North Carolina Securities Salesperson Bond: A Comprehensive Guide

April 28, 2022

North Carolina Securities Salesperson Bond

This guide provides information for insurance agents to help their customers obtain a North Carolina Securities Salesperson bond

At a Glance:

  • Average Cost: Between 1% to 7.5% of the bond amount per year based on the applicant’s credit history
  • Bond Amount: Maximum of $10,000 (more on this later)
  • Who Needs it: Certain securities salespersons operating in North Carolina
  • Purpose: To ensure the public will receive compensation for financial harm if the salesperson violates registration law
  • Who Regulates Securities Salespersons in North Carolina: The North Carolina Secretary of State

Background

North Carolina Statute 78A-36 requires all securities salespersons operating in the state to register with the Secretary of State. The North Carolina legislature enacted the registration requirement to ensure that securities salespersons engage in ethical business practices. To provide financial security for the enforcement of the registration law, certain securities salespersons may have to purchase and maintain a surety bond to be eligible for registration.

What is the Purpose of the North Carolina Securities Salesperson Bond?

North Carolina requires certain securities salespersons to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the salesperson fails to abide by the regulations outlined in North Carolina Statute 78A-56. Specifically, the bond protects the public if the salesperson engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the securities salesperson violates registration law.

North Carolina Securities Salesperson Bond Form

North Carolina Securities Salesperson Bond Form

How Can an Insurance Agent Obtain a North Carolina Securities Salesperson Surety Bond?

BondExchange makes obtaining a North Carolina Securities Salesperson bond easy. Simply log in to your account and use our keyword search to find the “salesperson” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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How is the Bond Amount Determined?

North Carolina Statute 78A-37 grants the Secretary of State the authority to set the required bond amount on a case by case basis. However, the bond amount may not be greater than $10,000. When determining the bond amount, the Secretary of State will examine factors such as the salesperson’s experience and total net capital.

Is a Credit Check Required for the North Carolina Securities Salesperson Bond?

Surety companies will run a credit check on the salesperson to determine eligibility and pricing for the North Carolina Securities Salesperson bond. Salespersons with excellent credit and work experience can expect to receive the best rates. Salespersons with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the salesperson’s credit.

How Much Does the North Carolina Securities Salesperson Bond Cost?

The North Carolina Securities Salesperson bond can cost anywhere between 1% to 7.5% of the bond amount per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the bond cost on a $10,000 bond requirement.

$10,000 Securities Salesperson Bond Cost

Credit Score Bond Cost (1 year)
680+ $100
625 – 679 $150
575 – 624 $375
550 – 574 $500
500 – 549 $750

Who is Required to Purchase the Bond?

The North Carolina Secretary of State will determine whether or not a securities salesperson needs a surety bond after examining their registration application. Salespersons that present a higher risk to consumers, i.e. limited professional experience and net capital, will be required to purchase a bond as a prerequisite to obtaining their registration. Salespersons with a net capital of $100,000 or more are automatically exempt from the bonding requirement.

North Carolina Statute 78A-2 defines a securities salesperson as an individual that “represents a dealer in effecting or attempting to effect purchases or sales of securities.”

How do Securities Salespersons Apply for a Registration in North Carolina?

Securities salespersons in North Carolina must navigate several steps to obtain a registration. Below are the general guidelines, but applicants should refer to the Secretary of State’s registration page for details on the process.

Registration Period – All North Carolina Securities Salesperson Registrations expire on December 31 of each year and must be renewed before the expiration date

Step 1 – Pass the Required Exam(s)

Securities salespersons are required to satisfy one of the following exam requirements:

Step 2 – File Form U4

After passing their exam(s) securities salespersons must file Form U4 online through the Central Registration Depository (CRD) system. Salespersons must pay a $125 fee when filing their form.

Step 3 – Purchase a Surety Bond

The Secretary of State will inform the salesperson if they need to purchase a surety bond, as well as the required amount, after reviewing the salesperson’s registration application (Form U4)

How Do North Carolina Securities Salespersons Renew Their Registrations?

Prior to December 31 of each year, securities salespersons will receive a renewal notice containing instructions on how to renew their registrations.

What are the Insurance Requirements for Securities Salespersons in North Carolina?

North Carolina does not require securities salespersons to purchase any form of liability insurance as a prerequisite to obtaining a business registration. Certain salespersons may need to purchase a surety bond at the discretion of the Secretary of State.

How Do North Carolina Securities Salespersons File Their Bonds?

Securities salespersons should mail their completed bond forms, including the power of attorney, to the following address:

NC Department of the Secretary of State
Securities Division
Post Office Box 29622
Raleigh, North Carolina 27626-0622

The surety bond requires signatures from both the surety company that issues the bond and from the salesperson. The surety company should include the following information on the bond form:

  • Legal name and address of entity/individual(s) buying the bond
  • Surety company’s name and address
  • Name and address of the entity requiring the bond
  • Bond amount
  • Date the bond is signed

What Can North Carolina Securities Salespersons Do to Avoid Claims Against Their Bonds?

To avoid claims on their bonds, securities salespersons in North Carolina must follow all registration regulations in the state, including some of the most important issues below that tend to cause claims:

  • Do not engage in any acts of fraud or misrepresentation
  • Do not breach any contracts made with consumers

What Other Insurance Products Can Agents Offer Securities Salespersons in North Carolina?

North Carolina does not require securities salespersons to purchase any form of liability insurance as a prerequisite to obtaining a business registration. However, some salespersons may obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for North Carolina Securities Salesperson Customers?

North Carolina provides the public with the means of checking individual salespersons’ registrations. To obtain a full list of all securities salespersons in North Carolina, we suggest contacting the Secretary of State directly. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

2022-05-04T09:53:33-04:00