Sec. 36a-459a. Investment policy.
Sec. 36a-459a. Investment policy. (a) The governing board of a Connecticut
credit union shall adopt and implement a written investment policy governing investments made pursuant to this section and securities trading, if any. No Connecticut credit
union shall make any investment pursuant to this section unless the purchase and holding
of such investment is consistent with such policy. The policy shall establish standards
for the making of prudent investments which shall include (1) the rating of individual
investments by nationally recognized rating services, if any, and (2) standards for diversification of the credit union's investment portfolio among industry categories. The
policy shall provide for the frequent and periodic review by the credit union of investments made pursuant to the policy and shall provide for the reasonable and expeditious
divestiture of investments which the governing board, upon its review, no longer deems
prudent or consistent with the credit union's investment policy. The investment policy
and any investment made pursuant to the policy shall be subject to the supervision of
the commissioner concerning safe and sound credit union practices.
(b) The investment officer or investment committee, if any, shall act for the governing board between meetings of the governing board in all matters involving investment
of funds pursuant to this section. Such investment officer or committee shall report to
the governing board at each of its regular meetings, during which the governing board
shall review all investments made pursuant to this section, as well as details of any
securities trading engaged in by such credit union. The minutes of the governing board
meetings shall recite the results of each such review. The governing board shall cause
the credit union to use reasonable efforts to divest as expeditiously as possible any
investment which the governing board, upon its review, no longer deems prudent or
consistent with the Connecticut credit union's investment policy.
(c) A Connecticut credit union may invest its funds, which are not committed to
loans to members in: (1) Securities, obligations, or other instruments of, or issued by,
or fully guaranteed as to principal and interest by the United States or any of its agencies
or instrumentalities, or in any trusts established for investing directly or collectively in
such instruments; (2) general obligations and revenue obligations of any state or territory
of the United States, or any political subdivision thereof, provided such obligations
are rated in the three highest rating categories by a rating service of such obligations
recognized by the commissioner and no more than ten per cent of total assets may be
invested in any one issuer; (3) obligations or other instruments or securities of the Student
Loan Marketing Association; (4) federal funds, shares, share certificates or other share
deposits of any other Connecticut credit union, federal credit union or out-of-state credit
union whose share accounts or deposits are insured by the National Credit Union Administration, or its successor agency; (5) loans not exceeding twenty per cent of the lending
credit union's total assets to any other Connecticut credit union, federal credit union or
out-of-state credit union; (6) federal funds of or deposit accounts with a Connecticut
bank, federal bank or out-of-state bank the accounts of which are insured by the Federal
Deposit Insurance Corporation or its successor agency; (7) shares of, deposits with or
loans to any federal reserve bank or any central liquidity facility established under state
or federal law; (8) shares of, deposits with or loans to any corporate Connecticut credit
union, corporate federal credit union or corporate out-of-state credit union; (9) shares
of stock or obligations of or loans to a national or state credit union association or credit
union corporation of which the credit union is a member, provided such investment does
not constitute a controlling interest in such association or corporation or does not in the
aggregate exceed one per cent of the total assets of the credit union; (10) real estate and
improvements thereon, furniture, fixtures and equipment for the present or future use
of the credit union, provided such investment may not in the aggregate exceed five per
cent of the total assets of the credit union without the written approval of the commissioner; (11) debt mutual funds and equity mutual funds, provided the portfolios of such
mutual funds consist solely of investments described in subdivisions (1) to (3), inclusive,
of this subsection; (12) fixed or variable rate asset-backed securities, collateralized mortgage obligations and real estate mortgage investment conduits, except stripped mortgage-backed securities, residual interests, mortgage servicing rights, commercial mortgage related securities or small business-related securities; (13) money market funds
rated in the three highest rating categories by a rating service of such funds recognized
by the commissioner; (14) repurchase agreements and reverse repurchase agreements
provided (A) the underlying securities are legal investments for Connecticut credit
unions, (B) the Connecticut credit union receives a daily assessment of the market value
of the underlying securities, including accrued interest, and maintains an adequate margin that reflects a risk assessment of the underlying securities and the term of the
agreement, and (C) the Connecticut credit union has entered into signed contracts with all
approved counterparties; and (15) Yankee dollar deposits, Eurodollar deposits, banker's
acceptances, deposit notes and bank notes with original weighted average maturities of
less than five years and issued by a Connecticut bank, federal bank or out-of-state bank.
