13-04.1 Money Brokers - North Dakota Statutes

Download pdf

Loading PDF...

CHAPTER 13-04.1MONEY BROKERS13-04.1-01.Administration.The department of financial institutions shall use itsfacilities to administer and enforce this chapter. Any person or persons delegated to administer
this chapter may not have financial interests directly or indirectly in any business which is subject
to this chapter. The department has the power to promulgate rules and regulations having the
force and effect of law, reasonably necessary to carry out the provisions of this chapter, in
accordance with chapter 28-32. Any hearing held and any orders issued pursuant to this chapter
must be in accordance with chapter 28-32. In addition to those powers set forth in chapter 28-32,
the department has additional powers as set forth in this chapter.13-04.1-01.1. Definitions. As used in this chapter, unless the context or subject matterotherwise requires:1."Borrower" means a person or entity that seeks out, or is solicited by a money broker
for the purpose of money brokering.2."Commissioner" means the commissioner of financial institutions.3."Money broker" means a person or entity who, in the ordinary course of business,
engages in money brokering.4."Money brokering" means the act of arranging or providing loans or leases as a form
of financing, or advertising or soliciting either in print, by letter, in person, or
otherwise, the right to find lenders or provide loans or leases for persons or
businesses desirous of obtaining funds for any purposes.13-04.1-02. Money broker license required. Except as otherwise provided, a personother than a money broker licensed and authorized under this chapter may not engage in money
brokering in the state of North Dakota without a money broker license issued by the
commissioner. A person engages in money brokering in North Dakota if the borrower resides in
North Dakota.13-04.1-02.1. Entities exempted from licensing requirements. This chapter does notapply to:1.Banks;2.Credit unions;3.Savings and loan associations;4.Insurance companies;5.Individuals licensed under chapter 13-10;6.State or federal agencies and their employees;7.Institutions chartered by the farm credit administration;8.Trust companies;9.Any other person or business regulated and licensed by the state of North Dakota;10.A real estate broker, broker, or a real estate salesperson as defined in section
43-23-06.1 in the brokering of loans to assist a person in obtaining financing for real
estate sold by the real estate broker, broker, or real estate salesperson; orPage No. 111.Any person, retail seller, or manufacturer providing lease financing for its own
property or inventory held as a normal course of business, or to leases on any real
property.13-04.1-03.Application for money broker license. Every application for a moneybroker license, or for a renewal thereof, must be made upon forms designed and furnished by the
department of financial institutions and must contain any information which the department shall
deem necessary and proper. The department may further require any application to provide
additional information which is not requested on the application form.The applicant mustregister with the North Dakota secretary of state if so required.13-04.1-04. Fee and bond to accompany application for money broker license. Theapplication for license must be in writing, under oath, and in the form prescribed by the
commissioner. The application must give the location where the business is to be conducted and
must contain any further information the commissioner requires, including the names and
addresses of the partners, officers, directors, trustees, and the principal owners or members, as
will provide the basis for the investigation and findings contemplated by section 13-04.1-03. At
the time of making such application, the applicant shall include payment in the sum of four
hundred dollars, which is not subject to refund, as a fee for investigating the application, and the
sum of four hundred dollars for the annual license fee, and provide a surety bond in the sum of
twenty-five thousand dollars. In addition, the applicant must pay a fifty dollar annual fee for each
branch location within the state. Fees must be deposited in the financial institutions regulatory
fund.13-04.1-05. Expiration and renewal of license. All licenses required herein expire onDecember thirty-first of each year and may be renewed. Renewals are effective the succeeding
January first. Applications for renewal must be submitted thirty days before the expiration of the
license and must be accompanied by the required annual fees, which are not subject to refund.
The form and content of renewal applications must be determined by the department of financial
institutions, and a renewal application may be denied upon the same grounds as would justify
denial of an initial application. When a licensee has been delinquent in renewing the licensee's
license, the department may charge an additional fee of fifty dollars for the renewal of such
license. A money broker license is not transferable. If the commissioner determines that an
ownership change has occurred in a sole proprietorship, partnership, limited liability partnership,
corporation, or limited liability corporation that was previously granted a money broker license,
the commissioner may require a new application from the purchaser. The application must be
filed within forty-five days from the date change of ownership is consummated. The department
shall act on the application within sixty days from the date the application is received but may
extend the review period for good cause. The money broker license granted to the previous
owner continues in effect to the new purchaser until the application is either granted or denied.13-04.1-05.1. Automatic six-month extension of license during 2009 calendar year.All current licensees who have made payment of a fee in accordance with section 13-04.1-04 or
13-04.1-05, for a money broker license effective after July 1, 2008, shall be granted an extension
of their current licenses until December 31, 2009. If at any time prior to December 31, 2009, a
licensee's license expires or otherwise terminates under this chapter, the applicant shall be
required to pay licensing fees in accordance with section 13-04.1-04, and that license will expire
on December 31, 2009.13-04.1-06. Powers of the department of financial institutions. Insofar as consistentwith the provisions of law, the department of financial institutions has the power to:1.Determine the qualifications of all applicants based on financial responsibility,
financial condition, business experience, character, and general fitness which must
reasonably warrant the belief that the applicant's business will be conducted lawfully
and fairly. In determining whether this qualification is met, and for the purpose of
investigating compliance with the chapter, the commissioner may review and
consider the relevant business records and capital adequacy of the applicant and thePage No. 2competence, experience, integrity, and financial ability of a person who is a member,
partner, director, officer, or twenty-five percent or more shareholder of the applicant.2.Establish codes of ethical conduct for licensees.13-04.1-07. Manner in which records to be kept. Every money broker licensed underthis chapter shall keep a record of all sums collected by them and of all loans and leases
completed as a result of their efforts for a period of six years from the date of last entry thereon.
