8.18.2008 The Missouri Bankers Association (the "MBA") is a trade association of commercial banks and savings and loan associations that represents approximately 380 federal and state separately chartered commercial banks, savings and loan associations and out of state banks with one or more branches located in Missouri. The MBA requested and was denied no-action relief that would have allowed:
- Missouri banks to offer and sell certain depository instruments without registration under the 1933 Act and the 1934 Act;
- the participating banks (“Participating Banks”) and their employees to administer without registering as broker-dealers; and
- the plan and arrangement to operate without requiring the trust to be required to be registered under the 1940 Act.
In 2004, the Missouri legislature adopted legislation to facilitate a "qualified tuition program" under Section 529, the Missouri Higher Education Deposit Program (the “Program”). The Program, which was designed by the MBA, is intended to meet the requirements of this facilitating legislation and Section 529. The Missouri law authorizes the state entity designated by statute to oversee all Missouri Section 529 Plans, the Missouri Higher Education Savings Program ("MOST") Board, to appoint an administrator (“Administrator") to operate the Program on behalf of the state. The Administrator would arrange for the creation of a trust (the "Trust") pursuant to a contract with the MOST Board. The Trust would be a commercial trust, drafted to meet the requirements of Section 529 and the Missouri law, and would originate through a commercial bank and would have as its trustee a bank or trust company that is qualified to conduct trust business in Missouri. In accordance with Section 529 and state law, the state of Missouri, through the MOST Board, would exercise ongoing oversight to "establish and maintain" this Missouri 529 Deposit Program.
A participant in the Program ("Participant") would have been able to make a deposit through the Program in a bank which had its headquarters or a branch located in Missouri and was participating in the Program. The funds deposited into the Program by a Participant would be invested in the Participating Bank's FDIC-insured certificates of deposit or other fully FDIC-insured deposit accounts at the Participating Bank as selected by the Participant. The Participant would designate a beneficiary ("Beneficiary") for whose benefit the Participant was depositing funds to be used for the Beneficiary's educational purposes.
The Program would have had a number of other features. For example, the Participant could roll over a 529 deposit by cashing in the deposit at the Participating Bank and transferring the funds from such deposit to another Participating Bank, or to another Section 529 program, but no more than once a year. The Participant could terminate his or her plan and cash in the deposit. The Program was designed to satisfy all of the requirements to be a "qualified tuition program" under section 529 of the Code. The SEC rejected the no-action request because of certain features of the Program.
Click http://www.sec.gov/divisions/corpfin/cf-noaction/2008/missouribankers081808-2a1.htm to access the no-action letter.