Current through Register Vol. 54, No. 12, March 23, 2024
(a) An association may invest in, sell, or
hold commercial paper and corporate debt securities, including corporate debt
securities convertible into stock, subject to the limitations set forth in
subsection (b); however, at any one time, the total investment made under this
section and §
34a.2 (relating to consumer loans)
added together shall not exceed 20% of an association's assets. An investment
under this section includes the investing in, redeeming, or holding of shares
in any open-end management investment company which is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940 and
whose portfolio is restricted by such management company's investment policy,
changeable only if authorized by shareholder vote, solely to the investments
that an association is authorized to invest in under other regulations or
statute.
(b) The following are the
limitations for investing in, selling, or holding corporate debt securities,
including corporate debt securities convertible into stock:
(1) As of the date of purchase, as shown by
the most recently published rating made of such investments by at least one
nationally recognized investment rating service: the commercial paper must be
rated in either one of the two highest grades, and the corporate debt
securities must be rated in one of the four highest grades.
(2) The commercial paper or corporate debt
securities shall be denominated in dollars, and the issuer shall be domiciled
in the United States.
(3) At any
one time, an association's total investment in the commercial paper and
corporate debt securities of any one issuer or issued by any person or entity
affiliated with such issuer shall not exceed 1% of the association's assets;
however, this provision shall not apply to investments in the shares of an
open-end management investment company. In such cases, an association's total
investment in the shares of any one such company shall not exceed 5.0% of the
association's assets.
(4)
Investments in corporate debt securities convertible into stock are subject to
the following additional limitations:
(i)
Purchase of securities convertible into stock at the option of the issuer is
prohibited.
(ii) At the time of
purchase, the cost of such securities shall be written down to an amount which
represents the investment value of the securities considered independently of
the conversion feature.
(iii) Such
securities must be treated on a national securities exchange.
(iv) Associations are prohibited from
exercising the conversion feature.
(5) At any one time, the average maturity of
an association's portfolio of corporate debt securities may not exceed 6
years.
(6) An association shall
maintain information in its files adequate to demonstrate that it has exercised
prudent judgment in making investments under this section.
This section cited in 10 Pa. Code §
34a.2 (relating to consumer
loans).
