2013 Kentucky Revised Statutes CHAPTER 286 - KENTUCKY FINANCIAL SERVICES CODE Subtitle 11 - Money Transmitters 11.11-015 Permissible investments -- Power of commissioner to define permissible investments -- All permissible investments deemed to be held in trust for benefit of purchasers and holders.
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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 licensee does not hold, at one (1) time,
receivables under this paragraph from any one (1) person aggregating
more than ten percent (10%) of the licensee's total permissible
investments. A receivable is deemed past due or doubtful of collection if
not remitted to the licensee in five (5) business days or less; and
(f) 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 the Investment Companies Act of
1940, 15 U.S.C. secs. 80a-1 et seq., and whose portfolio is restricted by
the management company's investment policy to investments specified in
paragraphs (a) to (d) of this subsection.
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-the-counter 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
(4)
(5)
(6)
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 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 12, 2012
History: Amended 2012 Ky. Acts ch. 66, sec. 1, effective July 12, 2012. -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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