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Each depositor insured to at least $250,000 per insured bank

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4000 - Advisory Opinions


Plaintiffs in Ongoing Class Action Do Not Qualify for "Pass-Through" Insurance for Defendants' Funds Held in Escrow Account by Court

FDIC-90-68

November 26, 1990

J. William Via, Jr., Counsel

By your letter of November 15, you elaborate on information provided with your letter of October 26 in which you requested concurrence in the substance of the deposit insurance advice rendered in an opinion letter, dated September 14, 1990, from your firm (per ***) addressed to ***, subject to all facts and assumptions set forth in the opinion. In my letter to you of November 5, I so concurred, with an amplification that need not concern us here. However, my letter of November 5 necessarily relied on the validity of the assumption recounted in paragraph two of *** 's letter, i.e., "For purposes of this opinion, we assume that the trustee is acting under a valid trust agreement which clearly establishes the separately valued interest of each beneficiary."

The additional facts set out in your letter of November 15 cause me to conclude that the beneficiaries in this situation, being plaintiffs in a class action suit, will not have an ascertainable and vested ownership interest in the funds that the defendants will provide for the escrow account until the suit is concluded. Until the court issues its final order, the number of plaintiffs can change, as can the amounts of the various claims, which means that until that time, the plaintiffs have indeterminate claims against the defendants (satisfiable out of any of defendants' assets), not ascertainable and unconditional ownership interests in the escrow account deposit, which thus does not qualify in the interim for "pass-through", or pro-rata, deposit insurance, in my opinion.


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