Banking Interpretations

Superintendent's Regulations

November 5, 2004

To: Deputy Stone - LFSD

From: First Assistant Counsel Barras

Subject: Round Robin Re Part 402.15 Issue


Does your Division's recommendation to allow, in certain cases, licensed budget planners to maintain monies of New York debtors in trust accounts in other states contravene the provisions of Part 402.15 of the Superintendent's Regulations?


The purpose of requiring a licensed budget planner to maintain debtors' trust accounts in New York is to facilitate the Superintendent's ability to obtain the monies therein in the event of possession or bankruptcy. If, in fact, the monies in the New York account are those of the licensee (e.g. monies used to pay the operating expenses of the licensee, as apparently would be the case if the proposed relief were granted), the purpose of Part 402.15 would be defeated. If the monies held in the New York account are truly those of the licensee, a court would consider them as such, regardless of the title of the New York account . If the proposed relief were granted, the Department would be forced to attempt to get hold of the debtors' monies in another state, which most likely would be more difficult.

In any event, Part 402.15(b) states that debtor accounts must be "maintained" in New York. That language doesn't appear to permit the arrangement sought to be approved by LFSD.

Noted: SK

cc: Director Kent