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Title 15, Commerce and TradeRelease 119-110

§80a–26 Unit Investment Trusts

Title 15 › CHAPTER 2D — INVESTMENT COMPANIES AND ADVISERS › SUBCHAPTER I — INVESTMENT COMPANIES › § 80a–26

Last updated Sep 22, 2026|Official source

Summary

Stops underwriters or depositors of a registered unit investment trust from selling the trust’s own securities (except short-term paper) unless those securities are surrendered to the trustee for redemption or the trust’s governing papers follow certain rules. The trust must name one or more trustees or custodians that are banks and must say each bank has at least $500,000 in capital, surplus, and undivided profits (or use the amount shown in its latest published condition report). The trustee may take fees from the trust’s income, or from the principal if there is no income, but only for services already done and for actual expenses. The trustee cannot count payments to the depositor, the principal underwriter, or their affiliates as trust expenses, except for a reasonable bookkeeping or administrative fee the Commission allows. The trustee must hold and keep separate all the trust’s investments, cash, special funds, and income until they are paid out to investors. A trustee cannot quit unless the trust is fully wound up or a qualified successor trustee accepts. The depositor must keep a record of each investor and must mail or deliver a notice within five days when one security is swapped for another, identifying what was replaced and the shares affected. The Commission may, after talking with federal banking regulators, set rules letting a bank or a bank affiliate serve as trustee in certain cases. Any swap of a single-issuer security needs Commission approval. If the trust’s papers don’t meet these rules, a written contract between the depositor and trustee that includes the required terms and is filed with the Commission can fix that. The Commission can ask a federal court to liquidate an inactive trust if that is best for investors. Separate accounts that fund variable insurance contracts are mostly exempt from the trustee rules, but they must still show fees are reasonable, make that representation in their registration statement by the earlier of August 1, 1997, or the first effective registration after October 11, 1996, follow the trustee rules as if they were trustees, file yearly financials with their state showing at least $1,000,000 in combined capital or surplus (or another amount the Commission sets), and be examined by the state insurance regulator. The Commission can make rules to enforce these fee and disclosure requirements.

