Current through Register Vol. 46, No. 39, September 25, 2024
(a) To be
considered presumptively eligible for the deposit of IOLA funds, an IOLA
account shall pay an interest or dividend rate on IOLA accounts which is not
less than the highest rate available among the following types of accounts, as
paid by the banking institution to its best customers on accounts maintained at
that institution which are determined to be similar to its IOLA accounts:
(1) a money market account with or tied to
check writing capability;
(2) a
government (such as for municipal deposits) checking account;
(3) an open-end money market fund investment
offered through the banking institution that is:
(i) tied to check writing capability at the
institution,
(ii) and which fund is
solely invested in, or fully collateralized by, U.S. Government securities;
and
(iii) has total assets of at
least $250,000,000; or
(4) any other interest- or dividend-paying
product with or tied to check-writing capability at the institution.
(b) As alternatives to the
foregoing, the institution requesting designation by the trustees of an account
as eligible to accept the deposit of IOLA funds may offer:
(1) the greater of 60 percent of the Federal
Funds Target Rate or one percent, paid on an interest-bearing checking account;
or
(2) a yield specified by the
IOLA fund, if it so chooses, which is agreed to by the financial institution
and would be in effect for a period to be mutually agreed upon.
(c) The following additional
provisions are applicable. As indicated by their terms, some apply only to one
or some of the options set forth above.
(1)
The Federal Funds Target Rate referenced in paragraph (b)(1) of this section
shall be calculated as of the first day of each month.
(2) A bank may elect to offer the highest
rates that it pays on government or high-yield money market accounts on another
qualifying IOLA checking account, instead of actually offering such
account.
(3) Institutions may elect
to pay a higher interest or dividend rate than provided for in this
section.
(4) All participating
financial institutions shall report, in the form and manner prescribed by the
IOLA fund, on the best rate paid to their best customers for each of the types
of accounts they offer within the definitions specified in paragraphs (a)(1)
through (4) of this section. To enable attorneys and law firms to open and
maintain an IOLA account, an eligible banking institution shall, within 60 days
of the effective date of these regulations and as requested thereafter, provide
to the IOLA board information that demonstrates compliance with the provisions
of this section.
(5) Where there is
reasonable cause to believe a financial institution is willfully
misrepresenting its best rate information, the IOLA fund may condition
continued approval status on a finding by the institution's auditor that its
certifications have been accurate.
(d) The IOLA Board shall periodically monitor
the effectiveness of this standard.
