Today's Law As Amended


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SB-664 Financial institutions.(2011-2012)



As Amends the Law Today


SECTION 1.

 Division 1 (commencing with Section 99) of the Financial Code is repealed.

SEC. 2.

 Division 1 (commencing with Section 99) is added to the Financial Code, to read:

DIVISION 1. FINANCIAL INSTITUTIONS

CHAPTER  1. Definitions
99.
 This division, Division 1.1 (commencing with Section 1000), Division 1.2 (commencing with Section 2000), Division 1.6 (commencing with Section 4800), Division 2 (commencing with Section 5000), Division 5 (commencing with Section 14000), Division 7 (commencing with Section 18000), and Division 15 (commencing with Section 31000) shall be known, and may be cited, as the “Financial Institutions Law.”
101.
 If and to the extent that any provision of this division is preempted by federal law, the provision does not apply and shall not be enforced.
103.
 The word “bank” as used in this division means any incorporated banking institution that shall have been incorporated to engage in commercial banking business, industrial banking, or trust business.
105.
 Banks are divided into the following classes:
(a) Commercial banks.
(b) Industrial banks.
(c) Trust companies.
107.
 “Commercial bank” means a corporation organized for the purpose of engaging in the commercial banking business.
109.
 “Commercial banking business” includes, but is not limited to, the business of soliciting, receiving, or accepting of money or its equivalent on deposit as a regular business whether the deposit is made subject to check or is evidenced by a certificate of deposit, a passbook, a note, a receipt, or other writing, provided that nothing herein shall apply to or include money or its equivalent left in escrow, or left with an agent pending investment in real estate or securities for, or on account of, his or her principal. In addition, “commercial banking business” means to lend money on the security of real or personal property or without security; to discount or deal in bills, notes, or other commercial paper; to buy and sell for the account of customers, and, if eligible for investment, for its own account, securities, gold and silver bullion, foreign coins, and bills of exchange; and generally to transact a commercial banking business.
111.
 “Industrial bank” means a corporation organized for the purpose of engaging in the industrial banking business.
113.
 “Industrial banking business” includes the making of loans and acceptance of deposits, including deposits evidenced by investment or thrift certificates, but excluding demand deposits.
115.
 “Trust business” means the business of acting as executor, administrator, guardian or conservator of estates, assignee, receiver, depositary or trustee under the appointment of any court, or by authority of any law of this or any other state or of the United States, or as trustee for any purpose permitted by law.
117.
 “Trust company” means a corporation, industrial bank, or a commercial bank that is authorized to engage in the trust business.
119.
 “Bank” or “banks” includes commercial banks, industrial banks, and trust companies unless the context otherwise requires. However, “bank” does not include a savings association or a credit union.
121.
 (a) “Office” includes head office, branch office, and any other authorized place of business of a licensee.
(b) “Head office” means the principal place of business of a licensee.
123.
 “Real property” and “personal property” have the meanings defined in and shall be construed in accordance with Title 1 (commencing with Section 654) of Part 1 of Division 2 of the Civil Code.
125.
 “Commissioner” means the Commissioner of Financial Institutions and “department” means the Department of Financial Institutions.
127.
 “Person” means an individual, sole proprietorship, partnership, joint venture, association, trust, estate, business trust, corporation, joint stock company, limited liability company, unincorporated association, sovereign government or agency, instrumentality, or political subdivision thereof, or any similar entity or organization.
129.
 Unless the provision or the context otherwise requires, the definitions set forth in this chapter govern the construction of this division.
131.
 References in this division to the voting of shares shall be construed in accordance with Section 111 of the Corporations Code.
133.
 If the articles of a bank provide for more or less than one vote for any share on any matter, the references in Sections 139 and 141 to a majority or other proportion of shares means, as to such matter, a majority or other proportion of the votes entitled to be cast. Whenever, under Division 1 (commencing with Section 100), Title 1 of the Corporations Code or this division, shares are disqualified from voting on any matter, they shall not be considered outstanding for the determination of a quorum at any meeting to act upon, or the required vote to approve action upon, such matter under any provision of Division 1 (commencing with Section 100), Title 1 of the Corporations Code, of this division, or of the articles or bylaws.
135.
 Any requirement in this division for a vote of each class of outstanding shares shall be construed in accordance with Section 117 of the Corporations Code.
137.
 “Approved by (or approval of) the board” means approved or ratified by the vote of the board or by the vote of a committee authorized to exercise the powers of the board, except as to any matter not within the competence of the committee under Section 311 of the Corporations Code or any matter for which this division also requires approval of the shareholders or approval of the outstanding shares.
139.
 “Approved by (or approval of) the outstanding shares” has the meaning set forth in Section 152 of the Corporations Code and shall include approval by the affirmative vote of a majority of the outstanding shares of each class or series entitled, by any provision of the articles, of this division, or of Division 1 (commencing with Section 100), Title 1 of the Corporations Code, to vote as a class or series on the subject matter being voted upon, and shall also include approval by the affirmative vote of such greater proportion (including all) of the outstanding shares of any class or series if such greater proportion is required by the articles, by this division, or by Division 1 (commencing with Section 100), Title 1 of the Corporations Code.
141.
 “Approved by (or approval of) the shareholders” has the meaning set forth in Section 153 of the Corporations Code and shall include approval or ratification by the affirmative vote or written consent of such proportion (including all) greater than a majority of the shares of any class or series as may be provided in the articles, in this division, or in Division 1 (commencing with Section 100), Title 1 of the Corporations Code for all or any specified shareholder action.
143.
 “Articles” has the meaning set forth in Section 154 of the Corporations Code.
145.
 “Board” has the meaning set forth in Section 155 of the Corporations Code.
147.
 “California” means:
(a) When used with respect to a bank, in the case of a state bank, a bank that is organized under the laws of this state and, in the case of a national bank, a national bank that maintains its main office in this state.
(b) When used with respect to an office of a bank, an office which is located in this state.
(c) When used with respect to any corporation other than a bank, a corporation that is organized under the laws of this state.
149.
 “CAMELS composite rating” shall have the meaning set forth in Section 327.8(j) of Title 12 of the Code of Federal Regulations.
151.
 “Certificate of correction” means a certificate executed and filed with the Secretary of State pursuant to Section 109 of the Corporations Code, subject, however, to the provisions of Section 1105.
153.
 “Certificate of determination” has the meaning set forth in Section 156 of the Corporations Code, subject, however, to the provisions of Section 1104.
155.
 “Certificate of revocation” means a certificate executed and filed with the Secretary of State pursuant to the second and third sentences of subdivision (c) of Section 110 of the Corporations Code, subject, however, to the provisions of Section 600.12.
157.
 “Common shares” has the meaning set forth in Section 159 of the Corporations Code.
159.
 (a) “Confidential information” means any information regarding a licensee contained in, or related to, any of the following:
(1) Applications filed with the commissioner.
(2) Examination, operating, condition, or any other reports prepared by, on behalf of, or for the use of, the commissioner.
(3) Information received in confidence by the commissioner.
(b) Confidential information is the property of the commissioner.
161.
 “Constituent corporation,” when used with respect to a corporation:
(a) In the case of a merger, has the meaning set forth in Section 161 of the Corporations Code.
(b) In the case of a consolidation, means a corporation that is consolidated with one or more other corporations.
163.
 “Contributed capital” means all of shareholders’ equity other than retained earnings. However, nothing in this section shall prohibit a bank from transferring amounts from time to time from its retained earnings to its contributed capital, subject to any applicable statutes, regulations, and generally accepted accounting principles.
165.
 “Credit union” means a corporation of the type described in Section 14002 organized under the laws of this state or a corporation of similar type organized under the laws of the United States or of any state of the United States other than this state.
167.
 “Directors” has the meaning set forth in Section 164 of the Corporations Code.
169.
 “Disappearing,” when used with respect to a corporation, means a constituent corporation that is not the surviving corporation.
171.
 “Distribution to its shareholders” has the meaning set forth in Section 166 of the Corporations Code. However, in Division 1 (commencing with Section 100), Title 1 of the Corporations Code and in this division, “distribution to its shareholders” does not include any purchase of shares by a bank or by a majority-owned subsidiary of a bank which is necessary to reduce or avoid loss to such bank or to such subsidiary on an extension of credit previously made in good faith. Also, in this division, “distribution to its shareholders” includes any distribution made by a bank or by a majority-owned subsidiary of a bank to the shareholders of any corporation of which such bank is a majority-owned subsidiary.
173.
 (a) “Foreign,” when used with respect to a bank, an office of a bank, or any corporation other than a bank, means foreign (other nation) or foreign (other state).
(b) “Foreign banking corporation” means a foreign bank.
175.
 “Foreign nation” means any nation other than the United States, including, without limitation, any subdivision, territory, trust territory, dependency, colony, or possession of any nation other than the United States. “Foreign nation” includes Puerto Rico, Guam, American Samoa, the Virgin Islands, and any territory, trust territory, dependency, or insular possession of the United States.
177.
 (a) The definition of “state of the United States” in Section 207 does not apply to this section. In this section, “state of the United States” means any state of the United States or the District of Columbia.
(b) “Foreign (other nation)”:
(1) When used with respect to a bank, means any bank (including, without limitation, any commercial bank, merchant bank, or other institution that engages in banking activities that are usual in connection with the business of banking in the nation in which the institution is organized or operating) other than (A) a bank that is organized under the laws of a state of the United States or (B) a national bank that maintains its main office in a state of the United States.
(2) When used with respect to an office of a bank, means an office that is located in a place other than a state of the United States.
(3) When used with respect to any corporation other than a bank, means a corporation that is organized under the laws of a foreign nation.
179.
 “Foreign (other state)”:
(a) When used with respect to a bank, means a bank that is organized under the laws of any state of the United States other than this state, or a national bank that maintains its main office in any state of the United States other than this state, and includes any savings bank, as defined in Section 3(g) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1813(g)), that is organized under the laws of a state other than this state.
(b) When used with respect to an office of a bank, means an office that is located in a state other than this state.
(c) When used with respect to a corporation other than a bank, means a corporation that is organized under the laws of any state of the United States other than this state or under the laws of the United States.
181.
 “Insured”:
(a) When used with respect to a bank or an office of a bank, means a bank or office the deposits of which are insured by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.).
(b) When used with respect to a deposit, means a deposit that is insured by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.).
183.
 “Law of the domicile” means:
(a) When used with respect to a national bank, the law of the United States.
(b) When used with respect to a state bank, the law of the state of the United States under which the bank is organized.
(c) When used with respect to a foreign (other nation) bank, the law of the foreign nation under which the bank is organized.
185.
 “Licensee” has the following meanings:
(a) Any bank authorized by the commissioner pursuant to Section 1042 to transact banking or trust business.
(b) Any industrial bank authorized by the commissioner pursuant to Section 1042 to transact industrial banking business.
(c) Any trust company authorized by the commissioner pursuant to Section 1042 to transact trust business.
(d) Any foreign (other nation) bank that is licensed under Article 2 (commencing with Section 1780) of Chapter 20 or under Article 3 (commencing with Section 1800) of Chapter 20.
(e) Any corporation licensed by the commissioner to transmit money pursuant to Division 1.2 (commencing with Section 1920).
(f) Any person authorized by the commissioner to conduct the business of a savings association pursuant to Division 2 (commencing with Section 5000).
(g) Any credit union authorized by the commissioner to conduct business pursuant to Section 14154.
(h) Any foreign (other state) credit union licensed by the commissioner to conduct business pursuant to Chapter 11 (commencing with Section 16000) of Division 5.
(i) Any foreign (other nation) credit union licensed by the commissioner to conduct business pursuant to Chapter 12 (commencing with Section 16500) of Division 5.
(j) Any industrial loan company authorized by the commissioner to conduct insurance premium finance business pursuant to Division 7 (commencing with Section 18000).
(k) Any corporation licensed by the commissioner as a business and industrial development corporation pursuant to Section 31154.
187.
 “Majority-owned subsidiary” has the meaning set forth for “subsidiary” in subdivision (a) of Section 189 of the Corporations Code.
189.
 (a) “National bank” or “national banking association” means a national banking association organized under the National Bank Act.
(b) For purposes of this division, a national bank is deemed to be a corporation.
191.
 “Officers’ certificate” has the meaning set forth in Section 173 of the Corporations Code.
193.
 “Resulting,” when used with respect to a corporation, means:
(a) In the case of a consolidation, the corporation into which the constituent corporations are consolidated.
(b) In the case of a conversion, the corporation into which the converting corporation is converted.
195.
 “ROCA supervisory rating” shall have the meaning set forth in Section 327.8(k) of Title 12 of the Code of Federal Regulations.
197.
 “Savings association” includes a savings association, a savings and loan association, and a savings bank. However, “savings association” does not include any savings bank of the type defined in Section 3(g) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(g)).
199.
 “Series,” when used with respect to shares, has the meaning set forth in Section 183 of the Corporations Code.
201.
 “Shares” has the meaning set forth in Section 184 of the Corporations Code.
203.
 “Shareholder” has the meaning set forth in Section 185 of the Corporations Code.
205.
 “State”:
(a) When used with respect to a corporation, means a corporation that is organized under the laws of a state of the United States.
(b) When used with respect to an office of a foreign (other nation) bank, means an office that the bank is authorized to maintain under the laws of a state of the United States.
207.
 “State of the United States” means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands.
209.
 “Surviving,” when used with respect to a corporation, means a corporation in which one or more other corporations are merged.
211.
 “Uniform Interagency Trust Rating System (UITRS)” shall have the meaning set forth in the policy statement regarding the uniform interagency trust rating system published by the Federal Financial Institutions Examination Council on October 13, 1998 (63 Fed. Reg. 54704).
213.
 “Uniform Rating System for Informational Technology (URSIT)” shall have the meaning set forth in the policy statement regarding the uniform rating system for information technology published by the Federal Financial Institutions Examination Council on January 20, 1999, and implemented on or before April 1, 1999 (64 Fed. Reg. 3109).
215.
 “Vote” has the meaning set forth in Section 194 of the Corporations Code.
217.
 “Voting power” has the meaning set forth in Section 194.5 of the Corporations Code.
CHAPTER  2. Transition Provisions
250.
 In this chapter, unless the provision or context requires otherwise:
(a) “New General Corporation Law” means Division 1 (commencing with Section 100), Title 1 of the Corporations Code, as in effect on and after January 1, 1977.
(b) “Prior Banking Law” means this division, as in effect on December 31, 1978.
(c) “Prior General Corporation Law” means Division 1 (commencing with Section 100), Title 1 of the Corporations Code, as in effect on December 31, 1976.
(d) “Revised Banking Law” means this division, as in effect on and after January 1, 1979, and as repealed and readded as of January 1, 2012.
(e) “Subject institution” means:
(1) Any corporation incorporated under the laws of this state which is, with the approval of the commissioner, incorporated for the purpose of engaging in, or which is authorized by the commissioner to engage in, the commercial banking business under this division.
(2) Any corporation incorporated under the laws of this state which is, with the approval of the commissioner, incorporated for the purpose of engaging in, or which is authorized by the commissioner to engage in, the trust business under this division.
(3) Any corporation incorporated under the laws of this state which is, with the approval of the commissioner, incorporated for the purpose of engaging in, or which is authorized by the commissioner to engage in, business under Article 1 (commencing with Section 1850) of Chapter 21 of Division 1.1.
251.
 For purposes of Chapter 23 (commencing with Section 2300) of the new General Corporation Law, in the case of any subject institution existing on January 1, 1979:
(a) The term “new law” shall mean the new General Corporation Law, subject, however, to the provisions of Section 101 of the revised Banking Law.
(b) The term “prior law” shall mean the prior General Corporation Law, subject, however, to the provisions of Section 101 of the prior Banking Law.
(c) The term “effective date” shall mean January 1, 1979.
252.
 (a) Sections 600 and 600.2 of the revised Banking Law shall not apply to any subject institution existing on January 1, 1979, unless and until an amendment of the articles of such subject institution is filed with the Secretary of State pursuant to Section 2302 of the new General Corporation Law.
(b) An amendment of the articles of a subject institution existing on January 1, 1979, which is filed with the Secretary of State pursuant to Section 2302 of the new General Corporation Law may be adopted by approval of the board alone in accordance with the second sentence of Section 2302 of the new General Corporation Law, notwithstanding the fact that such amendment changes such articles to conform to the provisions of Sections 600 and 600.2 of the revised Banking Law.
(c) Neither Article 6 (commencing with Section 690), Chapter 5 of the revised Banking Law nor Section 904 of the new General Corporation Law shall apply to an amendment of the articles of a subject institution existing on January 1, 1979, which is filed with the Secretary of State pursuant to Section 2302 of the new General Corporation Law on account of the fact that such amendment conforms such articles to the provisions of Section 600.2 of the revised Banking Law.
253.
 In case the board of a subject institution has, prior to January 1, 1979, adopted a resolution levying an assessment on the common shares of such subject institution in accordance with an order issued by the commissioner pursuant to Section 661 of the prior Banking Law:
(a) If the assessment has, prior to January 1, 1979, become a lien on the common shares in accordance with Section 2704 of the prior General Corporation Law, the assessment shall be collected pursuant to the prior General Corporation Law:
(b) Otherwise, the resolution shall be deemed to be rescinded on January 1, 1979.
254.
 Article 3 (commencing with Section 640), Chapter 5 of the revised Banking Law applies to any distribution to its shareholders made after January 1, 1979, by a subject institution existing on January 1, 1979, except that any such distribution effected pursuant to a contract for the purchase or redemption of shares entered into by such subject institution prior to January 1, 1979, may be made if permissible under the applicable provisions of the revised Banking Law and the new General Corporation Law or under the applicable provisions of the prior Banking Law and the prior General Corporation Law in effect at the time such contract was entered into.
CHAPTER  3. Department of Financial Institutions
Article  1. General Provisions
300.
 (a) In this section:
(1) “Business and industrial development corporation” means a corporation licensed under Division 15 (commencing with Section 31000).
(2) “Payment instrument” has the same meaning as set forth in Section 33059.
(3) “Traveler’s check” has the same meaning as set forth in Section 1803.
(b) There is in the state government, in the Business, Transportation and Housing Agency, a Department of Financial Institutions which has charge of the execution of, among other laws, the laws of this state relating to any of the following: (1) banks or trust companies or the banking or trust business; (2) savings associations or the savings association business; (3) credit unions or the credit union business; (4) persons who engage in the business of receiving money for transmission to foreign nations or such business; (5) issuers of traveler’s checks or the traveler’s check business; (6) issuers of payment instruments or the payment instrument business; (7) business and industrial development corporations or the business and industrial development corporation business, or (8) insurance premium finance agencies or the insurance premium finance business.
301.
 This chapter is applicable to this division, Division 1.1 (commencing with Section 1000), Division 1.2 (commencing with Section 2000), Division 1.6 (commencing with Section 4800), Division 5 (commencing with Section 14000), Division 7 (commencing with Section 18000), and Division 15 (commencing with Section 31000).
Article  2. Commissioner of Financial Institutions
320.
 The chief officer of the Department of Financial Institutions is the Commissioner of Financial Institutions. The Commissioner of Financial Institutions is the head of the department and, except as otherwise provided in this code, is subject to the provisions of the Government Code relating to department heads, but need not reside in Sacramento.
321.
 As of the operative date of this section:
(a) In this section, “order” means any approval, consent, authorization, exemption, denial, prohibition, requirement, or other administrative action, applicable to a specific case.
(b) The office of the Superintendent of Banks and the State Banking Department are abolished. All powers, duties, responsibilities, and functions of the Superintendent of Banks and the State Banking Department are transferred to the Commissioner of Financial Institutions and the Department of Financial Institutions, respectively. The Commissioner of Financial Institutions and the Department of Financial Institutions succeed to all the rights and property of the Superintendent of Banks and the State Banking Department, respectively; the Commissioner of Financial Institutions and the Department of Financial Institutions are subject to all the debts and liabilities of the Superintendent of Banks and the State Banking Department, respectively, as if the Commissioner of Financial Institutions and the Department of Financial Institutions had incurred them. Any action or proceeding by or against the Superintendent of Banks or the State Banking Department may be prosecuted to judgment, which shall bind the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively, or the Commissioner of Financial Institutions or the Department of Financial Institutions may be proceeded against or substituted in place of the Superintendent of Banks or the State Banking Department, respectively. References in the Constitution of the State of California or in any statute or regulation to the Superintendent of Banks or to the State Banking Department mean the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively. All agreements entered into with, and orders and regulations issued by, the Superintendent of Banks or the State Banking Department shall continue in effect as if the agreements were entered into with, and the orders and regulations were issued by, the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively.
(c) The office of the Savings and Loan Commissioner and the Department of Savings and Loan are abolished. All powers, duties, responsibilities, and functions of the Savings and Loan Commissioner and the Department of Savings and Loan are transferred to the Commissioner of Financial Institutions and the Department of Financial Institutions, respectively. The Commissioner of Financial Institutions and the Department of Financial Institutions succeed to all the rights and property of the Savings and Loan Commissioner and the Department of Savings and Loan, respectively; the Commissioner of Financial Institutions and the Department of Financial Institutions are subject to all the debts and liabilities of the Savings and Loan Commissioner and the Department of Savings and Loan, respectively, as if the Commissioner of Financial Institutions and the Department of Financial Institutions had incurred them. Any action or proceeding by or against the Savings and Loan Commissioner or the Department of Savings and Loan may be prosecuted to judgment, which shall bind the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively, or the Commissioner of Financial Institutions or the Department of Financial Institutions may be proceeded against or substituted in place of the Savings and Loan Commissioner or the Department of Savings and Loan, respectively. References in the Constitution of the State of California or in any statute or regulation to the Savings and Loan Commissioner or to the Department of Savings and Loan mean the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively. All agreements entered into with, and orders and regulations issued by, the Savings and Loan Commissioner or the Department of Savings and Loan shall continue in effect as if the agreements were entered into with, and the orders and regulations were issued by, the Commissioner of Financial Institutions or the Department of Financial Institutions.
(d) All powers, duties, responsibilities, and functions of the Commissioner of Corporations and the Department of Corporations with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business are transferred to the Commissioner of Financial Institutions and the Department of Financial Institutions, respectively. The Commissioner of Financial Institutions and the Department of Financial Institutions succeed to all the rights and property of the Commissioner of Corporations and the Department of Corporations, respectively, with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business; the Commissioner of Financial Institutions and the Department of Financial Institutions are subject to all the debts and liabilities of the Commissioner of Corporations and the Department of Corporations, respectively, with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business, as if the Commissioner of Financial Institutions and the Department of Financial Institutions had incurred them. Any action or proceeding by or against the Commissioner of Corporations or the Department of Corporations with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business may be prosecuted to judgment, which shall bind the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively, or the Commissioner of Financial Institutions or the Department of Financial Institutions may be proceeded against or substituted in place of the Commissioner of Corporations or the Department of Corporations, respectively. References in the Constitution of the State of California or any statute or regulation to the Commissioner of Corporations or to the Department of Corporations with respect to credit unions, the credit union business, industrial loan companies, or the industrial loan business mean the Commissioner of Financial Institutions or the Department of Financial Institutions, respectively. All agreements entered into with, and orders and regulations issued by, the Commissioner of Corporations or the Department of Corporations in the exercise of authority under any law relating to credit unions, the credit union business, industrial loan companies, or the industrial loan business, shall continue in effect as if the agreements were entered into with, and the orders and regulations were issued by, the Commissioner of Financial Institutions or the Department of Financial Institutions.
322.
 The commissioner is appointed by the Governor, and holds office at the pleasure of the Governor. The appointment of the commissioner is subject to confirmation by the Senate.
323.
 The commissioner shall be a citizen of the United States and a resident of the state for at least three years prior to his or her appointment. The commissioner shall be chosen solely for his or her qualifications and fitness to perform the duties of his or her office.
324.
 The annual salary of the commissioner is provided for by Chapter 6 (commencing with Section 11550) of Part 1 of Division 3 of Title 2 of the Government Code.
325.
 Before entering upon the duties of his or her office, the commissioner shall take and subscribe to the constitutional oath of office and file the same with the Secretary of State.
326.
 The commissioner is responsible for the performance of all duties, the exercise of all powers and jurisdiction, and the assumption and discharge of all responsibilities vested by law in the department. The commissioner has and may exercise all the powers necessary or convenient for the administration and enforcement of, among other laws, the laws described in Section 300. The commissioner may issue such rules and regulations consistent with law as he or she may deem necessary or advisable in executing the powers, duties, and responsibilities of the department.
327.
 (a) The commissioner shall apply the Interagency Guidance on Nontraditional Mortgage Product Risks issued in September 2006 and the Statement on Subprime Mortgage Lending issued in June 2007 by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration to state-regulated financial institutions, including, but not limited to, privately insured, state-chartered credit unions.
(b) The commissioner may issue emergency and final regulations to clarify the application of this section as soon as possible.
(c) A bank or credit union to which the commissioner applies the documents described in subdivision (a) shall adopt and adhere to policies and procedures that are reasonably intended to achieve the objectives set forth in those documents.
328.
 (a) The commissioner may make the agreements that he or she deems necessary or appropriate in exercising his or her powers.
(b) (1) The agreements authorized under subdivision (a) may include, but are not limited to, agreements with agencies of this state, of other states of the United States, of the United States, or of foreign nations that regulate financial institutions, relating to examinations of banks, savings associations, credit unions, industrial loan companies, and other matters.
(2) Any agreement with a government agency that regulates financial institutions is exempt from the advertising and competitive bidding requirements of the Public Contract Code.
329.
 (a) For purposes of this section, the following definitions apply:
(1) “Applicable law” means:
(A) With respect to any bank, Division 1.6 (commencing with Section 4800), and any of the following provisions:
(i) Article 6 (commencing with Section 405) of Chapter 3.
(ii) Article 3 (commencing with Section 1130) of Chapter 5 of Division 1.1.
(iii) Chapter 6 (commencing with Section 1200) of Division 1.1.
(iv) Chapter 10 (commencing with Section 1320) of Division 1.1.
(v) Chapter 14 (commencing with Section 1460) of Division 1.1.
(vi) Article 1 (commencing with Section 1530) of Chapter 15 of Division 1.1.
(vii) Chapter 16 (commencing with Section 1550) of Division 1.1.
(viii) Chapter 20 (commencing with Section 1750) of Division 1.1.
(ix) Section 456.
(x) Section 457.
(xi) Section 459.
(xii) Section 460.
(xiii) Section 760.
(xiv) Chapter 21 (commencing with Section 1850) of Division 1.1.
(xv) Chapter 18 (commencing with Section 1660) of Division 1.1.
(xvi) Chapter 19 (commencing with Section 1670) of Division 1.1.
(B) With respect to any savings association, any provision of Division 1.6 (commencing with Section 4800) and Division 2 (commencing with Section 5000).
(C) With respect to any issuer of traveler’s checks, any provision of Chapter 7 (commencing with Section 2120) of Division 1.2.
(D) With respect to any insurance premium finance company, any provision of Division 7 (commencing with Section 18000).
(E) With respect to any business and development corporation, any provision of Division 15 (commencing with Section 31000).
(F) With respect to any credit union, any of the following provisions:
(i) Section 14252.
(ii) Section 14253.
(iii) Section 14255.
(iv) Article 4 (commencing with Section 14350) of Chapter 3 of Division 5.
(v) Section 14401.
(vi) Section 14404.
(vii) Section 14408, only as that section applies to gifts to directors, volunteers, and employees, and the related family or business interests of the directors, volunteers, and employees.
(viii) Section 14409.
(ix) Section 14410.
(x) Article 5 (commencing with Section 14600) of Chapter 4 of Division 5.
(xi) Article 6 (commencing with Section 14650) of Chapter 4 of Division 5, excluding subdivision (a) of Section 14651.
(xii) Section 14803.
(xiii) Section 14851.
(xiv) Section 14858.
(xv) Section 14860.
(xvi) Section 14861.
(xvii) Section 14863.
(G) With respect to any person licensed to transmit money abroad, any provision of Chapter 1 (commencing with Section 2000) of Division 1.2.
(2) “Licensee” means any bank, savings association, credit union, transmitter of money abroad, issuer of payment instruments, issuer of traveler’s checks, insurance premium finance agency, or business and industrial development corporation that is authorized by the commissioner to conduct business in this state.
(b) Notwithstanding any other provision of this code that applies to a licensee or a subsidiary of a licensee, after notice and an opportunity to be heard, the commissioner may, by order that shall include findings of fact which incorporates a determination made in accordance with subdivision (e), levy civil penalties against any licensee or any subsidiary of a licensee who has violated any provision of applicable law, any order issued by the commissioner, any written agreement between the commissioner and the licensee or subsidiary of the licensee, or any condition of any approval issued by the commissioner. Notwithstanding any other provision of law, neither the commissioner nor any employee of the department shall disclose or permit the disclosure of any record, record of any action, or information contained in a record of any action, taken by the commissioner under the provisions of this section, unless the action was taken pursuant to paragraph (2) of subdivision (b), to persons other than federal or state government employees who are authorized by statute to obtain the records in the performance of their official duties, unless the disclosure is authorized or requested by the affected licensee or the affected subsidiary of the licensee. The commissioner shall have the sole authority to bring any action with respect to a violation of applicable law subject to a penalty imposed under this section.
Except as provided in paragraphs (1) and (2), any penalty imposed by the commissioner may not exceed one thousand dollars ($1,000) a day, provided that the aggregate penalty of all offenses in any one action against any licensee or subsidiary of a licensee shall not exceed fifty thousand dollars ($50,000).
(1) If the commissioner determines that any licensee or subsidiary of the licensee has recklessly violated any applicable law, any order issued by the commissioner, any provision of any written agreement between the commissioner and the licensee or subsidiary, or any condition of any approval issued by the commissioner, the commissioner may impose a penalty not to exceed five thousand dollars ($5,000) per day, provided that the aggregate penalty of all offenses in an action against any licensee or subsidiary of a licensee shall not exceed seventy-five thousand dollars ($75,000).
(2) If the commissioner determines that any licensee or subsidiary of the licensee has knowingly violated any applicable law, any order issued by the commissioner, any provision of any written agreement between the commissioner and the licensee or subsidiary, or any condition of any approval issued by the commissioner, the commissioner may impose a penalty not to exceed ten thousand dollars ($10,000) per day, provided that the aggregate penalty of all offenses in an action against any licensee or subsidiary of a licensee shall not exceed 1 percent of the total assets of the licensee or subsidiary of a licensee subject to the penalty.
(c) Nothing in this section shall be construed to impair or impede the commissioner from pursuing any other administrative action allowed by law.
(d) Nothing in this section shall be construed to impair or impede the commissioner from bringing an action in court to enforce any law or order he or she has issued, including orders issued under this section. Nothing in this section shall be construed to impair or impede the commissioner from seeking any other damages or injunction allowed by law.
(e) In determining the amount and the appropriateness of initiating a civil money penalty under subdivision (b), the commissioner shall consider all of the following:
(1) Evidence that the violation or practice or breach of duty was intentional or was committed with a disregard of the law or with a disregard of the consequences to the institution.
(2) The duration and frequency of the violations, practices, or breaches of duties.
(3) The continuation of the violations, practices, or breaches of duty after the licensee or subsidiary of the licensee was notified, or, alternatively, its immediate cessation and correction.
