H 648

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No. 142. An act relating to banking, insurance, and securities.
                                     (H.648)
It is hereby enacted by the General Assembly of the State of Vermont:
              * * * Banking; Financial and Related Services * * *
Sec. 1. 8 V.S.A. § 2102 is amended to read:
§ 2102. APPLICATION FOR LICENSE
   (a) Application for a license or registration shall be in writing, under oath
or affirmation, and in the form prescribed by the Commissioner and shall
contain the legal name, any fictitious name or trade name, and the address of
the residence and place of business of the applicant; if the applicant is a
partnership corporation, limited liability company, partnership, or other entity,
the name and title of each key individual and person in control of the applicant;
the county and municipality with street and number, if any, where the business
is to be conducted; and such further information as the Commissioner may
require.
   (b) At the time of making an application, the applicant shall pay to the
Commissioner a fee for investigating the application and a license or
registration fee for a period terminating on the last day of the current calendar
year. The following fees are imposed on applicants:
                                       ***
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      (9) For an application for a consumer litigation funding company
registration license under chapter 74 of this title, $200.00 as a registration
license fee and $300.00 as an application and investigation fee.
                                        ***
Sec. 2. 8 V.S.A. § 2103 is amended to read:
§ 2103. APPROVAL OF APPLICATION AND ISSUANCE OF LICENSE
   (a) Upon the filing of an application, payment of the required fees, and
satisfaction of any applicable bond and liquid asset requirements, the
Commissioner shall issue a license to the applicant if the Commissioner finds:
      (1)(A) The financial condition and responsibility, financial and business
experience, competence, character, and general fitness of the applicant
command the confidence of the community; and warrant belief that the
business will be operated honestly, fairly, and efficiently pursuant to the
applicable chapter of this title; and otherwise indicate that it is in the public
interest to permit the applicant to provide services in this State. If the applicant
is a corporation, limited liability company, partnership, or association other
entity, such findings are required with respect to each key individual and each
person in control of the applicant.
          (B) For purposes of assessing whether a person is financially
responsible, the Commissioner may consider how the person has managed his
or her the person’s own financial condition, which may include factors such as
whether the person has:
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               (i) current outstanding judgments, except judgments solely as a
result of medical expenses;
               (ii) current outstanding tax liens or other government liens and
filings;
               (iii) foreclosures within the past three years; or
               (iv) a pattern of seriously delinquent accounts within the past three
years.
         (2) Allowing the applicant to engage in business will promote the
convenience and advantage of the community in which the applicant will
conduct its business.
         (3) The applicant, each key individual, and each person in control of the
applicant has never had a financial services license or similar license revoked
in any governmental jurisdiction, except that a subsequent formal vacation of
such revocation shall not be deemed a revocation.
         (4) The applicant, each key individual, and each person in control of the
applicant has not been convicted of, or pled guilty or nolo contendere to, a
felony in a domestic, foreign, or military court:
            (A)(i) during the seven-year period preceding the date of the
application for licensing and registration; or
               (ii) at any time preceding such date of application, if such felony
involved an act of fraud or dishonesty, a breach of trust, or money laundering;
and
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            (B) provided that any pardon or expungement of a conviction shall
not be a conviction for purposes of this subsection.
         (5) The applicant has satisfied the applicable surety bond and liquid
asset requirement as follows:
            (A) for an application for a lender license, mortgage broker license,
mortgage loan originator license, or loan solicitation license, the applicable
bond and liquid asset requirements of sections 2203 and 2203a of this title;
            (B) for an application for a consumer litigation funding company
registration license, the financial stability requirement of section 2252 of this
title;
            (C) for an application for a money transmitter license, the net worth
and security requirements of sections 2540 and 2541 of this title;
            (D) for an application for a debt adjuster license, the bond
requirement of section 2755 of this title; and
            (E) for an application for a loan servicer license, the bond
requirement of sections 2903 and 2907 of this title.
         (6) For an application for a mortgage loan originator license, the
applicant has satisfied the prelicense education requirement of section 2204a of
this title and the prelicensing testing requirement of section 2204b of this title.
                                         ***
Sec. 3. 8 V.S.A. § 2107 is amended to read:
§ 2107. CHANGE OF CONTROL
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   (a) Any person or group of persons acting in concert, seeking to acquire
control of a licensee, shall submit a request to the Commissioner and shall
obtain the approval of the Commissioner prior to acquiring control. If the
person or group of persons is seeking to acquire control of a money transmitter
licensee, the person or group of persons shall submit with the request a
nonrefundable fee of $500.00. An individual is not deemed to acquire control
of a licensee and is not subject to this section when that individual becomes a
key individual in the ordinary course of business.
   (b) The request required by subsection (a) of this section shall include all
information required for the person or group of persons seeking to acquire
control and all new key individuals that have not previously submitted the
application requirements contained in section 2102 of this chapter or 2202a of
this title, as applicable to the specific license.
   (c) The Commissioner shall approve a request for change of control under
subsection (a) of this section if, after investigation, the Commissioner
determines that the person or group of persons requesting approval has the
financial condition and responsibility, competence, financial and business
experience, character, and general fitness to control and operate the licensee in
a lawful and proper manner, and that the interests of the public will not be
jeopardized by the change of control.
   (d) The Commissioner shall approve or deny a request for change of
control not later than 60 days after a complete request is filed and notify the
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licensee of the decision in a record. The Commissioner for good cause may
extend the review period.
   (e) The following persons are exempt from the prefiling requirements of
subsection (a) of this section, but the licensee shall notify the Commissioner of
the change of control, unless exempted by subsection (f) of this section, and
request the Commissioner’s approval using the standards in subsection (b) of
this section for a change of control:
      (1) a person that acts as a proxy for the sole purpose of voting at a
designated meeting of the security holders or holders of voting interests of a
licensee or person in control of a licensee;
      (2) a person that acquires control of a licensee by devise or descent;
      (3) a person that acquires control as a personal representative, custodian,
guardian, conservator, or trustee, or as an officer appointed by a court of
competent jurisdiction or by operation of law; and
      (4) a person that the Commissioner, by rule or order, exempts in the
public interest.
   (f) Regarding the control of a money transmitter licensee, the following
persons are exempt from the prefiling requirements of subsection (a) of this
section and do not need the Commissioner’s approval with respect to the
following specific actions:
      (1) a person that acts as a proxy for the sole purpose of voting at a
designated meeting of the security holders or holders of voting interests of a
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money transmitter licensee or person in control of a money transmitter
licensee;
      (2) a person that acquires control of a money transmitter licensee by
devise or descent;
      (3) a person that acquires control of a money transmitter licensee as a
personal representative, custodian, guardian, conservator, or trustee, or as an
officer appointed by a court of competent jurisdiction or by operation of law;
      (4) a person in control of the money transmitter licensee where there has
been an internal reorganization of such person but the ultimate person in
control of the money transmitter licensee remains the same; and
      (5) a person that the Commissioner, by rule or order, exempts in the
public interest.
   (g) Subsection (a) of this section does not apply to public offerings of
securities.
   (g)(h) Before filing a request for approval to acquire control, a person may
request in a record a determination from the Commissioner as to whether the
person would be considered a person in control of a licensee upon
consummation of a proposed transaction. If the Commissioner determines that
the person would not be a person in control of a licensee, the Commissioner
shall enter an order to that effect, and the proposed person and transaction is
not subject to the requirements of subsections (a) through (c) (a)–(c) of this
section.
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   (h)(i) If an applicant avails itself or is otherwise subject to a multistate
licensing process:
      (1) the Commissioner is authorized to accept the investigation results of
a lead investigative state for the purposes of reaching the findings in
subsections subsection (c) of this section if the lead investigative state has
sufficient staffing, expertise, and minimum standards; or
      (2) if Vermont is a lead investigative state, the Commissioner is
authorized to investigate the applicant pursuant to subsection (c) of this
section.
Sec. 4. 8 V.S.A. § 2109 is amended to read:
§ 2109. ANNUAL RENEWAL OF LICENSE
   (a) On or before December 1 of each year, every licensee shall renew its
license or registration for the next succeeding calendar year and shall pay to
the Commissioner the applicable renewal of license or registration fee. At a
minimum, the licensee or registree shall continue to meet the applicable
standards for licensure or registration. At the same time, the licensee or
registree shall maintain with the Commissioner any required bond in the
amount and of the character as required by the applicable chapter. The annual
license or registration renewal fee shall be:
                                       ***
      (9) For a consumer litigation funding company registration license under
chapter 74 of this title, $200.00.
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                                      ***
   (e) Notwithstanding any other provision of this title to the contrary, the
license of a mortgage loan originator who that fails to pay the annual renewal
fee or fails to satisfy all of the minimum license renewal standards by
December 1 shall automatically expire on December 31.
   (f) Notwithstanding any other provision of this title to the contrary, the
registration license of a consumer litigation funding company that fails to pay
the annual renewal fee or fails to satisfy all of the minimum registration license
renewal requirements by December 1 shall automatically expire on December
31.
   (g) Notwithstanding any other provisions of this title to the contrary, the
license of a money transmitter who that fails to pay the annual renewal fee on
or before December 1 shall automatically expire on December 31.
Sec. 5. 8 V.S.A. § 2110 is amended to read:
§ 2110. REVOCATION, SUSPENSION, TERMINATION, OR
          NONRENEWAL OF LICENSE; CEASE AND DESIST ORDERS
   (a) The Commissioner may deny, suspend, terminate, revoke, condition, or
refuse to renew a license or order that any person or licensee cease and desist
in any specified conduct if the Commissioner finds:
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      (5) subsequent to the date of application, the licensee is convicted of, or
pleads guilty or nolo contendere to, a violation of a state or federal anti-money-
laundering statute felony in a domestic, foreign, or military court;
      (6) the competence, financial condition and responsibility, financial and
business experience, competence, character, or general fitness of the licensee,
person in control of a licensee, or key individual does not command the
confidence of the community; does not warrant belief that the business will be
operated honestly, fairly, and efficiently pursuant to the applicable chapter of
this title; or otherwise indicates that it is not in the public interest to permit the
person to provide services in this State;
                                         ***
   (d)(1) If the Commissioner refuses to renew a license, then not later than 15
days after the date the renewal request is refused, the licensee may request that
the Commissioner reconsider the renewal request.
      (2) The licensee shall submit the licensee’s request in writing and shall
respond specifically to the Commissioner’s stated reason or reasons for
refusing the renewal request.
      (3) The Commissioner shall reconsider the renewal request in light of
the licensee’s request for reconsideration and response and shall issue a
decision pursuant to the standards in subsection (a) of this section not later than
60 days after the date of the request.
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      (4) The licensee may appeal the Commissioner’s decision by filing an
action in the Civil Division of the Superior Court of Washington County not
later than 15 days after the date of the Commissioner’s decision.
Sec. 6. 8 V.S.A. § 2117 is amended to read:
§ 2117. EXAMINATIONS AND INVESTIGATIONS; EXAMINATION
          FEES
                                       ***
   (k) Information obtained during, or for, an examination or investigation
under this part, including reports required pursuant to section 2120 of this
chapter, shall be confidential and privileged and shall be treated as provided in
section 23 of this title.
Sec. 7. 8 V.S.A. § 2252 is amended to read:
§ 2252. REGISTRATION LICENSE REQUIRED; FINANCIAL STABILITY
   (a) A company person shall not engage in the business of consumer
litigation funding without first filing a registration with the Commissioner on a
form prescribed by the Commissioner and submitting a registration fee and
proof of financial stability obtaining a license under this chapter.
   (b) A company shall file with the Commissioner evidence of its financial
stability, which shall include proof of In addition to the information required
by section 2102 of this title, an applicant for a consumer litigation funding
license shall provide, and a licensee shall at all times maintain, a surety bond
or irrevocable letter of credit issued and confirmed by a financial institution
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authorized by law to transact business in Vermont that is equal to double the
amount of the company’s largest funded amount in Vermont in the prior three
calendar years or $50,000.00, whichever is greater.
Sec. 8. 8 V.S.A. § 2260 is amended to read:
§ 2260. ANNUAL REPORTS
   (a) Annually, on or before April 1, each company registered licensed under
this chapter shall file a report with the Commissioner under oath or affirmation
and in the form and manner prescribed by the Commissioner. In addition to
information required by section 2120 of this title, the report shall include any
information the Commissioner requires concerning the company’s business
and operations during the preceding calendar year within Vermont and, in
addition, shall include:
                                      ***
Sec. 9. 8 V.S.A. § 2503 is amended to read:
§ 2503. DEFINITIONS
   As used in this chapter:
                                      ***
      (8) “Eligible rating” shall mean means a credit rating of any of the three
highest rating categories provided by an eligible rating service, whereby each
category may include rating category modifiers such as “plus” or “minus” for
S&P, or the equivalent for any other eligible rating service. Long-term credit
ratings are deemed eligible if the rating is equal to A- or higher by S&P, or the
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equivalent from any other eligible rating service. Short-term credit ratings are
deemed eligible if the rating is equal to or higher than A-2 or SP-2 by S&P, or
the equivalent from any other eligible rating service. In the event that ratings
differ among eligible rating services, the highest rating shall apply when
determining whether a security bears an eligible rating.
      (9) “Eligible rating service” shall mean means any Nationally
Recognized Statistical Rating Organization (NRSRO) as defined by the U.S.
Securities and Exchange Commission, and any other organization designated
by the Commissioner by rule or order.
      (10) “Exchange,” when used as a verb in reference to a transaction or
relationship involving virtual currency, means to assume or exercise control of
virtual currency from or on behalf of a person, including momentarily, to buy,
sell, trade, or convert:
          (A) virtual currency for money, monetary value, bank credit, or one
or more forms of virtual currency, or other consideration; or
          (B) money, monetary value, bank credit, or other consideration for
one or more forms of virtual currency.
      (11) “In this State” means at a physical location within Vermont for a
transaction requested in person. For a transaction requested electronically or
by phone, the provider of money transmission may determine if the person
requesting the transaction is “in this State” by relying on other information
provided by the person regarding the location of the individual’s residential
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address or a business entity’s principal place of business or other physical
address location, and any records associated with the person that the provider
of money transmission may have to indicate such location, including an
address associated with an account.
      (11)(12) “Licensee” means a person licensed under this chapter.
      (12)(13) “Limited station” means private premises where a check casher
is authorized to engage in check cashing for not more than two days of each
week solely for the employees of the particular employer or group of
employers specified in the check casher license application.
      (13)(14) “Mobile location” means a vehicle or a movable facility where
check cashing occurs.
      (14)(15) “Monetary value” means a medium of exchange, whether or
not redeemable in money.
      (15)(16) “Money” means a medium of exchange that is issued by the
United States or a foreign government. The term includes a monetary unit of
account established by an intergovernmental organization or by agreement
between two or more governments.
      (16)(17) “Money services” means money transmission, check cashing,
or currency exchange.
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      (17)(18)(A) “Money transmission” means any of the following:
              (i) selling or issuing payment instruments to a person located in
this State;
              (ii) selling or issuing stored value to a person located in this State;
or
              (iii) receiving money for transmission from a person located in
this State; or
              (iv) virtual-currency business activity.
            (B) The term “money transmission” includes payroll processing
services.
            (C) The term “money transmission” does not include the provision
solely of telecommunications services or network access.
      (18)(19) “Money transmission kiosk” means an automated, unstaffed
electronic machine that allows users to engage in through which money
transmission, including any machine that is capable of accepting or dispensing
cash in exchange for virtual currency is offered, facilitated, or engaged in, in
whole or in part, directly or indirectly. The term includes any virtual-currency
kiosk. The term does not include consumer cell phones and other similar
personal devices of consumers.
