. Co., Inc. v. Bureau of Sec., 312 A.2d 497 (N.J. 1973). See generally 1 Louis Loss & Joel Seligman, Securities Regulation 542-550 (3d ed. . . . . This term is intended to embrace new forms of records that are created or popularized in the future. Section 77r(b)(1)). Upon request from the investment adviser and for good cause, the administrator, by order, may waive, in whole or in part, the application of the prohibitions of this subsection to the investment adviser. . Tex. . . . The drafts were made available on NCCUSL’s public website before the meetings. Comm’n, 548 A.2d 157, 160 (M.D. It is unlawful to make, or cause to be made, to a purchaser, customer, client, or prospective customer or client a representation inconsistent with this section. . If no exemption is available for a nonissuer distribution, and it does not involve a federal covered security, the security must be registered under Article 3. . . The exemption also provides authority for an administrator to revoke any designation if necessary or appropriate in the public interest and for the protection of investors. See Comment 3 to Section 202. . . These exemptions were intended to facilitate ongoing broker-customer relationships with customers who have established a second or other residence for such purposes as a winter home (i.e. . 9. . Upon the issuance of the order, the administrator shall promptly notify each person specified in subsection (e) that the order has been issued, the reasons for the revocation, denial, postponement, or suspension, and that within 15 days after the receipt of a request in a record from the person the matter will be scheduled for a hearing. Section 18(b) of the Securities Act of 1933 applies to four types of “covered securities”: (1) Securities listed or authorized for listing on the New York Stock Exchange (NYSE), the American Stock Exchange (Amex); the National Market System of the Nasdaq stock market; or securities exchanges registered with the Securities and Exchange Commission (SEC) (or any tier or segment of their trading) if the SEC determines by rule that their listing standards are substantially similar to those of the NYSE, Amex, or Nasdaq National Market System, which the SEC has done through Rule 146; and any security of the same issuer that is equal in seniority or senior to any security listed on the NYSE, Amex, or Nasdaq National Market System; (2) securities issued by an investment company registered with the SEC (or one that has filed a registration statement under the Investment Company Act of 1940); (3) securities offered or sold to “qualified purchasers.” This category of covered securities will become operational when the SEC defines the term “qualified purchaser” as used in Section 18(b)(3) of the Securities Act of 1933, by rule. Section 102(28)(D) follows a significantly larger number of federal circuits and adopts a more restrictive form of vertical commonality that occurs only when there is profit sharing between two persons even if, for example, one is a conventional investor and one is a promoter. 1. . There are two versions of the Uniform Securities Act currently in force. (B) a savings institution, trust company, credit union, or similar institution that is organized or chartered under the laws of a State or of the United States, authorized to receive deposits, and supervised and examined by an official or agency of a State or the United States if its deposits or share accounts are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law. Schott v. Tehan, 365 F.2d 191, 195 (6th Cir. 9. The phrase “other electronic means” is coextensive with computer or other information technology permitted by subsections 102(8), 102(25). Section 102(16): Investment adviser representative: No Prior Provision. A rule adopted or order issued under this [Act] may prohibit, limit, or impose conditions on a broker-dealer regarding custody of funds or securities of a customer and on an investment adviser regarding custody of securities or funds of a client. . Id. registration of securities and notice of filing of federal covered securities; 80a.49: section 301; securities registration requirement. . . This subsection is identical to that in the 1956 Act and RUSA. . . Cf. (c) [No bond required.] . . . . (b) [Criminal.] Minimum financial requirements must be maintained during the entire time a person is registered and not merely at the time of the registration. REFERENCES TO FEDERAL AGENCIES.. . 17 … . . An individual will not be an agent under Section 102(2) because of the person’s status as a partner, officer, or director of a broker-dealer or issuer if such an individual does not effect or attempt to effect purchases or sales of securities. . . The 1956 Act contains similar but less inclusive language in Section 402(b)(8). . . . 3. Unless brackets are removed from the words “or variable” in Section 102(28)(B), a variable annuity or other variable insurance product would be considered a security under this Act and under federal securities law. All that is required is proof that a person acted intentionally in the sense that the person was aware of what he or she was doing. . . 