Sec. 36a-602. (Formerly Sec. 36-538). Surety bond or investments required. Authority of commissioner to proceed on bond. Cancellation of surety bond. Notice of cancellation. Automatic suspension of li
Sec. 36a-602. (Formerly Sec. 36-538). Surety bond or investments required.
Authority of commissioner to proceed on bond. Cancellation of surety bond. Notice
of cancellation. Automatic suspension of license. Notice. Opportunity for hearing.
(a) As a condition for the issuance and retention of the license, applicants for a license
and licensees shall file with the commissioner a surety bond, the form of which shall be
approved by the Attorney General, issued by a bonding company or insurance company
authorized to do business in this state. The bond shall be in favor of the commissioner,
cover claims that arise during the period the license remains in full force and effect and
the succeeding two years after such license has been surrendered, revoked or suspended
or has expired, in accordance with the provisions of sections 36a-595 to 36a-610, inclusive, and be in the principal sum of (1) three hundred thousand dollars for any applicant
and any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments
during the two previous reporting quarters of three hundred thousand dollars or less or
any licensee that engages in the business of money transmission with an average weekly
amount of money or monetary value received or transmitted, whichever amount is
greater, during the two previous reporting quarters of one hundred fifty thousand dollars
or less; (2) five hundred thousand dollars for any licensee that engages in the business of
issuing Connecticut payment instruments with an average daily balance of outstanding
Connecticut payment instruments during the two previous reporting quarters of greater
than three hundred thousand dollars but less than five hundred thousand dollars or any
licensee that engages in the business of money transmission with an average weekly
amount of money or monetary value received or transmitted, whichever amount is
greater, during the two previous reporting quarters of greater than one hundred fifty
thousand dollars but less than two hundred fifty thousand dollars; and (3) one million
dollars for any licensee that engages in the business of issuing Connecticut payment
instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters equal to or greater than five hundred
thousand dollars or any licensee that engages in the business of money transmission
with an average weekly amount of money or monetary value received or transmitted,
whichever amount is greater, during the two previous reporting quarters of two hundred
fifty thousand dollars or greater. The proceeds of the bond, even if commingled with
other assets of the licensee, shall be deemed by operation of law to be held in trust for
the benefit of any claimants against the licensee to serve the faithful performance of the
obligations of the licensee with respect to the receipt, handling, transmission or payment
of money or monetary value in connection with the sale and issuance of Connecticut
payment instruments or transmission of money or monetary value in the event of the
bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors. The commissioner may proceed on such bond against the principal or
surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant
to subsection (a) of section 36a-50. In the event a license has been surrendered, revoked
or suspended or has expired, in accordance with the provisions of sections 36a-595 to
36a-610, inclusive, the commissioner, in the commissioner's discretion, may lower the
required principal sum of the bond based on the licensee's level of business and outstanding Connecticut payment instruments.
(b) The surety company may cancel the bond at any time by a written notice to the
licensee, stating the date cancellation shall take effect. Such notice shall be sent by
certified mail to the licensee at least thirty days prior to the date of cancellation. A surety
bond shall not be cancelled unless the surety company notifies the commissioner in
writing not less than thirty days prior to the effective date of cancellation. The commissioner shall automatically suspend the license on the date the cancellation takes effect,
unless the surety bond has been replaced or renewed, all of the principal sum of such
surety bond has been invested as provided in subsection (c) of this section, or the surety
bond has been replaced in part and the remaining part of the principal sum of such surety
bond has been invested as provided in subsection (c) of this section or unless the licensee
has ceased business and has voluntarily surrendered the license. The commissioner shall
give the licensee notice of the automatic suspension pending proceedings for revocation
or refusal to renew such license and an opportunity for a hearing on such actions in
accordance with section 36a-51.
