Bill > SB972

This bill amends the California Financing Law to allow investment advisers registered with the U.S. Securities and Exchange Commission (SEC-registered investment advisers) to obtain a finance lender license to conduct commercial loan activities on behalf of themselves and their client accounts, provided all lending is limited to commercial loans. The license would cover affiliated SEC-registered investment advisers, and the primary adviser would be responsible for maintaining an appendix listing each client account, which is defined broadly to include various funds and vehicles managed by the adviser. To obtain this license, SEC-registered investment advisers must meet several requirements, including obtaining a surety bond of at least $25,000 per client account, undergoing background checks, meeting minimum net worth or capital commitment requirements for client accounts, and filing specified information under oath. The bill also clarifies that these client accounts are considered exempt persons under the California Financing Law, meaning they are exempt from usury laws, which prohibit excessive interest rates on loans. Furthermore, the bill specifies that this licensing process is only available for commercial loans made on a privately originated basis in an aggregate amount exceeding $500,000 and excludes mortgage loan origination, consumer lending, and smaller commercial loans. The Commissioner of Financial Protection and Innovation is authorized to adopt necessary regulations to implement these provisions.

Business and Industry

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260SB972