Source: https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=StatuteChapter&Statute=47-31B
Timestamp: 2020-01-22 10:43:28
Document Index: 732608358

Matched Legal Cases: ['§ 1', '§ 80', '§ 2', '§ 4', '§ 77', '§ 78', '§ 79', '§ 80', '§ 80', '§ 1001', '§ 1701', '§ 1', '§ 1', '§ 78', '§ 661', '§ 7001', '§ 3', '§ 4', '§ 7001', '§ 7003', '§ 7004', '§ 5', '§ 47', '§ 92', '§ 47', '§ 77', '§ 78', '§ 80', '§ 47', '§ 47', '§ 77', '§ 6', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 9', '§ 47', '§ 10', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 12', '§ 47', '§ 47', '§ 47', '§ 47', '§ 14', '§ 47', '§ 47', '§ 47', '§ 47', '§ 15', '§ 47', '§ 47', '§ 16', '§ 17', '§ 78', '§ 47', '§ 47', '§ 47', '§ 77', '§ 47', '§ 47', '§ 18', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 20', '§ 47', '§ 47', '§ 21', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 22', '§ 47', '§ 47', '§ 23', '§ 78', '§ 80', '§ 78', '§ 80', '§ 78', '§ 80', '§ 78', '§ 78', '§ 80', '§ 47', '§ 78', '§ 80', '§ 47', '§ 47', '§ 27', '§ 47', '§ 47', '§ 47', '§ 28', '§ 31', '§ 32', '§ 33', '§ 34', '§ 35', '§ 47', '§ 47', '§ 47', '§ 36', '§ 17', '§ 47', '§ 47', '§ 54', '§ 54', '§ 47', '§ 54', '§ 54', '§ 47', '§ 47', '§ 54', '§ 47', '§ 54', '§ 38', '§ 47', '§ 47', '§ 47', '§ 47', '§ 42', '§ 47', '§ 43', '§ 44', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 47', '§ 45', '§ 47', '§ 47', '§ 47', '§ 47', '§ 46', '§ 47', '§ 48', '§ 49', '§ 50', '§ 53']

SDLRC - Codified Law 47-31B
CHAPTER 47-31B
UNIFORM SECURITIES ACT OF 2002
47-31B-103 References to federal statutes.
47-31B-104 References to federal agencies.
47-31B-105 Electronic records and signatures.
ARTICLE 2. EXEMPTIONS FROM REGISTRATION OF SECURITIES.
47-31B-201 Exempt securities.
47-31B-202 Exempt transactions.
47-31B-203 Additional exemptions and waivers.
47-31B-204 Denial, suspension, revocation, condition, or limitation of exemptions.
ARTICLE 3. REGISTRATION OF SECURITIES AND NOTICE FILING OF FEDERAL COVERED SECURITIES.
47-31B-301 Securities registration requirement.
47-31B-302 Notice filing.
47-31B-303 Securities registration by coordination.
47-31B-304 Securities registration by qualification.
47-31B-305 Securities registration filings.
47-31B-306 Denial, suspension, and revocation of securities registration.
47-31B-307 Waiver and modification.
ARTICLE 4. BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, INVESTMENT ADVISER REPRESENTATIVES, AND FEDERAL COVERED INVESTMENT ADVISERS.
47-31B-401 Broker-dealer registration requirement and exemptions.
47-31B-402 Agent registration requirement and exemptions.
47-31B-403 Investment adviser registration and exemptions.
47-31B-404 Investment adviser representative registration requirement and exemptions.
47-31B-405 Federal covered investment adviser notice filing requirement.
47-31B-406 Registration by broker-dealer, agent, investment adviser, and investment adviser representative.
47-31B-407 Succession and change in registration of broker-dealer or investment advisor.
47-31B-408 Termination of employment or association of agent and investment adviser representative--Transfer of employment or association.
47-31B-409 Withdrawal of registration of broker-dealer, agent, investment adviser, and investment adviser representative.
47-31B-410 Filing fees.
47-31B-411 Postregistration requirements.
47-31B-412 Denial, revocation, suspension, withdrawal, restriction, condition, or limitation of registration.
ARTICLE 5. FRAUD AND LIABILITIES.
47-31B-501 General fraud.
47-31B-502 Prohibited conduct in providing investment advice.
47-31B-503 Evidentiary burden.
47-31B-504 Filing of sales and advertising literature.
47-31B-505 Misleading filings.
47-31B-506 Misrepresentations concerning registration or exemption.
47-31B-507 Qualified immunity.
47-31B-508 Criminal penalties.
