CHAPTER 205
HB 759-FN – FINAL VERSION
16Jan2008… 2585h
04/17/08 1319s
04/17/08 1392s
15May2008… 1838eba
2008 SESSION
08/03
HOUSE BILL 759-FN
AN ACT relative to administration and enforcement of banking laws.
SPONSORS: Rep. Reardon, Merr 11
This bill:
I. Establishes additional remedies for violations of banking laws.
II. Modifies reporting and record-keeping requirements for banking licenses.
III. Makes certain technical changes to the laws regarding banking.
This bill was requested by the banking department.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
16Jan2008… 2585h
04/17/08 1319s
04/17/08 1392s
15May2008… 1838eba
07-1097
08/03
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eight
AN ACT relative to administration and enforcement of banking laws.
Be it Enacted by the Senate and House of Representatives in General Court convened:
205:1 Principal; Definition. Amend RSA 361-A:1, VIII-a to read as follows:
VIII-a. “Principal” of the applicant or licensee means an owner with 10 percent or more ownership interest, corporate officer, director, member, general or limited liability partner, limited partner with 10 percent or more ownership interest, trustee, beneficiary of 10 percent or more of the trust that owns the applicant or licensee, indirect owner, senior manager, New Hampshire branch manager, and any person occupying similar status or performing similar functions.
205:2 Sales Finance Company; Definition. Amend the introductory paragraph of RSA 361-A:1, XIII to read as follows:
XIII. “Sales finance company” means a person engaged, in whole or in part, directly or indirectly, in the business of providing motor vehicle financing in this state to one or more retail buyers, or in the business of purchasing retail installment contracts from one or more retail sellers. The term includes but is not limited to any state or federally chartered bank, savings bank, trust company, credit union, cooperative bank, finance company, lending agency, industrial bank, or investment company, if so engaged. The term does not include the pledgee of an aggregate number of such contracts to secure a bona fide loan thereon, or other persons not within the intent of this chapter as the commissioner may designate by rule or order, nor does it include a licensed retail seller who:
205:3 State Chartered Banks; Licenses. Amend RSA 361-A:2, I to read as follows:
I. No person shall engage in the business of a sales finance company or retail seller in this state without a license therefor as provided in this chapter. Persons subject to this chapter shall be responsible for the supervision of their employees, agents, and branch offices. No state or federally chartered bank, savings bank, trust company, credit union, cooperative bank, or industrial bank shall be required to obtain such a license but shall comply with the provisions of RSA 361-A:7-12, unless otherwise exempted in this chapter.
205:4 Annual Report Due. Amend RSA 361-A:2-b, I(a) to read as follows:
I.(a) Each sales finance company licensee shall file, under oath, an annual report with the commissioner on or before [February 1] March 31 each year concerning operations for the preceding year or license period ending December 31 upon a form prescribed by the commissioner
205:5 New Section; Prohibitions. Amend RSA 361-A by inserting after section 3-a the following new section:
361-A:3-b Prohibitions.
I. It is unlawful for any person, in connection with the solicitation, offer, or closing of a loan, directly or indirectly:
(a) To employ any device, scheme, or artifice to defraud;
(b) 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 light of the circumstances under which they are made, not misleading; or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
II. It is unlawful for any person to make or cause to be made in any document filed under this chapter or in any proceeding under this chapter any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.
III. Any condition, stipulation or provision binding any person to waive compliance with any provision of this chapter or any rule or order under this chapter is void.
205:6 Banking Department; Examination of Records. Amend RSA 361-A:6-a, II to read as follows:
II. The affairs and records of every sales finance company licensee or person shall be subject at any time to periodic, special, regular, or other examination by the banking department with or without notice to the licensee or person. Those licensees or persons that maintain their files and business documents in another state shall appoint a New Hampshire agent and shall return such files and documents to such agent, or to their principal New Hampshire office, or to the banking department [or the office of their New Hampshire agent] for examination no later than 21 calendar days after being requested to do so by the banking department. When the commissioner requests a list of New Hampshire consumers who have contracted with the licensee or other similar summary document from a licensee from which to select particular files for review, the licensee shall ensure that the list is received by the commissioner within 7 calendar days and return the files selected by the commissioner to the commissioner within 14 calendar days to ensure compliance with the 21 day requirement. Failure to provide files and documents within the time established by this paragraph shall subject a licensee or person to a fine of $50 per day for each day after 21 days the files and documents are not produced. Failure to provide files and documents within 60 days after being requested to do so by the banking department shall be sufficient cause for license revocation, suspension, or denial.
205:7 Balloon Payment Loans. Amend RSA 361-A:8-a, III(c) to read as follows:
(c) If the balloon contract so provides, a disposition fee may be charged to the retail buyer, provided such fee does not exceed $250, or such greater or lesser amount announced by the commissioner to annually adjust the disposition fee based upon changes in [the “all items” category] the consumer price index for all urban consumers, all items category, of consumer prices compiled and reported by the U.S. Department of Labor, Bureau of Labor Statistics.
205:8 Books and Records. Amend RSA 361-A:9-a to read as follows:
361-A:9-a Books and Records.
I. A licensee shall keep and use business records in such form and at such location as the commissioner shall by rule determine. The records shall enable the commissioner to determine whether the licensee is complying with the provisions of this chapter, any rules adopted under it, and any other law, rule, or regulation applicable to the conduct of the business for which it is licensed under this chapter. The rules may contain provisions for records to be recorded, copied, or reproduced by any process which accurately reproduces or forms a durable medium for reproducing the original record or document, or in any other form or manner authorized by the commissioner. Nothing in this section shall be construed to permit any licensee to destroy original records or documents. Each licensee shall preserve all such business records for as long a period as the commissioner shall prescribe by rule.
