Source: https://securities.utah.gov/industry/library_interpretiveops.html
Timestamp: 2019-04-25 08:41:48+00:00

Document:
Class C non-voting stock and Class A voting stock of Ace Hardware Corporation were not considered securities for purposes of the Utah Uniform Securities Act. The Division found that the two classes of stock did not have the characteristics generally associated with stock and were therefore not considered securities.
The offering of American Family Care of Utah, Inc. stock did not constitute a public offering and was therefore exempt from registration under section 61-1-14(2)(n) of the Utah Uniform Securities Act.
The exclusion from the definition of "broker-dealer" granted to a "bank, savings institution, or trust company" by section 61-1-13(3)(c) of the Utah Uniform Securities Act was interpreted by the Division to include within its scope a Utah-chartered industrial bank. Employees of the industrial bank were not "agents" within the meaning of section 61-1-13(2) of the Act.
The Philanthropy Protection Act’s preemption of state law applies only to securities owned by charitable organizations or securities transactions involving funds maintained or managed by the charitable organization for investment of endowment funds, income funds, and contributions. The preemption does not permit a church bond issuer to sell bonds without having the sellers be licensed in Utah.
Opinion was rescinded on May 4, 2001.
The offering of limited partnership interests in Fayetteville Lithotripsy Biliary Limited was deemed to have satisfied Rule 177-10-2(f)(1)(A). The Division considered the phrase "close of offering" to include that point in time at which the investors have satisfied the offering price by either contributing cash or unconditionally obligating themselves to pay cash.
The Division will not require employees of federal savings banks, who are engaged in soliciting and providing traditional trust services for those banks, to become licensed as investment adviser representatives. This opinion is not applicable where banks have expanded into areas formerly forbidden and historically within the realm of investment advisers and/or broker-dealers.
The Division approved the use of Optical Storage Technology as a means to comply with SEC Rules 17-a3 and 17-a4 along with Utah Admin. Code Rule 164-5-1.
The Division confirmed that all foreign equity securities listed on the Financial Times/Standard & Poor's World Actuaries Indices ("FTS&P") would be deemed to be on the list (the "List") of foreign equity securities which are eligible for margin and thereby exempt from registration for secondary trading pursuant to Rule 164-14-23s (the "Rule") of the Utah Administrative Code. In addition, the Division further confirmed that foreign equity securities which are deemed by the SEC to have a "ready market" may be deemed to be on the List for the purposes of the Rule and thereby not subject to registration for secondary trading in Utah.
Rule 164-2-1 of the Utah Administrative Code specifically excludes a private investment company that claims exemption under Section 3(c)(1) of the Investment Company Act of 1940 from being regarded as a "client" of an investment adviser for purposes of determining the adviser's eligibility to receive performance-based compensation. In applying the above Rule, the Division treated performance-based compensation paid to a management entity affiliated to the fund's investment adviser as compensation paid indirectly to the adviser.
Section 61-1-3(3)(b) of the Utah Uniform Securities Act ("Act") states: "It is unlawful for any person to transact business in this state as an investment adviser or investment adviser representative unless a) the person is licensed under this chapter; or b) the person's only clients in this state are investment companies as defined in the Investment Company Act of 1940, other investment advisers, federal covered advisers, broker-dealers, banks, trust companies, savings and loan associations, insurance companies, employee benefit plans with assets of less than $1,000,000, and governmental agencies or instrumentalities, whether acting for themselves or as trustees with investment control, or other institutional investors as are designated by rule or order of the director". The Director of the Division has not designated, by rule or order, any "other institutional investors" under § 61-1-3(3)(b) of the Act. Accordingly, the exclusion only applies if an investment adviser's only clients are those listed in § 61-1-3(3)(b) of the Act.
A federal covered adviser that maintains a place of business in Utah and conducts business only with institutional clients was not required to license their supervised persons as investment adviser representatives under Utah law. The Division found that for purposes of §203A(b)(1)(A) of the Investment Advisers Act of 1940, the federal definition of investment adviser representative found in Rule 203A-3 under the 1940 Act should be applied. However, for all other purposes the Utah definition of investment adviser representative applies.
The distribution (the "Distribution") of the securities of the wholly owned corporate subsidiary by its parent corporation to the shareholders of the parent corporation in the form of a partial liquidating dividend was subject to Rule 177-11-1 of the Utah Admin. Code, even though (1) no cash would be received from the shareholders as a result of the Distribution, (2) no commission or remuneration would be paid in connection with the transaction, and (3) no broker, dealer, or agent would effect any portion of the transaction.