4. . The term “dishonest and unethical practices” in Section 412(d)(13) has been held not to be unconstitutionally vague. . 12. . Neither the 1956 Act nor RUSA provided for the registration of investment adviser representatives. . Section 1 et seq. . 16. . . Section 201(6): Certain options and rights: No Prior Provision. Under Section 204, the administrator will have the ability to revoke or limit this exemption. . . 1. . . Section 201 includes exempt securities and Section 202 includes exempt transactions. A person can violate both Section 501 and Section 502 if the person violates Section 502 in connection with the offer, purchase, or sale of a security. . It is unlawful for a person, in connection with the offer, sale, or purchase of a security, directly or indirectly: (1) to employ a device, scheme, or artifice to defraud; (2) to make an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statement made, in the light of the circumstances under which it is made, not misleading; or. An action under this subsection is governed by the following: (1) The person defrauded may maintain an action to recover the consideration paid for the advice and the amount of any actual damages caused by the fraudulent conduct, interest [at the legal rate of interest] from the date of the fraudulent conduct, costs, and reasonable attorneys’ fees determined by the court, less the amount of any income received as a result of the fraudulent conduct. . . 1. . . 12. (10) “Guaranteed” means guaranteed as to payment of all principal and all interest. 23. . . The new Act has two statute of limitations provisions. . . The model USA 2002 has been adopted in 17 states and proposed in several others. ), and “Electronic Signatures in Global and National Commerce Act” (15 U.S.C. . Ministerial or clerical violations of a statute or rule, if immaterial and occurring without intent or recklessness, typically would not constitute dishonest or unethical practices. . In paragraph (B), the phrase “or that is otherwise contractually responsible for assuring payment of the certificate” is intended to address forms of payment other than leases or conditional sales contracts. (4) the program or communication consists of an electronic communication that originates in this State, but which is not intended for distribution to the general public in this State. . . . . . A rule adopted under this [Act] may define an act, practice, or course of business of an investment adviser or an investment adviser representative, other than a supervised person of a federal covered investment adviser, as fraudulent, deceptive, or manipulative, and prescribe means reasonably designed to prevent investment advisers and investment adviser representatives, other than supervised persons of a federal covered investment adviser, from engaging in acts, practices, and courses of business defined as fraudulent, deceptive, or manipulative. . 3. . (b) [Exemptions from registration.] . 17-12a509. Section 305(f), follows the 1956 Act and RUSA, and authorizes the administrator to require the impoundment of funds until the issuer receives a specified amount from the sale of the security in this State or elsewhere and to require the escrow of promotional stock until specific conditions are met. . The prospectuses, pamphlets, circulars, form letters, advertisements, sales literature or advertising communications, include material disseminated electronically or available on a web site. . . The administrator may require an applicant for registration under Section 402 or 404 who has not been registered in a State within the two years preceding the filing of an application in this State to successfully complete an examination. . . . . . . . A reference in this [Act] to an agency or department of the United States is also a reference to a successor agency or department. (c) [Rules specifying contents of advisory contract.] The term does not include a tender offer that is subject to Section 14(d) of the Securities Exchange Act of 1934 (15 U.S.C. The following act is repealed: [Insert name of former State securities act]. The administrator may assess a reasonable charge for conducting an audit or inspection under this subsection. . . Section 306(a)(4) applies to activity that is conducted in a State where that activity is illegal. If the filing results in a denial or withdrawal, the administrator shall retain $[___] of the fee. . . . In a final order under subsection (c), the administrator may impose a civil penalty up to $[ ] for a single violation or up to $[ ] for more than one violation. (5) an initial fee and annual notice fee for a federal covered investment adviser required to file a notice under Section 405. Ct. App. (f) [Presumption for public hearings.] The typical distribution subject to Section 305(f) will be a relatively new promotional or speculative offering. Section 202(4): Nonissuer transactions in securities subject to Securities Exchange Act reporting: Prior Provision: RUSA Section 402(2). 