New Mexico Statutes 58-9-7. Fidelity bond; insurance required; evidence of financial responsibility required
A. No corporation shall obtain a certificate without securing and filing with the director a fidelity bond in the following amounts:
Terms Used In New Mexico Statutes 58-9-7
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Source: OCC
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Fiduciary: A trustee, executor, or administrator.
- Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
- Fraud: Intentional deception resulting in injury to another.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Probate: Proving a will
Trust Assets Managed by a Fiduciary Fidelity Bond Amounts $3,000,000 or less $500,000 More than $3,000,000 but not more than $15,000,000 $750,000 More than $15,000,000 but not more than $25,000,000 $1,000,000 More than $25,000,000 but not more than $50,000,000 $1,500,000 More than $50,000,000 but not more than $75,000,000 $2,000,000 More than $75,000,000 but not more than $100,000,000 $2,750,000 More than $100,000,000 but not more than $500,000,000 $3,500,000 More than $500,000,000 but not more than $1,000,000,000 $5,000,000 More than $1,000,000,000 but not more than $2,000,000,000 $6,000,000 $6,000,000 plus More than $2,000,000,000 $1,000,000 for every $1,000,000,000 000 over $2,000,000,000,000.
B. A trust company shall file a signed copy of its fidelity bond with the director, and the fidelity bond shall remain a part of the division’s records.
C. Every fidelity bond filed with the director by a trust company pursuant to Subsection A of this section shall contain a provision prohibiting the bond company from canceling such fidelity bond for failure to pay the premium unless the bond company files a written notice with the director at least ten days before canceling the fidelity bond. Every fidelity bond filed with the director by a trust company pursuant to Subsection A of this section shall contain a provision prohibiting the bond company from canceling such fidelity bond for any other reason unless the bond company files a written notice with the director at least thirty days before canceling the fidelity bond.
D. Except as provided in Subsection E of this section, a fidelity bond secured and filed pursuant to this section shall contain a deductible clause not to exceed fifteen percent of the face amount of the fidelity bond.
E. A trust company may submit a written request to the director for approval of a fidelity bond with a deductible clause in excess of fifteen percent of the face amount of the bond. Such written request must be submitted not less than ninety days prior to the expiration of any fidelity bond for the trust company previously filed with the director. If the director has not issued written approval for the trust company to secure and file a fidelity bond with a deductible clause in excess of fifteen percent within thirty days of the expiration of the trust company’s prior fidelity bond, the request of the trust company shall be deemed denied.
F. On or before March 1 of each year beginning with the year 2019, every trust company shall increase or adjust its fidelity bond to an amount equal to the amount required pursuant to Subsection A of this section.
G. The fidelity bond required by this section shall be for the benefit of:
(1) any person damaged by an act or acts of a trust company or its directors, officers or employees as a result of a violation of the provisions of, or any rule promulgated pursuant to, the Trust Company Act, the Uniform Probate Code [N.M. Stat. Ann. Chapter 45], the Uniform Prudent Investor Act N.M. Stat. Ann. § 45-7-601 to 45-7-612 or the Uniform Trust Code [N.M. Stat. Ann. Chapter 46A];
(2) any person damaged by the negligence, fraud or embezzlement of a trust company or its directors, officers or employees; or
(3) any person damaged by any other breach of trust of any trust company. H. The amount of a fidelity bond required by this section may be reduced by the director for nonprofit corporations that have otherwise established financial responsibility to the director’s satisfaction.
I. A reduction in the amount of a required fidelity bond approved by the director pursuant to Subsection H of this section shall be reviewed by the director on an annual basis, at which time the reduction may be terminated upon ninety days’ written notice by the director to the nonprofit corporation.
J. The director shall revoke the certificate of any trust company that fails to maintain a bond or to otherwise supply evidence of financial responsibility as required by this section.
K. The board of directors of a trust company shall acquire suitable insurance to protect the trust company against burglary, robbery, forgery, theft, fraud, embezzlement and other similar insurable losses to which the trust company may be exposed in the operation of the trust company.
L. The board of directors of a trust company shall procure errors and omissions insurance of at least five hundred thousand dollars ($500,000).
M. At least once each year, the board of directors of a trust company shall review the insurance coverage as set forth in Subsections K and L of this section to determine the adequacy of coverage in relation to the exposure of the trust company. The minimum amount of insurance required pursuant to this section does not automatically represent adequate insurance coverage in relation to the exposure. The actions of the board of directors shall be recorded in the minutes of the board. Immediately after procuring the insurance as required by Subsections K and L of this section, the board of directors shall file copies of the insurance policies with the director.
N. The director may revoke the certificate of any trust company that fails to maintain insurance as required by Subsections K and L of this section.
O. A trust company may be determined by the director to have demonstrated a lack of financial responsibility when any of the following nonexclusive conditions exist:
(1) the actual cash market value of the trust company’s assets is less than its liabilities; or
(2) the trust company fails to pay, in the manner commonly accepted by business practices, its obligations when due.
P. A trust company may be determined by the director to be in an unsafe and unsound condition when any one of the following nonexclusive conditions exist:
(1) the trust company fails to safely manage its operations;
(2) the trust company fails to provide services to its trust customers pursuant to the trust company’s fiduciary duty; or
risks.
(3) the trust company fails to manage and monitor its operational and financial