CHAPTER 2257. COLLATERAL FOR PUBLIC FUNDS

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GOVERNMENT CODE

TITLE 10. GENERAL GOVERNMENT

SUBTITLE F. STATE AND LOCAL CONTRACTS AND FUND MANAGEMENT

CHAPTER 2257. COLLATERAL FOR PUBLIC FUNDS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2257.001. SHORT TITLE. This chapter may be cited as the

Public Funds Collateral Act.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.002. DEFINITIONS. In this chapter:

(1) "Bank holding company" has the meaning assigned by Section

31.002(a), Finance Code.

(2) "Control" has the meaning assigned by Section 31.002(a),

Finance Code.

(3) "Deposit of public funds" means public funds of a public

entity that:

(A) the comptroller does not manage under Chapter 404; and

(B) are held as a demand or time deposit by a depository

institution expressly authorized by law to accept a public

entity's demand or time deposit.

(4) "Eligible security" means:

(A) a surety bond;

(B) an investment security;

security, other than an option contract to purchase or sell an

investment security;

(D) a fixed-rate collateralized mortgage obligation that has an

expected weighted average life of 10 years or less and does not

constitute a high-risk mortgage security; or

(E) a floating-rate collateralized mortgage obligation that does

not constitute a high-risk mortgage security.

(5) "Investment security" means:

(A) an obligation that in the opinion of the attorney general of

the United States is a general obligation of the United States

and backed by its full faith and credit;

(B) a general or special obligation issued by a public agency

that is payable from taxes, revenues, or a combination of taxes

and revenues; or

Subchapter A, Chapter 2256.

(6) "Permitted institution" means:

(A) a Federal Reserve Bank;

(B) a clearing corporation, as defined by Section 8.102,

Business & Commerce Code;

(D) a state or nationally chartered bank that is controlled by a

bank holding company that controls a bank eligible to be a

custodian under Section 2257.041.

(7) "Public agency" means a state or a political or governmental

entity, agency, instrumentality, or subdivision of a state,

including a municipality, an institution of higher education, as

defined by Section 61.003, Education Code, a junior college, a

district created under Article XVI, Section 59, of the Texas

Constitution, and a public hospital.

(8) "Public entity" means a public agency in this state, but

does not include an institution of higher education, as defined

by Section 61.003, Education Code.

(9) "State agency" means a public entity that:

(A) has authority that is not limited to a geographic portion of

the state; and

(B) was created by the constitution or a statute.

(10) "Trust receipt" means evidence of receipt, identification,

and recording, including:

(A) a physical controlled trust receipt; or

(B) a written or electronically transmitted advice of

transaction.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.48(a), eff.

Sept. 1, 1995; Acts 1995, 74th Leg., ch. 914, Sec. 5, eff. Sept.

1, 1995; Acts 1997, 75th Leg., ch. 254, Sec. 1, eff. Sept. 1,

1997; Acts 1997, 75th Leg., ch. 891, Sec. 3.22(4), eff. Sept. 1,

1997; Acts 1997, 75th Leg., ch. 1423, Sec. 8.70, eff. Sept. 1,

1997; Acts 1999, 76th Leg., ch. 62, Sec. 7.63, eff. Sept. 1,

1999.

Sec. 2257.0025. HIGH-RISK MORTGAGE SECURITY. (a) For purposes

of this chapter, a fixed-rate collateralized mortgage obligation

is a high-risk mortgage security if the security:

(1) has an average life sensitivity with a weighted average life

that:

(A) extends by more than four years, assuming an immediate and

sustained parallel shift in the yield curve of plus 300 basis

points; or

(B) shortens by more than six years, assuming an immediate and

sustained parallel shift in the yield curve of minus 300 basis

points; and

(2) is price sensitive; that is, the estimated change in the

price of the mortgage derivative product is more than 17 percent,

because of an immediate and sustained parallel shift in the yield

curve of plus or minus 300 basis points.