47-31B-509 Civil liability.
47-31B-510 Rescission offers.
ARTICLE 6. ADMINISTRATION AND JUDICIAL REVIEW.
47-31B-601 Administration.
47-31B-602 Investigations and subpoenas.
47-31B-603 Civil enforcement.
47-31B-604 Administrative enforcement.
47-31B-605 Rules, forms, orders, interpretive opinions, and hearings.
47-31B-606 Administrative files and opinions.
47-31B-607 Public records--Confidentiality.
47-31B-608 Uniformity and cooperation with other agencies.
47-31B-609 Judicial review.
47-31B-610 Jurisdiction.
47-31B-611 Service of process.
47-31B-612 Severability clause.
ARTICLE 7. TRANSITION.
47-31B-701, 47-31B-702. Reserved.
47-31B-703 Application of chapter to existing proceeding and existing rights and duties.
47-31B-101. Short title. This chapter may be cited as the Uniform Securities Act of 2002.
Source: SL 2004, ch 278, § 1.
47-31B-102. Definitions. In this chapter, unless the context otherwise requires:
(1) "Director," the director of insurance;
(9) "Fraud," "deceit," and " defraud," are not limited to common law deceit;
(12) "Insurance company," a company organized as an insurance company whose primary business is writing insurance or reinsuring risks underwritten by insurance companies and which is subject to supervision by the insurance commissioner or a similar official or agency of a state;
(ii) Not a supervised person as that term is defined in Section 202(a)(25) of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-2(a)(25)); or
(D) Is excluded by rule adopted or order issued under this chapter;
(26) "Sale," includes every contract of sale, contract to sell, or disposition of, a security or interest in a security for value, and offer to sell includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value. Both terms include:
Source: SL 2004, ch 278, § 2; SL 2018, ch 278, § 4.
47-31B-103. References to federal statutes. Securities Act of 1933 (15 U.S.C. § 77a et seq.), Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), Public Utility Holding Company Act of 1935 (15 U.S.C. § 79 et seq.), Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.), Investment Advisers Act of 1940 (15 U.S.C. § 80b-1 et seq.), Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1001 et seq.), National Housing Act (12 U.S.C. § 1701 et seq.), Commodity Exchange Act (7 U.S.C. § 1 et seq.), Internal Revenue Code (26 U.S.C. § 1 et seq. ), Securities Investor Protection Act of 1970 (15 U.S.C. § 78aaa et seq.), Securities Litigation Uniform Standards Act of 1998 (112 Stat. 3227), Small Business Investment Act of 1958 (15 U.S.C. § 661 et seq.), and Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et seq.) mean those statutes and the rules and regulations adopted under those statutes, as in effect July 1, 2004, or as later amended.
Source: SL 2004, ch 278, § 3.
47-31B-104. References to federal agencies. A reference in this chapter to an agency or department of the United States is also a reference to a successor agency or department.
Source: SL 2004, ch 278, § 4.
47-31B-105. Electronic records and signatures. This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, but does not modify, limit, or supersede Section 101(c) of that act (15 U.S.C. § 7001(c)) or authorize electronic delivery of any of the notices described in Section 103(b) of that act (15 U.S.C. § 7003(b)). This chapter authorizes the filing of records and signatures, when specified by provisions of this chapter or by a rule adopted or order issued under this chapter, in a manner consistent with Section 104(a) of that act (15 U.S.C. § 7004(a)).
Source: SL 2004, ch 278, § 5.