(4) The failure to cooperate with the commissioner in effecting early resolution of the problem.
(5) Evidence of concealment of the violation, practice, or breach of duty or, alternatively, voluntary disclosure of the violation, practice, or breach of duty.
(6) Any threat of loss, actual loss, or other harm to the institution, including harm to the public confidence in the institution, and the degree of that harm.
(7) Evidence that a licensee or subsidiary of a licensee received financial gain or other benefit as a result of the violation, practice, or breach of duty.
(8) Evidence of any restitution paid by a licensee or subsidiary of a licensee of losses resulting from the violation, practice, or breach of duty.
(9) History of prior violations, practices, or breaches of duty, particularly where they are similar to the actions under consideration.
(10) Previous criticism of the institution for similar actions.
(11) Presence or absence of a compliance program and its effectiveness.
(12) Tendency to engage in violations of law, unsafe or unsound banking practices, or breaches of duties.
(13) The existence of agreements, commitments, orders, or conditions imposed in writing intended to prevent the violation, practice, or breach of duty.
(14) Whether the violation, practice, or breach of duty causes quantifiable, economic benefit or loss to the licensee or the subsidiary of the licensee. In those cases, removal of the benefit or recompense of the loss usually will be insufficient, by itself, to promote compliance with the applicable law, order, or written agreement. The penalty amount should reflect a remedial purpose and should provide a deterrent to future misconduct.
(15) Other factors as the commissioner may, in his or her opinion, consider relevant to assessing the penalty or establishing the amount of the penalty.
(f) The amounts collected under this section shall be deposited in the appropriate fund of the department. For purposes of this subdivision, the term “appropriate fund” means the fund to which the annual assessments of fined licensees, or the parent licensee of the fined subsidiary, are credited.
330.
 The authority vested in the Superintendent of Banks under subdivision (2) of Section 1 of Article XV of the California Constitution is delegated to the commissioner.
331.
 Notwithstanding any other provision of law, the commissioner may adopt and implement any method of accepting electronic filings of applications, reports, or other matters, which, in the opinion of the commissioner, is secure. Any method of electronic filing chosen by the commissioner shall include a method to verify the identity of the person making the filing. The verification shall be deemed to satisfy all other verifications required by this division, and shall have the same force and effect as the use of manual signatures.
332.
 (a) (1) In this section, “federal law” includes, but is not limited to, the United States Constitution, any federal statute, any federal court decision, and any regulation, circular, bulletin, interpretation, decision, order, and waiver issued by a federal agency.
(2) The definitions set forth in Section 1750 apply to this section.
(b) (1) Notwithstanding any other provision of law, except as provided in subdivision (c), if the commissioner finds that any provision of federal law applicable to national banking associations doing business in this state is substantively different from the provisions of this code applicable to banks organized under the laws of this state, the commissioner may by regulation make that provision of federal law applicable to banks organized under the laws of this state.
(2) If the commissioner finds that any provision of federal law applicable to foreign (other nation) banks with respect to federal agencies or federal branches in this state is substantively different from the provisions of this code applicable to foreign (other nation) banks with respect to agencies or branch offices licensed by the commissioner under Chapter 20 (commencing with Section 1750) of Division 1.1, the commissioner may by regulation make that provision of federal law applicable to foreign (other nation) banks with respect to agencies or branch offices licensed by the commissioner under Chapter 20 (commencing with Section 1750) of Division 1.1.
(c) (1) Section 11343.4 and Article 5 (commencing with Section 11346) and Article 6 (commencing with Section 11349) of Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code do not apply to any regulation adopted under subdivision (b).
(2) The commissioner shall file any regulation adopted pursuant to subdivision (b), together with a citation to this section as authority for the adoption and a citation to the provisions of federal law made applicable by the regulation, with the Office of Administrative Law for filing with the Secretary of State and publication in the California Code of Regulations.
(3) Any regulation adopted under subdivision (b) shall become effective on the date when it is filed with the Secretary of State unless the commissioner prescribes a later date in the regulation or in a written instrument filed with the regulation.
(4) Any regulation adopted under subdivision (b) shall expire at 12 p.m. on December 31 of the year following the calendar year in which it becomes effective.
(5) Any regulation adopted pursuant to subdivision (b) shall be subject to the following restrictions:
(A) The commissioner shall not renew or reinstate the regulation adopted pursuant to subdivision (b).
(B) The commissioner shall not adopt a new regulation pursuant to subdivision (b), to address the same conformity issue that was addressed by the regulation that expired pursuant to subdivision (c).
(d) The commissioner may adopt regulations pursuant to subdivision (b) that are exempt from the expiration and restrictions of subdivision (c) if the regulations are adopted in compliance with all provisions of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of the Government Code, including those listed in paragraph (1) of subdivision (c).
333.
 The powers of supervision and examination of all licensees are vested in the commissioner.
334.
 The commissioner may promulgate or waive such rules and regulations as may be reasonable or necessary to carry out his or her duties and responsibilities.
335.
 (a) The commissioner, whenever in his or her opinion such action is necessary or appropriate to carry out his or her duties, may call a meeting of the board of directors of a licensee.
(b) A meeting of the board of a licensee called by the commissioner shall be held upon four days’ notice by first-class mail or 24 hours’ notice delivered personally or by telephone. The notice shall be given by the commissioner or, if the commissioner so orders, by an officer of the licensee.
(c) A meeting of the board of a licensee called by the commissioner shall be held at a place within this state as may be designated by the commissioner and specified in the notice of the meeting.
(d) The expenses of a meeting of the board of a licensee called by the commissioner shall be paid by the licensee.
336.
 The commissioner may, at any time, require a licensee to write down any asset held by the licensee to a valuation that will represent the asset’s then fair market value.
Article  3. Deputies and Employees
350.
 The commissioner shall appoint a chief deputy who holds office at the pleasure of the commissioner. The annual salary of the chief deputy shall be fixed by the commissioner with the approval of the Director of Finance. The chief deputy shall have the same qualifications as the commissioner. The commissioner shall also appoint two deputies, one to serve in the City and County of San Francisco and one to serve in the City of Los Angeles.
351.
 The Chief Officer of the Division of Credit Unions is the Deputy Commissioner of Financial Institutions for the Division of Credit Unions. The Deputy Commissioner of Financial Institutions for the Division of Credit Unions shall administer the laws of this state relating to credit unions or the credit union business under the direction of the commissioner. The Deputy Commissioner of Financial Institutions for the Division of Credit Unions shall be appointed by the Governor and shall hold office at the pleasure of the Governor. The Deputy Commissioner of Financial Institutions shall receive an annual salary as fixed by the Governor.
352.
 The commissioner may employ deputies in addition to the chief deputy, and examiners, appraisers, technical assistants, investigators, administrative assistants, clerks, and other employees that he or she may need to discharge in a proper manner the duties imposed upon him or her by law. He or she shall prescribe their duties and fix their compensation in accordance with classifications made by the State Personnel Board. The commissioner may also, at those times and on those terms as may be approved by the Governor, employ those attorneys as he or she may need.
353.
 Before entering upon the duties of his office each deputy and examiner shall take and subscribe to the constitutional oath of office and file the same with the Secretary of State.
354.
 The commissioner may require, at any time, of any deputy, examiner, or other employee of the department, an official bond in such amount as the commissioner may deem necessary. The premium for bonds required by the commissioner shall be an expense of the department.
355.
 Neither the commissioner nor any deputy or employee of the department shall do or be any of the following with respect to any bank, savings association, credit union, or industrial loan company supervised by the department:
(a) Be indebted, directly or indirectly, as borrower, endorser, surety, or guarantor to any such bank, savings association, credit union, or industrial loan company.
(b) Be an officer, director, or employee of any such bank, savings association, credit union, or industrial loan company.
(c) Own or deal in directly or indirectly, the shares or obligations of any such bank, savings association, credit union, or industrial loan company.
(d) Be interested in or, directly or indirectly, receive from any such bank, savings association, credit union, or industrial loan company or any officer, director, or employee thereof, any salary, fee, compensation, or other valuable thing by way of gift, credit, compensation for services, or otherwise. However, this subdivision does not prohibit any person from being interested in or directly or indirectly receiving (1) anything which is expressly excluded from a definition of “gift” or “honorarium” in the Political Reform Act of 1974 (Title 9 (commencing with Section 81000) of the Government Code) or in regulations issued under the Political Reform Act of 1974 by the Fair Political Practices Commission or (2) anything which, if received by the commissioner, would constitute a gift or honorarium within the meaning of the Political Reform Act of 1974 or regulations issued under the Political Reform Act of 1974 by the Fair Political Practices Commission but which the commissioner would not be prohibited from receiving under the Political Reform Act of 1974 or regulations issued under the Political Reform Act of 1974 by the Fair Political Practices Commission.
(e) Be interested in or engage in the negotiation of any loan to, obligation of, or accommodation for another person to or with any such bank, savings association, credit union, or industrial loan company.
Notwithstanding the foregoing the commissioner and any deputy or employee may have and maintain one or more deposit or similar accounts in any bank, savings association, credit union, or industrial loan company in this state and may maintain with any bank, savings association, credit union, or industrial loan company in this state a loan which was not obtained in violation of this section if the person reports the loan in writing to the department within 30 days after the person commences his or her term of appointment or employment with the department and if the loan is not renewed, renegotiated, extended, or otherwise modified on or after July 1, 1997.
A violation of this section by any person shall constitute sufficient grounds for his or her removal or discharge.
356.
 If the commissioner is unable to perform his or her duties for more than 30 consecutive days or if the office of the commissioner becomes vacant, the chief deputy shall have all the powers and duties of the commissioner until the return or recovery of the commissioner, or, in case of a vacancy, until a new commissioner is appointed by the Governor and qualifies to hold office.
357.
 If a deputy commissioner or any examiner has knowledge of the insolvency or unsafe condition of any licensee and willfully fails to report that fact to the commissioner in writing, he or she is guilty of a felony.
Article  4. Administration of the Department
370.
 The commissioner may have an office in the City of Sacramento, the City of Los Angeles, the City of San Diego, the City and County of San Francisco, or any other location in the state that he or she considers appropriate. The commissioner shall provide at the expense of the department such office space, furniture, and equipment as may be necessary or convenient for the transaction of the business of the department.
371.
 There is in the Department of Financial Institutions, the Division of Credit Unions. The Division of Credit Unions has charge of the execution of the laws of this state relating to credit unions and to the credit union business.
372.
 The department may expend moneys in accordance with law for the necessary travel expenses of officers and employees of the department while traveling in the line of their duties either within or without the state.
373.
 The commissioner shall adopt and keep an official seal. Papers executed by the commissioner in his or her official capacity pursuant to law and bearing the seal, or copies thereof certified by him or her, shall be received in evidence in like manner as the original and may be recorded in the same manner and with the same effect as a deed regularly acknowledged.
374.
 (a) Whenever it is necessary for the commissioner to approve any instrument and to affix his or her official seal thereto, the commissioner shall charge a fee of twenty-five dollars ($25) therefor.
(b) Whenever it is proper for the department to furnish a copy of any paper that has been filed therein and to certify to the paper, the commissioner may charge twenty-five cents ($0.25) for each page copied.
(c) Whenever the commissioner is required or requested to certify copies of documents, the commissioner may charge a fee of twenty-five dollars ($25) for certifying the copied documents and for affixing his or her official seal.
375.
 Official reports made by the commissioner and verified reports of an examination made by the commissioner, exclusively or in conjunction with or with assistance from any agency of the United States, of a state of the United States, or of a foreign nation are prima facie evidence of the facts stated in the reports for all purposes.
376.
 At least once each month, the commissioner shall issue and disseminate as the commissioner deems appropriate a bulletin containing the following information:
(a) Information regarding any of the following actions taken since issuance of the previous bulletin:
(1) The filing, approval, or denial under Chapter 1 (commencing with Section 1000) of Division 1.1 of an application for authority to organize a California state bank, or the issuance under Chapter 3 (commencing with Section 1040) of Division 1.1 of a certificate of authority to a California state bank.
(2) The filing, approval, or denial under Article 1 (commencing with Section 5400) of Chapter 2 of Division 2 of an application for the issuance of an organizing permit for the organization of a California savings association, or for the issuance under Article 2 (commencing with Section 5500) of Chapter 2 of Division 2 of a certificate of authority to a California savings association.
(3) The filing, approval, or denial under Article 2 (commencing with Section 14150) of Chapter 2 of Division 5 of an application for a certificate to act as a credit union, or the issuance of a certificate to engage in the business of a credit union.
(4) The filing, approval, or denial under Division 1.2 (commencing with Section 2000), Division 7 (commencing with Section 18000), or Division 15 (commencing with Section 31000) of an application for a license to engage in business, or the issuance under any of those laws of a license to engage in business.
(5) The filing, approval, or denial under Chapter 20 (commencing with Section 1750) of Division 1.1 of an application by a foreign (other nation) bank to establish its first office of any particular class (as determined under Section 1753) in this state, or the issuance under that chapter of a license in connection with the establishment of such an office.
(6) The filing, approval, or denial under Division 1.6 (commencing with Section 4800) of an application for approval of a sale, merger, or conversion.
(7) The filing, approval, or denial under Article 6 (commencing with Section 5700) of Chapter 2 of Division 2 of an application for approval of a conversion of a federal savings association into a state savings association, or the filing of a federal charter of a state savings association that has converted to a federal savings association.
(8) The filing, approval, or denial under Article 7 (commencing with Section 5750) of Chapter 2 of Division 2 of an application for approval of a reorganization, merger, consolidation, or transfer of assets of a state savings association.
(9) The filing, approval, or denial under Chapter 9 (commencing with Section 15200) of Division 5 of an application for approval of a merger, dissolution, or conversion of a credit union.
(10) The taking of possession of the property and business of a California state bank, savings association, credit union, or person licensed by the commissioner under any of the laws cited in paragraph (2).
(b) Other information as the commissioner deems appropriate.
377.
 Notwithstanding any other provision of this code, whenever any provision of this division requires the pledge of securities to be deposited with the Treasurer, to insure the performance of any act or duty, the securities after first being approved by the commissioner and upon the written order of the commissioner, shall be deposited with the Treasurer. The Treasurer, with the consent of the owner of the securities deposited or to be deposited with the Treasurer, may place the securities in the custody of a qualified trust company or bank in the same manner and under the same conditions provided in Article 3 (commencing with Section 16550) of Chapter 4 of Part 2 of Division 4 of Title 2 of the Government Code.
378.
 Whenever the commissioner is notified of or discovers a violation of the state law punishable by criminal penalties, he or she shall promptly advise the Attorney General.
379.
 (a) For the purposes of this section the following definitions shall apply:
(1) “Control” has the meaning set forth in subdivision (b) of Section 1250. “Control” also means the ownership of a subject person by means of sole proprietorship, partnership, or by any other similar means.
(2) “Controlling person” means a person who, directly or indirectly, controls a subject person.
(3) “Subject person” means any of the following:
(A) A commercial bank, industrial bank, trust company, savings association, or credit union incorporated under the laws of this state.
(B) A person licensed by the commissioner under Chapter 1 (commencing with Section 2000) of Division 1.2 to receive money for transmission to foreign countries.
(C) A person authorized by the commissioner pursuant to Section 2004 to act as an agent of a person licensed by the commissioner to receive money for transmission to foreign countries.
(D) A person licensed by the commissioner pursuant to Division 7 (commencing with Section 18000) to transact business as a premium finance agency.
(E) A person licensed by the commissioner pursuant to Division 15 (commencing with Section 31000) to transact business as a business and industrial development corporation.
(F) A person licensed by the commissioner pursuant to Division 16 (commencing with Section 33000) to engage in the business of selling payment instruments in this state issued by the licensee.
(G) A corporation incorporated under the laws of this state for the purpose of engaging in, or that is authorized by the commissioner to engage in, business pursuant to Article 1 (commencing with Section 1850) of Chapter 21 of Division 1.1.
(H) A foreign corporation that is licensed by the commissioner pursuant to Article 1 (commencing with Section 1850) of Chapter 21 of Division 1.1 to maintain an office in this state and to transact at that office business pursuant to Article 1 (commencing with Section 1850) of Chapter 21 of Division 1.1.
(b) Notwithstanding any other provision of law, and subject to subdivision (c), the commissioner may deliver, or cause to be delivered, to local, state, or federal law enforcement agencies fingerprints taken of any of the following:
(1) An applicant for employment with the department.
(2) A person licensed, or proposed to be licensed, as a subject person.
(3) A director, officer, or employee of an existing or proposed subject person.
(4) An existing or proposed controlling person of a subject person.
(5) A director, officer, or employee of an existing or proposed controlling person of a subject person.
(6) A director, officer, or employee of an existing or proposed affiliate of a subject person.
(c) The authorization in subdivision (b) may only be used by the department for the purpose of obtaining information regarding an individual as to the existence and nature of the criminal record, if any, of that individual relating to convictions, and to any arrest for which the individual is released on bail or on his or her own recognizance pending trial, for the commission or attempted commission of a crime involving robbery, burglary, theft, embezzlement, fraud, forgery, bookmaking, receiving stolen property, counterfeiting, or involving checks or credit cards or using computers.
(d) No request shall be submitted pursuant to this section without the written consent of the person affected.
(e) Any criminal history information obtained pursuant to this section shall be confidential and no recipient shall disclose its contents other than for the purpose for which it was acquired.
380.
 (a) The commissioner shall inform the Commissioner of Corporations and other appropriate state and federal officials charged with the regulation of financial institutions or securities transactions of any enforcement actions, including, but not limited to, civil or criminal actions, cease and desist orders, license or authorization suspensions or revocations, or an open investigation.
(b) The commissioner shall inform the Commissioner of Corporations and other appropriate state and federal officials charged with the regulation of financial institutions or securities transactions if it appears that any bank, bank holding company, savings association, savings and loan holding company, credit union, industrial loan company, industrial loan holding company, or other licensee of the department is conducting its business in a fraudulent, unsafe, unsound, or injurious manner, or has suffered or will suffer substantial financial loss or damage, and it appears to the commissioner that the information is relevant to the regulatory activities of the other agency.
381.
 Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to hearings conducted by the department.
Article  5. Financial Institutions Fund
400.
 As of the operative date of this section, there is established a Financial Institutions Fund in the State Treasury. Except as otherwise provided in Division 5 (commencing with Section 14000), all money collected or received by the commissioner under this code shall be deposited with the Treasurer to the credit of the Financial Institutions Fund.
Article  6. State Banking Account
405.
 (a) The commissioner shall annually collect pro rata from the banks and trust companies under the supervision of the department a fund in amount sufficient in the commissioner’s judgment to meet the expenses of the department in administering laws relating to banks or trust companies or to the banking or trust business that are not otherwise provided for and to provide a reasonable reserve for contingencies.
(b) The amount of the annual assessment for the fund on any bank or trust company shall not be less than five thousand dollars ($5,000). Above that minimum amount, except as otherwise provided subdivision (c), the annual assessment shall not exceed the sum of the products of a base assessment rate, or percentage thereof, and segregated portions of its total resources, according to the following table:
Segregated Total Resources
Percentage of Base
(In Millions or Fractions Thereof)
Assessment Rate
First $2
100.0
Next $18
 50.0
Next $80
 12.0
Next $100
 6.25
Next $800
6.0
Next $1,000
4.0
Next $4,000
3.5
Next $14,000
3.0
Next $20,000
2.5
Excess over $40,000
1.5
(c) (1) For purposes of determining the annual assessment on banks and trust companies that have one or more foreign (other state) branch offices, the resources of foreign (other state) branch offices shall be excluded from total resources, except that the commissioner may order the resources of foreign (other state) branch offices to be included in total resources if and to the extent that it is necessary in the commissioner’s judgment to meet the expenses of the department on account of foreign (other state) branch offices and a reasonable reserve for contingencies.
(2) If the commissioner finds that a bank or trust company allocated any resource to a foreign (other state) branch office for the purpose, in whole or in part, of reducing its annual assessment, the commissioner may, for purposes of calculating the annual assessment on the bank or trust company, reallocate the resource to the bank’s or trust company’s head office.
(d) The base assessment rate shall be set by the commissioner from time to time at the commissioner’s discretion, not to exceed two dollars and twenty cents ($2.20) per one thousand dollars ($1,000) of total resources.
406.
 The commissioner shall annually collect from national banking associations and foreign (other state) banks operating trust departments in this state an annual assessment to meet expenses of the department, not exceeding one one-hundredth of 1 percent of the amount required by law to be deposited with the Treasurer as surety for the faithful performance and execution of all court and private trusts accepted by them.
407.
 Whenever the commissioner makes an assessment pursuant to Section 405 or 406, the commissioner shall fix the date when the assessment is due and payable and shall mail or otherwise deliver to each bank and trust company assessed an invoice showing the amount of its assessment and the date when the assessment is due and payable.
408.
 The commissioner, in addition to the annual assessment, shall collect from each bank authorized to engage in the trust business, to defray the cost of examination, a fee not to exceed seventy-five dollars ($75) per hour for each examiner necessarily engaged in the examination of the trust company, trust business, or trust department. The commissioner shall assess the fee upon completion of the examination of the trust company or trust business and shall mail or otherwise deliver an invoice for the fee to the institution. The institution shall pay the fee within 30 days after the invoice is mailed or otherwise delivered to it.
409.
 If any bank or trust company fails to make timely payment of any assessment made pursuant to Section 405, 406, or 408, the commissioner may, in the commissioner’s sole discretion, (a) cancel the certificate of authority of the bank or trust company to conduct a banking or trust business or (b) levy a civil penalty pursuant to Section 329.
410.
 As of the operative date of this section:
(a) The State Banking Fund is converted into a separate account in the Financial Institutions Fund and designated as the State Banking Account.
(b) All moneys and other assets and all liabilities of the State Banking Fund shall be transferred to the State Banking Account.
411.
 Except as otherwise provided in Section 413 or 414, all salaries and other expenses of the department, other than those incurred in administering laws relating to savings associations or the savings association business, credit unions or the credit union business, industrial banks, the industrial banking business, insurance premium finance agencies, the insurance premium finance business, or Article 2 (commencing with Section 53630) of Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code, shall be paid out of the State Banking Account in the Financial Institutions Fund. Salaries and other expenses incurred in the liquidation or conservation of any bank (other than an industrial bank) or of any person licensed under Division 1.2 (commencing with Section 2000) or Division 15 (commencing with Section 31000), including the compensation of employees of the department to the extent that they are engaged in that liquidation or conservation, if possible, and if advanced from the State Banking Account in the Financial Institutions Fund, shall constitute a first charge against the assets of the bank or licensee, as the case may be. Salaries and other expenses incurred in the liquidation or conservation of any industrial bank, including the compensation of employees of the department to the extent that they are engaged in that liquidation or conservation, if possible, and if advanced from the Industrial Bank Account in the Financial Institutions Fund, shall constitute a first charge against the assets of the industrial bank.
412.
 The commissioner shall deliver all moneys received or collected by the commissioner under Section 405, 406, or 408 or otherwise, other than moneys received or collected by the commissioner under laws relating to savings associations, the savings association business, credit unions, the credit union business, industrial banks, the industrial banking business, insurance premium finance agencies, the insurance premium finance business, or Article 2 (commencing with Section 53630) of Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code, to the Treasurer, who shall deposit the moneys to the credit of the State Banking Account of the Financial Institutions Fund.
413.
 (a) In this section, “assessment statute” means any statute that authorizes the commissioner to make or collect an assessment (other than a fine) on financial institutions, including the following:
(1) Sections 405 to 407, inclusive.
(2) Section 2042.
(3) Section 33302.
(4) Article 2 (commencing with Section 8030) of Chapter 7 of Division 2.
(5) Article 4 (commencing with Section 14350) of Chapter 3 of Division 5.
(6)Section 1532.
(b) The commissioner may charge to and collect from the Financial Institutions Fund, the Credit Union Fund, each of the accounts included in the Financial Institutions Fund, and each of the programs included in the State Banking Account an amount equal to the fund’s, account’s, or program’s pro rata share of those expenses of the department which, in the opinion of the commissioner, it is not feasible to attribute to any single one of the funds, accounts, or programs. The fund’s, account’s, or program’s pro rata share shall be determined and paid in the manner and at the time ordered by the commissioner.
(c) The provisions of any assessment statute that authorize the commissioner to make or collect an assessment for the purposes specified in the assessment statute include authority for the commissioner to make and collect an assessment for the additional purpose of providing money in an amount that will, in the commissioner’s judgment, be sufficient to make payments that may be required under subdivision (b).
414.
 Notwithstanding any other provision of this code or of Section 53667 of the Government Code, the commissioner may, at any time during a fiscal year, pay any expense of the department from any of the following accounts and funds: the State Banking Account, the Savings and Loan Account, the Industrial Bank Account, the Financial Institutions Fund, the Credit Union Fund, and the Local Agency Deposit Security Fund. However, if the commissioner pays an expense of the department from an account or fund from which the expense is not, except for this section, permitted to be paid, the commissioner shall, as of a date within that fiscal year, reimburse the account or fund from which the expense was paid by making a transfer from the account or fund from which the expense would have been permitted to be paid.
CHAPTER  4. Operations
450.
 (a) In this section, “governmental agency” includes, without limitation, any agency of this state, of any other state of the United States, of the United States, or of any foreign nation.
(b) The commissioner may furnish information to a governmental agency that regulates financial institutions.
(c) The commissioner may furnish to a governmental agency that administers a loan guarantee or similar program, information relating to a person who participates in the program.
(d) The commissioner may furnish to a governmental agency that regulates business activities, other than the type described in subdivision (b), information relating to any of the following:
(1) A suspected violation of a law administered by the agency.
(2) A person involved in an application to the agency for a license, approval, or other authorization.
(e) The commissioner may furnish to a governmental agency that is a law enforcement agency information relating to a suspected crime.
(f) The commissioner may furnish information to any person who provides share insurance or guaranty of the shares of a credit union in accordance with Section 14858, 16004, or 16503.
(g) The commissioner may furnish confidential information regarding a licensee to the directors, officers, employees, attorneys, accountants, and consultants of that licensee in accordance with Section 452.
(h) This section does not prescribe the only circumstances under which the commissioner may furnish information.
451.
 With the prior approval of the commissioner, a foreign (other state) or foreign (other nation) financial institutions regulatory agency may examine a licensee and any of its offices, provided that the agency has a regulatory interest in the licensee. Any regulatory agency approved by the commissioner under this section shall be considered a supervisory agency under subdivision (f) of Section 7480 of the Government Code.
452.
 (a) Directors, officers, employees, attorneys, accountants, or consultants of a licensee may not disclose in any manner to any person confidential information regarding the licensee received from the commissioner. The prohibition in this section shall not apply to disclosures of confidential information by directors, officers, employees, attorneys, accountants, or consultants of the licensee:
(1) Made pursuant to a subpoena or other discovery proceeding.
(2) Made to any state or federal prosecuting or investigatory agency or authority.
(3) Made to any state, federal, or foreign (other nation) financial institutions regulatory agency that has a direct regulatory interest in the licensee.
(4) Made to any state or federal taxing agency.
(5) Made as otherwise required by law.
(6) Made as otherwise authorized by the commissioner in writing.
(b) Any director, officer, employee, attorney, accountant, or consultant that discloses confidential information in a manner other than allowed by this section shall be liable for a civil penalty not to exceed fifty thousand dollars ($50,000). The commissioner may impose a penalty under this section in accordance with the procedures set forth in Section 329.
(c) The prohibition set forth in subdivision (a) shall not apply to any discussion, analysis, or other use of confidential information provided by the commissioner that occurs between directors, officers, employees, attorneys, accountants, or consultants of the licensee.
453.
 Every licensee shall make and file with the commissioner whenever required by him or her a report in any form as the commissioner may prescribe and verified in any manner the commissioner prescribes, showing its financial condition and any other information as the commissioner may require at the close of business on any day designated by him or her. Any verification shall state that each of the officers making the verification has a personal knowledge of the matters in the report and that each of them believes that each statement in the report is true.
454.
 The commissioner shall call for the report specified in Section 453 from all licensees at least four times each year upon dates selected by the commissioner.
455.
 The commissioner may at any time require any licensee to make and file with him or her a special report furnishing any information as the commissioner may specify when necessary to inform him or her fully of the actual financial condition and all other affairs of the licensee. The reports shall be in the form and filed on a date prescribed by the commissioner and shall, if required by the commissioner, be verified in any manner that he or she prescribes.
456.
 Every licensee shall keep its corporate records, financial records, and books of account in words and figures of the English language and in form satisfactory to the commissioner.
457.
 Every licensee shall notify the commissioner of any change in the following officers of the licensee, to the extent that those officers exist within the licensee: chairperson, chief executive officer, president, general manager, managing officer, chief financial officer, or chief credit officer.
458.
 (a) Each report required under this article, or under any other provision of law administered by the commissioner, shall be filed with the commissioner at the time that the commissioner may require. If any licensee fails to make any required report at the time specified by the commissioner or fails to include therein any matter required by this article, any provision of law administered by the commissioner, or by the commissioner, it shall be liable to the people of this state in the sum of not more than one hundred dollars ($100) for each day that the report is delayed or withheld by the failure or neglect of the licensee.
(b) The provisions of Section 329 shall not apply to this section.
459.
 (a) Every licensee shall file with the commissioner one copy of all material filed by the licensee with any applicable federal financial institutions regulatory agency, law enforcement agency, or other federal agency that is required to be filed by law or order of the agency.
(b) Each copy required to be filed pursuant to subdivision (a) shall be filed with the commissioner on or before the date upon which the original is filed with the federal regulatory agency and shall be available for inspection by the public except to the extent the information contained therein is accorded confidential treatment under federal law or regulations. That material shall be open for inspection by the Attorney General.
460.
 Any person intentionally making a false statement in any report required to be rendered under this article or other provision of law administered by the commissioner is guilty of perjury.
461.
 Any debt due a licensee on which interest is past due and unpaid for the period of one year shall be charged off, unless the debt is well secured or is in process of collection.
462.
 Any person that provides services to any licensee, at the request of the commissioner, shall submit to an examination by the commissioner. Should the commissioner deem it necessary or desirable that an examination be made of a person, the examination shall be made at the expense of the person examined. If the person refuses to permit an examination to be made, the commissioner may order every licensee receiving services from that person to discontinue receiving those services or otherwise conducting business with that person, and the licensees shall comply with that order.
463.