(b) For purposes of this chapter, a floating-rate collateralized

mortgage obligation is a high-risk mortgage security if the

security:

(1) bears an interest rate that is equal to the contractual cap

on the instrument; or

(2) is price sensitive; that is, the estimated change in the

price of the mortgage derivative product is more than 17 percent,

because of an immediate and sustained parallel shift in the yield

curve of plus or minus 300 basis points.

Added by Acts 1997, 75th Leg., ch. 254, Sec. 2, eff. Sept. 1,

1997.

Sec. 2257.003. CHAPTER NOT APPLICABLE TO DEFERRED COMPENSATION

PLANS. This chapter does not apply to funds that a public entity

maintains or administers under a deferred compensation plan, the

federal income tax treatment of which is governed by Section

401(k) or 457 of the Internal Revenue Code of 1986 (26 U.S.C.

Sections 401(k) and 457).

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.004. CONFLICT WITH OTHER LAW. This chapter prevails

over any other law relating to security for a deposit of public

funds to the extent of any conflict.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.005. CONTRACT GOVERNS LEGAL ACTION. A legal action

brought by or against a public entity that arises out of or in

connection with the duties of a depository, custodian, or

permitted institution under this chapter must be brought and

maintained as provided by the contract with the public entity.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

SUBCHAPTER B. DEPOSITORY; SECURITY FOR DEPOSIT OF PUBLIC FUNDS

Sec. 2257.021. COLLATERAL REQUIRED. A deposit of public funds

shall be secured by eligible security to the extent and in the

manner required by this chapter.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.022. AMOUNT OF COLLATERAL. (a) Except as provided by

Subsection (b), the total value of eligible security to secure a

deposit of public funds must be in an amount not less than the

amount of the deposit of public funds:

(1) increased by the amount of any accrued interest; and

(2) reduced to the extent that the United States or an

instrumentality of the United States insures the deposit.

(b) The total value of eligible security described by Section

45.201(4)(D), Education Code, to secure a deposit of public funds

of a school district must be in an amount not less than 110

percent of the amount of the deposit as determined under

Subsection (a). The total market value of the eligible security

must be reported at least once each month to the school district.

(d) The value of an investment security is its market value.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 2003, 78th Leg., ch. 201, Sec. 46, eff.

Sept. 1, 2003.

Sec. 2257.023. COLLATERAL POLICY. (a) In accordance with a

written policy approved by the governing body of the public

entity, a public entity shall determine if an investment security

is eligible to secure deposits of public funds.

(b) The written policy may include:

(1) the security of the institution that obtains or holds an

investment security;

(2) the substitution or release of an investment security; and

(3) the method by which an investment security used to secure a

deposit of public funds is valued.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.024. CONTRACT FOR SECURING DEPOSIT OF PUBLIC FUNDS.

(a) A public entity may contract with a bank that has its main

office or a branch office in this state to secure a deposit of

public funds.

(b) The contract may contain a term or condition relating to an

investment security used as security for a deposit of public

funds, including a term or condition relating to the:

(1) possession of the collateral;

(2) substitution or release of an investment security;

(3) ownership of the investment securities of the bank used to

secure a deposit of public funds; and

(4) method by which an investment security used to secure a

deposit of public funds is valued.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 344, Sec. 5.006, eff.

Sept. 1, 1999.

Sec. 2257.025. RECORDS OF DEPOSITORY. (a) A public entity's

depository shall maintain a separate, accurate, and complete

record relating to a pledged investment security, a deposit of

public funds, and a transaction related to a pledged investment

security.

(b) The comptroller or the public entity may examine and verify

at any reasonable time a pledged investment security or a record

a depository maintains under this section.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.16, eff.

Sept. 1, 1997.