Full Legal Text

Title 15, §80a–26

Commerce and Trade, Source: USLM XML via OLRC

(a)Custody and sale of securities
No principal underwriter for or depositor of a registered unit investment trust shall sell, except by surrender to the trustee for redemption, any security of which such trust is the issuer (other than short-term paper), unless the trust indenture, agreement of custodianship, or other instrument pursuant to which such security is issued—
(1)designates one or more trustees or custodians, each of which is a bank, and provides that each such trustee or custodian shall have at all times an aggregate capital, surplus, and undivided profits of a specified minimum amount, which shall not be less than $500,000 (but may also provide, if such trustee or custodian publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, that for the purposes of this paragraph the aggregate capital, surplus, and undivided profits of such trustee or custodian shall be deemed to be its aggregate capital, surplus, and undivided profits as set forth in its most recent report of condition so published);
(2)provides, in substance, (A) that during the life of the trust the trustee or custodian, if not otherwise remunerated, may charge against and collect from the income of the trust, and from the corpus thereof if no income is available, such fees for its services and such reimbursement for its expenses as are provided for in such instrument; (B) that no such charge or collection shall be made except for services theretofore performed or expenses theretofore incurred; (C) that no payment to the depositor of or a principal underwriter for such trust, or to any affiliated person or agent of such depositor or underwriter, shall be allowed the trustee or custodian as an expense (except that provision may be made for the payment to any such person of a fee, not exceeding such reasonable amount as the Commission may prescribe as compensation for performing bookkeeping and other administrative services, of a character normally performed by the trustee or custodian itself); and (D) that the trustee or custodian shall have possession of all securities and other property in which the funds of the trust are invested, all funds held for such investment, all equalization, redemption, and other special funds of the trust, and all income upon, accretions to, and proceeds of such property and funds, and shall segregate and hold the same in trust (subject only to the charges and collections allowed under clauses (A), (B), and (C) of this paragraph) until distribution thereof to the security holders of the trust;
(3)provides, in substance, that the trustee or custodian shall not resign until either (A) the trust has been completely liquidated and the proceeds of the liquidation distributed to the security holders of the trust, or (B) a successor trustee or custodian, having the qualifications prescribed in paragraph (1) of this subsection, has been designated and has accepted such trusteeship or custodianship; and
(4)provides, in substance, (A) that a record will be kept by the depositor or an agent of the depositor of the name and address of, and the shares issued by the trust and held by, every holder of any security issued pursuant to such instrument, insofar as such information is known to the depositor or agent; and (B) that whenever a security is deposited with the trustee in substitution for any security in which such security holder has an undivided interest, the depositor or the agent of the depositor will, within five days after such substitution, either deliver or mail to such security holder a notice of substitution, including an identification of the securities eliminated and the securities substituted, and a specification of the shares of such security holder affected by the substitution.
(b)Bank or affiliated person of bank as trustee or custodian
The Commission may, after consultation with and taking into consideration the views of the Federal banking agencies (as defined in section 1813 of title 12), adopt rules and regulations, and issue orders, consistent with the protection of investors, prescribing the conditions under which a bank, or an affiliated person of a bank, either of which is an affiliated person of a principal underwriter for, or depositor of, a registered unit investment trust, may serve as trustee or custodian under subsection (a)(1).
(c)Substitution of securities
It shall be unlawful for any depositor or trustee of a registered unit investment trust holding the security of a single issuer to substitute another security for such security unless the Commission shall have approved such substitution. The Commission shall issue an order approving such substitution if the evidence establishes that it is consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this subchapter.
(d)Binding contract or agreement embodying applicable provisions deemed to qualify non-complying instrument by which securities were issued
In the event that a trust indenture, agreement of custodianship, or other instrument pursuant to which securities of a registered unit investment trust are issued does not comply with the requirements of subsection (a), such instrument will be deemed to meet such requirements if a written contract or agreement binding on the parties and embodying such requirements has been executed by the depositor on the one part and the trustee or custodian on the other part, and three copies of such contract or agreement have been filed with the Commission.
(e)Liquidation of unit investment trust
Whenever the Commission has reason to believe that a unit investment trust is inactive and that its liquidation is in the interest of the security holders of such trust, the Commission may file a complaint seeking the liquidation of such trust in the district court of the United States in any district wherein any trustee of such trust resides or has its principal place of business. A copy of such complaint shall be served on every trustee of such trust, and notice of the proceeding shall be given such other interested persons in such manner and at such times as the court may direct. If the court determines that such liquidation is in the interest of the security holders of such trust, the court shall order such liquidation and, after payment of necessary expenses, the distribution of the proceeds to the security holders of the trust in such manner and on such terms as may to the court appear equitable.
(f)Exemption
(1)In general
Subsection (a) does not apply to any registered separate account funding variable insurance contracts, or to the sponsoring insurance company and principal underwriter of such account.
(2)Limitation on sales
It shall be unlawful for any registered separate account funding variable insurance contracts, or for the sponsoring insurance company of such account, to sell any such contract—
(A)unless the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company, and, beginning on the earlier of August 1, 1997, or the earliest effective date of any registration statement or amendment thereto for such contract following October 11, 1996, the insurance company so represents in the registration statement for the contract; and
(B)unless the insurance company—
(i)complies with all other applicable provisions of this section, as if it were a trustee or custodian of the registered separate account;
(ii)files with the insurance regulatory authority of the State which is the domiciliary State of the insurance company, an annual statement of its financial condition, which most recent statement indicates that the insurance company has a combined capital and surplus, if a stock company, or an unassigned surplus, if a mutual company, of not less than $1,000,000, or such other amount as the Commission may from time to time prescribe by rule, as necessary or appropriate in the public interest or for the protection of investors; and
(iii)together with its registered separate accounts, is supervised and examined periodically by the insurance authority of such State.
(3)Fees and charges
For purposes of paragraph (2), the fees and charges deducted under the contract shall include all fees and charges imposed for any purpose and in any manner.
(4)Regulatory authority
The Commission may issue such rules and regulations to carry out paragraph (2)(A) as it determines are necessary or appropriate in the public interest or for the protection of investors.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1999—Subsecs. (b) to (f). Pub. L. 106–102 added subsec. (b) and redesignated former subsecs. (b) to (e) as (c) to (f), respectively. 1996—Subsec. (e). Pub. L. 104–290 added subsec. (e). 1987—Subsec. (b). Pub. L. 100–181, § 618, substituted “intended” for “intend”. Subsec. (c). Pub. L. 100–181, § 619, substituted “contract or agreement” for “contract of agreement”. 1970—Subsecs. (b) to (d). Pub. L. 91–547 added subsec. (b), redesignated former subsec. (b) as (c), struck out “at the

Effective Date

of this subchapter” before “comply”, substituted “contract of agreement” for “contract or agreement”, and redesignated former subsec. (c) as (d).

Statutory Notes and Related Subsidiaries

Effective Date

of 1999 AmendmentAmendment by Pub. L. 106–102 effective 18 months after Nov. 12, 1999, see section 225 of Pub. L. 106–102, set out as a note under section 77c of this title.

Effective Date

of 1970 AmendmentAmendment by Pub. L. 91–547 effective Dec. 14, 1970, see section 30 of Pub. L. 91–547, set out as a note under section 80a–52 of this title.

Executive Documents

Transfer of Functions

For

Transfer of Functions

of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.

Reference

Citations & Metadata

Citation

15 U.S.C. § 80a–26

Title 15, Commerce and Trade

Last Updated

Sep 22, 2026

Release point: 119-110