§ 19-8-308 - Authorized common trust fund investments. - Arkansas Statutes

19-8-308. Authorized common trust fund investments.

A trust created pursuant to this subchapter shall invest moneys held for the credit of a common trust fund only in the following authorized investments:

(1) Direct obligations of, or obligations on which the timely payment of principal of and interest on is fully guaranteed by, any agency or instrumentality of the United States;

(2) Certificates of deposit or time deposits of a bank or savings and loan whose principal office is located in the State of Arkansas, to the extent that such deposits and the interest thereon are either:

(A) Insured by the Federal Deposit Insurance Corporation; or

(B) (i) Secured by a perfected first security interest in collateral consisting of obligations of the type described in subdivision (1) or (2) of this section, and having a fair market value equal to not less than one hundred ten percent (110%) of the amount secured.

(ii) The collateral securing the deposit must be held by the trust or by an independent third party acting solely as agent for the trust, the collateral must be held free of any lien or claim by a third party, other than a party acting as agent for the trust, and the securities must be held pursuant to an agreement providing that the trust will value the collateral no less frequently than monthly and will liquidate the collateral if any deficiency in its required market value is not restored within two (2) business days of such valuation; and

(3) Securities of the type described in subdivision (1) or (2) of this section purchased under agreements to resell such securities, provided:

(A) A specific written repurchase agreement governs the transaction;

(B) The securities are held by the trust or an independent third party acting solely as agent for the trust;

(C) The securities are held free and clear of any lien or claim by a third party, other than a party acting as agent for the trust;

(D) The trust is the holder of a perfected first security interest in the securities;

(E) The fair market value of the securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least one hundred two percent (102%); and

(F) The repurchase agreement provides that the trust will value the securities no less frequently than monthly and will liquidate the securities if any deficiency in their required market value is not restored within two (2) business days of such valuation.