II. If the commissioner or examiner finds any business records to be inadequate, or kept or posted in a manner not in accordance with generally accepted accounting principles, the commissioner may employ experts to reconstruct, rewrite, post, or balance them at the expense of the person being examined if such person has failed to maintain, complete, or correct such business records after the commissioner or examiner has given him or her written notice and a reasonable opportunity to do so.
205:9 New Paragraph; Penalties. Amend RSA 361-A:11 by inserting after paragraph I the following new paragraph:
I-a. Any person who willfully violates any provisions of RSA 361-A:3-b, I or II or a cease and desist order or injunction issued pursuant to RSA 361-A:3-a shall be guilty of a class B felony. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction of any other offense.
205:10 New Paragraph; Penalties. Amend RSA 361-A:11 by inserting after paragraph VIII the following new paragraph:
IX. The attorney general on the commissioner’s behalf, may, with or without prior administrative action by the commissioner, bring an action against any person in any superior court in this state to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order under this chapter. Upon a proper showing, a permanent or temporary injunction, bar, restraining order, or writ of mandamus shall be granted and a receiver may be appointed for the defendant or the defendant’s assets. The court shall not require the commissioner or attorney general to post a bond. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both. In a proceeding in superior court under this paragraph where the state prevails, the commissioner and the attorney general shall be entitled to recover all costs and expenses of investigation, and the court shall include the costs in its final judgment.
205:11 Qualifications; Banking Commissioner and Deputy Banking Commissioner. Amend RSA 383:6 to read as follows:
383:6 Qualifications. No person who is not a resident of the state at the time of his or her appointment or who fails to become a resident of the state within one year after his or her appointment, and no person who is indebted to any corporation or association under the supervision of the commissioner, or who holds any stock or office in any such corporation or association, or who is engaged as principal or agent in the business of selling or negotiating in this state loans, stocks, or securities of any kind, or who is an officer or stockholder in any corporation engaged in such business, shall be eligible to hold or continue to hold the office of commissioner or deputy commissioner. The provisions of this section relative to indebtedness to a corporation or association under the supervision of the commissioner shall not disqualify a person who, at the time of his or her appointment, is indebted to such corporation or association for a home mortgage loan, or if at a time subsequent to his or her appointment a legal transfer of the loan or conversion of a corporation or association results in the loan being held by a corporation or association under the supervision of the commissioner or deputy commissioner, provided that the indebtedness shall be limited to such pre-existing contracts.
205:12 Bank Commissioner. Amend the introductory paragraph of RSA 383:11 to read as follows:
383:11 Payment of Cost of Examination. The bank commissioner shall, each fiscal year, charge and collect from the institutions, the condition and management of which he or she is required to examine under the provisions of RSA 383:9, and which he or she supervises under the provisions of RSA 361-A, RSA 397-A, [and] RSA 397-B, RSA 399-A, RSA 399-D, and RSA 399-G, the total amount appropriated for the bank commissioner’s department. Said sum shall be collected as follows:
205:13 Bank Commissioner. Amend RSA 383:11, II(b) to read as follows:
(b) From non-depository lenders, debt adjusters, money transmitters, and brokers. Each licensee and registrant subject to the supervision of the bank commissioner under the provisions of RSA 397-A, RSA 397-B, RSA 399-A, RSA 399-D, RSA 399-G, and sales finance companies under RSA 361-A, shall be charged and shall pay such proportion of said balance applicable to the consumer credit administration division under the banking department’s program appropriation unit designation as [its] the gross revenue received from the total dollar volume of loans made, originated, funded, or brokered [bear], or debt adjustment contracts entered into, or mortgage servicing fees received or money transmitted from each licensee’s New Hampshire business bears to the total gross revenue received from the total dollar volume of all such loans made, originated, funded, or brokered, or debt adjustment contracts entered into, or mortgage servicing fees received, or money transmitted, from New Hampshire business by such licensees during the preceding calendar year ending December 31, as shown by their annual reports to the commissioner.
205:14 Branch Office; Definition. Amend the introductory paragraph of RSA 397-A:1, IV to read as follows:
IV. “Branch office” means a [business] location within this state of a person required to be licensed under this chapter that is identified by any means to the public as a location at which a mortgage banker or mortgage broker conducts mortgage business. Branch office does not include:
205:15 Principal; Definition. Amend RSA 397-A:1, XIX to read as follows:
XIX. “Principal” of the applicant or licensee means an owner with 10 percent or more ownership interest, corporate officer, director, member, general or limited liability partner, limited partner with 10 percent or more ownership interest, trustee, beneficiary of 10 percent or more of the trust that owns the applicant or licensee, indirect owner, senior manager, New Hampshire branch manager, and any person occupying similar status or performing similar functions.
205:16 New Paragraphs; Application of Chapter. Amend RSA 397-A:2 by inserting after paragraph V the following new paragraphs:
VI. It is unlawful for any person, in connection with the solicitation, offer, closing, or servicing of a mortgage loan, directly or indirectly:
(a) To employ any device, scheme, or artifice to defraud;
(b) 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 light of the circumstances under which they are made, not misleading; or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
VII. It is unlawful for any person to make or cause to be made in any document filed under this chapter or in any proceeding under this chapter any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.