5. Information about Standards of Conduct. . . . . Section 304(b)(18), for example, would authorize the administrator to require that a report by an accountant, engineer, appraiser or other professional person be filed. rev. 28. A predecessor registered under this [Act] shall stop conducting its securities business other than winding down transactions and shall file for withdrawal of broker-dealer or investment adviser registration within 45 days after filing its amendment to effect succession. . . It does not codify or append related regulations or guidelines. . . As with RUSA Section 205, the intent is to facilitate coordination with widely used standardized forms. (d) [Foreign transactions.] . . . Section 412(i) parallels the language of Section 204 of the 1956 Act and Section 212(b) of RUSA with some significant changes. A rule adopted under this Act may be subject to judicial review in accordance with the state administrative procedure act. See Section 102(7). . 2. (9) any other individual exempted by rule adopted or order issued under this [Act]. 148, SECTION 603. . . . L. 105–353 substituted “77l(a)(2)” for “77l(2)” in two places and “77l(a)(1)” for “77l(1)” in two places. SECTION 305. An application that becomes incomplete or inaccurate after its effective date is not a ground for discipline under paragraph (d)(1). . . . 1995) (mens rea not required); State v. Mueller, 549 N.W.2d 455, 460 (Wis. Ct. App. Prior Provisions: 1956 Act Section 101; RUSA Section 501. (e) [Additional conditions or waivers.] . . . . 5. As is generally the law “truth is a complete defense to a defamation action.” Andrews v. Prudential Sec., Inc., 160 F.3d 304, 308 (6th Cir. Please read the caveats for more information. NSMIA also had implications for several securities registration exemptions (see Sections 201(3), 201(4), 201(6), 202(4), 202(6), 202(13), 202(14), 202(15) and 202(16)); securities registration (Sections 301(1) and 302); and the broker-dealer, agent, investment adviser, and investment adviser representative provisions (see especially Sections 402(b)(1) and (5), 403(b)(1)(A) and (2), 405 and 411). . . Chapter 17.--CORPORATIONS Article 12a.--UNIFORM SECURITIES ACT. 14. . An individual is not excused from attending, testifying, filing a statement, producing a record or other evidence, or obeying a subpoena of the administrator under this [Act] or in an action or proceeding instituted by the administrator under this [Act] on the ground that the required testimony, statement, record, or other evidence, directly or indirectly, may tend to incriminate the individual or subject the individual to a criminal fine, penalty, or forfeiture. . 1973), cert. If any provision of this [Act] or its application to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this [Act] that can be given effect without the invalid provision or application, and to this end the provisions of this [Act] are severable. Definitions. SECURITIES REGISTRATION BY QUALIFICATION.. . (b) [Administrator powers to investigate.] . . . . . SECTION 409. . . a private right of action that involves a claim of fraud, deceit, manipulation, or contrivance in contravention of a regulatory requirement concerning the securities laws, as defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. The following individuals are exempt from the registration requirement of subsection (a): (1) an individual who represents a broker-dealer in effecting transactions in this State limited to those described in Section 15(h)(2) of the Securities Exchange Act of 1934 (15 U.S.C. (e) [Costs.] . rev. rev. Section 411(g) parallels Rule 204-3, adopted under the Investment Advisers Act of 1940, popularly known as the brochure rule, which authorizes the SEC to require dissemination to investment adviser clients of specified information about the investment adviser and investment advice. See, e.g., Abell v. Potomac Ins. . . It is unlawful for the administrator or an officer, employee, or designee of the administrator to use for personal benefit or the benefit of others records or other information obtained by or filed with the administrator that are not public under Section 607(b). . . The exemptive provisions of Sections 202(16) and (17) operate to permit similar offers for securities that are not federal covered securities and are in the process of registration under federal or state statutes or both. . . 3. . . . 1998). 240.15a-6); (O) any other person, other than an individual, of institutional character with total assets in excess of $10,000,000 not organized for the specific purpose of evading this [Act]; or. . Rule 419 issued under the Securities Act of 1933 defines a “blank check company” to be a company that “is a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.” A “blind pool” is similar and would involve an investment in a blank check or other entity with no identified business plan or purpose. Both the 1956 Act and RUSA definition of “sale” are modeled on Section 2(a)(3) of the Securities Act of 1933. In order for a broker-dealer or issuer to be liable, the broker-dealer or issuer must have known or should have known of the administrator’s order to the individual suspended or barred. 