47-31B-201. Exempt securities. The following securities are exempt from the requirements of §§ 47-31B-301 through 47-31B-306 and 47-31B-504:
(B) A banking institution organized under the laws of the United States; a member bank of the Federal Reserve System; or a depository institution a substantial portion of the business of which consists or will consist of receiving deposits or share accounts that 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 or exercising fiduciary powers that are similar to those permitted for national banks under the authority of the Comptroller of Currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. § 92a); or
(C) Any other depository institution, unless by rule or order the director proceeds under § 47-31B-204;
(6) A federal covered security specified in Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. § 77r(b)(1)) or by rule adopted under that provision or a security listed or approved for listing on another securities market specified by rule under this chapter; a put or a call option contract; a warrant; a subscription right on or with respect to such securities; or an option or similar derivative security on a security or an index of securities or foreign currencies issued by a clearing agency registered under the Securities Exchange Act of 1934 and listed or designated for trading on a national securities exchange, a facility of a national securities exchange, or a facility of a national securities association registered under the Securities Exchange Act of 1934 or an offer or sale, of the underlying security in connection with the offer, sale, or exercise of an option or other security that was exempt when the option or other security was written or issued; or an option or a derivative security designated by the Securities and Exchange Commission under Section 9(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78i(b));
(7) A security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, social, athletic, or reformatory purposes, or as a chamber of commerce, and not for pecuniary profit, no part of the net earnings of which inures to the benefit of a private stockholder or other person, or a security of a company that is excluded from the definition of an investment company under Section 3(c)(10)(B) of the Investment Company Act of 1940 (15 U.S.C. § 80a-3(c)(10)(B)); except that with respect to the offer or sale of a note, bond, debenture, or other evidence of indebtedness issued by such a person, a rule may be adopted under this chapter limiting the availability of this exemption by classifying securities, persons, and transactions, imposing different requirements for different classes, specifying with respect to paragraph (B) the scope of the exemption and the grounds for denial or suspension, and requiring an issuer:
(A) To file a notice specifying the material terms of the proposed offer or sale and copies of any proposed sales and advertising literature to be used and provide that the exemption becomes effective if the director does not disallow the exemption within the period established by the rule;
(B) To file a request for exemption authorization for which a rule under this chapter may specify the scope of the exemption, the requirement of an offering statement, the filing of sales and advertising literature, the filing of consent to service of process complying with § 47-31B-611, and grounds for denial or suspension of the exemption; or
(C) To register under § 47-31B-304;
(8) Any securities of any cooperative corporation organized in good faith and qualified to do business as a cooperative under chapter 47-15 or chapter 47-21 and sold only to members of such cooperative corporations for the purpose of conducting under the cooperative plan among its stockholders any or all of the following businesses:
(A) Any agricultural, dairy, livestock, or produce business;
(B) The business of selling, marketing, or otherwise handling any agricultural, dairy, or livestock products, or other produce raised or produced by the stockholders of such corporation or by any cooperative corporation;
(C) The manufacture of any products from handling any agricultural, dairy, or livestock products, or other produce by the members of such corporations;
(D) The funding of economic development projects in South Dakota;
(E) The operation of a rural telephone among its stockholders;
(F) Any business incidental to any of the above purposes; and
(G) A member's or owner's interest in, or a retention certificate or like security given in lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit membership cooperative under the cooperative laws of a state, but not a member's or owner's interest, retention certificate, or like security sold to persons other than bona fide members of the cooperative; and
(9) An equipment trust certificate with respect to equipment leased or conditionally sold to a person, if any security issued by the person would be exempt under this section or would be a federal covered security under Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. § 77r(b)(1)).
Source: SL 2004, ch 278, § 6.
47-31B-202. Exempt transactions. The following transactions are exempt from the requirements of §§ 47-31B-301 through 47-31B-306 and 47-31B-504:
47-31B-204. Denial, suspension, revocation, condition, or limitation of exemptions. (a) Enforcement related powers. Except with respect to a federal covered security or a transaction involving a federal covered security, an order under this chapter may deny, suspend application of, condition, limit, or revoke an exemption created under § 47-31B-201(3)(C), (7), or (8) or 47-31B-202 or an exemption or waiver created under § 47-31B-203 with respect to a specific security, transaction, or offer. An order under this section may be issued only pursuant to the procedures in § 47-31B-306(d) or 47-31B-604 and only prospectively.
(b) Knowledge of order required. A person does not violate § 47-31B-301, 47-31B-303 through 47-31B-306, 47-31B-504, or 47-31B-510 by an offer to sell, offer to purchase, sale, or purchase effected after the entry of an order issued under this section if the person did not know, and in the exercise of reasonable care could not have known, of the order.
Source: SL 2004, ch 278, § 9.
47-31B-301. Securities registration requirement. It is unlawful for a person to offer or sell a security in this state unless:
(2) The security, transaction, or offer is exempted from registration under §§ 47-31B-201 through 47-31B-203; or
Source: SL 2004, ch 278, § 10.
47-31B-303. Securities registration by coordination. (a) Registration permitted. A security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination under this section.
(b) Required records. A registration statement and accompanying records under this section must contain or be accompanied by the following records in addition to the information specified in § 47-31B-305 and a consent to service of process complying with § 47-31B-611:
(3) Copies of any other information or any other records filed by the issuer under the Securities Act of 1933 requested by the director; and
(1) A stop order under subsection (d) or § 47-31B-306 or issued by the Securities and Exchange Commission is not in effect and a proceeding is not pending against the issuer under § 47-31B-306; and
(2) The registration statement has been on file for at least twenty days or a shorter period provided by rule adopted or order issued under this chapter.
