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Chapter 2. License of California Financial Code >> Division 14. >> Chapter 2.
It shall be unlawful for any person to operate a securities
depository within this state, or to solicit holders of securities
within this state to place their securities into a securities
depository located within this state or outside this state, except by
means of a corporation licensed by the commissioner as a securities
depository.
A securities depository shall only be operated by a
corportion:
(a) At least 90 percent of the capital stock of which is held by or for one or more persons (other than individuals), each of whom, (i) is subject to supervision or regulation pursuant to the provisions of federal or state banking laws or state insurance laws, or (ii) is a broker or dealer or investment company registered under the Securities Exchange Act of 1934 or the Investment Company Act of 1940, or (iii) is a national securities exchange or association registered under the Securities Exchange Act of 1934, and none of whom, other than a national securities exchange or association, holds in excess of 20 percent of the capital stock of such corporation; and
(b) Any remaining capital stock of which is held by individuals who have purchased such capital stock at or prior to the time of their taking office as directors of such corporation and who have purchased only so much of such capital stock as may be necessary to permit them to qualify as such directors.
(a) At least 90 percent of the capital stock of which is held by or for one or more persons (other than individuals), each of whom, (i) is subject to supervision or regulation pursuant to the provisions of federal or state banking laws or state insurance laws, or (ii) is a broker or dealer or investment company registered under the Securities Exchange Act of 1934 or the Investment Company Act of 1940, or (iii) is a national securities exchange or association registered under the Securities Exchange Act of 1934, and none of whom, other than a national securities exchange or association, holds in excess of 20 percent of the capital stock of such corporation; and
(b) Any remaining capital stock of which is held by individuals who have purchased such capital stock at or prior to the time of their taking office as directors of such corporation and who have purchased only so much of such capital stock as may be necessary to permit them to qualify as such directors.
The commisioner shall charge and collect the following fees:
(a) For filing an application for a securities depository license, two thousand five hundred dollars ($2,500).
(b) For holding a hearing in connection with the application, as set forth under Section 30205, the actual costs experienced in each particular instance.
(c) For continuing a license as a securities depository in effect, a fee of two thousand five hundred dollars ($2,500) per annum, payable biennially on the 15th day of December of each odd-numbered calendar year. If a license is issued during an even-numbered calendar year, the securities depository shall pay to the commissioner, within 60 days after the issuance of its license, an additional annual fee of two thousand five hundred dollars ($2,500).
(a) For filing an application for a securities depository license, two thousand five hundred dollars ($2,500).
(b) For holding a hearing in connection with the application, as set forth under Section 30205, the actual costs experienced in each particular instance.
(c) For continuing a license as a securities depository in effect, a fee of two thousand five hundred dollars ($2,500) per annum, payable biennially on the 15th day of December of each odd-numbered calendar year. If a license is issued during an even-numbered calendar year, the securities depository shall pay to the commissioner, within 60 days after the issuance of its license, an additional annual fee of two thousand five hundred dollars ($2,500).
All money received by the commissioner shall be paid by him
or her into the State Treasury to the credit of the State
Corporations Fund.
An application for a securities depository license shall be
signed and verified by an authorized officer of the applicant, and
shall set forth in such form as the commissioner may prescribe:
(a) The names and addresses of the incorporators, directors, and officers, with a statement of their character, experience, and general fitness to operate a securities depository.
(b) A showing that the proposed method of operation of such securities depository will be adequate for the protection of investors.
(c) The names of every person who holds or is to hold capital stock in the securities depository corporation together with a statement of the percentage interest attributable to each. The commissioner may require disclosure of such additional information as may be necessary to determine the individuals controlling such corporation.
(d) The addresses at which facilities of the applicant will be located and a description of each such facility and the functions there performed, and a description of any other business or operations which will be conducted on such premises.
(e) By way of exhibits, a copy of the articles of incorporation and a copy of the bylaws of the applicant.
(f) By way of exhibits, financial statements of the applicant, which shall include at least a balance sheet and profit and loss statement certified by an independent public accountant or certified public accountant, and if such certified statements are prepared as of a date more than 60 days prior to the filing of the application, a balance sheet and profit and loss statement, which need not be certified, prepared as of a date within such 60-day period, together with profit and loss statements covering at least three years of its operations, or such lesser period as the applicant may have operated, to the date of such certified balance sheet.