VIII. Any condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter or any rule or order under this chapter is void.
205:17 License Grant. Amend RSA 397-A:6, I to read as follows:
I. If the commissioner determines that the applicant meets the requirements of this chapter, then the commissioner shall forthwith issue a license or licenses permitting the applicant to engage in the business of making or brokering mortgage loans in accordance with the laws of this state. Licensees shall be responsible for the supervision of their employees, agents, loan originators, and branch offices. Licensees shall conduct background checks, including checking the list of entities issued by the Office of Foreign Assets Control (OFAC) whose assets were frozen by executive order, on all of their loan originators.
205:18 Record Keeping. Amend RSA 397-A:11, II to read as follows:
II. Those licensees that maintain their files and business records in another state are required to return such files to their principal or branch New Hampshire office, to the banking department, or to the office of their New Hampshire agent for examination no later than 21 calendar days after being requested to do so by the department. When the commissioner requests a loan list or other similar summary document from a licensee from which to select particular files for review, the licensee shall ensure that the list is received by the commissioner within 7 calendar days, and return the files selected by the commissioner to the commissioner within 14 calendar days to ensure compliance with the 21-day requirement. Failure to provide files and documents within the time established by this paragraph shall subject a licensee or person to a fine of $50 per day for each day after 21 days the files and documents are not produced. Failure to provide files and documents within 60 days after being requested to do so by the department shall be sufficient cause for license revocation, suspension, or denial.
205:19 New Paragraph; Records Keeping. Amend RSA 397-A:11 by inserting after paragraph IV the following new paragraph:
V. If the commissioner or examiner finds any records to be inadequate, or kept or posted in a manner not in accordance with generally accepted accounting principles, the commissioner may employ experts to reconstruct, rewrite, post, or balance them at the expense of the person being examined if such person has failed to maintain, complete, or correct such records after the commissioner or examiner has given him or her written notice and a reasonable opportunity to do so.
205:20 Examinations. Amend RSA 397-A:12, V-a to read as follows:
V-a. The commissioner may, in his or her discretion, accept all or a part of a report of examination of a mortgage banker or mortgage broker, certified to by the regulatory supervisory official of another state. To avoid unnecessary duplication of examinations and investigations, the commissioner, insofar as he or she deems it practicable in administering this section, may cooperate and share information with the regulators of this state and other states, the Federal Trade Commission, the Department of Housing and Urban Development, other federal regulators, or their successors in conducting examinations and investigations.
205:21 Annual Reports. Amend RSA 397-A:13, I to read as follows:
I. Each licensee shall file, under oath, an annual report with the banking department on or before [February 1] March 31 each year concerning operations for the preceding year or license period ending December 31 upon the form prescribed by the banking department. The annual report shall include a list of all individuals, and the address of the work location or an undertaking to provide the address immediately upon the department’s request, of each such individual, who act as originators for the licensee.
205:22 New Paragraph; Violations. Amend RSA 397-A:18 by inserting after paragraph III the following new paragraph:
IV. If any person refuses to obey the commissioner’s order, an action may be brought by the attorney general on the commissioner’s behalf in any superior court in this state to enjoin such person from engaging in or continuing such violation or from doing any act or acts in furtherance of such violation. In any such action, an order or judgment may be entered awarding a temporary or permanent injunction, and awarding the commissioner or the attorney general or both costs in bringing such action. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both.
205:23 New Paragraph; Penalty. Amend RSA 397-A:21 by inserting after paragraph I the following new paragraph:
I-a. Any person who willfully violates any provisions of RSA 397-A:2, VI or VII or a cease and desist order or injunction issued pursuant to RSA 397-A:18, II shall be guilty of a class B felony. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction of any other offense.
205:24 New Paragraph; Penalty. Amend RSA 397-A:21 by inserting after paragraph V the following new paragraph:
VI. The attorney general on the commissioner’s behalf, may, with or without prior administrative action by the commissioner, bring an action against any person in any superior court in this state to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order under this chapter. Upon a proper showing, a permanent or temporary injunction, bar, restraining order, or writ of mandamus shall be granted and a receiver may be appointed for the defendant or the defendant’s assets. The court shall not require the commissioner or attorney general to post a bond. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both. In a proceeding in superior court under this paragraph where the state prevails, the commissioner and the attorney general shall be entitled to recover all costs and expenses of investigation, and the court shall include the costs in its final judgment.
205:25 Principal; Definition. Amend RSA 397-B:1, V to read as follows:
V. “Principal” of the applicant or [licensee] registrant means an owner with 10 percent or more ownership interest, corporate officer, director, member, general or limited liability partner, limited partner with 10 percent or more ownership interest, trustee, beneficiary of 10 percent or more of the trust that owns the applicant or licensee, indirect owner, senior manager, New Hampshire branch manager, and any person occupying similar status or performing similar functions.
205:26 New Paragraph; Injunction. Amend RSA 397-B:3 by inserting after paragraph VIII the following new paragraph:
VIII-a. If any person refuses to obey the commissioner’s order, an action may be brought by the attorney general on the commissioner’s behalf in any superior court in this state to enjoin such person from engaging in or continuing such violation or from doing any act or acts in furtherance of such violation. In any such action, an order or judgment may be entered awarding a temporary or permanent injunction, and awarding the commissioner or the attorney general or both costs in bringing such action. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both.
205:27 New Paragraphs; Prohibitions. Amend RSA 397-B:3 by inserting after paragraph IX the following new paragraphs:
X. It is unlawful for any person, in connection with the servicing of a mortgage loan, directly or indirectly:
(a) To employ any device, scheme, or artifice to defraud;
(b) 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 light of the circumstances under which they are made, not misleading; or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
XI. It is unlawful for any person to make or cause to be made in any document filed under this chapter or in any proceeding under this chapter any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.