 (a) All references in this code and the Corporations Code to financial statements, balance sheets, income statements, and statements of changes in financial position of a licensee, and all references to assets, liabilities, earnings, retained earnings, shareholders’ equity, net worth, and similar accounting items of a licensee, mean those financial statements or those items prepared or determined in conformity with generally accepted accounting principles then applicable in the United States, fairly presenting in conformity with generally accepted accounting principles accepted in the United States the matters which they purport to present, subject to any specific accounting treatment required by any applicable provision of the Corporations Code, this code, or any regulation, order issued by the commissioner, or agreement entered into by the commissioner and a licensee.
(b) The commissioner may, by regulation or order, require that any financial statement or accounting item of a licensee be prepared or determined in a manner other than in conformity with generally accepted accounting principles accepted in the United States if the commissioner finds that such other manner is necessary or appropriate to carry out the purposes or provisions of this code.
464.
 (a) An officer of a financial institution, within the meaning of Section 1101(1) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3401(1)), shall furnish the State Department of Health Care Services or its designee with information in the possession of the bank or company regarding the assets of any person who is applying for, or is receiving assistance or benefits from, the State Department of Health Care Services and has provided authorization pursuant to Section 14013.5 of the Welfare and Institutions Code.
(b) The obtaining of financial records by the State Department of Health Care Services, or its designee, pursuant to this section shall be subject to the cost reimbursement requirements of Section 1115(a) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3415(a)) and shall be at no cost to the applicant, recipient, or any other person, as defined in paragraph (3) of subdivision (c) of Section 14013.5 of the Welfare and Institutions Code.
(c) An authorization obtained by the State Department of Health Care Services, or its designee, under Section 14013.5 of the Welfare and Institutions Code shall be considered as meeting the requirements of Section 1103(a) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3403(a)) and, notwithstanding Section 1104(a) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3404(a)), need not be furnished to the financial institution.
(d) The certification requirements of Section 1103(b) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3403(b)) shall not apply to requests by the State Department of Health Care Services, or its designee, pursuant to an authorization provided under Section 14013.5 of the Welfare and Institutions Code.
(e) A request by the State Department of Health Care Services, or its designee, pursuant to an authorization provided under Section 14013.5 of the Welfare and Institutions Code shall be deemed to meet the requirements of Section 1104(a)(3) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3404(a)(3)) and of Section 1102 of the act (12 U.S.C. Sec. 3402), relating to a reasonable description of financial records.
CHAPTER  5. Examinations and Reports-Banking
Article  1. Examination
500.
 (a) (1) For purposes of this section, “foreign bank” means the business in this state of every foreign (other nation) bank licensed under Article 3 (commencing with Section 1800) of Chapter 20 of Division 1.1.
(2) For purposes of this subdivision, an examination made by the commissioner in conjunction with or with assistance from a bank regulatory agency of the United States, of a state of the United States, or of a foreign nation is deemed to be an examination caused by the commissioner.
(3) No provision of this subdivision shall be deemed to require that the commissioner cause an examination to be made onsite at the offices of a bank.
(4) The commissioner shall cause every California state bank and every foreign bank to be examined to the extent and whenever and as often as the commissioner shall deem it advisable, but in no case less frequently than once every 12 months, except that the following banks shall be examined pursuant to federal law no less frequently than state banks and foreign banks that meet the respective federal criteria:
(A) California state banks that meet the criteria set forth in Section 1820(d)(4) of Title 12 of the United States Code.
(B) Foreign banks that meet the criteria set forth in Section 211.26(c)(2) of Title 12 of the Code of Federal Regulations.
(5) The examinations required by paragraph (4) may be conducted in alternate examination periods, as appropriate, if the commissioner determines that an examination of the state bank by the appropriate federal regulator, insuring or guaranteeing corporation during the intervening examination period carries out the purpose of this section. The commissioner may not accept two consecutive examinations, or two consecutive examination reports, made by federal regulators, insuring or guaranteeing corporations, or agencies with respect to the condition of the state bank.
(6) The commissioner shall cause every California state trust company to be examined to the extent and whenever and as often as the commissioner shall deem it advisable, but in no case less frequently than once every 24 months.
(7) The commissioner may examine subsidiaries of every California state bank, state trust company, and foreign (other nation) bank licensed under Article 3 (commencing with Section 1800) of Chapter 20 of Division 1.1 to the extent and whenever and as often as the commissioner shall deem it advisable.
(b) The commissioner may at any time examine any of the following:
(1) Any office of a bank organized under the laws of this state.
(2) Any office of a foreign (other state) bank that maintains an office in this state.
(3) Any office of a foreign (other nation) bank that maintains an office in this state.
(c) The officers and employees of every California state bank, California state trust company, and foreign bank being examined shall exhibit to the examiners, on request, any or all of its securities, books, records, and accounts and shall otherwise facilitate the examination so far as it may be in their power.
501.
 (a) Whenever, in the judgment of the commissioner, it is necessary or advisable to make an extra examination of or to devote any extraordinary attention to any bank, any foreign bank, or any office of a foreign bank, he or she has the authority to do so and to charge and collect from the bank or foreign bank, in the case of an extra examination, an amount not exceeding seventy-five dollars ($75) per hour for each examiner engaged in the examination and, in the case of extraordinary attention, an amount not exceeding the department’s expenses in providing the extraordinary attention, including, but not limited to, compensation of employees.
(b) Whenever in the judgment of the commissioner it is necessary or expedient for any examiner engaged in any examination to travel outside this state, the commissioner may charge for the travel expenses of the examiner.
502.
 (a) The commissioner may by order or regulation grant exemptions from this section in cases where the commissioner finds that the requirements of this section are not necessary.
(b) Each California state bank shall, within 90 days after the end of each fiscal year, or within such extended time as the commissioner may prescribe, file with the commissioner an audit report for the fiscal year.
(c) The audit report called for in subdivision (b) shall comply with all of the following provisions:
(1) The audit report shall contain those audited financial statements of the bank for or as of the end of the fiscal year prepared in accordance with generally accepted accounting principles and any other information that the commissioner may require.
(2) The audit report shall be based upon an audit of the bank conducted in accordance with generally accepted auditing standards and any other requirements that the commissioner may prescribe.
(3) The audit report shall be prepared by an independent certified public accountant or independent public accountant who is not unsatisfactory to the commissioner.
(4) The audit report shall include or be accompanied by a certificate or opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the commissioner. If the certificate or opinion is qualified, the commissioner may order the bank to take such action as the commissioner may find necessary to enable the independent certified public accountant or independent public accountant to remove the qualification.
503.
 The commissioner, whenever in his or her opinion the condition of the bank, trust company, or foreign banking corporation is such as to require such audit, may require any bank, trust company, or foreign banking corporation to employ a certified public accountant to make a special audit of the affairs of such bank or trust company at its expense.
504.
 The commissioner, for good cause, at any time and from time to time may employ appraisers to appraise the value of any investment, asset, or property held or upon which a lien is held as security for a loan. The bank, trust company, or foreign banking corporation shall pay to the commissioner on demand the cost of such appraisal.
505.
 The commissioner, a deputy commissioner, and every examiner assigned to an examination may administer an oath to any person whose testimony is required for the purposes of any examination authorized by this division and may by issuance of subpoena compel the appearance of any person and the production of any evidence for the purposes of the examination.
506.
 Whenever he or she deems it expedient, the commissioner may call a meeting of the stockholders of any bank or trust company. Notice of the time and place of the meeting shall be given to each stockholder by a notice mailed to the stockholder by registered mail at the stockholder’s last known address at least 15 days before the date of the meeting. Any expenses of such meeting shall be borne by the bank or trust company.
507.
 During any emergency period declared by the President of the United States, each bank shall conform to any order of the commissioner directed to it, relating to and conforming with regulations, limitations, or restrictions which are applicable thereto prescribed by the Secretary of the Treasury, the Comptroller of the Currency, or the Board of Governors of the Federal Reserve System regulating or governing the operations of banks which are members of the Federal Reserve System.
508.
 During any emergency period declared by the Governor no bank shall transact any banking business except to such extent and subject to such regulations, limitations, or restrictions as may be prescribed by the commissioner, which, as to member banks, shall be as consistent as the exigencies of the situation permit with the provisions of the Federal Reserve Act and regulations issued thereunder or, as to insured banks, shall be as consistent as the exigencies of the situation permit with the rules and regulations governing banks whose deposits are insured by the Federal Deposit Insurance Corporation.
509.
 (a) The commissioner may, in his or her discretion, bring an action in the name of the people of this state in a superior court to enjoin a violation of, to enforce compliance with, or to collect a penalty or other liability imposed under, this division or any regulation or order issued under this division. The amount of any penalty or liability collected shall be deposited into the State Banking Account in the Financial Institutions Fund. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and a monitor, receiver, conservator, or other designated fiduciary or officer of the court may be appointed for the defendant or the defendant’s assets, or other appropriate relief may be granted.
(b) A receiver, monitor, conservator, or other designated fiduciary officer of the court appointed by the superior court pursuant to this section may, with the approval of the court, exercise all of the powers of the defendant’s officers, directors, partners, trustees, or of persons who exercise similar powers and perform similar duties, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or any other designated fiduciary officer of the court by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the superior court.
(c) If the commissioner determines it is in the public interest, the commissioner may include in an action authorized by subdivision (a), a claim for ancillary relief, including, but not limited to, a claim for restitution, disgorgement, or damages on behalf of the person injured by the act or practice that is the subject matter of the action. The court has jurisdiction to award additional relief.
(d) The provision of subdivision (a) that authorizes the appointment of a monitor, receiver, conservator, or other designated fiduciary or officer of the court, and subdivisions (b) and (c) do not apply to any of the following:
(1) A state bank that is authorized by the commissioner to transact commercial banking or trust business.
(2) A national bank.
(3) A foreign (other state) bank that maintains a branch office in this state in accordance with federal law, the law of this state, and the law of the bank’s domicile.
(4) A foreign (other nation) bank that is licensed by the commissioner to maintain a branch office or agency, as defined in Section 1750, in this state.
(5) A foreign (other nation) bank that maintains a federal branch or agency, as defined in Section 1750, in this state.
(e) The provisions of this section that authorize the commissioner to bring actions and seek relief are not intended to, and do not, affect any right that any other person may have to bring the same or similar actions, or to seek the same or similar relief.
Article  2. Reports
520.
 (a) A California state bank shall prominently display in the lobby of its main office and each branch office, except an automated teller machine branch office, a notice that any person may obtain a financial report from the bank. The notice shall include the address and telephone number of the person or office to be contacted for a financial report. The bank shall, promptly after receiving a request for a financial report, mail or otherwise furnish the financial report to the requester. The first financial report shall be provided without charge.
(b) The financial report called for in this section shall contain either (1) the information that the commissioner may require by regulation or (2) in the absence of a regulation, the last balance sheet and income statement, each without any schedules, that the bank filed with the commissioner pursuant to Section 453.
CHAPTER  6. Enforcement
Article  1. General Provisions
550.
 In this article:
(a) “Appropriate licensee business” means the business that a licensee may conduct in accordance with the charter or license that the commissioner has issued to that licensee.
(b) “Customer” means a depositor of a bank, a member of a credit union, or a customer of any other licensee.
(c) “Holding company” shall have the meaning set forth in Section 1280.
(d) “Officer of a subject institution” means any director, officer, official, or employee of the subject institution.
(e) “Person” means a subject institution or a subject person.
(f) “Subject institution” means any of the following:
(1) Licensee.
(2) Subsidiary of a licensee.
(3) Foreign (other state) or foreign (other nation) bank or credit union that maintains an office in this state, with respect to any such office other than a national bank or federal credit union.
(4) Any other person lawfully conducting the business of a bank or credit union in this state other than a national bank or federal credit union.
(g)  “Subject person,” when used with respect to a subject institution, means any of the following:
(1) Director, officer, employee, or agent of the subject institution.
(2) Member, consultant, joint venture partner, or other person that participates in the affairs of a subject institution.
(3) Independent contractor, including any attorney, appraiser, or accountant, who knowingly or recklessly participates in any of the following acts if the act caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the subject institution:
(A) A violation of any applicable law, regulation, or order.
(B) A breach of fiduciary duty.
(C) An unsafe or unsound act.
(h)  “Violation” includes any act performed, alone or with other persons, for or toward causing, bringing about, participating in, counseling, aiding, or abetting a violation of any applicable statute, regulation, provision of a written order issued by the commissioner, or provision of a written agreement made between the commissioner and a subject institution or subject person.
551.
 Any subject person who is entitled to a hearing pursuant to this article may waive that right at any time. A waiver under this section shall relieve the commissioner from having to issue a formal notice of hearing that would otherwise be required by this article.
552.
 (a) Within 30 days after an order is issued pursuant to Section 567, 581, 582, 586, or 591, or subdivision (c) of Section 587, the person to whom the order is issued may file with the commissioner an application for a hearing on the order.
(b) If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner or within any longer period to which the person subject to the order consents, the order shall be deemed rescinded.
(c) Within 30 days after the hearing, or within any longer period to which the person consents, the commissioner shall affirm, modify, or rescind the order. If the commissioner fails to affirm, modify, or rescind the order within that time limit, the order shall be deemed rescinded.
(d) The right to petition for judicial review of the order shall not be affected by the failure of the person subject to the order to apply to the commissioner for a hearing on the order pursuant to subdivision (a).
553.
 In addition to any other action or requirement the commissioner deems necessary or advisable, an order issued pursuant to Section 580, 581, 582, 585, 586, or 587 may require the person subject to the order to do any of the following:
(a) Make restitution or provide reimbursement, indemnification, or guarantee against loss, if the subject institution, subject person, or holding company was unjustly enriched by the action or violation or if the action or violation involved a reckless disregard for any provision of this division, of any regulation or order issued under this division, of any other applicable law, or of any agreement with the commissioner.
(b) Restrict the growth of the subject institution.
(c) Dispose of any loan or other asset.
(d) Correct violations of law.
(e) Employ qualified officers or employees, who may be subject to approval of the commissioner.
(f) Limit the activities or functions of the subject institution, subject person, or holding company.
554.
 If the commissioner takes possession of a subject institution without a prior notice or hearing, or takes action against a subject person without prior notice or hearing, the commissioner shall, upon taking possession or taking that action, concurrently provide to the subject institution or subject person a written order. The order shall set forth the condition or conditions of the subject institution or action or actions of the subject person that constitute the basis or bases for the commissioner’s action. In any case where the commissioner takes possession of a subject institution, the commissioner shall establish, by clear evidence, the basis for his or her action.
Article  2. Actions Involving the Conduct of Business by Unauthorized Persons
560.
 No person who has not received a certificate from the commissioner authorizing it to engage in the banking business shall solicit or receive deposits, issue certificates of deposit with or without provision for interest, make payments on checks, or transact business in the way or manner of a bank or trust company.
561.
 No person who has not received a certificate from the commissioner authorizing it to engage in the banking business shall advertise that it is accepting deposits, and issuing notes or certificates therefore, or make use of any office sign, at the place where its business is transacted, having thereon any artificial or corporate name, or other words indicating that the place or office is the place or office of a bank or trust company, that deposits are received there or payments made on checks, or any other form of banking business is transacted, nor shall any person make use of or circulate any letterheads, billheads, blank notes, blank receipts, certificates, or circulars, or any written or printed paper, whatever, having thereon any artificial or corporate name or other words indicating that the business is the business of a bank or trust company, or transact business in a way or manner as to lead the public to believe that its business is that of a bank or trust company, except to the extent expressly authorized by this division.
562.
 No person who has not received a certificate from the commissioner authorizing it to engage in the banking business shall transact business under any name or title that contains the word “bank” or “banker” or “banking” or “industrial bank” or “industrial loan company” or “investment and loan” or “savings bank” or “thrift and loan” or “trust” or “trustee” or “trust company” or act or advertise in any manner that indicates that the business is the business of a bank or trust company. Any building and loan association or savings association having in its corporate name words not clearly indicating the nature of its business shall state, on all signs, letterheads, and advertising matter, “This is a building and loan association” or “This is a savings association” or words to that effect.
563.
 No provision of Section 560, 561, or 562 prohibits any of the following from transacting any business or performing any activity if it is authorized by applicable law to transact the business or perform the activity and is not prohibited by any applicable law, other than Sections 560, 561, or 562, from transacting the business or performing the activity:
(a) Any California state commercial bank, industrial bank, or trust company.
(b) Any national bank.
(c) Any insured foreign (other state) state bank.
(d) Any foreign (other state) state bank that is licensed by the commissioner under Article 4 (commencing with Section 3860) of Chapter 22 to maintain a facility, as defined in Section 3800, in this state.
(e) Any foreign (other nation) bank that is licensed by the commissioner under Chapter 20 (commencing with Section 1750) of Division 1.1 to maintain an office in this state.
(f) Any foreign (other nation) bank that maintains a federal agency, as defined in subdivision (g) of Section 1750, or federal branch, as defined in subdivision (h) of Section 1750, in this state.
(g) Any California state corporation that is incorporated for the purpose of engaging in, and that is authorized by the commissioner to engage in, business under Article 1 (commencing with Section 1850) of Chapter 21 of Division 1.1.
(h) Any corporation incorporated under Section 25A of the Federal Reserve Act (12 U.S.C. Sec. 612 et seq.).
(i) Any foreign corporation that is licensed by the commissioner under Article 1 (commencing with Section 1850) of Chapter 21 of Division 1.1 to maintain an office in this state and to transact at that office business under Article 1 (commencing with Section 1850) of Chapter 21 of Division 1.1.
(j) Any industrial bank that is organized under the laws of another state of the United States and is insured by the Federal Deposit Insurance Corporation.
564.
 Any person or any bank violating any provision of the foregoing sections of this article shall be liable to the people of the state in the amount of one hundred dollars ($100) per day or part thereof during which that violation continues.
565.
 No person shall represent by advertisement, circular, or otherwise, or in any manner mislead anyone to believe, that any securities are legal investments for savings banks in this state or conform to the requirements of law relating to such investments, unless those securities are in fact at that time legal investments for such banks or do in fact so conform. Any person violating the provisions of this section shall be guilty of a misdemeanor and shall be punishable by a fine of not more than one thousand dollars ($1,000) or by imprisonment in a county jail not exceeding one year, or by both such fine and imprisonment.
566.
 (a) The commissioner may bring an action in the name of the people of this state in superior court to enjoin any violation of, to enforce compliance with, or to collect any penalty or other liability imposed under, any law subject to the jurisdiction of the commissioner. The commissioner may bring an action in the name of the people of this state in superior court to enjoin any violation of, to enforce compliance with, or to collect any penalty or other liability imposed under, any regulation promulgated under the power of the commissioner. The commissioner may bring an action in the name of the people of this state in superior court to enjoin any violation of, to enforce compliance with, or to collect any penalty or other liability imposed under, any (1) agreement entered into with the commissioner or (2) order issued by the commissioner. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and a monitor, receiver, conservator, or other designated fiduciary or officer of the court may be appointed for the defendant or the defendant’s assets, or other relief may be granted as appropriate.
(b) A receiver, monitor, conservator, or other designated fiduciary officer of the court appointed by the court pursuant to this section may, with the approval of the court, exercise all of the powers of the defendant’s officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties. No action at law or in equity may be maintained by any party against the commissioner or a receiver, monitor, conservator, or other designated fiduciary or officer of the court by reason of his or her exercise of those powers or performing these duties pursuant to the order of, or with the approval of, the court.
(c) If the commissioner finds that it is in the public interest, the commissioner may include in any action authorized by subdivision (a) a claim for ancillary relief, including a claim for restitution, disgorgement, or damages on behalf of the person injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award ancillary relief.
(d) Neither the provision of subdivision (a) that authorizes the appointment of a monitor, receiver, conservator, or other designated fiduciary or officer of the court nor any provision of subdivision (b) or (c) applies to any of the following:
(1) A licensee that is authorized by the commissioner to transact appropriate licensee business.
(2) A foreign (other state) or foreign (other nation) bank or credit union that maintains an office in this state in accordance with federal law, the law of this state, and the law of the bank or credit union’s domicile.
(e) The provisions of this section that authorize the commissioner to bring actions and seek relief are not intended to, and do not, affect any right that any other person may have to bring the same or similar actions or to seek the same or similar relief.
567.
 If the commissioner finds that a person has conducted, or that there is reasonable cause to believe that a person is about to conduct, business that requires a license issued by the commissioner and that person has not been issued the required license, the commissioner may, without any prior notice or hearing, order the person to cease and desist from conducting any unauthorized business unless and until the person is issued a license to engage in appropriate licensee business.
Article  3. Orders Against Licensees and Subject Persons
580.
 If, after notice and an opportunity to be heard, the commissioner finds any of the factors set forth in subdivision (a) or (b) with respect to any subject institution, subject person, or any holding company, the commissioner may order the subject institution, subject person, or holding company to cease and desist from the act or violation:
(a) That the subject institution, subject person, or holding company has engaged or participated, is engaging or participating, or that there is reasonable cause to believe that the subject institution, subject person, or holding company is about to engage or participate, in any unsafe or unsound act with respect to the business of the subject institution.
(b) That the subject institution, subject person, or holding company has violated, is violating, or that there is reasonable cause to believe that the subject institution, subject person, or holding company is about to violate any:
(1) Provision of any division subject to the jurisdiction of the commissioner.
(2) Provision of any regulation promulgated by, or subject to the jurisdiction of, the commissioner.
(3) Provision of any other applicable law.
(4) Provision of any written agreement between the subject institution, subject person, or holding company, and the commissioner.
581.
 If the commissioner finds that any of the factors set forth in Section 580 is true with respect to any subject institution, subject person, or holding company, and that the action, omission, or violation is likely to have any of the consequences set forth in subdivisions (a) to (d), inclusive, the commissioner may, without any prior notice or opportunity to be heard, order the subject institution or subject person to cease and desist from the following:
(a) Any act, omission, or violation that may cause the insolvency of the subject institution.
(b) Any act, omission, or violation that may cause significant dissipation of the assets or earnings of the subject institution.
(c) Any act, omission, or violation that may weaken the condition of the subject institution.
(d) Any act, omission, or violation that may otherwise prejudice the interests of the customers of the subject institution.
582.
 If the commissioner finds that a subject institution’s books or records are so incomplete or inaccurate that the commissioner is unable through the normal supervisory process to determine the financial condition of the subject institution or the details or purpose of any transaction or transactions that may materially affect the financial condition of the subject institution, the commissioner may, without any prior notice or hearing, order the subject institution to do either of the following:
(a) Cease any activity or practice that gave rise, in whole or in part, to the incomplete or inaccurate state of the books or records.
(b) Take affirmative action to restore the books or records to a complete and accurate state.
Article  4. Suspension or Removal of Subject Persons
585.
 If, after notice and an opportunity to be heard, the commissioner finds that any of the factors set forth in subdivision (a), any of the factors set forth in subdivision (b), and any of the factors set forth in subdivision (c) are true with respect to a subject person of a subject institution or holding company, the commissioner may issue an order suspending or removing the subject person from the subject person’s office, if any, with the subject institution or holding company, and prohibiting the subject person from participating in any manner in the conduct of the affairs of the subject institution or holding company without the approval of the commissioner:
(a) (1) That the subject person has, directly or indirectly, violated, or has caused a subject institution to violate, any provision of any:
(A) Division subject to the jurisdiction of the commissioner.
(B) Regulation promulgated by, or subject to the jurisdiction of, the commissioner.
(C) Other applicable law.
(D) Order issued by the commissioner or under the commissioner’s authority.
(E) Written agreement between the subject institution, subject person, or holding company and the commissioner.
(2) That the subject person has, directly or indirectly, engaged or participated in any unsafe or unsound act in connection with the business of the subject institution, holding company, or any other business institution.
(3) That the subject person has, directly or indirectly, engaged or participated in any act that constitutes a breach of the subject person’s fiduciary duty.
(b) That, by reason of the act, violation, or breach of fiduciary duty described in subdivision (a):
(1) The subject institution, holding company, or business institution has suffered or will probably suffer financial loss or other harm.
(2) The rights or interests of the customers or members of the subject institution have been or could be prejudiced.
(3) The subject person has received financial gain or other benefit.
(c) That the act, violation, or breach of fiduciary duty described in subdivision (a) either involves dishonesty on the part of the subject person or demonstrates the subject person’s willful or continuing disregard for the safety or soundness of the subject institution, holding company, or business institution.
586.
 If the commissioner finds that any of the factors set forth in subdivision (a) of Section 585, any of the factors set forth in subdivision (b) of Section 585, and any of the factors set forth in subdivision (c) of Section 585 are true with respect to a subject person of a subject institution, and that it is necessary or advisable for the protection of the subject institution or holding company, or the rights or interests of the customers or members of the subject institution, the commissioner may, without any prior notice or opportunity to be heard, issue an order suspending the subject person from the subject person’s office, if any, with the subject institution or holding company, and prohibiting the subject person from participating in any manner in the conduct of the affairs of the subject institution or holding company without the prior approval of the commissioner.
587.
 (a) If the commissioner finds that any of the factors set forth in paragraph (1) and the factor set forth in paragraph (2) are true with respect to a subject person or former subject person of a subject institution or holding company, the commissioner may, without any prior notice or opportunity to be heard, issue an order suspending the subject person or former subject person from his or her office, if any, with the subject institution or holding company and prohibiting him or her from further participating in any manner in the conduct of the affairs of the subject institution or holding company without the approval of the commissioner:
(1) That the subject person or former subject person has been charged in an indictment issued by a grand jury or in an information, complaint, or similar pleading issued by a United States attorney, district attorney, or other governmental official or agency authorized to prosecute crimes, with commission of or participation in any of the following:
(A) A crime that involves dishonesty or breach of trust and that is punishable by imprisonment for a term exceeding one year.
(B) A criminal violation of any provision of this division.
(C) A criminal violation of Section 1956, 1957, or 1960 of Title 18 of, or Section 5322 or 5324 of Title 31 of, the United States Code.
(D) A criminal violation of a law of any jurisdiction other than the United States that is substantially similar to any of the statutes specified in subparagraph (C).
(2) That continued or resumed service or participation by the subject person or former subject person may pose a threat to the rights or interests of the customers or members of the subject institution or may threaten to impair public confidence in the subject institution.
(b) An order issued pursuant to subdivision (a) shall remain in effect until the indictment or the information, complaint, or similar pleading is finally disposed of or, if the order is earlier terminated by the commissioner, until the order is so terminated.
(c) If the commissioner finds that the factors set forth in paragraphs (1) and (2) are true with respect to a subject person or former subject person of a subject institution or holding company, the commissioner may, without any prior notice or opportunity to be heard, issue an order suspending or removing the subject person or former subject person from his or her office, if any, with the subject institution or holding company and prohibiting him or her from further participating in any manner in the affairs of the subject institution or holding company without the approval of the commissioner:
(1) That the subject person or former subject person has been finally convicted of any crime of the type described in paragraph (1) of subdivision (a). For purposes of this paragraph, an agreement to enter a pretrial diversion or similar program is deemed to be a conviction.
(2) That continued or resumed service or participation by the subject person or former subject person may pose a threat to the interests of the customers of the subject institution or may threaten to impair public confidence in the subject institution.
(d) The fact that any subject person of a subject institution charged with a crime of the type described in paragraph (1) of subdivision (a) is not finally convicted of the crime does not preclude the commissioner from issuing an order regarding the subject person pursuant to any other provision of this article.
588.
 (a) Any subject institution, subject person of a subject institution, or former subject person of a subject institution to whom an order is issued under Sections 585 to 587, inclusive, may apply to the commissioner to modify or rescind the order. In deciding whether to grant or deny the application, the commissioner shall consider whether it is in the public interest to modify or rescind the order and whether it is reasonable to believe that the subject person or former subject person will, if and when he or she becomes a subject person of a subject institution or holding company, comply with all applicable provisions of law, or any regulation or order issued by the commissioner.
(b) The right of any subject person or former subject person of a subject institution or holding company to whom an order is issued under Sections 585 to 587, inclusive, to petition for judicial review of the order shall not be affected by the failure of the subject institution or holding company to apply to the commissioner pursuant to subdivision (a) to modify or rescind the order.
589.
 (a) In this section, “subject depository institution” means any:
(1) Licensee or any bank or credit union that maintains an office in this state.
(2) Affiliate of any of the institutions specified in paragraph (1).
(3) Subsidiary of any of the institutions specified in paragraph (1).
(4) Holding company of any of the institutions specified in paragraph (1).
(b) It is unlawful for any subject person or former subject person of a subject institution to whom an order is issued under Sections 585 to 587, inclusive, willfully to do, directly or indirectly, any of the following without the approval of the commissioner, so long as the order is in effect:
(1) Act as a subject person of any subject depository institution.
(2) Vote any shares or other securities having voting rights for the election of any person as a director of a subject depository institution.
(3) Solicit, procure, transfer or attempt to transfer, or vote any proxy, consent, or authorization with respect to any shares or other securities of a subject depository institution having voting rights.
(4) Otherwise to participate in any manner in the affairs of any subject depository institution.
Article  5. Suspension or Possession of a License
590.
 The commissioner may revoke or suspend any license issued by, or under the authority of, the commissioner, if, after notice and opportunity to be heard, the commissioner finds any of the following:
(a) The licensee has violated, is violating, or that there is reasonable cause to believe that the licensee is about to violate, any provision of any of the following:
(1) Any division subject to the jurisdiction of the commissioner.
