CITE
15 USC Sec. 80a-26 01/05/2009
EXPCITE
TITLE 15 - COMMERCE AND TRADE
CHAPTER 2D - INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I - INVESTMENT COMPANIES
HEAD
Sec. 80a-26. Unit investment trusts
STATUTE
(a) Custody and sale of securities
No principal underwriter for or depositor of a registered unit
investment trust shall sell, except by surrender to the trustee for
redemption, any security of which such trust is the issuer (other
than short-term paper), unless the trust indenture, agreement of
custodianship, or other instrument pursuant to which such security
is issued -
(1) designates one or more trustees or custodians, each of
which is a bank, and provides that each such trustee or custodian
shall have at all times an aggregate capital, surplus, and
undivided profits of a specified minimum amount, which shall not
be less than $500,000 (but may also provide, if such trustee or
custodian publishes reports of condition at least annually,
pursuant to law or to the requirements of its supervising or
examining authority, that for the purposes of this paragraph the
aggregate capital, surplus, and undivided profits of such trustee
or custodian shall be deemed to be its aggregate capital,
surplus, and undivided profits as set forth in its most recent
report of condition so published);
(2) provides, in substance, (A) that during the life of the
trust the trustee or custodian, if not otherwise remunerated, may
charge against and collect from the income of the trust, and from
the corpus thereof if no income is available, such fees for its
services and such reimbursement for its expenses as are provided
for in such instrument; (B) that no such charge or collection
shall be made except for services theretofore performed or
expenses theretofore incurred; (C) that no payment to the
depositor of or a principal underwriter for such trust, or to any
affiliated person or agent of such depositor or underwriter,
shall be allowed the trustee or custodian as an expense (except
that provision may be made for the payment to any such person of
a fee, not exceeding such reasonable amount as the Commission may
prescribe as compensation for performing bookkeeping and other
administrative services, of a character normally performed by the
trustee or custodian itself); and (D) that the trustee or
custodian shall have possession of all securities and other
property in which the funds of the trust are invested, all funds
held for such investment, all equalization, redemption, and other
special funds of the trust, and all income upon, accretions to,
and proceeds of such property and funds, and shall segregate and
hold the same in trust (subject only to the charges and
collections allowed under clauses (A), (B), and (C) of this
paragraph) until distribution thereof to the security holders of
the trust;
(3) provides, in substance, that the trustee or custodian shall
not resign until either (A) the trust has been completely
liquidated and the proceeds of the liquidation distributed to the
security holders of the trust, or (B) a successor trustee or
custodian, having the qualifications prescribed in paragraph (1)
of this subsection, has been designated and has accepted such
trusteeship or custodianship; and
(4) provides, in substance, (A) that a record will be kept by
the depositor or an agent of the depositor of the name and
address of, and the shares issued by the trust and held by, every
holder of any security issued pursuant to such instrument,
insofar as such information is known to the depositor or agent;
and (B) that whenever a security is deposited with the trustee in
substitution for any security in which such security holder has
an undivided interest, the depositor or the agent of the
depositor will, within five days after such substitution, either
deliver or mail to such security holder a notice of substitution,
including an identification of the securities eliminated and the
securities substituted, and a specification of the shares of such
security holder affected by the substitution.
(b) Bank or affiliated person of bank as trustee or custodian
The Commission may, after consultation with and taking into
consideration the views of the Federal banking agencies (as defined
in section 1813 of title 12), adopt rules and regulations, and
issue orders, consistent with the protection of investors,
prescribing the conditions under which a bank, or an affiliated
person of a bank, either of which is an affiliated person of a
principal underwriter for, or depositor of, a registered unit
investment trust, may serve as trustee or custodian under
subsection (a)(1) of this section.
(c) Substitution of securities
It shall be unlawful for any depositor or trustee of a registered
unit investment trust holding the security of a single issuer to
substitute another security for such security unless the Commission
shall have approved such substitution. The Commission shall issue
an order approving such substitution if the evidence establishes
that it is consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of this
subchapter.
(d) Binding contract or agreement embodying applicable provisions
deemed to qualify non-complying instrument by which securities
were issued
In the event that a trust indenture, agreement of custodianship,
or other instrument pursuant to which securities of a registered
unit investment trust are issued does not comply with the
requirements of subsection (a) of this section, such instrument
will be deemed to meet such requirements if a written contract or
agreement binding on the parties and embodying such requirements
has been executed by the depositor on the one part and the trustee
or custodian on the other part, and three copies of such contract
or agreement have been filed with the Commission.
