Cal. Code Regs. Tit. 10, § 260.216.15 - Bond Requirement

Current through Register 2022 Notice Reg. No. 16, April 25, 2022

(a) Any issuer who employs agents in connection with any security or transaction not exempt by Chapter 1 (commencing with Section 25100) of Part 2 of Division 1 of Title 4 of the Code shall furnish and maintain, so long as such issuer is engaging in sales of securities requiring the posting of such bond, a surety bond in the amount of $10,000 issued by a corporate surety admitted to transact business in the State of California, in the form and tenor required pursuant to subdivision (e) of Section 25216 of the Code, unless such issuer complies with subdivision (b) hereof.

(b) An appropriate deposit of cash or securities is acceptable by the Commissioner in lieu of the bonds mentioned in subsection (a).

The following procedure should be observed by the person making such deposit ("depositor"):

(1) Appropriate deposits of cash or securities include certificates of deposit or other appropriate evidence of deposit of bank accounts or savings and loan certificates or share accounts. Securities which have a fluctuating market value will not be deemed appropriate within the meaning of subdivision (e) of Section 25216 of the Code.

(2) The depositor forwards the cash or securities to a bank of its choice in the City of Sacramento, with the request that the same be held subject to written instructions of the Commissioner of Corporations or State Treasurer.

(3) Concurrently, the depositor files with the Commissioner six copies of an Assignment Form furnished by the Commissioner completed as to Part I and Part II, together with two copies of instruction letter to the Sacramento bank. If the depositor is a corporation, it shall also file two copies of the resolution of its board of directors authorizing the filing of the Assignment.

(4) Upon acceptance of the deposit, the Commissioner will complete Part III of the Assignment Form. One copy each of the completed form will be forwarded to the depositor or issuer, and the bank or savings and loan association where the funds are deposited.

(5) The arrangement may be terminated by filing a bond as specified in subsection (a) of this section, upon expiration or termination of the qualification, or otherwise as ordered by the Commissioner. However, the deposit in lieu of bond is not returnable to the depositor until two years after termination of the arrangement.

(c) The Commissioner has no authority to adjudicate any claim or controversy against the bond or deposit, and disputed claims must be adjudicated by a court. Upon the filing of suit and notice thereof to the Commissioner, the Commissioner, if he/she deems it appropriate, will turn over all or part of the deposit to the court by means of an interpleader or similar proceeding.

Notes

Cal. Code Regs. Tit. 10, § 260.216.15

Note: Authority cited: Sections 25216(e) and 25610, Corporations Code. Reference: Section 25216, Corporations Code.

1. Amendment filed 1-11-72; effective thirtieth day thereafter (Register 72, No. 3).
2. Amendment of subsections (c)(3) and (4) filed 11-14-78; effective thirtieth day thereafter (Register 78, No. 45).
3. Amendment filed 4-27-84; effective thirtieth day thereafter (Register 84, No. 18).