(2) Any regulation promulgated by, or subject to the jurisdiction of, the commissioner.
(3) A provision of any other applicable law.
(4) A provision of any order issued by the commissioner.
(5) A provision of any written agreement between the licensee and the commissioner.
(6) A condition imposed on any written approval granted by the commissioner.
(b) Any fact or condition exists which, if it had existed at the time of the original application for the license, would be grounds for denying the application for the license.
(c) The licensee is conducting its business in an unsafe manner.
(d) The licensee is in such condition that it is unsafe or unsound for the licensee to transact appropriate licensee business.
(e) The licensee has inadequate capital or net worth or is insolvent.
(f) The licensee failed to pay any of its obligations as they came due or is reasonably expected to be unable to pay its obligations as they come due.
(g) The licensee is the subject of an order for relief in bankruptcy, or has sought other relief under any bankruptcy, reorganization, insolvency, or moratorium law, or any person has applied for any such relief under any such law against the licensee and the licensee has by any affirmative act approved of, or consented to, the action or the relief has been granted.
(h) The licensee has ceased to transact appropriate licensee business.
(i) The licensee refuses to submit its books, papers, and affairs to the inspection of any examiner.
(j) Any officer of the licensee refuses to be examined upon oath touching the concerns of the licensee.
(k) The licensee has, with the approval of its board, requested the commissioner to take possession of its property and business.
591.
 If the commissioner finds that any of the factors set forth in Section 590 is true with respect to any licensee and that it is necessary for the protection of the public interest, the commissioner may issue an order immediately suspending or revoking the licensee’s license.
592.
 If the commissioner finds that any of the factors set forth in subdivisions (a) to (k), inclusive, is true with respect to a licensee, the commissioner may by order, without any prior notice or opportunity to be heard, take possession of the property and business of the licensee:
(a) The licensee has violated any provision of (1) any division subject to the jurisdiction of the commissioner, (2) any regulation promulgated by, or subject to the jurisdiction of, the commissioner, (3) any provision of any other applicable law, (4) any provision of any order issued by the commissioner, (5) any provision of any written agreement made between the commissioner and the licensee, or (6) a condition imposed on any written approval granted by the commissioner.
(b) The licensee is conducting its business in an unsafe or unsound manner.
(c) The licensee is in such condition that it is unsafe or unsound for the licensee to transact appropriate licensee business.
(d) The licensee has inadequate capital or net worth or is insolvent.
(e) If the licensee is a bank, the tangible shareholders’ equity of the bank is less than the following:
(1) If the bank is a commercial bank or industrial bank, the greater of three percent of the bank’s total assets or one million dollars ($1,000,000).
(2) If the bank is a trust company other than a commercial bank authorized to engage in trust business, one million dollars ($1,000,000).
(f) The licensee failed to pay any of its obligations as they came due or is reasonably expected to be unable to pay its obligations as they come due.
(g) The licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under any bankruptcy, reorganization, insolvency, or moratorium law, or that any person has applied for any such relief under any such law against the licensee and the licensee has by any affirmative act approved of or consented to the action or the relief has been granted.
(h) The licensee has ceased to transact the business the licensee is authorized to conduct pursuant to its license.
(i) The licensee refuses to submit its books, papers, and affairs to the inspection of any examiner.
(j) Any officer of the licensee refuses to be examined upon oath touching the concerns of the licensee.
(k) The licensee has, with the approval of its board, requested the commissioner to take possession of its property and business.
593.
 (a) If the commissioner takes possession of the property and business of a licensee pursuant to Section 592, the licensee may, within 10 days, apply to the superior court in the county where its head office is located to enjoin further proceedings. The court may, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing, dismiss the application or enjoin the commissioner from further proceedings and order the commissioner to surrender the property and business of the licensee to the licensee or make any further order as may be just. The judgment of the court may be appealed by the commissioner or by the licensee as allowed by law.
(b) At any time after the commissioner takes possession of the property and business of a licensee pursuant to Section 592, the licensee may, with the approval of the commissioner, resume business upon conditions as the commissioner may prescribe.
594.
 (a) Upon taking possession of the property and business of any licensee, the commissioner shall give notice of that fact to all persons holding or having in their possession any assets of the licensee. No person knowing of the taking, or who has been notified thereof, shall have a lien or charge upon any assets of the licensee for any payment, advance, or clearance thereafter made or for any liability thereafter incurred.
(b) The giving of notice in accordance with this section shall not be deemed to be a prerequisite to the taking of possession of the property and business of the licensee.
595.
 The commissioner is deemed to take possession of the entire property and business of a licensee when the commissioner takes possession of the business and property of the head office of the licensee.
CHAPTER  7. Liquidation and Conservation
Article  1. General Provisions
600.
 In this article, “Federal Insurance Agency” means the Federal Deposit Insurance Corporation or the National Credit Union Administration, as appropriate, or their respective successors-in-interest.
601.
 Upon taking possession of the property and business of any licensee, the commissioner has authority, and it is his or her duty, to collect all moneys due to the licensee and to do other acts as are necessary or expedient to collect, conserve, or protect the licensee’s assets, property, and business, and he or she shall proceed to conserve or liquidate the affairs of the licensee as provided in this article.
602.
 No attachment shall be issued against the property of any licensee subject to conservation or liquidation pursuant to this article.
603.
 Upon taking possession of the property and business of any licensee pursuant to Section 592, the commissioner may proceed to liquidate or conserve the licensee in the manner provided by this article.
604.
 Upon taking possession of the property and business of a licensee pursuant to Section 592, the commissioner may tender to any person or persons an appointment as conservator, liquidator, receiver, or liquidating committee of the licensee.
605.
 The commissioner shall supervise the acts of the conservator, liquidator, receiver, or liquidating committee appointed under this article and may remove the conservator, liquidator, receiver, or any or all members of the liquidating committee in his or her discretion.
606.
 If required by the commissioner, the conservator, liquidator, receiver, or members of the liquidating committee appointed under this article shall provide proof of bond coverage that extends to the conservator, liquidator, receiver, or members of the liquidating committee. The bond shall include fraud, dishonesty, and faithful performance coverage. The premium for that bond shall be paid out of the assets of the licensee.
607.
 (a) If the commissioner retains possession of the assets of the licensee for the purpose of liquidation or conservation, the commissioner shall, to the extent possible, use the services of civil service employees of the commissioner’s office, and the attorneys employed by the commissioner or the Department of Justice shall render all necessary legal services, as the commissioner may request.
(b) The commissioner, from time to time, under his or her official seal, may appoint one or more special deputy commissioners as his or her agent or agents with the powers specified in the certificate of appointment to assist him or her in the duties of conservation or of liquidation and distribution. The certificate of appointment shall be filed in the office of the commissioner and a certified copy in the office of the clerk of the county in which the head office of the licensee is located. The commissioner may employ counsel and procure expert assistance and advice as may be necessary in the liquidation and distribution of the assets of the licensee and for that purpose may retain any of the officers or employees of the licensee as the commissioner may deem necessary.
608.
 The compensation of civil service employees, special deputies, counsel, and other employees and assistants appointed to assist in the conservation or liquidation of any licensee and the distribution of its assets and all expenses of supervision and liquidation shall be fixed by the commissioner and shall be paid out of the funds of the licensee in the hands of the commissioner. The expenses of liquidation shall be reported to the court upon each application for payment of a dividend.
609.
 If a licensee is not insured by a Federal Insurance Agency, upon the commissioner taking possession of the business and property of the licensee, the superior court of the State of California for the county in which the head office of the licensee is located shall have exclusive original jurisdiction of all proceedings relating thereto and of any action or other proceedings brought under the provisions of this article. All papers relating to the proceeding, including copies of the certificate of appointment of any special deputy and the inventories required to be filed, shall be filed and be made a part of the record of the proceeding without the payment of any additional fees. No damages may be awarded in the proceeding but, if sought, may only be recovered in a separate action.
Article  2. Conservation or Liquidation of an Insured Licensee
620.
 If the licensee whose property and business has been taken pursuant to Section 592 is insured by a Federal Insurance Agency, the commissioner may tender to the appropriate Federal Insurance Agency an appointment as conservator, liquidator, or receiver of the licensee. The commissioner shall determine whether the licensee whose property and business has been taken shall be liquidated or conserved. If the Federal Insurance Agency accepts the appointment, the Federal Insurance Agency shall have, in addition to any powers conferred by applicable federal law, the powers conferred on the commissioner pursuant to this article.
621.
 The Federal Insurance Agency may be, and act as, a conservator, liquidator, or receiver without bond.
622.
 If the Federal Insurance Agency accepts the appointment in accordance with Section 621, the rights of customers and other creditors of the insured licensee shall be determined in accordance with the applicable provisions of the laws of this state.
623.
 The Federal Insurance Agency conservator, liquidator, or receiver shall possess with respect to the insured licensee all the powers, rights, and privileges given the commissioner under this article with respect to the conservation or liquidation of a licensee, as appropriate, and the property and assets of which he or she has taken possession, except insofar as the same may be in conflict with the provisions of applicable federal law.
624.
 (a) The commissioner may sell to any other licensee any part or the whole of the business of a licensee that is subject to liquidation or conservatorship. The purchase and sale shall be approved by the purchasing licensee, as follows:
(1) If the purchasing licensee is organized under the laws of this state, by two-thirds of all of its directors.
(2) If the licensee is any licensee other than a licensee organized under the laws of this state, in accordance with the laws of the jurisdiction under which the licensee is organized.
(b) (1) Subject to any applicable federal statutes and regulations, any bank or credit union organized under the laws of this state may, with the approval of two-thirds of all of its directors, purchase from the receiver of a national banking association or a federal credit union the whole or any part of the business of the national banking association or federal credit union.
(2) Subject to any applicable federal statutes and regulations and any applicable laws of the jurisdiction under which a foreign corporation is organized, any foreign corporation or office of a foreign corporation that is licensed by the commissioner to transact business in this state and that is authorized to accept shares or deposits in this state, may purchase from the receiver of a national banking association or federal credit union the whole or any part of the business of the national banking association or federal credit union.
(c) The provisions of Chapter 12 (commencing with Section 1200) and Chapter 13 (commencing with Section 1300) of Division 1 of Title 1 of the Corporations Code shall not apply to any purchase and sale of the type described in subdivision (a) or (b).
(d) When a purchase and sale of the type described in subdivision (a) or (b) becomes effective, the licensee shall, ipso facto and by operation of law and without further transfer, substitution, act, or deed, to the extent provided in the agreement of the purchase and sale or in the order of the court approving the purchase and sale and except as withheld or limited by the agreement or by the order:
(1) Succeed to the rights, obligations, properties, assets, investments, shares, deposits, demands, and agreements of the licensee whose business is sold, subject to the right of every customer of a licensee to withdraw his or her shares or deposit in full on demand after the sale, irrespective of the terms under which the share or deposit was made.
(2) Succeed to the rights, obligations, properties, assets, investments, shares, deposits, demands, and agreements of the licensee whose business is sold under all trusts, executorships, administrations, guardianships, conservatorships, agencies, and other fiduciary or representative capacities, to the same extent as though the purchasing licensee had originally assumed, acquired, or owned the same, subject to the rights of trustors and beneficiaries under the trusts so sold to nominate another or succeeding trustee of the trust so sold after the sale.
(3) Succeed to and be entitled to take and execute the appointment to executorships, trusteeships, guardianships, conservatorships, and other fiduciary and representative capacities to which the licensee whose business is sold is or may be named in wills, whenever probated, or to which it is or may be named or appointed by any other instrument.
(e) For purposes of subdivision (d), any purchase and sale of the type referred to in subdivision (d) shall be deemed to be effective at the time provided in the agreement of the purchase and sale or in the order of the court approving the purchase and sale.
Article  3. Conservatorship of an Uninsured Licensee
640.
 Whenever the commissioner deems it necessary in order to conserve the assets of any licensee that does not have federal deposit or share insurance for the benefit of the customers and other creditors, he or she may appoint a conservator of the licensee and require the conservator to post a bond as the commissioner deems proper. The conservator, under the direction of the commissioner, shall take possession of the books, records, and assets of every description of the licensee and take any action as the conservator may deem necessary to conserve the assets of the licensee pending further disposition of its business.
641.
 A conservator appointed in accordance with Section 640 has all of the powers and rights with relation to the business and the property of the licensee for which he or she is appointed conservator as are possessed by the commissioner under this article with relation to a licensee of which the commissioner has taken possession, and the conservator is subject to the same obligations as are imposed upon the commissioner under this article. During the time that the conservator remains in possession of the licensee the rights of the licensee, and of all persons with respect thereto, subject to the other provisions of this article, are the same as if the commissioner had taken possession of the property and business of the licensee for the purposes of liquidation. All expenses of the conservatorship shall be paid out of the assets of the licensee and shall be a lien thereon which shall be prior to any other lien. The conservator shall receive a salary in an amount no greater than that which would be paid by the commissioner to a special deputy in charge of the liquidation of a licensee.
642.
 The commissioner may order an examination at the earliest possible date of a licensee for which the commissioner has appointed a conservator.
643.
 While any licensee is in the hands of a conservator, the commissioner may require the conservator to set aside and make available for withdrawal by customers and for payment to other creditors on a ratable basis such amounts as in the opinion of the commissioner may safely be used for that purpose.
644.
 The commissioner, in his or her discretion, may permit the conservator to receive shares or deposits, but any shares or deposits received while the licensee is in the hands of a conservator shall be held as trust funds and shall not be subject to any limitation as to payment or withdrawal. The shares or deposits shall be segregated and shall not be used to liquidate any indebtedness of the licensee existing at the time the conservator was appointed or for the payment of any later indebtedness incurred for the purpose of liquidating any indebtedness of the licensee existing at the time the conservator was appointed. The shares or deposits shall be kept on hand in cash, invested in direct obligations of the United States, or deposited with the Federal Reserve Bank.
645.
 If the commissioner is satisfied that it may be done safely and that it would be in the public interest, he or she may terminate a conservatorship and permit the licensee for whom a conservator was appointed to resume the transaction of its business under the direction of its board, subject to any terms, conditions, restrictions, and limitations as the commissioner may prescribe.
646.
 The conservator of a licensee that has been permitted to resume accepting member shares or deposits shall first cause a notice to be published in a newspaper of local circulation. The notice shall state the date on which the affairs of the licensee will be returned to its board and that the provisions of Section 644 will not be effective after 30 days from that date. The form of the notice and the newspaper in which the same is to be published shall be first approved by the commissioner. On the date of the publication of the notice, the conservator shall mail a copy of the notice to every person who made any deposit in the licensee after the date of the appointment of the conservator. The conservator shall address the copy of the notice to the persons who have made the deposits at the addresses appearing upon the books of the licensee. The conservator shall also mail a similar notice to every person making a deposit in the licensee after the date of the publication of the notice and before the affairs of the licensee are returned to its board.
647.
 The commissioner may assess and collect from all licensees for whom a conservator is appointed their ratable share of the costs incurred in the administration of this article.
648.
 Any licensee that the commissioner has taken possession of pursuant to Section 592, and for which a conservator has been appointed pursuant to this article, may be reorganized under a plan that requires the consent of any of the following:
(a) Customers and other creditors of the licensee representing at least 75 percent in amount of its total member shares or deposits and other liabilities as shown by the books of the licensee, excluding member shares or deposits and other liabilities which are to be satisfied in full under the provisions of the plan.
(b) Stockholders owning at least two-thirds of the outstanding stock as shown by the books of the licensee.
(c) Members of the licensee.
(d) Customers and other creditors of the licensee representing at least 75 percent in amount of its total shares or deposits and other liabilities as shown by the books of the licensee, excluding shares or deposits and other liabilities that are to be satisfied in full under the provisions of the plan, and, if applicable to the licensee, of stockholders owning at least two-thirds of its outstanding stock as shown by the books of the licensee.
649.
 All customers, creditors, stockholders, if applicable, and other interested persons shall be given notice of any proposed plan of reorganization in the manner and at the times as the commissioner directs.
650.
 No plan of reorganization shall become effective until the commissioner finds that the plan is fair and equitable to all customers, creditors, and stockholders, if applicable, and is in the public interest and until the commissioner approves the same in writing, subject to any conditions, restrictions, and limitations as the commissioner may prescribe.
651.
 No creditor having security for the payment of his, her, or its claim shall be affected in his, her, or its right to enforce the security by the provisions of any plan for the reorganization of the licensee. Any plan of reorganization involving the reduction of claims of creditors shall apply only to that portion of a secured creditor’s loan that is not covered by the pledged security.
652.
 When any plan of reorganization becomes effective, all books, records, and assets of the licensee shall be disposed of in accordance with the provisions of the plan and the affairs of the licensee shall be conducted by its board in the manner provided by the plan and under the conditions, restrictions, and limitations that may have been prescribed by the commissioner. When any plan of reorganization adopted and approved as herein provided becomes effective, all customers and other creditors and, if applicable, stockholders of the licensee, whether or not they have consented to the plan of reorganization, shall be fully and in all respects subject to and bound by the plan’s provisions and the claims of all customers and other creditors shall be treated as if they had consented to the plan of reorganization.
Article  4. Liquidation of an Uninsured Licensee
670.
 Upon taking possession of the property and business of a licensee that does not have federal deposit or share insurance, the commissioner may sell, compromise, or compound any bad or doubtful debt owing the licensee for a principal sum not exceeding ten thousand dollars ($10,000), upon those terms as the commissioner may deem proper. If the principal sum thereof exceeds ten thousand dollars ($10,000), the commissioner may compromise, compound, or sell the debt upon those terms as the court may approve. If it appears improbable that a recovery on a debt can be had, and that the costs of an action to collect would be lost, and the principal sum thereof does not exceed five hundred dollars ($500), the commissioner may determine that no suit thereon shall be brought. If the principal sum of that debt exceeds ten thousand dollars ($10,000), the commissioner may determine that no suit thereon be brought after obtaining approval of the court.
671.
 The commissioner may sell any real or personal property of the licensee for cash or on credit and on any other terms and conditions as the commissioner may deem proper, subject to the approval of the court.
672.
 (a) The commissioner may, with the approval of the court, sell any part or the whole of the business of a licensee to any other licensee. The purchase and sale shall be approved by the purchasing licensee, as follows:
(1) If the purchasing licensee is organized under the laws of this state, by two-thirds of all of its directors.
(2) If the licensee is any licensee other than a licensee organized under the laws of this state, in accordance with the laws of the jurisdiction under which the licensee is organized.
(b) (1) Subject to any applicable federal statutes and regulations, any bank or credit union organized under the laws of this state may, with the approval of two-thirds of all of its directors and of the commissioner, purchase from the receiver of a national banking association or a federal credit union the whole or any part of the business of the national banking association or federal credit union.
(2) Subject to any applicable federal statutes and regulations and any applicable laws of the jurisdiction under which a foreign corporation is organized, any foreign corporation or any office of a foreign corporation that is licensed by the commissioner to transact business in this state and that is authorized to accept shares or deposits in this state, may, with the approval of the commissioner, purchase from the receiver of a national banking association or federal credit union the whole or any part of the business of the national banking association or federal credit union.
(c) The provisions of Chapter 12 (commencing with Section 1200) and Chapter 13 (commencing with Section 1300) of Division 1 of Title 1 of the Corporations Code shall not apply to any purchase and sale of the type described in subdivision (a) or (b).
(d) When a purchase and sale of the type described in subdivision (a) or (b) becomes effective, the purchasing licensee shall, by operation of law and without further transfer, substitution, act, or deed, to the extent provided in the agreement of the purchase and sale or in the order of the court approving the purchase and sale and except as withheld or limited by the agreement or by the order:
(1) Succeed to the rights, obligations, properties, assets, investments, shares, deposits, demands, and agreements of the licensee whose business is sold, subject to the right of every customer of the licensee whose shares or deposit is sold to withdraw his or her shares or deposit in full on demand after the sale, irrespective of the terms under which the deposit was made.
(2) Succeed to the rights, obligations, properties, assets, investments, shares, deposits, demands, and agreements of the whose business is sold under all trusts, executorships, administrations, guardianships, conservatorships, agencies, and other fiduciary or representative capacities, to the same extent as though the purchasing licensee had originally assumed, acquired, or owned the same, subject to the rights of trustors and beneficiaries under the trusts so sold to nominate another or succeeding trustee of the trust so sold after the sale.
(3) Succeed to and be entitled to take and execute the appointment to executorships, trusteeships, guardianships, conservatorships, and other fiduciary and representative capacities to which the licensee whose business is sold is or may be named in wills, whenever probated, or to which it is or may be named or appointed by any other instrument.
(e) For purposes of subdivision (d), any purchase and sale of the type referred to in subdivision (d) shall be deemed to be effective at the time provided in the agreement of the purchase and sale or in the order of the court approving the purchase and sale.
673.
 Within six months after taking possession of the property and business of any licensee that does not have federal deposit or share insurance, the commissioner may terminate or adopt any executory contract to which the licensee may be a party, including leases of real or personal property. Claims for damages resulting from the termination of any contract or lease may be filed and allowed, but no claim of a landlord for damages resulting from the rejection of an unexpired lease of real property or under any covenant of the lease shall be allowed in an amount exceeding the rent reserved by the lease, without acceleration, for the year succeeding the date of the surrender of the premises plus the amount of any unpaid accrued rent without acceleration. Any claim shall be filed within 30 days of the date of the termination or within the time that claims are to be filed under Section 680, whichever is longer.
674.
 The commissioner, in his or her own name or in the name of the licensee, may execute, acknowledge, and deliver any and all conveyances and other instruments necessary or appropriate to effectuate the sale of any real or personal property or to effectuate any other transaction in connection with the liquidation of a licensee or the distribution of its assets. Any conveyance or other instrument executed by the commissioner pursuant to this authority shall be valid and effectual for all purposes as though the same had been executed by the officers of the licensee by authority of its board of directors. Whenever the commissioner sells any real property of the licensee a certified copy of the order of the court approving the sale shall be recorded in the county in which any part of the real property is located.
675.
 The commissioner, in the name of the delinquent licensee or in his or her own name, may prosecute and defend any and all actions and other legal proceedings appropriate or necessary to the liquidation of the licensee.
676.
 The commissioner from time to time shall deposit all moneys coming into his or her hands in the course of the liquidation of the licensee in one or more state banks or state credit unions and in the event of the suspension or insolvency of the depositary shall be preferred before all other deposits.
677.
 The commissioner shall make an inventory of the assets of the licensee in duplicate and file one in the office of the commissioner and one with the clerk of the county in which the head office of the licensee is located to be filed with the papers in the liquidation proceedings. The inventory shall be open for inspection at all reasonable times.
678.
 When the time fixed for the presentation of claims has expired, the commissioner shall make in duplicate a full and complete list of all claims presented, including and specifying claims that have been rejected by the commissioner, and a list of all claims of customers as shown by the books or records of the licensee for which claims have not yet been presented, and shall file one copy of the list in the commissioner’s office and one with the clerk of the county in which the head office of the licensee is located to be filed with the papers in the liquidation proceedings. Before each application to the court for leave to declare a dividend, the commissioner shall file a supplemental list of claims presented since the last preceding list was filed, including and specifying any claims that have been rejected by him or her. The list of claims and of claims of customers as shown by the books or records of the licensee shall be open for inspection at all reasonable times.
679.
 The commissioner shall cause notice to be given by advertisement in any newspapers of general circulation as he or she may select weekly for three consecutive months, calling on all persons who have claims against the licensee to present the same to the commissioner and make legal proof thereof at a place to be specified therein and within four months of the date of the first publication of the notice, which date shall be specified in the notice. The notice shall also state that all claims other than those of customers appearing upon the books or records of the licensee shall be forever barred if not filed within the four months’ period and that all claims of customers appearing upon the books or records of the licensee will be forever barred, except as herein provided, if not filed prior to the filing of a petition for a final dividend. The commissioner shall also mail a similar notice to all persons, including customers whose names appear as creditors upon the books of the licensee and whose addresses appear upon the books or records of the licensee, and shall enclose therewith a printed form of notice of claim.
680.
 All claims of every kind against the licensee or against any property owned or held by the licensee shall be presented to the commissioner in writing verified by the claimant or someone on his or her behalf within four months of the date of the first publication of the notice to creditors. Any claim, other than the claim of a customer whose claim appears upon the books or records of the licensee, not presented within the four months’ period shall be forever barred and any claim of a customer whose claim appears upon the books or records of the licensee that is not so presented prior to the date of the filing of the petition of the commissioner with the court for approval of the payment of the final dividend shall be forever barred except as to any moneys remaining after all debts for which claims were duly filed have been paid in full with interest. If the commissioner doubts the validity of any claim, he or she may reject the claim and serve notice of the rejection upon the claimant either by mail or personally. An affidavit of the mailing or personal service of the notice shall be prima facie evidence of the receipt thereof and shall be filed with the commissioner. Any action upon a rejected claim shall be brought within three months after the date of mailing or personal service of the notice of rejection.
681.
 At any time and from time to time after the expiration of the time fixed for the presentation of claims, the commissioner, after obtaining approval of the court, may declare and pay one or more dividends upon all approved claims out of the funds remaining in his or her hands after the payment of expenses and after setting aside an amount sufficient to pay to all customers, who have not yet filed claims but whose claims appear upon the books or records of the licensee, their pro rata share of the funds then available for the payment of a dividend. At any time after the expiration of one year from the date of the first publication of notice to creditors and after obtaining the approval of the court, the commissioner may declare and pay a final dividend.
682.
 (a) Expenses and claims of unsecured creditors have priority in the following order:
(1) Expenses of liquidation and approved claims for fees and assessments due the department.
(2) Approved claims given priority under other provisions of state or federal law, including, but not limited to, Sections 676 and 710.
(3) Approved claims for “deposits,” as that term is defined in 12 U.S.C. Section 1813(l), but including obligations of the type described in 12 U.S.C. Section 1813(l)(5)(A) and (B).
(4) Approved claims for other general liabilities.
(5) Approved claims for obligations subordinated to deposits and other general liabilities.
(b) Interest shall be given the same priority as the claim on which it is based, but no interest shall be paid on any claim until the principal of all claims within the same class has been paid or adequately provided for in full.
(c) Any funds remaining shall be paid to the members or shareholders, as appropriate.
683.
 Objections to any claim not rejected by the commissioner may be made by any person interested by filing a copy of the objection with the commissioner, who shall present the copy to the court at the time of the next application for approval of the declaration of a dividend. The court shall thereupon dispose of the objections or may order a reference for that purpose, and should the objections to any claim be sustained by the court or by the referee, the claim shall not be allowed by the commissioner until the claimant has established the claim by judgment.
684.
 Dividends remaining unpaid and any sums available for payment of shares or deposits for which no claim was filed, which remain in the hands of the commissioner six months after the order for the payment of a final dividend, shall be deposited in the State Treasury. The shares or deposits shall be deemed to have been received under Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure, and shall be subject to claim or other disposition as provided in that chapter. The commissioner may pay over the moneys held by him or her to the persons respectively entitled thereto at any time prior to depositing the shares or deposits in the State Treasury, upon being furnished satisfactory evidence of the persons’ right to the same.
685.
 Whenever, under the provisions of this article, the commissioner is required to transmit unclaimed money or other unclaimed property to any state officer for deposit in the State Treasury, the commissioner, upon request of the Controller, shall transmit to the Controller all signature cards and any other identifying information available from the records of the licensee, covering the money or other property. Upon receipt by the Controller of the signature cards or other identifying information, the licensee and the commissioner shall be relieved of all responsibility therefor. The signature cards and other identifying information may be destroyed or otherwise disposed of by the Controller whenever, in his or her discretion, their further retention by him or her is no longer required in the interest of the customers or the state.
686.
 All approved claims of customers and other creditors shall bear interest at the rate provided by law on judgments from the date that the commissioner takes possession of the property and business of the licensee.
687.
 If the licensee has in its possession for safekeeping or storage any jewelry, plate, money, specie, bullion, stocks, bonds, securities, valuable papers, or other valuable personal property, or has rented any vaults, safes, or safe-deposit boxes, the commissioner shall cause to be mailed, by registered mail, postage prepaid, to any known person claiming to be or appearing on the books of the licensee to be the owner of the property or to the person in whose name the safe, vault, or box stands a notice notifying the person to remove all of the personal property within a specified fixed period of not less than 60 days.
688.
 On the last day fixed in the notice for the removal of the property or on the date when the property is removed or the box surrendered, any contract between the person owning the property or holding the box and the licensee shall cease and the amount of the unearned prepaid rent or charges, if any, shall become a debt of the licensee to the person.
689.
 If any property is not removed within the time fixed by the notice mailed by the commissioner, the commissioner may dispose of the property as the court, on application thereto, shall direct. The commissioner may cause any safe, vault, or box to be opened in his or her presence or in the presence of one of the special deputy commissioners and of a notary not an officer or employee of the licensee or of the commissioner. The contents thereof, if any, shall be sealed by the notary in a package upon which the notary shall distinctly mark the name and address of the person in whose name the safe or box stands upon the books of the licensee and shall attach thereon a list and a description of the property within the package. The package so sealed and addressed, together with the list and description may be kept by the commissioner in one or more of the safes or boxes of the licensee or elsewhere until delivered to the person whose name it bears or until otherwise disposed of as directed by the court.
690.
 (a) When the commissioner has completed the liquidation of the licensee, he or she shall petition the court for an order declaring the licensee duly wound up and dissolved.
(b) After any notice as the court may direct and a hearing, the court may make an order declaring the licensee duly wound up and dissolved. The order shall declare all of the following:
(1) The licensee has been duly wound up.
