DFI-SL 17.03 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.04(1)(a)(a)
Responsibility of the board of directors. The board of directors of an association is responsible for the proper exercise of fiduciary powers by the association. All matters pertinent to the exercise of fiduciary powers, 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. The board of directors may assign, by action entered in the minutes, the administration of any of the association's trust powers to a director, officer, employee, or committee.
DFI-SL 17.04(1)(b)
(b)
Administration of accounts. No fiduciary account may be accepted without the prior approval of the board of directors, or of the director, officer, employee or committee to whom the board may have assigned the performance of that responsibility. A written record shall be made of 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, the association shall make a prompt review of the assets. 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 the assets. The board shall act to ensure that all investments have been made in accordance with the terms and purposes of the governing instrument.
DFI-SL 17.04(2)
(2) 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 unless prohibited by law.
DFI-SL 17.04(3)
(3) Compliance with federal securities laws. Every association exercising trust powers shall adopt written policies and procedures to ensure that the federal securities laws are complied with in connection with any decision or recommendation to purchase or sell any security. The policies and procedures 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.
DFI-SL 17.04(4)
(4) 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.
DFI-SL 17.04(5)
(5) Bonding. Directors, officers and employees of an association engaged in the operation of a trust department shall acquire bond coverage as the division may require.
DFI-SL 17.04(6)
(6) Oath or affidavit. If the laws of a state require that a corporation acting as trustee, executor, administrator, personal representative or in any capacity specified in this chapter shall take an oath or make an affidavit, the president, vice president, cashier or trust officer of the association may take the necessary oath or execute the necessary affidavit.
DFI-SL 17.04 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.05(1)(1)
General. Every association exercising trust powers shall keep its fiduciary records separate and distinct from other records of the association. All fiduciary records shall be kept and retained for such time as to enable the association to furnish any information or reports with respect to the records as may be required by the division. The fiduciary records shall contain full information on each account.
DFI-SL 17.05(2)
(2) Record of pending litigation. Every association shall keep an adequate record of all pending litigation to which it is a party in connection with its exercise of trust powers.
DFI-SL 17.05 Note
Note: This section parallels
12 CFR 550.6.
DFI-SL 17.05 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.06
DFI-SL 17.06
Audit of trust department. At least once during each calendar year, the association's trust department shall be audited by auditors in a manner consistent with s.
215.25, Stats. A copy of the report of the audit shall be promptly filed with the division. Trust department audits may be made as part of the audits required by s.
215.25, Stats.
DFI-SL 17.06 Note
Note: This section parallels
12 CFR 550.7.
DFI-SL 17.06 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.07
DFI-SL 17.07
Segregation of assets; prohibited deposits. Associations exercising any of the powers enumerated in this chapter shall segregate all assets held in any fiduciary capacity from the general assets of the association. No association may receive in its trust department deposits of current funds subject to check or the deposit of checks, drafts, bills of exchange, or other items for collection or exchange purposes.
DFI-SL 17.07 Note
Note: This section parallels
12 USC 1464 (n) (3) and (4) and is intended to prohibit operating a check clearing exchange through a trust account.
DFI-SL 17.07 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.08
DFI-SL 17.08
Funds awaiting investment or distribution. DFI-SL 17.08(1)(1)
General. Funds held in a fiduciary capacity by an association awaiting investment or distribution may not be held uninvested or undistributed any longer than is reasonable for the proper management of the account.
DFI-SL 17.08(2)
(2) Use by association in regular business. Funds held in trust by an association, including managing agency accounts, awaiting investment or distribution may, unless prohibited by the instrument creating the trust or by local law, be deposited in other departments of the association, except the association shall first set aside under control of the trust department as collateral security:
DFI-SL 17.08(2)(a)
(a) Direct obligations of the United States, or other obligations fully guaranteed by the United States as to principal and interest;
DFI-SL 17.08(2)(b)
(b) Readily marketable securities of the classes in which state chartered corporate fiduciaries may invest trust funds; or
DFI-SL 17.08(3)
(3) Contingent lien. An association shall ensure that in the event of its failure, the owners of the funds held in trust for investment under this chapter shall have a lien on the bonds or other securities set apart under sub.
(2) in addition to their claim against the estate of the association.
DFI-SL 17.08(4)
(4) Amount of collateral. Collateral securities or securities substituted for collateral securities as collateral shall at all times be at least equal in face value to the amount of trust funds deposited under sub.
(2), but the security is not required to the extent that the funds so deposited are insured by the federal deposit insurance corporation.
DFI-SL 17.08(5)
(5) Productivity. Any funds held by an association as fiduciary awaiting investment or distribution and deposited in other departments of the association shall be made productive.
