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Article 2. Conflicts Of Interest of California Financial Code >> Division 15. >> Chapter 12. >> Article 2.
In this article, unless the context otherwise requires:
(a) "Adviser," when used with respect to a licensee, means any person who regularly provides legal, accounting, or management services or advice to such licensee.
(b) "Associate," when used with respect to a licensee, means:
(1) Any principal shareholder, director, officer, manager, agent, or adviser of such licensee;
(2) Any director, officer, partner, general manager, agent, employer, or employee of any person referred to in paragraph (1) of this subdivision;
(3) Any person who controls, is controlled by, or is under common control with, any person referred to in paragraph (1) of this subdivision, directly or indirectly through one or more intermediaries;
(4) Any close relative of any person referred to in paragraph (1) of this subdivision;
(5) Any person of which any person referred to in paragraphs (1) to (4), inclusive, of this subdivision is a director or officer; or
(6) Any person in which any person referred to in paragraphs (1) to (4), inclusive, of this subdivision or any combination of such persons acting in concert owns or controls, directly or indirectly, a 10 percent or greater equity interest.
(7) For purposes of this subdivision, any person who is in any of the relationships referred to in paragraphs (1) to (6), inclusive, of this subdivision within six months before or after a licensee provides financing assistance shall be deemed to be in such relationship as of the date when such licensee provides such financing assistance.
(8) For purposes of this subdivision, in case a licensee, in order to protect its interests, designates any person to serve as a director of, officer of, or in any capacity in the management of, a business firm to which such licensee provides financing assistance, such person shall not, on that account, be deemed to have any relationship with such business firm; provided, however, that this paragraph shall not apply in any case where the person has, directly or indirectly, any other financial interest in the business firm or where the person, at any time before the licensee provides the financing assistance, served as a director of, officer of, or in any other capacity in the management of, the business firm for a period of 30 days or more.
(c) "Close relative" means ancestor, lineal descendant, brother or sister and lineal descendants of either, spouse, father-in-law, mother-in-law, son-in-law, brother-in-law, daughter-in-law, or sister-in-law.
(d) "Closing services" means services performed in connection with the providing of financing assistance. "Closing services" includes (but is not limited to) appraising property and preparing credit reports. "Closing services" does not include any services performed after the providing of financing assistance.
(e) "Short-term financing assistance" means any financing assistance with a term of not more than five years.
(a) "Adviser," when used with respect to a licensee, means any person who regularly provides legal, accounting, or management services or advice to such licensee.
(b) "Associate," when used with respect to a licensee, means:
(1) Any principal shareholder, director, officer, manager, agent, or adviser of such licensee;
(2) Any director, officer, partner, general manager, agent, employer, or employee of any person referred to in paragraph (1) of this subdivision;
(3) Any person who controls, is controlled by, or is under common control with, any person referred to in paragraph (1) of this subdivision, directly or indirectly through one or more intermediaries;
(4) Any close relative of any person referred to in paragraph (1) of this subdivision;
(5) Any person of which any person referred to in paragraphs (1) to (4), inclusive, of this subdivision is a director or officer; or
(6) Any person in which any person referred to in paragraphs (1) to (4), inclusive, of this subdivision or any combination of such persons acting in concert owns or controls, directly or indirectly, a 10 percent or greater equity interest.
(7) For purposes of this subdivision, any person who is in any of the relationships referred to in paragraphs (1) to (6), inclusive, of this subdivision within six months before or after a licensee provides financing assistance shall be deemed to be in such relationship as of the date when such licensee provides such financing assistance.
(8) For purposes of this subdivision, in case a licensee, in order to protect its interests, designates any person to serve as a director of, officer of, or in any capacity in the management of, a business firm to which such licensee provides financing assistance, such person shall not, on that account, be deemed to have any relationship with such business firm; provided, however, that this paragraph shall not apply in any case where the person has, directly or indirectly, any other financial interest in the business firm or where the person, at any time before the licensee provides the financing assistance, served as a director of, officer of, or in any other capacity in the management of, the business firm for a period of 30 days or more.
(c) "Close relative" means ancestor, lineal descendant, brother or sister and lineal descendants of either, spouse, father-in-law, mother-in-law, son-in-law, brother-in-law, daughter-in-law, or sister-in-law.
(d) "Closing services" means services performed in connection with the providing of financing assistance. "Closing services" includes (but is not limited to) appraising property and preparing credit reports. "Closing services" does not include any services performed after the providing of financing assistance.
