PART 9—FIDUCIARY ACTIVITIES OF NATIONAL BANKS Authority: 12 U.S.C. 24 (Seventh), 92a, and 93a; 15 U.S.C. 78q, 78q-1, and 78w. Source: 61 FR 68554, Dec. 30, 1996, unless otherwise noted. Regulations § 9.1 Authority, purpose, and scope. (a) Authority. (b) Purpose. (c) Scope. § 9.2 Definitions. For the purposes of this part, the following definitions apply: (a) Affiliate (b) Applicable law (c) Custodian under a uniform gifts to minors act (d) Fiduciary account (e) Fiduciary capacity (f) Fiduciary officers and employees (g) Fiduciary powers (h) Guardian (i) Investment discretion (j) Trust office (k) Trust representative office e.g., [61 FR 68554, Dec. 30, 1996, as amended at 66 FR 34797, July 2, 2001] § 9.3 Approval requirements. (a) A national bank may not exercise fiduciary powers unless it obtains prior approval from the OCC to the extent required under 12 CFR 5.26. (b) A national bank that has obtained the OCC s approval to exercise fiduciary powers is not required to obtain the OCC s prior approval to engage in any of the activities specified in § 9.7(d) in a new state or to conduct, in a new state, activities that are ancillary to its fiduciary business. Instead, the national bank must follow the notice procedures prescribed by 12 CFR 5.26(e). (c) A person seeking approval to organize a special-purpose national bank limited to fiduciary powers shall file an application with the OCC pursuant to 12 CFR 5.20. [61 FR 68554, Dec. 30, 1996, as amended at 66 FR 34798, July 2, 2001] § 9.4 Administration of fiduciary powers. (a) Responsibilities of the board of directors. (b) Use of other personnel. (c) Agency agreements. (d) Bond requirement. § 9.5 Policies and procedures. A national bank exercising fiduciary powers shall adopt and follow written policies and procedures adequate to maintain its fiduciary activities in compliance with applicable law. Among other relevant matters, the policies and procedures should address, where appropriate, the bank's: (a) Brokerage placement practices; (b) Methods for ensuring that fiduciary officers and employees do not use material inside information in connection with any decision or recommendation to purchase or sell any security; (c) Methods for preventing self-dealing and conflicts of interest; (d) Selection and retention of legal counsel who is readily available to advise the bank and its fiduciary officers and employees on fiduciary matters; and (e) Investment of funds held as fiduciary, including short-term investments and the treatment of fiduciary funds awaiting investment or distribution. § 9.6 Review of fiduciary accounts. (a) Pre-acceptance review. (b) Initial post-acceptance review. (c) Annual review. § 9.7 Multi-state fiduciary operations. (a) Acting in a fiduciary capacity in more than one state. (1) Any of the eight fiduciary capacities expressly listed in 12 U.S.C. 92a(a), unless the state prohibits its own state banks, trust companies, and other corporations that compete with national banks in that state from acting in that capacity; and (2) Any other fiduciary capacity the state permits for its own state banks, trust companies, or other corporations that compete with national banks in that state. (b) Serving customers in other states. (c) Offices in more than one state. (d) Determination of the state referred to in 12 U.S.C. 92a. (e) Application of state law State laws used in section 92a. (2) Other state laws. [66 FR 34798, July 2, 2001] § 9.8 Recordkeeping. (a) Documentation of accounts. (b) Retention of records. (c) Separation of records. § 9.9 Audit of fiduciary activities. (a) Annual audit. (b) Continuous audit. i.e., (c) Fiduciary audit committee. (1) Must not include any officers of the bank or an affiliate who participate significantly in the administration of the bank's fiduciary activities; and (2) Must consist of a majority of members who are not also members of any committee to which the board of directors has delegated power to manage and control the fiduciary activities of the bank. § 9.10 Fiduciary funds awaiting investment or distribution. (a) In general. (b) Self-deposits In general. (2) Acceptable collateral. (i) Direct obligations of the United States, or other obligations fully guaranteed by the United States as to principal and interest; (ii) Securities that qualify as eligible for investment by national banks