(a)Surety bonds. —(1) Every person licensed under this chapter shall file with the Commissioner, in a form satisfactory to the Commissioner, an original corporate surety bond with surety provided by a corporation authorized to transact business in this State, in the principal sum to be determined by the Commissioner. However, the bond amount may not be less than $50,000 nor more than $200,000. In determining the amount of the bond required for a licensee, the Commissioner shall consider, among other things:
a. The dollar value of the trust funds held by a licensee as a trustee under this chapter; and
b. Such other and further criteria as the Commissioner considers necessary and appropriate.
(2) A bond may not be accepted by the Commissioner unless all of the following requirements are satisfied:
a. The aggregate value of the bond must be equal to or greater than the amount determined by paragraph (a)(1) of this section.
b. The term of the bond must be commensurate with the license period or continuous.
c. The expiration date of the bond may not be earlier than midnight of the date on which the license issued under this chapter expires.
d. The bond must run to the State for the benefit of the Office of the State Bank Commissioner and for the benefit of all consumers injured by any wrongful act, omission, default, fraud, or misrepresentation by the licensee in the course of its activity as a licensee. Compensation under the bond must be for amounts which represent actual losses and may not be paid for claims made by business creditors, third-party service providers, agents, or persons otherwise in the employ of the licensee. Surety claims must be paid to the Office of the State Bank Commissioner by the insurer not later than 90 days after receipt of a claim. A claim paid after 90 days is subject to daily interest at the legal rate. The aggregate liability of the surety on the bond, exclusive of any interest which accrues for payments made after 90 days, may not exceed the amount of the bond.
(3) If a licensee changes its surety company or if its surety bond is otherwise amended, the licensee shall immediately provide the Commissioner with the amended original copy of the surety bond. Cancellation of an existing bond by a surety is not effective unless written notice of its intention to cancel is filed with the Commissioner at least 30 days before the date on which cancellation is scheduled to take effect.
(4) The Commissioner may require potential claimants to provide documentation and affirmations that the Commissioner determines are necessary and appropriate. If the Commissioner determines that multiple consumers have been injured by a licensee, the Commissioner shall cause a notice to be published for the purpose of identifying all relevant claims.
(5) When a surety company receives a claim against the bond of a licensee, the surety company shall immediately notify the Commissioner and may not pay any claim until it receives notice to do so from the Commissioner.
(6) The Commissioner has 2 calendar years after the effective date of cancellation or termination of a surety bond by an insurer to submit claims to the insurer.
(b) In lieu of requiring the filing of a surety bond pursuant to subsection (a) of this section, the Commissioner may, at the Commissioner’s discretion, accept an irrevocable letter of credit from a licensee.
(1) An irrevocable letter of credit must be provided by an insured depository institution as defined in the Federal Deposit Insurance Act at 12 U.S.C. § 1813(c) and acceptable to the Commissioner, in a form satisfactory to the Commissioner, in the principal sum to be determined by the Commissioner. However, the irrevocable letter of credit amount may not be less than $50,000 nor more than $200,000. In determining the amount of the irrevocable letter of credit required for a licensee, the Commissioner shall consider, among other things:
a. The dollar value of the trust funds held by a licensee as a trustee under this chapter; and
b. Such other and further criteria as the Commissioner considers necessary and appropriate.
(2) An irrevocable letter of credit may not be accepted by the Commissioner unless all of the following requirements are satisfied:
a. The aggregate value of the irrevocable letter of credit must be equal to or greater than the amount determined by paragraph (b)(1) of this section.
b. The irrevocable letter of credit must run to the State for the benefit of the Office of the State Bank Commissioner and for the benefit of all consumers injured by any wrongful act, omission, default, fraud, or misrepresentation by the licensee in the course of its activity as a licensee. Compensation under the irrevocable letter of credit must be for amounts which represent actual losses and may not be paid for claims made by business creditors, third-party service providers, agents, or persons otherwise in the employ of the licensee. The aggregate liability of the insured depository institution issuing the irrevocable letter of credit may not exceed the amount of the irrevocable letter of credit.
c. Draws upon irrevocable letters of credit must be available by sight drafts thereunder, in amounts determined by the Commissioner, up to the aggregate amount of the irrevocable letter of credit. Sight drafts must be honored in accordance with § 5-108 of Title 6 (issuer’s rights and obligations).
(3) The Commissioner may require potential claimants to provide documentation and affirmations that the Commissioner determines are necessary and appropriate. If the Commissioner determines that multiple consumers have been injured by a licensee, the Commissioner shall cause a notice to be published for the purpose of identifying all relevant claims.
(4) The Commissioner may refuse release of an irrevocable letter of credit following the surrender of a license, up to 2 years after the effective date of licensure termination.