DFI-SL 17.08 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89;
CR 23-039: am. (4) Register March 2024 No. 819, eff. 4-1-24.
DFI-SL 17.09
DFI-SL 17.09
Investment of funds held as fiduciary. DFI-SL 17.09(1)(1)
Private trusts. Funds held by an association in a fiduciary capacity shall be invested in accordance with the instrument establishing the fiduciary relationship and local law. If the instrument does not specify the character or class of investments to be made and does not give the association, its directors, or its officers investment discretion in the matter, funds held under the instrument may be invested in any investment in which state chartered corporate fiduciaries may invest under local law.
DFI-SL 17.09(2)
(2) Court trusts. If, under local law, corporate fiduciaries appointed by a court are permitted to exercise discretion in investments, or if an association acting as fiduciary under appointment by a court is vested with discretion in investments by an order of the court, funds of the accounts may be invested in any investments which are permitted by local law. Otherwise, an association acting as fiduciary under appointment by a court shall make all investments of funds in such accounts under an order of that court. The orders in either case shall be preserved with the fiduciary records of the association.
DFI-SL 17.09(3)
(3) Collective investment of trust funds. The collective investment of funds received or held by an association as fiduciary is governed by ss.
DFI-SL 17.13 and
17.14.
DFI-SL 17.09 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.10(1)(1)
Purchases. Unless authorized by the instrument creating the relationship, or by court order or local law, funds held by an association as fiduciary shall not be invested in:
DFI-SL 17.10(1)(a)
(a) Stock or obligations of, or property acquired from, the association or its directors, officers, or employees, or individuals with whom there exists a connection, or organizations in which there exists an interest, which may affect the exercise of the best judgment of the association in acquiring the property; or
DFI-SL 17.10(1)(b)
(b) Stock or obligations of, or property acquired from, affiliates of the association or their directors, officers or employees.
DFI-SL 17.10(2)
(2) Loans. No association may lend any officer, director, or employee any funds held in trust under the powers conferred by this chapter.
DFI-SL 17.10(3)
(3) Sale or transfer. Property held by an association as fiduciary shall not be sold or transferred, by loan or otherwise, to the association or its directors, officers, or employees, or to individuals with whom there exists a connection, or organizations in which there exists such an interest, which may affect the exercise of the best judgment of the association in selling or transferring the property, or to affiliates of the association or their directors, officers or employees, except:
DFI-SL 17.10(3)(a)
(a) When lawfully authorized by the instrument creating the relationship or by court order or by local law;
DFI-SL 17.10(3)(b)
(b) The association may, if it has been advised by its counsel in writing that it has incurred as fiduciary a contingent or potential liability and desires to relieve itself from the liability, so sell or transfer property with the approval of the board of directors and the division. The association, upon the consummation of the sale or transfer, shall make reimbursement in cash at no loss to the account;
DFI-SL 17.10(3)(c)
(c) As provided in the laws and rules governing collective investments; or
DFI-SL 17.10(4)
(4) Investment in stock of association. Except as provided in s.
DFI-SL 17.08, funds held by an association as fiduciary shall not be invested by the purchase of stock or obligations of the association or its affiliates unless authorized by the instrument creating the relationship or by court order or by local law. However, if the retention of stock or obligations of the association or its affiliates is authorized by the instrument creating the relationship or by court order or by local law, it may exercise rights to purchase its own stock or securities convertible into its own stock when offered pro rata to stockholders, unless forbidden by local law. When the exercise of rights or receipt of a stock dividend results in fractional share holdings, additional fractional shares may be purchased to complement the fractional shares so acquired. In elections of directors, an association's share held by the association as sole trustee, whether in its own name as trustee or in the name of its nominee, may not be voted by the registered owner unless, under the terms of the trust, the manner in which the shares shall be voted may be determined by a donor or beneficiary of the trust and the donor or beneficiary actually directs how the shares will be voted.
DFI-SL 17.10(5)(a)(a) An association may sell assets held by it as fiduciary in one account to itself as fiduciary in another account if the transaction is fair to both accounts and if such transaction is not prohibited by the terms of any governing instrument or by local law.
DFI-SL 17.10(5)(b)
(b) An association may make a loan to an account from the funds belonging to another account, when the making of loans to a designated account is authorized by the instrument creating the account from which the loans are made, and is not prohibited by local law, and the terms of the transaction are fair to all accounts.
DFI-SL 17.10(5)(c)
(c) An association may make a loan to an account and may take as security assets of the account, provided the transaction is fair to the account and is not prohibited by local law.
