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NYS Comptroller

THOMAS P. DiNAPOLI

The Academy for New York State's Local Officials

Protecting the Public’s Interest: A Tutorial on Local Government Ethics and Transparency in New York State

Module 1 - Conflict of Interest of Municipal Officers and Employees

Text for Video - Additional Prohibitions - Designations of Banks or Trust Companies

At this point, I also want to discuss a little bit about another prohibition that is out there specifically under Section 801 of the General Municipal Law. There is a prohibition that affects only municipal chief fiscal officers, treasurers, and their staff. I am going to run through the law a little bit here and try and explain it. It is fairly complicated but I’m going to come round and try and give you the bare bone example of what’s going on here. Here we go. Unless an exception applies Section 801(2) prohibits a chief fiscal officer, treasurer, and their staff from having an interest in a bank or trust company designated either as a depository, paying agent, registration agent or for the investment of funds.

Section 802(1)(a) provides an exception for designation of a bank or trust company as a depository, paying agent, registration agent, or for the investment of funds. But the exception does not apply to a chief fiscal officer, treasurer, and their staff unless the municipality would be required to designate a bank or trust company located outside of the municipality.

So again, what does this all mean? I’m going try to lay it out here for you. If in the event there is only one bank or trust company within your municipality, the exception applies. Meaning that any interest in the bank on the part of a chief fiscal officer, district treasurer, or his/her staff is not prohibited. On the other hand, if there is more than one bank or trust company within your municipality, the chief fiscal officer, district treasurer, and his/her staff may not have an interest in a bank or trust company designated as a depository, paying agent, registration agent, or for the investment of funds unless another statutory exception applies in this situation. An example that may be, let's say this individual own less than 5 percent of the outstanding stock.

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