How much does a blue sky bond cost?
The cost of your blue sky bond depends on the bond amount. This amount is determined on a state level, and may differ from state to state. The amount may also be determined according to the situation and the applicant. Some states, such as North Carolina, have a fixed blue sky surety bond amount, which in North Carolina’s case is $35,000. To get a blue sky bond there, you may need to pay between $350 and $1,050.
The exact rate at which you can obtain your bond is determined on the basis of each applicant’s financial stability, based on their personal credit score or financial statements. Applicants who have a high credit score are typically offered a lower rate on their bond, as they are considered low-risk.
A high credit score is considered one of 700 FICO or above. Applicants with a high score will usually be offered a rate that is between 1% and 3% of the total bond amount.
Options for applicants with bad credit
Even if your credit score is lower, there’s good news: you can still get bonded. The only difference is that you may be required to pay a higher rate than applicants with a high credit score.
Our Bad Credit Program is tailor-made to enable applicants with low scores to get a bond. By getting bonded, applicants are able to get their license and start doing business. This, in turn, allows them to gradually improve their credit score, so as to get increasingly better bond rates each time they renew their bond.
Applicants with lower scores are required to pay a higher rate because of the increased risk that sureties assume when bonding such applicants. Exactly how much your bond will cost under this program is determined on a case-by-case basis. Visit the Bad Credit Program page to get more information, or if you want to request a quote on your bond.
What is the purpose of the blue sky bond?
The purpose of the blue sky bond is to offer protection to customers of securities dealers, such as investors. The bond is named after the “blue sky law,” which regulates the sale of securities in order to protect the public from fraud. Blue sky laws are part of the legislation of various states, a number of which also include bond provisions in those laws.
The bond protects investors and the public, by legally binding securities dealers to comply with laws and regulations, as well as the conditions set forth in the bond. If a dealer violates any of these, and causes damages or losses to the other parties to the bond, the latter can file a claim against the dealer’s blue sky bond.
By filing a claim against the bond, claimants can secure compensation in the amount of the damages they have suffered. When a claim is filed, the surety that issued the bond to the dealer investigates the claim, and takes action to compensate claimants.
Under the bond agreement, the securities dealer must then compensate the surety for any payment it makes to claimants.
How to get a securities dealer license?
To become a securities dealer, you will need to comply with a number of different requirements. You will need to:
- Apply at the U.S. Securities and Exchange Commission (SEC), submit Form BD and receive approval
- Join a self-regulating organization (SRO)
- Join the Securities Investor Protection Corporation (SIPC)
- File a separate registration in each state you want to do business in, and comply with all state requirements, such as obtaining a blue sky bond
- Have all your “associated persons” fulfill the licensing requirements as well and comply with regulations
Make sure to contact the SEC or visit the SEC website if you have any questions concerning the registration process for securities dealers and brokers.
If you have any questions regarding the bonding requirements for the blue sky bond in your state, give us a call at 866.450.3412. We’ll be happy to provide you with any additional information you need, and assist you in getting bonded.