XII. Any condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter or any rule or order under this chapter is void.
205:28 New Paragraph; Registration. Amend RSA 397-B:4 by inserting after paragraph III the following new paragraph:
IV. Persons registered under this chapter are under a continuing obligation to update information on file with the commissioner. If any information filed with the commissioner becomes materially inaccurate, the registrant shall promptly submit to the commissioner an amendment to its application records that will correct the information on file with the commissioner. An amendment shall be considered to be filed promptly if the amendment is filed within 30 days of the event that requires the filing of the amendment.
205:29 Record Keeping. Amend RSA 397-B:4-a to read as follows:
397-B:4-a Record Keeping.
I. A registrant shall keep and use business records in such form and at such location as the commissioner shall by rule determine. The records shall enable the commissioner to determine whether the registrant is complying with the provisions of this chapter, any rules adopted under it, and any other law, rule, or regulation applicable to the conduct of the business for which it is registered under this chapter. The rules may contain provisions for records to be recorded, copied, or reproduced by any process which accurately reproduces or forms a durable medium for reproducing the original record or document, or in any other form or manner authorized by the commissioner. Nothing in this section shall be construed to permit any registrant to destroy original records or documents. Each registrant shall preserve all such business records for as long a period as the commissioner shall prescribe by rule.
II. If the commissioner or examiner finds any business records to be inadequate, or kept or posted in a manner not in accordance with generally accepted accounting principles, the commissioner may employ experts to reconstruct, rewrite, post, or balance them at the expense of the person being examined if such person has failed to maintain, complete, or correct such business records after the commissioner or examiner has given him or her written notice and a reasonable opportunity to do so.
III. Each registrant shall file, under oath, an annual report with the banking department on or before March 31 each year concerning operations for the preceding year or registration period ending December 31 upon the form prescribed by the banking department. Any mortgage servicing company failing to file the annual report required by this section within the time prescribed may be required to pay to the department a penalty of $25 for each calendar day the annual report is overdue up to a maximum penalty of $2,500 per report.
205:30 New Paragraph; Penalties. Amend RSA 397-B:6 by inserting after paragraph V the following new paragraph:
VI. The attorney general on the commissioner’s behalf, may, with or without prior administrative action by the commissioner, bring an action against any person in any superior court in this state to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order under this chapter. Upon a proper showing, a permanent or temporary injunction, bar, restraining order, or writ of mandamus shall be granted and a receiver may be appointed for the defendant or the defendant’s assets. The court shall not require the commissioner or attorney general to post a bond. The court shall have the power to enforce obedience to such injunction, in addition to all the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both. In a proceeding in superior court under this paragraph where the state prevails, the commissioner and the attorney general shall be entitled to recover all costs and expenses of investigation, and the court shall include the costs in its final judgment.
205:31 New Section; Violations. Amend RSA 397-B by inserting after section 6 the following new section:
397-B:6-a Violations. Any person who willfully violates any provisions of RSA 397-B:3, X or XI or a cease and desist order or injunction issued pursuant to RSA 397-B:3, VIII shall be guilty of a class B felony. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction of any other offense.
205:32 Exemption. Amend RSA 397-B:10 to read as follows:
397-B:10 Exemption. The provisions of this chapter shall not apply to any bank, trust company, savings and loan association, or cooperative bank, savings bank, or credit union which may be chartered by this state or any other state or by any agency of the United States, or to any other person not within the intent of this chapter as the commissioner may designate by rule or order, nor shall the registration provisions of this chapter apply to any individual or entity licensed by the banking department as a mortgage banker in accordance with RSA 397-A.
205:33 New Paragraph; Definitions. Amend RSA 399-A:1 by inserting after paragraph I-a the following new paragraph:
I-b. “Affiliate” means a partnership, corporation, trust, limited liability company, or other organization that directly or indirectly owns, is under common ownership with, or is directly or indirectly owned by, a lender.
205:34 Principal; Definition. Amend RSA 399-A:1, XIII to read as follows:
XIII. “Principal” of the applicant or licensee means an owner with 10 percent or more ownership interest, corporate officer, director, member, general or limited liability partner, limited partner with 10 percent or more ownership interest, trustee, beneficiary of 10 percent or more of the trust that owns the applicant or licensee, indirect owner, senior manager, New Hampshire branch manager, and any person occupying similar status or performing similar functions.
205:35 License Required. Amend RSA 399-A:2, III to read as follows:
III. This chapter shall not apply to any person lawfully engaged in business as permitted by the laws of this state or of the United States relative to banks, trust companies, insurance companies, savings or building and loan associations, or credit unions, or to loans made by them, or to any other person not within the intent of this chapter as the commissioner may designate by rule or order, nor shall this chapter apply to any person engaged solely in the business of making loans for educational purposes or to the loans made by such persons.
205:36 New Paragraph; License Required; Penalty. Amend RSA 399-A:2 by inserting after paragraph IV the following new paragraph:
V. Any person who willfully violates any provisions of RSA 399-A:8-a, I or II or a cease and desist order or injunction issued pursuant to RSA 399-A:8 shall be guilty of a class B felony. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction of any other offense.
