Commingling is a general term that refers to something being combined with something else and being treated the same, even though the items' origins are different. It has different meanings depending on the context.
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In investing, a commingled fund, also known as a commingled pool or a common fund, is one where funds or properties are combined into a common fund or stock.
In a trading organisation, the term commingling is used to describe the mixing of market prices from various foreign brokers & exchanges within a market gateway.
In law, commingling is a breach of trust in which a fiduciary mixes funds that he holds in the care of a client with his own funds, making it difficult to determine which funds belong to the fiduciary and which belong to the client. This raises particular concerns where the funds are invested, and gains or losses from the investments must be allocated. In such circumstances, the law usually presumes that any gains run to the client and any losses run to the fiduciary who is guilty of commingling.
Commingling is particularly an issue in case of bankruptcy of the fiduciary. Funds held in care are not the fiduciary's property, and the client is not a creditor. So in case of bankruptcy, if the funds have been properly kept separate, they can easily be returned to the client. If, however, the funds have been commingled, the client is potentially subject to becoming entangled in the bankruptcy proceedings, and there may not be sufficient funds to pay the client back.
For example, a tenant who deposits money with a landlord has not lent money to the landlord – the tenant is not a creditor – and is entitled to their deposit back even in case that the landlord declares bankruptcy, assuming property is in good condition – the tenant is responsible for the property, but is not undertaking credit risk.
Similarly, a client who invests with a fund or broker is investing, not lending, so the fiduciary must keep the client money separate and not use it for their own purposes, but only for approved investment purposes: the client is subject to investment risk on their money, but not credit risk regarding the fiduciary.
Lawyers and brokers
The problem of commingling is of particular concern in the legal profession. Attorneys are strictly prohibited from commingling their clients' funds with their own, and such activity is grounds for disbarment in virtually every jurisdiction, because of the ease of embezzlement and the difficulty of detection. Similar rules apply for licensed real estate brokers handling earnest money and other professionals who hold deposits as agents for clients in absentia.
Commingling is also evidence that may be used in "piercing the corporate veil" of a sham corporation, where a person shields himself from personal liability through "incorporation", yet fails to observe strict separation of corporate and personal property or accounts, among other improprieties.
For small business, strict separation of corporate and personal property is a particular issue, notably in tax and divorce law.
In community property states of the United States, "commingling" non-marital property with marital property can make it community property. For example, depositing money received by an individual through inheritance – ordinarily considered non-marital, individual property – into a joint bank account may transform the money into community property. Most community property states apply a presumption of community property; where there is any commingling the burden of proof is on the party disputing the classification to "trace" the property back to individual property, and demonstrate an intent to keep it separated.
In computer science
Commingling has a few meanings related to computer science.
Data commingling can also be related to high speed data transmission mixing. In this situation, data of one security level can inadvertently or purposely be mixed with data of a lower or higher security level on the same transmission portal. Portal vehicles can be wire, fiber optics, microwave or various radio frequency transmission portals. This commingling can cause breaches of security and become a source of legal issues to any entity, corporation or individual.
The term Data Commingling can also be related to using personal computers and personal software programs for business, security, government, etc. uses. In the early formulation stages of entities, non-profit or profit corporations, LLC's, LLP's, etc., the creation and use of stand-alone computers and stand-alone networks, "absolutely unconnected" to involved individuals, is the easiest and safest way to prevent Data Commingling.
In US postal operations
Commingling is a strategy used by mail houses to achieve postage savings for clients. The principle is to combine mail from different clients to help meet USPS quantity discount minimums for mailings going to targeted neighborhoods.
- "Commingling in a 401(k)". CNN.com. 2000-04-11. Retrieved 2015-01-14.
- "Assessing Data Risks in a Hybrid Cloud Environment". dummies.com. Retrieved 2013-05-28.
- "More employees are using a personal laptop as primary work PC". betanews.com. Retrieved 2013-05-28.
- "Postal : User's Guide to Commingling". TargetMarketingMag.com. 2009-03-01. Retrieved 2015-01-14.