Local Rule LOCAL RULE 7067-1: REGISTRY FUND

LOCAL RULE 7067-1 REGISTRY FUND

(a) Receipt of Funds.

(1) Order Required. No money, other than unclaimed or undistributed dividends, may be sent to the court or its officers for deposit into the court's registry without an order of the court.

(2) Deposit with Treasurer. Unless otherwise directed, all registry funds in pending or adjudicated cases must be deposited with the treasurer of the United States in the name and to the credit of the court pursuant to 28 U.S.C. § 2041, through depositories designated by the United States Department of the Treasury to accept such deposits on its behalf.

(3) Providing Order Permitting Deposit. A party or attorney making a deposit or transferring funds to the court's registry must provide the order permitting the deposit or transfer to the clerk, chief deputy, or financial manager.

(b) Investment of Registry Funds.

(1) Authorized Investment Mechanism. If the court orders that funds on deposit with the court must be placed in some form of interest-bearing account or invested in a court-approved, interest-bearing instrument in accordance with Rule 67 of the Federal Rules of Civil Procedure, the Court Registry Investment System ("CRIS"), administered by the Administrative Office of the United States Courts under 28 U.S.C. § 2045, will be the only investment mechanism authorized.

(2) Interpleader Funds. Interpleader funds deposited under 28 U.S.C. § 1335 meet the IRS definition of a "Disputed Ownership Fund" ("DOF"), a taxable entity that requires tax administration. Unless the court orders otherwise, interpleader funds must be deposited in the DOF established within the CRIS and administered by the Administrative Office of the United States Courts, which will be responsible for meeting all DOF tax administration requirements.

(3) Custodian of Funds. The director of the Administrative Office of the United States Courts is designated as the custodian for all CRIS funds. The director or the director's designee must perform the duties of custodian. Funds held in the CRIS remain subject to the control and jurisdiction of the court.

(4) Pooling of Funds. Funds deposited in the CRIS must be pooled together with funds deposited to the credit of other courts in the CRIS and used to purchase Government Account Series securities through the Bureau of Public Debt, which will be held at the United States Department of the Treasury, in an account in the name and to the credit of the director of the Administrative Office of the United States Courts. The pooled funds will be invested in accordance with the principles of the CRIS Investment Policy as approved by the Registry Monitoring Group.

(5) Procedure for Distributing Income from Funds. An account will be established in the CRIS Liquidity Fund titled in the name of the case giving rise to the deposit invested in the fund. Income generated from fund investments will be distributed to each case based on the ratio each account's principal and earnings has to the aggregate principal and income total in the fund after the CRIS fee, described in subsection (c) of this rule, has been applied. Reports showing the interest earned and the principal amounts contributed in each case will be prepared and distributed to each court participating in the CRIS and made available to parties and/or their attorneys.

(6) Procedure for Distributing Income from Funds in Interpleader Case. For each interpleader case, an account must be established in the CRIS DOF, titled in the name of the case giving rise to the deposit invested in the fund. Income generated from fund investments will be distributed to each case after the DOF fee, described in subsection (c) of this rule, has been applied and tax withholdings have been deducted from the fund. Reports showing the interest earned and the principal amounts contributed in each case will be available through the FedInvest/CMS application for each court participating in the CRIS and made available to parties and/or their attorneys. On appointment of an administrator authorized to incur expenses on behalf of the DOF in a case, the case DOF funds should be transferred to another investment account as directed by court order.

(c) Fees and Taxes.

(1) Deduction of CRIS Fee. The custodian is authorized and directed by this rule to deduct the CRIS fee of an annualized 10 basis points on assets on deposit for all CRIS funds, excluding the case funds held in the DOF, for the management of investments in the CRIS. According to the Bankruptcy Court Miscellaneous Fee Schedule, the CRIS fee is assessed from interest earnings to the pool before a pro rata distribution of earnings is made to court cases.

(2) Deduction of DOF Fee. The custodian is authorized and directed by this rule to deduct the DOF fee of an annualized 20 basis points on assets on deposit in the DOF for the management of investments and tax administration. According to the Bankruptcy Court Miscellaneous Fee Schedule, the DOF fee is assessed from interest earnings to the pool before a pro rata distribution of earnings is made to court cases. The custodian is further authorized and directed by this rule to withhold and pay federal taxes due on behalf of the DOF.