(2) A final franchise tax return, if any, as described by Section 23332 of the Revenue and Taxation Code, has been filed with the Franchise Tax Board as required under Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code, and any tax or penalty due under the Corporation Tax Law has been paid, and the licensee’s known debts and liabilities have been paid or adequately provided for, or any taxes, penalties, debts, and liabilities have been paid so far as the licensee’s assets permitted, as the case may be. If there are known debts or liabilities for the payment of which adequate provision has been made, the order shall describe the provision, setting forth any information necessary to enable the creditor or other person to whom payment is to be made to appear and claim payment of the debt or liability.
(3) All known assets of the licensee have been distributed to its shareholders or wholly applied on account of the licensee’s debts and liabilities.
(4) The licensee is dissolved.
(c) The court may make additional orders and grant further relief as it deems proper upon the evidence submitted.
(d) Upon the making of the order declaring the licensee dissolved, the corporate existence of the licensee shall cease, except for the purposes of any necessary further winding up.
(e) Upon the making of the order declaring the licensee dissolved, the commissioner shall file with the Secretary of State a copy of the order, certified by the clerk of the court.
691.
 Whenever this article requires court approval of any step in the liquidation proceedings, approval shall be given after a hearing upon notice as the court may direct. At the hearing, the court may by order approve the actions of the commissioner for which he or she has petitioned the court’s approval or it may, by appropriate order, otherwise direct the commissioner in the matter in connection with which the petition was filed.
692.
 Whenever, in the opinion of the commissioner, the liquidation or reorganization of any licensee taken in charge by him or her would be facilitated, or the public interests and the interests of customers or stockholders would be served, the commissioner may borrow money on behalf of the licensee from any federal agency authorized to lend money to receivers, trustees, liquidating agents, or other agents or supervisory authorities in charge of licensees that are closed or in process of liquidation and, with approval of the court, the commissioner may secure any borrowings by the pledge of the assets of the licensee in any manner and amount the commissioner deems necessary, proper, or expedient.
Article  5. Disposal of Unclaimed Trust Property
700.
 Whenever any licensee is being liquidated or whenever the trust business of any licensee has been discontinued and the licensee has in its possession money or other property held by it in trust or for safekeeping and the beneficiaries or persons entitled thereto are unknown or cannot be found, the commissioner or the licensee, upon obtaining approval of the superior court of the county in which the liquidation proceedings are pending or in which the head office of the licensee is situated, may do the following:
(a) In the case of money, deliver it to the Treasurer.
(b) In the case of other property, deliver it to the Controller for deposit in the State Treasury.
701.
 Upon the delivery of any money to the Treasurer or upon the delivery of any property to the Controller, a certified copy of the order of the court approving the delivery shall be given to the Controller, and upon the delivery of any money to the Treasurer a notice giving the amount delivered shall be filed with the Controller. Upon the receipt of any money or other properties, the Treasurer or the Controller, as the case may be, shall issue a receipt for the same and the receipt shall be deemed a voucher in favor of the licensee to the same extent as though executed by the beneficiary or other person entitled thereto.
702.
 All money or other property delivered to the Treasurer or Controller pursuant to this article shall be deemed to be delivered for deposit in the State Treasury under the provisions of Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure and shall be subject to claim or other disposition as provided in that chapter.
Article  6. Priorities
710.
 The holder or transferor of a negotiable instrument transferred to a licensee for collection has a preferred claim in the amount of the liability of the licensee on the instrument if the instrument was forwarded to the licensee by any person or by any other financial institution for collection and remittance, if payment therefor has not been made and if the same has been collected either in whole or in part by the licensee, unless the holder or transferor is a voluntary depositor in the licensee and the proceeds of the collection, at his or her request, have been credited by the licensee to his or her account.
CHAPTER  8. Voluntary Liquidation
720.
 Any licensee that voluntarily has ceased to do the business for which it is licensed shall immediately notify the commissioner and proceed to liquidate its affairs. Any share or deposit or other sum that has not been paid to the person entitled thereto within six months after the licensee ceased to conduct a business shall be paid into the State Treasury. The deposits with the State Treasury shall be deemed to have been received under the provisions of Chapter 7 (commencing with Section 1500) of Title 10 of Part 3 of the Code of Civil Procedure and shall be subject to claim or other disposition as provided in that chapter. If the commissioner has reason to conclude that the liquidation of the licensee is not being safely or expeditiously conducted, he or she may take possession of the business and property of the licensee in the same manner and with the same effect and subject to the same rights accorded the licensee as if he or she had taken possession pursuant to Chapter 7 (commencing with Section 600), and he or she may proceed to liquidate the licensee’s affairs in the same manner as provided in that article. When the licensee has been completely liquidated, its corporate existence shall be dissolved in the manner provided by law.
721.
 If the licensee referred to in Section 720 is a state-chartered credit union and the commissioner has taken possession of the business and property of the credit union, the commissioner may appoint a liquidating agent or a liquidating committee of three members of the credit union to liquidate the business and assets of the credit union in the manner provided in Article 2 (commencing with Section 15250) of Chapter 9 of Division 5, except that, in lieu of the certificate required under Section 15252, the commissioner shall prepare and file in the office of the Secretary of State a certificate of commencement of liquidation proceedings upon taking possession of the business and assets, and the commissioner or his or her authorized deputy shall countersign the certificate referred to in Sections 15257 and 15258 whenever liquidation is involuntary. The commissioner may, however, prepare and file a final certificate whenever he or she retains possession of the assets of any credit union for the purpose of liquidation. The liquidating agent need not be a member of the credit union to be liquidated and may be a person, firm, or corporation, as determined by the commissioner.
CHAPTER  9. Approval of Names of Nonbank Corporations
730.
 In this chapter:
(a) “Nonbank corporation” means any corporation incorporated or proposed to be incorporated under the laws of this state, other than (1) any bank or (2) any corporation incorporated or proposed to be incorporated under the laws of this state for the purpose of transacting business under Article 1 (commencing with Section 1850) of Chapter 21 of Division 1.1.
(b) “Subject name,” means a name of a nonbank corporation which, as set forth, or as proposed to be set forth, in the articles of such nonbank corporation, includes “bank,” “trust,” “trustee,” or related words.
731.
 An application for a certificate of approval of the subject name of a nonbank corporation shall be in such form, shall contain such information, shall be signed in such manner, and shall (if the commissioner so requires by regulation or order) be verified in such manner, as the commissioner may by regulation or order require.
732.
 The fee for filing with the commissioner an application for a certificate of approval of the subject name of a nonbank corporation shall be twenty-five dollars ($25).
733.
 If the commissioner finds, with respect to an application for a certificate of approval of the subject name of a nonbank corporation, that the subject name does not indicate that the nonbank corporation is engaged in the banking, industrial banking, or trust business, the commissioner shall issue a certificate of approval of the subject name. If the commissioner finds otherwise, the commissioner shall deny the application.
734.
 Promptly after the articles of a nonbank corporation, with the certificate of approval of the subject name of such nonbank corporation attached thereto, are filed with the Secretary of State, such nonbank corporation shall file with the commissioner a copy of such articles certified by the Secretary of State.
CHAPTER  10. Legal Investments for Nonbank Licensees
800.
 As used in this chapter, unless the context requires otherwise, the following terms have the following meanings:
(a) “Net direct debt” of any public corporation means all indebtedness of every kind after deducting from the indebtedness sinking funds available for the payment thereof, any indebtedness evidenced by tax anticipation notes for the payment of which nondelinquent taxes are pledged, obligations payable only from special assessments, revenue obligations payable only from special revenues pledged for their payment, and such proportion of any indebtedness issued for revenue producing works, properties, or utilities that have been in operation for at least one year as the amount of the annual net revenue therefrom bears to the amount of the annual debt service requirements of those bonds.
(b) “Net overlapping debt” of any public corporation means the proportion of the net direct debt as above defined of any other public corporation (herein called overlapping corporation) that lies wholly or partially within the boundaries of the public corporation as the assessed valuation of the taxable property of the overlapping public corporation lying within the boundaries of the public corporation as shown by the last official equalized county assessment roll bears to the assessed valuation of all taxable property of the overlapping public corporation as shown by the last official equalized county assessment roll.
(c) “Funded debt,” as used in this chapter, means all interest-bearing indebtedness of a corporation not maturing within one year of the date the indebtedness was incurred.
801.
 Any securities or other assets that are described in Sections 803 to 819, inclusive, are legal investments for savings banks.
802.
 Where any laws of this state provide that the moneys of any pension fund, retirement plan, trust fund, or the moneys of any special fund the investment of which is governed by law, or the funds of any political subdivision or public corporation may or shall be invested in securities which are a legal investment for savings banks, that law shall be deemed to authorize or require, as the case may be, that those moneys be invested in securities in which savings banks were authorized to invest their funds by the provisions of the Bank Act as it read prior to January 1, 1949, other than paragraph (f) of subdivision 5 of Section 61 of that act, or in bonds, debentures, and notes legal for investments for savings banks in the State of New York or the State of Massachusetts as of the time the investment is made or in securities in which commercial banks are authorized to invest their funds by the provisions of Sections 803 to 819, inclusive.
803.
 Gold and silver bullion and United States mint certificates of ascertained value.
804.
 Stock of a federal reserve bank or of a federal home loan bank to the extent authorized by Section 1325.
805.
 Bonds or other interest-bearing notes and obligations of the United States and those for which the faith and credit of the United States are pledged for the payment of principal and interest.
806.
 Bonds of the State of California and those for which the faith and credit of the State of California are pledged for the payment of principal and interest and in registered warrants of the State of California.
807.
 Bonds of any flood control and water conservation districts, or any zone thereof, having an assessed valuation on taxable real property of not less than one million dollars ($1,000,000), county, city and county, city, metropolitan water district, municipal utility district, special districts established by and within any municipal utility district, transit district, rapid transit district including sales tax revenue bonds of the district, metropolitan transit authority, flood control district, or school district of the State of California (herein referred to generally as public corporation) except the bonds of any particular such public corporation which may be declared ineligible for investment by savings banks by regulations of the commissioner.
808.
 Bonds of any other political subdivision, public corporation, or district of the State of California (herein referred to generally as public corporations) having the power, without limit as to rate or amount; to levy taxes to pay the principal and interest of the bonds upon all property within its boundaries subject to taxation by such public corporation, provided the net direct debt of such public corporation together with its net overlapping debt does not exceed 25 percent of the assessed valuation of the taxable property within its boundaries according to the last official equalized county assessment roll.
809.
 (a) Any of the following subject to the conditions set forth in subdivision (b) to (d), inclusive.
(1) Bonds or other evidences of indebtedness of, or which are unconditionally guaranteed by the Dominion of Canada, the State of Israel, the United States of Mexico, the Commonwealth of Puerto Rico, or any state of the United States other than California, for the payment of both principal and interest of which in United States dollars, the faith and credit of the entity is pledged.
(2) Limited obligations of any state of the United States, other than California, or the Commonwealth of Puerto Rico, payable only from special taxes that are pledged to the payment of principal and interest of the limited obligations.
(3) Bonds or other evidences of indebtedness of any city, county, political subdivision, public corporation, or district (herein referred to generally as public corporations) of any state of the United States, other than California, or of the Dominion of Canada, or of the State of Israel, or of the United States of Mexico or of the Commonwealth of Puerto Rico, having the power without limit as to rate or amount to levy taxes to pay the principal and interest of the bonds upon all property within its boundaries subject to taxation by the public corporation.
(b) In the case of bonds constituting general obligations of any such state, commonwealth, dominion, or country, such state, commonwealth, dominion, or country has not within 10 years prior to the investment defaulted for a period of more than 90 days in the payment of any part of either principal or interest of any of its debts.
(c) In the case of limited obligations of any state, or commonwealth, all of the following conditions are met:
(1) The state or commonwealth has not, within 10 years prior to the date of the investment, defaulted for a period of more than 90 days in the payment of either principal or interest of any of its debts.
(2) The special taxes pledged for the payment of the limited obligations shall have been collected for five years and shall have averaged at least one and one-half times the debt service requirements, including those for principal, interest, and sinking fund, on all special obligations existing at the time.
(3) The special taxes for each of the five fiscal years shall have equaled at least the amount of all the debt service requirements on the special obligations.
(d) In the case of bonds or other evidences of indebtedness of any public corporation of any state other than California, or of any commonwealth, all of the following conditions are met:
(1) The public corporation has had a corporate existence or been otherwise established and functioning for at least 10 years prior to the time of the investment.
(2) The public corporation has a population of at least 50,000 inhabitants according to the last federal or state census.
(3) The public corporation for a period of at least 10 years prior to the investment has not defaulted in the payment of any part of the principal or interest of any of its debts for a period of more than 90 days.
(4) The net direct debt together with the net overlapping debt of the public corporation does not exceed 10 percent of the assessed valuation of the property subject to taxation by the public corporation according to the last official equalized assessment roll or list upon the basis of which taxes for debt service are based.
810.
 Bonds of any irrigation district, water storage district, water conservation district, county water district, reclamation district, drainage district, and any district the primary function of which is the irrigation, reclamation or drainage of land within its boundaries, located in California, other than bonds referred to in Section 807, provided either of the following conditions are met:
(a) The bonds qualify under Section 808.
(b) The bonds have been certified as legal securities for savings banks pursuant to Chapter 1 (commencing with Section 20000) of Division 10 of the Water Code and the certification remains unrevoked and the total outstanding bonded indebtedness of the district including bonds authorized but not issued, but excluding bonds payable solely from revenues and not directly or indirectly from assessments, does not exceed 50 percent of the aggregate of the assessed value of the lands, exclusive of improvements, subject to assessment by the district, and the value of the property owned by the district or to be acquired or constructed with the proceeds of the bonds under consideration.
811.
 (a) Bonds, consolidated bonds, collateral trust debentures, consolidated debentures, or other obligations issued by federal land banks or federal intermediate credit banks established under the Federal Farm Loan Act, as amended, and the Farm Credit Act of 1971.
(b) Debentures and consolidated debentures issued by the Central Bank for Cooperatives and banks for cooperatives established under the Farm Credit Act of 1933, as amended, and the Farm Credit Act of 1971.
(c) Bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act.
(d) Bonds of any federal home loan bank established under the Federal Home Loan Bank Act.
(e) Stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation.
812.
 Bonds, notes or other obligations issued by the Federal Financing Bank, the United States Postal Service, or issued or assumed by the International Bank for Reconstruction and Development, the Tennessee Valley Authority, the Inter-American Development Bank, the Government Development Bank for Puerto Rico, the Asian Development Bank, the International Finance Corporation, or the African Development Bank.
813.
 (a) Notes with a maturity not exceeding 15 months after the date of issue, issued in anticipation of uncollected taxes, income, revenue, cash receipts, and other moneys of the State of California or any city, county, city and county, or school district thereof; provided the notes and warrants and the interest thereon shall be a first lien and charge against, and shall be payable from, the first moneys received by the local agency from such pledged moneys; provided the total amount of the notes issued at any one time or during any specified period does not exceed 85 percent of the receipts or revenues.
(b) Grant anticipation notes issued by the agencies and payable not later than 36 months after the date of issue, provided that the total amount of the notes and interest payable thereon issued at any one time or during any specified period does not exceed 80 percent of the grant funds stated in writing by the granting authority as committed or appropriated, and shall be paid on a specified date or dates within a 36-month period from the dating of the notes.
814.
 Revenue securities of any state of the United States, or of the Commonwealth of Puerto Rico, and of any city, county, city and county, political subdivision, public corporation, or district (herein referred to generally as public corporations) of any state or commonwealth and of any department, board, agency, or authority of any state or commonwealth or of any public corporation, if the following conditions are met:
(a) The revenue securities constitute obligations payable out of the revenues from a revenue-producing property owned, controlled, or operated by a state, commonwealth, public corporation, or by a department, board, agency, or authority thereof and are secured by the revenues.
(b) Either of the following paragraphs apply:
(1) (A) The net income from the property available for the payment of the securities for the five fiscal years next preceding any such investment, shall have averaged at least one and one-tenth times all debt service requirements for principal, interest, and sinking fund of all revenue securities payable only out of the revenues from that property during each of those fiscal years, and for each of the five fiscal years shall have equaled at least all debt service requirements for principal, interest, and sinking fund of the securities, and for the last fiscal year shall have amounted to at least the maximum annual debt service requirement for any fiscal year thereafter on all such securities that were outstanding during such last fiscal year and which will be outstanding in any fiscal year thereafter.
(B) The gross income from the property, the net income from which is pledged for the payment of the securities, in the last fiscal year prior to the investment was not less than one million dollars ($1,000,000) if located in California, and was not less than five million dollars ($5,000,000) if located elsewhere.
(C) The issuer is obligated to maintain rates at least sufficient to meet debt service requirements and such obligation is legally enforceable.
(2) (A) The issuer of the securities is entitled to receive under a legally enforceable contract with a corporation any of the securities of which are a legal investment for savings banks under this chapter annual payments averaging not less than nine hundred thousand dollars ($900,000) a year commencing with the completion of a project or projects as fixed in the construction contract therefor and continuing during the maximum term for which said revenue securities are to mature.
(B) The issuer of the securities is obligated to maintain rates to produce revenue, or will receive contract payments, either or both of which will be sufficient to meet debt service requirements and such obligation or contract is legally enforceable.
(c) The public corporation or any department, board, agency, or authority thereof which issues the securities, if existing elsewhere than in California, has not within 10 years prior to such investment defaulted for a period of more than 90 days in the payment of principal or interest on any of its debts.
815.
 Bonds of any local public housing agency (as defined in the United States Housing Act of 1937, as amended) that are secured by either of the following:
(a) An agreement between the public housing agency and the Public Housing Administration in which the public housing agency agrees to borrow from the Public Housing Administration, and the Public Housing Administration agrees to lend to the public housing agency, prior to the maturity of the obligations (which obligations shall have a maturity of not more than 18 months), moneys in an amount that (together with any other moneys irrevocably committed to the payment of interest on such obligations) will suffice to pay the principal of the obligations with interest to maturity thereon, which moneys under the terms of the agreement are required to be used for the purpose of paying the principal of and the interest on such obligations at their maturity.
(b) A pledge of annual contributions under an annual contributions contract between such public housing agency and the Public Housing Administration if the contract shall contain the covenant by the Public Housing Administration that is authorized by subsection (b) of Section 22 of the United States Housing Act of 1937, as amended, and if the maximum sum and the maximum period specified in such contract pursuant to that subsection 22(b) shall not be less than the annual amount and the period for payment that are requisite to provide for the payment when due of all installments of principal and interest on the obligations.
816.
 Bonds secured by an insurance commitment of the Federal Housing Administration.
817.
 Evidences of indebtedness of companies incorporated in the United States and, directly or indirectly, engaged in manufacturing, extraction, merchandising, or commercial financing and in bonds of authorities established pursuant to the California Industrial Development Financing Act (Title 10 (commencing with Section 91500) of the Government Code), to which these companies are obligated with respect to payment subject to the following conditions:
(a) Any unsecured evidences of indebtedness shall be issued by a company substantially all of whose property is free of mortgage and shall carry a covenant by the obligor that they will be secured equally with any mortgage bond, except a purchase money mortgage, which may be later issued.
(b) The company is of a size as to attract at least statewide interest in its publicly held securities and its gross income shall have averaged not less than ten million dollars ($10,000,000) and its net income shall have averaged not less than one million dollars ($1,000,000) for the five fiscal years preceding the investment and its gross income was not less than ten million dollars ($10,000,000) and its net income not less than one million dollars ($1,000,000) for at least three of these five fiscal years.
(c) Working capital, as measured by consolidated current assets less consolidated current liabilities as shown in the latest published balance sheet, shall exceed 150 percent of the total of consolidated debt due in longer than one year and “minority interest.” For that purpose, “minority interest” means any outstanding interest in a subsidiary having a prior claim on the earnings of the subsidiary. However, the foregoing ratio requirement shall not apply in the case of evidences of indebtedness of any corporation whose consolidated gross assets less any valuation reserves exceed five hundred million dollars ($500,000,000) and whose consolidated current assets exceed consolidated current liabilities by at least one hundred million dollars ($100,000,000) as shown by the latest published balance sheet. When new financing is involved, the changes in gross assets, capital structure and working capital shall be considered and reliance may be placed on the representations made in the official prospectus prepared under the rules of the Securities and Exchange Commission as to the application of the proceeds of the financing.
(d) The total consolidated debt of the company including current liabilities and “minority interest,” as shown on the latest published balance sheet, does not exceed 331/3 percent of its gross assets less valuation reserves.
(e) The consolidated annual net income for the five fiscal years next preceding the investment, before deduction of state and federal taxes imposed on or measured by income or profits but after deducting all charges, including reserves, regularly recurring charges for amortization of discount, and expense allocable to funded debt (1) shall have averaged not less than six times the annual consolidated interest charges existing at the time the investment is made; (2) in at least three of the five fiscal years shall have been at least four times the annual consolidated interest charges for the same year; and (3) for the fiscal year next preceding the investment shall have been not less than six times the consolidated interest charges for that year and not less than six times the annual consolidated charges on the funded debt outstanding at the time of the investment.
818.
 Fixed interest railroad bonds meeting the requirements of subdivisions (a) and (b); bonds secured by a mortgage on jointly operated railroad facilities meeting the requirements of subdivision (c); and railroad equipment trust certificates meeting the requirements of subdivision (d).
(a) The railroad bonds are issued by or are assumed, guaranteed, or provision made unconditionally for the payment of principal and interest on specified dates, by a solvent railroad company that meets all of the following conditions:
(1) Operates at least 500 miles of standard gauge road within the continental United States and which has had average annual operating revenues of at least ten million dollars ($10,000,000) during the five years next preceding the investment.
(2) Has an average annual balance of income available for fixed charges for the last 15 years for which the necessary statistical data are available, when divided by an amount equal to its fixed charges for the last fiscal year, shall produce a quotient which is at least 15 percent higher than the quotient obtained by dividing the average annual balance of income available for fixed charges of all class 1 railroads for the same one 5-year period by an amount equal to the fixed charges of all class 1 railroads for the last year in the period.
(3) Has an average “balance of net income” (computed by deducting the sum of its fixed charges and contingent interest charges for the latest fiscal year from the average annual balance available for fixed charges for the latest 15 years for which the necessary statistical data are available) when divided by its average annual railroad operating income for the same 15-year period, shall produce a quotient at least 15 percent greater than the quotient obtained by dividing the average balance of income of all class 1 railroads, computed in the same manner, by the average annual railway operating income of all class 1 railroads for the same 15-year period.
(4) Has an average balance of income available for fixed charges for the last three fiscal years preceding the investment that has not been less than one and one-half times its fixed charges for the last fiscal year.
(b) The railroad bonds are secured by any of the following:
(1) A mortgage, either direct or collateral, which shall be a first mortgage on not less than 75 percent of the mileage subject to the mortgage.
(2) A first mortgage on terminal properties comprising the company’s principal freight or passenger terminal in a city of not less than 250,000 population according to the latest federal or state census.
(3) A refunding mortgage on not less than 75 percent of the railroad mileage owned or operated by the issuing company under which bonds may be issued for retirement or refunding of all debts secured by prior liens on all or any part of the property (other than liens on equipment) subject to the mortgage; provided, that the amount of debt senior to the refunding mortgage is not more than 50 percent of the sum of all senior debt and the refunding mortgage, or that underlying mortgage bonds in an amount equal to at least 50 percent of the debt outstanding under the refunding mortgage are pledged as security under the refunding mortgage.
(4) A first mortgage on railroad property leased to and operated by the company where the lease extends beyond the maturity date of the bonds and the company has guaranteed, assumed, or committed itself under the terms of the lease to pay principal and interest on the bonds.
(c) Bonds secured by a mortgage on jointly operated railroad facilities must be secured by a first mortgage on a terminal, depot, tunnel, or bridge used by or leased to two or more railroads which have jointly and severally agreed unconditionally to pay the interest and principal of the bonds or have unconditionally guaranteed or assumed such payment, one of which railroads must meet the requirements set forth in subdivision (a).
(d) Railroad equipment trust certificates must be issued by a solvent class 1 railroad whose average balance of income available for fixed charges for the last three fiscal years preceding the investment shall be not less than one and one-half times its fixed charges for the last fiscal year. The certificates must be issued to provide funds for the construction or acquisition of new standard gauge railroad equipment made with the approval of the Interstate Commerce Commission and be secured by equipment trust, lease, conditional sales contract, or first lien on such equipment. The aggregate principal amount of such obligations shall not exceed 80 percent of the purchase price of the equipment and the certificates shall mature within 15 years from date of issuance in equal annual, semiannual, or monthly installments, beginning not later than one year after the date of issuance.
(e) As used in this section, the terms “balance of income available for fixed charges,” “fixed charges,” “contingent interest,” and “railway operating income” shall have the same meaning as in the accounting reports filed by common carriers by rail pursuant to regulations of the Interstate Commerce Commission except that “balance of income available for payment of fixed charges” shall be computed before deduction of federal income or excess profits taxes, and “fixed charges” and “contingent interest” of the railroad shall be such charges existing as of the time the computation is made excluding charges with respect to debt which has been retired or will be retired within six months and for the payment of which funds have been or are contemporaneously being set aside in trust but including charges with respect to new debt issued or in the process of being issued.
819.
 Bonds and debentures of gas, electric, or gas and electric companies meeting the requirements of subdivision (a); bonds and debentures of telephone companies meeting the requirements of subdivision (b); and bonds and debentures of water companies meeting the requirements of subdivision (c).
(a) Bonds or debentures of a gas, electric, or gas and electric company shall be of an issue that originally amounted to not less than one million dollars ($1,000,000) and, if bonds, be secured by a mortgage on substantially all of its physical property, and, if debentures, shall be issued by a company substantially all of whose physical property is free of mortgage and must carry a covenant to be secured equally with any mortgage indebtedness, except a purchase money mortgage, subsequently issued, and both bonds and debentures shall be issued by a public utility corporation that meets all of the following conditions:
(1) Derives more than 50 percent of its gross operating revenue from the business of supplying electricity, artificial gas, or natural gas or all or any of them, and at least 80 percent of its gross operating revenue from all or any of the public utility businesses enumerated in this section.
(2) Shall have had a gross operating revenue of not less than seven million five hundred thousand dollars ($7,500,000) for its most recent fiscal year.
(3) Has a funded debt not exceeding two-thirds of the value of its physical property as shown by the books of the corporation or by a statement of a certified public accountant issued within one year, which statement may be based upon the books of the corporation, less the amount of any reserves for depreciation, retirement, or amortization of that physical property. Physical property of a corporation shall include the physical property of a subsidiary corporation if the corporation owns not less than 90 percent of the outstanding voting shares of the subsidiary corporation.
(4) Shall have had earnings including earnings of subsidiaries mentioned in paragraph (3), available for interest payments, before deduction of state and federal taxes imposed on or measured by income or profits, during four of the five most recent fiscal years and during the most recent fiscal year equal to at least twice the existing annual interest charges on the corporation’s total funded debt during those respective fiscal years.
(b) Bonds or debentures of telephone companies shall be of an issue originally amounting to at least one million dollars ($1,000,000) and, if bonds, be secured by a mortgage on substantially all of the physical property of the company, and if debentures shall be issued by a company substantially all of whose physical property is free of mortgage and shall carry a covenant to be secured equally with any mortgage indebtedness, except a purchase money mortgage, subsequently issued, and both bonds and debentures shall be issued by a company that meets all of the following conditions:
(1) During its last fiscal year had gross revenues of at least seven million five hundred thousand dollars ($7,500,000), more than 50 percent of which was derived from owned properties used in furnishing telephone and other communication services and at least 80 percent of its gross revenues from all or any of the public utility businesses enumerated in this section.
(2) Whose funded debt does not exceed two-thirds of the value of its physical property as shown by the books of the corporation or by a statement of a certified public accountant issued within one year, which statement may be based upon the books of the corporation, less the amount of any reserves shown on the statement for depreciation, retirement or amortization of such physical property. Physical property of a corporation shall include the physical property of a subsidiary corporation if the corporation owns not less than 90 percent of the outstanding voting shares of the subsidiary corporation.
(3) Which for four of the five most recent fiscal years and for the last fiscal year had earnings including earnings of subsidiaries mentioned in paragraph (2) available for the payment of interest charges, before deduction of state and federal taxes imposed on or measured by income or profits, at least equal to twice the interest charges on the company’s total funded debt during such respective fiscal years.
(c) Water company bonds or debentures shall be of an issue originally amounting to at least one million dollars ($1,000,000) and if bonds, be secured by a first mortgage on the company’s property, and if debentures, shall be issued by a company substantially all of whose property is free of mortgage and shall carry a covenant to be secured equally with any mortgage indebtedness, except a purchase money mortgage, subsequently issued, and both bonds and debentures shall be issued by a company that meets all of the following conditions:
(1) Is the supplier of substantially all water for domestic use in a community or communities having a population of not less than 25,000.
(2) Whose funded debt does not exceed two-thirds of the value of its physical property as shown by the published statement of the company for its next preceding fiscal period, less the amount of any reserves shown for depreciation, retirement or amortization of such physical property. Physical property of a corporation shall include the physical property of a subsidiary corporation if the corporation owns not less than 90 percent of the outstanding voting shares of the subsidiary corporation.
(3) Which for four out of the five most recent fiscal years and for the most recent fiscal year shall have had earnings including those of subsidiaries mentioned in paragraph (2) available for the payment of interest charges, before deduction of state and federal taxes imposed on or measured by income or profits, of at least one and one-half times the interest charges on the company’s total funded debt during the respective fiscal years.