(d) A Connecticut credit union may, subject to the provisions of subsections (e),
(f) and (g) of section 36a-461a, invest its funds in or make loans to credit union service
organizations provided (1) the total of any such investment in or loan to any one credit
union service organization does not exceed two per cent of the total assets of the credit
union without regard to the amount derived from the profitability of such credit union
service organization, and (2) the credit union shall file with the commissioner prior
written notice of its intention to make such investment or loan. The Connecticut credit
union may make such investment or loan unless the commissioner disapproves such
investment or loan not later than thirty business days after the notice is filed. The thirty-day period may be extended by the commissioner, in writing, if the commissioner determines that the notice raises issues that require additional information or additional time
for analysis.
(e) In addition to other investments authorized by this section, a Connecticut credit
union may, with the prior written approval of the commissioner, invest its funds in: (1)
Debt securities, equity securities, debt mutual funds and equity mutual funds without
regard to any other liability to the Connecticut credit union of the maker, obligor, guarantor or issuer of such securities and mutual funds provided: (A) The securities and mutual
funds are rated in the three highest rating categories by a rating service of such securities
and mutual funds recognized by the commissioner or, if not so rated, are determined
by the credit union's governing board to be a prudent investment, (B) the total amount
of such securities and mutual funds of any one maker, obligor or issuer invested in by
a Connecticut credit union may not exceed at any time twenty-five per cent of its capital,
(C) the total amount of such debt securities and debt mutual funds may not exceed at
any time twenty-five per cent of its total assets, (D) the total amount of such equity
securities and equity mutual funds may not exceed at any time twenty-five per cent of
its total assets, and (E) a Connecticut credit union may not engage in securities trading,
including when-issued trading and pair-off transactions without additional prior written
approval of the commissioner; and (2) subject to any limitations imposed by the commissioner, in any other investment the commissioner deems appropriate in light of such
factors as the financial condition and strategic goals of the Connecticut credit union and
the degree of risk inherent in the investment, provided the credit union demonstrates
that sufficient resources, knowledge, systems and procedures are in place to monitor
and control the risks involved.
(f) All securities in which a Connecticut credit union invests shall be registered in
the name of the credit union. Records of securities owned by such credit union shall be
maintained at the main office of such credit union. The records held by such credit union
concerning its account with any of the depositories or financial institutions holding its
securities, and the securities registered in its name and held by it, shall be subject to
inspection at any time during business hours by any director, member of senior management or member of the supervisory committee of the Connecticut credit union.
(g) As used in this section:
(1) "Debt mutual funds" means partnership interests in, shares of stock of, units of
beneficial interest in or other ownership interest in any one investment company registered under the Investment Company Act of 1940, as from time to time amended, commonly described as mutual funds, money market funds, investment trusts or business
trusts, provided the portfolios of such investment companies consist solely of investments described in subdivision (3) of this subsection.
(2) "Equity mutual funds" means partnership interests in, shares of stock of, units
of beneficial interest in or other ownership interest in any one investment company
which is registered under the Investment Company Act of 1940, as from time to time
amended, commonly described as mutual funds, money market funds, investment trusts
or business trusts, but excludes debt mutual funds, as defined in subdivision (1) of this
subsection.
(3) "Debt securities" means (A) any marketable obligation evidencing indebtedness
of any person in the form of direct, assumed or guaranteed bonds, notes or debentures or
any security that has attributes similar to such marketable obligations; (B) any obligation
identified by certificates of participation in investments described in subparagraph (A)
of this subdivision in which a Connecticut credit union could invest directly; or (C)
repurchase agreements.
(4) "Equity securities" means any stock or similar security, certificate of interest
or participation in any profit-sharing agreement, preorganization certificate or subscription, transferable share, voting trust certificate or certificate of deposit for an equity
security, limited partnership interest, interest in a joint venture or certificate of interest
in a business trust; or any security convertible, with or without consideration, into such
a security, or carrying any warrant or right to subscribe to or purchase such a security;
or any such warrant or right; or any put, call, straddle or other option or privilege of
buying such a security from or selling such a security to another without being bound
to do so, but excludes debt mutual funds, as defined in subdivision (1) of this subsection,
and equity mutual funds, as defined in subdivision (2) of this subsection.
(P.A. 02-73, S. 60; P.A. 03-84, S. 62; 03-196, S. 20; P.A. 06-10, S. 7.)
History: P.A. 03-84 changed "Commissioner of Banking" to "commissioner", effective June 3, 2003; P.A. 03-196
added reference to Sec. 36a-461a(g) in Subsec. (d), effective July 1, 2003; P.A. 06-10 amended Subsec. (d) to allow
commissioner to extend thirty-day period if commissioner determines that notice raises issues that require additional
information or additional time for analysis, effective May 2, 2006.