sb 0404

CHAPTER 78

SB 404 - FINAL VERSION

AN ACT changing certain limitations on investment management fees and investments by banks acting as fiduciaries.

SPONSORS: Sen. Eaton, Dist 10; Sen. Johnson, Dist 3; Rep. Keye, Hills 30; Rep. Hunt, Ches 10; Rep. Thomas, Belk 3; Rep. Peterson, Hills 8

I. Clarifies that the prudent investor standard allows a bank, acting in a fiduciary capacity as trustee, to invest trust assets in the securities of an investment company or investment trust for which the bank or its affiliate provides certain services.

II. Removes the requirement that banks deduct certain fees they receive from investment companies or investment trusts into which the bank invests trust assets, from the fees or commissions that they charge to a trust which they supervise as trustee, and allows banks to receive a fee from an investment company or investment trust to which the bank provides certain services, subject to the requirement that it notify the person who receives account statements as to how the fee is determined.

III. Limits the requirement that a bank have express written consent from the trust instrument, the court, the grantor, or the trust beneficiaries before it may purchase, for trusts which it controls as trustee, any mutual fund or pooled security instrument issued by the bank or its affiliate.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT changing certain limitations on investment management fees and investments by banks acting as fiduciaries.

Be it Enacted by the Senate and House of Representatives in General Court convened:

78:1 Fiduciary Presumption Against Conflict of Interest; Compensation for Investment Advisory Fees, Commissions, and Other Fees. RSA 384:65, III is repealed and reenacted to read as follows:

(a) Invest in the securities of an investment company or investment trust, to which such fiduciary or its affiliate provides services in a capacity other than as trustee, such as advisor, distributor, transfer agent, registrar, sponsor, manager, shareholder servicing agent, administrator, or custodian, and such investment is not presumed to be affected by a conflict between personal and fiduciary interests if the investment complies with the prudent investor standard pursuant to RSA 564-A:3-b.

(b) Be compensated by the investment company or investment trust for providing services in a capacity other than as trustee, such as advisor, distributor, transfer agent, registrar, sponsor, manager, shareholder servicing agent, administrator, or custodian, if the fiduciary at least annually notifies the person or persons to whom it sends account statements of the rate and method by which the compensation was determined.

78:2 Purchase of the Bonds or Securities of a Fiduciary Bank; Prohibited Unless Expressly Authorized. Amend RSA 384:65, V to read as follows:

V. Notwithstanding paragraphs I-IV, no bank authorized to exercise trust powers in this state which is acting as a fiduciary shall purchase for the fiduciary estate any [~~bond or other~~] fixed income or equity security issued by such bank or an affiliate thereof, unless the bank is expressly authorized to do so by the terms of the instrument creating the trust, a court order, the written consent of the grantor of the trust, or the written consent of the beneficiaries of the trust.