      (19)(20)(A) “Outstanding money transmission obligations” shall be
established and extinguished in accordance with applicable state law and shall
mean means:
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             (i) any payment instrument or stored value issued or sold by the
licensee to a person located in the United States or reported as sold by an
authorized delegate of the licensee to a person that is located in the United
States that has not yet been paid or refunded by or for the licensee, or
escheated in accordance with applicable abandoned property laws; or
             (ii) any money received for transmission by the licensee or an
authorized delegate in the United States from a person located in the United
States that has not been received by the payee or refunded to the sender, or
escheated in accordance with applicable abandoned property laws.
          (B) For purposes of this section, “in the United States” shall include
includes, to the extent applicable, a person in any state, territory, or possession
of the United States; the District of Columbia; the Commonwealth of Puerto
Rico; or a U.S. military installation located in a foreign country.
      (20)(21) “Payment instrument” means a written or electronic check,
draft, money order, traveler’s check, or other written or electronic instrument
for the transmission or payment of money or monetary value, whether or not
negotiable. The term does not include stored value or any instrument that is:
          (A) redeemable by the issuer only for goods or services provided by
the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the
extent required by applicable law to be redeemable in cash for its cash value;
or
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             (B) not sold to the public but issued and distributed as part of a
loyalty, rewards, or promotional program.
       (21)(22) “Payroll processing services” means receiving money for
transmission pursuant to a contract with a person to deliver wages or salaries,
make payment of payroll taxes to state and federal agencies, make payments
relating to employee benefit plans, or make distributions of other authorized
deductions from wages or salaries. The term does not include an employer
performing payroll processing services on its own behalf or on behalf of its
affiliate.
       (22)(23) “Prevailing market value” means the value to buy or sell a
particular virtual currency, as applicable, quoted on a virtual currency
exchange operated by a licensee based in the United States, with sufficient
volume to reflect the prevailing market price of such virtual currency.
       (23)(24) “Receiving money for transmission” or “money received for
transmission” means receiving money or monetary value in the United States
for transmission within or outside the United States by electronic or other
means.
       (24)(25) “Stored value” means monetary value representing a claim
against the issuer evidenced by an electronic or digital record, and that is
intended and accepted for use as a means of redemption for money or
monetary value, or payment for goods or services. The term includes “prepaid
access” as defined by 31 C.F.R. § 1010.100, as may be amended.
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Notwithstanding the foregoing, the term “stored value” does not include a
payment instrument or closed loop stored value, or stored value not sold to the
public but issued and distributed as part of a loyalty, rewards, or promotional
program.
        (25)(26) “Tangible net worth” means the aggregate assets of a licensee
excluding all intangible assets, less liabilities, as determined in accordance
with United States U.S. generally accepted accounting principles.
        (27) “Transfer,” when used in reference to a transaction or relationship
involving virtual currency, means to assume or exercise control of virtual
currency from or on behalf of a person and to:
           (A) credit the virtual currency to the account or digital wallet of
another person;
           (B) move the virtual currency from one account or digital wallet of a
person to another account or digital wallet of the same person; or
           (C) relinquish or transfer control or ownership of virtual currency to
another person, digital wallet, distributed ledger address, or smart contract.
        (26)(28) “U.S. dollar equivalent of virtual currency” means the
prevailing market value of a particular virtual currency in United States dollars
for a particular date or period specified in this chapter.
        (27)(29)(A) “Virtual currency” means a digital representation of value
that:
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             (i) is used as a medium of exchange, unit of account, or store of
value; and
             (ii) is not money, whether or not denominated in money.
          (B) The term “virtual currency” does not include:
             (i) a digital representation of value that can be redeemed for
goods, services, discounts, or purchases solely as part of a customer affinity or
rewards program with the issuing merchant or other designated merchants, or
both, or can be redeemed for digital units in another customer affinity or
rewards program, but cannot be, directly or indirectly, converted into,
redeemed, or exchanged for money, monetary value, bank credit, or virtual
currency; or
             (ii) a digital representation of value issued by or on behalf of a
publisher and used solely within an online game, game platform, or family of
games sold by the same publisher or offered on the same game platform, and:
                (I) has no market or application outside of such online game,
game platform, or family of games;
                (II) cannot be, directly or indirectly, converted into, redeemed,
or exchanged for money, monetary value, bank credit, or virtual currency; and
                (III) may or may not be redeemable for real-world goods,
services, discounts, or purchases.
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      (28)(30) “Virtual-currency administration” means:
          (A) issuing virtual currency with the authority to redeem such virtual
currency for money, monetary value, bank credit, or other virtual currency; or
          (B) issuing virtual currency that entitles the purchaser or holder of
such virtual currency, or otherwise conveys or represents a right of the
purchaser or holder of such virtual currency, to redeem such virtual currency
for money, monetary value, bank credit, or other virtual currency.
      (29)(31) “Virtual-currency business activity” means:
          (A) exchanging or transferring virtual currency, engaging in virtual-
currency administration, or engaging in virtual-currency storage, in each case
whether directly or through an agreement with a virtual-currency control-
services vendor;
          (B) holding electronic precious metals or electronic certificates
representing interests in precious metals on behalf of another person or issuing
shares or electronic certificates representing interests in precious metals;
          (C) buying or selling virtual currency as a consumer business; or
          (D) receiving virtual currency or control of virtual currency for
transmission or transmitting virtual currency, except where the transaction is
undertaken for nonfinancial purposes and does not involve the transfer of more
than a nominal amount of virtual currency.
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      (30)(32) “Virtual-currency control-services vendor” means a person that
has control of virtual currency solely under an agreement with a person that, on
behalf of another person, assumes control of virtual currency.
      (33) “Virtual-currency kiosk” means a money transmission kiosk
through which virtual-currency business activity is offered, facilitated, or
engaged in, in whole or in part, directly or indirectly. Examples include
money transmission kiosks that are capable of accepting or dispensing money,
monetary value, or other forms of consideration in connection with a virtual-
currency transaction.
      (31)(34) “Virtual-currency kiosk operator” means a person that offers,
facilitates, or engages in, in whole or in part, directly or indirectly, virtual-
currency business activity via a money transmission virtual-currency kiosk
located in this State or a person that owns, operates, or manages a money
transmission virtual-currency kiosk located in this State through which virtual-
currency business activity is offered.
      (32)(35) “Virtual-currency storage” means:
          (A) maintaining possession, custody, or control over virtual currency
on behalf of another person, including as a virtual-currency control-services
vendor;
          (B) issuing, transferring, or otherwise granting or providing to any
person in this State any claim or right, or any physical, digital, or electronic
instrument, receipt, certificate, or record representing any claim or right to
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receive, redeem, withdraw, transfer, exchange, or control any virtual currency
or amount of virtual currency; or
          (C) receiving possession, custody, or control over virtual currency
from a person in this State, in return for a promise or obligation to return,
repay, exchange, or transfer such virtual currency or a like amount of such
virtual currency.
      (36) “Virtual-currency transaction” means a transaction, conducted or
performed by any means, involving or related to virtual-currency business
activity. Examples include purchasing stored value or closed loop stored value
for the purpose of exchanging, transferring, buying, or selling virtual currency.
Sec. 10. 8 V.S.A. § 2506 is amended to read:
§ 2506. APPLICATION FOR LICENSE; ADDITIONAL INFORMATION
   (a) In addition to the information required by section 2102 of this title, an
application for a license under this subchapter shall state or contain:
                                       ***
      (7) the name and address of any financial institution or credit union
through which the applicant plans to conduct money services.
   (b) For good cause shown and consistent with the purposes of this section,
the Commissioner may waive one or more requirements of this section or
permit an applicant to submit substituted information in lieu of the required
information.
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Sec. 11. 8 V.S.A. § 2507 is amended to read:
§ 2507. MONEY TRANSMISSION KIOSK REGISTRATION
   (a) A licensee shall not locate, or allow a third party to locate, a money
transmission kiosk in this State that allows users of the money transmission
kiosk to engage in money transmission through which money transmission is
offered, facilitated, or engaged in, in whole or in part, directly or indirectly, by
or on behalf of the licensee unless the licensee registers the money
transmission kiosk and obtains the prior approval of the Commissioner for its
activation.
   (b) To apply for registration and approval to activate a money transmission
kiosk, a licensee shall submit an application, using a form prescribed by the
Commissioner, that includes the ownership and location of the money
transmission kiosk, an affidavit of all businesses and services to be offered at
the kiosk, the written agreement between the licensee and the owner of the
money transmission kiosk if different persons, and the text of each disclosure
required pursuant to subsection (c) of this section along with a description of
the form, timing, and location for each disclosure.
   (c) Each money transmission kiosk shall disclose prominently and
conspicuously, using as high a contrast or resolution as any other display or
graphics on the money transmission kiosk, prior to the point at which a user of
the money transmission kiosk is irrevocably committed to completing any
transaction:
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      (1) on or at the location of the money transmission kiosk, or on the first
screen of such kiosk, the name, address, and telephone number, and Vermont
license number of the owner of the kiosk licensee and the days, time, and
means by which a consumer can contact the owner licensee for consumer
assistance; and
      (2) on the screen of the money transmission kiosk:
          (A) for a transaction that does not involve virtual currency, the
amount of the fees or charges that will be assessed to the user of the money
transmission kiosk for the transaction by the licensee and by the owner of the
money transmission kiosk, a clear explanation of who is imposing each fee or
charge and that such fees and charges are in addition to any fees or charges that
may be imposed by other entities relevant to the particular transaction, and the
method by which the user may cancel the transaction to avoid the imposition of
fees or charges; and
          (B) for a transaction that involves virtual currency, all disclosures
required pursuant to subsection 2574(c) of this chapter, a clear explanation of
who is imposing each consideration to be charged for the transaction, and that
such consideration is in addition to any fees or charges that may be imposed by
other entities relevant to the particular transaction, and the method by which
the user may cancel the transaction to avoid the imposition of the consideration
and other fees or charges.
                                       ***
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Sec. 12. 8 V.S.A. § 2519 is amended to read:
§ 2519. ACTIVITIES OF CHECK CASHERS AND CURRENCY
          EXCHANGES
   (a) Check cashing.
      (1) A licensee, in every location conducting business under a license
issued pursuant to this chapter, shall conspicuously post and at all times
display a notice stating all fees charged. A licensee shall file with the
Commissioner a statement of the fees charged at every location licensed for
services offered there.
      (2) Before a licensee shall deposit, with any financial institution or
credit union, a payment instrument that is cashed by a licensee, each such item
shall be endorsed with the actual name under which such licensee is doing
business. Additionally, the words “Licensed Check Cashing Business” must
be written legibly or stamped immediately after or below the name of the
endorser.
      (3) A licensee shall comply with all applicable federal statutes
governing currency transaction reporting.
      (4) A licensee may not alter or delete any information on any payment
instrument cashed.
      (5) A licensee shall issue a receipt for each check cashing transaction
upon request. The receipt shall include, among other matters the licensee may
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desire to include, the amount of the payment instrument and the total fee
charged.
        (6) A licensee shall not impose any fee or other charge for bad checks
other than as expressly permitted under the provisions of 9 V.S.A. §§ 2311 and
2312.
        (7) Within 10 business days after being advised by the payor financial
institution or credit union that a payment instrument has been altered, forged,
stolen, obtained through fraudulent or illegal means, or negotiated without
proper legal authority, or represents the proceeds of illegal activity, the
licensee shall notify the police department in the city or town where the
payment instrument was cashed. If a payment instrument is returned to the
licensee by the payor financial institution or credit union for any of the
aforementioned reasons, the licensee may not release or destroy the payment
instrument without the consent of the city or town police department, or other
investigative law enforcement authority.
                                       ***
Sec. 13. 8 V.S.A. § 2573 is amended to read:
§ 2573. CONDITIONS PRECEDENT TO ENGAGING IN VIRTUAL-
           CURRENCY BUSINESS ACTIVITY
                                       ***
   (b) A person that engages in virtual-currency business activity is engaged
in the business of money transmission. [Repealed.]
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                                      ***
Sec. 14. 8 V.S.A. § 2571 is amended to read:
§ 2571. DEFINITIONS
   As used in this subchapter:
      (1) “Blockchain” has the same meaning as in 12 V.S.A. § 1913(a)(1).
      (2) “Blockchain analytics” means a software service that uses data from
various virtual currencies and their applicable blockchains to provide a risk
rating specific to digital wallet addresses from users of virtual-currency kiosks.
      (3) “Digital wallet” means hardware or software that enables individuals
to store and use virtual currency.
      (4) “Digital wallet address” means an alphanumeric identifier
representing a destination on a blockchain for a virtual currency transfer that is
associated with a digital wallet.
      (5) “Exchange,” used as a verb, means to assume or exercise control of
virtual currency from or on behalf of a person, including momentarily, to buy,
sell, trade, or convert:
          (A) virtual currency for money, monetary value, bank credit, or one
or more forms of virtual currency, or other consideration; or
          (B) money, monetary value, bank credit, or other consideration for
one or more forms of virtual currency.
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      (6) “Existing customer” means a consumer who:
          (A) is engaging in a transaction at a virtual-currency kiosk in
Vermont; and
          (B) whose first transaction with the virtual-currency kiosk operator
occurred more than 30 days prior.
      (7)(6) “New customer” means a consumer who:
          (A) is engaging in a transaction at a virtual-currency kiosk in
Vermont; and
          (B) whose first transaction with the virtual-currency kiosk operator
occurred not more than 30 days prior.
      (8) “Transfer” means to assume or exercise control of virtual currency
from or on behalf of a person and to:
          (A) credit the virtual currency to the account or digital wallet of
another person;
          (B) move the virtual currency from one account or digital wallet of a
person to another account or digital wallet of the same person; or
          (C) relinquish or transfer control or ownership of virtual currency to
another person, digital wallet, distributed ledger address, or smart contract.
Sec. 14a. 8 V.S.A. § 2574 is amended to read:
§ 2574. REQUIRED DISCLOSURES
                                          ***
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   (c) Disclosures.
      (1) Disclosures prior to each virtual-currency transaction. In connection
with any virtual-currency transaction effected through a virtual-currency kiosk
in this State, or in any transaction where the licensee or any affiliate thereof is
acting in a principal capacity in a sale of virtual currency to, or purchase of
virtual currency from, a customer, then immediately prior to effecting such a
purchase or sale transaction with or on behalf of a customer, a licensee shall
prominently disclose and shall require the customer to acknowledge and
confirm the terms and conditions of the virtual-currency transaction, which
shall include the following:
      (A)(1) the type, value, date, precise time, and amount of the transaction;
and
      (B)(2) the consideration charged for the transaction, including:
          (i)(A) any charge, fee, commission, or other consideration for any
trade, exchange, conversion, or transfer involving virtual currency; and
          (ii)(B) any difference between the price paid by the customer for any
virtual currency and the prevailing market price value of such virtual currency,
if any;
          (C) for a customer of a virtual-currency kiosk, a description of the
virtual-currency kiosk operator’s refund policy, which shall be consistent with
the requirements specified in subsections 2577(k) and (l) of this subchapter;
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          (D) for a customer of a virtual-currency kiosk, the customer warning
described in subdivision (g)(1) of this section; and
          (E) the daily transaction limit, if applicable.
