Financial Affairs; Investment of Surplus; Prohibited Investments
(a) A local agency shall not invest any funds pursuant to this article or pursuant to Article 2 (commencing with Section 53630) in inverse floaters, range notes, or mortgage-derived, interest-only strips.
(b) A local agency shall not invest any funds pursuant to this article or pursuant to Article 2 (commencing with Section 53630) in any security that could result in zero interest accrual if held to maturity. However, a local agency may hold prohibited instruments until their maturity dates. The limitation in this subdivision shall not apply to local agency investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1940 (15 U.S.C. SEC. 80a-1 et seq.) that are authorized for investment pursuant to subdivision (l) of Section 53601.
(Amended by Stats. 2009, Ch. 332, Sec. 68.1.)