HB1521: HB1521 Ponzi Scheme Prevention Act; enact

26 LC 62 0447 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 Georgia1 Annotated, relating to financial institutions and the "Georgia Uniform Securities Act of2 2008," respectively, so as to remove an exemption from securiti es regulation for certain3 financial institutions; to provide for notes as securities; to exempt certain notes as securities;4 to provide for a rebuttable presumption; to provide for a short title; to provide for related5 matters; to repeal conflicting laws; and for other purposes.6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:7 SECTION 1.8 This Act shall be known and may be cited as the "Ponzi Scheme Prevention Act."9 SECTION 2.10 Chapter 1 of Title 7 of the Official Code of Georgia annotated, relating to financial11 institutions, is amended by repealing and reserving Code Sectio n 7-1-787, relating to12 exemption from securities regulation.13 H. B. 1521 - 1 - 26 LC 62 0447 SECTION 3.14 Chapter 5 of Title 10 of the Official Code of Georgia Annotated , relating to the "Georgia15 Uniform Securities Act of 2008," is amended by adding a new Cod e section to read as16 follows:17 "10-5-6.18 (a) All notes are presumed securities, subject to other provis ions of law to the contrary,19 unless the note is:20 (1) Delivered in consumer financing;21 (2) Secured by a mortgage on a home;22 (3) A short-term note secured by a lien on a small business or some of its assets;23 (4) Evidencing an unsecured loan based on a lender's trust in the character and credit of24 a customer;25 (5) A short-term note secured by an assignment of accounts receivable;26 (6) A note which formalizes an open account debt occurred in t he ordinary course of27 business; or28 (7) Evidencing loans by commercial banks for current operations.29 (b) A note that is not listed in subsection (a) of this Code s ection may rebut the30 presumption of being a security if it acts similar in function to one of the notes listed in31 subsection (a) of this Code section. Factors to consider when determining if a note is32 similar in function include:33 (1) If the note is exchanged to facilitate the purchase and sa le of a minor asset or34 consumer good, to correct cash flow deficiencies, or to advance some other commercial35 or consumer purpose;36 (2) If the note is an instrument in which there is common trad ing for speculation or37 investment;38 (3) The reasonable expectations of the public; and39 H. B. 1521 - 2 - 26 LC 62 0447 (4) Other factors, including but not limited to regulatory schemes significantly reducing40 the risk of an instrument, which would render application of this chapter unnecessary."41 SECTION 4.42 All laws and parts of laws in conflict with this Act are repealed.43 H. B. 1521 - 3 -