(e) Liquidation of unit investment trust
Whenever the Commission has reason to believe that a unit
investment trust is inactive and that its liquidation is in the
interest of the security holders of such trust, the Commission may
file a complaint seeking the liquidation of such trust in the
district court of the United States in any district wherein any
trustee of such trust resides or has its principal place of
business. A copy of such complaint shall be served on every trustee
of such trust, and notice of the proceeding shall be given such
other interested persons in such manner and at such times as the
court may direct. If the court determines that such liquidation is
in the interest of the security holders of such trust, the court
shall order such liquidation and, after payment of necessary
expenses, the distribution of the proceeds to the security holders
of the trust in such manner and on such terms as may to the court
appear equitable.
(f) Exemption
(1) In general
Subsection (a) of this section does not apply to any registered
separate account funding variable insurance contracts, or to the
sponsoring insurance company and principal underwriter of such
account.
(2) Limitation on sales
It shall be unlawful for any registered separate account
funding variable insurance contracts, or for the sponsoring
insurance company of such account, to sell any such contract -
(A) unless the fees and charges deducted under the contract,
in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks
assumed by the insurance company, and, beginning on the earlier
of August 1, 1997, or the earliest effective date of any
registration statement or amendment thereto for such contract
following October 11, 1996, the insurance company so represents
in the registration statement for the contract; and
(B) unless the insurance company -
(i) complies with all other applicable provisions of this
section, as if it were a trustee or custodian of the
registered separate account;
(ii) files with the insurance regulatory authority of the
State which is the domiciliary State of the insurance
company, an annual statement of its financial condition,
which most recent statement indicates that the insurance
company has a combined capital and surplus, if a stock
company, or an unassigned surplus, if a mutual company, of
not less than $1,000,000, or such other amount as the
Commission may from time to time prescribe by rule, as
necessary or appropriate in the public interest or for the
protection of investors; and
(iii) together with its registered separate accounts, is
supervised and examined periodically by the insurance
authority of such State.
(3) Fees and charges
For purposes of paragraph (2), the fees and charges deducted
under the contract shall include all fees and charges imposed for
any purpose and in any manner.
(4) Regulatory authority
The Commission may issue such rules and regulations to carry
out paragraph (2)(A) as it determines are necessary or
appropriate in the public interest or for the protection of
investors.
SOURCE
(Aug. 22, 1940, ch. 686, title I, Sec. 26, 54 Stat. 827; Pub. L. 91-
547, Sec. 15, Dec. 14, 1970, 84 Stat. 1424; Pub. L. 100-181, title
VI, Secs. 618, 619, Dec. 4, 1987, 101 Stat. 1262; Pub. L. 104-290,
title II, Sec. 205(a), Oct. 11, 1996, 110 Stat. 3429; Pub. L. 106-
102, title II, Sec. 211(b), Nov. 12, 1999, 113 Stat. 1396.)
AMENDMENTS
1999 - Subsecs. (b) to (f). Pub. L. 106-102 added subsec. (b) and
redesignated former subsecs. (b) to (e) as (c) to (f),
respectively.
1996 - Subsec. (e). Pub. L. 104-290 added subsec. (e).
1987 - Subsec. (b). Pub. L. 100-181, Sec. 618, substituted
"intended" for "intend".
Subsec. (c). Pub. L. 100-181, Sec. 619, substituted "contract or
agreement" for "contract of agreement".
1970 - Subsecs. (b) to (d). Pub. L. 91-547 added subsec. (b),
redesignated former subsec. (b) as (c), struck out "at the
effective date of this subchapter" before "comply", substituted
"contract of agreement" for "contract or agreement", and
redesignated former subsec. (c) as (d).
EFFECTIVE DATE OF 1999 AMENDMENT
Amendment by Pub. L. 106-102 effective 18 months after Nov. 12,
1999, see section 225 of Pub. L. 106-102, set out as a note under
section 77c of this title.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see section
30 of Pub. L. 91-547, set out as a note under section 80a-52 of
this title.
TRANSFER OF FUNCTIONS
For transfer of functions of Securities and Exchange Commission,
with certain exceptions, to Chairman of such Commission, see Reorg.
Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
64 Stat. 1265, set out under section 78d of this title.