205:37 Application and Fees. Amend RSA 399-A:3, II to read as follows:
II. Every applicant for licensing shall be required to submit to the banking department detailed financial information sufficient for the commissioner to determine the applicant’s ability to conduct the business of a small loan lender, payday lender, or title loan lender with financial integrity. The application shall include [a balance sheet or a statement of net worth prepared in accordance with generally accepted accounting principles. Net worth] a financial statement that shall be prepared in accordance with generally accepted accounting principles and shall include a balance sheet, income statement, statement of changes in owner’s equity, a cash flow statement, and note disclosures. If the financial statement is not audited, a certification statement shall be attached and signed by a duly authorized officer of the licensee. The certification statement shall state that the financial statement is true and accurate to the best of the officer’s belief and knowledge. If the financial statement is more than 6 months old, the applicant shall also submit an interim balance sheet and income statement not more than 3 months old. Financial statements provided in connection with a license application under this section shall be subject to review and verification during the course of any examination or investigation conducted under this chapter. Each applicant and licensee shall maintain a positive net worth at all times. Each applicant shall demonstrate that it has available for use in such business at each location specified in the application, at least $25,000, or in the case of a licensee, has such amount available or actually invested in loans made under this chapter at each location or has posted a continuous surety bond in the amount of $25,000 in the form and under the terms determined by the commissioner.
205:38 Reporting Requirements. Amend RSA 399-A:6, I(a) to read as follows:
I.(a) Each licensee shall file, under oath, an annual report with the commissioner on or before [February 1st] March 31 each year concerning its business and operations for the preceding calendar year or license period ending December [31st] 31 in the form prescribed by the commissioner.
205:39 Cease and Desist Orders. Amend RSA 399-A:8 to read as follows:
399-A:8 Cease and Desist Orders.
I. The banking department may issue a cease and desist order against any licensee or person who it has reasonable cause to believe has violated or is about to violate the provisions of this chapter or any rule or order under this chapter. Delivery of such order shall be by hand or registered mail at the principal office of the licensee or other person. The order shall be calculated to give reasonable notice of the rights of the person to request a hearing on the order and shall state the reasons for the entry of the order. A hearing shall be held not later than 10 days after the request for such hearing is received by the commissioner after which and within 20 days of the date of the hearing the commissioner shall issue a further order vacating the cease and desist order or making it permanent as the facts require. All hearings shall comply with RSA 541-A. If the person to whom a cease and desist order is issued fails to appear at the hearing after being duly notified, such person shall be deemed in default, and the proceeding may be determined against him or her upon consideration of the cease and desist order, the allegations of which may be deemed to be true. If the person to whom a cease and desist order is issued fails to request a hearing within 30 calendar days of receipt of such order, then such person shall likewise be deemed in default, and the order shall, on the thirty-first day, become permanent, and shall remain in full force and effect until and unless later modified or vacated by the commissioner, for good cause shown.
II. If any person refuses to obey the commissioner’s order, an action may be brought by the attorney general on the commissioner’s behalf in any superior court in this state to enjoin such person from engaging in or continuing such violation or from doing any act or acts in furtherance of such violation. In any such action, an order or judgment may be entered awarding a temporary or permanent injunction, and awarding the commissioner or the attorney general or both costs in bringing such action. The court shall have the power to enforce such injunction, in addition to all of the court’s customary powers, by imposing a fine not exceeding $10,000 or by imprisonment, or both.
205:40 New Section; Prohibitions. Amend RSA 399-A by inserting after section 8 the following new section:
399-A:8-a Prohibitions.
I. It is unlawful for any person, in connection with the solicitation, offer, or closing of a loan, directly or indirectly:
(a) To employ any device, scheme, or artifice to defraud;
(b) 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 light of the circumstances under which they are made, not misleading; or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
II. It is unlawful for any person to make or cause to be made in any document filed under this chapter or in any proceeding under this chapter any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.
III. Any condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter or any rule or order under this chapter is void.
205:41 Banking Department; Examinations. Amend RSA 399-A:10, III to read as follows:
III. Those licensees or persons that maintain their files and business documents in another state shall appoint a New Hampshire agent and shall return such files and documents to their principal New Hampshire office, the banking department, or the office of their New Hampshire agent for examination no later than 21 calendar days after being requested to do so by the department. When the commissioner requests a list of New Hampshire consumers who have contracted with the licensee or other similar summary document from a licensee from which to select particular files for review, the licensee shall ensure that the list is received by the commissioner within 7 calendar days and return the files selected by the commissioner to the commissioner within 14 calendar days to ensure compliance with the 21-day requirement. Failure to provide files and documents within the time established by this paragraph shall subject a licensee or person to a fine of $50 per day for each day after 21 days the files and documents are not produced. Failure to provide files and documents within 60 days after being requested to do so by the department shall be sufficient cause for license revocation, suspension, or denial, or other penalties under this chapter.
205:42 New Paragraph; Powers of Commissioner. Amend RSA 399-A:18 by inserting after paragraph VI the following new paragraph:
VII. The attorney general on the commissioner’s behalf, may, with or without prior administrative action by the commissioner, bring an action against any person in any superior court in this state to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order under this chapter. Upon a proper showing, a permanent or temporary injunction, bar, restraining order, or writ of mandamus shall be granted and a receiver may be appointed for the defendant or the defendant’s assets. The court shall not require the commissioner or attorney general to post a bond. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both. In a proceeding in superior court under this paragraph where the state prevails, the commissioner and the attorney general shall be entitled to recover all costs and expenses of investigation, and the court shall include the costs in its final judgment.
205:43 Principal; Definition. Amend RSA 399-D:2, VII-a to read as follows:
VII-a. “Principal” of the applicant or licensee means an owner with 10 percent or more ownership interest, corporate officer, director, member, general or limited liability partner, limited partner with 10 percent or more ownership interest, trustee, beneficiary of 10 percent or more of the trust that owns the applicant or licensee, indirect owner, senior manager, New Hampshire branch manager, and any person occupying similar status or performing similar functions.
