State of California California Department of Consumer Affairs


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To form a corporation, individuals must contact the California Secretary of State. Once a corporation is formed and has issued shares, it falls under the jurisdiction of the California Department of Corporations for the offer and sale of securities.

The Department of Corporations is mandated to regulate several professions and administers several programs. The Securities Regulation Division licenses and regulates broker-dealers, broker-dealer agents and investment advisers who have client funds under management of less than $25 million (the United States Securities and Exchange Commission regulates all other investment advisers).

The Securities Regulation Division also regulates the offer and sale of securities and franchises. The Financial Services Division is responsible for the administration of five separate laws. They are the California Deferred Deposit Transaction Law, the California Finance Lenders Law, the California Residential Mortgage Lending Act, Check Sellers, Bill Payers and Proraters Law, and Escrow Law. Each of these divisions is described in further detail below.

License & Regulation of:

Broker-Dealers Investment Advisers/Financial Planners Offer/Sale of Securities/Franchises/ Off-Exchange Commodities (e.g., precious metals and foreign currencies where there is no immediate delivery to the purchaser). Independent Escrow Agents Consumer and Commercial Finance Lenders Residential Mortgage Lenders or Mortgage Bankers Check Sellers, Any person, who makes, offers or originates a deferred transaction. (i.e. a payday loan.)

California Department of Corporations
1515 K Street, Suite 200
Sacramento, CA 95814
Hotline: (866) ASK-CORP
(866) 275-2677


As of July 1, 2000 the Health Plan Program and the administration of the Knox Knee Health Care Service Plan Act of 1975, as amended by the 1999 HMO reform legislation, has transferred to the new Department of Managed Health Care. (HMO's were formerly regulated by the Department of Corporation's Health Plan Division).


Mortgage Brokers refer to:

Department of Real Estate
2201 Broadway
PO BOX 18700
Sacramento, CA 95818
(916) 227-0864


The Securities Regulation Division (SRD) licenses:

  • Broker-dealers
  • Broker-dealer agents
  • Investment advisors/Financial planners

The SRD is also responsible for the qualification of the offer and sale of securities in California.

Department of Corporations Securities Regulation Division 1515 K Street, Suite 200
Sacramento, CA 95814
(866) ASK-CORP (hotline)
(866) 275-2677

Department of Corporations Securities Regulation Division 320 West 4th Street, Suite 750
Los Angeles, CA 90013-1105
(866) ASK-CORP (hotline
) (866) 275-2677
(213) 576-7500


The Financial Services Division (FSD) is responsible for the regulation of five separate laws:

  1. California Deferred Transaction Law
  2. California Finance Lenders Law
  3. California Residential Mortgage Lending Act
  4. Check Sellers, Bill Payers and Proraters Law
  5. Escrow Law

California Deferred Transaction Law:

Deferred deposit transaction means a transaction whereby a person defers depositing a customer's personal check until a specific date, pursuant to a written agreement, as provided in Financial Code Section 23035. (i.e. a payday loan) "The CDDTL defines a "deferred deposit originator" as any person who offers, originates or makes a deferred deposit transaction."


The following persons or entities are excluded from the definition of licensee and are therefore not subject to the CDDTL:" "A state or federally chartered bank, thrift, savings association, or industrial loan company."

"A retail seller engaged primarily in the business of selling consumer goods, including consumables, to retail buyers that cashes checks or issues money orders for a minimum fee not exceeding $2 as a service to its customers that is incidental to its main purpose or business."

California Finance Lenders Law:

Finance companies operate under the California Finance Lenders Law and are subject to regulation by the FSD. The law defines a finance lender as "any person who is engaged in the business of making consumer loans or making commercial loans".

California Residential Mortgage Lending Act (CRMLA):

The CRMLA was designed to authorize and regulate mortgage banking activities. The CRMLA requires that any person engaged in the business of making or servicing residential mortgage loans within California do so only under the authority of a license under the CRMLA. Licenses are issued either as a lender, a service or both.

There are exemptions from this license requirement such as:

Banks, trust companies, or industrial loan companies, federally chartered savings and loan associations, federal savings banks, or federal credit unions, savings and loan associations, savings banks, or credit unions organized under the laws of California. For a complete list contact the Department of Corporations.

Check Sellers, Bill Payers and Proraters Law:

There are four types of licenses issued under this law:

  1. Check Sellers sell checks,
  2. money orders or drafts to be used by others for payment of obligations
  3. Bill Payers receive money as an agent of any obligor to pay bills.
  4. General Proraters contact with delinquent debtors and intercede with creditors to settle debt.
  5. Special Proraters contract to pay non-delinquent bills for their customers.

Escrow Law

Independent escrow companies are subject to jurisdiction of the Financial Services Division. Any person that is engaged in the escrow business in California do so only as a corporation organized for that purpose licensed as an escrow agent.

There are exemptions from this license requirement, but are subject to the administration of other state agencies. The exceptions are as follows:
<p>Banks, trust companies, building and loan or savings and loan associations or insurance companies.

Any person licensed to practice law in California. Title insurance companies (regulated by the Department of Insurance). Any real estate broker (regulated by the Department of Real Estate).</ p>

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