(g) Such additional information as the commissioner may by rule prescribe.
(a) The names and addresses of the incorporators, directors, and officers, with a statement of their character, experience, and general fitness to operate a securities depository.
(b) A showing that the proposed method of operation of such securities depository will be adequate for the protection of investors.
(c) The names of every person who holds or is to hold capital stock in the securities depository corporation together with a statement of the percentage interest attributable to each. The commissioner may require disclosure of such additional information as may be necessary to determine the individuals controlling such corporation.
(d) The addresses at which facilities of the applicant will be located and a description of each such facility and the functions there performed, and a description of any other business or operations which will be conducted on such premises.
(e) By way of exhibits, a copy of the articles of incorporation and a copy of the bylaws of the applicant.
(f) By way of exhibits, financial statements of the applicant, which shall include at least a balance sheet and profit and loss statement certified by an independent public accountant or certified public accountant, and if such certified statements are prepared as of a date more than 60 days prior to the filing of the application, a balance sheet and profit and loss statement, which need not be certified, prepared as of a date within such 60-day period, together with profit and loss statements covering at least three years of its operations, or such lesser period as the applicant may have operated, to the date of such certified balance sheet.
(g) Such additional information as the commissioner may by rule prescribe.
Upon the receipt of a proper and complete application for
license, and all required fees, the commissioner shall immediately
examine and investigate all facts connected with the proposed
licensee, including but not limited to its stockholders, directors,
officers and managers, and its proposed safeguards with respect to
custody, handling, recordkeeping, insurance, and auditing of
securities on deposit. The commissioner may or may not require the
applicant to submit to an appropriate hearing. At such hearing any
interested person may show cause either in favor of, or opposed to,
the application.
The commissioner may refuse to issue any license being
applied for, and shall refuse to issue any license being applied for
if upon his examination and investigation, and after appropriate
hearing, he finds any of the following:
(a) That the incorporators, directors, officers, or stockholders lack the character, experience, or general fitness to engage in such a business.
(b) That the proposed licensee's program of safeguards with respect to custody, handling, recordkeeping, insurance, and auditing of securities on deposit is inadequate for the protection of investors.
(c) That the requirements with respect to ownership of capital stock of Section 30201 are not met.
(d) That the applicant is, or is in danger of becoming, insolvent.
(a) That the incorporators, directors, officers, or stockholders lack the character, experience, or general fitness to engage in such a business.
(b) That the proposed licensee's program of safeguards with respect to custody, handling, recordkeeping, insurance, and auditing of securities on deposit is inadequate for the protection of investors.
(c) That the requirements with respect to ownership of capital stock of Section 30201 are not met.
(d) That the applicant is, or is in danger of becoming, insolvent.
No licensee, or any other person, shall solicit deposits of
securities or otherwise conduct the business of a licensee, by means
of any statement or representation which is false, misleading, or
deceptive, or which omits to state material information, or which
infers that such licensee has been sponsored, recommended or approved
or that his abilities or qualifications have in any respect been
passed upon by the commisioner. The commissioner may order a licensee
or other person to desist from any conduct which he shall find to be
a violation of this section.
A securities depository license is not transferable or
assignable. Further, no license may be acquired, either in whole or
in part, through stock purchase or other devices without the consent
of the commissioner.
Any person who operates a securities depository, or solicits
holders of securities within this state to place securities in a
securities depository, either directly as principal or indirectly as
agent, employee, manager, fiduciary representative, or in any other
capacity, unless such securities depository has applied for and
received the license required by this division, is guilty of a
misdemeanor punishable by imprisonment in a county jail for not less
than three months and not exceeding 12 months, or by a fine of not
less than two hundred fifty dollars ($250) and not exceeding one
thousand dollars ($1,000), or by both such fine and imprisonment.
Every person subject to this division shall keep and use in
its business, books, accounts, and records which will properly enable
the commissioner to determine whether the operation of a securities
depository by such person complies with the provisions of this
division and with all rules and regulations made by the commissioner
under this division.
The business, accounts and records of every person licensed
under this division are subject to inspection and examination by the
commissioner at any time without prior notice.
