§ 104.504. Administration of Trust Powers.

(a) (1) Responsibility of the board of directors. The board of directors is responsible for the proper exercise of fiduciary powers by the association. All matters pertinent thereto, including the determination of policies, the investment and disposition of property held in a fiduciary capacity, and the direction and review of the actions of all officers, employees, and committees utilized by the association in the exercise of its fiduciary powers, are the responsibility of the board. In discharging this responsibility, the board of directors may assign, by action duly entered in the minutes, the administration of such of the association's trust powers as it may consider proper to assign to such director(s), officer(s), employee(s), or committee(s) as it may designate.

(2) Administration of accounts. No fiduciary account shall be accepted without the prior approval of the board, or of the director(s), officer(s), or committee(s) to whom the board may have assigned the performance of that responsibility. A written record shall be made of such acceptances and of the relinquishment or closing out of all fiduciary accounts. Upon the acceptance of an account for which the association has investment responsibilities, a prompt review of the assets shall be made. The board shall also ensure that at least once during every calendar year thereafter, and within 15 months of the last review, all the assets held in or held for each fiduciary account for which the association has investment responsibilities are reviewed to determine the advisability of retaining or disposing of such assets. The board of directors should act to ensure that all investments have been made in accordance with the terms and purposes of the governing instrument.

(b) Use of other association personnel. The trust department may utilize personnel and facilities of other departments of the association, and other departments of the association may utilize personnel and facilities of the trust department only to the extent not prohibited by law.

(c) Compliance with Federal and State securities laws. Every association exercising trust powers shall adopt written policies and procedures to ensure that the federal and state securities laws are complied with in connection with any decision or recommendation to purchase or sell any security. Such policies and procedures, in particular, shall ensure that the association's trust departments shall not use material inside information in connection with any decision or recommendation to purchase or sell any security.

(d) Legal counsel. Every association exercising fiduciary powers shall designate, employ, or retain legal counsel who shall be readily available to pass upon fiduciary matters and to advise the association and its trust department.

(e) Bonding. In addition to the minimum bond coverage required by Section 563.19 of the Insurance Regulations (12 CFR Section 563.19) and by Section 5610 of the law, directors, officers, and employees of an association engaged in the operation of a trust department shall acquire such additional bond coverage as the commissioner may require.

HISTORY

1. Change without regulatory effect renumbering former Section 245.5 to Section 104.504 (Register 87, No. 14). For prior history, see Register 81, No. 25.

Note

Note: Authority cited: Section 5500.5, Financial Code. Reference: Title 10, Calif. Adm. Code, Chapter 2, Subchapter 3, Article 5 (Section 103.500) and Subchapter 4, Article 5 (Section 104.500 et seq.); and Sections 5003 and 5501.5, Financial Code.