House Bill 1521
By: Representatives Miller of the 62nd, Draper of the 90th, Jackson of the 68th, Campbell of
the 35th, and Westbrook of the 163rd
A BILL TO BE ENTITLED
AN ACT
To amend Chapter 1 of Title 7 and Chapter 5 of Title 10 of the Official Code of Georgia
Annotated, relating to financial institutions and the "Georgia Uniform Securities Act of
2008," respectively, so as to remove an exemption from securities regulation for certain
financial institutions; to provide for notes as securities; to exempt certain notes as securities;
to provide for a rebuttable presumption; to provide for a short title; to provide for related
matters; to repeal conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
This Act shall be known and may be cited as the "Ponzi Scheme Prevention Act."
SECTION 2.
Chapter 1 of Title 7 of the Official Code of Georgia annotated, relating to financial
institutions, is amended by repealing and reserving Code Section 7-1-787, relating to
exemption from securities regulation.
SECTION 3.
Chapter 5 of Title 10 of the Official Code of Georgia Annotated, relating to the "Georgia
Uniform Securities Act of 2008," is amended by adding a new Code section to read as
follows:
<ins>"10-5-6.
(a) All notes are presumed securities, subject to other provisions of law to the contrary,
unless the note is:
(1) Delivered in consumer financing;
(2) Secured by a mortgage on a home;
(3) A short-term note secured by a lien on a small business or some of its assets;
(4) Evidencing an unsecured loan based on a lender's trust in the character and credit of
a customer;
(5) A short-term note secured by an assignment of accounts receivable;
(6) A note which formalizes an open account debt occurred in the ordinary course of
business; or
(7) Evidencing loans by commercial banks for current operations.
(b) A note that is not listed in subsection (a) of this Code section may rebut the
presumption of being a security if it acts similar in function to one of the notes listed in
subsection (a) of this Code section. Factors to consider when determining if a note is
similar in function include:
(1) If the note is exchanged to facilitate the purchase and sale of a minor asset or
consumer good, to correct cash flow deficiencies, or to advance some other commercial
or consumer purpose;
(2) If the note is an instrument in which there is common trading for speculation or
investment;
(3) The reasonable expectations of the public; and
</ins>
<ins>(4) Other factors, including but not limited to regulatory schemes significantly reducing
the risk of an instrument, which would render application of this chapter unnecessary."
</ins> SECTION 4.
All laws and parts of laws in conflict with this Act are repealed.