      (2) Disclosures for new kiosk accounts. When opening an account for a
new customer, and prior to entering into an initial transaction for, on behalf of,
or with such customer, each virtual-currency kiosk operator shall disclose
relevant terms and conditions associated with its products, services, and
activities and with virtual currency, generally, including disclosures
substantially similar to the following:
          (A) the customer’s liability for unauthorized virtual-currency
transactions;
          (B) under what circumstances the virtual-currency kiosk operator
will, absent a court or government order, disclose information concerning the
customer’s account to third parties;
          (C) the customer’s right to receive periodic account statements and
valuations from the virtual-currency kiosk operator;
          (D) the customer’s right to receive a receipt, trade ticket, or other
evidence of a transaction;
          (E) the customer’s right to prior notice of a change in the virtual-
currency kiosk operator’s rules or policies;
          (F) a statement of the material risks associated with virtual-currency
transactions, generally, as described in subsection (h) of this section;
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          (G) the name and telephone number of the Department of Financial
Regulation and a statement disclosing that a customer may contact the
Department with questions or complaints about a licensee; and
          (H) such other disclosures as are customarily given in connection
with the opening of customer accounts.
   (d) Licensee receipt requirements. Except as otherwise provided in
subsection (e) of this section, at the conclusion of a virtual-currency
transaction with or on behalf of a person, a licensee shall provide the person
with a receipt that contains:
      (1) the name and contact information of the licensee, including
information the person may need to ask a question or file a complaint;
      (2) the type of virtual currency, value quantity of virtual currency, date,
precise time, and amount of the transaction expressed in U.S. currency;
      (3) the consideration charged for the transaction, including:
          (A) any charge, fee, commission, or other consideration for any trade,
exchange, conversion, or transfer involving virtual currency; or
          (B) the amount of any difference between the price paid by the
customer for any virtual currency and the prevailing market price value of such
virtual currency, if any; and
      (4) any other information required pursuant to section 2562 of this title.
   (e) Licensee daily confirmation. If a licensee discloses that it will provide
a daily confirmation in the initial disclosure under subsection (b) of this
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section, the licensee may elect to provide a single, daily confirmation for all
transactions with or on behalf of a person on that day instead of a per-
transaction confirmation.
   (f) Kiosk transaction receipt. Notwithstanding any other provision of law
to the contrary, a virtual-currency kiosk operator shall provide a customer with
both a paper and an electronic receipt in a retainable form for each virtual-
currency transaction completed at a virtual-currency kiosk. In addition to the
information required to be included in a receipt under subsection (d) of this
section or under section 2562 of this title, each receipt for a virtual-currency
transaction completed at a virtual-currency kiosk shall include:
      (1) the identification of any applicable digital wallet address to which
virtual currency is transmitted;
      (2) the full name of the account owner;
      (3) any unique transaction identifiers;
      (4) a prominent statement of the virtual-currency kiosk operator’s refund
obligations under this section, in a form approved by the Commissioner;
      (5) a statement of the operator’s liability for nondelivery or delayed
delivery of virtual currency; and
      (6) the name and telephone number of the Department of Financial
Regulation and a statement disclosing that a customer may contact the
Department with questions or complaints about an operator.
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   (g) Customer warning.
      (1) Prior to entering into a virtual-currency transaction with a customer
at a virtual-currency kiosk, and as required by subdivision (c)(1)(D) of this
section, each virtual-currency kiosk operator shall ensure a warning is
disclosed to the customer substantially similar to the following:
Customer Notice. Please Read Carefully.
      Did you receive a phone call from your bank, software provider, the
police, or were you directed to make a payment for Social Security, a utility
bill, an investment, warrants, or bail money at this kiosk? STOP
      Is anyone on the phone pressuring you to make a payment of any kind?
STOP
      I understand that the purchase and sale of cryptocurrency may be a final,
irreversible, and nonrefundable transaction.
      I confirm I am sending funds to a digital wallet I own or directly have
control over. I confirm that I am using funds gained from my own initiative to
make my transaction.
      (2) A virtual-currency kiosk operator shall ensure a customer has a
readily accessible opportunity to end a transaction for any reason prior to its
completion.
   (h) Statement of material risks. As used in subdivision (c)(2)(F) of this
section, a statement of material risks associated with virtual-currency
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transactions, generally, shall include disclosures substantially similar to the
following:
      (1) Virtual currency is not legal tender, is not backed by the
government, and accounts and value balances are not subject to Federal
Deposit Insurance Corporation or Securities Investor Protection Corporation
protections.
      (2) Legislative and regulatory changes or actions at the State, federal, or
international level may adversely affect the use, transfer, exchange, and value
of virtual currency.
      (3) Transactions in virtual currency may be irreversible and,
accordingly, losses due to fraudulent or accidental transactions may not be
recoverable.
      (4) Some virtual-currency transactions shall be deemed to be made
when recorded on a public ledger, which is not necessarily the date or time that
the customer initiates the transaction.
      (5) The value of virtual currency may be derived from the continued
willingness of market participants to exchange fiat currency for virtual
currency, which may result in the potential for permanent and total loss of
value of a particular virtual currency should the market for that virtual
currency disappear.
      (6) There is no assurance that a person who accepts a virtual currency as
payment today will continue to do so in the future.
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        (7) The volatility and unpredictability of the price of virtual currency
relative to fiat currency may result in significant loss over a short period of
time.
        (8) The nature of virtual currency may lead to an increased risk of fraud
or cyber attack.
        (9) The nature of virtual currency means that any technological
difficulties experienced by the virtual-currency kiosk operator may prevent the
access or use of a customer’s virtual currency.
        (10) Any bond or trust account maintained by the virtual-currency kiosk
operator for the benefit of its customers may not be sufficient to cover all
losses incurred by customers.
Sec. 14b. 8 V.S.A. § 2577 is amended to read:
§ 2577. VIRTUAL-CURRENCY KIOSK OPERATORS PROHIBITION
   (a) Daily transaction limit Prohibition of virtual currency kiosks.
        (1) A virtual-currency kiosk operator shall not accept or dispense more
than $2,000.00 of cash in a day in connection with virtual-currency
transactions with a single, new customer in this State via one or more virtual-
currency kiosks No person shall locate, operate, or otherwise make available
for use, or allow a third party to locate, operate, or otherwise make available
for use, a virtual currency kiosk in Vermont.
        (2) A virtual-currency kiosk operator shall not accept or dispense more
than $5,000.00 of cash in a day in connection with virtual-currency
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transactions with a single, existing customer in this State via one or more
virtual-currency kiosks No person shall offer, facilitate, or engage in, in whole
or in part, directly or indirectly, virtual-currency business activity via a money
transmission kiosk in Vermont.
   (b) Fee cap Registration expiration and refunds. The aggregate fees and
charges, directly or indirectly, charged to a customer related to a single
transaction or series of related transactions involving virtual currency effected
through a money transmission kiosk in this State, including any difference
between the price charged to a customer to buy, sell, exchange, swap, or
convert virtual currency and the prevailing market value of such virtual
currency at the time of such transaction, shall not exceed the greater of the
following: With respect to any virtual-currency kiosk in operation in Vermont
prior to July 1, 2026:
      (1) $5.00; or Expiration and termination. Any registration of a virtual-
currency kiosk shall expire and terminate on July 1, 2026.
      (2) 15 percent of the U.S. dollar equivalent of virtual currency involved
in the transaction or transactions.
   (c) Single transaction. The purchase, sale, exchange, swap, or conversion
of virtual currency, or the subsequent transfer of virtual currency, in a series of
transactions shall be deemed to be a single transaction for purposes of
subsections (a) and (b) of this section.
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   (d) Licensing requirement. A virtual-currency kiosk operator shall comply
with the licensing requirements of this subchapter to the extent that the virtual-
currency kiosk operator engages in virtual-currency business activity.
   (e) Operator accountability. If a virtual-currency kiosk operator allows or
facilitates another person to engage in virtual-currency business activity via a
virtual-currency kiosk in this State that is owned, operated, or managed by the
virtual-currency kiosk operator, the virtual-currency kiosk operator shall do all
of the following:
      (1) ensure that the person engaging in virtual-currency business activity
is licensed under subchapter 2 of this chapter to engage in virtual-currency
business activity and complies with all other applicable provisions of this
chapter;
      (2) ensure that any charges collected from a customer via the virtual-
currency kiosk comply with the fee cap established in subsection (b) of this
section; and
      (3) comply with all other applicable provisions of this chapter.
   (f) Moratorium. To protect the public safety and welfare and safeguard the
rights of consumers, virtual-currency kiosks shall not be permitted to operate
in Vermont prior to July 1, 2026. This moratorium shall not apply to a virtual-
currency kiosk that was duly licensed and operational in Vermont on or before
June 30, 2024.
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   (g) Customer identification. For each virtual-currency transaction
occurring at a virtual-currency kiosk in this State, the virtual-currency kiosk
operator shall verify the identity of the customer prior to accepting payment
from the customer. A virtual-currency kiosk operator shall not allow a
customer to engage in any transaction at a virtual-currency kiosk under any
name, account, or identity other than the customer’s own true name and
identity. A virtual-currency kiosk operator shall obtain a copy of a
government-issued identification card that identifies the customer and shall
collect additional customer information, including the customer’s name, date
of birth, telephone number, address, and email address prior to accepting any
payment from a customer at a virtual-currency kiosk in this State. In addition,
a virtual-currency kiosk operator shall take a photograph of the customer in a
retainable format at the virtual-currency kiosk for each transaction. A virtual-
currency kiosk operator shall be strictly liable for any violation of this
subsection.
   (h) Customer support. A virtual-currency kiosk operator shall offer live,
toll-free, telephone customer support during the hours of operation of a virtual-
currency kiosk. The customer support telephone number shall be displayed on
the virtual-currency kiosk or on the virtual-currency kiosk screen.
   (i) Mandatory live screening.
      (1) A virtual-currency kiosk operator shall identify and speak by
telephone with:
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          (A) a new customer over 60 years of age prior to such customer’s
first virtual-currency transaction with the virtual-currency kiosk operator; or
          (B) a customer attempting to conduct more than $5,000.00 in virtual-
currency transactions during any consecutive 10-day period.
      (2) The virtual-currency kiosk operator’s approval of a transaction
subject to a mandatory live screening under this subsection shall be dependent
upon its assessment of its communication with the customer during the
screening.
      (3) A virtual-currency kiosk operator shall record and retain a copy of
each mandatory live screening.
      (4) During the mandatory live screening, the virtual-currency kiosk
operator shall:
          (A) positively identify the customer;
          (B) reconfirm any attestations made by the customer at the virtual-
currency kiosk;
          (C) discuss the purpose of the transaction; and
          (D) discuss types of fraudulent schemes relating to virtual currency.
   (j) Blockchain analytics. A virtual-currency kiosk operator shall use
blockchain analytics software and retain an established third party that
specializes in performing blockchain analytics to assist in the prevention of
sending purchased virtual currency from a virtual-currency kiosk operator to a
digital wallet known to be affiliated with fraudulent activity at the time of a
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transaction. The Commissioner may request evidence from any virtual-
currency kiosk operator of its current use of blockchain analytics.
      (k) Full refund for new customers. The virtual-currency kiosk operator
shall provide a full refund to a customer who was fraudulently induced to
engage in a virtual-currency kiosk transaction, provided the fraudulently
induced transaction occurred while the customer was a new customer and
further provided the customer contacts the virtual-currency kiosk operator and
a law enforcement or government agency to inform the operator and the
agency of the fraudulent nature of the transaction within 90 days after the
customer’s last virtual-currency transaction with the virtual-currency kiosk
operator. The refund shall include any fees charged in association with the
fraudulently induced transaction.
      (l)(3) Fee refund for existing customers. The virtual-currency kiosk
operator shall provide a fee refund to an existing customer who has been
fraudulently induced to engage in a virtual-currency kiosk transaction,
provided the customer contacts the virtual-currency kiosk operator and a law
enforcement or government agency to inform the operator and the agency of
the fraudulent nature of the transaction within 90 days after the last
fraudulently induced transaction. The refund shall include all fees charged in
association with the fraudulently induced transaction.
      (4) Records retention. Until at least July 1, 2031, or a later date required
by the Commissioner, the virtual-currency kiosk operator shall maintain, and
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make available to the Commissioner upon request, all records that the virtual-
currency kiosk operator was required to maintain prior to July 1, 2026.
   (c) Violations. For any virtual-currency kiosk transaction occurring after
July 1, 2026, in violation of this section, the virtual-currency kiosk operator
shall provide a full refund to the customer upon request of the customer or the
Commissioner. The refund shall include any fees charged in association with
the transaction.
   (m) Fraud prevention. A virtual-currency kiosk operator shall take
reasonable steps to detect and prevent fraud, including establishing and
maintaining a written antifraud policy. The antifraud policy shall, at a
minimum, include the following:
      (1) the identification and assessment of fraud-related risk areas;
      (2) procedures and controls to protect against identified risks;
      (3) allocation of responsibility for monitoring risks;
      (4) procedures for the periodic evaluation and revision of the antifraud
procedures, controls, and monitoring mechanisms;
      (5) procedures and controls that prevent more than one customer from
using the same digital wallet;
      (6) procedures and controls that enable the virtual-currency kiosk
operator to prevent a digital wallet from being used at a virtual-currency kiosk
it operates if the operator knows or reasonably should know the digital wallet
is affiliated with fraudulent activities; and
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      (7) policies and procedures for using a risk-based method for monitoring
customers on a post transaction basis.
   (n) Due diligence policy. A virtual-currency kiosk operator shall maintain,
implement, and enforce a written Enhanced Due Diligence Policy. The Policy
shall be reviewed and approved by the virtual-currency kiosk operator’s board
of directors or an equivalent governing body of the virtual-currency kiosk
operator. The Policy shall identify, at a minimum, individuals who are at risk
of fraud based on age or mental capacity.
   (o) Compliance policies. A virtual-currency kiosk operator shall maintain,
implement, and enforce written compliance policies and procedures. Such
policies and procedures shall be reviewed and approved by the virtual-currency
kiosk operator’s board of directors or an equivalent governing body of the
virtual-currency kiosk operator.
   (p) Compliance officer.
      (1) A virtual-currency kiosk operator shall designate and employ a
compliance officer who meets the following requirements:
          (A) is qualified to coordinate and monitor compliance with this
section and all other applicable federal and State laws and regulations;
          (B) is employed full-time by the virtual-currency kiosk operator; and
          (C) is not an individual who owns more than 20 percent of the
virtual-currency kiosk operator by whom the individual is employed.
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      (2) Compliance responsibilities required under federal and State law and
regulation shall be completed by one or more full-time employees of the
virtual-currency kiosk operator.
   (q) Consumer protection officer. A virtual-currency kiosk operator shall
designate and employ a consumer protection officer who meets the following
requirements:
      (1) is qualified to coordinate and monitor compliance with this section
and all other applicable federal and State laws and regulations;
      (2) is employed full-time by the virtual-currency kiosk operator; and
      (3) is not an individual who owns more than 20 percent of the virtual-
currency kiosk operator by whom the individual is employed.
   (r) The Commissioner may adopt rules the Commissioner deems necessary
and proper to carry out the purposes of this section, including with respect to
what constitutes fraudulent activity or a fraudulently induced transaction in the
context of customer transactions at a virtual-currency kiosk.
            * * * Banking; Financial and Related Institutions * * *
Sec. 15. REPEAL
   8 V.S.A. § 10101 (application of consumer protection chapter) is repealed.
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Sec. 16. 8 V.S.A. § 10201 is amended to read:
§ 10201. STATEMENT OF POLICY ON FINANCIAL PRIVACY
   It is the policy of this State to protect the privacy of customers of financial
institutions regulated entities without unduly inhibiting the free flow of
commerce or legitimate law enforcement activities.