SEC. 4.

 Division 1.2 (commencing with Section 2000) is added to the Financial Code, to read:

DIVISION 1.2. MONEY TRANSMISSION ACT

CHAPTER  1. General Provisions
2000.
 This chapter shall be known and may be cited as the Money Transmission Act.
2001.
 The Legislature finds and declares all of the following:
(a) Money transmission businesses conduct a significant amount of business in this state and technological advances are occurring in the provision of money transmission services.
(b) Persons who use money transmission businesses in this state use those businesses for, among other purposes, paying for the necessities of life and transmitting money to family members.
(c) The failure of money transmission businesses to fulfill their obligations would cause loss to consumers, disrupt the payments mechanism in this state, undermine public confidence in financial institutions doing business in this state, and adversely affect the health, safety, and general welfare of persons in this state.
(d) To protect the interests of consumers of money transmission businesses in this state, to maintain public confidence in financial institutions doing business in this state, and to preserve the health, safety, and general welfare of the people of this state, it is necessary to regulate money transmission businesses in this state.
2002.
 It is the intent of the Legislature that the provisions of this act accomplish all of the following:
(a) Protect the interests of persons in this state who use money transmission services.
(b) Provide for the safe and sound conduct of the business of licensees.
(c) Maintain public confidence in licensees.
2003.
 For purposes of this chapter, the following definitions shall apply:
(a) “Affiliate,” when used with respect to a specified person, means any person controlling, controlled by, or under common control with, that specified person, directly or indirectly through one or more intermediaries. For purposes of subdivisions (q) and (v), a specified person is affiliated with another person if that person controls, is controlled by, or under common control through the ownership directly or indirectly of shares or equity securities possessing more than 50 percent of the voting power of that specified person.
(b) “Agent” means a person that provides money transmission in California on behalf of the licensee, provided that the licensee becomes liable for the money transmission from the time money or monetary value is received by that person. However, “agent” does not include any officer or employee of the licensee when acting as such at an office of a licensee.
(c) “Applicant” means a person that files an application for a license or for acquisition of control of a licensee under this chapter.
(d) “Average daily outstanding” means the amount of outstanding money transmission obligations in California at the end of each day in a given period of time, added together, and divided by the total number of days in that period of time.
(e)  “Branch office” means any office in this state of a licensee or agent at which the licensee receives money or monetary value to provide money transmission, either directly or through an agent.
(f) “Business day” means one of the following:
(1) When used with respect to any act to be performed in this state, any day other than Saturday, Sunday, or any other day that is provided for as a holiday in the Government Code.
(2) When used with respect to any act to be performed in any jurisdiction other than this state, any day other than a day that is a legal holiday under the laws of that jurisdiction.
(g) “Commissioner” means the Commissioner of Financial Institutions.
(h) “Control” has the meaning set forth in Section 1250.
(i) “Day” means calendar day.
(j) “In California” or “in this state” means physically located in California, or with, to, or from persons located in California.
(k) “Issue” and “issuer” mean, with regard to a payment instrument, the entity that is the maker or drawer of the instrument in accordance with the California Commercial Code and is liable for payment. With regard to stored value, “issue” and “issuer” mean the entity that is liable to the holder of stored value and has undertaken or is obligated to pay the stored value. Only a licensee may issue stored value or payment instruments.
(l) “Licensee” means a corporation or limited liability company licensed under this chapter.
(m) “Monetary value” means a medium of exchange, whether or not redeemable in money.
(n) “Money” means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.
(o) “Money transmission” means any of the following:
(1) Selling or issuing payment instruments.
(2) Selling or issuing stored value.
(3) Receiving money for transmission.
(p) “Outstanding,” with respect to payment instruments and stored value, means issued or sold by the licensee in the United States and not yet paid or refunded by the licensee, or issued or sold on behalf of the licensee in the United States by its agent and reported as sold, but not yet paid or refunded by the licensee. “Outstanding,” with respect to receiving money for transmission means all money or monetary value received in the United States for transmission by the licensee or its agents but not yet paid to the beneficiaries or refunded to the person from whom the money or monetary value was received. All outstanding money transmission of a licensee is and shall remain a liability of the licensee until it is no longer outstanding.
(q) “Payment instrument” means a check, draft, money order, traveler’s check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or any instrument that is redeemable by the issuer for goods or services provided by the issuer or its affiliate.
(r) “Person” means an individual, corporation, business trust, estate, trust, partnership, proprietorship, syndicate, limited liability company, association, joint venture, government, governmental subdivision, agency or instrumentality, public corporation or joint stock company, or any other organization or legal or commercial entity, provided, however, that “person,” when used with respect to acquiring control of or controlling a specified person, includes any combination of two or more persons acting in concert.
(s) “Receiving money for transmission” or “money received for transmission” means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means. The term does not include sale or issuance of payment instruments and stored value.
(t) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(u) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(v) “Stored value” means monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The term does not include a credit card voucher, letter of credit, or any stored value that is only redeemable by the issuer for goods or services provided by the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.
(w) “Traveler’s check” means an instrument that meets all of the following:
(1) Is designated on its face by the term “traveler’s check” or by any substantially similar term or is commonly known and marketed as a traveler’s check.
(2) Contains a provision for a specimen signature of the purchaser to be completed at the time of purchase.
(3) Contains a provision for a countersignature of the purchaser to be completed at the time of negotiation.
CHAPTER  2. Exemptions
2010.
 This chapter does not apply to the following:
(a) The United States or a department, agency, or instrumentality thereof, including any federal reserve bank and any federal home loan bank.
(b) Money transmission by the United States Postal Service or by a contractor on behalf of the United States Postal Service.
(c) A state, county, city, or any other governmental agency or governmental subdivision of a state.
(d) A commercial bank or industrial bank, the deposits of which are insured by the Federal Deposit Insurance Corporation or its successor, or any foreign (other nation) bank that is licensed under Article 3 (commencing with Section 1800) of Chapter 20 or that is authorized under federal law to maintain a federal agency or federal branch office in this state; a trust company licensed pursuant to Section 1042 or a national association authorized under federal law to engage in a trust banking business; an association or federal association, as defined in Section 5102 the deposits of which are insured by the Federal Deposit Insurance Corporation or its successor; and any federally or state chartered credit union the member accounts of which are insured or guaranteed as provided in Section 14858.
(e) Electronic funds transfer of governmental benefits for a federal, state, county, or local governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or a state or governmental subdivision, agency, or instrumentality thereof.
(f) A board of trade designated as a contract market under the federal Commodity Exchange Act (7 U.S.C. Secs. 1-25, incl.) or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board.
(g) A person that provides clearance or settlement services pursuant to a registration as a clearing agency or an exemption from registration granted under the federal securities laws to the extent of its operation as such a provider.
(h) An operator of a payment system to the extent that it provides processing, clearing, or settlement services, between or among persons excluded by this section, in connection with wire transfers, credit card transactions, debit card transactions, stored value transactions, automated clearing house transfers, or similar funds transfers, to the extent of its operation as such a provider.
(i) A person registered as a securities broker-dealer under federal or state securities laws to the extent of its operation as such a broker-dealer.
(j) A person listed under subdivision (d) is exempted from all the provisions of this chapter, except Sections 2062 and 2063.
2011.
 The commissioner may, by regulation or order, either unconditionally or upon specified terms and conditions or for specified periods, exempt from this chapter 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 chapter.
CHAPTER  3. Licenses
2030.
 (a) A person shall not engage in the business of money transmission in this state, or advertise, solicit, or hold itself out as providing money transmission in this state, unless the person is licensed or exempt from licensure under this chapter or is an agent of a person licensed or exempt from licensure under this chapter.
(b) A license under this chapter is not transferable or assignable.
2031.
 (a) No person other than a corporation or limited liability company may apply for or be issued a license.
(b) No person other than the following may be issued a license:
(1) A corporation or limited liability company organized under the laws of this state.
(2) A corporation, other than a corporation organized under the laws of this state, that is qualified to transact intrastate business in this state under Chapter 21 (commencing with Section 2100) of Division 1 of Title 1 of the Corporations Code.
(3) A limited liability company, other than a limited liability company organized under the laws of this state, that is qualified to transact intrastate business in this state under Chapter 10 (commencing with Section 17450) of Title 2.5 of the Corporations Code, except that a limited liability company that is organized outside the United States shall not be issued a license.
2032.
 (a) In this section, “material litigation” means litigation that according to United States generally accepted accounting principles is significant to an applicant’s or a licensee’s financial health and would be required to be disclosed in the applicant’s or licensee’s annual audited financial statements, report to shareholders, or similar records.
(b) An applicant for licensure under this chapter shall pay to the commissioner a nonrefundable fee of five thousand dollars ($5,000).
(c) An applicant for a license under this chapter shall do so in a form and in a medium prescribed by the commissioner by order or regulation. The application shall state or contain all of the following:
(1) The legal name and residential business address of the applicant and any fictitious or trade name used by the applicant in conducting its business.
(2) A list of any criminal convictions of the applicant and any material litigation in which the applicant has been involved in the 10-year period next preceding the submission of the application.
(3) A description of any money transmission services previously provided by the applicant and the money transmission services that the applicant seeks to provide in this state.
(4) A list of the applicant’s proposed agents and the locations in this state where the applicant and its agents propose to engage in money transmission.
(5) A list of other states in which the applicant is licensed to engage in money transmission and any license revocations, suspensions, or other disciplinary action taken against the applicant in another state.
(6) Information concerning any bankruptcy or receivership proceedings affecting the licensee.
(7) A sample form of payment instrument or instrument upon which stored value is recorded, if applicable.
(8) A sample form of receipt for transactions that involve money received for transmission.
(9) The name and address of any bank through which the applicant’s payment instruments and stored value will be paid.
(10) A description of the source of money and credit to be used by the applicant to provide money transmission services.
(11) The date of the applicant’s incorporation or formation and the state or country of incorporation or formation.
(12) A certificate of good standing from the state or country in which the applicant is incorporated or formed.
(13) A description of the structure or organization of the applicant, including any parent or subsidiary of the applicant, and whether any parent or subsidiary is publicly traded.
(14) The legal name, any fictitious or trade name, all business and residential addresses, and the employment, in the 10-year period next preceding the submission of the application, of each executive officer, manager, director, or person that has control, of the applicant, and the education background for each such person.
(15) A list of any criminal convictions and material litigation in which any executive officer, manager, director, or person in control, of the applicant has been involved in the 10-year period next preceding the submission of the application.
(16) A copy of the applicant’s audited financial statements for the most recent fiscal year and, if available, for the two-year period next preceding the submission of the application.
(17) A copy of the applicant’s unconsolidated financial statements for the current fiscal year, whether audited or not, and, if available, for the two-year period next preceding the submission of the application.
(18) If the applicant is publicly traded, a copy of the most recent report filed with the United States Securities and Exchange Commission under Section 13 of the federal Securities Exchange Act of 1934 (15 U.S.C. Sec. 78m).
(19) If the applicant is a wholly owned subsidiary of:
(A) A corporation publicly traded in the United States, a copy of audited financial statements for the parent corporation for the most recent fiscal year or a copy of the parent corporation’s most recent report filed under Section 13 of the federal Securities Exchange Act of 1934 (15 U.S.C. Section 78m) and, if available, for the two-year period next preceding the submission of the application.
(B) A corporation publicly traded outside the United States, a copy of similar documentation filed with the regulator of the parent corporation’s domicile outside the United States.
(20) The name and address of the applicant’s registered agent in this state.
(21) The applicant’s plan for engaging in money transmission business, including without limitation three years of pro forma financial statements.
(22) Any other information the commissioner requires with respect to the applicant.
(d) The commissioner may waive any of the information required under subdivision (c) or permit an applicant to submit other information instead of the required information.
2033.
 (a) The commissioner may conduct an examination of the applicant and the applicant shall pay the reasonable cost of the examination.
(b) If the commissioner finds all of the following with respect to an application for a license, the commissioner shall approve the application:
(1) The applicant has adequate tangible shareholders’ equity, as specified in Section 2040 to engage in the business of money transmission and the financial condition of the applicant is otherwise such that it will be safe and sound for the applicant to engage in the business of money transmission.
(2) The applicant, the directors and officers of the applicant, any person that controls the applicant, and the directors and officers of any person that controls the applicant are of good character and sound financial standing.
(3) The applicant is competent to engage in the business of money transmission.
(4) The applicant’s plan for engaging in the business of money transmission affords reasonable promise of successful operation.
(5) It is reasonable to believe that the applicant, if licensed, will engage in the business of money transmission and will comply with all applicable provisions of this chapter and of any regulation or order issued under this chapter.
(c) The commissioner shall deny an application for a license if he or she finds, after notice and a hearing, that the requirements of subdivision (b) have not been satisfied.
2034.
 (a) Before any corporation or limited liability company is issued a license, the corporation or limited liability company shall file with the commissioner, in such form as the commissioner may by regulation or order require, an appointment irrevocably appointing the commissioner to be the corporation’s or limited liability company’s attorney to receive service of any lawful process in any noncriminal judicial or administrative proceeding against the corporation or limited liability company, or any of its successors, that arises under this chapter or under any regulation or order issued under this chapter after such appointment has been filed, with the same force and validity as if served personally on the corporation or limited liability company or its successor, as the case may be.
(b) Service may be made by leaving a copy of the process at any office of the commissioner, but that service is not effective unless (1) the party making that service, who may be the commissioner, sends notice of service and a copy of the process by registered or certified mail to the party served at its last address on file with the commissioner, and (2) an affidavit of compliance with this section by the party making service is filed in the case on or before the return date, if any, or within such further time as the court, in the case of a judicial proceeding, or the administrative agency, in the case of an administrative proceeding, allows.
(c) The provisions of this section are in addition to, and not in limitation of, other provisions of law relating to service of process.
2035.
 (a) No person shall, directly or indirectly, acquire control of a licensee unless the commissioner has first approved, in writing, the acquisition of control. An application to acquire control of a licensee shall be in writing, under oath, and in a form prescribed by the commissioner. The application shall contain that information which the commissioner may require.
(b) The commissioner shall not approve the application unless the commissioner finds all of the following:
(1) The applicant and all of the officers and directors of the applicant are of good character and sound financial standing.
(2) The applicant is competent to engage in the business of money transmission.
(3) It is reasonable to believe that, if the applicant acquires control of the licensee, the applicant and the licensee will comply with all applicable provisions of this chapter and any regulation or order issued under this chapter.
(4) The applicant’s plans, if any, to make any major change in the business, corporate structure, or management of the licensee are not detrimental to the safety and soundness of the licensee.
(c) For the purposes of subdivision (b), the commissioner may find an applicant’s plan to make major changes in the management of a licensee is detrimental to the licensee if the plan provides for a person who is not of good character to become a director or officer of the licensee. The grounds specified in this subdivision shall not be deemed to be the only grounds upon which the commissioner may find, for the purposes of subdivision (b), that an applicant’s plan to make a major change in the management of a licensee is detrimental to the licensee.
(d) If it appears to the commissioner that any person is violating or failing to comply with this section, the commissioner may direct the person to comply with this section by an order issued over the commissioner’s official seal.
(e) Whenever it appears to the commissioner that any person has committed or is about to commit a violation of any provision of this section or of any regulation or order of the commissioner issued pursuant to this section, the commissioner may apply to the superior court for an order enjoining the person from violating or continuing to violate this section or that regulation or order, and for other equitable relief as the nature of the case or interests of the licensee, the controlling person, the creditors or shareholders of the licensee or controlling person or the public may require.
(f) The commissioner may, for good cause, amend, alter, suspend, or revoke any approval of a proposal to acquire control of a licensee issued pursuant to this section.
(g) There shall be exempted from the provisions of this section any transaction which the commissioner by regulation or order exempts as not being comprehended within the purposes of this section and the regulation of which he or she finds is not necessary or appropriate in the public interest or for the protection of a licensee or the customers of a licensee.
(h) The commissioner may conduct an examination of the applicant and the applicant shall pay the reasonable cost of the examination.
2036.
 The commissioner may impose on any authorization, approval, license, or order issued pursuant to this chapter any conditions that he or she deems reasonable or necessary to the public interest.
2037.
 (a) As security, each licensee shall deposit and thereafter maintain on deposit with the Treasurer cash in an amount not less than, or securities having a market value not less than, such amount as the commissioner may find and order from time to time as necessary to secure the faithful performance of the obligations of the licensee with respect to money transmission in California. These securities shall be subject to the approval of the commissioner and shall consist of interest-bearing bonds, notes, or other obligations of the United States or any agency or instrumentality thereof, or of the State of California, or of any city, county, or city and county, political subdivision or district of the State of California, or that are guaranteed by the United States or the State of California.
(b) So long as a licensee that maintains securities on deposit with the Treasurer pursuant to this section is solvent, that licensee shall be entitled to receive any interest paid on the securities.
(c) In lieu of the deposit of cash or securities pursuant to subdivision (a), a licensee may deliver to the commissioner the bond of a surety company, in form and written by a company satisfactory to the commissioner, in an amount not less than the amount of the deposit of cash or securities required of the licensee, conditioned upon the faithful performance of the obligations of the licensee with respect to money transmission in California. The commissioner shall deposit such bond with the Treasurer.
(d) A licensee that sells or issues payment instruments or stored value shall maintain securities on deposit or a bond of a surety company in an amount of no less than five hundred thousand dollars ($500,000) or 50 percent of the average daily outstanding payment instrument and stored value obligations in California, whichever is greater; provided that such amount shall not be more than two million dollars ($2,000,000).
(e) A licensee that engages in receiving money for transmission shall maintain securities on deposit or a bond of a surety company in an amount greater than the average daily outstanding obligations for money received for transmission in California, provided that such amount shall not be less than two hundred fifty thousand dollars ($250,000) nor more than seven million dollars ($7,000,000).
(f) The amount of securities on deposit or a bond of a surety company required to be maintained by subdivisions (d) and (e) are cumulative.
(g) The money and securities deposited with the State Treasurer pursuant to this section and the proceeds of any bond held by the State Treasurer pursuant to this section shall constitute a trust fund for the benefit of persons in California who purchased payment instruments or stored value from the licensee or its agent, or persons in California who delivered to any licensee or its agent money or monetary value for money transmission. Suit to recover on any bond may be brought by any party aggrieved in a court of competent jurisdiction of any county in which the licensee has an agent.
(h) Securities on deposit or a bond shall cover claims for so long as the commissioner specifies, but for at least four years after the licensee ceases to provide services under this chapter in this state. However, the commissioner may permit the amount of the security to be reduced or eliminated before the expiration of that time to the extent the amount of the licensee’s payment instruments or stored value obligations outstanding, or outstanding money or monetary value received for money transmission, is less than the deposit or bond. The commissioner may permit a licensee to substitute another form of security acceptable to the commissioner for the security effective at the time the licensee ceases to provide money transmissions in this state.
2038.
 Fees shall be paid to, and collected by, the commissioner, as follows:
(a) The fee for filing an application for a license is five thousand dollars ($5,000), as provided in subdivision (b) of Section 2032.
(b) The fee for filing an application for approval to acquire control of a licensee is three thousand five hundred dollars ($3,500).
(c) A licensee shall pay annually on or before July 1, a licensee fee of two thousand five hundred dollars ($2,500).
(d) A licensee shall pay annually on or before July 1, one hundred twenty-five dollars ($125) for each licensee branch office in this state.
(e) A licensee shall pay annually on or before July 1, twenty-five dollars ($25) for each agent branch office in this state.
(f) Whenever the commissioner examines a licensee or any agent of a licensee, the licensee shall pay, within 10 days after receipt of a statement from the commissioner, a fee of seventy-five dollars ($75) per hour for each examiner engaged in the examination plus, if it is necessary for any examiner engaged in the examination to travel outside this state, the travel expenses of the examiner.
(g) Whenever the commissioner examines an applicant, the applicant shall pay, within 10 days after receipt of a statement from the commissioner, a fee of seventy-five dollars ($75) per hour for each examiner engaged in the examination plus, if it is necessary for any examiner engaged in the examination to travel outside this state, the travel expenses of the examiner.
(h) Each fee for filing an application shall be paid at the time the application is filed with the commissioner. No fee for filing an application shall be refundable, regardless of whether the application is approved, denied, or withdrawn.
2039.
 (a) The commissioner may by order or regulation grant exemptions from this section in cases where the commissioner finds that the requirements of this section are not necessary or may be duplicative.
(b) In addition to such other reports as may be required pursuant to Sections 453, 454, and 455, each licensee shall, within 90 days after the end of each fiscal year, or within such extended time as the commissioner may prescribe, file with the commissioner an audit report for the fiscal year that shall comply with all of the following provisions:
(1) The audit report shall contain audited financial statements of the licensee for or as of the end of the fiscal year prepared in accordance with United States generally accepted accounting principles and such other information as the commissioner may require.
(2) The audit report shall be based upon an audit of the licensee conducted in accordance with United States generally accepted auditing standards and such other requirements as the commissioner may prescribe.
(3) The audit report shall be prepared by an independent certified public accountant or independent public accountant who is not unsatisfactory to the commissioner.
(4) The audit report shall include or be accompanied by a certificate of opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the commissioner. If the certificate or opinion is qualified, the commissioner may order the licensee to take such action as the commissioner may find necessary to enable the independent or certified public accountant or independent public accountant to remove the qualification.
(c) Each licensee shall, not more than 45 days after the end of each calendar year quarter, or within a longer period as the commissioner may by regulation or order specify, file with the commissioner a report containing all of the following:
(1) Financial statements, including balance sheet, income statement, statement of changes in shareholders’ equity, and statement of cashflows, for, or as of the end of, that calendar year quarter, verified by two of the licensee’s principal officers. The verification shall state that each of the officers making the verification has a personal knowledge of the matters in the report and that each of them believes that each statement on the report is true.
(2) For issuers and sellers of payment instruments and stored value, a schedule of eligible securities owned by the licensee pursuant to Section 2081.
(3) Other information as the commissioner may by regulation or order require.
(d) Each licensee, not more than 45 days after the end of each calendar year quarter, shall file with the commissioner a report containing all of the following:
(1) The current address of each branch office of the licensee in this state. If a branch office was opened or closed during the calendar year quarter, the date it was opened or closed. If a branch office was relocated during the calendar year quarter, the addresses of the old and new locations and the date of relocation.
(2) The name of each person who acted as an agent in this state of the licensee during the calendar year quarter and the address for each agent branch office. If a person was appointed or terminated as an agent during the calendar year quarter, the date of appointment or termination. If an agent branch office relocated, the addresses for the old and new locations and the date of relocation.
(3) The total volume of activities, number of transactions conducted, and outstanding money transmission obligations in California under this chapter and in the United States in the calendar year quarter categorized by type of money transmission. For money received for transmission, a report of the average daily outstanding transmission liabilities in California, and, if applicable, a schedule of each foreign country to which money was sent, along with the total amount of money sent to that foreign country in that calendar year quarter. For payment instruments and stored value, a report of the average daily outstanding payment instruments and stored value liabilities in California in that calendar year quarter.
(4) Other information as the commissioner may by regulation or order require.
(e) Each licensee shall file with the commissioner other reports as and when the commissioner may by regulation or order require.
2040.
 (a) A licensee under this chapter shall maintain tangible shareholders’ equity in an amount determined to be adequate by the commissioner from time to time, but in no event shall tangible shareholders’ equity be less than five hundred thousand dollars ($500,000). “Tangible shareholders’ equity” means shareholders’ or members’ equity minus intangible assets as determined in accordance with United States generally accepted accounting principles.
(b) The commissioner at any time may require a licensee to write down any asset held by it to a valuation that will represent its then fair market value. Any receivable or debt due to a licensee that is past due and unpaid for the period of one year shall be charged off, unless it is well secured or is in process of collection.
(c) The aggregate value of a licensee’s accounts receivable, excluding money transmission receivables, loans or extensions of credit to any one person, or that person’s affiliates, cannot exceed 50 percent of the licensee’s tangible shareholders’ equity without the advanced written approval of the commissioner. Whenever such amount equals or exceeds 20 percent of the licensee’s tangible shareholders’ equity, the licensee shall maintain records evidencing such amount and any security or other source of payment for the amount owed, and such other records as the commissioner may require by order or regulation.
2041.
 (a) A licensee shall conduct money transmission in California under its true name unless it has complied with Chapter 5 (commencing with Section 17900) of Part 3 of Division 7 of the Business and Professions Code.
(b) A licensee may only conduct money transmission in California under its true name unless it has provided 30-day advance written notice to the commissioner. A licensee may also use a trade name or logo, so long as there is reasonable disclosure of its true name.
2042.
 (a) In addition to the fees provided in Section 2038, the commissioner shall levy an assessment each fiscal year, on a pro rata basis, on those licensees that at any time during the preceding calendar year engaged in the business of money transmission in California in an amount that is, in his or her judgment, sufficient to meet the commissioner’s expenses in administering the provisions of this chapter and to provide a reasonable reserve for contingencies.
(b) For licensees that sell or issue payment instruments or stored value, the amount of the annual assessment on any licensee shall not exceed the sum of the products determined by multiplying (1) increments of the aggregate face amount of payment instruments and stored value issued or sold in California by the licensee, directly or indirectly through agents, in the calendar year next preceding the date of such assessment, by (2) percentages of the base assessment rate, according to the following table:
Aggregate face amount of payment instruments and stored value sold (in millions)
Percentage of base assessment rate
First $1 ........................
100.0
Next $9 ........................
25.0
Next $40 ........................
12.5
Next $50 ........................
6.0
Next $400 ........................
3
Next $500 ........................
2
Excess over $1,000 ........................
1
The base assessment rate shall be fixed from time to time by the commissioner but shall not exceed one dollar ($1) per one thousand dollars ($1,000) face amount of payment instruments and stored value sold.
(c) For licensees receiving money for transmission, the basis of the apportionment of the assessment among the licensees assessed shall be the proportion that the total amount of money received for transmission by the licensee in California bears in relation to the total amount of money received for transmission by all licensees in California, as shown by the reports of licensees to the commissioner for the preceding calendar year. The assessment rate shall be fixed from time to time by the commissioner but shall not exceed one dollar ($1) per one thousand dollars ($1,000) of money received for transmission in California by the licensee.
(d) The commissioner shall notify each licensee by mail of the amount levied against it. The licensee shall pay the amount levied within 20 days. If payment is not made to the commissioner within that time, the commissioner shall assess and collect, in addition to the annual assessment, a penalty of 5 percent of the assessment for each month or part thereof that the payment is delinquent.
CHAPTER  4. Agents
2060.
 (a) In this section, “remit” means to make direct payments of money to a licensee or its representative authorized to receive money or to deposit money in a bank in an account specified by the licensee.
(b) No licensee shall appoint or continue any person as agent, unless the licensee and the person have made a written contract. A written contract between a licensee and an agent shall require the agent to operate in full compliance with this chapter.
(c) The written contract shall contain each of the following provisions:
(1) That the licensee appoints the person as its agent with authority to conduct money transmission on behalf of the licensee.
(2) That the agent shall make and keep accounts, correspondence, memoranda, papers, books, and other records as the commissioner by regulation or order requires and preserve the records for the time specified by the regulation or order.
(3) That all money or monetary value, less fees due agents provided for and expressly set forth in the written agreement, received by the agent for money transmission on behalf of the licensee shall be trust funds owned by and belonging to the licensee until the time when the money or an equivalent amount are remitted by the agent to the licensee in accordance with this section.
(4) That the money must be remitted in accordance with the provisions of this chapter.
(5) Any other provisions that the commissioner may by regulation or order find to be necessary to carry out the provisions and purposes of this chapter.
(d) An agent shall remit all money owing to the licensee in accordance with the terms of the contract between the licensee and the agent.
(e) An agent of a licensee shall remit any money, less fees, received on behalf of the licensee for money transmission as follows:
(1) Within three business days of receipt.
(2) In case the aggregate face amount of the money, less fees, does not in any calendar week exceed ten thousand dollars ($10,000), within 10 business days of receipt.
(3) Within a period longer than three business days of receipt, if the agent has previously deposited with, and during such period maintains on deposit with, an office of an insured bank or of an insured savings and loan association located in the United States in an account that is in the sole and exclusive name of the licensee an amount that, for each day by which such period exceeds three business days, is not less than the aggregate face amount of money received on behalf of the licensee for money transmission that the agent usually sells per day.
(4) Within such shorter period as the licensee may provide.
(f) An agent may not provide money transmission outside the scope of activity permissible under the contract between the agent and the licensee. All money or monetary value, less fees, received by an agent of a licensee shall, from the time when the money is received by the agent until the time when the money or an equivalent amount is remitted by the agent to the licensee, constitute trust funds owned by and belonging to the licensee.
(g) An agent may not use a subagent to conduct money transmissions on behalf of a licensee.
(h) Each licensee shall exercise reasonable supervision over its agents to ensure compliance with applicable laws, rules, and regulations with respect to money transmission.
(i) No agent of a licensee shall, nor shall any licensee cause or knowingly permit any of its agents to, conduct money transmission on behalf of the licensee without concurrently receiving money, monetary value or its equivalent, credit card, or payment instrument, or a combination of same believed to be valid in an amount not less than the amount of the money transmission being provided. In the case of a sale of payment instruments or stored value to an insured bank, an insured savings and loan association, or an insured credit union, the licensee or agents of the licensee may receive such amounts the next business day after the sale.