The records of a licensee may be maintained electronically provided they can be reproduced
upon request by the department of financial institutions and within the required statutory time
period provided in this section.13-04.1-08. Revocation of license - Suspension of license - Surrender of license.1.The department of financial institutions may, if it has reason to believe that grounds
for revocation of a license exist, send by registered or certified mail to the licensee, a
notice of hearing stating the contemplated action and in general the grounds thereof
and setting the time and place for a hearing thereon. Such hearing must be held in
accordance with chapter 28-32 as must any appeal therefrom.2.If the department of financial institutions finds that probable cause for revocation of
any license exists and that enforcement of the chapter requires immediate
suspension of such license pending investigation, it may, upon written notice, enter
an order suspending such license for a period not exceeding thirty days, pending the
holding of a hearing as prescribed in this chapter.3.Any licensee may surrender the licensee's license by delivering it to the department
of financial institutions with written notice of its surrender, but such surrender does
not affect the licensee's civil or criminal liability for acts committed prior thereto.13-04.1-08.1. Suspension and removal of money broker officers and employees.1.The commissioner of financial institutions may issue and serve upon a money broker
officer or employee and upon the licensee involved a complaint stating the basis for
the commissioner's belief that the officer or employee is willfully engaging or has
willfully engaged in any of the following conduct:a.Violating a law, rule, order, or written agreement with the commissioner;b.Engaging in harassment or abuse, the making of false or misleading
representations, or engaging in unfair practices involving lending activity; orc.Performing an act of commission or omission or practice which is a breach of
trust or a breach of fiduciary duty.2.The complaint must contain a notice of opportunity for hearing pursuant to chapter
28-32.3.If a hearing is not requested within twenty days of the date the complaint is served
upon the officer or employee, or if a hearing is held and the commissioner finds that
the record so warrants, the commissioner may enter an order suspending or
temporarily removing the employee or officer from office for a period not exceeding
three years from the effective date of the suspension or temporary removal.4.A contested or default suspension or temporary removal order is effective
immediately upon service of the order on the officer or employee and upon the
licensee. A consent order is effective as agreed. An officer or employee suspended
or temporarily removed from office pursuant to this section is not eligible, while
under suspension, for reinstatement to a position within a licensed money broker.Page No. 35.When an officer or employee, or other person participating in the conduct of the
affairs of a licensee is charged with a felony in state or federal court which involves
dishonesty or breach of trust, the commissioner may immediately suspend the
person from office or prohibit the person from further participation in the affairs of the
money broker, or both. The order is effective immediately upon service of the order
on the licensee and the person charged and remains in effect until the criminal
charge is finally disposed of or until modified by the commissioner. If a judgment of
conviction, federal pretrial diversion, or similar state order or judgment is entered,
the commissioner may order that the suspension or prohibition be made permanent.
