New Jersey Senate Bill S4262

New Jersey 2026-2027 Regular Session

• Introduced: 5/14/26
• Refer: 5/14/26

Caption

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

Summary

This bill requires that at least 50 percent of money received by the State or another public entity from litigation in which the Attorney General participated be deposited in escrow, trust, or custody accounts at qualifying New Jersey financial institutions. The covered proceeds include damages, civil fines, restitution, settlement funds, and other litigation-related receipts. The Attorney General, in consultation with the State Treasurer, would be responsible for arranging the deposits. To qualify, a financial institution must be authorized to do business in New Jersey, be approved by the Department of Banking and Insurance, provide escrow/trust/custody services, maintain at least $1 billion in total deposits, hold at least 15 percent of its deposits in New Jersey, and limit these litigation proceeds to no more than 10 percent of its total deposits. The department would also maintain a directory of approved institutions, and banks already approved by the New Jersey Supreme Court to hold attorney trust accounts would be presumptively approved for this purpose.

Impact

The bill would add a new statutory requirement in Title 52 governing how litigation proceeds recovered by the State or its political subdivisions are held before disbursement. It would direct the Attorney General and State Treasurer to use certain in-state financial institutions for at least half of those funds, and it would give the Department of Banking and Insurance a role in approving and listing eligible institutions. The measure would not change the underlying authority to recover or distribute litigation proceeds, but it would impose a new escrow/deposit framework for those funds.

Sentiment

Based on the bill text and sponsor statement, the measure appears to be framed positively as a comity-based policy aligning state practice with existing court rules that require attorney trust accounts to be kept in New Jersey banks. The sponsor’s stated rationale suggests support for keeping public litigation proceeds in-state and using institutions with sufficient size and expertise. No committee transcripts or recorded votes were provided, so there is no additional evidence of opposition or formal debate in the available materials.

Contention

The main policy issue is the requirement that at least 50 percent of litigation proceeds be placed with certain New Jersey financial institutions, which could be viewed as favoring larger in-state banks and limiting flexibility in treasury management. The eligibility criteria—especially the $1 billion deposit threshold, the 15 percent in-state deposit requirement, and the cap that litigation proceeds cannot exceed 10 percent of total deposits—may exclude smaller institutions and could be seen as restrictive. Another possible point of contention is the bill’s application to funds recovered in multi-jurisdictional, class action, or mass tort matters, though the bill limits its reach to proceeds recoverable by the Attorney General and preserves the rights of other parties.