List of legal investments

July 2018

This Legal List of Investments is prepared as of July 1, 2018.  Investors are advised to take note of changes to individual investments on this List that occur after this date.

The following is a list of and related provisions regarding stocks, bonds, notes, railroad equipment trust certificates and other interest-bearing obligations which, in the opinion of the Division of Banks, are now legal investments, under the provisions of Massachusetts General Laws chapter 167, sections 15A-15K, inclusive.

As used throughout this document and in G.L. c. 167, sections 15A-15K, inclusive, the terms “legal list” and “legal investments” shall mean the list of securities approved for investment by the Commissioner.  All references to the General Laws herein are as amended or added by Chapter 343 of the Acts of 2014.

An entity issuing stocks, bonds, notes or other interest-bearing obligations shall apply directly to the Commissioner of Banks and identify itself as being eligible for possible inclusion on the List under Sections 15E to 15K of G.L. c. 167, provided, however, that investments governed by said Section 15B must follow the process for inclusion on the List set out in that statute.

Approval of any security by the Commissioner of Banks for addition to or inclusion in the List should not in any way be construed as a recommendation by the Division for investment.  Each investor has the responsibility of evaluating the merits of a particular investment for the individual institution as well as determining whether that investment meets the investor's financial objectives.

For more information contact:

Andrea L. Cipolla, Chief Director
Commonwealth of Massachusetts Division of Banks
1000 Washington Street, 10^th Floor
Boston, Massachusetts  02118-6400
[phone]

Federal, state, and international obligations

Statutory Requirements:  (Now governed by M.G.L. c. 167, section 15C)

An entity that may invest pursuant to section 15A or the legal list may invest in bonds, notes or other interest-bearing obligations of the following classes:

1. United States:  Direct obligations of the United States or in obligations that are unconditionally guaranteed as to the payment of principal and interest by the United States.

   2.  Massachusetts:  Legally issued, assumed or unconditionally guaranteed bonds, notes or other interest-bearing obligations of this Commonwealth, including legally issued bonds, notes or other indebtedness of an entity established as a public instrumentality by general or special law.

   3.  Other States:  Legally issued, assumed or unconditionally guaranteed bonds, notes or other interest-bearing obligations of any state of the United States other than this Commonwealth, which has not, within the 20 years prior to the making of such investment, defaulted for a period of more than 120 days in the payment of any part of either principal or interest of any legally issued or assumed obligation; provided that the full faith and credit of such state shall be pledged for the payment of the principal and interest of such obligations.

   4.  Canada:  Bonds, notes or other obligations issued, or guaranteed as to both principal and interest, by the Dominion of Canada or any of its provinces; provided (a) that such bonds, notes or obligations shall be payable in United States funds either unconditionally or at the option of the holder of the bonds, notes or other obligations; and (b) that at the date of investment the Dominion of Canada or the applicable province shall not have been in default in the payment of interest or principal of any of its obligations for a period in excess of 31 days at any time within the 20 years preceding such date of investment.  Not more than 5% of the assets of an entity authorized to invest pursuant to section 15A or the legal list may be invested in obligations authorized under this paragraph.

   5.  Other International Obligations:  Bonds, notes or obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, the Inter‑American Development Bank or the Asian Development Bank containing an unconditional promise to pay, or an unconditional guarantee of the payment of, the interest on the bonds, notes or obligations regularly and the principal of the bonds, notes or obligations by a specified date, in United States currency;  provided that not more than 3% of the assets of an entity authorized to invest pursuant to section 15A or the legal list shall be invested in such bonds, notes or obligations; and provided, further, that the Commissioner may at any time on his or her own initiative suspend the authorization granted by this clause for periods as the Commissioner may determine. 

   6.  Federal Agency Obligations:
   
   a. Obligations of, or instruments issued by, and fully guaranteed as to principal and interest by the Federal National Mortgage Association, established under the federal National Housing Act, 12 U.S.C. 1715 et seq., as amended;
   
   b. Debentures, bonds or other obligations issued by any Federal Home Loan Bank or consolidated Federal Home Loan Bank debentures or bonds issued by the Federal Home Loan Bank Board under the Federal Home Loan Bank Act, 12 U.S.C. 1421 et seq., as amended;
   
   c. Debentures issued by the Central Bank for Cooperatives or consolidated debentures issued by said central bank and the 12 regional banks for cooperatives under the Farm Credit Act, as amended;
   
   d. Collateral trust debentures or other similar obligations issued by any federal intermediate credit bank or consolidated debentures or other similar obligations issued by the federal intermediate credit banks under the Federal Farm Loan Act, as amended;
   
   e. Farm loan bonds issued by any federal land bank under the Federal Farm Loan Act, as amended;
   
