Kan. Admin. Regs. § 17-23-8 - Self-dealing
(a) Unless lawfully
authorized by the instrument creating the relationship, by court order or by
the laws of the state of Kansas, funds of a fiduciary account for which a bank
or trust company has investment discretion shall not be invested in stock or
obligations of, or property acquired from any of the following:
(1) The bank or trust company, or its
directors, officers, or employees, or individuals with whom there exists such a
connection;
(2) organizations in
which there exists an interest that might affect the exercise of the best
judgment of the bank or trust company in acquiring the property; or
(3) affiliates of the bank or trust company,
or their directors, officers or employees.
(b)
(1) A
bank or trust company shall not lend, sell, or otherwise transfer assets of a
fiduciary account for which a bank or trust company has investment discretion
to the bank or trust company or any of its directors, officers, or employees,
or to affiliates of the bank or trust company or any of their directors,
officers, or employees, or to individuals or organizations with whom there
exists an interest that might affect the exercise of the best judgment of the
bank or trust company, unless any of the following conditions is met:
(A) The transaction is lawfully authorized by
the instrument creating the relationship, by written direction from the person
or persons holding the power to amend or terminate the trust, by court order or
by the laws of the state of Kansas;
(B) legal counsel advises the bank or trust
company in writing that the bank or trust company has incurred, in its
fiduciary capacity, a contingent or potential liability, and the bank or trust
company desires to relieve itself from the contingent or potential liability.
In this case, the bank or trust company, upon the consummation of the sale or
transfer of assets, shall make reimbursement in cash at the greater of book or
market value of the assets to the fiduciary account;
(C) the transaction is authorized as is
provided in paragraph (b)(8)(B) of K.A.R. 17-23-11 ; or
(D) the transaction is required in writing by
the state bank commissioner.
(2) Notwithstanding paragraph (b)(1), a bank
or trust company may lend funds held in trust to participants and beneficiaries
of employee benefit plans in accordance with the exemptions found in section
408 of the employee retirement income security act of 1974, 29 U.S.C. §
1108, as
in effect on December 17, 1999, which is hereby adopted by reference.
(c) Except as provided
in subsection (b) of K.A.R. 17-23-6, funds of a fiduciary account for which a
bank or trust company has investment discretion shall not be invested by the
purchase of stock or obligations of the bank or trust company or its affiliates
unless authorized by the instrument creating the relationship, by court order,
or by the laws of the state of Kansas.
(1) If
the retention of stock or obligations of the bank or trust company or its
affiliates is authorized by the instrument creating the relationship, by court
order, or by the laws of the state of Kansas, it may exercise rights to
purchase its own stock, or securities convertible into its own stock, when
offered pro rata to stockholders.
(2) If the exercise of rights or receipts of
a stock dividend results in fractional share holdings, additional fractional
shares may be purchased to complement the fractional shares so acquired.
(d) A bank or trust
company 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 is
not prohibited by any governing instrument.
(e) A bank or trust company may make a loan
to an account from the funds belonging to another account, if the making of
these loans to a designated account is authorized by the instrument creating
the account from which the loans are made.
(f) A bank or trust company may make a loan
to an account and may take as security assets of the account, if the
transaction is fair to the account.
(g) Except with the specific written approval
of its board of directors, a bank or trust company shall not permit any of its
current officers or employees to retain any compensation for acting as a
cofiduciary with the bank or trust company in the administration of any account
undertaken by it.
Notes
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