1. A. For broker-dealers not subject to the Securities Exchange Act of 1934, the term "net worth" as used in § 13.1-505 B of the Act shall be computed as total assets minus total liabilities, excluding liabilities of the broker-dealer which are subordinated to the claims of creditors pursuant to a satisfactory subordination agreement as defined in Appendix D of Rule 15c3-1 under the Securities Exchange Act of 1934 (17 CFR 240.15c3-1d).

2. B. If a broker-dealer applicant or registrant not subject to the Securities Exchange Act of 1934 cannot demonstrate and maintain a net worth in excess of $25,000, the commission shall require the filing of a surety bond on the form prescribed. The amount of the penal sum of the surety bond can be determined according to the following table:

   NET WORTH (Rounded to nearest $1)	PENALTY AMOUNT OF SURETY BOND
   Less than $5,000	$25,000
   5,001-10,000	20,000
   10,001-15,000	15,000
   15,001-20,000	10,000
   20,001-25,000	5,000

3. C. If the net worth of a broker-dealer registrant not subject to the Securities Exchange Act of 1934 plus the penal sum of its surety bond drops below $25,000, the registrant must so notify the Division of Securities and Retail Franchising in writing within three business days and immediately take action to establish a net worth in excess of $25,000.

Statutory Authority

§§ 12.1-13 and 13.1-523 of the Code of Virginia.

Historical Notes

Derived from Rule 307, Case No. SEC810005, eff. July 1, 1981; amended by Case No. SEC890040, eff. July 1, 1989; Virginia Register Volume 13, Issue 25, eff. September 1, 1997; Volume 14, Issue 22, eff. July 1, 1998; Volume 15, Issue 22, eff. July 1, 1999.