21VAC5-20-300: Net worth

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).

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

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.