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4000 - Advisory Opinions

Accounts Held by Agents or Nominees


October 3, 1989

Walter P. Doyle, Counsel

In response to your September 28 letter, the deposit account records of an insured bank issuing a certificate of deposit should indicate that the depositor is holding the certificate in a fiduciary capacity, specifically indicating that some of the beneficial owners may also be acting as fiduciaries, if that is the case. The best way of satisfying this requirement is by referring to the existence of such fiduciary relationships on the certificate itself. A general reference to "ABC Co., nominee for clients and other fiduciaries" would suffice. While a letter to the bank referring to the two levels of fiduciary relationships would also suffice if made a part of the bank's deposit records, there is always the possibility that such a letter might not be found as a part of such records should the bank eventually be closed, thus limiting coverage for the entire deposit to a total of $100,000.

The $100,000 coverage for each beneficial owner would flow down to participants of employee benefit trusts whose funds are represented in such a certificate if the requirement in the preceding paragraph is met and if your records as fiduciary depositor indicate that such client is in fact a trust or other fiduciary--so long as the individual participant's interest, as shown by the trust's records, is determinable without reference to any contingency other than life expectancy. Your records must identify each client and indicate the nature and extent of the client's interest in the amount you hold for the client on deposit in each insured bank. As to pension or profit sharing trusts, you are correct that the records showing each participant's allocable interest may be maintained by the plan administrator or actuary.

Finally, any one individual's interests in both pension and profit sharing trusts set up by the same employer, as to deposits of the trusts in the same insured bank, would be combined under the same $100,000 limit. For example, if John Jones has a one percent interest in his employer's pension plan and a 2 percent interest in the same employer's profit sharing plan, and your firm receives $600,000 from the pension plan and $400,000 from the profit sharing plan and places it in XYZ insured bank as nominee for such plans' trustees, Mr. Jones' $6000 interest in the pension plan deposit and $8000 interest in the profit sharing plan deposit would be combined and insured in full, as being well under the $100,000 limit for Mr. Jones in that bank. Other nonfiduciary deposits owned by Mr. Jones at the same bank would be subject to separate, additional deposit insurance coverage.

I trust the foregoing responds adequately to your questions. If not, please let us know.

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