   f. Promissory notes representing domestic farm labor housing loans authorized under federal law when the notes are fully guaranteed as to principal and interest by the Farmers Home Administration of the United States Department of Agriculture;
   
   g. Bonds, notes or obligations issued, assumed or guaranteed by the Export‑Import Bank of the United States;
   
   h. Obligations of any person, including any form of mortgage‑backed security, as to which the payment of principal and interest according to the terms of such obligations shall be guaranteed by the Government National Mortgage Association under the provisions of the National Housing Act, as amended;
   
   i. Certificates issued by the Federal Home Loan Mortgage Corporation representing interests in mortgage loans made, acquired or participated in by said Federal Home Loan Mortgage Corporation;
   
   j. System-wide obligations issued under the provisions of the Farm Credit Act, as amended, by the institutions included in the federal farm credit system.

Municipal obligations

Statutory Requirements:  (Now governed by M.G.L. c. 167, section 15D)

An entity authorized to invest pursuant to section 15A or the legal list may invest in bonds, notes or other interest‑bearing obligations of the following classes:

1. Massachusetts:  Legally issued or assumed bonds, notes or other interest-bearing obligations of a county, city, town or legally established district of this Commonwealth.
    
2. Other States:  Legally issued or assumed bonds, notes or other interest‑bearing obligations of a county, city, town or legally established district outside of the Commonwealth; provided, however, that this clause shall not authorize investments in obligations of any city or town outside of the Commonwealth which have been in default for more than 120 days in the payment of any part of principal and interest of all bonds, notes or other interest-bearing obligations legal for investment under this section.
   
   3. Full Faith and Credit Requirement:  The full faith and credit of the county, city, town or district shall be pledged for the full payment of principal and interest of all bonds, notes or other interest-bearing obligations legal for investment under any provision of this section.

Railroad obligations

Statutory Requirements:  (Now governed by M.G.L. c. 167, section 15E)

Bonds, notes or other interest-bearing obligations of railroad corporations subject to the conditions, limitations and requirements of section 15E.

Not more than 20% of the assets of the entity shall be invested in the railroad obligations.

Railroad equipment obligations and trust certificates

Investments in railroad equipment obligations shall be those of, or guaranteed by, a railroad incorporated in the United States or any state and which is doing business principally within the United States.       

The outstanding Philadelphia Plan Equipment Trust Certificates of the following companies are legal.

• Burlington Northern Santa Fe
• Norfolk Southern Railway Company
• Union Pacific Railroad Company

Telephone company obligations

Statutory Requirements:  (Now governed by M.G.L. c. 167, s. 15F)

Bonds, notes or other obligations of telephone companies subject to the conditions, limitations and statutory requirements of section 15F.

Not more than 20% of the assets of the entity shall be invested in the bonds of telephone companies.

All outstanding issues, which meet statutory requirements, of the following companies:

• AT & T, Inc.¹
• Carolina Telephone & Telegraph Company
• Indiana Bell Telephone Company
• United Telephone Company of Pennsylvania
• Verizon Florida, Inc. (formerly General Telephone Company of Florida)
• Verizon New England, Inc. (formerly New England Telephone & Telegraph Company)
• Verizon New Jersey, Inc. (formerly New Jersey Bell Telephone Company)
• Verizon New York, Inc. (formerly New York Telephone Company)
• Verizon, Northwest, Inc. (formerly General Telephone Company of the Northwest, Inc.)
• Verizon Pennsylvania, Inc. (formerly Bell Atlantic Pennsylvania)
• Verizon Virginia, Inc. (formerly Chesapeake & Potomac Telephone Company of Virginia)

Holders of obligations of companies affected by the mergers or acquisitions noted below should contact the appropriate service representative office of the company for further direction:

1. The merger of Bell Atlantic and GTE was finalized on June 30, 2000 under the new name of Verizon Communications.
2. SBC Communications completed the acquisition of Ameritech Corporation on October 8, 1999.
3. SBC Communications completed the acquisition of AT & T Corporation on November 21, 2005.  See footnote.
4. AT & T completed the acquisition of Bell South Corporation on December 29, 2006.
5. CenturyTel, Inc., and EMBARQ merged on July 1, 2009 to become CenturyLink, Inc.
6. Frontier Communications Corporation acquired Verizon Communications, Inc. local exchange businesses in fourteen states effective July 1, 2010.

Gas, electric, light, and water obligations

Statutory Requirements:  (Now governed by M.G.L. c. 167, s. 15G)

A. Massachusetts companies

Bonds, notes or other interest‑bearing obligations of a gas, electric light or water company incorporated or doing business in this Commonwealth and subject to the control and supervision of the Commonwealth.

