77-7

77-7

San Francisco, California
February 3, 1977

Re: Financial Code Section 3390

Dear Mr. ________:

This is in response to your telephone inquiry of February 1, 1977, and confirms our conversation of February 3, 1977, in which you asked whether a Massachusetts employer of a California resident could establish an employee savings plan. As I understand the proposed plan, the employer would withhold designated amounts from employees paychecks and pay interest on these amounts. The collected money would not be placed in a separate bank account, but would be used for the employers’ business. The money deposited with the employer could be withdrawn by an employee at any time. Although employee savings plans are not prohibited per se in California, the plan which you described would not be permissible. The employer would in fact be receiving money for deposit and that activity is specifically prohibited in Financial Code Section 3390 which reads as follows:

“No person which has not received a certificate from the Superintendent authorizing it to engage in the banking business shall solicit or receive deposits, issue certificates of deposit with or without, provision for interest, make payment on check, or transact business in the way or manner of a commercial bank, or trust company.”

I hope this information has been helpful to you. If you wish a specific ruling as to the propriety of a plan proposed by your client, please submit the facts to us in writing and we will be happy to render an opinion.

Very truly yours,

CARL J. SCHMITT
Superintendent of Banks
By

M. JUDITH NELSON
Counsel