Sec. 2257.026. CHANGE IN AMOUNT OR ACTIVITY OF DEPOSITS OF

PUBLIC FUNDS. A public entity shall inform the depository for

the public entity's deposit of public funds of a significant

change in the amount or activity of those deposits within a

reasonable time before the change occurs.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

SUBCHAPTER C. CUSTODIAN; PERMITTED INSTITUTION

Sec. 2257.041. DEPOSIT OF SECURITIES WITH CUSTODIAN. (a) In

addition to other authority granted by law, a depository for a

public entity other than a state agency may deposit with a

custodian a security pledged to secure a deposit of public funds.

(b) At the request of the public entity, a depository for a

public entity other than a state agency shall deposit with a

custodian a security pledged to secure a deposit of public funds.

The custodian and the state agency shall agree in writing on the

terms and conditions for securing a deposit of public funds.

(d) A custodian must be approved by the public entity and be:

(1) a state or national bank that:

(A) is designated by the comptroller as a state depository;

(B) has its main office or a branch office in this state; and

more;

(2) the Texas Treasury Safekeeping Trust Company;

(3) a Federal Reserve Bank or a branch of a Federal Reserve

Bank;

(4) a federal home loan bank; or

(5) a financial institution authorized to exercise fiduciary

powers that is designated by the comptroller as a custodian

pursuant to Section 404.031(e).

(e) A custodian holds in trust the securities to secure the

deposit of public funds of the public entity in the depository

pledging the securities.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1995, 74th Leg., ch. 1010, Sec. 1, eff.

June 17, 1995; Acts 1997, 75th Leg., ch. 891, Sec. 3.17, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 344, Sec. 5.007, eff.

Sept. 1, 1999.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 3, eff. September 1, 2009.

Sec. 2257.042. DEPOSIT OF SECURITIES WITH PERMITTED INSTITUTION.

(a) A custodian may deposit with a permitted institution an

investment security the custodian holds under Section 2257.041.

(b) If a deposit is made under Subsection (a):

(1) the permitted institution shall hold the investment security

to secure funds the public entity deposits in the depository that

pledges the investment security;

(2) the trust receipt the custodian issues under Section

2257.045 shall show that the custodian has deposited the security

in a permitted institution; and

(3) the permitted institution, on receipt of the investment

security, shall immediately issue to the custodian an advice of

transaction or other document that is evidence that the custodian

deposited the security in the permitted institution.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.043. DEPOSITORY AS CUSTODIAN OR PERMITTED INSTITUTION.

(a) A public entity other than a state agency may prohibit a

depository or an entity of which the depository is a branch from

being the custodian of or permitted institution for a security

the depository pledges to secure a deposit of public funds.

(b) A depository or an entity of which the depository is a

branch may not be the custodian of or permitted institution for a

security the depository pledges to secure a deposit of public

funds by a state agency.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.044. CUSTODIAN AS BAILEE. (a) A custodian under this

chapter or a custodian of a security pledged to an institution of

higher education, as defined by Section 61.003, Education Code,

whether acting alone or through a permitted institution, is for

all purposes the bailee or agent of the public entity or

institution depositing the public funds with the depository.

(b) To the extent of any conflict, Subsection (a) prevails over

Chapter 8 or 9, Business & Commerce Code.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.045. RECEIPT OF SECURITY BY CUSTODIAN. On receipt of

an investment security, a custodian shall:

(1) immediately identify on its books and records, by book entry

or another method, the pledge of the security to the public

entity; and

(2) promptly issue and deliver to the appropriate public entity

officer a trust receipt for the pledged security.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.046. BOOKS AND RECORDS OF CUSTODIAN; INSPECTION. (a)

A public entity's custodian shall maintain a separate, accurate,

and complete record relating to each pledged investment security

and each transaction relating to a pledged investment security.

(b) The comptroller or the public entity may examine and verify

at any reasonable time a pledged investment security or a record

a custodian maintains under this section. The public entity or

its agent may inspect at any time an investment security

evidenced by a trust receipt.

with the comptroller in the manner and on the dates prescribed by

the comptroller.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.18, eff.

