Attorney General of Colorado — Opinion
May 29, 1975
RE: Collateral for state funds
J.D. MacFARLANE, Attorney General
Mr. Sam Brown Treasurer, State of Colorado 140 State Capitol Denver, Colorado 80203
Dear Mr. Brown:
QUESTION PRESENTED AND CONCLUSION
This is in response to your question of whether it is permissible for the State Treasurer to accept as collateral for deposits of state moneys securities held in custody outside the State of Colorado.
My conclusion is “no.”
C.R.S. 1973, 24-36-110(2)(b) provides that any interest-bearing obligations accepted by the State Treasurer as collateral security for the deposit of state moneys “shall be held in custody by the Denver branch of the federal reserve bank of Kansas City or by some national or state bank doing business in the state under a joint custody receipt or written escrow agreement.”
The issue then is whether the requirement that the obligations be held in the custody by a bank “doing business in the state” means that the securities must be physically located in the state.
It is a basic rule of statutory construction that a statute should be construed so as to effectuate its interest. It is clear from reading the entire statute that its intent is to safeguard and protect public moneys by requiring either surety bonds or secure interest-bearing obligations.
If the collateralized securities were allowed to be held in banks outside the State of Colorado the public moneys would receive less protection than if they were located in the state. For example, securities held in New York would not be readily accessible for inventory and audit to ascertain whether they adequately secure the amount of moneys on deposit. Further, if the depository defaulted in payment of the moneys on deposit, and for some reason the New York bank refused to deliver the securities to the Treasurer, the Treasurer’s only recourse would be to bring an action for their recovery in the State of New York.
Consequently, it is my conclusion that the requirement of “doing business in this state” by implication contemplates that the obligations will be held in a facility located within the state.
C.R.S. 1973, 24-36-110(2)
TREASURY, DEPT. OF All Other Areas
Statutory requirement that treasurer deposit state moneys in depositories which provide collateral on deposit with banks doing business in this state contemplates that the securities be held in a facility located within the state.