pursuant to 12 CFR part 1; (iii) Readily marketable securities of the classes in which state banks, trust companies, or other corporations exercising fiduciary powers are permitted to invest fiduciary funds under applicable state law; (iv) Surety bonds, to the extent they provide adequate security, unless prohibited by applicable law; and (v) Any other assets that qualify under applicable state law as appropriate security for deposits of fiduciary funds. (c) Affiliate deposits. § 9.11 Investment of fiduciary funds. A national bank shall invest funds of a fiduciary account in a manner consistent with applicable law. § 9.12 Self-dealing and conflicts of interest. (a) Investments for fiduciary accounts In general. (2) Additional securities investments. (i) Exercise rights to purchase additional stock (or securities convertible into additional stock) when offered pro rata to stockholders; and (ii) Purchase fractional shares to complement fractional shares acquired through the exercise of rights or the receipt of a stock dividend resulting in fractional share holdings. (b) Loans, sales, or other transfers from fiduciary accounts In general. (i) The transaction is authorized by applicable law; (ii) Legal counsel advises the bank in writing that the bank has incurred, in its fiduciary capacity, a contingent or potential liability, in which case the bank, upon the sale or transfer of assets, shall reimburse the fiduciary account in cash at the greater of book or market value of the assets; (iii) As provided in § 9.18(b)(8)(iii) for defaulted investments; or (iv) Required in writing by the OCC. (2) Loans of funds held as trustee. (c) Loans to fiduciary accounts. (d) Sales between fiduciary accounts. (e) Loans between fiduciary accounts. § 9.13 Custody of fiduciary assets. (a) Control of fiduciary assets. (b) Separation of fiduciary assets. [61 FR 68554, Dec. 30, 1996, as amended at 82 FR 8105, Jan. 23, 2017] § 9.14 Deposit of securities with state authorities. (a) In general. (b) Acting in a fiduciary capacity in more than one state. e.g., [61 FR 68554, Dec. 30, 1996, as amended at 66 FR 34798, July 2, 2001; 82 FR 8105, Jan. 23, 2017] § 9.15 Fiduciary compensation. (a) Compensation of bank. (b) Compensation of co-fiduciary officers and employees. § 9.16 Receivership or voluntary liquidation of bank. If the OCC appoints a receiver for an uninsured national bank, or if a national bank places itself in voluntary liquidation, the receiver or liquidating agent shall promptly close or transfer to a substitute fiduciary all fiduciary accounts, in accordance with OCC instructions and the orders of the court having jurisdiction. § 9.17 Surrender or revocation of fiduciary powers. (a) Surrender. (b) Revocation. § 9.18 Collective investment funds. (a) In general. 1 1 (1) A fund maintained by the bank, or by one or more affiliated banks, 2 2 See (2) A fund consisting solely of assets of retirement, pension, profit sharing, stock bonus or other trusts that are exempt from Federal income tax. (i) A national bank may invest assets of retirement, pension, profit sharing, stock bonus, or other trusts exempt from Federal income tax and that the bank holds in its capacity as trustee in a collective investment fund established under paragraph (a)(1) or (a)(2) of this section. (ii) A national bank may invest assets of retirement, pension, profit sharing, stock bonus, or other employee benefit trusts exempt from Federal income tax and that the bank holds in any capacity (including agent), in a collective investment fund established under this paragraph (a)(2) if the fund itself qualifies for exemption from Federal income tax. (b) Requirements. (1) Written plan. (i) Investment powers and policies with respect to the fund; (ii) Allocation of income, profits, and losses; (iii) Fees and expenses that will be charged to the fund and to participating accounts; (iv) Terms and conditions governing the admission and withdrawal of participating accounts; (v) Audits of participating accounts; (vi) Basis and method of valuing assets in the fund; (vii) Expected frequency for income distribution to participating accounts; (viii) Minimum frequency for valuation of fund assets; (ix) Amount of time following a valuation date during which the valuation must be made; (x) Bases upon which the bank may terminate the fund; and (xi) Any other matters necessary to define clearly the rights of participating accounts. (2) Fund management. 