June 10, 1992







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<p>
<p>




          David P. Dollieslager, CCUE<br>

          President-Manager<br>

          Sun Coast Credit Union<br>

          P.O. Box 685<br>

          Daytona Beach, Florida 32115<p>




                  Re:  Purity Financial Corporation (Your May 8, 1992,

                       Letter)<p>




          Dear Mr. Dollieslager:<p>




          You have asked us for a legal opinion regarding the relation-

          ship between Sun Coast Credit Union (SSCU) and Purity Finan-

          cial Corporation (PFC).  In order to provide an informative

          opinion, we contacted the Regional office to determine the

          concerns the examiner had with your arrangement with PFC. 

          The Region provided us with the following information:  SSCU

          entered into lease and marketing agreements with PFC to have

          PFC market insurance products sold on the premises of SSCU, a

          state-chartered federally-insured credit union.  The lease

          agreement states that the manner in which PFC conducts its

          business would clearly designate the independent ownership

          and operation of PFC.  However, sales literature distributed

          at SSCU by PFC employees contained the following stamp on the

          back:<p>


                             Mark R. Murphy<br>

                             Tax Advantage Accounts<bR>

                             Sun Coast Credit Union<p>


          Furthermore, the examiner discovered that there was no

          physical separation between the activities of PFC and SSCU.  <p>


          We reviewed the marketing and lease agreements between PFC

          and SSCU in light of the above information.  Although a cur-

          sory review of the documents you provided us did not reveal

          any violations of the applicable provisions of the FCU Act or

          NCUA's Rules and Regulations, it is the responsibility of

          each credit union to ensure the legality of an agreement be-

          fore entering into it.  Furthermore, it is apparent that SSCU

          and PFC failed to follow the terms of the agreement in rela-

          tion to the literature being distributed (see section 4.07 of

          the lease agreement) and the physical separation of PFC's

          business activities from SSCU's business activities (see sec-

          tion 4.01 of the lease agreement).  The literature may imply

          that Mr. Murphy is the employee and/or agent of SSCU.  The

          failure to physically separate the business activities may

          produce confusion as to whether SSCU and PFC are separate en-

          tities.  If SSCU and PFC are considered one legal entity, it

          may result in additional liability for the credit union and

          ultimately to the National Credit Union Share Insurance Fund. <p>


          Subsequent to the exam, PFC moved its operations out of SSCU. 

          Although physical separation within the credit union would

          have been sufficient, this action alleviates one of our con-

          cerns.  However, SSCU should ensure that PFC eliminates any

          reference to SSCU from its promotional material.  We defer to

          the Region for any safety and soundness concerns presented by

          these agreements.  <p>


          One additional note.  This letter should not be viewed as an

          endorsement of the marketing and lease agreements.<p>




                                        Sincerely,<p>


<p>




                                        Hattie M. Ulan<br>

                                        Associate General Counsel<p>


          GC/MM:sg<br>

          SSIC 3000<Br>

          92-0520<br>

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