The dividend distribution of all of the outstanding shares of LTC Healthcare, Inc., a 99%-owned subsidiary of LTC Properties, Inc., to the common stockholders of LTC Properties, constituted a "sale" as defined under § 61-1-13(22) of the Utah Uniform Securities Act.
The Division found that Mitchell Hutchins Asset Management, Inc., a wholly owned subsidiary of Paine Webber Incorporated, was an Institutional Buyer pursuant to § 61-1-14(2)(h) of the Utah Uniform Securities Act.
The distribution of warrants to purchase common stock of Monoclonal Antibodies, Inc., was considered an "offer" or "sale" within § 61-1-13(15) of the Utah Uniform Securities Act (the "Act"). However, the issuance of the warrants was entitled to exemption from the registration requirements pursuant to § 61-1-14(2)(f) of the Act.
The proposed offering of Pacific Crest Investment & Loan's ("PCIL") certificates of deposit and depository instruments, which were all "insured deposits" within the scope of Sections 3(1), 7(i) and 11(a) of the Federal Deposit Insurance Act and the FDIC's regulations thereunder, was found to be exempt from registration pursuant to § 61-1-14(1)(c) of the Utah Uniform Securities Act (the "Act"). Furthermore, the Division held that the offer and sale of PCIL's "depository products" to credit unions in Utah were exempt from registration pursuant to § 61-1-14(2)(h) of the Act, as credit unions are considered financial institutions for the purposes of this exemption.
The Division approved, with reservations, the sale of certain certificates of deposit ("CDs") by agents of Pruco Securities Corporation who were (1) licensed with the Division, (2) had passed the Uniform Securities Agent State Law Examination ("Series 63 examination"), and (3) had passed the National Association of Securities Dealers, Inc.'s examination for investment company securities and variable insurance contracts ("Series 6 examination").
The Prudential Securities Incorporated Section 401(k) plan qualified as a "pension or profit-sharing trust" for purposes of the Institutional Buyer exemption found in § 61-1-14(2)(h) of the Utah Uniform Securities Act.
The Division held that "Memberships" in Quality Physicians Network, Inc. did not constitute "securities" as the term is defined in § 61-1-13(22) of the Utah Uniform Securities Act.
A financial services holding company, meeting the criteria of section 4 of the Bank Holding Company Act and receiving the designation granted by the federal reserve, has sufficient experience and sophistication to qualify as a financial institution and/or institutional buyer. Accordingly, a broker-dealer who has no place of business in Utah and transacts business in Utah only with a financial services holding company, meets the exclusive from the definition of a broker-dealer and is exempt from the licensing requirements of §61-1-3 of the Utah Uniform Securities Act.
Safe Harbor Funds, LLC, File # B00351117, November 6, 2002.
Opinion was rescinded on October 4, 2010.
The Division recognizes, with reservations, the CD-ROM and Internet versions of Standard & Poor’s Corporation Records, to the same extent as the print version, for purposes of Utah’s Manual Listing Exemption found at § R164-14-2b of the Utah Administrative Code.
A "qualified institutional buyer," as defined under Regulation 144A(a)(1) of the 1933 Securities Act, could qualify as an "other institutional investor" only in the context of a private resale of securities to an institution as it relates to SEC Rule 144.
Class A Common Stock of TruServ Corporation was not considered a "security" for purposes of the Utah Uniform Securities Act. The Division found that the stock did not have the characteristics generally associated with stock and therefore was not considered a security.
Section 61-1-21.5 (3) of the Utah Uniform Securities Act ("Act") provides that the Utah Division of Securities may refer cases involving violations of the Act to the attorney general, county attorney or district attorney of the appropriate jurisdiction. However, referral under this section is not required. The attorney general, county attorney, or district attorney of any appropriate jurisdiction may initiate the prosecution of a criminal action under the Act without a referral from the Utah Division of Securities.
Federal covered securities, as defined by § 61-1-13(12) of the Utah Uniform Securities Act (the "Act"), do not require a notice filing under § 61-1-15.5 of the Act if an election is made to register or seek an exemption for the securities and all requirements of the registration or exemption are met.
The "Residence Agreements" and "Memberships" contractual arrangements The World of ResidenSea Limited proposed to enter into with prospective purchasers did not involve a "security" as defined in § 61-1-13(24) of the Utah Uniform Securities Act. Specifically, the Division found that these contractual arrangements did not have the requisite features of an "investment contract."

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