3 3 et seq. (3) Proportionate interests. (4) Valuation Frequency of valuation. (ii) General method of valuation. (iii) Short-term investment funds (STIFs) method of valuation. (A) Operate with a stable net asset value of $1.00 per participating interest as a primary fund objective; (B) Maintain a dollar-weighted average portfolio maturity of 60 days or less and a dollar-weighted average portfolio life maturity of 120 days or less as determined in the same manner as is required by the Securities and Exchange Commission pursuant to Rule 2a-7 for money market mutual funds (17 CFR 270.2a-7); (C) Accrue on a straight-line or amortized basis the difference between the cost and anticipated principal receipt on maturity; (D) Hold the STIF's assets until maturity under usual circumstances; (E) Adopt portfolio and issuer qualitative standards and concentration restrictions; (F) Adopt liquidity standards that include provisions to address contingency funding needs; (G) Adopt shadow pricing procedures that: ( 1 ( 2 (H) Adopt procedures for stress testing the STIF's ability to maintain a stable net asset value per participating interest that shall provide for: ( 1 ( 2 ( 3 ( 4 (I) Adopt procedures that require a bank to disclose to STIF participants and to the OCC's Asset Management Group, Credit & Market Risk Division, within five business days after each calendar month-end, the fund's total assets under management (securities and other assets including cash, minus liabilities); the fund's mark-to-market and amortized cost net asset values both with and without capital support agreements; the dollar-weighted average portfolio maturity; the dollar-weighted average portfolio life maturity of the STIF as of the last business day of the prior calendar month; and for each security held by the STIF as of the last business day of the prior calendar month: ( 1 ( 2 ( 3 ( 4 ( 5 ( 6 ( 7 ( 8 (J) Adopt procedures that require a bank that administers a STIF to notify the OCC's Asset Management Group, Credit & Market Risk Division, prior to or within one business day thereafter of the following: ( 1 ( 2 ( 3 ( 4 ( 5 ( 6 (K) Adopt procedures that in the event a STIF has re-priced its net asset value below $0.995 per participating interest, the bank administering the STIF shall calculate, admit, and withdraw the STIF's participating interests at a price based on the mark-to-market net asset value; and (L) Adopt procedures that, in the event a bank suspends or limits withdrawals and initiates liquidation of the STIF as a result of redemptions, require the bank to: ( 1 ( 2 ( 3 (iv) Reservation of authority. (A) The OCC may issue an administrative order specifying, for purposes of paragraph (b)(4)(iii)(B) of this section, temporary revisions to the length of the dollar-weighted average portfolio maturity requirement, the length of dollar-weighted average portfolio life maturity, and the manner of determining such limits; (B) A bank seeking to comply with paragraph (b)(4)(iii)(B) will be deemed to be in compliance with that paragraph's requirements by complying with the limits or other revisions, and any applicable conditions, described in the administrative order; and (C) The OCC will publish the administrative order on www.occ.gov (5) Admission and withdrawal of accounts In general. (ii) Prior request or notice. (iii) Prior notice period for withdrawals from funds with assets not readily marketable. (B) A bank that requires a prior notice period for withdrawals must withdraw an account from the fund within the prior notice period or, if permissible under the fund's written plan, within one year after the date on which notice was required, except as described in paragraph (b)(5)(iii)(C) of this section. (C) A bank may withdraw an account from the fund up to one year after the withdrawal period described in paragraph (b)(5)(iii)(B) of this section, with the OCC's approval, provided that the following conditions are met: ( 1 ( 2 ( 3 ( 4 ( 5 (D) Upon request by a bank, the OCC may approve an extension beyond the one-year extension period described in paragraph (b)(5)(iii)(C) of this section if the OCC determines that the bank has made a good faith effort to satisfy withdrawal requests and the bank has been unable to satisfy such requests without causing harm to participants due to ongoing severe market conditions. The bank must also continue to satisfy the conditions described in paragraph (b)(5)(iii)(C) of this section. Extensions under this paragraph must be requested and approved annually, for a maximum of two years after the initial one-year extension period. (iv) Method of distributions. (v) Segregation of investments. (6) Audits and financial reports Annual audit. 