Alert June 10, 2014

OCC Updates Booklet in its Handbook Concerning Collective Investment Funds

The OCC issued a revised and updated booklet (the “Revised Booklet") concerning collective investment funds (“CIFs”).  The Revised Booklet is part of the OCC’s “Comptroller’s Handbook.”  The Revised Booklet (which updates the OCC’s prior 2005 guidance) describes and discusses various aspects of CIFs and provides guidance regarding risk management of CIFs.

The Revised Booklet contains updated discussions of, among other topics, investment risk management and valuation of CIFs, securities lending, audit and financial reports of CIFs and Board of Directors and senior management responsibilities for oversight of risk management of CIFs.  In the Revised Booklet, the OCC cautions that, in reviewing risk management of CIFs, the OCC will closely scrutinize a bank’s arrangements with third-party vendors.

In conjunction with the OCC’s issuance of the Revised Booklet, the OCC rescinded its 1990 Banking Circular 247 “Application of Securities Laws to Common Trust Funds.”