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DFI-SL 17.04 Note Note: This section parallels 12 CFR 550.5 and 12 USC 1464 (n) (7).
DFI-SL 17.04 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.05 DFI-SL 17.05 Books and accounts.
DFI-SL 17.05(1)(1)General. Every association exercising trust powers shall keep its fiduciary records separate and distinct from other records of the association. All fiduciary records shall be kept and retained for such time as to enable the association to furnish any information or reports with respect to the records as may be required by the division. The fiduciary records shall contain full information on each account.
DFI-SL 17.05(2) (2) Record of pending litigation. Every association shall keep an adequate record of all pending litigation to which it is a party in connection with its exercise of trust powers.
DFI-SL 17.05 Note Note: This section parallels 12 CFR 550.6.
DFI-SL 17.05 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.06 DFI-SL 17.06 Audit of trust department. At least once during each calendar year, the association's trust department shall be audited by auditors in a manner consistent with s. 215.25, Stats. A copy of the report of the audit shall be promptly filed with the division. Trust department audits may be made as part of the audits required by s. 215.25, Stats.
DFI-SL 17.06 Note Note: This section parallels 12 CFR 550.7.
DFI-SL 17.06 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.07 DFI-SL 17.07 Segregation of assets; prohibited deposits. Associations exercising any of the powers enumerated in this chapter shall segregate all assets held in any fiduciary capacity from the general assets of the association. No association may receive in its trust department deposits of current funds subject to check or the deposit of checks, drafts, bills of exchange, or other items for collection or exchange purposes.
DFI-SL 17.07 Note Note: This section parallels 12 USC 1464 (n) (3) and (4) and is intended to prohibit operating a check clearing exchange through a trust account.
DFI-SL 17.07 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.08 DFI-SL 17.08 Funds awaiting investment or distribution.
DFI-SL 17.08(1)(1)General. Funds held in a fiduciary capacity by an association awaiting investment or distribution may not be held uninvested or undistributed any longer than is reasonable for the proper management of the account.
DFI-SL 17.08(2) (2) Use by association in regular business. Funds held in trust by an association, including managing agency accounts, awaiting investment or distribution may, unless prohibited by the instrument creating the trust or by local law, be deposited in other departments of the association, except the association shall first set aside under control of the trust department as collateral security:
DFI-SL 17.08(2)(a) (a) Direct obligations of the United States, or other obligations fully guaranteed by the United States as to principal and interest;
DFI-SL 17.08(2)(b) (b) Readily marketable securities of the classes in which state chartered corporate fiduciaries may invest trust funds; or
DFI-SL 17.08(2)(c) (c) Other readily marketable securities as the division may determine.
DFI-SL 17.08(3) (3) Contingent lien. An association shall ensure that in the event of its failure, the owners of the funds held in trust for investment under this chapter shall have a lien on the bonds or other securities set apart under sub. (2) in addition to their claim against the estate of the association.
DFI-SL 17.08(4) (4) Amount of collateral. Collateral securities or securities substituted for collateral securities as collateral shall at all times be at least equal in face value to the amount of trust funds deposited under sub. (2), but the security is not required to the extent that the funds so deposited are insured by the federal deposit insurance corporation.
DFI-SL 17.08(5) (5) Productivity. Any funds held by an association as fiduciary awaiting investment or distribution and deposited in other departments of the association shall be made productive.
DFI-SL 17.08 Note Note: This section parallels 12 CFR 550.8 and 12 USC 1464 (n) (5).
DFI-SL 17.08 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89; CR 23-039: am. (4) Register March 2024 No. 819, eff. 4-1-24.
DFI-SL 17.09 DFI-SL 17.09 Investment of funds held as fiduciary.
DFI-SL 17.09(1)(1)Private trusts. Funds held by an association in a fiduciary capacity shall be invested in accordance with the instrument establishing the fiduciary relationship and local law. If the instrument does not specify the character or class of investments to be made and does not give the association, its directors, or its officers investment discretion in the matter, funds held under the instrument may be invested in any investment in which state chartered corporate fiduciaries may invest under local law.
