A recent order issued by the Federal Court trying the NPS civil suit referenced a mirror trust employed by the defendant bank (12-31-14 Order – Comerica MSJ ). To facilitate the trading of investment securities, a brokerage account is established with a firm that can administer the transactions more efficiently than the fiduciary institution. The fiduciary institution may not actually custody the assets, but rather, records the transactions on its accounting system. This practice is prevalent when independent fund managers have established relations with brokerage firms.
In the order denying a request for a summary judgment, the NPS Federal Court suggested that such a practice may not satisfy Iowa law that requires a preneed trustee to control and protect trust assets.