Requires funds received by NJ from lawsuits in which AG participated be held in escrow by certain financial institutions.

S4262

SENATE, No. 4262

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MAY 14, 2026

Sponsored by:

Senator� VIN GOPAL

District 11 (Monmouth)

SYNOPSIS

���� Requires funds received by NJ from lawsuits in which
AG participated be held in escrow by certain financial institutions.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning certain funds held in escrow and
supplementing Title 52 of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1. Notwithstanding the
provisions of section 1 of P.L.1956, c.174 (C.52:18-16.1) or any rule,
regulation, or order to the contrary, when the Attorney General, by and through
the Office of the Attorney General or other counsel retained by the Attorney
General, �represents the State, any political subdivision of the State, or any agency
thereof, �in any litigation which results in the receipt of money damages,
civil fines, monetary restitution, settlement funds, or other proceeds relating
to the litigation, the Attorney General, in consultation with the State
Treasurer, shall provide for the deposit of at least 50 percent of such funds
in a financial institution that meets the requirements of subsections a.
through e. of this section. The financial institution shall:

���� a. Maintain at least 15
percent of its total deposits in the State, as set forth in the most recent
Deposit Market Share Report published on the website of the Federal Deposit
Insurance Corporation;

���� b. Be licensed or otherwise
authorized to do business in this State by the Department of Banking and
Insurance (the department) and listed by the department as an approved
financial institution;

���� c. Provide escrow, trust, or
custody services in the usual course of business and have appropriate expertise,
as determined by the department, to open and operate an account holding
proceeds of litigation as described in this act;

���� d. Not accept for deposit any
proceeds of litigation as described in this act that constitutes more than 10
percent of the financial institution�s total deposits; and

���� e. Maintain total deposits of at
least $1 billion.

���� 2. In multi-jurisdictional,
class action, or mass tort litigation involving the Attorney General, the
provisions of this act shall apply only to such proceeds recoverable by the
Attorney General, without prejudice to the rights of any other party.

���� 3. The Department of Banking
and Insurance shall maintain a directory of New Jersey financial institutions
approved by the department for the purposes of this act. Any financial
institution approved by the Supreme Court of New Jersey to serve as a
repository for an attorney trust account shall be presumptively approved by the
department for the purposes of this act.

���� 4. This act shall take effect
immediately.

STATEMENT

����

���� This bill requires that funds
received by the State or other government entity from lawsuits in which the
Attorney General participated would be required to be held in escrow in certain
financial institutions.

���� The bill applies to money
damages, civil fines, monetary restitution, settlement funds, or other proceeds
relating to the litigation.� The Department of Banking and Insurance (the
department) would maintain a directory of financial institutions in New Jersey
approved by the department for this purpose.�

���� Under the bill, the Attorney
General, in consultation with the State Treasurer, would provide that at least
50 percent of such funds be deposited in a financial institution that meets
certain requirements. The financial institution is required to:

���� a. Maintain at least 15
percent of its total deposits in the State as set forth in the most recent
Deposit Market Share Report published on the website of the Federal Deposit
Insurance Corporation;

���� b. Be licensed or otherwise
authorized to do business in this State by the department and listed by the
department as an approved financial institution;

���� c. Provide escrow, trust, or
custody services in the usual course of business and have appropriate
expertise, as determined by the department,� to open and operate an account
holding proceeds of litigation conducted by the State or other public entity;

���� d. Not accept for deposit any
proceeds of such litigation that constitute more than 10 percent of the
financial institution�s total deposits; and

���� e. Maintain total deposits of
at least $1 billion.

���� Under the bill, any financial
institution approved by the Supreme Court of New Jersey to hold attorney trust
accounts would be presumptively approved by the department to also hold the funds
regulated under the bill. Currently, under the Rules of Court, every attorney
who practices in the State must keep an attorney trust account in a financial
institution in the State. The sponsor wishes to note that although the Rules of
Court require attorney trust accounts to be held in New Jersey banks, the State
itself is not required to comply with this rule. In the interests of comity
with the Rules of Court, the Legislature is imposing a similar requirement for
litigation where the State is a party.