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ORDER APPROVING APPLICATION TO ESTABLISH A NONDEPOSITORY TRUST COMPANY TO BE KNOWN AS WATCH POINT TRUST COMPANY
Nixon Peabody LLP, Rochester, New York (“Nixon Peabody”) filed an application, pursuant to Title 9-B M.R.S.A. Chapter 121, to establish a nondepository trust company to be known as Watch Point Trust Company (“Watch Point TC”) and to be located in Boston, Massachusetts. Watch Point TC will have a registered agent in Maine. The application was accepted for processing on June 28, 2010. Public notice, as required by Title 9-B M.R.S.A. 252.2(B), was provided by publication, posting on the Bureau’s website and mail to interested parties affording them an opportunity to either submit written comments or request a hearing. The Bureau received no comments during the public comment period ending August 2, 2010.
A Principal Bank Examiner of the Maine Bureau of Financial Institutions conducted an investigation of this transaction. All evidence and pertinent material which were considered by the Examiner were also considered by the Superintendent in reaching his decision.
Nixon Peabody is a full-service, international law firm and one of the largest multipractice firms in the United States. It offers comprehensive legal services to individuals and organizations of all sizes in local, state, national and international matters. Its clients include emerging and middle-market businesses, national and multinational corporations, financial institutions, public entities, educational and not-for-profit institutions, and individuals.
Nixon Peabody Financial Advisors LLC (“NPFA”), a wholly-owned subsidiary of Nixon Peabody, is a registered investment advisor (“RIA”) and registered with the Securities and Exchange Commission (“SEC”). NPFA’s services include investment advisory, employee benefit planning, income tax planning and preparation, retirement planning, education planning, risk management/insurance planning and estate and gift planning.
Recent amendments by the SEC to custody and safekeeping rules (17 CFR Parts 275 and 279) under the Investment Advisers Act of 1940 require a qualified custodian maintaining client assets to send statements directly to the advisory clients. This requirement restricts the ability of RIAs, including NPFA, to prepare and send statements to their clients. Inasmuch as subaccounting and client statement preparation is a substantial part of NPFA’s operating model, this ruling poses a significant structural challenge to Nixon Peabody. The formation of Watch Point TC, which as a nondepository trust company would then become a “qualified custodian” as defined by SEC rule, and the partial spin out of NPFA’s platform operations to Watch Point TC will allow operations to continue in an uninterrupted manner and with no client impact. In addition to being a qualified custodian, Watch Point TC will offer investment management, employee benefit planning, income tax planning and preparation, retirement planning, education planning, and risk management/insurance planning. Its clients will include individuals, trustees, pension and profit sharing plans and other limited partnership and limited liability companies.
The proposed directors, officers and employees of Watch Point TC are employees of Nixon Peabody. The financial resources of Nixon Peabody are sound and sufficient to provide necessary support, if any, to Watch Point TC. The Bureau has considered the competitive effects, the future prospects and the convenience and needs of the markets to be served and found them consistent with approval. Accordingly, the application of Nixon Peabody to establish a nondepository trust company with the name “Watch Point Trust Company” is approved, subject to the conditions listed on Appendix A.
The transaction shall be completed within one year of the effective date of this Order, unless a written extension is granted by the Superintendent. Any person aggrieved by this Order shall be entitled to a judicial review of the Order in accordance with the Maine Administrative Procedure Act, Title 5, Chapter 375, subchapter VII.
By order of the Superintendent, effective September 13, 2010.
Watch Point Trust Company
Last Updated: June 5, 2013
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