6-1229. Maintenance of permissible investments

461 words·~2 min read·/az/title-6/6-1229

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

A. A licensee shall maintain at all times permissible investments that have a market value computed in accordance with United States generally accepted accounting principles of not less than the aggregate amount of all of its outstanding money transmission obligations.

B. Except for permissible investments enumerated in section 6-1230, subsection A, the director may limit the extent to which a specific investment maintained by a licensee within a class of permissible investments may be considered a permissible investment if the specific investment represents undue risk to customers not reflected in the market value of investments.

C. Permissible investments, even if commingled with other assets of the licensee, are held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations in the event of insolvency, the filing of a petition by or against the licensee under the United States bankruptcy code (11 United States Code sections 101 through 112) for bankruptcy or reorganization, the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization or in an action by a creditor against the licensee that is not a beneficiary of this statutory trust.

A permissible investment impressed with a trust pursuant to this subsection is not subject to attachment, levy of execution or sequestration by order of any court, except for a beneficiary of this statutory trust.

D. On the establishment of a statutory trust pursuant to subsection C of this section or when any money is drawn on a letter of credit pursuant to section 6-1230, subsection A, paragraph 7, the director shall notify the applicable regulator of each state in which the licensee is licensed to engage in money transmission of the establishment of the trust or the money drawn on the letter of credit. Notice is satisfied if performed pursuant to a multistate agreement or through NMLS.

Money drawn on a letter of credit and any other permissible investments held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations are deemed held in trust for the benefit of such purchasers and holders on a pro rata and equitable basis in accordance with statutes pursuant to which permissible investments are required to be held in this state and other states, as applicable. A statutory trust is terminated on extinguishment of all of the licensee's outstanding money transmission obligations.

E. The director may allow other types of investments that the director determines are of sufficient liquidity and quality to be a permissible investment. The director may participate in efforts with other state regulators to determine that other types of investments are of sufficient liquidity and quality to be a permissible investment.