Up to 30 complex federal credit unions (FCUs) will be allowed to engage in investment activities prohibited under portions of federal rules – but permitted by statute – under a pilot program approved Monday by the board of the federal credit union regulator.
The National Credit Union Administration (NCUA) Board said it took the action (by notation vote) after an investment firm requested the program. The NCUA said the firm was ALM First Financial Advisors, LLC, of Dallas, Texas. The agency said the firm is a Securities and Exchange Commission (SEC) registered investment advisor.
Under agency rules, FCUs are authorized to invest in funds that are registered with the SEC or regulated by the Office of the Comptroller of the Currency (OCC), the NCUA said. That is, if the underlying assets purchased by the fund are permissible under agency rules for FCUs.
According to the NCUA, the pilot program will allow the up to 30 “complex” FCUs (those having assets of more than $500 million) in the pilot to invest in a series of non-registered investment funds comprised of consumer loans.
The agency said the pilot fund would include permissible consumer loans for federally insured credit unions and with maturities of less than 10 years and overnight investments.
Participants must be complex FCUs and have a capital adequacy classification of well-capitalized to invest in the fund, the agency said. The FCUs are also limited to an aggregate investment of 50% of net worth as defined in agency regulations.
NCUA Board Approves Non-Registered Investment Fund Pilot Program
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