(j) If any agent of a licensee shall commingle any money or monetary value, less fees, received on behalf of the licensee for money transmission with any other property owned or controlled by the agent, all such property shall be impressed with a trust in favor of the licensee in an amount equal to the aggregate amount of such money so commingled. No money or monetary value, less fees, received by any agent on behalf of the licensee for money transmission, while held by such agent, nor any property impressed with a trust pursuant to this subdivision, shall be subject to attachment, levy of execution, or sequestration by order of any court, except for the benefit of the licensee.
(k) Each licensee shall be liable as a principal for the money or monetary value from the time when the money or monetary value is received by the agent. Each licensee shall be liable as the maker or drawer on each payment instrument issued or sold by such licensee.
2061.
 (a) No licensee shall appoint any person as an agent unless it has conducted a review of the proposed agent’s fitness to act as an agent and has determined that the proposed agent and any persons who control the proposed agent are of good character and sound financial standing.
(b) A licensee shall maintain records of this review for each agent while the agent is providing money transmission on behalf of the licensee, and for three years after the relationship with the agent has terminated.
2062.
 A person may not provide money transmissions on behalf of a person not licensed or not exempt from licensure under this chapter. A person that engages in that activity provides money transmissions services to the same extent as if the person was a licensee, and shall be jointly and severally liable with the unlicensed or nonexempt person.
2063.
 (a) No agent of a licensee who has actual notice that the commissioner has suspended or revoked the license of the licensee or that the commissioner has issued an order taking possession of the property and business of the licensee shall conduct money transmission on behalf of the licensee.
(b) If any agent of a licensee, after first having actual notice that the commissioner has suspended or revoked the license of the licensee or that the commissioner has issued an order taking possession of the property and business of the licensee, conducts money transmission on behalf of the licensee, the agent shall be jointly and severally liable with the licensee for payment of the money transmission.
CHAPTER  5. Eligible Securities
2081.
 (a) A licensee shall at all times own eligible securities having an aggregate market value computed in accordance with United States generally accepted accounting principles of not less than the aggregate amount of all of its outstanding payment instruments and stored value obligations issued or sold in the United States and all outstanding money received for transmission in the United States.
(b) If the commissioner finds that the financial condition of a licensee is impaired, or that the financial condition of a licensee is such that its business is being conducted in an unsafe and unsound manner, the commissioner, to protect the public interest, may issue an order, subject to the procedures set forth in Section 2148, doing one or both of the following:
(1) Increasing the amount of eligible securities that the licensee must maintain.
(2) Requiring the licensee to obtain, as security for the payment of outstanding money transmission obligations, additional security in the form of financial guarantees.
(c) Eligible securities, even if commingled with other assets of the licensee, are deemed to be held in trust for the benefit of the purchasers and holders of the licensee’s outstanding payment instrument and stored value obligations, and all senders of outstanding money received for transmission, in the event of bankruptcy or receivership of the licensee, or in the event of an action by a creditor against the licensee who is not a beneficiary of this statutory trust. No eligible securities impressed with a trust pursuant to this subdivision shall be subject to attachment, levy of execution, or sequestration by order of any court, except for a beneficiary of this statutory trust.
(d) All outstanding payment instruments and stored value issued or sold by a licensee or its agent, and all outstanding money received for transmission by a licensee or its agent, shall remain a liability of the licensee from the time money or monetary value is received by the licensee or its agent until the licensee receives confirmation that such money or monetary value was received by the beneficiary, or until the outstanding payment instrument or stored value obligation has been paid, or until the money is refunded to the customer.
(e) A licensee shall maintain a record in the United States of proof of receipt by the beneficiary or refund to the customer of money received for transmission.
(a) “Eligible security” means any United States currency eligible security or foreign currency eligible security.
2082.
 (b) For the purposes of this chapter, the following are United States currency eligible securities:
(1) Cash.
(2) Any deposit in an insured bank or an insured savings and loan association or insured credit union.
(3) Any bond, note, or other obligation that is issued or is guaranteed by the United States or any agency of the United States.
(4) Any bond, note, or other obligation that is issued or guaranteed by any state of the United States or by any governmental agency of or within any state of the United States and that is assigned an eligible rating by an eligible securities rating service.
(5) Any bankers acceptance that is eligible for discount by a federal reserve bank.
(6) Any commercial paper that is assigned an eligible rating by an eligible rating securities service.
(7) Any bond, note, or other obligation that is assigned an eligible rating by an eligible securities rating service.
(8) Any share of an investment company that is an open-end management company, that is registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, et seq.), that holds itself out to investors as a money market fund, and that operates in accordance with all provisions of the Investment Company Act of 1940, and the regulations of the Securities and Exchange Commission applicable to money market funds, including Section 270.2a-7 of the regulations of the Securities and Exchange Commission (17 C.F.R. Sec. 270.2a-7).
For purposes of this paragraph and paragraph (9), “investment company,” “management company,” and “open-end” have the meanings set forth in Sections 3, 4, and 5, respectively, of the Investment Company Act of 1940 (15 U.S.C. Secs. 80a-4, and 80a-5, respectively).
(9) Any share of an investment company that is an open-end management company, that is registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), and that invests exclusively in securities that constitute eligible securities that comply with valuation requirements of this chapter.
(10) Any account due to any licensee from any agent in the United States on account of the receipt of money on behalf of the licensee for money transmission by the agent, if the account is current and not past due or otherwise doubtful of collection.
(11) Any other security or class of securities that the commissioner has by regulation or order declared to be eligible securities.
(c) “Foreign currency eligible security” means any of the following that is denominated in a foreign currency:
(1) Cash.
(2) Any deposit in an office of a bank acceptable to the commissioner that is located in a foreign country.
(3) Any other security or class of securities that the commissioner has by regulation or order declared to be eligible securities pursuant to Section 2086.
(d) For the purposes of this chapter, “value” means the following:
(1) When used with respect to an eligible security owned by a licensee of the type described in paragraph (10) of subdivision (b), net carrying value as determined in conformity with United States generally accepted accounting principles. However, in computing the value of the account, any amount that consists of money that has not been remitted to the licensee or refunded within 45 business days of receipt by the agent shall be excluded from the value of the account and shall be excluded from the calculation of eligible securities.
(2) Market value when used with respect to any other eligible security owned by a licensee.
2083.
 (a) In computing for purposes of Section 2082 the aggregate value of eligible securities owned by a licensee, all of the following shall be excluded:
(1) The value of any eligible security if and to the extent that the value of the eligible security, when combined with the aggregate value of all other eligible securities owned by the licensee that are issued or guaranteed by the same person or by any affiliate of the same person by whom the eligible security is issued or guaranteed, exceeds 10 percent of the aggregate value of all eligible securities owned by the licensee.
(2) The portion of the aggregate value of all eligible securities of the type described in paragraph (10) of subdivision (b) of Section 2082 that exceeds 25 percent of the aggregate value of all eligible securities owned by the licensee; and that portion of the aggregate value of agent receivables from any one person that exceeds 10 percent of the aggregate value of all eligible securities owned by the licensee, or any higher percentage that the commissioner may approve for the licensee, up to a maximum of 20 percent.
(3) The portion of the aggregate value of all eligible securities of the type described in paragraph (6) of subdivision (b) of Section 2082 that exceeds 20 percent of the aggregate value of all eligible securities owned by the licensee.
(4) The portion of the aggregate value of all eligible securities of the type described in paragraph (7) of subdivision (b) of Section 2082 that exceeds 20 percent of the aggregate value of all eligible securities owned by the licensee.
(5) The portion of the aggregate value of all eligible securities of the type described in paragraph (8) of subdivision (b) of Section 2082, except for a money market fund that invests exclusively in obligations issued or guaranteed by the United States or any agency of the United States, that exceeds 20 percent of the aggregate value of all eligible securities owned by the licensee.
(6) The portion of the aggregate value of all eligible securities of the type described in paragraphs (6), (7), and (8) of subdivision (b) of Section 2082 that exceeds 50 percent of the aggregate value of all eligible securities owned by the licensee.
(b) Subdivision (a) shall not be deemed to require the exclusion of the value of any of the following eligible securities, and each of the following eligible securities shall be exempted from the limitations of subdivision (a):
(1) The following eligible securities:
(A) Cash.
(B) Any deposit in an insured bank, insured savings and loan association, or insured credit union.
(C) Any bond, note, or other obligation for the payment of which the full faith and credit of the United States are pledged.
(2) Any eligible security that the commissioner, in view of the financial condition of the obligor or issuer and such other factors as may in the opinion of the commissioner be relevant, finds to be of such quality that exclusion of the value of such eligible security pursuant to subdivision (a) is not necessary for the purposes of this chapter and which the commissioner by regulation or order exempts, in whole or in part, from the limitations of subdivision (a).
2084.
 (a) A licensee shall be deemed to own an eligible security only if the following apply:
(1) The licensee owns the eligible security solely and exclusively in its own right, both of record and beneficially.
(2) The eligible security is not subject to any pledge, lien, or security interest.
(3) The licensee can freely negotiate, assign, or otherwise transfer the eligible security.
(b) Notwithstanding subdivision (a), no licensee shall be deemed not to own an eligible security solely on account of any of the following facts, provided that, but for that fact, the licensee would be deemed to own the eligible security under the provisions of subdivision (a):
(1) The fact that the eligible security is owned of record by a documented nominee of the licensee or by a securities depository.
(2) The fact that the licensee has pledged the eligible security with the United States or any state of the United States to secure payment by the licensee of transmission money.
2085.
 If the commissioner finds that any eligible security or class of eligible securities is not of sufficient liquidity or quality to be eligible securities, the commissioner may by regulation or order declare the security or class of securities to be ineligible.
2086.
 If the commissioner finds that any security or class of securities that is not an eligible security is of sufficient liquidity and quality to be an eligible security, the commissioner may by regulation or order declare the security or class of securities to be eligible securities.
2087.
 (a) If the commissioner finds that a rating assigned to a class of securities by an eligible securities rating service indicates that the class of securities is of sufficient quality to be eligible securities, the commissioner may by regulation or order declare the rating to be an eligible rating.
(b) With respect to this chapter “eligible rating” means any rating assigned to such security or class of securities by such eligible securities rating service which the commissioner has by regulation or order declared to be an eligible rating.
2088.
 (a) The commissioner may by regulation or order declare a securities rating service to be an eligible securities rating service if the commissioner finds the following with respect to the securities rating service:
(1) It has been continuously engaged in the business of rating securities for a period of not less than three years.
(2) It is competent to rate securities and is nationally recognized for rating securities in a competent manner.
(3) It publishes its ratings of securities on a nationwide basis.
(b) With respect to this chapter “eligible securities rating service” means any securities rating service that the commissioner by regulation or order declared to be an eligible securities ratings service.
2089.
 A licensee shall maintain eligible securities that are adequately diversified, predominantly of a duration commensurate with the licensee’s outstanding money transmission obligations, and of sufficient liquidity and quality to promptly pay the outstanding money transmission obligations of the licensee.
CHAPTER  6. Consumer Disclosures
2100.
 (a) (1) Each licensee shall file with the commissioner a certified copy of every receipt form used by it or by its agent for receiving money for transmission prior to its first use. No licensee or its agent shall use any receipt, a certified copy of which has not been filed with the commissioner, or use a receipt that the commissioner has deemed not to be in compliance pursuant to paragraph (2).
(2) If the commissioner determines, within 30 business days of the filing date of a receipt, that the receipt does not comply with the requirements of this section or Sections 2102 and 2103, the commissioner shall notify the licensee in writing that the receipt is not in compliance with those requirements.
(b) Notwithstanding subdivision (a), before a new licensee issues its first receipt to a customer, it shall file with the commissioner a certified copy of the receipt forms to be used by it or its agents for receiving money for transmission. The new licensee shall not use the receipt forms until approved by the commissioner. For purposes of this subdivision, a new licensee is a licensee that has not been previously licensed by the commissioner as a money transmitter or has not previously received money for transmission in California.
(c) If a receipt is required by this chapter to be in English and another language, the English version of the receipt shall govern any dispute concerning the terms of the receipt. However, any discrepancies between the English version and any other version due to the translation of the receipt from English to another language including errors or ambiguities shall be construed against the licensee or its agent and the licensee or its agent shall be liable for any damages caused by these discrepancies.
(d) Any licensee violating the requirements of this section shall be subject to a fine of fifty dollars ($50) for each violation. This provision is in addition to any other enforcement provisions that may apply to such a violation.
(e) If any licensee or its agent uses a receipt form, a certified copy of which has not been filed with the commissioner, the licensee shall be liable for the acts of its agent whether or not the licensee authorized the agent to use that form.
(f) The receipt form shall comply with the requirements of Sections 2102 and 2103.
2101.
 Every licensee or its agent shall forward all money received for transmission or give instructions committing equivalent money to the person designated by the customer within 10 days after receiving that money, unless otherwise ordered by his or her customer.
2102.
 (a) Every licensee or its agent shall refund to the customer within 10 days of receipt of the customer’s written request for a refund any and all money received for transmission unless any of the following occurs:
(1) The money has been forwarded within 10 days of the date of receipt.
(2) Instructions have been given committing an equivalent amount of money to the person designated by the customer within 10 days of the date of the receipt of the money from the customer.
(3) The customer instructs the licensee to transmit the money at a time beyond 10 days. If the customer gives instructions as to when the money shall be forwarded or transmitted and the moneys have not yet been forwarded or transmitted, the licensee or its agent shall refund the customer’s money within 10 days of receipt of the customer’s written request for a refund.
(4) Refund would violate law.
(b) In the case of money received for transmission, a receipt shall be provided by a licensee or its agent to all customers which shall be made available to the customer in English and in the language principally used by that licensee or that agent to advertise, solicit, or negotiate, either orally or in writing, at that branch office if other than English. The receipt shall either include or have attached a conspicuous statement in English and in the language principally used by the licensee or that agent to advertise, solicit, or negotiate, either orally or in writing at that branch office if other than English in a size equal to at least 10 point bold type, as follows:
RIGHT TO REFUND
“You, the customer, are entitled to a refund of the money to be transmitted as the result of this agreement if _____ (name of licensee) does not forward the money received from you within 10 days of the date of its receipt, or does not give instructions committing an equivalent amount of money to the person designated by you within 10 days of the date of the receipt of the funds from you unless otherwise instructed by you.
If your instructions as to when the moneys shall be forwarded or transmitted are not complied with and the money has not yet been forwarded or transmitted, you have a right to a refund of your money.
If you want a refund, you must mail or deliver your written request to _____ (name of licensee) at _____ (mailing address of licensee). If you do not receive your refund, you may be entitled to your money back plus a penalty of up to $1,000 and attorney’s fees pursuant to Section 2102 of the California Financial Code.”
(c) A cause of action under this section may be brought in small claims court if it does not exceed the jurisdiction of that court, or in any other appropriate court. The customer shall be entitled to recover each of the following:
(1) Any and all money received for transmission, plus any fees and charges paid by the customer.
(2) A penalty in an amount not to exceed one thousand dollars ($1,000). The court shall award the prevailing party costs and attorney’s fees.
2103.
 (a) The receipt presented to each customer for money received for transmission pursuant to subdivision (b) of Section 2102 shall clearly state the rate of exchange for the particular transaction, if any, the amount of commission or fees, and the net exchange after all fees and commissions have been deducted. The receipt shall also state the total amount of money presented by the customer and the total amount to be delivered to the beneficiary designated by the customer. These disclosures shall be in English and in the same language as that principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate, either orally or in writing, at that branch office if other than English.
(b) If window and exterior signs concerning the rates of exchange for money received for transmission are used, they shall clearly state in English and in the same language principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate, either orally or in writing, at that branch office if other than English, the rate of exchange for exchanging the currency of the United States for foreign currency. If an interior sign or any advertising is used that quotes exchange rates, it shall, in addition to clearly stating the rates of exchange for exchanging the currency of the United States for foreign currency, also state all commissions and fees charged on all such transactions.
(c) At each branch office, there shall be disclosed the exchange rates, fees, and commissions charged in English and in the same language principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate, either orally or in writing, with respect to money received for transmission at that branch office. At each branch office, there shall be signage clearly identifying the name of the licensee as well as any trade names used by the licensee at that branch office.
(d) If the customer does not specify at the time the money is presented to the licensee or its agent the country to which the money is to be transmitted, the rate of exchange for the transaction is not required to be set forth on the receipt. If the customer does specify at the time the money is presented to the licensee or its agent the country to which the money is to be transmitted but the specified country’s laws require the rate of exchange for the transaction to be determined at the time the transaction is paid out to the intended recipient, the rate of exchange for the transaction is not required to be set forth on the receipt.
2104.
 Each licensee or agent shall prominently post on the premises of each branch office that issues or sells payment instruments, and at machines located in this state and operated by the licensee or agent that issues or sells payment instruments, a notice clearly stating that payment instruments are not insured by the federal government, the state government, or any other public or private entity. This notice shall be printed in English and in the same language principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate, either orally or in writing, with respect to the purchase of payment instruments. The information required in this notice shall be clear, legible, and in letters not less than one-half inch in height. The notice shall be posted in a conspicuous location in the unobstructed view of the public within the premises. The licensee shall provide to each of its agents the notice required by this section. In those locations operated by an agent, the agent, not the licensee, shall be responsible for the failure to properly post the required notice.
2105.
 (a) Each licensee or agent shall prominently post on the premises of each branch office that conducts money transmission a notice stating that:
“If you have complaints with respect to any aspect of the money transmission activities conducted at this location, you may contact the California Department of Financial Institutions at its toll-free telephone number, 1-800-622-0620, by e-mail at consumer.complaint@dfi.ca.gov, or by mail at Department of Financial Institutions, Consumer Services, 1810 13th Street, Sacramento, CA 95811.”
(b) The commissioner may by order or regulation modify the content of the notice required by this section. This notice shall be printed in English and in the same language principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate either orally or in writing, with respect to money transmission at that branch office. The information required in this notice shall be clear, legible, and in letters not less than one-half inch in height. The notice shall be posted in a conspicuous location in the unobstructed view of the public within the premises. The licensee shall provide to each of its agents the notice required by this section. In those locations operated by an agent, the agent, and not the licensee, shall be responsible for the failure to properly post the required notice.
2106.
 (a) No licensee shall sell or issue any form of payment instrument in California unless a certified copy of the payment instrument has first been filed with the commissioner. The payment instrument shall clearly identify the licensee as the issuer.
(b) The commissioner may by order or regulation declare that a form of payment instrument is prohibited if it is misleading in any material respect or otherwise does not comply with applicable law.
(c) A payment instrument that identifies the agent through which the licensee sells the payment instrument shall identify the agent as such and shall identify the licensee at least as conspicuously as it does the agent.
CHAPTER  7. Examinations, Special Reports, and Records
2120.
 (a) The commissioner may at any time and from time to time examine the business and any office, within or outside this state, of any licensee or any agent of a licensee in order to ascertain whether that business is being conducted in a lawful manner and whether all money transmission is properly accounted for.
(b) The directors, officers, and employees of any licensee or agent of a licensee being examined by the commissioner shall exhibit to the commissioner, on request, any or all of the licensee’s accounts, books, correspondence, memoranda, papers, and other records and shall otherwise facilitate the examination so far as it may be in their power to do so.
2121.
 The commissioner may consult and cooperate with other state or federal money transmission regulators in enforcing and administering this chapter. They may jointly pursue examinations and take other official action that they are otherwise empowered to take.
2122.
 A licensee shall file a report with the commissioner within five business days after the licensee has reason to know of the occurrence any of the following events:
(a) The filing of a petition by or against the licensee under the United States Bankruptcy Code (11 U.S.C. Secs. 101-110, incl.) for bankruptcy or reorganization.
(b) The filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors.
(c) The commencement of a proceeding to revoke or suspend its license in a state or country in which the licensee engages in business or is licensed.
(d) The cancellation or other impairment of the licensee’s bond or other security.
(e) A charge or conviction of the licensee or of an executive officer, manager, director, or person in control of the licensee for a felony.
(f) A charge or conviction of an agent for a felony.
2123.
 A licensee that is a money services business under the regulations adopted pursuant to the United States Bank Secrecy Act (31 C.F.R. Part 103) and the agents of the licensee that are money services businesses shall comply with those regulations.
2124.
 (a) A licensee shall maintain the following records for determining its compliance with this chapter for at least three years:
(1) A record of each payment instrument or stored value obligation sold.
(2) A general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts.
(3) Bank statements and bank reconciliation records.
(4) Records of outstanding payment instruments and stored value obligations.
(5) Records of each payment instrument and stored-value obligation paid within the three-year period.
(6) A list of the last known names and addresses of all of the licensee’s agents and their branch offices.
(7) Any other records the commissioner reasonably requires by order or regulation.
(b) A licensee or its agent shall maintain records of any receipts provided pursuant to Section 2102 for six months or a longer period of time specified in the contract between the licensee and its agent.
(c) The items specified in subdivisions (a) and (b) may be maintained in any form of record.
(d) Records may be maintained outside this state if they are made available to the commissioner on seven days’ notice that is sent in a record.
(e) If records not required to be maintained in English pursuant to Section 456 are in a language other than English, the licensee shall provide records translated into English within seven days’ notice that is sent in a record.
CHAPTER  8. Additional Enforcement Provisions
2148.
 (a) If it appears to the commissioner that a licensee is violating or failing to comply with any law of this state, the commissioner may direct the licensee to comply with the law by an order issued under the commissioner’s official seal, or if it appears to the commissioner that any licensee is conducting its business in an unsafe or injurious manner, the commissioner may in like manner direct it to discontinue the unsafe or injurious practices. The order shall require the licensee to show cause before the commissioner, at a time and place to be fixed by the commissioner, as to why the order should not be observed.
(b) If, upon any hearing held pursuant to subdivision (a), the commissioner finds that the licensee is violating or failing to comply with any law of this state or is conducting its business in an unsafe or injurious manner, the commissioner may make a final order directing it to comply with the law or to discontinue the unsafe or injurious practices. A licensee shall comply with the final order unless, within 10 days after the issuance of the order, its enforcement is restrained in a proceeding brought by the licensee.
2149.
 (a) The commissioner may issue an order suspending or revoking a license, or taking possession of and placing a licensee in receivership, if after notice and an opportunity for hearing, the commissioner finds that:
(1) The licensee is violating this chapter or a regulation adopted or an order issued under this chapter, or a condition of approval issued under this chapter.
(2) The licensee does not cooperate with an examination or investigation by the commissioner.
(3) The licensee engages in fraud, intentional misrepresentation, or gross negligence.
(4) The competence, experience, character, or general fitness of the licensee, or any director, officer, employee, or person in control of a licensee, indicates that it is not in the public interest to permit the person to provide money transmission services.
(5) The licensee engages in an unsafe or unsound practice.
(6) The licensee is insolvent, suspends payment of its obligations, or makes a general assignment for the benefit of its creditors.
(7) The licensee does not remove an agent after the commissioner issues and serves upon the licensee a final order including a finding that the agent has violated this chapter.
(8) The licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under any bankruptcy, reorganization, insolvency, or moratorium law, or any person has applied for any such relief under that law against the licensee and the licensee has by any affirmative act approved of or consented to the action or the relief has been granted.
(9) Any fact or condition exists that, if it had existed at the time when the licensee applied for its license, would have been grounds for denying the application.
(b) In determining whether a licensee is engaging in an unsafe or unsound practice, the commissioner may consider the size and condition of the licensee’s provision of money transmission services, the magnitude of the loss, the gravity of the violation of this chapter, and the previous conduct of the person involved.
2150.
 (a) The commissioner may issue an order suspending or revoking the designation of an agent if, after notice and an opportunity for hearing, the commissioner finds that:
(1) The agent violated this chapter or a regulation adopted or an order issued under this chapter.
(2) The agent did not cooperate with an examination or investigation by the commissioner.
(3) The agent engaged in fraud, intentional misrepresentation, or gross negligence.
(4) The agent is convicted of a violation of a state or federal anti-money laundering statute.
(5) The competence, experience, character, or general fitness of the agent, or any director, officer, employee, or person in control of the agent, indicates that it is not in the public interest to permit the agent to provide money transmissions.
(6) The agent is engaging in an unsafe or unsound practice.
(7) The agent has made or caused to be made in any application or report filed with the commissioner or in any proceeding before the commissioner, any statement that was at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, or has omitted to state in any of those applications, reports, or proceedings any material fact which is required to be stated therein.
(8) The agent is an agent of a licensee who, because of its operations and financial condition, is not competent to supervise and monitor the agent.
(9) The agent will not comply with all applicable provisions of this chapter and of any regulation or order issued under this chapter.
(b) In determining whether an agent is engaging in an unsafe or unsound practice, the commissioner may consider the size and condition of the agent’s provision of money transmission services, the magnitude of the loss, the gravity of the violation of this chapter or a rule adopted or order issued under this chapter, and the previous conduct of the agent.
(c) No licensee shall appoint as an agent any person with respect to whom an order issued under this section is in effect.
(d) No person with respect to whom an order issued under this section is in effect shall become or continue to be an agent of any licensee.
(e) If applicable, the commissioner may disclose to the licensee criminal history information upon which an order is based.
2150.1.
 (a) Every order, decision, or other official act of the commissioner is subject to review in accordance with law.
(b) Whenever the commissioner has taken possession of the property and business of any licensee, the licensee, within 10 days after that taking, if it deems itself aggrieved thereby, may apply to the superior court in the county in which the head office of the licensee is located to enjoin further proceedings. The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing and a determination of the facts upon the merits, may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to the licensee.
2150.2.
 (a) If the commissioner finds that any of the factors set forth in Section 2149 is true with respect to any licensee and that it is necessary for the protection of the public interest, the commissioner may issue an order immediately suspending or revoking the licensee’s license.
(b) Within 30 days after the license is suspended or revoked pursuant to subdivision (a), the licensee may file with the commissioner an application for a hearing on the suspension or revocation.
(c) If the commissioner fails to commence a hearing within 15 business days after the application is filed with the commissioner pursuant to subdivision (b) or within a longer period of time agreed to by the licensee, the suspension or revocation shall be deemed rescinded.
(d) Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the suspension or revocation. Otherwise, the suspension or revocation shall be deemed rescinded.
(e) The right of the licensee to petition for judicial review of the suspension or revocation shall not be affected by the failure of the licensee to apply to the commissioner for a hearing on the suspension or revocation pursuant to subdivision (b).
2151.
 (a) If the commissioner finds that any of the factors set forth in Section 2150 is true with respect to any agent and that it is necessary for the protection of the public interest, the commissioner may issue an order immediately suspending or barring that agent from continuing to be or becoming an agent of any licensee during the period for which that order is in effect.
(b) Within 30 days after an order is issued pursuant to subdivision (a), the licensee or the agent or former agent with respect to whom the order was issued may file with the commissioner an application for a hearing on the order.
(c) If the commissioner fails to commence a hearing within 20 business days after the application is filed with the commissioner pursuant to subdivision (b) or within a longer period of time agreed to by the parties, the suspension or revocation shall be deemed rescinded.
(d) Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the order.
(e) The right of the licensee or agent or former agent to petition for judicial review of the order shall not be affected by the failure of that person to apply to the commissioner for a hearing on the order pursuant to subdivision (b).
2151.1.
 The commissioner may assess a civil penalty against a person that violates this chapter or a regulation adopted or an order issued under this chapter in an amount not to exceed one thousand dollars ($1,000) for each violation or, in the case of a continuing violation, one thousand dollars ($1,000) for each day or part thereof during which the violation continues, plus this state’s costs and expenses for the investigation and prosecution of the matter, including reasonable attorney’s fees.
2152.
 (a) A person that intentionally makes a false statement, misrepresentation, or false certification in a record filed or required to be maintained under this chapter or that intentionally makes a false entry or omits a material entry in such a record is guilty of a felony.
(b) A person that knowingly engages in an activity for which a license is required under this chapter without being licensed or exempt from licensure under this chapter is guilty of a felony.
(c) Nothing in this chapter limits the power of the state to punish any person for any act that constitutes a crime under any statute.
2153.
 The enforcement provisions of this chapter are in addition to any other enforcement powers that the commissioner may have under law.
CHAPTER  9. Miscellaneous Provisions
2170.
 Any licensee may surrender its license by filing with the commissioner the license and a report with any information as the commissioner requires. The voluntary surrender of the license shall become effective at the time and upon the conditions as the commissioner specifies by order.
2171.
 If any provision of this chapter or the application thereof to any person or circumstances is held invalid, illegal, or unenforceable, that invalidity, illegality, or unenforceability shall not affect other provisions or applications of this chapter that can be given effect without the invalid, illegal, or unenforceable provision or application, and to this end, the provisions of this chapter are declared to be severable.
2172.
 (a) A license issued under the former Chapter 14 (commencing with Section 1800), Chapter 14A (commencing with Section 1851), or the former Division 16 (commencing with Section 33000) that is in effect immediately before January 1, 2011, shall remain in effect as a valid license under this chapter.
(b) Any person that, prior to January 1, 2011, was not required to obtain a license under the former Chapter 14 (commencing with Section 1800), Chapter 14A (commencing with Section 1851), or Division 16 (commencing with Section 33000), but is required to have a license under this chapter, shall file an application for a license pursuant to this chapter by July 1, 2011, in order to continue conducting money transmission in this state directly or through agents. If the application is timely filed and pending with the commissioner, that person may continue to conduct money transmission in this state, until the application has been approved, abandoned, or denied.

