Section 17.4 - Bonding Requirements(a) Compliance required. Pursuant to Finance Code, § RSA 183.112, a trust company is required to maintain a bond for protection and indemnity of clients, in reasonable amounts against dishonesty, fraud, defalcation, forgery, theft, and other insurable losses with a corporate insurance or surety company. Unless the banking commissioner waives the bonding requirement for a particular individual, a bond is required for each director, manager, managing participant, officer, and employee without regard to whether the person receives salary or other compensation. In addition to complying with Finance Code, § RSA 183.112, a trust company shall comply with this section.(b) Types of bonds. Bonds must be obtained from a corporate insurance or surety company authorized to do business in this state, or acceptable to the banking commissioner and otherwise lawfully permitted to issue the coverage against all losses arising from dishonesty, fraud, defalcation, forgery, theft, errors and omission, and other similar insurable losses determined by the banking commissioner to be reasonably appropriate. In lieu of individual bonds, schedule or blanket bonds may be utilized, if in a form acceptable to the banking commissioner, to provide coverage for all directors, managers, managing participants, officers, and employees of a trust company. In addition, a trust company through its board must demonstrate that it has conducted a thorough review of the risks associated with the trust business conducted to determine if additional specialized bond coverages should be obtained. The board's review must be fully documented in its minutes.(c) Holding company's comprehensive insurance coverage. In lieu of obtaining individual or blanket bond coverage, a trust company which is owned and controlled by a holding company, may utilize a holding company's comprehensive insurance coverage to satisfy the requirements of Finance Code, § RSA 183.112, and this section. Utilization by a trust company of its holding company's comprehensive insurance coverage must be lawfully permitted under terms of the comprehensive insurance policy and the insurance laws of this state. Evidence of bond coverage for a trust company's directors, officers, and employees must be provided to the banking commissioner.(d) Records. A trust company shall retain all original bonds to demonstrate compliance with Finance Code, § RSA 183.112, and this section, which documents must be available at all times to the department for examination and review.7 Tex. Admin. Code § 17.4
The provisions of this §17.4 adopted to be effective September 3, 1998, 23 TexReg 8832; amended to be effective July 11, 2002, 27 TexReg 5962