10, SECTION 103. Proof of evil motive or intent to violate the law or knowledge that the law was being violated is not required. . . . . The [Attorney General or the proper prosecuting attorney] with or without a reference from the administrator, may institute criminal proceedings under this [Act]. . . On the meaning of “control,” see 4 Louis Loss & Joel Seligman, Securities Regulations 1703-1727 (3d ed. In conformance with the North American Free Trade Agreement (NAFTA) and General Agreement on Trade in Services (GATS), the exemption separately provides authority for the administrator to designate by rule or order other specific foreign jurisdictions and their trading exchanges upon an adequate showing. 2. Each state may adopt different rules tailored for various types of nonprofit debt offerings, (e.g., local church bond offerings, national church bond offerings, church extension funds, charitable gift annuities). . Comment 17 to Section 412. . (18) “Nonissuer transaction” or “nonissuer distribution” means a transaction or distribution not directly or indirectly for the benefit of the issuer. In such cases registration is required. The distinction between “a person engaged in the business of effecting transactions in securities” and an investor, who may buy and sell with some frequency and is outside the scope of this term, has been well developed in the case law. . . . 4. rev. This Section is substantively identical to the 1956 Act and RUSA except for the addition of Section 301(1), which is necessitated by the National Securities Markets Improvement Act of 1996. 2000) (discussing both New York qualified and absolute immunity cases). . Section 202(23): Nonissuer transactions involving specified foreign issuer securities traded on designated securities exchanges. Ct. 1977) (unlicenced person who took information relevant to securities transactions and turned it over to securities agents was himself an agent). If a hearing is requested or ordered, the administrator, after notice of and opportunity for hearing for each person subject to the order, may modify or vacate the order or extend the order until final determination. Sections 306(a)(7) and (b) take a different approach. . . Under Section 412(d)(7) the administrator may not proceed against a broker-dealer or investment adviser firm on the basis of the insolvency of a partner, officer, director, controlling person or other person specified in subsection (b), unless it is a sole proprietorship. . The legislative history plainly demonstrates that Congress was primarily interested in regulating the business of rendering personalized investment advice, including publishing activities that are a normal incident thereto. . See Section 402(c). . . 3. - UNIFORM SECURITIES ACT. With respect to periodic reports under Section 305(i), a misleading report would be the basis of a stop order under Section 306(a)(1) if it is materially inaccurate as of the date it was filed. . 2. 10. . . This Act reflects a policy decision that these matters should be addressed in this Act to promote uniformity in securities regulation. (F) if the basis for relief under this section may have been a violation of Section 509(f), an offer to reimburse in cash the consideration paid for the advice, the amount of any actual damages that may have been caused by the conduct, and interest [at the legal rate of interest] from the date of the violation causing the loss; (2) the offer under paragraph 1 states that it must be accepted by the purchaser, seller, or recipient of investment advice within 30 days after the date of its receipt by the purchaser, seller, or recipient of investment advice or any shorter period, of not less than three days, that the administrator, by order, specifies; (3) the offeror has the present ability to pay the amount offered or to tender the security under paragraph (1); (4) the offer under paragraph (1) is delivered to the purchaser, seller, or recipient of investment advice, or sent in a manner that ensures receipt by the purchaser, seller, or recipient of investment advice; and. The Official Comment to the 1956 Act Section 401(f) quoted an opinion of the Securities and Exchange Commission General Counsel in Investment Advisers Act Release 2 on the meaning of “special compensation” included in Section 102(15)(C): [This clause] amounts to a recognition that brokers and dealers commonly give a certain amount of advice to their customers in the course of their regular business, and that it would be inappropriate to bring them within the scope of the Investment Advisers Act merely because of this aspect of their business. Tender requires only notice in a record of the present ability to pay the amount tendered and willingness to take delivery of the security for the amount specified. . . PUBLIC RECORDS; CONFIDENTIALITY.. . However, in the case of an application by an agent for a broker-dealer that is a member of a self-regulatory organization or by an individual for registration as an investment adviser representative, a denial order may not be based on this paragraph if the individual has successfully completed all examinations required by subsection (e).