B. Other companies

Bonds of any company which at the time of the investment is incorporated under the laws of the United States or any state and transacting the business of supplying electrical energy or artificial gas or natural gas purchased from another company and supplied in substitution for or in mixture with artificial gas for light, heat, power and other purposes or transacting any or all of the business. The bonds shall be part of an original issue of not less than $25,000,000 in principal amount.

C. Investment limitations

Not more than 25% of the assets of the entity shall be invested in obligations under this section and no more than 4% shall be invested in the obligations of any 1 company.

• AEP Texas Central Company (formerly Central Power & Light Company)
• AEP Texas North Company (formerly West Texas Utilities Company)
• Allete (formerly Minnesota Power and Light)
• Alliant Energy (formerly Interstate Power Company)
• Atlantic City Electric Company
• Carolina Power & Light Company (d/b/a Duke Energy Progress, Inc.)
• Constellation Energy Group (formerly Baltimore Gas & Electric)
• Delmarva Power & Light Company
• Duke Energy Corporation
• Empire District Electric Company
• Eversource Energy
• Florida Power & Light Company
• Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)
• Gulf Power Company
• Hawaiian Electric Company
• Idaho Power Company
• Kentucky Utilities Company
• Louisville Gas and Electric Company
• Madison Gas & Electric Company (formerly MGE Energy)
• Narragansett Electric Company
• New England Power Company
• Northern States Power Company (Minnesota)
• Northern States Power Company (Wisconsin)
• OGE Energy (formerly Oklahoma Gas and Electric Company)
• Potomac Electric Power Company
• PPL Electric Utilities Corporation (formerly Pennsylvania Power & Light Company)
• Public Service Company of Oklahoma
• Public Service Electric & Gas Company
• South Carolina Electric & Gas Company
• Southern Indiana Gas & Electric Company
• Southwestern Electric Power Company
• Southwestern Public Service Company
• Virginia Electric & Power Company
• Wisconsin Electric Power Company
• Wisconsin Power & Light Company
• Wisconsin Public Service Corporation

Stock of banks and bank holding companies

Statutory Requirements:  (Now governed by M.G.L. c. 167, s. 15H and 15I)

An entity that may invest pursuant to section 15A or the legal list may invest in the common stock of

(i) a bank in stock form incorporated under the laws of and doing business within the Commonwealth; provided, however, that there shall be no preferred stock outstanding; or, in the common stock of a federally chartered bank in stock form doing business within the Commonwealth; provided, however that there shall be no preferred stock outstanding; provided further, that state-chartered or federally-chartered banks shall be well capitalized under bank regulatory criteria;

(ii) In the common stock of a state-chartered bank or federally chartered bank doing business anywhere within the United States, which is a member of the Federal Reserve System and is well capitalized under bank regulatory criteria;

(iii) In the common stock of a bank holding company as defined in chapter 167A; provided, however, that the stock shall be received pursuant to an offer made by the bank holding company to exchange shares of its common stock for shares of a bank in stock form incorporated under the laws of the Commonwealth or for shares of a federally chartered bank doing business in the Commonwealth; or provided, however, that the stock shall be received pursuant to a plan for the merger or consolidation of the bank with or into or the transfer, sale or exchange of property or of assets of the bank or with a bank in stock form incorporated under the laws of the Commonwealth or a federally chartered bank doing business in the Commonwealth the stock of the bank, as the case may be, shall be at the time owned by the bank holding company.

(iv) In the common stock of a bank holding company as defined in said chapter 167A acquired otherwise than as set forth in the first paragraph or in the common stock of a bank holding company as defined in the federal Bank Holding Company Act of 1956, 12 U.S.C. 1841 et seq.; provided, however, that the holding company shall own 80 per cent or more of the voting stock of the qualifying bank; provided further, that if at any time after an investment in the common stock of the bank holding company, no bank of the holding company shall meet the requirements of clauses (iii) or (iv), the holding company’s stock shall be disposed of within the reasonable time as the Commissioner shall determine; and

(v) In the common stock of a company as defined in chapter 167A or in said federal Bank Holding Company Act of 1956; provided, however, that the banking institution or bank represents at least 50% of the company’s assets at book value at the end of its fiscal year immediately preceding the date of investment or at the date of investment in the case of a newly formed company.

(vi) In the purchase of the whole or any part of the stock of a savings bank, co-operative bank, federal savings and loan association or federal savings bank; provided, however, that the bank or association shall be well capitalized under bank regulatory criteria.

Insurance company stocks

Statutory Requirements:  (Now governed by M.G.L. c. 167, section 15J)

An entity that may invest pursuant to section 15A or the legal list may invest in the capital stock of any insurance company that may conduct a fire and casualty insurance business; provided, however that no insurance stock shall be purchased if the cost of the insurance stock added to the cost of the insurance stocks and bank stocks already owned shall exceed 66 ²/₃% of the total of the assets of the entity.

