Trustee
A commercial bank or trust company with trust powers which acts in a fiduciary capacity for and on behalf of the bondholders by entering into an indenture with the issuer of the bonds.
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Trust Indenture Act of 1939
A federal statute setting out the requirements for Trust Indentures in connection with publicly traded corporate Securities.
The Trust Indenture Act prohibits the sale of corporate debt Securities to the public unless they are issued under an Indenture that conforms to federal statutory standards. The basic requirement of the Trust Indenture Act is that a Trustee be appointed to oversee the Indenture and that the Trustee exercise certain ministerial duties prior to a Default under the Indenture and exercise a fiduciary duty to act as a prudent person on behalf of investors after a Default occurs under the Indenture.
The Trust Indenture Act expressly exempts any Security exempted from the provisions of the 1933 Act by virtue of Section 3(a)(2) of the 1933 Act thereby exempting most municipal Securities from its purview.
Dive Deeper on State Law Matters
Learn more about the various aspects of state laws and how they intersect with municipal securities.
See Also
Indenture or Trust Indenture/Agreement
A contract between an issuer and a trustee under which the issuer issues bonds and specifies their maturities, interest rates, redemption provisions, form, exchange provisions, security and other terms.
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Blue Sky Laws
State securities laws, which regulate the offering of securities. Although these laws vary from state to state, most contain provisions concerning (a) prohibitions against fraud; (b) regulation of brokers and dealers doing business in the state; and (c) registration of Securities.