License & Permit
Securities Dealer and Investment Adviser Bond (Blue Sky)
A bond a state securities regulator may require from broker-dealers or investment advisers registering under the state's securities (blue sky) law.
- Required by
- State securities commissions (in Alabama, the Alabama Securities Commission)
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond promises the state, and investors harmed by the registrant, that the dealer or adviser will follow the state securities act. If the registrant violates the act and causes losses, a person harmed can claim on the bond up to its amount. The registrant must repay the surety for any claim paid.
Who needs it
- Investment advisers who do not meet the state's net worth requirement
- Advisers with custody of or discretion over client funds
- Broker-dealers in states that require a bond
What the underwriter looks at
- Owner's personal credit
- Firm financial statements and net worth
- Regulatory and disciplinary history
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
What does Alabama require?
Under Commission Rule 830-X-3-.06, an investment adviser must keep a net worth of $10,000 or carry a $50,000 surety bond, and the bond is required if the adviser has custody of or discretion over client accounts.
Why is it called a blue sky bond?
State securities laws are known as blue sky laws, so bonds required under them are often called blue sky bonds.