Cal. Code Regs. Tit. 10, § 30.300 - Investments

Current through Register 2021 Notice Reg. No. 52, December 24, 2021

(a) Investments made by a credit union pursuant to Sections 14652,14653 and 14653.5 of the Financial Code shall be subject to the following provisions:

(1) The board of directors of a credit union shall adopt and review at least annually, and the credit union shall comply with, a written investment policy which sets out the goals of the credit union's investment portfolio with respect to the yield, maturity, liquidity and diversification of its investments.

(2) A credit union shall maintain documentary evidence that its investments are authorized pursuant to Sections 14652,14653 and 14653.5 of the Financial Code and meet the requirements of this Section.

(b) Pursuant to Section 14653.5 of the Financial Code, a credit union is authorized to make the following investments:

(1) Federal Funds: A credit union may sell funds to authorized financial institutions, provided that the interest or other consideration received from the authorized financial institution is the market value of federal funds transactions and that the transaction has a maturity of one or more business days or the credit union is able to require repayment at any time.

(2) Yankee Dollars: A credit union may invest in Yankee Dollar deposits in a United States branch of a foreign bank licensed to do business in the state in which it is located or in a state-chartered, foreign-controlled bank, if the branch of the foreign bank or the foreign-controlled bank are insured by the Federal Deposit Insurance Corporation.

(3) Eurodollar Deposits: A credit union may invest in Eurodollar deposits in a branch of an authorized financial institution.

(4) Bankers' Acceptances: A credit union may invest in bankers' acceptances issued by a bank insured by the Federal Deposit Insurance Corporation.

(5) Deposits: A credit union may invest in deposits of authorized financial institutions.

(6) Mutual funds or trusts: A credit union may invest in an "investment company" (commonly known as a "mutual fund") as defined in the Investment Company Act of 1940 ( 15 U.S.C. Sec. 80a-1 et seq.) or trusts provided all investments and investment practices of the investment company or trust would be permissible if made directly by the credit union or federal credit unions.

(c) Credit unions may not engage in the following investment activities with respect to investments authorized by Subdivision (b):

(1) A credit union may not buy or sell a standby commitment.

(2) A credit union may not buy or sell a futures contract.

(3) A credit union may not engage in adjusted trading.

(4) A credit union may not engage in a short sale.

(5) A credit union's directors, officials, committee members and employees, and their immediate family members, may not receive pecuniary consideration in connection with the making of an investment or deposit by the credit union.

(d) For purposes of Subdivisions (b) and (c) of this Section, the following definitions shall apply:

(1) "Adjusted trading" means any method or transaction used to defer a loss whereby a credit union sells a security to a vendor at a price above its current market price and simultaneously purchases or commits to purchase from the vendor another security at a price above its current market price.

(2) "Authorized financial institution" means a national bank, state bank, trust company, savings association, credit union, or other financial institution which is organized under the laws of the State of California, or which is insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund.

(3) "Bankers' acceptance" means a time draft that is drawn on and accepted by a bank, and that represents an irrevocable obligation of the bank.

(4) "Eurodollar deposit" means a deposit in a foreign branch of a United States depository institution.

(5) "Federal funds transaction" means a short-term or open-ended transfer of funds to an authorized financial institution.

(6) "Futures contract" means a contract for the future delivery of commodities, including certain government securities, sold on commodities exchanges.

(7) "Immediate family member" means a spouse, or a child, parent, grandchild, grandparent, brother or sister, or the spouse of any such individual.

(8) "Market price" means the last established price at which a security is sold.

(9) "Maturity date" means the date on which a security matures, and shall not mean the call date or the average life of the security.

(10) "Security" means any security, obligation, account, deposit, or other item authorized for investment by a credit union.

(11) "Short sale" means the sale of a security not owned by the seller.

(12) "Standby commitment" means a commitment to either buy or sell a security, on or before a future date, at a predetermined price. The seller of the commitment is the party receiving payment for assuming the risk associated with committing either to purchase a security in the future at a predetermined price, or to sell a security in the future at a predetermined price. The seller of the commitment is required to either accept delivery of a security (in the case of a commitment to buy) or make delivery of a security (in the case of a commitment to sell), in either case at the option of the buyer of the commitment.

(13) "Yankee Dollar deposit" means a deposit in a United States branch of a foreign bank licensed to do business in the state in which it is located, or a deposit in a state chartered, foreign controlled bank.

Notes

Cal. Code Regs. Tit. 10, § 30.300

Note: Authority cited: Section 14201, Financial Code. Reference: Sections 14652,14653 and 14653.5, Financial Code.

1. Change without regulatory effect adding new article 3 (sections 30.300-30.307) and renumbering and amending former section 922 to new section 30.300 filed 8-19-97 pursuant to section 100, title 1, California Code of Regulations (Register 97, No. 34).
2. Amendment of section and Note filed 2-27-2003; operative 3-29-2003 (Register 2003, No. 9).