A finding of not guilty or other disposition of the charge does not preclude the
commissioner from pursuing administrative or civil remedies.6.Under this section, a person engages in conduct "willfully" if the person acted
intentionally in the sense that the person was aware of what the person was doing.13-04.1-09. Fraudulent practices. It is a fraudulent practice and it is unlawful:1.For any person knowingly to subscribe to, or make or cause to be made, any
material false statement or representation in any application or other document or
statement required to be filed under any provision of this chapter, or to omit to state
any material statement or fact necessary in order to make the statements made, in
light of the circumstances under which they are made, not misleading.2.For any person, in connection with the procurement or promise of procurement of
any lender or loan funds, directly or indirectly, to employ any device, scheme, or
artifice to defraud.3.For any person, in connection with the procurement or promise of procurement of
any lender or loan funds, directly or indirectly, to make any untrue statement of a
material fact or to omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they are made, not
misleading.13-04.1-09.1. Advance fees prohibited - Exception. A money broker may not take anytype of fee in advance before the funding of the loan or lease, unless the money broker is
licensed under this chapter.13-04.1-09.2. Maximum charges permitted for loans not in excess of one thousanddollars - Refund - Installment payments - Permitted charges.1.Every licensee may make loans under this section in any amount not exceeding one
thousand dollars and may contract for, receive, or collect on the loans, charges not
in excess of two and one-half percent per month on that part of the unpaid balance
of principal not exceeding two hundred fifty dollars; two percent per month on that
part of the unpaid balance of principal exceeding two hundred fifty dollars but not
exceeding five hundred dollars; one and three-fourths percent per month on that part
of the unpaid balance of principal in excess of five hundred dollars but not exceeding
seven hundred fifty dollars; and one and one-half percent per month on that part of
the unpaid balance of principal exceeding seven hundred fifty dollars but not
exceeding one thousand dollars.For the purpose of computing charges for afraction of a month, whether at the maximum rate or less, a day is considered
one-thirtieth of a month. Amounts to be charged for any small loan by a licensee
under this chapter may also be calculated and charged on a stated dollar per
hundred basis but the charges over the entire term of the loan may not be in excess
of the equivalent percentage charges on the monthly unpaid balances of principal
authorized in this section. If charges are calculated and charged on a dollar per
hundred basis, the loan must be repayable in substantially equal periodic
installments of principal and charges and the annual percentage simple interestPage No. 4equivalent must be conspicuously stated in the note or small loan contract executed
in connection with the loan.2.When any note or loan contract in which charges have been calculated and charged
on a dollar per hundred basis is paid in full by cash, a new loan, renewal, or
otherwise, one month or more before the final installment date, the licensee shall
refund or credit to the borrower a portion of the total charges which must be at least
as great as the sum of the full periodic installment balances scheduled to follow the
installment date following the date of prepayment in full bears to the sum of all the
periodic installment balances of the loan contract, both sums to be determined
according to the payment schedules that had been agreed upon in the loan contract.
Charges during the month of payment must be prorated in the proportion that the
number of days remaining in the installment period bears to the total days of the
installment period. No refund of one dollar or less need be made.3.On any note or loan contract in which charges have been calculated and charged on
a dollar per hundred basis, a licensee may charge, collect, and receive on any
installment of principal and charges continuing unpaid for five or more days from the
date the payment is due a sum that may not exceed the amount of charges during
the final full month of the loan before maturity. The charge may not be collected
more than once for the same default. The charge may be collected at the time of
the default or any time thereafter.However, if the charge is taken out of anypayment received after a default occurs and if the deduction results in the default of
a subsequent installment, no charge may be made for the subsequent default.4.On any note or loan contract in which charges have been calculated and charged on
a dollar per hundred basis, if the payment date for any scheduled installment is
deferred one or more full months and a corresponding deferment is made for all
subsequent installments, the licensee may charge and receive a deferment charge
that may not exceed one-twelfth of the charges authorized in subsection 1 applied to
the balance of principal and charges due at the date of the deferment multiplied by
the number of full months during the deferment in which no payment is made.
Thereafter, charges must be made over the remaining extended life of the loan in
the same manner and at the same ratio as though no deferral or extension had been
granted. The charges may be collected at the time of the deferment or any later
time.If the loan is prepaid in full during the deferment period, the borrower isentitled to receive in addition to the refund required under subsection 2 a refund of
that portion of the deferment charge applicable to any unexpired months of the
deferment period.5.A licensee may not enter into any contract of loan under this section under which the
borrower agrees to make any scheduled payment of principal and charges more
than twenty-four and one-half calendar months from the date of making the contract.