The actual cost of every inspection and examination shall be
paid to the commissioner by the person examined and the commissioner
may maintain an action for the recovery of such costs in any court
of competent jurisdiction.
(a) Every person subject to this division shall submit to
the commissioner, at such person's own expense, financial statements
prepared in accordance with generally accepted accounting principles
covering the calendar year or, if such person has an established
fiscal year, then for such fiscal year, within 105 days after the
close of the calendar year or fiscal year. Such financial statements
shall be covered by a report or certificate of an independent
certified public accountant or independent public accountant. In
addition financial statements, which may be unaudited, as of the end
of the calendar month next preceding the date of submission of the
audited financial statements shall also be filed concurrently with
such audited financial statements. All audits referred to in this
section shall be by independent certified public accountants or
independent public accountants acceptable to the commissioner. The
audits shall be conducted in accordance with generally accepted
auditing standards. The audited financial statements shall include at
least an audited balance sheet showing the person's net worth and a
statement of income and expenses for the year ended on the balance
sheet date. The commissioner may by rule prescribe the matters to be
covered in the report or certification of the auditor.
(b) Within such period as the commissioner shall prescribe, which shall not be less than 10 days, a person subject to this division shall submit to the commissioner, at such person's own expense, a report containing such information regarding its financial condition, operations, or the ownership of its outstanding securities as the commissioner may require.
(b) Within such period as the commissioner shall prescribe, which shall not be less than 10 days, a person subject to this division shall submit to the commissioner, at such person's own expense, a report containing such information regarding its financial condition, operations, or the ownership of its outstanding securities as the commissioner may require.
If any person subject to this division fails to make any
report required by law or by the commissioner, the commissioner shall
immediately cause the books, records, papers, and affairs of said
person to be thoroughly examined. The commissioner may, in carrying
out his responsibilities under this section, employ an independent
public accountant or certified public accountant the cost of whose
services shall be borne by such person in accordance with Section
30212.
If the commissioner, as a result of any examination or from
any report made to him, shall find that any person subject to this
division is in an insolvent condition, or is operating a securities
depository in such an unsafe or injurious manner as to render further
operations hazardous to the public or to depositors the commissioner
may forthwith, by an order addressed to and served by registered
mail on such person, direct discontinuance of the operation of a
securities depository within the State of California or direct
discontinuance of the solicitation of security holders within the
State of California by such securities depository, or otherwise limit
the conduct of the business of such depository as may be necessary
for the safety of security holders. The order shall remain in effect
until set aside by the commissioner in whole or in part.
Whenever in the opinion of the commissioner any person
required by this division to be licensed is engaged in operating a
securities depository or in soliciting securities holders within this
state to place securities in a securities depository, without a
license from the commissioner, the commissioner may order said person
to desist and to refrain from engaging in such business. If, after
such an order is made, a request for a hearing is filed in writing
and the hearing is not held within 60 days thereafter, the order is
rescinded.
The commissioner may from time to time make, amend, and
rescind such rules, forms, and orders as are necessary to carry out
the provisions of this law, including rules defining any terms,
whether or not used in this law, insofar as the definitions are not
inconsistent with the provisions of this law. For the purposes of
rules and forms, the commissioner may classify persons and matters
within his jurisdiction and may prescribe different requirements for
different classes. The commissioner may in his discretion waive any
requirement of any rule or form in situations where in his opinion
such requirement is not necessary in the public interest or for the
protection of investors. All rules of the commissioner other than
those relating solely to the internal administration of the
Department of Business Oversight shall be made, amended, or rescinded
in accordance with the provisions of Chapter 4.5 (commencing with
Section 11371) of Part 1 of Division 3 of Title 2 of the Government
Code.
(a) It is unlawful for any person to knowingly alter,
destroy, mutilate, conceal, cover up, falsify, or make a false entry
in any record, document, or tangible object with the intent to
impede, obstruct, or influence the administration or enforcement of
this division.
(b) It is unlawful for any person to knowingly make an untrue statement to the commissioner during the course of licensing, investigation, or examination, with the intent to impede, obstruct, or influence the administration or enforcement of any provision of this division.
(b) It is unlawful for any person to knowingly make an untrue statement to the commissioner during the course of licensing, investigation, or examination, with the intent to impede, obstruct, or influence the administration or enforcement of any provision of this division.