(c) In lieu of all or part of the principal sum of such surety bonds, applicants for a
license and licensees may invest such sum as provided in this subsection. The book or
market value, whichever is lower, of such investments shall be equal to the amount of
the bond required by subsection (a) of this section less the amount of the bond filed with
the commissioner by the applicant or licensee. Such applicants and licensees shall keep
such investments with such banks, Connecticut credit unions or federal credit unions
as such applicants or licensees may designate and the commissioner may approve, and
subject to such conditions as the commissioner deems necessary for the protection of
consumers and in the public interest. As used in this subsection, "investments" means:
(1) Dollar deposits; and (2) interest-bearing bills, notes, bonds, debentures or other
obligations issued or guaranteed by (A) the United States or any of its agencies or
instrumentalities, or (B) any state, or any agency, instrumentality, political subdivision,
school district or legally constituted authority of any state if such investment is of prime
quality. The investments shall secure the same obligation as would a surety bond filed
under this section. The investments shall be held at such banks or credit unions to cover
claims during the period the license remains in full force and effect and the succeeding
two years after such license has been surrendered, revoked or suspended or has expired
in accordance with the provisions of sections 36a-595 to 36a-610, inclusive. The licensee
shall be permitted to collect interest on such investments and at any time to exchange,
examine and compare such investments. The investments made pursuant to this section,
even if commingled with other assets of the licensee, shall be deemed by operation of
law to be held in trust for the benefit of any claimants against the licensee to serve
the faithful performance of the obligations of the licensee with respect to the receipt,
handling, transmission or payment of money or monetary value in connection with the
sale and issuance of Connecticut payment instruments or transmission of money or
monetary value in the event of the bankruptcy of the licensee, and shall be immune from
attachment by creditors or judgment creditors.
(P.A. 81-264, S. 9; P.A. 91-306, S. 1; P.A. 94-122, S. 280, 340; P.A. 98-192, S. 6; P.A. 01-56, S. 9; P.A. 02-111, S.
39; P.A. 03-61, S. 4; P.A. 04-14, S. 7; P.A. 06-35, S. 9; P.A. 07-91, S. 9.)
History: P.A. 91-306 amended Subsec. (a) by deleting existing provisions re amount of bond and added Subdivs. (1),
(2) and (3) re principal sum of bond; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-538 transferred
to Sec. 36a-602 in 1995; P.A. 98-192 amended Subsec. (a) by adding provision re two-year time period for bond to remain
in place and adding specific requirements for licensees that engage in the business of receiving money for transmitting the
same; P.A. 01-56 amended Subsec. (a) by changing "Connecticut instruments" to "Connecticut payment instruments", by
rewording language re money transmission and by replacing provisions re trust fund with provisions re proceeds of bond
deemed to be held in trust for benefit of claimants, and amended Subsec. (c) by replacing provisions re investment maintained in trust with provisions re investments deemed to be held in trust for benefit of claimants; P.A. 02-111 amended
Subsec. (a) by adding provision re authority of commissioner to proceed on bond to collect civil penalty imposed pursuant
to Sec. 36a-50(a); P.A. 03-61 changed "corporate surety bond" to "surety bond" throughout, amended Subsec. (a) by
revising provisions re approval of form, coverage of bond and beginning of two-year period and by adding provision re
surrendered, revoked, suspended or expired license and amended Subsec. (c) by inserting "Connecticut"; P.A. 04-14
amended Subsec. (a)(1), (2) and (3) to replace references to "equivalent thereof" with references to "monetary value
received or transmitted, whichever amount is greater", and to insert references to "monetary value" in provisions re proceeds
of the bond to be held in trust for benefit of claimants against licensee, added new Subsec. (b) re cancellation of surety
bond and automatic suspension of license and redesignated existing Subsecs. (b) and (c) as new Subsecs. (c) and (d),
respectively, revising internal reference accordingly, effective April 16, 2004; P.A. 06-35 amended Subsec. (c) to require
applicants and licensees to keep investments with such banks, Connecticut credit unions or federal credit unions as applicants or licensees designate, to require that investments be held subject to such conditions as commissioner deems necessary
for protection of consumers and in the public interest and to define "investments" to include "dollar deposits" and "interest-bearing" bills, notes, bonds, debentures or other obligations, deleting former Subdiv. designators (1) and (2), reference to
"in accordance with such regulations as the commissioner may adopt", and Subsec. designator (d), to add provision requiring
investments to be held at banks or credit unions to cover claims during period license remains in effect and the succeeding
two years after license has been surrendered, revoked or suspended or has expired, and to make conforming changes,
effective May 8, 2006; P.A. 07-91 amended Subsec. (a) to insert references to "Connecticut" payment instruments and
transmission of "monetary value", and amended Subsec. (c) to insert references to transmission or payment of "monetary
value" and to make a technical change.