(e) "Short-term financing assistance" means any financing assistance with a term of not more than five years.
(a) The commissioner may, by such regulations or orders as
he or she deems necessary and appropriate, either unconditionally or
upon specified terms and conditions and for specified periods, exempt
from the provisions of this article any person or transaction or
class of persons or transactions, if the commissioner finds such
action to be in the public interest and that the regulation of such
persons or transactions is not necessary for the purposes of this
division.
(b) In exempting from the provisions of this article any person or transaction or class of persons or transactions, the commissioner shall give due consideration to any conflict of interest provision of federal law or regulation applicable to such person or transaction governing participants in federal financing programs.
(b) In exempting from the provisions of this article any person or transaction or class of persons or transactions, the commissioner shall give due consideration to any conflict of interest provision of federal law or regulation applicable to such person or transaction governing participants in federal financing programs.
It shall be unlawful for any licensee, directly or
indirectly, to provide financing assistance to any of its associates.
(a) It shall be unlawful for any licensee, directly or
indirectly, to provide financing assistance to any associate of
another licensee if any associate of the first licensee receives, has
received, or is about to receive, directly or indirectly, financing
assistance or a commitment for financing assistance from such other
licensee.
(b) It shall be unlawful for any licensee, directly or indirectly, to provide financing assistance to any associate of another licensee if any associate of the first licensee receives, has received, or is about to receive, directly or indirectly financing assistance or a commitment for financing assistance from a third licensee pursuant to any contract, understanding, or arrangement among such licensees.
(b) It shall be unlawful for any licensee, directly or indirectly, to provide financing assistance to any associate of another licensee if any associate of the first licensee receives, has received, or is about to receive, directly or indirectly financing assistance or a commitment for financing assistance from a third licensee pursuant to any contract, understanding, or arrangement among such licensees.
It shall be unlawful for any licensee or for any associate
of a licensee, directly or indirectly, to borrow money from:
(a) Any person to which such licensee has provided, or has committed to provide, financing assistance;
(b) Any director of, officer of, or person who owns a 10 percent or greater equity interest in, any person referred to in subdivision (a); or
(c) Any close relative of any person referred to in subdivision (b).
(a) Any person to which such licensee has provided, or has committed to provide, financing assistance;
(b) Any director of, officer of, or person who owns a 10 percent or greater equity interest in, any person referred to in subdivision (a); or
(c) Any close relative of any person referred to in subdivision (b).
It shall be unlawful for any licensee, directly or
indirectly, to provide financing assistance to discharge, or to free
other funds for use in discharging, in whole or in part, an
obligation to any associate of such licensee; provided, however, that
this section shall not apply to any transaction effected by an
associate of a licensee in the normal course of such associate's
business involving a line of credit or short-term financing
assistance.
It shall be unlawful for any licensee, directly or
indirectly, to provide financing assistance for the purchase of
property from any associate of such licensee.
It shall be unlawful for any licensee, directly or
indirectly, to provide financing assistance to any person to whom any
associate of such licensee provides financing assistance, either
contemporaneously with, or within one year before or after, the
providing of financing assistance by the licensee, if the terms on
which the licensee provides financing assistance are less favorable
to the licensee than the terms on which the associate provides
financing assistance to the associate. In any case where the
financing assistance provided by the associate of the licensee is of
a different kind from the financing assistance provided by the
licensee, the burden shall be on the licensee to prove that the terms
on which it provided financing assistance were at least as favorable
to it as the terms on which the associate provided financing
assistance to the associate. This section shall not apply to any
transaction effected by an associate of a licensee in the normal
course of such associate's business involving a line of credit or
short-term financing assistance.
It shall be unlawful for any associate of a licensee,
directly or indirectly, to receive from any person to whom such
licensee provides financing assistance, any compensation in
connection with the providing of such financing assistance or
anything of value for procuring, influencing, or attempting to
procure or influence, the licensee's action with respect to the
providing of the financing assistance. This section shall not apply
to the receipt by an associate of a licensee of fees for bona fide
closing services performed by such associate; provided, however, that
the associate is, with the consent and knowledge of the person to
whom the financing assistance is provided, designated by the licensee
to perform such services, that the services are appropriate and
necessary in the circumstances, that the fees for the services are
approved as reasonable by the licensee, and that the fees for the
services are collected by the licensee on behalf of the associate.
It shall be unlawful for any licensee, directly or
indirectly, to sell or otherwise transfer any of its assets to any of
its associates.
