reasonable for the proper management of the account. Each banking institution<br>exercising fiduciary powers must adopt and follow written policies and procedures intended to<br>ensure that the maximum rate of return available for trust-quality, short-term investments is<br>obtained consistent with the requirements of the governing instrument or law. The policies and<br>procedures must take into consideration all relevant factors, including the anticipated return that<br>could be obtained while the cash remains uninvested or undistributed, the cost of investing the<br>funds, and the anticipated need for the funds.6-05.2-06. Self-dealing.1.Funds held by a banking institution as fiduciary may not be invested in stock or<br>obligations of, or property acquired from, the banking institution or its directors,<br>officers, or employees, or individuals with whom there exists such a connection, or<br>organizations in which there exists such an interest, as affects the exercise of the<br>best judgment of the banking institution in acquiring the property, or in stock or<br>obligations of, or property acquired from, affiliates of the banking institution or their<br>directors, officers, or employees, unless authorized by the instrument creating the<br>relationship or as authorized by law.2.Property held by a banking institution as fiduciary may not be sold or transferred, by<br>loan or otherwise, to the banking institution or its directors, officers, or employees, or<br>to individuals with whom there exists such a connection, or organizations in which<br>there exists such an interest, as affects the exercise of the best judgment of the<br>banking institution in selling or transferring the property, or to affiliates of the banking<br>institution or their directors, officers, or employees except:a.As authorized by the instrument creating the relationship or as authorized by<br>law;b.When the banking institution has been advised in writing by its counsel or<br>auditor that it has incurred as a fiduciary a contingent or potential liability and<br>desires to relieve itself of that liability, a sale or transfer may be made with thePage No. 2approval of the board of directors, provided that the banking institution, upon<br>consummation of the sale or transfer, makes reimbursement in cash at no loss<br>to the account;c.To purchase at market value, defaulted investment funds; ord.Where ordered by the board.3.Funds held by a banking institution as fiduciary may not be invested by the purchase<br>of stock or obligations of the banking institution or its affiliates unless authorized by<br>the instrument or as authorized by law. If the retention of stock or obligations of the<br>banking institution or its affiliates is authorized by the instrument creating the<br>relationship, by court order, or by law it may exercise rights to purchase its own<br>stock or securities convertible into its own stock when offered pro rata to<br>stockholders. When the exercise of rights or receipt of a stock dividend results in<br>fractional share holdings, additional fractional shares may be purchased to<br>complement the fractional shares so acquired.4.A banking institution may sell assets held by it as fiduciary in one account to itself as<br>fiduciary in another account if the transaction is fair to both accounts and if the<br>transaction is not prohibited by the terms of any governing instrument.5.A banking institution may make a loan to an account from the funds belonging to<br>another account when the making of a loan to a designated account is authorized by<br>the instrument creating the account from which the loan is made.6.A banking institution may make a loan to an account and may take, as security for<br>the loan, assets of the account provided the transaction is fair to the account.6-05.2-07. Custody of investments.1.The investment of each account must be kept separate from the assets of the<br>banking institution and must be placed in the joint custody or control of not less than<br>two of the officers or employees of the banking institution designated for that<br>purpose by the board of directors or by one or more officers designated by the<br>board. The banking institution may permit the investments of a fiduciary account to<br>be deposited elsewhere.2.Except for commingled investments, the investments of each account must be kept<br>separate from those of all other accounts or adequately identified as the property of<br>the relevant account.Page No. 3Document Outlinechapter 6-05.2 fiduciary powers
