643 - Bond or securities.

§ 643.  Bond  or  securities.  1.  As a condition for the issuance and  retention of the license, applicants for a license and  other  licensees  shall,  within  thirty  days after notice by the superintendent, or such  longer or shorter period as he or she shall  prescribe,  file  with  the  superintendent  one  or more corporate surety bond or bonds, as required  below, in form satisfactory to him  or  her  and  issued  by  a  bonding  company  or  insurance  company authorized to do business in this state.  One bond shall be in favor of the superintendent and in  such  principal  amount  as  he  or she shall determine is necessary or desirable for the  protection of the purchasers and holders of New York instruments sold or  to be sold by the applicant or licensee, provided, however,  that  until  June first, nineteen hundred seventy-seven, the principal amount of such  bond  shall  be no less than two hundred ten thousand dollars and on and  after June first, nineteen hundred seventy-seven, the  principal  amount  of such bond shall be no less than five hundred thousand dollars. If the  applicant  or  licensee  intends to engage or engages in the sale of New  York traveler's checks, such applicant or licensee shall file  with  the  superintendent  a  separate  bond.  Said  bond  shall be in favor of the  superintendent and in such principal amount as he or she shall determine  is necessary or desirable for  the  protection  of  the  purchasers  and  holders  of  the  New  York  traveler's checks sold or to be sold by the  applicant or licensee; provided, however, that the principal  amount  of  such  bond  shall not be less than seven hundred fifty thousand dollars,  unless the superintendent, for good cause shown, shall  have  determined  that  a lesser amount will adequately protect the purchasers and holders  of the New York traveler's checks sold or to be sold by  such  applicant  or licensee.    In making any determination under this subdivision, the superintendent  may  take  into  account  the  financial  condition of the licensee, the  number of locations in this state at which the licensee, either directly  or  through  agents,  transacts  the  business  of  selling   New   York  instruments  or New York traveler's checks, the controls imposed on such  agents or, and the possible exposure of purchasers and  holders  of  New  York  instruments and New York traveler's checks to loss in the event of  the  insolvency,  bankruptcy  or  other  financial  impairment  of   the  licensee.  The  proceeds  of each bond shall constitute a trust fund for  the exclusive benefit of the purchasers and  holders  of  the  New  York  instruments  and  New York traveler's checks, as the case may be. Except  as otherwise provided in the following sentence, in  the  event  of  the  insolvency  or  bankruptcy  of any licensee, the proceeds of the bond or  bonds held for the exclusive benefit of the purchasers  and  holders  of  New  York instruments and the proceeds of the bond or bonds held for the  exclusive benefit of the purchasers and holders of New  York  traveler's  checks  shall be paid to the superintendent forthwith for disposition in  accordance with  the  provisions  of  this  article.  If  any  New  York  instruments  have  been  assigned  to the fund, the proceeds of the bond  held for the exclusive benefit of the purchasers and holders of New York  instruments shall constitute a trust fund for the benefit of, and  shall  be  payable  to, the fund to the extent of such assignment. From time to  time, the superintendent may require, upon thirty days  notice  or  such  longer or shorter period as he or she shall prescribe, that such bond or  bonds  be  increased  if he or she shall determine that such increase is  necessary or desirable for the protection of the purchasers and  holders  of New York instruments and New York traveler's checks.    2.  The licensee shall give notice to the superintendent by registered  or certified mail of any action which shall be brought against  him  and  of  any judgment which shall be entered against him by such purchaser or  holder of a New York instrument or a New  York  traveler's  check,  withdetails  sufficient  to identify the action or judgment, within ten days  after the commencement of any such action or notice to the  licensee  of  entry  of  any such judgment. The corporate surety shall within ten days  after it pays any claim or judgment to any such purchaser or holder of a  New  York  instrument  or a New York traveler's check give notice to the  superintendent  by  registered  mail  of  such  payment,  with   details  sufficient to identify the purchaser or holder and the claim or judgment  so  paid. Whenever the principal sum of such bond or bonds is reduced by  one or more recoveries or payments thereon the licensee shall furnish  a  new or additional bond or bonds under the provisions of this section, so  that  the  total  or aggregate principal sum of such bond or bonds shall  equal the sum required pursuant to the provisions of  this  section,  or  shall  furnish  an  endorsement  duly  executed  by the corporate surety  reinstating the bond or bonds to the required principal sum thereof. The  liability of the surety on such bond or bonds to the superintendent  and  to  the said purchasers and holders of New York instruments and New York  traveler's  