Code of Federal Regulations (alpha)

CFR /  Title 12  /  Part 615  /  Sec. 615.5143 Management of ineligible investments and reservation

(a) Investments ineligible when purchased. Investments that do not satisfy the eligibility criteria set forth in Sec. 615.5140 at the time of purchase are ineligible. You must not purchase ineligible investments. If you determine that you have purchased an ineligible investment, you must notify us within 15 calendar days after the determination. You must divest of the investment no later than 60 calendar days after you determine that the investment is ineligible unless we approve, in writing, a plan that authorizes you to divest the investment over a longer period of time. Until you divest of the investment:

(1) It must not be used to satisfy your liquidity requirement(s) under Sec. 615.5134;

(2) It must continue to be included in the Sec. 615.5132 investment portfolio limit calculation; and

(3) It must be excluded as collateral under Sec. 615.5050 and net collateral under Sec. 615.5301(c).

(b) Investments that no longer satisfy eligibility criteria. If you determine that an investment (that satisfied the eligibility criteria set forth in Sec. 615.5140 when purchased) no longer satisfies the eligibility criteria, you may continue to hold it, subject to the following requirements:

(1) You must notify us within 15 calendar days after such determination;

(2) You must not use the investment to satisfy your liquidity requirement(s) under Sec. 615.5134;

(3) You must continue to include the investment in the Sec. 615.5132 investment portfolio limit calculation;

(4) You may continue to include the investment as collateral under Sec. 615.5050 and net collateral under Sec. 615.5301(c) at the lower of cost or market value; and

(5) You must develop a plan to reduce the investment's risk to you.

(c) Reservation of authority. FCA retains the authority to require you to divest of any investment at any time for failure to comply with Sec. 615.5132(a) or Sec. 615.5142 or for safety and soundness reasons. The timeframe set by FCA will consider the expected loss on the transaction (or transactions) and the effect on your financial condition and performance. [77 FR 66374, Nov. 5, 2012]