Sec. 17. 8 V.S.A. § 10202 is amended to read:
§ 10202. DEFINITIONS
   As used in this subchapter:
      (1)(A) “Account verification service” means any person who, for
monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in
whole or in part in the practice of:
              (A)(i) assembling information on the frequency and location of
depository account openings or attempted openings by a consumer, or forced
closings by a depository institution of accounts of a consumer; or
              (B)(ii) authenticating or validating Social Security numbers or
addresses for the purpose of reporting to third parties for use in fraud
prevention.
          (B) Mailing such information to a customer to the address provided
by such customer shall not be prohibited by this subchapter.
      (2) “Credit reporting agency” means any person who, for monetary fees,
dues, or on a cooperative nonprofit basis, regularly engages in whole or in part
in the practice of assembling or evaluating consumer credit information or
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other information on consumers for the purpose of reporting to third parties on
the credit rating or creditworthiness of any consumer.
      (3) “Customer” means, for purposes of this subchapter, any person who
deposits, borrows, or invests with a financial institution regulated entity,
including a surety or a guarantor on a loan.
      (4) “Financial information” means an original or copy of, or information
derived from:
           (A) a document that grants signature authority over a deposit or share
account;
           (B) a statement, ledger card, or other record of a deposit or share
account that shows transactions in or with respect to that deposit or account;
           (C) a check, clear draft, or money order that is drawn on a financial
institution regulated entity or issued and payable by or through a financial
institution regulated entity;
           (D) any item, other than an institutional or periodic charge, that is
made under an agreement between a financial institution regulated entity and
another person’s deposit or share account;
           (E) any information that relates to a loan account or an application
for a loan; or
           (F) evidence of a transaction conducted by electronic or telephonic
means.
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      (5) “Financial institution” means a financial institution as defined in
subdivision 11101(32) of this title, and a credit union, financial institution
subsidiary, licensed lender, mortgage broker, or sales finance company
organized or regulated under the laws of this State, the United States, or any
other state or territory.
      (6) “Mercantile agency” means any person who, for monetary fees,
dues, or on a cooperative nonprofit basis, regularly engages in whole or in part
in the practice of assembling or evaluating business credit information or other
information on businesses for the purpose of reporting to third parties on the
credit rating or creditworthiness of any business.
      (6) “Regulated entity” means a person required to be licensed or
chartered pursuant to Part 2 of this title, an entity organized under the laws of
another state that is regulated by its home state in an equivalent manner to an
independent trust company chartered pursuant to chapter 77 of this title, a
financial institution, a credit union, branches and agencies of foreign banks,
and subsidiaries of any such person.
Sec. 18. 8 V.S.A. § 10203 is amended to read:
§ 10203. DISCLOSURE OF FINANCIAL RECORDS PROHIBITED
   Except as otherwise expressly provided in this subchapter, a financial
institution regulated entity, its officers, employees, agents, and directors shall
not disclose to any person any financial information relating to a customer.
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Financial institutions Regulated entities shall adopt reasonable procedures to
ensure compliance with this subchapter.
Sec. 19. 8 V.S.A. § 10204 is amended to read:
§ 10204. EXCEPTIONS
   This subchapter does not prohibit any of the activities listed in this section.
This section shall not be construed to require any financial institution regulated
entity to make any disclosure not otherwise required by law. This section shall
not be construed to require or encourage any financial institution regulated
entity to alter any procedures or practices not inconsistent with this subchapter.
This section shall not be construed to expand or create any authority in any
person or entity other than a financial institution regulated entity.
                                       ***
      (6) The preparation, examination, handling, or maintenance of financial
records by any officer, employee, or agent of a financial institution regulated
entity that has custody of the records.
      (7) The examination of financial records by a certified public accountant
while engaged by the financial institution regulated entity to perform an
independent audit.
      (8) The disclosure of information to a collection agency, its employees
or agents, or to any person engaged by the financial institution regulated entity
to assist in recovering an amount owed to the financial institution regulated
entity, if such disclosure is made in the furtherance of recovering such amount.
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                                      ***
      (13) The exchange, in the regular course of business, of credit
information between a financial institution regulated entity and a credit
reporting agency, provided such exchange is in compliance with the Vermont
Fair Credit Reporting Act, 9 V.S.A. chapter 63, subchapter 3, and the federal
Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.
      (14) The exchange, in the regular course of business, of information
between a financial institution regulated entity and an account verification
service, provided such exchange is in compliance with the Vermont Fair Credit
Reporting Act, 9 V.S.A. chapter 63, subchapter 3, and the federal Fair Credit
Reporting Act, 15 U.S.C. § 1681 et seq.
      (15) The exchange, in the regular course of business, of information
between a financial institution regulated entity and a mercantile agency,
provided such exchange is solely for the purpose of reporting to third parties
on the credit rating or creditworthiness of any business and is in compliance
with the Vermont Fair Credit Reporting Act, 9 V.S.A. chapter 63, subchapter
3, and the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.
                                      ***
      (19) Disclosure requested pursuant to subpoena, provided that no
disclosure shall be made until 14 days after the financial institution regulated
entity has notified the customer that financial information has been requested
by subpoena. Such notice shall be served by first-class mail to the customer at
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the most recent address known to the financial institution regulated entity. The
provisions of this subdivision shall not apply where the subpoena is issued by
or on behalf of a regulatory, criminal, or civil law enforcement agency.
      (20) Disclosure required by order of court.
      (21) Disclosure of customer financial information among directors,
officers, employees, or agents of affiliated financial institutions regulated
entities, provided that such disclosure is limited to information necessary or
appropriate to the fulfillment of any such persons’ duties and responsibilities to
the financial institution or institutions regulated entity or entities, and provided
further that such disclosure is made in compliance with the Vermont Fair
Credit Reporting Act, 9 V.S.A. chapter 63, subchapter 3, and the federal Fair
Credit Reporting Act, 15 U.S.C. § 1681 et seq.
      (22) Disclosure of customer financial information of one financial
institution regulated entity to another financial institution regulated entity in
connection with a proposed merger, consolidation, acquisition, or other
reorganization transaction involving such institution, provided that no further
disclosure is made except in compliance with this subchapter, and provided
further that such disclosure is made in compliance with the Vermont Fair
Credit Reporting Act, 9 V.S.A. chapter 63, subchapter 3, and the federal Fair
Credit Reporting Act, 15 U.S.C. § 1681 et seq.
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      (23) Disclosure in accordance with rules adopted by the Commissioner,
provided that the Commissioner may permit disclosure by temporary order,
until such time as rules under this subdivision are adopted.
      (24) Disclosure sought by the Department of Taxes of this State
pursuant to its authority and obligations under Title 32.
      (25) Reports or disclosure of financial or other information to the
Department of Disabilities, Aging, and Independent Living, pursuant to 33
V.S.A. §§ 6903(b), 6904, and 6915.
      (26) Disclosure of information sought by the Department of Vermont
Health Access or its agents pursuant to the Department’s authority and
obligations under 33 V.S.A. § 403.
Sec. 20. 8 V.S.A. § 10205 is amended to read:
§ 10205. PENALTIES
   In addition to the authority provided under sections 11601, 11602, and
11603 of in this title, the Commissioner may impose an administrative penalty
of not more than $1,000.00 for each violation of this subchapter resulting from
willful conduct or from a failure by a financial institution regulated entity to
provide reasonable supervision of its employees to prevent violations of this
subchapter.
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Sec. 21. 8 V.S.A. § 10206 is amended to read:
§ 10206. LEAD SOLICITATIONS
   (a) As used in this section, “consumer” means a natural person residing in
this State.
   (b) A person shall not use the name, trade name, or trademark of any
financial institution regulated entity in any written or oral advertisement or
solicitation to a specifically identified consumer, or that contains specific
information on the account or loan of a specifically identified consumer, for
products or services, without the express written consent of the financial
institution regulated entity.
   (c) A person shall not include a loan number, loan amount, or any other
specific loan information that is publicly available and relative to a specifically
identified consumer in any written or oral solicitation for products or services
unless the solicitation clearly and conspicuously states on the front page of the
correspondence in bold-face type and in a type size at least equal to the body of
the correspondence:
      (1) that the person is not affiliated with or sponsored by the financial
institution regulated entity;
      (2) that the solicitation is not authorized by the financial institution
regulated entity;
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      (3) that the financial institution regulated entity has not supplied the
person with any loan information or personal or financial information
referenced in the solicitation; and
      (4) the name, address, and telephone number of the person who paid for
the solicitation.
   (d) The statements required by subsection (c) of this section shall also be
given at the time of any oral solicitation to a specifically identified consumer.
   (e) In addition to any other authority provided elsewhere, the
Commissioner may enforce violations of this section against any person and
may impose penalties as set forth in sections 2110 and 2115 of this title; may
recover costs and attorney’s fees, including court costs; may order any person
to cease violating this section; and may take such other actions as the
Commissioner deems necessary and appropriate. All administrative
proceedings shall be conducted in accordance with 3 V.S.A. chapter 25 and
any rules adopted by the Commissioner on hearing procedures.
   (f) A financial institution regulated entity that has had its name, trade name,
or trademark misrepresented in a solicitation in violation of this section may, in
addition to any other remedy provided by law, bring an action in the Civil
Division of the Superior Court in the county of its primary place of business
or, if its primary place of business is located outside Vermont, in Washington
the Superior Court of Washington County. The court shall award damages for
each violation in the amount of actual damages demonstrated by the financial
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institution regulated entity or $5,000.00, whichever is greater. In any
successful action for injunctive relief or for damages, the court shall award the
financial institution regulated entity reasonable attorney’s fees and costs,
including court costs.
   (g) A person’s failure to comply with the requirements of this section shall
constitute an unfair and deceptive act in commerce enforceable under 9 V.S.A.
chapter 63.
   (h) For purposes of this section, each solicitation sent to each consumer
constitutes a separate violation.
Sec. 22. [Deleted]
Sec. 23. 8 V.S.A. § 10402 is amended to read:
§ 10402. LENDING REPORTS, DISCLOSURES, AND STANDARDS
   An entity subject to this chapter Any person licensed, chartered, or
otherwise authorized, or required to be licensed, chartered, or otherwise
authorized, under Part 2, 4, or 5 of this title shall be subject to and comply with
the provisions of 9 V.S.A. chapter 4 (interest).
Sec. 24. 8 V.S.A. § 10403 is amended to read:
§ 10403. PROHIBITION ON DISCRIMINATION BASED ON SEX,
          MARITAL STATUS, RACE, COLOR, RELIGION, NATIONAL
          ORIGIN, AGE, SEXUAL ORIENTATION, GENDER IDENTITY,
          OR DISABILITY
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   (a) Discrimination prohibited. No financial lending institution shall
discriminate against any applicant for credit services on the basis of the sex,
marital status, race, color, religion, national origin, age, sexual orientation,
gender identity, or disability of the applicant, provided the applicant has the
legal capacity to contract.
   (b) Rulemaking. The Department Commissioner of Financial Regulation
shall adopt rules necessary to carry out the provisions of this section.
   (c) Definitions. As used in this section:
      (1) “Adverse action” means denial, revocation, or termination of credit
services. The term does not include a change in the terms of an account
expressly agreed to by an applicant nor any action or forbearance relating to an
account taken in connection with inactivity, default, or delinquency as to that
account.
      (2) “Applicant” means any person who applies to a financial lending
institution directly for an extension, renewal, or continuation of credit or
applies to a financial lending institution indirectly by use of an existing credit
plan for an amount exceeding a previously established credit limit.
      (3) “Application” means an oral or written request for an extension of
credit that is made in accordance with procedures established by a financial
lending institution for the type of credit requested. The term does not include
the use of an account or line of credit to obtain an amount of credit that is
within a previously established credit limit. A completed application means an
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application in connection with which a financial lending institution has
received all the information that the financial lending institution regularly
obtains and considers in evaluating applications for the amount and type of
credit requested, including credit reports, any additional information requested
from the applicant, and any approvals or reports by governmental agencies or
other persons that are necessary to guarantee, insure, or provide security for the
credit or collateral. The financial lending institution shall exercise reasonable
diligence in obtaining such information.
      (4) “Credit services” means credit cards, personal loans, mortgage loans,
and commercial loans.
      (5) “Financial institutions” means Vermont financial institutions, credit
unions, and licensed lenders.
      (6) “Disability” applied to an applicant means a person with a disability
as defined in 21 V.S.A. § 495d(5). As used in this section, an applicant with a
disability does not include an alcoholic or drug abuser who, by reason of
current alcohol or drug use, constitutes an unacceptable credit risk.
      (6) “Lending institution” means a Vermont financial institution,
Vermont credit union, and any person required to obtain, or exempt from the
requirement to obtain, a lender license pursuant to section 2201 of this title.
      (7) “Person” means a natural person, a corporation, government or
governmental subdivision or agency, trust, estate, partnership, cooperative,
association, or other entity.
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   (d) Notification requirements.
      (1) Within 30 days of after reaching a decision on a completed
application, a financial lending institution shall notify the applicant of its
decision on the application.
      (2) Each applicant against whom adverse action is taken shall receive a
written statement of reasons for such action from the financial lending
institution.
      (3) For commercial credit only, a statement of reasons meets the
requirements of this section only if it contains the specific reasons for the
adverse action taken and cites the specific documentation or business judgment
that supports the adverse decision on the application. Consumer credit shall be
governed by the Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.), 15
U.S.C. § 1691 et seq., and regulations adopted pursuant to the Act.
      (4) Financial Lending institutions shall be required to maintain a copy of
all “statements of reasons” and the documentation upon which the decision
was based for 24 months after the date of issuance.
   (e) Civil enforcement. A financial lending institution that discriminates
against an applicant in violation of this section shall be liable to the applicant
for punitive damages, for actual damages sustained by the applicant as a result
of the discrimination, and for costs and reasonable attorney’s fees as
determined by the court.
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Sec. 25. 8 V.S.A. § 10404 is amended to read:
§ 10404. HOME LOAN ESCROW ACCOUNTS
                                       ***
   (e) The lender shall maintain escrow account funds in a federally an
insured depository institution, as defined in the Federal Deposit Insurance Act,
12 U.S.C. § 1813, as may be amended, or as defined under the Federal Credit
Union Act, 12 U.S.C. § 1781, as may be amended.
                                       ***
Sec. 26. 8 V.S.A. § 10405 is amended to read:
§ 10405. DEBT PROTECTION AGREEMENTS
                                       ***
   (c)(1) Requirements. In the case of credit granted by a seller or retail seller
of motor vehicles or of other goods and services that is not required to be
licensed under chapter 73 of this title, such retail seller or seller of motor
vehicles or of other goods and services shall, within 15 business days, sell,
assign, or otherwise transfer the loan agreement, motor vehicle installment
contract, or retail sales installment contract, together with the related debt
protection agreement in accordance with the provisions of subdivision (2) of
this subsection.
      (2) All assignments, sales, or transfers of a loan agreement or motor
vehicle or retail installment contract to which a debt protection agreement
relates and the related debt protection agreement shall be to a financial
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institution as defined in subdivision 11101(32) of this title, a credit union, or
an entity licensed under subdivision 2201(a)(1) or (4) of this title to engage in
lending or sales financing.