4 4 et seq. (ii) Financial report. (A) A summary of purchases (with costs); (B) A summary of sales (with profit or loss and any other investment changes); (C) Income and disbursements; and (D) An appropriate notation of any investments in default. (iii) Limitation on representations. (iv) Availability of the report. (7) Advertising restriction. (8) Self-dealing and conflicts of interest. (i) Bank interests. (ii) Loans to participating accounts. (iii) Purchase of defaulted investments. (9) Management fees. (i) The fee is permitted under applicable law (and complies with fee disclosure requirements, if any) in the state in which the bank maintains the fund; and (ii) The amount of the fee does not exceed an amount commensurate with the value of legitimate services of tangible benefit to the participating fiduciary accounts that would not have been provided to the accounts were they not invested in the fund. (10) Expenses. (11) Prohibition against certificates. (12) Good faith mistakes. (c) Other collective investments. (1) Single loans or obligations. (i) A single real estate loan, a direct obligation of the United States, or an obligation fully guaranteed by the United States, or a single fixed amount security, obligation, or other property, either real, personal, or mixed, of a single issuer; or (ii) A variable amount note of a borrower of prime credit, if the bank uses the note solely for investment of funds held in its fiduciary accounts. (2) Mini-funds. (3) Trust funds of corporations and closely-related settlors. (4) Other authorized funds. (5) Special exemption funds. 5 5 (i) The reason that the proposed fund requires a special exemption; (ii) The provisions of the proposed fund that are inconsistent with paragraphs (a) and (b) of this section; (iii) The provisions of paragraph (b) of this section for which the bank seeks an exemption; and (iv) The manner in which the proposed fund addresses the rights and interests of participating accounts. [61 FR 68554, Dec. 30, 1996, as amended at 68 FR 70131, Dec. 17, 2003; 77 FR 61237, Oct. 9, 2012; 82 FR 8105, Jan. 23, 2017; 85 FR 16892, Mar. 25, 2020; 85 FR 49232, Aug. 13, 2020; 86 FR 28241, May 26, 2021] § 9.20 Transfer agents. (a)(1) Registration. (2) Amendments to registration. (3) Withdrawal from registration. (4) Reports. (b) Operational and reporting requirements. [73 FR 22242, Apr. 24, 2008] Interpretations § 9.100 Acting as indenture trustee and creditor. With respect to a debt securities issuance, a national bank may act both as indenture trustee and as creditor until 90 days after default, if the bank maintains adequate controls to manage the potential conflicts of interest. § 9.101 Providing investment advice for a fee. (a) In general. (b) Specific activities Full-service brokerage. et seq. (2) Activities not involving investment advice for a fee. (i) Financial advisory and counseling activities, including strategic planning of a financial nature, merger and acquisition advisory services, advisory and structuring services related to project finance transactions, and providing market economic information to customers in general; (ii) Client-directed investment activities ( i.e., (iii) Investment advisory activities incidental to acting as a municipal securities dealer; (iv) Real estate management services provided to other financial institutions; (v) Real estate consulting services, including acting as a finder in locating, analyzing, and making recommendations regarding the purchase of property, and making recommendations concerning the sale of property; (vi) Advisory activities concerning bridge loans; (vii) Advisory activities for homeowners' associations; (viii) Advisory activities concerning tax planning and structuring; and (ix) Investment advisory activities authorized by the OCC under 12 U.S.C. 24(Seventh) as incidental to the business of banking. [63 FR 6473, Feb. 9, 1998]