CT HB05392

Exchange facilitators in Connecticut must maintain a fidelity bond of at least $1 million and either deposit exchange funds in a separately identified account requiring dual authorization (client and facilitator) or place funds in a qualified escrow or trust with a financial institution.

Exchange facilitators must maintain an errors and omissions insurance policy of at least $250,000 or deposit equivalent cash, securities, or provide irrevocable letters of credit.

Exchange facilitators must notify clients within 10 business days of any change in control (transfer of more than 50% of assets or ownership within a 12-month period) via facsimile, email, first-class mail, and website posting for 90 days; exception applies to publicly traded companies remaining publicly traded.

Exchange funds must be invested or deposited according to the prudent investor standard prioritizing liquidity and principal preservation, and cannot be commingled with the facilitator's operating accounts or loaned to affiliated entities except for exchange expenses, property acquisition, or qualified intermediary deposits.

Exchange facilitators are prohibited from material misrepresentations, fraudulent conduct, failure to account for client money, material breach of contractual duties, and material violations of the act's provisions; clients may file civil suits and recover damages from the required bonds, insurance, or deposits.