                                       ***
Sec. 27. 8 V.S.A. § 10504 is amended to read:
§ 10504. BASIC BANKING RULES
   The Commissioner may adopt rules to require Vermont financial
institutions with their principal place of business in this State to offer basic
checking and savings accounts if the Commissioner finds a material
deterioration in the availability and cost of basic checking and savings account
services in the results of any two consecutive surveys. The rule Any rules
adopted by the Commissioner under this section shall ensure that any required
basic banking will not impair the safety and soundness of any affected
Vermont financial institution and that any such rules shall not adversely affect
other consumers of banking services.
Sec. 28. 8 V.S.A. § 10505 is amended to read:
§ 10505. RETURNED CHECK CHARGES
   No depository institution financial institution or credit union shall assess a
returned check charge or similar charge against a depositor for the costs of
processing a check received by that depositor and returned for nonsufficient
funds by the institution upon which it was drawn.
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Sec. 29. 8 V.S.A. § 10601 is amended to read:
§ 10601. APPLICATION
   This subchapter shall apply to all persons any person licensed, chartered or
otherwise authorized, or registered, or required to be licensed, chartered or
otherwise authorized, or registered, under Parts 2, 4, and 5 Part 2, 4, or 5 of
this title.
Sec. 30. 8 V.S.A. § 10701 is amended to read:
§ 10701. DEFINITIONS
   As used in this subchapter:, the term
       (1) Financial institution. “Financial institution” means a financial
institution as defined in subdivision 10202(5) of this chapter.
       (2) Reverse mortgage loan. “Reverse mortgage loan” “reverse mortgage
loan” means a loan that:
       (A)(1) is a loan in which the committed principal amount is secured by a
mortgage on residential property owned by the borrower;
       (B)(2) is due upon sale of the property securing the loan or upon the
death of the last surviving borrower or upon the borrower terminating use of
the real property as a principal residence or upon the borrower’s default;
       (C)(3) provides cash advances to the borrower based upon the equity or
the value in the borrower’s owner-occupied principal residence; and
       (D)(4) requires no payment of principal or interest until the entire loan
becomes due and payable.
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Sec. 31. 8 V.S.A. § 10702 is amended to read:
§ 10702. COUNSELING
   Prior to accepting an application for a reverse mortgage loan, a financial
institution person shall refer every borrower to counseling from an
organization that is a housing counseling agency approved by the U.S.
Department of Housing and Urban Development and shall receive certification
from the counselor that the borrower has received in-person, face-to-face
counseling. However, if the borrower cannot or chooses not to travel to a
counselor and cannot be visited by a counselor in their home, telephone
counseling shall be provided by counseling agencies that are authorized by the
Department of Financial Regulation. The certificate shall be signed by the
borrower and the counselor and include the date of counseling; the name,
address, and telephone number of both the borrower and the organization
providing counseling; and shall be maintained by the holder of the reverse
mortgage throughout the term of the reverse mortgage loan.
Sec. 32. 8 V.S.A. § 10703 is amended to read:
§ 10703. ANNUITIES
   A financial institution No person shall not require an applicant for a reverse
mortgage loan to purchase an annuity as a condition of obtaining a reverse
mortgage loan. A financial institution or a broker arranging a reverse
mortgage loan shall not No person shall:
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      (1) offer an annuity to the borrower prior to the closing of the reverse
mortgage or before the expiration of the right of the borrower to rescind the
reverse mortgage agreement;
      (2) refer the borrower to anyone for the purchase of an annuity prior to
the closing of the reverse mortgage or before the expiration of the right of the
borrower to rescind the reverse mortgage agreement.
Sec. 33. 8 V.S.A. § 10704 is amended to read:
§ 10704. LIMITATION ON REVERSE MORTGAGE LOAN PROGRAMS
   No financial institution person shall issue a reverse mortgage loan unless it
is a lender approved by the federal Department of Housing and Urban
Development (HUD) to enter into a loan insured by the federal government
and the reverse mortgage loan complies with all requirements for participation
in the HUD Home Equity Conversion Mortgage Program or other similar
federal reverse mortgage loan program from time to time created and is insured
by the Federal Housing Administration or other similar federal agency or is a
government sponsored enterprise reverse mortgage loan.
Sec. 34. 8 V.S.A. § 11101 is amended to read:
§ 11101. DEFINITIONS
   Except as otherwise specifically provided elsewhere in this title, and subject
to such definitions as the Commissioner adopts by rule, the following terms
have the following meanings for purposes of this Part and Parts 1, 2, and 5 of
this title, unless the context clearly indicates otherwise:
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                                      ***
      (65) “Vermont financial institution” means a special purpose financial
institution or universal financial institution organized under the laws of the
State of Vermont.
                                      ***
            * * * Banking; Financial and Related Institutions * * *
Sec. 35. 8 V.S.A. § 12201 is amended to read:
§ 12201. MEETINGS
   (a) The governing body of a Vermont financial institution shall meet at
least monthly, except as otherwise provided in this section as often as is
necessary to ensure proper oversight of the financial institution but not less
than four times per year, at least once each quarter. A governing body that has
appointed an executive committee that meets during the months in which the
governing body does not meet shall meet at least six times a year, including
once each quarter. Minutes If a governing body meets less than monthly,
during the months in which the governing body does not meet, the governing
body shall appoint an executive committee that meets monthly. The minutes
of executive committee meetings shall be ratified by the governing body at the
governing body’s next meeting.
                                      ***
Sec. 36. 8 V.S.A. § 13402 is amended to read:
§ 13402. MEETINGS OF THE GOVERNING BODY
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   (a) The governing body shall hold at least six meetings each year at a time
fixed in the internal governance documents, which shall be held of a mutual or
cooperative financial institution shall meet as often as is necessary to ensure
proper oversight of the financial institution but not less than four times per
year, at least once each quarter. In any month in which the governing body
does not meet, the executive committee permitted under subsection 13403(c)
of this title shall meet and a record of the meeting of the executive committee
If a governing body meets less than monthly, during the months in which the
governing body does not meet, the governing body shall appoint an executive
committee that meets monthly. The minutes of executive committee meetings
shall be ratified at the governing body’s next meeting of the governing body.
                                       ***
Sec. 37. 8 V.S.A. § 14301 is amended to read:
§ 14301. LOAN AUTHORITY
   (a) General loan authority. Unless otherwise prohibited by State law, a
Vermont financial institution may make, sell, purchase, arrange, participate in,
invest in, or otherwise deal in loans, derivative transactions, or extensions of
credit for any lawful purpose.
   (b) Written loan policy.
      (1) A financial institution’s governing body shall establish a written
loan, credit, and derivative transaction policy, as applicable to the activities of
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the financial institution, which shall be reviewed and ratified at least annually,
that addresses at a minimum, the following:
          (A) loan portfolio mix and diversification standards and, if
applicable, derivative transaction portfolio mix and diversification standards;
          (B) prudent underwriting standards, including loan-to-value limits
that are clear and measurable;
          (C) loan administration procedures, including delegation and
individual lending officer authority; and
          (D) documentation and approval requirements to monitor compliance
with lending policies; and
          (E) the circumstances under which a loan shall be considered for
approval by the financial institution’s governing body.
      (2) The policies adopted pursuant to this section shall be consistent with
safe and sound banking practices and appropriate to the size of the institution
and nature and scope of its operations.
   (c) Interest on loans. Financial institutions may demand and receive
interest and charges on their loans in accordance with 9 V.S.A. chapter 4
(interest) or as otherwise provided by law.
   (d) Limitations. A Vermont financial institution may shall not make loans,
derivative transactions, or extensions of credit outstanding at one time to a
borrower in excess of 20 percent of its capital or to a corporate group in excess
of 50 percent of its capital. As used in this subsection, “corporate group”
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means a person and all persons in whom it owns, controls, or holds the power
to vote 50 percent or more of any class of voting securities. Total loans,
derivative transactions, or other extensions of credit in excess of 10 percent of
capital shall be approved by a majority of the governing body or the executive
committee of that institution or organization.
      (1) Loans, derivative transactions, or extensions of credit to one person
will shall be attributed to another person and each person both persons shall be
deemed a single borrower as follows:
            (A) In the case of obligations of one person, the The proceeds will of
a loan, derivative transaction, or extension of credit to one person shall be
deemed to be used for the direct benefit of another person and will shall be
attributed to the other person when the proceeds, or assets purchased with the
proceeds, are transferred to another person, other than in a bona fide arm’s
length transaction where the proceeds are used to acquire property, goods, or
services.
            (B) A common enterprise shall be deemed to exist between persons,
and the obligations of one person shall be attributed to the other person in the
following situations:
               (i) The expected source of repayment for each obligation is the
same for each borrower and neither borrower has another source of income
from which the loan, together with the borrower’s other obligations, may be
fully repaid. An employer shall not be treated as a source of repayment under
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this subdivision (i) with respect to wages and salaries paid to an employee,
unless the situation in subdivision (ii) of this subdivision (d)(1)(B) exists.
            (ii)(I) Loans, derivative transactions, or extensions of credit are
made:
                   (aa) to borrowers who are related directly or indirectly
through common control, including where one borrower is directly or
indirectly controlled by another borrower; and
                   (bb) substantial financial interdependence exists between or
among the borrowers.
               (II) For purposes of this subdivision (d)(1)(B)(ii), control is
deemed to exist when a person directly or indirectly, or acting through or
together with one or more persons, owns, controls, or has the power to vote 25
percent or more of any class of voting securities of another person; controls, in
any manner, the election of a majority of the directors, trustees, or other
persons exercising similar functions of another person; or has the power to
exercise a controlling influence over the management or policies of another
person.
               (III) For purposes of this subdivision (d)(1)(B)(ii), substantial
financial interdependence is deemed to exist when 50 percent or more of one
borrower’s gross receipts or gross expenditures are, on an annual basis, derived
from transactions with the other borrower.
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                  (IV) For the purposes of this subdivision (d)(1)(B)(ii), gross
receipts and expenditures include gross revenues, gross expenses,
intercompany loans, dividends, capital contributions, and similar receipts or
payments.
               (iii) Loans, derivative transactions, or extensions of credit are
made to borrowers to acquire a business enterprise of which those borrowers
will own more than 50 percent of the voting securities or voting interests.
               (iv) The Commissioner determines, based upon an evaluation of
the facts and circumstances of particular transactions, that a common enterprise
exists.
            (C) In the case of The obligations of a partnership or association, the
obligations of each shall be attributed to each general partner and of or each
member of the association.
            (C)(D) In the case of The obligations of a general partner or a
member of an association, the obligations of shall be attributed to the
partnership or association.
            (D) In the case of obligations of a corporation, the obligations of any
subsidiaries in which it holds, directly or indirectly, a controlling equity
interest.
            (E) In the case of obligations of a limited liability company, the
obligations of any subsidiaries in which it holds, directly or indirectly, a
controlling equity interest.
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          (F) In the case of obligations of a corporation or limited liability
company, the amount of a loan made to any other person to the extent that the
proceeds of the loan directly or indirectly are to be:
             (i) loaned to the corporation or limited liability company;
             (ii) used for the acquisition from the corporation or limited liability
company of any equity interest in the corporation or company; and
             (iii) transferred to the corporation or limited liability company
without fair and adequate consideration; provided, however, that the discharge
of an equivalent amount of debt previously incurred in good faith for value
shall be deemed fair and adequate consideration.
          (E) The obligations of a general partner or a member of an
association are not attributed to other general partners or members unless the
situation in subdivision (A) or (B) of this subdivision (d)(1) exists.
          (F) The obligations of persons in a corporate group are not attributed
to other persons in the corporate group unless the situation in subdivision (A)
or (B) of this subdivision (d)(1) exists.
      (2) The following shall not be counted as indebtedness subject to the
limitation of this subsection:
          (A) Indebtedness indebtedness evidenced by bills of exchange or
drafts drawn against existing values and secured by a lien upon goods in transit
with shipper’s order, bills of lading, or comparable instruments attached.;
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          (B) Indebtedness indebtedness evidenced by notes or other paper
secured by readily marketable corporate stock having a fair market value of not
less than 125 percent of the indebtedness.;
          (C) Indebtedness indebtedness evidenced by notes or other paper
secured by an assignment of accounts receivable or of amounts due to become
due on open account or on a contract to the extent of not less than 125 percent
of the indebtedness.;
          (D) Indebtedness indebtedness evidenced by notes or other paper
secured by liens upon agricultural products, manufactured goods, or other
chattels in storage in warehouses or elevators with warehouse or elevator
receipts attached, or goods released on trust receipts, when the value of the
security is not less than 125 percent of the indebtedness and the financial
institution’s interest is insured against loss by insurance policies or certificates
of insurance attached.;
          (E) Indebtedness indebtedness arising out of the daily transaction of
the business of any clearing house association.;
          (F) Indebtedness indebtedness secured to the extent thereof by the
cash surrender value of life insurance evidenced by policies of insurance
validity issued and assigned.;
          (G) Indebtedness indebtedness secured to the extent thereof by
savings deposits or certificates of deposit of solvent financial institutions up to
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the amount insured by the Federal Deposit Insurance Corporation, and duly
assigned.;
          (H) Any any portion of any indebtedness that the U.S. government,
or an agency or instrumentality of the United States, unconditionally agreed to
purchase or has unconditionally guaranteed as to payment of both principal and
interest, including loans insured or guaranteed under the National Housing Act,
12 U.S.C. Chapter 13, or the Servicemen’s Readjustment Act of 1944, 38
U.S.C. Chapter 37, as may be amended.;
          (I) Additional additional funds advanced for the benefit of a borrower
by a financial institution for payment of taxes, insurance, utilities, security, and
maintenance and operating expenses necessary to preserve the value of real
property securing the loan.;
          (J) Amounts amounts paid against uncollected funds in the normal
process of collection.; and
          (K) That that portion of a loan or extension of credit sold as a
participation by a financial institution on a nonrecourse basis, provided that the
participation results in a pro rata sharing of credit risk proportionate to the
respective interests of the originating and participating lenders.
Sec. 38. 8 V.S.A. § 30101 is amended to read:
§ 30101. DEFINITIONS
   As used in this part Except as otherwise specifically provided elsewhere in
this title, the following terms have the following meanings for purposes of this
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Part and Parts 1, 2, and 4 of this title, unless the context clearly indicates
otherwise:
                                        ***
Sec. 39. 8 V.S.A. § 31304 is amended to read:
§ 31304. MEETINGS OF GOVERNING BODY
   (a) The governing body of a credit union shall meet as often as is necessary
and at least monthly, provided that if the governing body delegates its authority
to an executive committee, the executive committee shall meet during the
months in which the governing body does not meet. The governing body shall
meet at least six times a year, including once each quarter. The governing
body and the executive committee, if appointed, shall keep complete minutes
of all of their meetings, which minutes shall include the names of all persons
present at each meeting to ensure the proper oversight of the credit union but
not less than four times per year, at least once each quarter. Minutes If a
governing body meets less than monthly, during the months in which the
governing body does not meet, the governing body shall appoint an executive
committee that meets monthly. The minutes of the executive committee
meetings shall be ratified by the governing board body at the governing body’s
next meeting.
                                        ***
Sec. 40. 8 V.S.A. § 32204 is amended to read:
§ 32204. JOINT DEPOSITS
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   (a) The provisions of section 14204 of this title governing joint deposits
shall apply to credit unions in the same manner as they apply to financial
institutions as defined in subdivision 11101(32) of this title.
   (b) Provided a joint deposit is made in the name of at least one member, a
credit union shall treat a joint deposit the same regardless of whether the other
individuals in whose name it is made are members or nonmembers.