DFI-SL 17.09(2) (2) Court trusts. If, under local law, corporate fiduciaries appointed by a court are permitted to exercise discretion in investments, or if an association acting as fiduciary under appointment by a court is vested with discretion in investments by an order of the court, funds of the accounts may be invested in any investments which are permitted by local law. Otherwise, an association acting as fiduciary under appointment by a court shall make all investments of funds in such accounts under an order of that court. The orders in either case shall be preserved with the fiduciary records of the association.
DFI-SL 17.09(3) (3) Collective investment of trust funds. The collective investment of funds received or held by an association as fiduciary is governed by ss. DFI-SL 17.13 and 17.14.
DFI-SL 17.09 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.10 DFI-SL 17.10 Self-dealing.
DFI-SL 17.10(1)(1)Purchases. Unless authorized by the instrument creating the relationship, or by court order or local law, funds held by an association as fiduciary shall not be invested in:
DFI-SL 17.10(1)(a) (a) Stock or obligations of, or property acquired from, the association or its directors, officers, or employees, or individuals with whom there exists a connection, or organizations in which there exists an interest, which may affect the exercise of the best judgment of the association in acquiring the property; or
DFI-SL 17.10(1)(b) (b) Stock or obligations of, or property acquired from, affiliates of the association or their directors, officers or employees.
DFI-SL 17.10(2) (2) Loans. No association may lend any officer, director, or employee any funds held in trust under the powers conferred by this chapter.
DFI-SL 17.10(3) (3) Sale or transfer. Property held by an association as fiduciary shall not be sold or transferred, by loan or otherwise, to the association or its directors, officers, or employees, or to individuals with whom there exists a connection, or organizations in which there exists such an interest, which may affect the exercise of the best judgment of the association in selling or transferring the property, or to affiliates of the association or their directors, officers or employees, except:
DFI-SL 17.10(3)(a) (a) When lawfully authorized by the instrument creating the relationship or by court order or by local law;
DFI-SL 17.10(3)(b) (b) The association may, if it has been advised by its counsel in writing that it has incurred as fiduciary a contingent or potential liability and desires to relieve itself from the liability, so sell or transfer property with the approval of the board of directors and the division. The association, upon the consummation of the sale or transfer, shall make reimbursement in cash at no loss to the account;
DFI-SL 17.10(3)(c) (c) As provided in the laws and rules governing collective investments; or
DFI-SL 17.10(3)(d) (d) When required by the division.
DFI-SL 17.10(4) (4) Investment in stock of association. Except as provided in s. DFI-SL 17.08, funds held by an association as fiduciary shall not be invested by the purchase of stock or obligations of the association or its affiliates unless authorized by the instrument creating the relationship or by court order or by local law. However, if the retention of stock or obligations of the association or its affiliates is authorized by the instrument creating the relationship or by court order or by local law, it may exercise rights to purchase its own stock or securities convertible into its own stock when offered pro rata to stockholders, unless forbidden by local law. When the exercise of rights or receipt of a stock dividend results in fractional share holdings, additional fractional shares may be purchased to complement the fractional shares so acquired. In elections of directors, an association's share held by the association as sole trustee, whether in its own name as trustee or in the name of its nominee, may not be voted by the registered owner unless, under the terms of the trust, the manner in which the shares shall be voted may be determined by a donor or beneficiary of the trust and the donor or beneficiary actually directs how the shares will be voted.
DFI-SL 17.10(5) (5) Transactions between accounts.
DFI-SL 17.10(5)(a) (a) An association 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 if such transaction is not prohibited by the terms of any governing instrument or by local law.
DFI-SL 17.10(5)(b) (b) An association may make a loan to an account from the funds belonging to another account, when the making of loans to a designated account is authorized by the instrument creating the account from which the loans are made, and is not prohibited by local law, and the terms of the transaction are fair to all accounts.
DFI-SL 17.10(5)(c) (c) An association may make a loan to an account and may take as security assets of the account, provided the transaction is fair to the account and is not prohibited by local law.
DFI-SL 17.10 Note Note: This section parallels 12 CFR 550.10 and 12 USC 1464 (n) (8).
DFI-SL 17.10 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.11 DFI-SL 17.11 Custody of investments.
