Have a question? 
+1 815-826-6324 (815-8-BondAI) 
phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
The Alabama Securities Commission accepts a $50,000 surety bond on Form U-SB in place of the net capital a dealer or investment adviser would otherwise have to prove, and it requires that same bond from any firm that holds client money or trades client accounts on discretion. One bond, one form, and the executed original goes in with the Form BD or Form ADV filing.
Alabama requires a $50,000 surety bond on the Uniform Surety Bond Form U-SB from a securities dealer or investment adviser that maintains custody of client funds or securities or has discretionary authority over client accounts, and from any dealer or adviser that chooses the bond in place of the minimum net capital, under Alabama Securities Commission Rule 830-X-3-.06 and Code of Alabama 8-6-3. The bond is payable to the State of Alabama, must be written by a surety qualified in the state, and is filed with the commission along with the $250 registration fee.
We can help with all Alabama bonds!
Rule 830-X-3-.06 sets minimum net capital at $50,000 for a dealer and $10,000 for an investment adviser, measured as assets minus total liabilities excluding subordinated liabilities. A firm that does not want to carry that net capital can instead provide a $50,000 bond payable to the State of Alabama. That is the first trigger.
The second is independent of net capital. A dealer or adviser that maintains custody of customer funds or securities, or that has discretionary authority over customer accounts, must post a $50,000 surety bond in addition to meeting the net capital requirement. The Alabama Securities Commission's investment adviser page lists all three situations plainly: the bond is required if the firm maintains custody, has discretionary authority, or lacks $10,000 in minimum net capital. A dealer with ample net capital but discretionary accounts still needs the bond.
Code of Alabama 8-6-3 authorizes the commission to require all or any class of applicants to post surety bonds or cash in an amount not less than $50,000, and to set different financial requirements for advisers that have custody or discretion. The rule carries that out and cites 8-6-23 for its rulemaking authority.
The bond is written on the Uniform Surety Bond Form U-SB, the multistate form developed for securities registrants, and is payable to the State of Alabama. It must be issued by a surety company qualified to do business in the state. Investment advisers file the original with the commission together with the Form ADV submitted through IARD, a GAAP balance sheet dated within 90 days, an officer's oath on that balance sheet, a statement on custody and discretionary authority, and the $250 filing fee. Dealers file Form BD through Web CRD with the $250 fee and send the commission a statement on custody and discretionary accounts in Alabama, an undertaking on prior sales to Alabama residents and a list of agents working the state.
A firm whose net capital drops below the minimum must suspend business immediately and notify the commission within three business days. It cannot resume until the commission approves financial statements showing compliance. A bond on file avoids that problem entirely for the net capital trigger.
Under 8-6-3 an investment adviser with no place of business in Alabama that directs business communications to no more than five clients in the state in any 12 consecutive months does not register, nor does an adviser whose only Alabama clients are investment companies, other advisers, broker dealers, banks, trust companies, savings and loan associations, insurance companies and similar institutions. The commission states there is no de minimis exemption for broker dealers effecting securities transactions in Alabama. A dealer claiming any other exemption has to cite the specific statute to the commission.
If you maintain custody of client funds or securities or have discretionary authority over client accounts, yes. Rule 830-X-3-.06 requires the $50,000 bond in addition to net capital in those two situations. Net capital only lets you skip the bond if you have neither custody nor discretion.
No. The bond is $50,000 for both. What differs is the net capital it can replace: $50,000 for a dealer and $10,000 for an investment adviser.
The commission's investment adviser requirements call for the Uniform Surety Bond Form U-SB, the standard multistate securities bond form, payable to the State of Alabama.
Code of Alabama 8-6-3 lets the commission require surety bonds or cash. Ask the commission before relying on a cash deposit, since the published application requirements describe the surety bond.
An investment adviser with no office in Alabama and no more than five Alabama clients in any 12 months, or whose only Alabama clients are institutions such as investment companies, banks, insurance companies and other advisers or dealers, does not register under 8-6-3. There is no de minimis exemption for broker dealers. If you must register, the bond rules above apply.
The surety prices the bond from the firm's financial statements and the principals' credit. Securities bonds are reviewed more closely than ordinary license bonds because the bond stands behind client money.
This website is a referral and marketing platform that connects users with licensed insurance agents. We do not issue surety bonds directly except in states where we are licensed. All bond applications are processed and fulfilled by licensed agents. By using this site, you agree to our Terms & Conditions, Privacy Policy, and the use of cookies. If you do not agree, please exit the site.
