Bond or letter of credit of distributor unsatisfactory; reduction of cash deposit

Sec. 407. (a) The administrator may require a distributor to file a new bond or new letter of credit, with a satisfactory surety or financial institution in the same form and amount if: (1) liability upon the old bond or letter of credit is discharged or reduced by judgment rendered, payment made, or otherwise; or (2) in the opinion of the administrator any surety on the old bond or financial institution on the old letter of credit becomes unsatisfactory. If the new bond or new letter of credit is unsatisfactory, the administrator shall cancel the license of the distributor. If the new bond or new letter of credit is satisfactorily furnished, the administrator shall release in writing the surety on the old bond or financial institution on the old letter of credit from any liability accruing after the effective date of the new bond or new letter of credit. (b) If a distributor has a cash deposit with the administrator and the deposit is reduced by a judgment rendered, payment made, or otherwise, the administrator may require the distributor to make a new deposit equal to the amount of the reduction.