Sept. 1, 1997.

Sec. 2257.047. BOOKS AND RECORDS OF PERMITTED INSTITUTION. (a)

A permitted institution may apply book entry procedures when an

investment security held by a custodian is deposited under

Section 2257.042.

(b) A permitted institution's records must at all times state

the name of the custodian that deposits an investment security in

the permitted institution.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.048. ATTACHMENT AND PERFECTION OF SECURITY INTEREST.

(a) A security interest that arises out of a depository's pledge

of a security to secure a deposit of public funds by a public

entity or an institution of higher education, as defined by

Section 61.003, Education Code, is created, attaches, and is

perfected for all purposes under state law from the time that the

custodian identifies the pledge of the security on the

custodian's books and records and issues the trust receipt.

(b) A security interest in a pledged security remains perfected

in the hands of a subsequent custodian or permitted institution.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

SUBCHAPTER D. AUDITS AND EXAMINATIONS; PENALTIES

Sec. 2257.061. AUDITS AND EXAMINATIONS. As part of an audit or

regulatory examination of a public entity's depository or

custodian, the auditor or examiner shall:

(1) examine and verify pledged investment securities and records

maintained under Section 2257.025 or 2257.046; and

(2) report any significant or material noncompliance with this

chapter to the comptroller.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff.

Sept. 1, 1997.

Sec. 2257.062. PENALTIES. (a) The comptroller may revoke a

depository's designation as a state depository for one year if,

after notice and a hearing, the comptroller makes a written

finding that the depository, while acting as either a depository

or a custodian:

(1) did not maintain reasonable compliance with this chapter;

and

(2) failed to remedy a violation of this chapter within a

reasonable time after receiving written notice of the violation.

(b) The comptroller may permanently revoke a depository's

designation as a state depository if the comptroller makes a

written finding that the depository:

(1) has not maintained reasonable compliance with this chapter;

and

(2) has acted in bad faith by not remedying a violation of this

chapter.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff.

Sept. 1, 1997.

Sec. 2257.063. MITIGATING CIRCUMSTANCES. (a) The comptroller

shall consider the total circumstances relating to the

performance of a depository or custodian when the comptroller

makes a finding required by Section 2257.062, including the

extent to which the noncompliance is minor, isolated, temporary,

or nonrecurrent.

(b) The comptroller may not find that a depository or custodian

did not maintain reasonable compliance with this chapter if the

noncompliance results from the public entity's failure to comply

with Section 2257.026.

the obligation to secure a deposit of public funds with eligible

security in the amount and manner required by this chapter within

a reasonable time after the public entity deposits the deposit of

public funds with the depository.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff.

Sept. 1, 1997.

Sec. 2257.064. REINSTATEMENT. The comptroller may reinstate a

depository's designation as a state depository if:

(1) the comptroller determines that the depository has remedied

all violations of this chapter; and

(2) the depository assures the comptroller to the comptroller's

satisfaction that the depository will maintain reasonable

compliance with this chapter.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff.

Sept. 1, 1997.

SUBCHAPTER E. EXEMPT INSTITUTIONS

Sec. 2257.081. DEFINITION. In this subchapter, "exempt

institution" means:

(1) a public retirement system, as defined by Section 802.001;

(2) the permanent school fund, as described by Section 43.001,

Education Code.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 6.31, eff.

Sept. 1, 1997.

