Trust CompaniesDeposits with State Treasurer

Section § 1570

Explanation

This law requires every trust company in California to deposit money or securities with the State Treasurer to act as security when managing court and private trusts. The amount they must deposit depends on the population of the city where their main office is located.

If the trust company is in a city with a population of 100,000 or less, they need to deposit at least $50,000 for court trusts and $50,000 for private trusts. If the company manages trust funds from court trusts exceeding $500,000, they must notify the commissioner and deposit an additional $50,000 for both court and private trusts.

If the company is in a city with a population greater than 100,000, the deposit requirement doubles to at least $100,000 for each type of trust.

Every trust company shall deposit with the State Treasurer money or securities of the character described in Section 1572 as security for its court and private trusts as follows:
(a)CA Financial Code § 1570(a) If the trust company’s principal place of business is situated in a city the population of which does not exceed 100,000 persons, it shall deposit with the State Treasurer money or securities having a market value of at least fifty thousand dollars ($50,000) as security for the faithful performance and execution of all court trusts accepted by it, and money or securities having a market value of at least fifty thousand dollars ($50,000) as security for the faithful performance and execution of all private trusts accepted by it.
Whenever any such trust company receives trust funds or property, other than real property, from court trusts accepted by it to the amount of five hundred thousand dollars ($500,000), it shall forthwith give the commissioner written notice thereof, and within 30 days thereafter shall make an additional deposit with the State Treasurer of money or securities having a market value of fifty thousand dollars ($50,000) as security for its court trusts, and money or securities having a market value of fifty thousand dollars ($50,000) as additional security for its private trusts.
(b)CA Financial Code § 1570(b) If the trust company’s principal place of business is situated in a city the population of which exceeds 100,000 persons, it shall deposit with the State Treasurer money or securities having a market value of at least one hundred thousand dollars ($100,000) as security for the faithful performance and execution of all court trusts accepted by it, and money or securities having a market value of at least one hundred thousand dollars ($100,000) as security for the faithful performance and execution of all private trusts accepted by it.
trust company State Treasurer money or securities deposit ...

Section § 1571

Explanation

When a trust company receives over $1 million in trust funds or property from court-related trusts, it must quickly notify the commissioner and deposit $50,000 in money or securities with the State Treasurer within 30 days. If it receives an extra $500,000, the company must also quickly notify the commissioner and deposit an additional $25,000 within 30 days. This process repeats until the total deposited reaches $500,000.

Whenever any trust company receives trust funds or property, other than real property, from court trusts accepted by it to the amount of one million dollars ($1,000,000), it shall forthwith give the commissioner written notice thereof, and within 30 days thereafter shall make an additional deposit with the State Treasurer of money or securities having a market value of fifty thousand dollars ($50,000). For each additional five hundred thousand dollars ($500,000) of such trust funds thereafter received by any trust company from court trusts a similar notification in writing shall forthwith be given to the commissioner and a further deposit of money or securities having a market value of twenty-five thousand dollars ($25,000) shall be made within 30 days thereafter by such trust company with the State Treasurer until money or securities having a market value of five hundred thousand dollars ($500,000) have been so deposited.
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Section § 1572

Explanation
Trust companies in California are required to deposit securities with the Treasurer. These securities can include U.S. government bonds, California state bonds, certain obligations outlined in specified sections, loans secured by real estate, and bonds from international banks. The security ensures trust companies have a financial backup for their activities.
Security deposited with the Treasurer by trust companies pursuant to Section 1570 or 1571 shall consist of the following:
(a)CA Financial Code § 1572(a) Bonds or other interest-bearing notes or obligations of the United States or those for which the faith and credit of the United States are pledged for the payment of principal and interest.
(b)CA Financial Code § 1572(b) Bonds of the State of California or those for which the faith and credit of the State of California are pledged for the payment of principal and interest or in registered warrants of the State of California.
(c)CA Financial Code § 1572(c) Obligations and securities of the type described in subdivisions (a) to (g), inclusive, of Section 1510.
(d)CA Financial Code § 1572(d) Obligations and assets of the type described in subdivisions (a) to (c), inclusive, of Section 1511.
(e)CA Financial Code § 1572(e) Loans secured by a first lien on real property and otherwise complying with the provisions of subdivision (a) of Section 1486.
(f)CA Financial Code § 1572(f) Obligations issued, assumed, or guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the International Finance Corporation, or the African Development Bank.
trust companies security deposit U.S. government bonds ...

