§ 643 — Bond or securities

§ 643. Bond or securities. 1. As a condition for the issuance and\nretention of the license, applicants for a license and other licensees\nshall, within thirty days after notice by the superintendent, or such\nlonger or shorter period as he or she shall prescribe, file with the\nsuperintendent one or more corporate surety bond or bonds, as required\nbelow, in form satisfactory to him or her and issued by a bonding\ncompany or insurance company authorized to do business in this state.\nOne bond shall be in favor of the superintendent and in such principal\namount as he or she shall determine is necessary or desirable for the\nprotection of the purchasers and holders of New York instruments sold or\nto be sold by the applicant or licensee, provided, however, that until\nJune first, nineteen hundred seventy-seven, the principal amount of such\nbond shall be no less than two hundred ten thousand dollars and on and\nafter June first, nineteen hundred seventy-seven, the principal amount\nof such bond shall be no less than five hundred thousand dollars. If the\napplicant or licensee intends to engage or engages in the sale of New\nYork traveler's checks, such applicant or licensee shall file with the\nsuperintendent a separate bond. Said bond shall be in favor of the\nsuperintendent and in such principal amount as he or she shall determine\nis necessary or desirable for the protection of the purchasers and\nholders of the New York traveler's checks sold or to be sold by the\napplicant or licensee; provided, however, that the principal amount of\nsuch bond shall not be less than seven hundred fifty thousand dollars,\nunless the superintendent, for good cause shown, shall have determined\nthat a lesser amount will adequately protect the purchasers and holders\nof the New York traveler's checks sold or to be sold by such applicant\nor licensee.\n In making any determination under this subdivision, the superintendent\nmay take into account the financial condition of the licensee, the\nnumber of locations in this state at which the licensee, either directly\nor through agents, transacts the business of selling New York\ninstruments or New York traveler's checks, the controls imposed on such\nagents or, and the possible exposure of purchasers and holders of New\nYork instruments and New York traveler's checks to loss in the event of\nthe insolvency, bankruptcy or other financial impairment of the\nlicensee. The proceeds of each bond shall constitute a trust fund for\nthe exclusive benefit of the purchasers and holders of the New York\ninstruments and New York traveler's checks, as the case may be. Except\nas otherwise provided in the following sentence, in the event of the\ninsolvency or bankruptcy of any licensee, the proceeds of the bond or\nbonds held for the exclusive benefit of the purchasers and holders of\nNew York instruments and the proceeds of the bond or bonds held for the\nexclusive benefit of the purchasers and holders of New York traveler's\nchecks shall be paid to the superintendent forthwith for disposition in\naccordance with the provisions of this article. If any New York\ninstruments have been assigned to the fund, the proceeds of the bond\nheld for the exclusive benefit of the purchasers and holders of New York\ninstruments shall constitute a trust fund for the benefit of, and shall\nbe payable to, the fund to the extent of such assignment. From time to\ntime, the superintendent may require, upon thirty days notice or such\nlonger or shorter period as he or she shall prescribe, that such bond or\nbonds be increased if he or she shall determine that such increase is\nnecessary or desirable for the protection of the purchasers and holders\nof New York instruments and New York traveler's checks.\n 2. The licensee shall give notice to the superintendent by registered\nor certified mail of any action which shall be brought against him and\nof any judgment which shall be entered against him by such purchaser or\nholder of a New York instrument or a New York traveler's check, with\ndetails sufficient to identify the action or judgment, within ten days\nafter the commencement of any such action or notice to the licensee of\nentry of any such judgment. The corporate surety shall within ten days\nafter it pays any claim or judgment to any such purchaser or holder of a\nNew York instrument or a New York traveler's check give notice to the\nsuperintendent by registered mail of such payment, with details\nsufficient to identify the purchaser or holder and the claim or judgment\nso paid. Whenever the principal sum of such bond or bonds is reduced by\none or more recoveries or payments thereon the licensee shall furnish a\nnew or additional bond or bonds under the provisions of this section, so\nthat the total or aggregate principal sum of such bond or bonds shall\nequal the sum required pursuant to the provisions of this section, or\nshall furnish an endorsement duly executed by the corporate surety\nreinstating the bond or bonds to the required principal sum thereof. The\nliability of the surety on such bond or bonds to the superintendent and\nto the said purchasers and holders of New York