DFI-SL 17.11(1)(1)Segregation of trust assets and joint custody. The investments of each account shall be kept separate from the assets of the association, and shall be placed in the joint custody or control of not fewer than 2 of the officers or employees of the association designated for that purpose either by the board of directors of the association or by one or more officers designated by the board of directors of the association, and all such officers and employees shall be adequately bonded. To the extent permitted by law, an association may permit the investments of a fiduciary account to be deposited elsewhere.
DFI-SL 17.11(2) (2) Segregation of accounts. The investments of each account shall be either:
DFI-SL 17.11(2)(a) (a) Kept separate from those of all other accounts, except as provided in s. DFI-SL 17.13; or
DFI-SL 17.11(2)(b) (b) Adequately identified as the property of the relevant account.
DFI-SL 17.11 Note Note: This section parallels 12 CFR 550.11.
DFI-SL 17.11 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.12 DFI-SL 17.12 Compensation of association.
DFI-SL 17.12(1)(1)General. If the amount of the compensation for acting in a fiduciary capacity is not regulated by local law or provided for in the instrument creating the fiduciary relationship or otherwise agreed to by the parties, an association acting in such capacity may charge or deduct a reasonable compensation for its services. When the association is acting in a fiduciary capacity under appointment by a court, it shall receive the compensation allowed or approved by that court or by local law.
DFI-SL 17.12(2) (2) Officer or employee of association as co-fiduciary. No association may except with the specific approval of its board of directors, permit any of its officers or employees, while serving as a co-fiduciary, to retain any compensation for acting as a co-fiduciary with the association in the administration of any account undertaken by it.
DFI-SL 17.12(3) (3) Bequests or gifts to trust officers and employees. No association may permit an officer or employee engaged in the operation of its trust department to accept a bequest or gift of assets held in a fiduciary capacity by the association unless the bequest or gift is directed or made by a relative or is approved by the board of directors of the association.
DFI-SL 17.12 Note Note: This section parallels 12 CFR 550.12.
DFI-SL 17.12 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.13 DFI-SL 17.13 Collective investment.
DFI-SL 17.13(1)(1)When not prohibited by local law, funds held by an association as fiduciary may be held in:
DFI-SL 17.13(1)(a) (a) A common trust fund maintained by the association exclusively for the collective investment and reinvestment of moneys contributed to the common trust fund by the association in its capacity as trustee, executor, administrator, personal representative, guardian, or custodian under a uniform gifts to minor act;
DFI-SL 17.13(1)(b) (b) A fund consisting solely of assets of retirement, pension, profit sharing, stock bonus or other trusts which are exempt from federal income taxation under the Internal Revenue Code.
DFI-SL 17.13(2) (2)Collective investments of funds or other property by an association under sub. (1) shall be administered in accordance with s. DFI-SL 17.14. Any documents required to be filed with the comptroller of the currency under 12 CFR 9.18 shall also be filed with the division who may review the documents for compliance with all relevant laws and rules.
DFI-SL 17.13(3) (3)As used in this section and s. DFI-SL 17.14, the term association includes 2 or more associations which are members of the same affiliated group with respect to any fund established under this section of which any of the affiliated associations is trustee, or of which 2 or more of the affiliated associations are co-trustees.
DFI-SL 17.13 Note Note: This section parallels 12 CFR 550.13.
DFI-SL 17.13 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.
