Current through Register 2021 Notice Reg. No. 52, December 24, 2021
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
the Financial Code, a credit union is authorized to make the following
(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.
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
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
Deposits: A credit union may invest in deposits of authorized financial
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.
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.
Credit unions may not engage in the
following investment activities with respect to investments authorized by
(1) A credit union may not
buy or sell a standby commitment.
(2) A credit union may not buy or sell a
(3) A credit
union may not engage in adjusted trading.
(4) A credit union may not engage in a short
(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.
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.
"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.
"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
(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.
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
(10) "Security" means any
security, obligation, account, deposit, or other item authorized for investment
by a credit union.
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