   (c) A single joint share account may hold more than one membership share,
supporting membership for more than one member of the credit union. If more
than one joint owner seeks credit union membership through the joint account,
the joint account must contain a membership share for each member.
Sec. 41. 8 V.S.A. § 32301 is amended to read:
§ 32301. LOAN AUTHORITY
   (a) Unless otherwise restricted by applicable law, rule, or regulation, a
credit union may lend to its members, including where a coborrower is a
nonmember, for such purposes as prescribed by the governing body. The
governing body shall establish a written loan policy in accordance with the
requirements of this section.
   (b) Every loan application shall be in writing upon a form approved by the
governing body, which application shall state the purpose for which the loan is
desired and the security, if any, offered for such loan.
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   (c) Written loan policy. A credit union’s governing body and credit
committee shall establish a written loan policy in accordance with this
subsection.
      (1) The written loan policy shall address, at a minimum, the following:
          (A) loan portfolio mix and diversification standards;
          (B) prudent underwriting standards, including loan-to-value limits
that are clear and measurable;
          (C) loan administration procedures, including delegation and
individual lending officer authority; and
          (D) documentation and approval requirements to monitor compliance
with lending policies.
      (2) The lending policies adopted pursuant to this section shall be
consistent with safe and sound practices and appropriate to the size of the
credit union and nature and scope of its operations.
   (d) Interest and charges on loans. Credit unions may demand and receive
interest and charges on their loans in accordance with 9 V.S.A. chapter 4
(interest) or as otherwise provided by law.
   (e) Limitations. The total direct or indirect liabilities of any one member,
however incurred, to a credit union shall not exceed, at the time incurred, the
greater of $200.00 or 10 percent of the credit union’s total assets.
                                      ***
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      (2) The following shall not be counted as indebtedness subject to the
limitation of this subsection:
                                       ***
          (H) any portion of any indebtedness that the U.S. government, or an
agency or instrumentality of the United States, unconditionally agreed to
purchase or has unconditionally guaranteed as to payment of both principal and
interest, including loans insured or guaranteed under the National Housing Act,
12 U.S.C. Chapter 13, or the Servicemen’s Readjustment Act of 1944, 38
U.S.C. Chapter 37, as may be amended;
                                       ***
Sec. 42. 8 V.S.A. § 34101 is amended to read:
§ 34101. MERGERS
   (a) General. Any two or more credit unions may merge into one Vermont
credit union in accordance with the procedures and subject to the conditions
and limitations set forth in this chapter.
                                       ***
   (d) Vote of members. The plan of merger, as approved by the
Commissioner, shall be submitted to the members of each participating the
merging credit union for their approval at such credit union’s annual meeting
or at a special meeting called for that purpose in the following manner. Unless
a greater percentage is required by the organizational documents of either the
merging credit union, the plan of merger or assumption must be approved by a
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majority vote of the members present at a meeting called for this purpose. The
vote constitutes the adoption of the organizational documents of the continuing
credit union, including amendments, contained in the merger agreement.
   (e) Executed plan; certificate; effective date. The following provisions
apply to the executed plan, certificate, and effective date:
      (1) Upon approval by the members of each participating the merging
credit union, an executive officer and the secretary of each credit union shall
submit the executed plan of merger to the Commissioner, together with the
certified by these officers, and the executive officer and the secretary of the
merging credit union shall also submit the record of the vote of the members
approving it, each certified by these officers.
      (2) Upon receipt of the items in subdivision (1) of this subsection and
evidence that the participating credit unions have complied with all applicable
State and federal law, the Commissioner shall issue to the continuing credit
union a certificate specifying the name of each participating credit union and
the name of the continuing credit union. The continuing credit union shall file
a copy of the certificate with the Secretary of State for recording. This
certificate is conclusive evidence of the merger and of the correctness of all
proceedings relating to the merger in all courts and places. The certificate may
be filed in the appropriate land records offices to evidence the new name in
which property of each participating credit union is to be held.
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      (3) Unless a later date is specified in the certificate, the merger is
effective upon filing of the certificate as provided in subdivision (2) of this
subsection, and the authority of all but the surviving continuing credit union
shall terminate automatically upon filing. The Commissioner may file or order
any credit union to file conforming documents with the Secretary of State.
      (4) Any plan of merger may contain a provision that, notwithstanding
approval of the members or the Commissioner, the plan may be abandoned at
any time prior to the effective date of the merger by the governing body of any
participating credit union, either at the absolute discretion of the governing
body or upon the occurrence of any stated condition.
   (f) Federal credit union as participant. If one of the parties to a merger with
a Vermont credit union is a federal credit union, the participants shall comply
with all requirements imposed by federal law for such merger in addition to the
requirements contained in this title and shall provide evidence of such
compliance to the Commissioner.
   (g) Sections 34103 and 34104 of this title shall apply to mergers and
acquisitions made pursuant to this chapter.
   (h) Authority for expedited mergers. Notwithstanding any other provision
of law to the contrary or any organizational document of any participating
credit union, following approval of the plan of merger by a majority vote of the
governing body of each participating credit union and receipt by the
Commissioner of certified copies of the authorizing resolutions adopted by the
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governing body of each participating credit union, the Commissioner may
waive any requirement of subsection (b) of this section, may waive the
requirements of subsection (d) of this section, and may order that the merger
become effective immediately if the Commissioner believes that the action is
necessary for the protection of the members or the public.
Sec. 43. 9 V.S.A. § 201 is amended to read:
§ 201. DEFINITIONS
   As used in this subchapter:
      (1) “Disbursement of loan funds” means the delivery of the loan funds
by the lender to the settlement agent in one or more of the following forms:
          (A) cash;
          (B) wired funds or electronic transfer;
          (C) certified check;
          (D) checks issued by a governmental entity or instrumentality;
          (E) cashier’s check, teller’s check, or any transfer of funds by check
or otherwise that is fully collected and unconditionally available to the
settlement agent;
          (F) checks or other drafts issued by a state-chartered or federally
chartered financial institution, as defined in 8 V.S.A. § 11101(32); checks or
other drafts issued by a state-chartered or federally chartered credit union, as
defined in 8 V.S.A. § 30101(5); and
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          (G) checks issued by an insurance company licensed in the State of
Vermont.
                                      ***
                              * * * Insurance * * *
Sec. 44. 8 V.S.A. § 3441 is amended to read:
§ 3441. FORMATION OF A MUTUAL INSURANCE HOLDING
          COMPANY
                                      ***
   (e) The mutual insurance holding company may use the word “mutual” in
its name. The stock insurance company subsidiary of the mutual insurance
holding company may continue to use the word “mutual” in its name if the
name also includes the abbreviation “SI” for stock insurer.
Sec. 45. 8 V.S.A. § 3561 is amended to read:
§ 3561. ANNUAL STATEMENT AND QUARTERLY STATEMENTS
   (a) Each domestic, foreign, and alien insurance company doing business in
this state State shall annually submit to the Commissioner a statement of its
financial condition, verified by oath of two of its executive officers, on or
before March 1 of each year, file a copy of its annual statement convention
blank, along with any additional filings as prescribed by the Commissioner for
the preceding year. The statement shall be prepared in accordance with the
National Association of Insurance Commissioners’ NAIC’s Instructions
Handbook and Accounting Practices and Procedures Manual and, shall include
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the signed jurat page verified by oath or affirmation of two of its executive
officers and the actuarial certification, and shall be in such general form and
context, as approved by, and shall contain any other information required by,
the National Association of Insurance Commissioners NAIC with any useful or
necessary modifications or adaptations thereof required or approved or
accepted by the Commissioner for the type of insurance and kinds of insurers
to be reported upon, and as supplemented by additional information required
by the Commissioner. The statement of an alien insurer shall relate only to the
insurer’s transactions and affairs in the United States unless the Commissioner
requires otherwise. A foreign or alien company, upon withdrawing from the
State of Vermont shall pay to the Commissioner $25.00 for the filing of its
final financial statement.
   (b) Each year, in a form and manner prescribed by the Commissioner, each
domestic, foreign, and alien insurer doing business in this State shall file with
the NAIC a copy of the quarterly statements exhibiting its condition and affairs
for the period beginning on January 1 of the current calendar year through and
including the last day of the quarter for which the report is being made. The
first quarterly statement shall be filed on or before May 15. The second
quarterly statement shall be filed on or before August 15. The third quarterly
statement shall be filed on or before November 15. If any of the dates
specified in this subsection falls on a day other than a business day, then the
quarterly statement is due on or before the first business day preceding such
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date. The information filed with the NAIC shall include a jurat page. A copy
of any amendments and addenda to the quarterly statement filings
subsequently filed with the Department shall also be filed with the NAIC.
   (c) A foreign insurer domiciled in a state that has a law substantially
similar to subsection (a) of this section shall be deemed in compliance with this
section.
   (d)(1) At the direction of the Commissioner, each domestic, foreign, and
alien insurance company doing business in this State shall annually submit to
the Commissioner, in a manner and on forms approved by the Commissioner, a
statement of its market conduct performance for the purpose of permitting the
participation of this State in the Market Conduct Annual Statement program of
the National Association of Insurance Commissioners NAIC. The statement
shall be prepared in accordance with the Market Conduct Annual Statement
instructions published by the National Association of Insurance
Commissioners NAIC, with any useful or necessary modifications or
adaptations thereof required or approved or accepted by the Commissioner for
the type of insurance and kinds of insurers to be reported upon, and as
supplemented by additional information required by the Commissioner.
      (2) Subject to section 22 of this title, all market conduct annual
statements and other information filed pursuant to subdivision (1) of this
subsection, all records, and other information of investigations conducted by
the Department under this title, whether such statements, records, or
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information are in the possession of another regulatory or law enforcement
agency, the National Association of Insurance Commissioners NAIC, or any
person, shall be confidential and privileged, shall not be made public, shall not
be subject to subpoena, and shall not be subject to discovery or introduction
into evidence in any private civil action.
   (c)(e) The Commissioner shall adopt by rule the Medical Professional
Liability Closed Claim Reporting Model Law of the National Association of
Insurance Commissioners NAIC, as may be amended from time to time, or in
the Commissioner’s discretion a substantially similar rule. Subject to section
22 of this title, information that identifies, directly or indirectly, the closed
claims of a health care facility or a health care provider shall be confidential
and privileged, shall not be made public, shall not be subject to subpoena, and
shall not be subject to discovery or introduction into evidence in any private
civil action.
Sec. 46. 8 V.S.A. § 3811 is amended to read:
§ 3811. DEPENDENTS’ COVERAGE
   Any group life policy issued under section 3803 (employee groups) or 3804
(labor union groups) or 3807 (public employee groups) or 3808 (trustee
groups) or 3809 (employer association groups) or 3810a (associations and
discretionary groups) of this title may be extended to insure the employees or
members against loss due to the death of their spouses and children, or any
class or classes thereof, subject to the following requirements:
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      (1) The premium for the insurance shall be paid by the policyholder,
either from the employer’s, union’s, or association’s funds or funds contributed
by them or from funds contributed by the insured employees or members, or
from both. If any part of the premium is to be derived from funds contributed
by the insured employees or members, the insurance with respect to spouses
and children may be placed in force only if at least 75 percent of the then
eligible employees or members who then have eligible dependents, excluding
any as to whose family members evidence of insurability is not satisfactory to
the insurer, elected to make the required contribution. If no part of the
premium is to be derived from funds contributed by the employees or
members, all eligible employees or members, excluding any as to whose
family members evidence of insurability is not satisfactory to the insurer, must
be insured with respect to their spouses and children.
                                      ***
Sec. 47. 8 V.S.A. § 4724 is amended to read:
§ 4724. UNFAIR METHODS OF COMPETITION OR UNFAIR OR
          DECEPTIVE ACTS OR PRACTICES DEFINED
   The following are hereby defined as unfair methods of competition or unfair
or deceptive acts or practices in the business of insurance:
                                      ***
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      (7) Unfair discrimination; arbitrary underwriting action.
          (A) Making or permitting any unfair discrimination between insureds
of the same class and equal risk in the rates charged for any contract of
insurance, or in the dividends or other benefits payable thereon, or in any other
of the terms and conditions of such contracts.
          (B) Making or permitting unfair discrimination against an applicant
or an insured, on the basis of the sex, sexual orientation, gender identity, race,
religion, national origin, or marital status of the applicant or insured, with
regard to:
             (i) underwriting standards and practices or eligibility
requirements; or
             (ii) rates; however, nothing in this subdivision shall prevent any
person who contracts to insure another from setting rates for such insurance in
accordance with reasonable classifications based on relevant actuarial data or
actual cost experience in accordance with section 4686 of this title.
                                       ***
                              * * * Securities * * *
Sec. 48. 9 V.S.A. § 5202 is amended to read:
§ 5202. EXEMPT TRANSACTIONS
   The following transactions are exempt from the requirements of sections
5301 through 5306 5301–5306 and 5504 of this chapter:
                                       ***
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      (14)(A) A sale or an offer to sell securities by or on behalf of an issuer,
if the transaction is part of a single issue in which:
            (A)(i) not more than 25 10 purchasers are present in this State
during any 12 consecutive months, other than those designated in subdivision
(13) of this section;
            (B)(ii) a general solicitation or general advertising is not made in
connection with the offer to sell or the sale of the securities;
            (C)(iii) a commission or other remuneration is not paid or given,
directly or indirectly, to a person other than a broker-dealer registered under
this chapter or an agent registered under this chapter for soliciting a
prospective purchaser in this State; and
            (D)(iv) the issuer reasonably believes that all the purchasers in this
State, other than those designated in subdivision (13) of this section, are
purchasing for investment.
          (B) The exemption specified in this subdivision (14) shall not apply
to a federal covered security that is otherwise subject to a notice filing
requirement under subsection 5302(c) of this title.
                                        ***
Sec. 49. 9 V.S.A. § 5302 is amended to read:
§ 5302. NOTICE FILING
                                        ***
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   (f) Investment companies subject to 15 U.S.C. § 80a-1 et seq. shall pay to
the Commissioner an initial notice filing fee of $2,275.00 and an annual
renewal fee of $2,025.00 for each portfolio or share class of investment
company securities for which a notice filing is submitted. These fees are
nonrefundable.
                                      ***
Sec. 50. 9 V.S.A. § 5305 is amended to read:
§ 5305. SECURITIES REGISTRATION FILINGS
   (a) A registration statement may be filed by the issuer, a person on whose
behalf the offering is to be made, or a broker-dealer registered under this
chapter.
   (b) A person filing a registration statement shall pay a filing fee of $600.00.
A person filing a registration statement in connection with the New England
Crowdfunding Initiative shall be exempt from the filing fee requirement.
Open-end investment companies shall pay a registration fee and an annual
renewal fee for each portfolio as long as the registration of those securities
remains in effect. The fee is nonrefundable.
                                      ***
   (k) At the time of filing a request for exemption from registration, the
applicant shall pay a fee of $200.00. The fee is nonrefundable.
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Sec. 51. 9 V.S.A. § 5602 is amended to read:
§ 5602. INVESTIGATIONS AND SUBPOENAS
                                      ***
   (f) Unless presented by an emergency or exigent circumstances, the
Commissioner shall give notice to the Attorney General and U.S. Attorney not
less than five business days before applying to the Washington County
Superior Court of Washington County to compel the testimony, the filing of
the statement, the production of the record, or the giving of other evidence
under subsection (e) of this section. In the case of an emergency or exigent
circumstances, the Commissioner shall notify the Attorney General and U.S.