Every loan contract must require payment of principal and charges in installments
that must be payable at approximately equal periodic intervals, except that payment
dates may be omitted to accommodate borrowers with seasonal incomes.Noinstallment contracted for may be substantially larger than any preceding
installment.When a loan contract provides for monthly installments, the firstinstallment may be payable at any time within forty-five days after the date of the
loan.6.A licensee may not induce or permit any person, or husband and wife, jointly or
severally, to be obligated, directly or indirectly, under more than one contract of loan
at the same time if the multiple loans result in a higher rate of charge than would
otherwise be permitted by this chapter.7.No further amount in addition to the charges provided for in this chapter may be
directly or indirectly charged, contracted for, or received. However, this restriction
does not apply to court costs, lawful fees for the filing, recording, or releasing in anyPage No. 5public office of any instrument securing a loan, and the identifiable charge or
premium for insurance provided for by rule. If any sum in excess of the amounts
authorized by this chapter is willfully charged, contracted for, or received, the
licensee or any assignee or other person has no right to collect or receive any
charges or recompense.13-04.1-10.Orders and injunctions.Whenever it appears to the department offinancial institutions either upon complaint or otherwise, that any person has engaged in, is
engaging in, or is about to engage in any act or practice or transaction which is prohibited by this
chapter, or by any order of the department issued pursuant to any section of this chapter or
which is declared to be illegal in this chapter, the department may, in its discretion:1.Issue any order, including cease and desist, stop, and suspension orders, which it
deems necessary or appropriate in the public interest or for the protection of the
public; provided, however, that any person aggrieved by an order issued pursuant to
this subsection may request a hearing before the department if such request is
made within ten days after receipt of the order.Such hearing must be held inaccordance with chapter 28-32 as must any appeal therefrom.2.Apply to the district court of any county in this state for an injunction restraining such
person and the agents, employees, partners, officers, and directors of such person
from continuing such act, practice, or transaction of engaging therein or doing any
acts in furtherance thereof, and for such other and further relief as the facts may
warrant. In any proceeding for an injunction, the department may apply for and on
due showing be entitled to have issued the court's subpoena requiring the
appearance forthwith of any defendants and their agents, employees, partners,
officers, or directors, and the production of such documents, books, and records as
may appear necessary for the hearing upon the petition for an injunction. Upon
proof of any of the offenses described in this section, the court may grant such
injunction as the facts may warrant. The court may not require the department to
post a bond.13-04.1-11. Investigations and subpoenas.1.The department of financial institutions in its discretion:a.May make such public or private investigation within or outside this state as it
deems necessary to determine whether any person has violated or is about to
violate any provision of this chapter or any rule or order hereunder, or to aid in
the enforcement of this chapter or in the prescribing of rules and forms
hereunder. The licensee shall pay an investigation fee and must be charged by
the department of financial institutions at an hourly rate to be set by the
commissioner, sufficient to cover all reasonable expenses of the department
associated with the visitation provided for by this section. Fees must be paid to
the state treasurer and deposited in the financial institutions regulatory fund.b.May require or permit any person to file a statement in writing, under oath or
otherwise as the department determines, as to all the facts and circumstances
concerning the matter to be investigated.c.May publish information concerning any violation of this chapter or any rule or
order hereunder.2.For the purpose of any investigation or proceeding under this chapter, the
department of financial institutions may administer oaths and affirmations, subpoena
witnesses, compel their attendance, take evidence, and require the production of
any books, papers, correspondence, memoranda, agreements, or other documents
or records which the department deems relevant or material to the inquiry.Page No. 63.In case of contumacy by, or refusal to obey a subpoena issued to, any person, the
district court, upon application by the department of financial institutions, may issue
to the person an order requiring such person to appear before the department, there
to produce documentary evidence if so ordered or to give evidence touching the
matter under investigation or in question. Failure to obey the order of the court may
be punished by the court as a contempt of court.4.No person is excused from attending and testifying or from producing any document
or record before the department of financial institutions, or in obedience to the
subpoena of the department, or in any proceeding instituted by the department, on
the grounds that the testimony or evidence, documentary or otherwise, required of
such person may tend to incriminate such person or subject such person to a
penalty forfeiture; but no individual may be prosecuted or subjected to any penalty or
forfeiture for or on account of any transaction, matter, or thing concerning which
such person is compelled, after claiming the privilege against self-incrimination, to
testify or produce evidence, documentary or otherwise, except that the individual
testifying is not exempt from prosecution and punishment for perjury or contempt
committed in testifying.13-04.1-11.1.Response to department requests.An applicant, licensee, or otherperson subject to the provisions of this chapter shall comply with requests for information,
documents, or other requests from the department of financial institutions within the time
specified in the request, which must be a minimum of ten days, or, if no time is specified, within
thirty days of the mailing of the request by the department of financial institutions. If the request
for information is in regard to a new application or renewal of an existing application and is not
received within the time specified in the request, or within thirty days of the mailing of the request,
the department may deny the application.13-04.1-12. Remedies not exclusive. The remedies provided for in this chapter are inaddition to and not exclusive of any other remedies provided by law.13-04.1-13. Penalty. Any person violating any of the provisions of this chapter or anyrule or order of the department of financial institutions made pursuant to the provisions of this
chapter or who engages in any act, practice, or transaction declared by any provision of this
chapter to be unlawful is guilty of a class C felony. The commissioner may impose a civil money
penalty not to exceed five thousand dollars per violation upon a person or agency who willfully
violates a law, rule, written agreement, or order under this chapter. An interested party may
appeal the assessment of a civil money penalty under the provisions of chapter 28-32 by filing a
written notice of appeal within twenty days after service of the assessment of civil money
penalties. A civil money penalty collected under this section must be paid to the state treasurer
and deposited in the financial institutions regulatory fund.Page No. 7Document Outlinechapter 13-04.1 money brokers