Connecticut HB 6339 has been signed into law. The statute requires an exchange facilitator to post a Connecticut exchange facilitator fidelity bond in an amount not less than one million dollars ($1m). An errors/omissions policy, a deposit of cash or securities or an irrevocable letters of credit in the amount of $250,000 is also part of the new statutory requirements. Exchange facilitators are persons or entities that perform like-kind exchanges of property under the federal tax law (IRC Code Section 1031). the exchange facilitator fidelity bond and insurance serve to mitigate dishonesty perils because a facilitator obtains contractual rights to sell their represented’s property.
Legislation to regulate exchange facilitators originally was introduced as HB 5392. That bill would have permitted any consumer injured from an exchange facilitator violation of the requirements of the law to bring suit to recover on the exchange facilitator fidelity bond. The Surety & Fidelity Association of America (SFAA)explained to the bill sponsor the differences between surety and fidelity bond coverage, more specifically the provision third party claims on a fidelity bond. The provisions in HB 5392 were included in HB 6339, which the Governor has signed into law. While the bill sponsor seemed to understand our concerns, as enacted the law requires complainants to file a claim with the Banking Commissioner to recover from the Connecticut exchange facilitator fidelity bond or errors and omissions insurance policy. The new law also allows aggrieved parties to bring civil suits against the facilitator.
Connecticut surety leader, Surety One, Inc. specializes in underwriting fidelity risks for ALL business classes. Fidelity bonds for TPAs, MGAs, title agencies, labor unions and other hazardous classes are all welcomed. For more information visit us at SuretyOne.com, call (787) 333-0222 or (800) 373-2804, or email us at Underwriting@SuretyOne.com for a Connecticut exchange facilitator fidelity bond application or further information about our commercial crime policy programs.