205:44 New Section; Prohibitions. Amend RSA 399-D by inserting after section 13 the following new section:
399-D:13-a Prohibitions.
I. It is unlawful for any person, in connection with the solicitation, offer, or implementation of a debt adjustment service, directly or indirectly:
(a) To employ any device, scheme, or artifice to defraud;
(b) 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 light of the circumstances under which they are made, not misleading; or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
II. It is unlawful for any person to make or cause to be made in any document filed under this chapter or in any proceeding under this chapter any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.
III. Any condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter or any rule or order under this chapter is void.
205:45 Books and Records. Amend RSA 399-D:21, II to read as follows:
II. Books and Records:
(a) Every licensee shall keep and use in [his or her] its business, books, accounts, and records which will enable the commissioner to determine whether such licensee is complying with the provisions of this chapter and with the regulations of the commissioner.
(b) Every licensee shall preserve such books, accounts, and records for at least [7] 5 years after making the final entry on any transaction recorded therein.
III. If the commissioner or examiner finds any accounts or records to be inadequate, or kept or posted in a manner not in accordance with generally accepted accounting principles, the commissioner may employ experts to reconstruct, rewrite, post, or balance them at the expense of the person being examined if such person has failed to maintain, complete, or correct such records or accounting after the commissioner or examiner has given him or her written notice and a reasonable opportunity to do so.
205:46 Banking Department; Examinations. Amend RSA 399-D:22, V to read as follows:
V. Licensees that maintain their files in another state are required to return such files to their New Hampshire office [or if there is no office in New Hampshire], to the banking department, or to the office of their New Hampshire agent as named in the license application as amended. Such licensees are required to return all files and records no later than 21 calendar days after being requested to do so by the banking department. When the commissioner requests a list of New Hampshire consumers who have contracted with the licensee or other similar summary document from a licensee from which to select particular files for review, the licensee shall ensure that the list is received by the commissioner within 7 calendar days and return the files selected by the commissioner to the commissioner within 14 calendar days to ensure compliance with the 21-day requirement. Failure to provide files and documents within the time established by this paragraph shall subject a licensee or person to a fine of $50 per day for each day after 21 days the files and documents are not produced. Failure to provide files and documents within 60 days after being requested to do so by the banking department shall be sufficient cause for license revocation, suspension, or denial.
205:47 New Paragraph; Violations. Amend RSA 399-D:23 by inserting after paragraph II the following new paragraph:
III. If any person refuses to obey the commissioner’s order, an action may be brought by the attorney general on the commissioner’s behalf in any superior court in this state to enjoin such person from engaging in or continuing such violation or from doing any act or acts in furtherance of such violation. In any such action, an order or judgment may be entered awarding a temporary or permanent injunction, and awarding the commissioner or the attorney general or both costs in bringing such action. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both.
205:48 New Paragraph; Penalty. Amend RSA 399-D:24 by inserting after paragraph V the following new paragraph:
VI. The attorney general on the commissioner’s behalf, may, with or without prior administrative action by the commissioner, bring an action against any person in any superior court in this state to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order under this chapter. Upon a proper showing, a permanent or temporary injunction, bar, restraining order, or writ of mandamus shall be granted and a receiver may be appointed for the defendant or the defendant’s assets. The court shall not require the commissioner or attorney general to post a bond. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both. In a proceeding in superior court under this paragraph where the state prevails, the commissioner and the attorney general shall be entitled to recover all costs and expenses of investigation, and the court shall include the costs in its final judgment.
205:49 New Section; Violations. Amend RSA 399-D by inserting after section 24 the following new section:
399-D:24-a Violations. Any person who willfully violates any provisions of RSA 399-D:13-a, I or II or a cease and desist order or injunction issued pursuant to RSA 399-D:23, II shall be guilty of a class B felony. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction of any other offense.
205:50 Annual Report. Amend RSA 399-D:28, I(a) to read as follows:
I.(a) Each licensee shall file, under oath, an annual report with the commissioner on or before [February 1] March 31 of each year concerning its business and operations for the preceding calendar year or license period ending December 31 in the form prescribed by the commissioner. [A separate annual report shall be filed for each type of license held by the licensee.]
205:51 Principal; Definition. Amend RSA 399-G:1, XI to read as follows:
XI. “Principal” of the applicant or licensee means an owner with 10 percent or more ownership interest in the applicant or licensee, a corporate officer, director, member, general and limited liability partner, limited partner with 10 percent or more ownership interest, trustee, beneficiary of 10 percent or more of the trust that owns the applicant or licensee, indirect owner, senior manager, and any person occupying similar status or performing similar functions.
205:52 Licensing Filings. Amend RSA 399-G:5, I to read as follows:
I. To be considered for licensing, each person shall complete and file with the department one verified application prescribed by the commissioner. At a minimum, the application shall state the primary business address of the applicant, the applicant’s tax identification number, the address of its principal office and all authorized delegates located or to be located within the state, a copy of its FinCEN Form 107 Registration of Money Services Business filing, and a list of the principals of the applicant. Each principal [and indirect owner] shall provide their social security number and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant’s form and place of organization, the applicant’s proposed method of doing business, the qualifications and business history of the applicant and those persons listed in the application, and the applicant’s financial condition and history. The applicant shall disclose whether the applicant or any of its principals [or indirect owners] has ever been issued or been the subject of an injunction or administrative order, has ever been convicted of a misdemeanor involving the financial services industry or any aspect of the financial services business, or has ever been convicted of any felony.
