6.1-21 - (Repealed effective October 1, 2010) Deposit or other use of trust funds. - Virginia Statutes

§ 6.1-21. (Repealed effective October 1, 2010) Deposit or other use of trustfunds.

Funds received or held in the trust department of a bank or trust companyawaiting investment or distribution shall not be used by the bank or a trustcompany in the conduct of its business except that such funds may bedeposited by a bank, in its commercial or savings department to the credit ofits trust department, if the bank first delivers to the trust department, ascollateral security therefor securities of any of the following classes:

(1) Bonds, notes, or certificates of indebtedness of the United States; or

(2) Other readily marketable securities of the classes in which fiduciariesare authorized or permitted to invest trust funds, as set forth in §26-40.01; or

(3) Other readily marketable bonds, notes, or debentures, commonly known asinvestment securities, meeting the following requirements:

(a) That the issue be of a sufficiently large total to make marketabilitypossible;

(b) Such a public distribution of the securities must have been provided foror made in a manner to protect or insure the marketability of the issue;

(c) That the trust agreement under which the security is issued provides fora trustee independent of the obligor, which trustee must be a bank or trustcompany.

The securities so deposited as collateral shall be owned by the bank andshall at all times be at least equal in market value to the amount of trustfunds so used in the conduct of the business of the bank less such amountthereof as shall be insured by the Federal Deposit Insurance Corporationunder existing or future federal law.

In the event of the failure or liquidation of such bank the owners of thefunds held in trust for investment shall have a lien on the bonds or othersecurities so set apart in addition to their claim against the estate of thebank.

(Code 1950, § 6-99; 1966, c. 584; 1992, c. 810; 1993, c. 432; 1994, c. 7.)