instruments and New York\ntraveler's checks shall not be affected in any way by any\nmisrepresentation, breach of warranty or failure to pay the premium or\nby any act or omission upon the part of the licensee nor by the\ninsolvency or bankruptcy of the licensee or the insolvency of the\nlicensee's estate, and in the event of the death or dissolution or\nliquidation of the licensee, shall continue upon all transactions\nentered into by the agents of such deceased, dissolved or liquidated\nlicensee within a period of thirty days after the death, dissolution or\nliquidation of the licensee or termination of the bond or bonds,\nwhichever date shall first occur, provided, however, that such\ntransactions were entered into in good faith by such purchasers and\nholders of New York instruments and New York traveler's checks. Every\nsuch corporate surety bond shall provide that in the event that a\njudgment recovered against the licensee or its legal representative or\nsuccessor by any such purchaser or holder on a claim arising or a\ntransaction entered into during the life of the bond shall remain\nunsatisfied after the expiration of thirty days from the service of\nnotice of entry of judgment upon the licensee or upon his legal\nrepresentative or successor or upon the attorney for the licensee, and\nupon the corporate surety, or in the event that the fund has become an\nassignee of any claim arising or a transaction entered into during the\nlife of the bond, then an action may be maintained against the corporate\nsurety under the terms of the bond (1) by such purchaser or holder for\nthe amount of such judgment not exceeding the amount of the bond, except\nduring a stay of execution of such judgment against the licensee or his\nlegal representatives or successors, or (2) by the superintendent, on\nbehalf of the fund, for the amount of such claim, not exceeding the\namount of the bond. The bond may not be cancelled either by the licensee\nor the surety except upon notice to the superintendent by registered or\ncertified mail with return receipt requested, the cancellation to be\neffective not less than ten days after receipt by the superintendent of\nsuch notice.\n 3. In lieu of such corporate surety bond or bonds, or of any portion\nof the principal sum thereof as required by this section, applicants for\na license and other licensees may keep on deposit, or may be required to\nkeep on deposit by the superintendent, with such banks, trust companies,\nnational banks, savings bank, savings and loan associations, federal\nsavings associations, credit unions, or federal credit unions in the\nstate of New York as such applicants or licensees may designate and the\nsuperintendent may approve, and in accordance with such rules and\nregulations as the superintendent shall from time to time promulgate,\ninterest-bearing stocks and bonds, notes, debentures or other\nobligations of the United States or any agency or instrumentality\nthereof, or guaranteed by the United States, or of this state, or of a\ncity, county, town, village, school district or instrumentality of this\nstate, or guaranteed by this state, or dollar deposits, to an aggregate\namount, based upon principal amount or market value, whichever is lower,\nin the case of the above-described securities, of not less than the\namount of the required corporate surety bond or bonds or portion or\nportions thereof. Such securities or funds shall be deposited to secure\nthe same obligation or obligations as would the corporate surety bond or\nbonds filed under this section. So long as it shall continue business in\nthe ordinary course, such licensee shall be permitted to collect\ninterest on the securities so deposited and from time to time to\nexchange, examine and compare such securities. In the event of the\nfailure or insolvency of such licensee, the securities, any proceeds\ntherefrom and the funds deposited pursuant to this section shall\nconstitute a trust fund for the exclusive benefit of the purchasers and\nholders of New York instruments or New York traveler's checks, as the\ncase may be, or, in the event such New York instruments are assigned to\nthe fund, the securities, any proceeds therefrom and the funds deposited\npursuant to this section for the benefit of the purchasers and holders\nof New York instruments shall constitute a trust fund, for the benefit\nof the fund.\n 4. Notwithstanding the foregoing provisions of this section, if the\nsuperintendent shall find that a licensee has transacted the business of\nmoney transmission in this state for a period of five consecutive years\nand that such business has been conducted honestly, efficiently and\nsafely and that the licensee's financial condition is sound and that its\nNew York instruments are insured, the superintendent may dispense with,\nmodify or eliminate any of the foregoing requirements of this section\nwith respect to New York instruments; provided, however, that if at any\ntime subsequent thereto, the superintendent shall deem it necessary or\ndesirable for the protection of the purchasers and holders of New York\ninstruments, to reinstate any of the requirements of this section, he\nmay do so.\n