Judges: DUANE WOODARD, Attorney General
Filed Date: 6/29/1987
Status: Precedential
Modified Date: 7/5/2016
Robert R. Ridl, C.P.A. Director of Local Governments Audits Office of State Auditor 200 East 14th Avenue Denver, CO 80203
Dear Mr. Ridl:
This letter is in response to your request for an opinion concerning the legality of the investment of funds by certain Colorado local governments1 in government investment trusts which are currently being marketed by various financial institutions as investment vehicles for governmental entities.
QUESTION PRESENTED AND CONCLUSION
May Colorado local governments lawfully invest in government investment trusts?
Colorado local governmental units may pool funds for investment only in accordance with sections
24-75-701 and24-75-702 , C.R.S. (1986 Supp.).
ANALYSIS
You have submitted for my review several government investment trusts which have been marketed to various Colorado units of local government. This office has considered the legality of local government investments on several occasions in the past, and has consistently opined that section
You have inquired here about investments in trusts known as "Massachusetts business trusts." According to the information which you have supplied, such trusts differ from traditional mutual funds with respect to the interests of the investors in the underlying trust answers: investors in "Massachusetts business trusts" acquire equitable undivided interests in the property held by the trustee. The purpose of government investment trusts like "Massachusetts business trusts" is to enable governmental units to combine their assets in order to take advantage of investment opportunities. The portfolios of such trusts are characteristically limited to securities which would constitute permissible direct investments of the participating governmental entities. Even though investments in "Massachusetts business trusts" are then, arguably direct investments in authorized securities, it is nonetheless my opinion that such investments are prohibited by law.
Lawful investments for the state and its political subdivisions are set forth in section
SUMMARY
It is my opinion that Colorado local governmental units may pool funds for investment only in accordance with sections
Very truly yours,
DUANE WOODARD Attorney General
PUBLIC FUNDS
Section
LOCAL GOV AUDITS REPORTS
Colorado local governments may pool funds only in accordance with sections