DFI-SL 17.14 DFI-SL 17.14 Common trust funds. Investment of funds or other property under s. DFI-SL 17.13 shall be administered as follows:
DFI-SL 17.14(1) (1)Each collective investment fund shall be established and maintained in accordance with a written plan which shall be approved by a resolution of the association's board of directors and filed with the division. A copy of the plan shall be available at the principal office of the association for inspection during all business hours, and upon request a copy of the plan shall be furnished to any person. The plan shall contain appropriate provisions not inconsistent with this chapter as to the manner in which the fund is to be operated. The plan shall include provisions relating to:
DFI-SL 17.14(1)(a) (a) The investment powers and a general statement of the investment policy of the association with respect to the fund;
DFI-SL 17.14(1)(b) (b) The allocation of income, profits and losses;
DFI-SL 17.14(1)(c) (c) The terms and conditions governing the admission or withdrawal of participations in the fund;
DFI-SL 17.14(1)(d) (d) The auditing of accounts of the association with respect to the fund;
DFI-SL 17.14(1)(e) (e) The basis and method of valuing assets in the fund, setting forth specific criteria for each type of asset;
DFI-SL 17.14(1)(f) (f) The minimum frequency for valuation of assets of the fund;
DFI-SL 17.14(1)(g) (g) The period following each valuation date during which the valuation may be made (which period in usual circumstances shall not exceed 10 business days);
DFI-SL 17.14(1)(h) (h) The basis upon which the fund may be terminated; and
DFI-SL 17.14(1)(i) (i) Other matters as may be necessary to define clearly the rights of participants in the fund.
DFI-SL 17.14(2) (2)Property held by an association in its capacity as trustee of retirement, pension, profit-sharing, stock bonus or other trusts which are exempt from federal income taxation under any provisions of the Internal Revenue Code may be invested in collective investment funds established under s. DFI-SL 17.13 (1) (a) or (b) subject to restrictions under this section. Assets of retirement, pension, profit-sharing, stock bonus, or other trusts which are exempt from federal income taxation under section 401 of the Internal Revenue Code may be invested in collective investment funds established under s. DFI-SL 17.13 (1) (b) if the fund qualifies for tax exemption under Revenue Ruling 56.267 and following rulings.
DFI-SL 17.14(3) (3)All participants in a collective investment fund shall be on the basis of a proportionate interest in all of the assets. In order to determine whether the investment of funds received or held by an association as fiduciary in a participation in a collective investment fund is proper, the association may consider the collective investment fund as a whole and shall not, for example, be prohibited from making the investment because any particular asset is non-income producing.
DFI-SL 17.14(4) (4)Not less frequently than once during each period of 3 months an association administering a collective investment fund shall determine the value of the assets in the fund as of the date set for the valuation of assets. No participation shall be admitted to or withdrawn from the fund except:
DFI-SL 17.14(4)(a) (a) On the basis of the valuation;
DFI-SL 17.14(4)(b) (b) As of the valuation date; and
DFI-SL 17.14(4)(c) (c) On written request for or notice of intention of taking that action which is entered on or before the valuation date in the fiduciary records of the association and approved in the manner the board of directors prescribes. No requests or notice may be canceled or countermanded after the valuation date.
DFI-SL 17.14(5)(a)(a) An association administering a collective investment fund shall at least once during each period of 12 months cause an adequate audit to be made of the collective investment fund by auditors responsible only to the board of directors of the association. In the event the audit is performed by independent public accountants, the reasonable expenses of the audit may be charged to the collective investment fund.
DFI-SL 17.14(5)(b) (b) An association administering a collective investment fund shall at least once during each period of 12 months prepare a financial report of the fund. This report, based upon the audit required under par. (a), shall contain a list of investments in the fund showing the cost and current market value of each investment; a statement for the period since the previous report showing purchases, with cost; sales, with profit or loss and any other investment changes; income and disbursements; and an appropriate notation as to any investments in default.
DFI-SL 17.14(5)(c) (c) The financial report under par. (b) may include a description of the fund's value on previous dates, as well as its income and disbursements during previous accounting periods. No predictions or representations as to future results may be made. In addition, as to funds described in s. DFI-SL 17.13 (1) (a) neither the report nor any other publication of the association may make reference to the performance of funds other than those administered by the association.
DFI-SL 17.14(5)(d) (d) A copy of the financial report required under par. (b) shall be furnished, or notice shall be given that a copy of the report is available and will be furnished without charge upon request, to each person to whom a regular periodic accounting would ordinarily be rendered with respect to each participating account. A copy of the financial report may be furnished to prospective customers. The cost of printing and distribution of these reports shall be borne by the association. In addition, a copy of the report shall be furnished upon request to any person for a reasonable charge. The fact of the availability of the report for any fund described in s. DFI-SL 17.13 (1) (a) may be given publicity solely in connection with the promotion of the fiduciary services of the association.
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Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published.