SEC. 5.

 The heading of Division 1.1 (commencing with Section 4000) of the Financial Code is amended and renumbered to read:

DIVISION 1.3. THE SETTING OF FEES IN CONSUMER CREDIT AGREEMENTS AND RELATED CONSUMER PROTECTIONS

SEC. 6.

 The heading of Division 1.2 (commencing with Section 4050) of the Financial Code is amended and renumbered to read:

DIVISION 1.4. CALIFORNIA FINANCIAL INFORMATION PRIVACY ACT

SEC. 7.

 The heading of Division 1.3 (commencing with Section 4100) of the Financial Code is amended and renumbered to read:

DIVISION 1.5. FINANCIAL INSTITUTIONS

SEC. 8.

 The heading of Division 1.5 (commencing with Section 4800) of the Financial Code is amended and renumbered to read:

DIVISION 1.6. DEPOSITORY CORPORATIONS—SALE, MERGER, AND CONVERSION

SEC. 9.

 The heading of Division 1.6 (commencing with Section 4970) of the Financial Code is amended and renumbered to read:

DIVISION 1.7. Covered Loans

SEC. 10.

 The heading of Division 1.7 (commencing with Section 4981) of the Financial Code is amended and renumbered to read:

DIVISION 1.8. SECURITIES SALES

SEC. 11.

 The heading of Division 1.8 (commencing with Section 4990) of the Financial Code is amended and renumbered to read:

DIVISION 1.9. PERSONS CONNECTED WITH FINANCIAL INSTITUTIONS

SEC. 12.

 The heading of Division 1.9 (commencing with Section 4995) of the Financial Code is amended and renumbered to read:

DIVISION 1.10. HIGHER-PRICED MORTGAGE LOANS

SEC. 13.

 Section 1861 is added to the Financial Code, to read:

1861.
 It shall be unlawful for any director, officer, agent, or employee of any corporation to use or to conspire to use the credit, the funds, or the power of the corporation to fix or control the price of any commodities, and any person violating this section shall be punished by a fine of not less than two thousand dollars ($2,000) nor more than ten thousand dollars ($10,000), imprisonment in a county jail for not more than one year, imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code, or by both that fine and imprisonment, in the discretion of the court.

SEC. 14.

 Section 1881 is added to the Financial Code, to read:

1881.
 Whoever being connected in any capacity with any corporation represents in any way that the State of California is liable for the payment of any bond or other obligation, or the interest thereon, issued or incurred by any corporation, or that the State of California incurs any liability in respect of any act or omission of the corporation, shall be punished by a fine of not more than ten thousand dollars ($10,000) and by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code.

SEC. 15.

 Section 14315 of the Financial Code is amended to read:

14315.
 (a) On taking possession of the business and assets of any credit union as provided in this chapter, the commissioner may proceed to liquidate the credit union in the manner provided by Chapter 7 (commencing with Section 600) of Division 1, and the provisions of that chapter, except Sections 700, 701, 702, and 710, shall apply as if the California credit union were a California state commercial bank, or he or she may appoint a liquidating agent or a liquidating committee of three members of the credit union to liquidate the business and assets of the credit union in the manner provided in Article 2 (commencing with Section 15250) of Chapter 9, except that in lieu of the certificate required under Section 15252 the commissioner shall prepare and file in the office of the Secretary of State a certificate of commencement of liquidation proceedings upon taking possession of the business and assets, and the commissioner or his authorized deputy shall countersign the certificate referred to in Sections 15257 and 15258 whenever liquidation is involuntary. The commissioner may, however, prepare and file a final certificate whenever he or she retains possession of the assets of any credit union for the purpose of liquidation. The liquidating agent need not be a member of the credit union to be liquidated, and may be a person, firm, or corporation as determined by the commissioner.
(b) If the commissioner takes possession of the property and business of a California credit union pursuant to Section 14313, the commissioner may tender to the National Credit Union Administration an appointment as conservator or receiver of the California credit union. If the National Credit Union Administration accepts the appointment, the National Credit Union Administration shall have, in addition to any powers conferred by federal law, the powers conferred on the commissioner pursuant to subdivision (a).

SEC. 16.

 Section 14652 of the Financial Code is amended to read:

14652.
 Every credit union may invest in securities and other assets described in Chapter 10 (commencing with Section 800) of Division 1 as legal investments for nonbank licensees.
SEC. 17.
 (a) It is the intent of the Legislature to provide licensees under Division 1.2 (commencing with Section 2000) of the Financial Code, as added by Section 4 of this bill, which recasts the provisions of Chapter 14 (commencing with Section 1800) of Division 1 of the Financial Code, as added by Section 2 of Chapter 612 of the Statutes of 2010, adequate time to update receipts, notices, disclosures, and postings to conform to the provisions of this bill.
(b) A licensee under Division 1.2 (commencing with Section 2000) of the Financial Code, as added by Section 4 of this bill, shall, by July 1, 2012, update all receipts, notices, disclosures, and postings, as set forth in that division, to conform to the provisions of this bill.
SEC. 18.
 Sections 13 and 14 of this bill add Sections 1861 and 1881 to the Financial Code. The language in those sections is identical to the language proposed by Sections 98 and 99 of AB 109, which has been chaptered but is not operative. Sections 13 and 14 of this bill shall become operative only if (1) this bill is enacted and becomes effective on or before January 1, 2012, (2) this bill adds Sections 1861 and 1881 to the Financial Code with language identical to Sections 98 and 99 of AB 109, and (3) AB 109 becomes operative, in which case Sections 1861 and 1881 of the Financial Code, as added by Section 3 of this bill, shall remain operative only until the operative date of AB 109, at which time Sections 13 and 14 of this bill shall become operative.