BILL NUMBER: AB 459	CHAPTERED  07/20/99

	CHAPTER   130
	FILED WITH SECRETARY OF STATE   JULY 20, 1999
	APPROVED BY GOVERNOR   JULY 19, 1999
	PASSED THE ASSEMBLY   JULY 6, 1999
	PASSED THE SENATE   JULY 1, 1999
	AMENDED IN SENATE   JUNE 21, 1999

INTRODUCED BY   Assembly Member Ackerman

                        FEBRUARY 16, 1999

   An act to amend Section 1561.1 of the Financial Code, relating to
investments.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 459, Ackerman.  Trust companies:  investments.
   Existing law authorizes a trust company to invest or reinvest in
the securities or other interests of any fund for which the trust
company or its affiliate is providing specified investment or
management services.  The trust company is required to provide
written notice to certain persons at least 30 days prior to an
initial investment.
   This bill instead requires that notice to be provided within 30
days before or after the initial investment.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1561.1 of the Financial Code is amended to
read:
   1561.1.  (a) As used in this section:
   (1) "Fund" means any investment company registered under the
Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), as
amended from time to time.
   (2) "Trust" means any court trust or private trust.
   (3) "Trust Law" means Division 9 (commencing with Section 15000)
of the Probate Code.
   (b) Within the standards established by trust law, including, but
not limited to, Division 9 (commencing with Section 15000) of the
Probate Code, a trust company acting in any capacity under a trust
may, in the exercise of its investment discretion unless the trust
instrument provides expressly to the contrary, invest and reinvest in
the securities of or other interests in any fund to which the trust
company or its affiliate is providing services including, but not
limited to services as an investment adviser, sponsor, distributor,
custodian, agent, registrar, administrator, servicer, or manager, and
for which the trust company or its affiliate receives compensation.

   (c) Within 30 days before or after the initial investment under
the exercise of discretionary powers authorized by subdivision (b),
the trust company, acting in any capacity under a trust, shall
furnish written notice of the exercise of the discretionary powers
and a copy of the prospectus relating to the securities to all
persons to whom the trust company is required to render statements of
account pursuant to applicable provisions of the Trust Law or to
whom the trust company regularly provides a statement of account
unless specifically waived in writing.
   (d) With respect to any trust so invested, the trust company shall
disclose to all persons identified in subdivision (c), at least
annually by prospectus, statement of account, or other written
notice, a brief description of the fees or rates charged by the trust
company and its affiliates for its services as investment adviser or
investment manager to the fund.
   (e) In connection with an investment or reinvestment authorized by
subdivision (b), the portion of compensation a trust company
receives from the trust reasonably attributable to investment
advisory or investment management services to the trust shall be
reduced (but not below zero) by an amount equal to compensation that
is received by the trust company or its affiliates for providing
investment advisory or investment management services to the fund for
the portion of the trust invested in the fund.