Section § 1573

Explanation

This law section explains that any money or securities meant for trust businesses must be approved by the commissioner and deposited with the State Treasurer. Once deposited, the Treasurer issues a receipt and ensures that the funds are used solely for the beneficiaries' security and protection. The state guarantees the safekeeping and eventual return of these deposits. Additionally, these funds are managed according to specific sections of the Government Code that outline how such funds should be handled.

Such money or securities shall be approved by the commissioner and be deposited with the Treasurer upon the written order of the commissioner. Upon receiving any such deposit the Treasurer shall give his or her receipt therefor and thereafter subject to the provisions of this chapter shall hold such deposits for the sole benefit of the beneficiaries of the class of trust business for the security and protection of which the same were deposited. The state is responsible for the custody and safe return of any money or securities so deposited. The Treasurer shall deposit any such moneys under the provisions of Sections 16370 to 16375 of the Government Code.
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Section § 1574

Explanation

This law explains that a trust company can swap securities it has deposited with the state's Treasurer for similar ones of the same market value, with the approval of a commissioner. It can also withdraw any excess securities, as long as they have more than is needed by law. The commissioner must authorize any such exchanges or withdrawals, and the Treasurer is instructed to follow the order. As long as the trust company remains financially stable, it can collect any interest or dividends from these deposited securities.

Securities deposited pursuant to this article may be exchanged from time to time, with the approval of the commissioner, for other like securities of equal market value. Upon written request to the commissioner, any trust company shall be entitled to withdraw from the Treasurer, from time to time, any amount of its securities so deposited in excess of the amount it is required to maintain on deposit in order to conform with the requirements of this article. Upon receiving a written request for such withdrawal or exchange, and satisfactory proof of the facts warranting the same, the commissioner shall forthwith deliver to the Treasurer a written order directing the withdrawal or exchange of such securities so as to conform with the provisions of this section. The Treasurer shall comply with such written order. So long as the trust company so depositing such securities shall continue solvent, it shall have the right and shall be permitted by the Treasurer to receive the interest and dividends on any securities deposited by it.
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Section § 1575

Explanation

If the value of a security deposit falls below the required amount, additional funds or securities must be added right away to meet the requirements. The commissioner has the right to check the value of any security at any point, and can charge a reasonable fee for doing so.

Should any security deposited pursuant to this article so depreciate in value as to reduce the deposit below the amount required by this article, additional money or securities shall be deposited promptly in amount sufficient to meet such requirements. The commissioner may make an investigation of the value of any security deposited pursuant to this article, at the time such security is presented for deposit or at any time thereafter, whenever in his judgment such investigation is necessary. The commissioner may make such charge as may be reasonable and proper for such investigation.
security deposit depreciation additional securities commissioner investigation ...

Section § 1576

Explanation
This law states that when the government reviews the value of certain financial assets, specifically U.S. Government securities with a maturity of less than five years, these should be valued at least at their face value.
When any revaluation of securities is made by the commissioner pursuant to Section 1575, other than at the time such securities are presented for deposit, United States Government securities having a maturity date less than five years from the date of such revaluation shall be valued at not less than par.
revaluation of securities commissioner United States Government securities ...

Section § 1577

Explanation

This law says that any money and securities deposited under this rule can only be sold or otherwise handled by the State Treasurer if a court orders it. The sale or disposal must benefit the specified beneficiaries of the trust business, and it must serve to secure and protect those beneficiaries.

The money and securities deposited pursuant to this article shall be subject to sale and the same or the proceeds thereof shall be subject to disposal by the State Treasurer only on the order of a court of competent jurisdiction and for the benefit respectively of the beneficiaries of that class of trust business for the security and protection of which the securities were deposited.
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Section § 1578

Explanation

If a trust company breaks the rules of a specific article, the commissioner has the authority to impose a financial penalty on them following the guidelines of Section 329.

The commissioner may, pursuant to Section 329, levy a civil penalty against any trust company that fails to comply with this article.
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