205:53 Record Keeping. Amend RSA 399-G:12, II to read as follows:
II. Those licensees that maintain their files in another state are required to return the files to their principal New Hampshire office, to the banking department, or the office of their New Hampshire agent for examination no later than 21 calendar days after being requested to do so by the department. Such licensees are required to return all files and records no later than 21 calendar days after being requested to do so by the banking department. When the commissioner requests a list of New Hampshire consumers who have contracted with the licensee or other similar summary document from a licensee from which to select particular files for review, the licensee shall ensure that the list is received by the commissioner within 7 calendar days and return the files selected by the commissioner to the commissioner within 14 calendar days to ensure compliance with the 21 day requirement. Failure to provide files and documents shall subject a licensee to a fine of $50 per day for each day after 21 days the files and documents are not produced. Failure to provide files and documents within 60 days after being requested to do so by the department, shall be sufficient cause for license revocation, suspension, or denial.
205:54 New Paragraph; Record Keeping. Amend RSA 399-G:12 by inserting after paragraph III the following new paragraph:
IV. If the commissioner or examiner finds any accounts or records to be inadequate, or kept or posted in a manner not in accordance with generally accepted accounting principles, the commissioner may employ experts to reconstruct, rewrite, post, or balance them at the expense of the person being examined if such person has failed to maintain, complete, or correct such records or accounting after the commissioner or examiner has given him or her written notice and a reasonable opportunity to do so.
205:55 Annual Report. Amend RSA 399-G:14, I to read as follows:
I. Each licensee shall file, under oath, an annual report with the banking department on or before [February 1] March 31 each year concerning operations for the preceding year or license period ending December 31 upon the form prescribed by the department.
205:56 Annual Financial Statement; Audit. Amend RSA 399-G:14, III to read as follows:
III. Each licensee shall also file, under oath, its financial statement with the commissioner within 90 days from the date of its fiscal year end. The financial statement shall be prepared in accordance with generally accepted accounting principles with appropriate note disclosures and, unless excepted by an order form the commissioner for hardship reasons, shall be audited by an independent certified public accountant. A money transmitter’s financial statement shall include a balance sheet, income statement, statement of changes in owners’ equity, a cash flow statement, and a statement of net worth. [If the financial statement filed under this section is not audited, a certification statement shall be attached and signed by an authorized officer of the licensee. The certification statement shall state that the financial statement is true and accurate to the best of the officer’s belief and knowledge.] The financial statement shall include or be accompanied by a calculation that reflects the fiscal year’s average daily transactions in United States dollars.
205:57 New Section; Prohibitions. Amend RSA 399-G by inserting after section 18 the following new section:
399-G:18-a Prohibitions.
I. It is unlawful for any person, in connection with the solicitation, offer, or transaction of money transmission, directly or indirectly:
(a) To employ any device, scheme, or artifice to defraud;
(b) 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 light of the circumstances under which they are made, not misleading; or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
II. It is unlawful for any person to make or cause to be made in any document filed under this chapter or in any proceeding under this chapter any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect or, in connection with such statement, to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.
205:58 New Paragraph; Powers of the Commissioner. Amend RSA 399-G:19 by inserting after paragraph II the following new paragraph:
III. If any person refuses to obey the commissioner’s order, an action may be brought by the attorney general on the commissioner’s behalf in any superior court in this state to enjoin such person from engaging in or continuing such violation or from doing any act or acts in furtherance of such violation. In any such action, an order or judgment may be entered awarding a temporary or permanent injunction, and awarding the commissioner or the attorney general or both costs in bringing such action. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both.
205:59 New Section; Prosecution of Violations. Amend RSA 399-G by inserting after section 19 the following new section:
399-G:19-a Prosecution of Violations. Any person who willfully violates any provisions of RSA 399-G:18-a, I or II or a cease and desist order or injunction issued pursuant to RSA 399-G:19, II shall be guilty of a class B felony. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction of any other offense.
205:60 New Paragraph; Powers of Commissioner. Amend RSA 399-G:21 by inserting after paragraph V the following new paragraph:
VI. The attorney general on the commissioner’s behalf, may, with or without prior administrative action by the commissioner, bring an action against any person in any superior court in this state to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order under this chapter. Upon a proper showing, a permanent or temporary injunction, bar, restraining order, or writ of mandamus shall be granted and a receiver may be appointed for the defendant or the defendant’s assets. The court shall not require the commissioner or attorney general to post a bond. The court shall have the power to enforce obedience to such injunction, in addition to all of the court’s customary powers, by a fine not exceeding $10,000 or by imprisonment, or both. In a proceeding in superior court under this paragraph where the state prevails, the commissioner and the attorney general shall be entitled to recover all costs and expenses of investigation, and the court shall include the costs in its final judgment.
205:61 Reference to Indirect Owners Deleted. Amend the introductory paragraph of RSA 361-A:2, II(a) to read as follows:
II.(a) The application for such license shall be in writing and verified on a form prescribed by the commissioner. The application shall contain the name of the applicant; the tax applicant’s identification number; date of incorporation, if incorporated; the address where the business is or is to be conducted and similar information as to any branch office of the applicant; the trade name, if any, under which the applicant proposes to conduct such business; and such other pertinent information as the commissioner may require. The application shall include a list of the names and resident addresses of principals and the name of any person occupying a similar status or performing similar functions. Each principal [and indirect owner] shall provide his or her social security numbers and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant’s form and place of organization, the applicant’s proposed method of doing business, the qualifications and business history of the applicant and those persons listed in the application, and in the case of sales finance companies, the applicant’s financial condition and history. The applicant shall disclose if any injunction or administrative order has been issued against the applicant or any of its principals [or indirect owners] listed in the application and whether the applicant or any of its principals [or indirect owners] have been convicted of a misdemeanor involving the lending industry or any aspect of the lending business or convicted of any felony.