Bank debentures and notes

Statutory Requirements: (Now governed by M.G.L. c. 167, section 15K)

An entity that may invest pursuant to section 15A or the legal list may invest in the securities of any of the following classes: debentures, convertible debentures, notes or other evidences of indebtedness of a banking corporation in the common stock of which the corporation may invest pursuant to paragraph 1 of section 15H; provided, however, that the entity that may invest pursuant to said section 15A or the legal list shall be well capitalized under regulatory criteria; or of a banking corporation in the common stock of which the corporation may invest pursuant to paragraph 2 of said section 15H shall be well capitalized under regulatory criteria.

Other obligations

(Now governed by M.G.L. c. 167, section 15B)

• Massachusetts Bay Transportation Authority:  Various Issues²
• Massachusetts Port Authority:  Various Issues
• Massachusetts Turnpike Authority:  Various Issues³
• Tennessee Valley Authority:  Various Issues
• Washington D.C. Metropolitan Area Transit Authority: Various Issues

Common and preferred stocks

(Now governed by M.G.L. c. 167, section 15B)

Pursuant to M.G.L. c. 167, s. 15B(g), not more than 10% of the assets of the entity shall be invested in investments authorized under this section.

Abbott Laboratories

• Abbott Laboratories
• Altria Group (formerly Philip Morris Companies)
• American International Group, Inc.
• Bank of America Corporation 
• Bristol Myers Squibb Company
• Coca Cola Company
• Consolidated Edison
• Eli Lilly & Company
• Emerson Electric Company
• General Electric Company
• General Mills, Inc.
• Hewlett‑Packard Company
• Johnson & Johnson
• Kimberly‑Clark Corporation
• McDonald’s Corporation
• Merck & Co., Inc. (merged with Schering-Plough Corporation)
• PepsiCo, Inc.
• Pfizer, Inc.
• Procter & Gamble Company
• Rockwell Automation (formerly Rockwell International Corporation)
• Southern Company
• Unilever N. V.

Investment funds

As provided under General Laws chapter 167, section 15B, such list shall include the name of any investment fund, approved by the commissioner, which invests only in such stocks, bonds, notes and other interest-bearing obligations which are legal investments as provided herein.  The shares of any such investment fund so approved shall be legal investments pursuant to this section to the same extent as any such stocks, bonds, notes and other interest bearing obligations.

Pursuant to General Laws chapter 167, s. 15B(g), not more than 10% of the assets of the entity shall be invested in investments authorized under this section.

BLACKROCK/iSHARES EXCHANGE TRADED FUNDS:

• iShares U.S. Treasury Bond ETF
• iShares Treasury Floating Rate Bond ETF
• iShares Short Treasury Bond ETF
• iShares 1-3 Year Treasury Bond ETF
• iShares 3-7 Year Treasury Bond ETF
• iShares 7-10 Year Treasury Bond ETF
• iShares 10-20 Year Treasury Bond ETF
• iShares 20 Year+ Treasury Bond ETF
• iShares Agency Bond ETF
• iShares TIPS Bond ETF
• iShares 0-5 Year TIPS Bond ETF
• iShares GNMA Bond ETF
• iShares MBS ETF

BLACKROCK PROVIDENT INSTITUTIONAL FUNDS:

• T-Fund

DREYFUS:

• Government Cash Management
• Treasury & Agency Cash Management
• Treasury Prime Cash Management (formerly Treasury Securities Cash Management)

FEDERATED INVESTORS FUNDS:

• Federated Government Income Trust
• Federated Government Ultrashort Duration Fund
• Federated U.S. Government Securities Fund: 2-5 yrs.

FIDELITY: 

• Fidelity Investments Money Market Treasury Portfolio - Class I (formerly Fidelity Treasury Portfolio)
• Fidelity Treasury Only Money Market Fund

RBC:

• RBC US Government Money Market Fund: Institutional Classes 1 and 2

TRANSWESTERN CAPITAL:

• Institutional Short Duration Government Bond Fund

TRUST FOR CREDIT UNIONS:

• Ultra Short Duration Portfolio
• Short Duration Portfolio

UBS GLOBAL ASSET MANAGEMENT:

• UBS Select Treasury Institutional Fund

VICTORY CAPITAL FUNDS:

• Victory INCORE Fund for Income

WISDOMTREE:

• Floating Rate Treasury Fund

Footnotes

1. SBC Communications completed the acquisition of AT & T Corporation on November 21, 2005.  Following the acquisition, SBC adopted AT&T, Inc. as its name.
2. Massachusetts transportation agencies, including the Massachusetts Bay Transportation Authority, were integrated into the Massachusetts Department of Transportation effective November 1, 2009.
3. Massachusetts transportation agencies, including the Massachusetts Turnpike Authority, were integrated into the Massachusetts Department of Transportation effective November 1, 2009.