checks  shall  not  be  affected   in   any   way   by   any  misrepresentation,  breach  of warranty or failure to pay the premium or  by any act or omission  upon  the  part  of  the  licensee  nor  by  the  insolvency  or  bankruptcy  of  the  licensee  or  the insolvency of the  licensee's estate, and in the event  of  the  death  or  dissolution  or  liquidation  of  the  licensee,  shall  continue  upon  all transactions  entered into by the agents of such  deceased,  dissolved  or  liquidated  licensee  within a period of thirty days after the death, dissolution or  liquidation of the  licensee  or  termination  of  the  bond  or  bonds,  whichever   date   shall  first  occur,  provided,  however,  that  such  transactions were entered into in good  faith  by  such  purchasers  and  holders  of  New  York instruments and New York traveler's checks. Every  such corporate surety bond shall  provide  that  in  the  event  that  a  judgment  recovered  against the licensee or its legal representative or  successor by any such purchaser or  holder  on  a  claim  arising  or  a  transaction  entered  into  during  the  life  of  the bond shall remain  unsatisfied after the expiration of thirty  days  from  the  service  of  notice  of  entry  of  judgment  upon  the  licensee  or  upon his legal  representative or successor or upon the attorney for the  licensee,  and  upon  the  corporate surety, or in the event that the fund has become an  assignee of any claim arising or a transaction entered into  during  the  life of the bond, then an action may be maintained against the corporate  surety  under  the terms of the bond (1) by such purchaser or holder for  the amount of such judgment not exceeding the amount of the bond, except  during a stay of execution of such judgment against the licensee or  his  legal  representatives  or  successors, or (2) by the superintendent, on  behalf of the fund, for the amount of  such  claim,  not  exceeding  the  amount of the bond. The bond may not be cancelled either by the licensee  or  the surety except upon notice to the superintendent by registered or  certified mail with return receipt requested,  the  cancellation  to  be  effective  not less than ten days after receipt by the superintendent of  such notice.    3. In lieu of such corporate surety bond or bonds, or of  any  portion  of the principal sum thereof as required by this section, applicants for  a license and other licensees may keep on deposit, or may be required to  keep on deposit by the superintendent, with such banks, trust companies,  national  banks,  savings  bank,  savings and loan associations, federal  savings associations, credit unions, or federal  credit  unions  in  the  state  of New York as such applicants or licensees may designate and the  superintendent may approve,  and  in  accordance  with  such  rules  and  regulations  as  the  superintendent shall from time to time promulgate,  interest-bearing  stocks  and  bonds,   notes,   debentures   or   otherobligations  of  the  United  States  or  any  agency or instrumentality  thereof, or guaranteed by the United States, or of this state, or  of  a  city,  county, town, village, school district or instrumentality of this  state,  or guaranteed by this state, or dollar deposits, to an aggregate  amount, based upon principal amount or market value, whichever is lower,  in the case of the above-described securities,  of  not  less  than  the  amount  of  the  required  corporate  surety bond or bonds or portion or  portions thereof. Such securities or funds shall be deposited to  secure  the same obligation or obligations as would the corporate surety bond or  bonds filed under this section. So long as it shall continue business in  the  ordinary  course,  such  licensee  shall  be  permitted  to collect  interest on the securities  so  deposited  and  from  time  to  time  to  exchange,  examine  and  compare  such  securities.  In the event of the  failure or insolvency of such licensee,  the  securities,  any  proceeds  therefrom  and  the  funds  deposited  pursuant  to  this  section shall  constitute a trust fund for the exclusive benefit of the purchasers  and  holders  of  New  York instruments or New York traveler's checks, as the  case may be, or, in the event such New York instruments are assigned  to  the fund, the securities, any proceeds therefrom and the funds deposited  pursuant  to  this section for the benefit of the purchasers and holders  of New York instruments shall constitute a trust fund, for  the  benefit  of the fund.    4.  Notwithstanding  the  foregoing provisions of this section, if the  superintendent shall find that a licensee has transacted the business of  money transmission in this state for a period of five consecutive  years  and  that  such  business  has  been conducted honestly, efficiently and  safely and that the licensee's financial condition is sound and that its  New York instruments are insured, the superintendent may dispense  with,  modify  or  eliminate  any of the foregoing requirements of this section  with respect to New York instruments; provided, however, that if at  any  time  subsequent  thereto, the superintendent shall deem it necessary or  desirable for the protection of the purchasers and holders of  New  York  instruments,  to  reinstate  any of the requirements of this section, he  may do so.