South Dakota Codified Laws 51A-10-9. Preferential deposits
No bank may give preference to any depositor or creditor by pledging the assets of the bank as collateral security except as provided in § 51A-4-13 and as follows:
(1) The bank may deposit with the treasurer of the United States so much of its assets as may be necessary to qualify as a depository for federal funds and bankruptcy court funds;
Terms Used In South Dakota Codified Laws 51A-10-9
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- 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.
- Federal Deposit Insurance Corporation: A government corporation that insures the deposits of all national and state banks that are members of the Federal Reserve System. Source: OCC
- Lien: A claim against real or personal property in satisfaction of a debt.
(2) A bank, in order to qualify as a depository of funds deposited by the state, any political subdivision thereof, including counties, municipalities, townships, and school districts, or by any officer, commission, board, bureau, or agency of the state or political subdivision or any tribal government, shall segregate as security, investment securities as provided in §§ 51A-4-25 and 51A-4-26, or irrevocable standby letters of credit, or a surety bond, in accordance with § 4-6A-3, a sum equal to one hundred percent of the amount deposited in excess of the amount insured by the Federal Deposit Insurance Corporation;
(3) A bank may pledge securities to guarantee deposit of out-of-state municipal, school district, county, or state funds in excess of the amount insured by the federal deposit insurance corporation;
(4) The public deposits preferred by this section are hereby granted a paramount, preferred, and perfected first lien on the bank assets so deposited or segregated or pledged.
Source: SDC 1939, § 6.0418; SL 1941, ch 17; SL 1957, ch 13; SL 1963, ch 25; SDCL §§ 51-10-15 to 51-10-17; SL 1969, ch 11, § 8.10; SL 1974, ch 39, § 16; SL 1982, ch 334, § 4; SL 1986, ch 44, § 14; SL 1987, ch 45, § 3; SDCL § 51-22-12; SL 1991, ch 390, § 7; SL 1992, ch 335; SL 1997, ch 273, § 1; SL 2002, ch 221, § 1.