2011 Kentucky Revised Statutes Subtitle 11. Money Transmitters 286.11.015 Permissible investments -- Power of commissioner to define permissible investments -- All permissible investments deemed to be held in trust for benefit of purchasers and holders.
KY Rev Stat § 286.11.015 (1996 through Reg Sess) What's This?
286.11-015 Permissible investments -- Power of commissioner to define permissible
investments -- All permissible investments deemed to be held in trust for
benefit of purchasers and holders.
(1)
(2)
(3)
Every licensee shall, at all times, maintain permissible investments that have a
market value that is computed in accordance with generally accepted accounting
principles. These investments shall not be less than the aggregate amount of all
outstanding payment instruments.
Except to the extent otherwise limited in subsection (5) of this section, the
following investments are permissible for a licensee:
(a) Cash, time deposits, savings deposits, demand deposits, a certificate of
deposit, or senior debt obligation of an insured depository institution as
defined in 12 U.S.C. sec. 1813 or as defined under 12 U.S.C. sec. 1781;
(b) Banker's acceptance or bill of exchange that is eligible for purchase upon
endorsement by a member bank of the federal reserve system and is eligible
for purchase by a federal reserve bank;
(c) An investment bearing a rating of one (1) of the three (3) highest grades as
defined by a nationally recognized organization that rates securities;
(d) An investment security that is an obligation of the United States or a
department, agency, or instrumentality thereof; an investment in an obligation
that is guaranteed fully as to principal and interest by the United States; or an
investment in an obligation of a state or a governmental subdivision, agency,
or instrumentality thereof;
(e) Receivables that are payable to a licensee from its agents, in the ordinary
course of business, pursuant to contracts which are not past due or doubtful of
collection, if the aggregate amount of receivables under this paragraph does
not exceed twenty percent (20%) of the total permissible investments of a
licensee and the licensee does not hold, at one (1) time, receivables under this
paragraph in any one (1) person aggregating more than ten percent (10%) of
the licensee's total permissible investments.
The following investments are permissible under this section, but only to the extent
specified as follows:
(a) An interest-bearing bill, note, bond, or debenture of a person whose equity
shares are traded on a national securities exchange or on a national over-thecounter market, if the aggregate of investments under this paragraph do not
exceed twenty percent (20%) of the total permissible investments of a licensee
and the licensee does not, at one (1) time, hold investments under this
paragraph in any one (1) person aggregating more than ten percent (10%) of
the licensee's total permissible investments;
(b) A share of a person traded on a national securities exchange or a national
over-the-counter market or a share or certificate issued by an open-end
management investment company that is registered with the United States
Securities and Exchange Commission pursuant to 15 U.S.C. secs. 80a-1 to
80a-64, and whose portfolios are restricted by the management company's
(4)
(5)
(6)
investment policy to shares of a person traded on a national securities
exchange or a national over-the-counter market, if:
1.
The aggregate of investments under this paragraph does not exceed
twenty percent (20%) of the total permissible investments of a licensee;
and
2.
The licensee does not, at one (1) time, hold investments under this
paragraph in any one (1) person aggregating more than ten percent
(10%) of the licensee's total permissible investments; and
(c) A demand-borrowing agreement made to a corporation or a subsidiary of a
corporation whose securities are traded on a national securities exchange, if:
1.
The aggregate amount of principal and interest outstanding under
demand-borrowing agreements under this paragraph does not exceed
twenty percent (20%) of the total permissible investments of a licensee;
and
2.
The licensee does not, at one (1) time, hold principal and interest
outstanding under demand-borrowing agreements under this paragraph
with any one (1) person aggregating more than ten percent (10%) of the
licensee's total permissible investments.
The aggregate of investments under subsection (3) of this section shall not exceed
fifty percent (50%) of the total permissible investments of a licensee.
The commissioner may limit the extent to which a type of investment within a class
of permissible investments may be considered a permissible investment, except for
money, time deposits, savings deposits, demand deposits, and certificates of deposit
issued by a federally insured financial institution. The commissioner may by rule or
order allow other types of investments that the commissioner determines to be
substantially equivalent to other permissible investments in regards to safety and
soundness.
Permissible investments, even if commingled with other assets of the licensee, shall
be deemed by operation of law to be held in trust for the benefit of the purchasers
and holders of the licensee's outstanding payment instruments in the event of
insolvency or bankruptcy of the licensee.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 837, effective July 15, 2010. -- Created
2006 Ky. Acts ch. 247, sec. 8, effective April 24, 2006.
Legislative Research Commission Note (7/12/2006). This section was created in 2006
Ky. Acts ch. 247 as a new section of KRS Chapter 366A. Sec. 38 of that same bill
also required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A,
and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky
Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1),
has codified this section as a new section of KRS Chapter 286.
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