Sec. 2257.082. FUNDS OF EXEMPT INSTITUTION. An exempt

institution is not required to have its funds fully insured or

collateralized at all times if:

(1) the funds are held by:

(A) a custodian of the institution's assets under a trust

agreement; or

(B) a person in connection with a transaction related to an

investment; and

(2) the governing body of the institution, in exercising its

fiduciary responsibility, determines that the institution is

adequately protected by using a trust agreement, special deposit,

surety bond, substantial deposit insurance, or other method an

exempt institution commonly uses to protect itself from

liability.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2257.083. INVESTMENT; SELECTION OF DEPOSITORY. This

chapter does not:

(1) prohibit an exempt institution from prudently investing in a

certificate of deposit; or

(2) restrict the selection of a depository by the governing body

of an exempt institution in accordance with its fiduciary duty.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

SUBCHAPTER F. POOLED COLLATERAL TO SECURE

DEPOSITS OF CERTAIN PUBLIC FUNDS

Sec. 2257.101. DEFINITION. In this subchapter, "participating

institution" means a financial institution that holds one or more

deposits of public funds and that participates in the pooled

collateral program under this subchapter.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.102. POOLED COLLATERAL PROGRAM. (a) As an

alternative to collateralization under Subchapter B, the

comptroller by rule shall establish a program for centralized

pooled collateralization of deposits of public funds and for

monitoring collateral maintained by participating institutions.

The rules must provide that deposits of public funds of a county

are not eligible for collateralization under the program. The

comptroller shall provide for a separate collateral pool for any

single participating institution's deposits of public funds.

(b) Under the pooled collateral program, the collateral of a

participating institution pledged for a public deposit may not be

combined with, cross-collateralized with, aggregated with, or

pledged to another participating institution's collateral pools

for pledging purposes.

to more than one participating depositor under contract with that

participating institution.

(d) The pooled collateral program must provide for:

(1) participation in the program by a participating institution

and each affected public entity to be voluntary;

(2) uniform procedures for processing all collateral

transactions that are subject to an approved security agreement

described by Section 2257.103; and

(3) the pledging of a participating institution's collateral

securities using a single custodial account instead of an account

for each depositor of public funds.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.103. PARTICIPATION IN POOLED COLLATERAL PROGRAM. A

financial institution may participate in the pooled collateral

program only if:

(1) the institution has entered into a binding collateral

security agreement with a public agency for a deposit of public

funds and the agreement permits the institution's participation

in the program;

(2) the comptroller has approved the institution's participation

in the program; and

(3) the comptroller has approved or provided the collateral

security agreement form used.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.104. COLLATERAL REQUIRED; CUSTODIAN TRUSTEE. (a)

Each participating institution shall secure its deposits of

public funds with eligible securities the total value of which

equals at least 102 percent of the amount of the deposits of

public funds covered by a security agreement described by Section

2257.103 and deposited with the participating institution,

reduced to the extent that the United States or an

instrumentality of the United States insures the deposits. For

purposes of determining whether collateral is sufficient to

secure a deposit of public funds, Section 2257.022(b) does not

apply to a deposit of public funds held by the participating

institution and collateralized under this subchapter.

(b) A participating institution shall provide for the collateral

securities to be held by a custodian trustee, on behalf of the

participating institution, in trust for the benefit of the pooled

collateral program. A custodian trustee must qualify as a

custodian under Section 2257.041.

under the pooled collateral program in the manner provided by

Subchapter C to the extent practicable. The rules must ensure

that a custodian trustee depository does not own, is not owned

by, and is independent of the financial institution or

institutions for which it holds the securities in trust, except

that the rules must allow the following to be a custodian

trustee:

(1) a federal reserve bank;

(2) a banker's bank, as defined by Section 34.105, Finance Code;

and

(3) a federal home loan bank.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.105. MONITORING COLLATERAL. (a) Each participating

institution shall file the following reports with the comptroller

electronically and as prescribed by rules of the comptroller:

(1) a daily report of the aggregate ledger balance of deposits

of public agencies participating in the pooled collateral program

that are held by the institution, with each public entity's funds

held itemized;

(2) a weekly summary report of the total market value of

securities held by a custodian trustee on behalf of the

participating institution;

(3) a monthly report listing the collateral securities held by a

custodian trustee on behalf of the participating institution,

together with the value of the securities; and

(4) as applicable, a participating institution's annual report

that includes the participating institution's financial

statements.