Attorney as soon as possible before applying to the Washington County
Superior Court of Washington County.
                                      ***
Sec. 52. 9 V.S.A. § 5603(b)(2)(C) is amended to read:
          (C) imposing a civil penalty up to $15,000.00 for each violation; an
order of rescission, restitution, or disgorgement directed to a person that has
engaged in an act, practice, or course of business constituting a violation of this
chapter or the predecessor act or a rule adopted or an order issued under this
chapter or the predecessor act. The court may increase a civil penalty amount
by not more than $5,000.00 per violation for violations involving a person who
is a vulnerable adult as defined in 33 V.S.A. § 6902(14)(34). The limitations
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on civil penalties contained in this subdivision shall not apply to settlement
agreements; and
Sec. 53. 9 V.S.A. § 5604(e) is amended to read:
   (e) For purposes of determining any sanction to be imposed under
subsections (a) through (d) (a)–(d) of this section, the Commissioner shall
consider among other factors, the frequency and persistence of the conduct
constituting a violation of this chapter or a rule or order of the Commissioner
under this chapter and the number of persons adversely affected by the
conduct, and the resources of the person committing the violation:
      (1) the extent that the violation harmed or might have harmed investors,
access to capital markets, or public confidence in the securities industry and
the integrity of capital markets;
      (2) whether the respondent knew or had reason to know that the
violation existed and whether the violation was intentional;
      (3) the economic benefit, if any, that could have been anticipated from
an intentional or knowing violation;
      (4) the length of time the violation existed;
      (5) the deterrent effect of the penalty;
      (6) the economic resources of the respondent;
      (7) the respondent’s record of compliance; and
      (8) any other aggravating or mitigating circumstances.
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Sec. 54. 9 V.S.A. § 5616 is amended to read:
§ 5616. VERMONT FINANCIAL SERVICES EDUCATION AND VICTIM
          RESTITUTION SPECIAL FUND
   (a) Purpose. The purpose of this section is to provide:
      (1) funds for the purposes specified in subsection 5601(d) of this title;
      (2) restitution assistance to victims of securities violations who:
          (A) were awarded restitution in a final order issued by the
Commissioner or were awarded restitution in the final order in a legal action
initiated by the Commissioner;
          (B) have not received the full amount of restitution ordered before
the application for restitution assistance is due; and
          (C) demonstrate to the Commissioner’s satisfaction that there is no
reasonable likelihood that they will receive the full amount of restitution in the
future; and
      (3) funds for the purposes specified in section 5617 of this title.
   (b) Definitions. As used in this section:
      (1) “Claimant” means a person who files an application for restitution
assistance under this section on behalf of a victim. The claimant and the
victim may be the same but do not have to be the same. The term includes the
named party in a restitution award in a final order, the executor of a named
party in a restitution award in a final order, and the heirs and assigns of a
named party in a restitution award in a final order.
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         (2) “Dependent child” means a person who falls within the definition of
“qualifying child” as defined in 26 U.S.C. § 152, as may be amended, with
respect to the victim or the victim’s surviving spouse as of the date the final
order is issued.
         (3) “Final order” means a final an order issued by the Commissioner
that disposes of a securities violation claim or claims or a final an order in a
legal action initiated by the Commissioner in the Superior Court of
Washington County that disposes of a securities violation claim or claims.
         (3)(4) “Fund” means the Vermont Financial Services Education and
Victim Restitution Special Fund created by this section.
         (4)(5) “Securities violation” means a violation of this chapter and any
related administrative rules.
         (5)(6) “Victim” means a person who was awarded restitution in a final
order.
         (6)(7) “Vulnerable person adult” means:
            (A) a person who meets the definition of vulnerable person adult
under 33 V.S.A. § 6902(14)(34); or
            (B) a person who is at least 60 years of age.
   (c) Eligibility.
         (1) A natural person who was a resident of Vermont at the time of the
alleged fraud is eligible for restitution assistance The claimant shall be limited
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to the victim or, in the case of a deceased victim, the deceased victim’s
surviving spouse or dependent child.
       (2) The Commissioner shall not award securities restitution assistance
under this section:
          (A) unless the victim is a natural person who was a resident of
Vermont at the time of the securities violation addressed in the final order;
          (B) to more than one claimant per victim;
          (B)(C) unless the person ordered to pay restitution has not paid the
full amount of restitution owed to the victim before the application for
restitution assistance from the fund is due;
          (C)(D) if there was no award of restitution in the final order; or
          (D)(E) to a claimant who has not exhausted his or her appeal rights.
     (d) Denial of assistance. The Commissioner shall not award restitution
assistance if the victim:
       (1)(i) sustained the monetary injury as a result of:
          (A)(I) participating or assisting in the securities violation; or
          (B)(II) attempting to commit or committing the securities violation;
or
       (2)(ii) profited or would have profited from the securities violation.
     (e)(d) Application for restitution assistance and maximum amount of
restitution assistance award.
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         (1) The Commissioner may adopt procedures and forms for application
for restitution assistance under this section.
         (2) An application must be received by the Commissioner within two
years after the deadline for payment of restitution established in the final order.
         (3) Except as provided in subdivision (4) of this subsection, the
maximum award from the Fund for each claimant shall be the lesser of
$25,000.00 or 25 percent of the amount of unpaid restitution awarded in a final
order.
         (4) If the claimant is victim was a vulnerable person adult at the time of
the securities violation addressed in the final order, the maximum award from
the Fund shall be the lesser of $50,000.00 or 50 percent of the amount of
unpaid restitution awarded in the final order.
         (5) The following information provided in or with an application for
restitution assistance is confidential:
            (A) the claimant’s and victim’s name, date of birth, physical address,
mailing address, email address, and phone number;
            (B) each of the items listed in subdivisions 2430(10)(A)(i)–(vii) of
this title pertaining to the claimant or victim; and
            (C) any other information provided in or with an application for
restitution assistance that alone, or in combination with the other information
provided in or with the application, would allow a person to identify the
claimant or victim with reasonable certainty.
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   (f)(e) Vermont Financial Services Education and Victim Restitution
Special Fund. The Vermont Financial Services Education and Victim
Restitution Special Fund, pursuant to 32 V.S.A. chapter 7, subchapter 5, is
created to provide funds for the purposes specified in this section, in subsection
5601(d) of this title, and in section 5617 of this title. All monies received by
the State for use in financial services education initiatives pursuant to
subsection 5601(d) of this title, in providing uncompensated victims restitution
pursuant to this section, or in providing whistleblower awards pursuant to
section 5617 of this title shall be deposited into the Fund. The Commissioner
may direct a party to deposit a sum not to exceed 15 percent of the total
settlement amount into the Fund in conjunction with settling an enforcement
matter within the Department’s jurisdiction, as described in 8 V.S.A. § 11(a).
Interest earned on the Fund shall be retained in the Fund.
   (g)(f) Award not subject to execution, attachment, or garnishment. An
award made by the Commissioner under this section is not subject to
execution, attachment, garnishment, or other process.
   (h)(g) State’s liability for award. The Commissioner shall have the
discretion to suspend applications and awards determine award amounts based
on the solvency of the Fund and the designation of monies in the Fund to the
other purposes established for the Fund. The State shall not be liable for any
determination made under this section.
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   (i)(h) Subrogation of rights of State.
      (1) The State is subrogated to the rights of the person awarded
restitution under this chapter to the extent of the award.
      (2) The subrogation rights are against the person who committed the
securities violation or a person liable for the pecuniary loss ordered to pay
restitution to the victim for the securities violation addressed in the final order.
   (i) Forfeiture of restitution award.
      (1) A person shall not engage in dishonesty, forgery, fraud, or deceit in
connection with an application for restitution assistance.
      (2) A person found by the Commissioner or a court to have engaged in
dishonesty, forgery, fraud, or deceit in connection with an application for
restitution assistance shall forfeit to the Department any amount paid in a
restitution assistance award and may be subject to penalties and other remedies
available pursuant to section 5508, 5603, or 5604 of this title or other law.
   (j) Rulemaking authority. The Commissioner may adopt rules to
implement this section.
                    * * * Miscellaneous Housekeeping * * *
Sec. 55. 8 V.S.A. § 19 is amended to read:
§ 19. FINANCIAL INSTITUTION SUPERVISION FUND; FEES AND
      DEPARTMENTAL EXPENSES
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   (a) The Commissioner shall charge each financial institution or financial
institution applicant for Department services rendered. Charges for
Department services shall be billed as follows:
                                        ***
   (f) There is hereby created a fund to be known as the Financial Institution
Supervision Fund for the purpose of providing the financial means for the
Commissioner of Financial Regulation to administer Parts 2, 4, and 5 of this
title, 9 V.S.A. Parts 1 and 3, and Title 9A. All fees and assessments received
by the Department pursuant to such administration shall be deposited in into
this Fund.
   (g) All payments from the Banking Financial Institution Supervision Fund
for the maintenance of staff and associated expenses, including contractual
services as necessary, shall be disbursed from the State Treasury only upon
warrants issued by the Commissioner of Finance and Management after receipt
of proper documentation regarding services rendered and expenses incurred.
   (h) Any entity, subject to the assessment under subsection (d) of this
section, that converts or relinquishes its State charter or closes all of its
branches or offices in this State will be responsible for a pro rata share of the
assessment made under subsection (d) of this section for the final period it was
authorized to conduct business under this title.
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Sec. 56. REPEALS
   (a) 8 V.S.A. chapter 3 (the Commissioner) is repealed and 8 V.S.A. § 80
(Insurance Regulatory and Supervision Fund) is recodified as 8 V.S.A. § 3317
pursuant to Sec. 57 of this act.
   (b) 8 V.S.A. § 3470 (allowing mortgage loans to a husband and wife if one
or both is a “minor,” defined as 18 years of age or older) is repealed.
Sec. 57. 8 V.S.A. § 3317 is added to read:
§ 3317. INSURANCE REGULATORY AND SUPERVISION FUND
   (a) There is hereby created a fund to be known as the Insurance Regulatory
and Supervision Fund for the purpose of providing the financial means for the
Commissioner of Financial Regulation to administer Part 3 of this title, and
except as provided under subsection 6017(a) of this title. All fees and
assessments received by the Department pursuant to such administration shall
be credited to this Fund. All fines and administrative penalties, however, shall
be deposited directly into the General Fund.
   (b) All payments from the Insurance Regulatory and Supervision Fund for
the maintenance of staff and associated expenses, including contractual
services as necessary, shall be disbursed from the State Treasury only upon
warrants issued by the Commissioner of Finance and Management, after
receipt of proper documentation regarding services rendered and expenses
incurred.
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   (c) Annually, $30,000.00 shall be transferred from the Fund to the Division
of Fire Safety Special Fund established in 20 V.S.A. § 3157.
   (d) At the end of each fiscal year, the balance in the Insurance Regulatory
and Supervision Fund shall be transferred to the General Fund.
   (e) The Commissioner of Finance and Management may anticipate receipts
to the Insurance Regulatory and Supervision Fund and issue warrants based
thereon.
Sec. 58. 9 V.S.A. § 5411 is amended to read:
§ 5411. POSTREGISTRATION REQUIREMENTS
   (a) Subject to 15 U.S.C. § 78o(h) 15 U.S.C. § 78o(i) or 15 U.S.C. § 80b-22
15 U.S.C. § 80b-18a, a rule adopted or order issued under this chapter may
establish minimum financial requirements for broker-dealers registered or
required to be registered under this chapter and investment advisers registered
or required to be registered under this chapter.
   (b) Subject to 15 U.S.C. § 78o(h) 15 U.S.C. § 78o(i) or 15 U.S.C. § 80b-22
15 U.S.C. § 80b-18a, a broker-dealer registered or required to be registered
under this chapter and an investment adviser registered or required to be
registered under this chapter shall file such financial reports as are required by
a rule adopted or order issued under this chapter. If the information contained
in a record filed under this subsection is or becomes inaccurate or incomplete
in a material respect, the registrant shall promptly file a correcting amendment.
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   (c) Subject to 15 U.S.C. § 78o(h) 15 U.S.C. § 78o(i) or 15 U.S.C. § 80b-22
15 U.S.C. § 80b-18a:
      (1) a broker-dealer registered or required to be registered under this
chapter and an investment adviser registered or required to be registered under
this chapter shall make and maintain the accounts, correspondence,
memoranda, papers, books, and other records required by rule adopted or order
issued under this chapter;
      (2) broker-dealer records required to be maintained under subdivision
(1) of this subsection may be maintained in any form of data storage acceptable
under 15 U.S.C. § 78q(a) if they are readily accessible to the Commissioner;
and
      (3) investment adviser records required to be maintained under
subdivision (1) of this subsection may be maintained in any form of data
storage required by rule adopted or order issued under this chapter.
   (d) The records of a broker-dealer registered or required to be registered
under this chapter and of an investment adviser registered or required to be
registered under this chapter are subject to such reasonable periodic, special, or
other audits or inspections by a representative of the Commissioner, within or
without this State, as the Commissioner considers necessary or appropriate in
the public interest and for the protection of investors. An audit or inspection
may be made at any time and without prior notice. The Commissioner may
copy, and remove for audit or inspection copies of, all records the
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Commissioner reasonably considers necessary or appropriate to conduct the
audit or inspection. The Commissioner may assess a reasonable charge for
conducting an audit or inspection under this subsection.
   (e) Subject to 15 U.S.C. § 78o(h) 15 U.S.C. § 78o(i) or 15 U.S.C. § 80b-22
15 U.S.C. § 80b-18a, a rule adopted or order issued under this chapter may
require a broker-dealer or investment adviser that has custody of or
discretionary authority over funds or securities of a customer or client to obtain
insurance or post a bond or other satisfactory form of security in an amount to
be established by rule or order. The Commissioner may determine the
requirements of the insurance, bond, or other satisfactory form of security.
Insurance or a bond or other satisfactory form of security may not be required
of a broker-dealer registered under this chapter whose net capital exceeds, or of
an investment adviser registered under this chapter whose minimum financial
requirements exceed, the amounts required by rule or order under this chapter.
The insurance, bond, or other satisfactory form of security must permit an
action by a person to enforce any liability on the insurance, bond, or other
satisfactory form of security if instituted within the time limitations in
subdivision 5509(j)(2) of this chapter.
   (f) Subject to 15 U.S.C. § 80b-18a, an investment advisor registered or
required to be registered under this chapter shall maintain adequate insurance
for the risk of a cybersecurity breach. The Commissioner may establish
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requirements for such cybersecurity insurance, including criteria that may be
used to determine if the cybersecurity insurance is adequate.
   (g) Subject to 15 U.S.C. § 78o(h) 15 U.S.C. § 78o(i) or 15 U.S.C. § 80b-22
15 U.S.C. § 80b-18a, an agent may not have custody of funds or securities of a
customer except under the supervision of a broker-dealer, and an investment
adviser representative may not have custody of funds or securities of a client
except under the supervision of an investment adviser or a federal covered
investment adviser. A rule adopted or order issued under this chapter may
prohibit, limit, or impose conditions on a broker-dealer regarding custody of
funds or securities of a customer and on an investment adviser regarding
custody of securities or funds of a client.
   (g)(h) With respect to an investment adviser registered or required to be
registered under this chapter, a rule adopted or order issued under this chapter
may require that information or other record be furnished or disseminated to
clients or prospective clients in this State as necessary or appropriate in the
public interest and for the protection of investors and advisory clients.