DFI-SL 17.10 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.11(1)(1)
Segregation of trust assets and joint custody. The investments of each account shall be kept separate from the assets of the association, and shall be placed in the joint custody or control of not fewer than 2 of the officers or employees of the association designated for that purpose either by the board of directors of the association or by one or more officers designated by the board of directors of the association, and all such officers and employees shall be adequately bonded. To the extent permitted by law, an association may permit the investments of a fiduciary account to be deposited elsewhere.
DFI-SL 17.11(2)
(2) Segregation of accounts. The investments of each account shall be either:
DFI-SL 17.11 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.12(1)(1)
General. If the amount of the compensation for acting in a fiduciary capacity is not regulated by local law or provided for in the instrument creating the fiduciary relationship or otherwise agreed to by the parties, an association acting in such capacity may charge or deduct a reasonable compensation for its services. When the association is acting in a fiduciary capacity under appointment by a court, it shall receive the compensation allowed or approved by that court or by local law.
DFI-SL 17.12(2)
(2) Officer or employee of association as co-fiduciary. No association may except with the specific approval of its board of directors, permit any of its officers or employees, while serving as a co-fiduciary, to retain any compensation for acting as a co-fiduciary with the association in the administration of any account undertaken by it.
DFI-SL 17.12(3)
(3) Bequests or gifts to trust officers and employees. No association may permit an officer or employee engaged in the operation of its trust department to accept a bequest or gift of assets held in a fiduciary capacity by the association unless the bequest or gift is directed or made by a relative or is approved by the board of directors of the association.
DFI-SL 17.12 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.13(1)(1)
When not prohibited by local law, funds held by an association as fiduciary may be held in:
DFI-SL 17.13(1)(a)
(a) A common trust fund maintained by the association exclusively for the collective investment and reinvestment of moneys contributed to the common trust fund by the association in its capacity as trustee, executor, administrator, personal representative, guardian, or custodian under a uniform gifts to minor act;
DFI-SL 17.13(1)(b)
(b) A fund consisting solely of assets of retirement, pension, profit sharing, stock bonus or other trusts which are exempt from federal income taxation under the Internal Revenue Code.
DFI-SL 17.13(2)
(2) Collective investments of funds or other property by an association under sub.
(1) shall be administered in accordance with s.
DFI-SL 17.14. Any documents required to be filed with the comptroller of the currency under
12 CFR 9.18 shall also be filed with the division who may review the documents for compliance with all relevant laws and rules.
DFI-SL 17.13(3)
(3) As used in this section and s.
DFI-SL 17.14, the term association includes 2 or more associations which are members of the same affiliated group with respect to any fund established under this section of which any of the affiliated associations is trustee, or of which 2 or more of the affiliated associations are co-trustees.
DFI-SL 17.13 History
History: Cr.
Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.14
DFI-SL 17.14
Common trust funds. Investment of funds or other property under s.
DFI-SL 17.13 shall be administered as follows:
DFI-SL 17.14(1)
(1) Each collective investment fund shall be established and maintained in accordance with a written plan which shall be approved by a resolution of the association's board of directors and filed with the division. A copy of the plan shall be available at the principal office of the association for inspection during all business hours, and upon request a copy of the plan shall be furnished to any person. The plan shall contain appropriate provisions not inconsistent with this chapter as to the manner in which the fund is to be operated. The plan shall include provisions relating to:
DFI-SL 17.14(1)(a)
(a) The investment powers and a general statement of the investment policy of the association with respect to the fund;
DFI-SL 17.14(1)(c)
(c) The terms and conditions governing the admission or withdrawal of participations in the fund;
DFI-SL 17.14(1)(d)
(d) The auditing of accounts of the association with respect to the fund;
DFI-SL 17.14(1)(e)
(e) The basis and method of valuing assets in the fund, setting forth specific criteria for each type of asset;
DFI-SL 17.14(1)(g)
(g) The period following each valuation date during which the valuation may be made (which period in usual circumstances shall not exceed 10 business days);
DFI-SL 17.14(1)(i)
(i) Other matters as may be necessary to define clearly the rights of participants in the fund.
DFI-SL 17.14(2)
(2) Property held by an association in its capacity as trustee of retirement, pension, profit-sharing, stock bonus or other trusts which are exempt from federal income taxation under any provisions of the Internal Revenue Code may be invested in collective investment funds established under s.
DFI-SL 17.13 (1) (a) or
(b) subject to restrictions under this section. Assets of retirement, pension, profit-sharing, stock bonus, or other trusts which are exempt from federal income taxation under section
401 of the Internal Revenue Code may be invested in collective investment funds established under s.
DFI-SL 17.13 (1) (b) if the fund qualifies for tax exemption under Revenue Ruling 56.267 and following rulings.
