Texas Finance Code - Section 151.308. Security
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§ 151.308. SECURITY. (a) An applicant for a money
transmission license must provide, and a money transmission license
holder must maintain at all times, security consisting of a surety
bond, an irrevocable letter of credit, or a deposit instead of a
bond in accordance with this section.
(b) The amount of the required security is the greater of
$300,000 or an amount equal to one percent of the license holder's
total yearly dollar volume of money transmission business in this
state or the applicant's projected total volume of business in this
state for the first year of licensure, up to a maximum of $2
million. When the amount of the required security exceeds $1
million, the applicant or license holder may, in the alternative,
provide security in the amount of $1 million, plus a dollar for
dollar increase in the net worth of the applicant or license holder
over the amount required under Section 151.307, up to a total amount
of $2 million.
(c) The security must:
(1) be in a form satisfactory to the commissioner;
(2) be payable to any claimant or to the commissioner,
on behalf of a claimant or this state, for any liability arising out
of the license holder's money transmission business in this state,
incurred under, subject to, or by virtue of this chapter;
(3) be conditioned on the faithful compliance of the
license holder or the principals, responsible individuals,
employees and authorized delegates of the license holder with this
chapter or any rule adopted or order issued under this chapter; and
(4) if the security is a bond, be issued by a qualified
surety company authorized to engage in business in this state and
acceptable to the commissioner or, if the security is an
irrevocable letter of credit, be issued by a financial institution
acceptable to the commissioner.
(d) A claimant may bring suit directly on the security, or
the commissioner may bring suit on behalf of the claimant or the
state, either in one action or in successive actions.
(e) The commissioner may collect from the security or
proceeds of the security any delinquent fee, assessment, cost,
penalty, or other amount imposed on and owed by a license holder.
If the security is a surety bond, the commissioner shall give the
surety reasonable prior notice of a hearing to impose an
administrative penalty against the license holder, provided that a
surety may not be considered an interested, aggrieved, or affected
person for purposes of an administrative proceeding under Section
151.801 or Chapter 2001, Government Code.
(f) The security remains in effect until canceled, which may
occur only after providing 30 days' written notice to the
commissioner. Cancellation does not affect any liability incurred
or accrued during the period covered by the security.
(g) The security shall cover claims for at least five years
after the license holder surrenders its license or otherwise ceases
to engage in activities for which a license is required under this
subchapter. However, the commissioner may permit the amount of the
security to be reduced or eliminated before that time to the extent
that the amount of the license holder's obligations to the
department and to purchasers in this state is reduced. The
commissioner may permit a license holder to substitute another form
of security when the license holder ceases to provide money
transmission in this state.
(h) If the commissioner at any time reasonably determines
that the required security is insecure, deficient in amount, or
exhausted in whole or in part, the commissioner by written order
shall require the license holder to file or make new or additional
security to comply with this section.
(i) Instead of providing all or part of the amount of the
security required by this section, an applicant or license holder
may deposit, with a financial institution possessing trust powers
that is authorized to conduct a trust business in this state and is
acceptable to the commissioner, an aggregate amount of United
States currency, certificates of deposit, or other cash equivalents
that equals the total amount of the required security or the
remaining part of the security. The deposit:
(1) must be held in trust in the name of and be pledged
to the commissioner;
(2) must secure the same obligations as the security;
and
(3) is subject to other conditions and terms the
commissioner may reasonably require.
(j) The security is considered by operation of law to be
held in trust for the benefit of this state and any individual to
whom an obligation arising under this chapter is owed, and may not
be considered an asset or property of the license holder in the
event of bankruptcy, receivership, or a claim against the license
holder unrelated to the license holder's obligations under this
chapter.
Added by Acts 2005, 79th Leg., ch. 1099, § 1, eff. Sept. 1, 2005.
Section: 151.301 151.302 151.303 151.304 151.305 151.306 151.307 151.308 151.309 151.401 151.402 151.403 151.404 151.405 151.501
Last modified: August 10, 2007
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