   (h)(i) A rule adopted or order issued under this chapter may require an
individual registered under section 5402 or 5404 of this chapter to participate
in a continuing education program approved by the Securities and Exchange
Commission and administered by a self-regulatory organization or, in the
absence of such a program, a rule adopted or order issued under this chapter
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may require continuing education for an individual registered under section
5404.
 * * * Providers of Merchant Cash Advances; Licensing and Regulation * * *
Sec. 59. 8 V.S.A. § 2115(e) is amended to read:
   (e)(1) A loan contract made in knowing and willful violation of subdivision
2201(a)(1) of this title is void, and the lender shall not collect or receive any
principal, interest, or charges; provided, however, in the case of a loan made in
violation of subdivision 2201(a)(1) of this title, where the Commissioner does
not find a knowing and willful violation, the lender shall not collect or receive
any interest or charges, but may collect and receive principal.
        (2) A commercial financing contract made in knowing and willful
violation of subdivision 2247(b)(1) or (2) of this title is void, and the provider
shall not collect or receive any amounts, payments, receivables, or charges;
provided, however, in the case of a commercial financing contract made in
violation of subdivision 2247(b)(1) or (2) of this title, where the Commissioner
does not find a knowing and willful violation, the provider may only collect
and receive an amount up to the disbursement amount paid to the recipient,
after any fees deducted or withheld at disbursement, and the provider may not
collect or receive any charges or other amounts.
        (3) If a person who receives an order that directs the person to cease
exercising the duties and powers of a licensee and imposes an administrative
penalty under this part continues to perform the duties or exercise the powers
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of a licensee without satisfying the penalty, or otherwise reaching a
satisfactory resolution between the parties that allows the person to exercise
such duties and powers, or securing a decision vacating the order by the
Commissioner or by a court of competent jurisdiction, a loan contract or
commercial financing contract made by the person after receipt of such order is
void and the lender person shall not collect or receive any principal, interest, or
amounts, payments, receivables, or charges.
Sec. 60. 8 V.S.A. § 2247 is added to read:
§ 2247. COMMERCIAL FINANCING
   (a) Definitions. As used in this section:
      (1) “Commercial financing” means a sales-based financing or factoring
transaction.
      (2) “Factoring transaction” means an accounts receivable purchase
transaction that includes an agreement to purchase, transfer, assign, or sell a
legally enforceable claim for payment held by a recipient for goods the
recipient has supplied or services the recipient has rendered that have been
ordered but for which payment has not yet been made. A purchase of accounts
receivable in connection with the purchase and sale of substantially all of the
assets of a business or line of business shall not be deemed to be a factoring
transaction.
      (3) “Finance charge” means the cost of financing as a dollar amount. It
includes any charge payable directly or indirectly by the recipient and imposed
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directly or indirectly by the provider as an incident to or a condition of the
extension of financing. It includes all charges that would be included under 12
C.F.R. Part 1026.4 as if the transaction were subject to 12 C.F.R. Part 1026.4.
In addition, the finance charge shall include any charges as determined by the
Commissioner. For the purposes of a factoring transaction, the finance charge
includes the discount taken on the face value of the accounts receivable.
      (4) “Provider” means a person who provides or will provide commercial
financing to a recipient or who extends a specific offer of commercial
financing to a person or to the person’s authorized representative. A provider
also includes a person who solicits prospective recipients of commercial
financing or who presents specific offers of commercial financing on behalf of
a third party.
      (5) “Recipient” means a person that receives or applies for commercial
financing or is made a specific offer of commercial financing by a provider. A
recipient may also be an authorized representative of such person.
      (6) “Sales-based financing” means a transaction that is repaid by the
recipient to the provider, over time, as a percentage of sales or revenue, in
which the payment amount may increase or decrease according to the volume
of sales made or revenue received by the recipient. Sales-based financing also
includes a true-up mechanism where the financing is repaid as a fixed payment
but provides for a reconciliation process that adjusts the payment to an amount
that is a percentage of sales or revenue. Sales-based financing also includes
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transactions structured as a sale or assignment of future accounts receivable,
future revenue, or future sales.
      (7) “Solicit prospective recipients of commercial financing” means, for
compensation or gain or with the expectation of compensation or gain, to:
          (A) solicit prospective recipients for commercial financing;
          (B) offer, broker, directly or indirectly arrange, place, or find
commercial financing for a prospective recipient;
          (C) obtain commercial financing for a prospective recipient or offer
to obtain commercial sales-based financing for a recipient from a provider;
          (D) initiate prospective recipients’ interest or inquiry in commercial
financing by online marketing, direct response advertising, telemarketing, or
other similar contact;
          (E) engage in the business of selling information identifying a
prospective recipient of commercial financing;
          (F) generate or augment information identifying a prospective
recipient of commercial financing for other persons; or
          (G) refer prospective Vermont recipients to other persons for
commercial financing.
      (8) “Specific offer” means the specific terms of commercial financing,
including price or amount, that is quoted to a recipient, based on information
obtained from, or about, the recipient, which, if accepted by a recipient, shall
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be binding on the provider, as applicable, subject to any specific requirements
stated in such terms.
   (b) License requirement.
      (1) A provider shall not provide commercial financing to a person in this
State, extend a specific offer of commercial financing to a person in this State,
or solicit prospective recipients of commercial financing extended by such
provider, unless the provider is licensed as a lender under this chapter.
      (2) A provider shall not solicit prospective recipients of commercial
financing on behalf of a third party or present or extend specific offers of
commercial financing on behalf of a third party unless the provider holds a
loan solicitation license under this chapter and such third party is licensed as a
lender under this chapter or exempt from the licensing requirements under this
section pursuant to subdivision (3) or (4) of this subsection.
      (3) A lender license, commercial lender license, or loan solicitation
license shall not be required under this section for any of the following:
          (A) a state agency, political subdivision, or other public
instrumentality of a state;
          (B) a federal agency or other public instrumentality of the United
States;
          (C) a depository institution or a financial institution as defined in
subdivision 11101(32) of this title; or
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          (D) a seller of goods or services that finances the sale of such goods
or services to a recipient.
       (4) This section shall not apply to commercial financing transactions of
$1,000,000.00 or more that are not primarily for personal, family, or household
use.
       (5) For purposes of this section, subsection 2201(d) of this title shall not
apply.
   (c) Personal, family, or household use. A commercial financing offered,
extended, or otherwise provided primarily for personal, family, or household
use, for the purpose of regulation under this chapter, shall also be deemed to be
a loan for purposes of this chapter. Any commercial financing deemed to be a
loan under this subsection shall be governed by and subject to applicable
provisions of this title, including this section, and 9 V.S.A. chapters 4, 59, and
61.
   (d) Certain automatic debts prohibited. A provider shall not establish a
mechanism for automatically debiting a recipient’s deposit account unless the
provider holds a validly perfected security interest in the recipient’s account
under Title 9A, with a first priority against the claims of all other persons.
   (e) Confessions of judgment. A commercial financing contract that
contains a confession of judgment provision or any similar provision is void
and unenforceable.
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   (f) Choice of law, jurisdiction, and venue; arbitration. Where a provider
enters into a contract or agreement with a recipient to provide commercial
financing, such contract or agreement shall be governed exclusively by
Vermont law, and any cause of action arising under such contract or agreement
shall be brought in a court in this State. Any provision in the contract or
agreement providing that the law of any other jurisdiction shall govern or
mandating that any such action be brought outside this State shall be
unenforceable by any party other than the recipient. Where a contract between
a provider and recipient contains an arbitration provision, such contract shall
not require face-to-face arbitration proceedings outside this State. If the
contract requires face-to-face arbitration proceedings outside this State, such
provision is unenforceable by any party other than the recipient. The
enforceability of the remaining provisions of the arbitration agreement and the
method of selecting a forum for the conduct of the arbitration proceedings are
as provided in the Vermont Arbitration Act, 12 V.S.A. chapter 192, the Federal
Arbitration Act, 9 U.S.C. §§ 1–16, and any applicable rules of arbitration. The
provider shall pay any arbitrators’ expenses or fees, or any other expenses or
administrative fees incurred in the conduct of any such arbitration proceedings.
   (g) Sales-based financing disclosure requirements.
      (1) A provider shall provide the following disclosures to a recipient at
the time of extending a specific offer of sales-based financing:
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          (A) The total amount of the commercial financing, and the
disbursement amount, if different from the financing amount, after any fees
deducted or withheld at disbursement.
          (B) The finance charge.
          (C) The estimated annual percentage rate, using the words “annual
percentage rate” or the abbreviation “APR,” expressed as a yearly rate,
inclusive of any fees and finance charges, and determined in accordance with
the federal Truth in Lending Act, Regulation Z, 12 C.F.R. § 1026.22, as may
be amended, based on the estimated term of repayment and the projected
periodic payment amounts, regardless of whether such act or such regulation
would require such a calculation. The estimated term of repayment and the
projected periodic payment amounts shall be calculated based on a projection
of the volume of the recipient’s sales or revenue. The projected volume of
sales or revenue may be calculated using the historical method, as described in
subdivision (i) of this subdivision (g)(1)(C), or the opt-in method, as described
in subdivision (ii) of this subdivision (g)(1)(C).
            (i) A provider using the historical method shall use an average
historical volume of sales or revenue on which the financing’s payment
amounts are based and by which the estimated annual percentage rate is
determined. The provider shall fix the historical time period to be used to
calculate the average historical volume of sales or revenue and use such period
for all disclosure purposes for all sales-based financing products offered by the
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provider. The fixed historical time period shall either be the time period
immediately preceding the specific offer or, alternatively, a time period
consisting of the same number of months with the highest sales or revenue
volume within the past 12 months. The fixed historical time period shall be at
least one month and shall not exceed 12 months.
             (ii) A provider using the opt-in method shall determine the
estimated annual percentage rate, the estimated term, and the projected
payments using a projected sales or revenue volume that the provider elects for
each disclosure. Upon a finding by the Commissioner that the use of projected
sales or revenue volume by the provider has resulted in an unacceptable
deviation between the estimated and actual annual percentage rates, the
Commissioner shall require the provider to use the historical method. The
Commissioner may consider unusual and extraordinary circumstances
impacting the provider’s deviation between estimated and actual annual
percentage rates in making such finding.
          (D) The total repayment amount, which is the disbursement amount
plus the finance charge.
          (E) The estimated term is the period of time required for the periodic
payments, based on the projected sales volume, to equal the total amount
required to be repaid.
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           (F) The payment amounts, based on the projected sales volume:
              (i) for payment amounts that are fixed, the payment amounts and
frequency (for example, daily, weekly, or monthly), and, if the payment
frequency is other than monthly, the amount of the average projected payments
per month; or
              (ii) for payment amounts that are variable, a payment schedule or
a description of the method used to calculate the amounts and frequency of
payments, and the amount of the average projected payments per month.
           (G) A description of all other potential fees and charges not included
in the finance charge, including draw fees, late payment fees, and returned
payment fees.
           (H) Were the recipient to elect to pay off or refinance the commercial
financing prior to full repayment, the provider shall disclose:
              (i) whether the recipient would be required to pay:
                 (I) any finance charges other than interest accrued since the last
payment; if so, disclosure of the percentage of any unpaid portion of the
finance charge and maximum dollar amount the recipient could be required to
pay; and
                 (II) any additional fees not already included in the finance
charge; and
              (ii) a description of collateral requirements or security interests, if
any.
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      (2) The provider shall obtain the recipient’s signature on the disclosures
required by this subsection before finalizing the application for the sales-based
financing.
      (3) A provider shall not provide sales-based financing to a recipient
without first providing the disclosures required by this subsection and
obtaining the recipient’s signature on such disclosures.
      (4) The Commissioner may prescribe the format for the disclosures
required by this subsection.
   (h) Factoring transaction disclosure requirements.
      (1) A provider shall provide the following disclosures to a recipient at
the time of extending a specific offer for a factoring transaction:
          (A) The amount of the receivables purchase price paid to the
recipient and, if different from the purchase price, the amount disbursed to the
recipient after any fees deducted or withheld at disbursement.
          (B) The finance charge.
          (C) The estimated annual percentage rate, using the words “annual
percentage rate” or the abbreviation “APR,” calculated according to the federal
Truth in Lending Act, Regulation Z, 12 C.F.R. § 1026 Appendix J, as a “single
advance, single payment transaction,” regardless of whether such act or such
regulation would require such a calculation. To calculate the estimated annual
percentage rate, the purchase amount is considered the financing amount, the
purchase amount minus the finance charge is considered the payment amount,
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and the term is established by the payment due date of the receivables. As an
alternate method of establishing the term, the provider may estimate the term
for a factoring transaction as the average payment period, based on its
historical data over a period not to exceed the previous 12 months, concerning
payment invoices paid by the party owing the accounts receivable in question.
          (D) The total payment amount, which is the purchase amount plus the
finance charge.
          (E) A description of all other potential fees and charges that can be
avoided by the recipient.
          (F) A description of the receivables purchased and any additional
collateral requirements or security interests.
      (2) The provider shall obtain the recipient’s signature on the disclosures
required by this subsection before finalizing the application for the factoring
transaction.
      (3) A provider shall not provide commercial financing to a recipient in a
factoring transaction without first providing the disclosures required by this
subsection and obtaining the recipient’s signature on such disclosures.
      (4) The Commissioner may prescribe the format for the disclosures
required by this subsection.
   (i) Disclosures required if recipient required to pay off existing commercial
financing as condition. If as a condition of obtaining commercial financing the
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provider requires the recipient to pay off the balance of existing commercial
financing from the same provider, the provider shall disclose to the recipient:
      (1) The amount of the new commercial financing used to pay off the
portion of the existing commercial financing that consists of prepayment
charges required to be paid and any unpaid interest expense that was not
forgiven at the time of renewal. For financing for which the total repayment
amount is calculated as a fixed amount, the prepayment charge is equal to the
original finance charge multiplied by the amount of the renewal used to pay off
existing financing as a percentage of the total repayment amount, minus any
portion of the total repayment amount forgiven by the provider at the time of
prepayment.
      (2) If the disbursement amount will be reduced to pay down any unpaid
portion of the outstanding balance, the actual dollar amount by which such
disbursement amount will be reduced.
   (j) Rulemaking. The Commissioner is authorized to adopt rules the
Commissioner determines are consistent with the purposes of this section, or
appropriate for the effective administration of this section, including:
      (1) Rules in connection with the calculation or determination of any
metric required to be disclosed to a recipient.
      (2) Rules necessary to develop and prescribe disclosure formatting to be
used by providers that allows for recipients to easily compare financing options
in a clear and conspicuous manner. Such rules may include the designation
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and method for disclosing the information required in this section, or
approving adequate forms and methods already used by providers.
      (3) Rules that define the terms used in this section if the Commissioner
determines such rules are necessary and appropriate to interpret and implement
the provisions of this section.
      (4) Rules necessary for the enforcement of this section.
Sec. 61. COMMERCIAL FINANCING RULEMAKING
   The Commissioner may initiate a rulemaking concerning the
implementation and enforcement of commercial financing transactions
consistent with the requirements established in Secs. 59 and 60 of this act.
However, such rules shall not take effect until on or after July 1, 2027.
                      * * * Effective Dates; Application * * *
Sec. 62. EFFECTIVE DATES; APPLICATION
   This act shall take effect on July 1, 2026, except that Secs. 59 and 60,
concerning commercial financing, shall take effect on July 1, 2027, and shall
apply to commercial financing contracts entered into or modified, amended, or
restructured on or after July 1, 2027.
Date Governor signed bill: June 16, 2026
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