California Financial Code

§ 51009

FIN § 51009 Effective Jan 1, 2009Div. 20.5

Statute text

(a)A person who engages in business as an exchange facilitator shall have the responsibility to act as a custodian for all exchange funds, including, but not limited to, money, property, other consideration, or instruments received by the person from, or on behalf of, a client, except funds received as the person’s compensation. A person who engages in business as an exchange facilitator shall invest those exchange funds in investments that meet a prudent investor standard and that satisfy the investment goals of liquidity and preservation of principal. For purposes of this section, a prudent investor standard is violated if any of the following occurs:

(1)Exchange funds are knowingly commingled by the exchange facilitator with the operating accounts of the exchange facilitator.

(2)Exchange funds are loaned or otherwise transferred to any person or entity, other than a financial institution, that is affiliated with or related to the exchange facilitator. This paragraph does not apply to the transfer of funds from an exchange facilitator to an exchange accommodation titleholder in accordance with an exchange contract.

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Legislative history

Added by Stats. 2008, Ch. 708, Sec. 2. Effective January 1, 2009.