205:62 Reference to Indirect Owners Deleted. Amend RSA 397-A:5, I to read as follows:
I. To be considered for licensing, each person shall complete and file with the department one verified application prescribed by the commissioner. At a minimum, the application shall state the primary business address of the applicant, the applicant’s tax identification number, the address of its principal office and all branch offices located or to be located within the state, and a list of the principals of the applicant. Each principal [and indirect owner] shall provide his or her social security number and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant’s form and place of organization, the applicant’s proposed method of doing business, the qualifications and business history of the applicant and its principals, and the applicant’s financial condition and history. The applicant shall disclose whether the applicant or any of its principals [or indirect owners] has ever been issued or been the subject of an injunction or administrative order, has ever been convicted of a misdemeanor involving the lending industry or any aspect of the lending business or has ever been convicted of any felony.
205:63 Reference to Indirect Owners Deleted. Amend RSA 397-B:4, I(b) to read as follows:
(b) The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant’s form and place of organization, the applicant’s tax identification number, and the applicant’s proposed method of doing business. The applicant shall disclose whether the applicant or any of its principals [or indirect owners] has ever been issued or been the subject of an injunction or administrative order, has ever been convicted of a misdemeanor involving the lending industry or any aspect of the lending business, or has ever been convicted of any felony. Each principal [and indirect owner] shall provide his or her social security number and authorize the commissioner to conduct a background check.
205:64 Reference to Indirect Owners Deleted. Amend RSA 399-A:3, I(a) to read as follows:
I.(a) Every applicant for licensing under this chapter shall file with the commissioner a written verified application, on a form prescribed by the commissioner. The application shall contain the name of the applicant; the applicant’s tax identification number; the address where the business is or is to be conducted and similar information for any branch office of the applicant; the trade name, if any, under which the applicant proposes to conduct such business; the articles of incorporation or organization or partnership agreement; the name and address of the New Hampshire resident agent if the applicant is a foreign entity; and such other pertinent information as the commissioner may require. The application shall include the names of the applicant’s principals[, indirect owners,] and the name of any person occupying a similar status or performing similar functions. Each such principal [and indirect owner] shall provide his or her social security number and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant’s form and place of organization, the applicant’s proposed method of doing business, the qualifications and business history of the applicant and its principals, and the applicant’s financial condition and history. The applicant shall disclose if any injunction or administrative order has been issued against the applicant or any of its principals [or indirect owners] and whether the applicant or any of its principals [or indirect owners] have been convicted of a misdemeanor involving the lending industry or any aspect of the lending business or of any felony. Each applicant and licensee who conducts payday or title loan lending shall maintain an office in this state that is accessible to consumers. Persons subject to this chapter shall be responsible for the supervision of their employees, agents, and branch offices. Each initial and renewal license application shall be accompanied by a nonrefundable application fee of $450 for the principal place of business of the licensee and the sum of $450 for each branch of such licensee maintained in this state.
205:65 Reference to Indirect Owners Deleted. Amend the introductory paragraph of RSA 399-D:5, II to read as follows:
II. To be considered for licensing, each person, firm, or corporation shall file with the department one verified application on a form prescribed by the commissioner. At a minimum, the application shall be in writing, setting forth the primary business address of the applicant, the applicant’s tax identification number, the address of its principal office and all branch offices located or to be located within the state, and a list of the principals [or indirect owners] and the name of any person occupying a similar status or performing similar functions. Each principal [and indirect owner] shall provide his or her social security number and shall authorize the commissioner to conduct a background check. The applicant shall submit any other information that the commissioner may require including, but not limited to, the applicant’s form and place of organization, the applicant’s proposed method of doing business, qualifications, and business history of the applicant and those persons listed in the application, and the applicant’s financial condition and history. The applicant shall disclose if any injunction or administrative order has been issued against the applicant or any of its principals [or indirect owners] and whether the applicant or any of its principals [or indirect owners] have been convicted of a misdemeanor involving the lending industry or any aspect of the lending business or convicted of any felony. Each application shall designate the name and address of the manager or person in charge at each licensed location and shall contain other information required by rules adopted under this chapter. The applicant shall submit any other information that the commissioner may require. In addition:
205:66 License and Registration Grant. Amend RSA 399-G:6, VI to read as follows:
VI. Money transmitters, who sell or issue payment instruments or stored value, or receive money or monetary value for transmission to another location shall be liable to customers for the amount of money as well as any fees paid by the customer and received by the money transmitter, authorized delegate or person acting on his or her behalf, if the money fails to reach its intended recipient unless transmission to the recipient is prohibited by law. If an intended recipient of a money transmission fails to accept or retrieve the money transmitted, a licensee’s responsibility to any person for a money transmission conducted on that person’s behalf by the licensee’s authorized delegate shall be limited to the amount of money transmitted.
205:67 New Paragraph; Licensee Requirements. Amend RSA 399-D:7 by inserting after paragraph VII the following new paragraph:
VIII. Licensees shall maintain a positive net worth at all times.
205:68 Repeal. RSA 399-A:19, relative to review of commissioner’s actions, is repealed.
205:69 Effective Date. This act shall take effect 60 days after its passage.
Approved: June 16, 2008
Effective Date: August 15, 2008