(b) The comptroller shall provide the participating institution

an acknowledgment of each report received.

value of the securities held in each pool.

(d) The comptroller shall post each report on the comptroller's

Internet website.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.106. ANNUAL ASSESSMENT. (a) Once each state fiscal

year, the comptroller shall impose against each participating

institution an assessment in an amount sufficient to pay the

costs of administering this subchapter. The amount of an

assessment must be based on factors that include the number of

public entity accounts a participating institution maintains, the

number of transactions a participating institution conducts, and

the aggregate average weekly deposit amounts during that state

fiscal year of each participating institution's deposits of

public funds collateralized under this subchapter. The

comptroller by rule shall establish the formula for determining

the amount of the assessments imposed under this subsection.

(b) The comptroller shall provide to each participating

institution a notice of the amount of the assessment against the

institution.

the amount assessed against it under this section not later than

the 45th day after the date the institution receives the notice

under Subsection (b).

(d) Money remitted to the comptroller under this section may be

appropriated only for the purposes of administering this

subchapter.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.107. PENALTY FOR REPORTING VIOLATION. The comptroller

may impose an administrative penalty against a participating

institution that does not timely file a report required by

Section 2257.105.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.108. NOTICE OF COLLATERAL VIOLATION; ADMINISTRATIVE

PENALTY. (a) The comptroller may issue a notice to a

participating institution that the institution appears to be in

violation of collateral requirements under Section 2257.104 and

rules of the comptroller.

(b) The comptroller may impose an administrative penalty against

a participating institution that does not maintain collateral in

an amount and in the manner required by Section 2257.104 and

rules of the comptroller if the participating institution has not

remedied the violation before the third business day after the

date a notice is issued under Subsection (a).

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.109. PENALTY FOR FAILURE TO PAY ASSESSMENT. The

comptroller may impose an administrative penalty against a

participating institution that does not pay an assessment against

it in the time provided by Section 2257.106(c).

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.110. PENALTY AMOUNT; PENALTIES NOT EXCLUSIVE. (a)

The comptroller by rule shall adopt a formula for determining the

amount of a penalty under this subchapter. For each violation

and for each day of a continuing violation, a penalty must be at

least $100 per day and not more than $1,000 per day. The penalty

must be based on factors that include:

(1) the aggregate average weekly deposit amounts during the

state fiscal year of the institution's deposits of public funds;

(2) the number of violations by the institution during the state

fiscal year;

(3) the number of days of a continuing violation; and

(4) the average asset base of the institution as reported on the

institution's year-end report of condition.

(b) The penalties provided by Sections 2257.107-2257.109 are in

addition to those provided by Subchapter D or other law.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.111. PENALTY PROCEEDING CONTESTED CASE. A proceeding

to impose a penalty under Section 2257.107, 2257.108, or 2257.109

is a contested case under Chapter 2001.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.112. SUIT TO COLLECT PENALTY. The attorney general

may sue to collect a penalty imposed under Section 2257.107,

2257.108, or 2257.109.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.113. ENFORCEMENT STAYED PENDING REVIEW. Enforcement

of a penalty imposed under Section 2257.107, 2257.108, or

2257.109 may be stayed during the time the order is under

judicial review if the participating institution pays the penalty

to the clerk of the court or files a supersedeas bond with the

court in the amount of the penalty. A participating institution

that cannot afford to pay the penalty or file the bond may stay

the enforcement by filing an affidavit in the manner required by

the Texas Rules of Civil Procedure for a party who cannot afford

to file security for costs, subject to the right of the

comptroller to contest the affidavit as provided by those rules.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

Sec. 2257.114. USE OF COLLECTED PENALTIES. Money collected as

penalties under this subchapter may be appropriated only for the

purposes of administering this subchapter.

Added by Acts 2009, 81st Leg., R.S., Ch.

486, Sec. 1, eff. September 1, 2009.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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