Details of Kentucky's net-worth substitution

Under 808 KAR 10:200, custody generally requires $35,000 net worth when assets under management are $25 million or less, or 0.15% of total assets under management when they exceed $25 million. A bond may replace all but $10,000 of that requirement. For discretion without custody, the requirement is $10,000 when assets are $25 million or less, or 0.1% of total assets under management when they exceed $25 million; a bond may replace any portion of the applicable requirement.

The rule also addresses advance-fee arrangements, qualified custody exceptions and home-state capital treatment. It requires positive net worth at all times and monthly computations supported by assets-under-management records. Bond substitution does not eliminate solvency or financial reporting duties. Use the firm's actual arrangements and current balance sheet for the Department's accepted calculation.

The posted form lasts one year from execution unless terminated or otherwise provided by law. Separately, an action against the surety must be brought within one year of the underlying judgment or order. The bond duration does not replace that claim deadline. The form allows thirty days' written termination notice to the principal and Commissioner while preserving obligations arising before the Commissioner's receipt of notice. Arrange the signatures and sworn acknowledgment.