(d) Notice of federal registration statement effectiveness. The registrant shall promptly notify the director in a record of the date when the federal registration statement becomes effective and the content of any price amendment and shall promptly file a record containing the price amendment. If the notice is not timely received, the director may issue a stop order, without prior notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this section. The director shall promptly notify the registrant of an order by telegram, telephone, or electronic means and promptly confirm this notice by a record. If the registrant subsequently complies with the notice requirements of this section, the stop order is void as of the date of its issuance.
(e) Effectiveness of registration statement. If the federal registration statement becomes effective before each of the conditions in this section is satisfied or is waived by the director, the registration statement is automatically effective under this chapter when all the conditions are satisfied or waived. If the registrant notifies the director of the date when the federal registration statement is expected to become effective, the director shall promptly notify the registrant by telegram, telephone, or electronic means and promptly confirm this notice by a record, indicating whether all the conditions are satisfied or waived and whether the director intends the institution of a proceeding under § 47-31B-306. The notice by the director does not preclude the institution of such a proceeding.
Source: SL 2004, ch 278, § 12.
47-31B-304. Securities registration by qualification. (a) Registration permitted. A security may be registered by qualification under this section.
47-31B-305. Securities registration filings. (a) Who may file. A registration statement may be filed by the issuer, a person on whose behalf the offering is to be made, or a broker-dealer registered under this chapter.
(b) Filing fee. A person filing a registration statement shall pay a filing fee as follows: On the first five hundred thousand dollars of the total proposed sale price of the securities covered by such registration, the sum of one dollar per thousand dollars. All registrations over five hundred thousand dollars, the sum of five hundred dollars, plus seventy-five cents per thousand dollars of excess over five hundred thousand dollars. The minimum fee is one hundred dollars. The maximum fee is two thousand dollars. If a registration statement is withdrawn before the effective date or a pre-effective stop order is issued under § 47-31B-306, the director shall retain the minimum fee of one hundred dollars.
(c) Status of offering. A registration statement filed under § 47-31B-303 or 47-31B-304 must specify:
(d) Incorporation by reference. A record filed under this chapter or the predecessor act within five years preceding the filing of a registration statement may be incorporated by reference in the registration statement to the extent that the record is currently accurate.
(e) Nonissuer distribution. In the case of a nonissuer distribution, information or a record may not be required under subsection (h) or § 47-31B-304, unless it is known to the person filing the registration statement or to the person on whose behalf the distribution is to be made or unless it can be furnished by those persons without unreasonable effort or expense.
(f) Form of subscription. A rule adopted or order issued under this chapter may require as a condition of registration that a security registered under this chapter be sold only on a specified form of subscription or sale contract and that a signed or conformed copy of each contract be filed under this chapter or preserved for a period specified by the rule or order, which may not be longer than five years.
(g) Effective period. Except while a stop order is in effect under § 47-31B-306, a registration statement is effective for one year after its effective date, or for any longer period designated in an order under this chapter during which the security is being offered or distributed in a nonexempted transaction by or for the account of the issuer or other person on whose behalf the offering is being made or by an underwriter or broker- dealer that is still offering part of an unsold allotment or subscription taken as a participant in the distribution. For the purposes of a nonissuer transaction, all outstanding securities of the same class identified in the registration statement as a security registered under this chapter are considered to be registered while the registration statement is effective. If any securities of the same class are outstanding, a registration statement may not be withdrawn until one year after its effective date. A registration statement may be withdrawn only with the approval of the director. A fee of one hundred dollars is required for any extension of registration.
(h) Periodic reports. While a registration statement is effective, a rule adopted or order issued under this chapter may require the person that filed the registration statement to file reports, not more often than quarterly, to keep the information or other record in the registration statement reasonably current and to disclose the progress of the offering. The only fee required for filing a report under this subsection (h) is for the annual report. The annual report fee is twenty-five dollars.
(i) Post-effective amendments. A registration statement may be amended after its effective date. The post-effective amendment becomes effective when the director so orders. If a post- effective amendment is made to increase the number of securities specified to be offered or sold, the person filing the amendment shall pay a late registration fee of twenty five dollars and a filing fee, calculated in the manner specified in subsection (b). A post-effective amendment relates back to the date of the offering of the additional securities being registered if, within one year after the date of the sale, the amendment is filed and the additional registration fee is paid.
Source: SL 2004, ch 278, § 14.
47-31B-306. Denial, suspension, and revocation of securities registration. (a) Stop orders. The director may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the director finds that the order is in the public interest and that:
(1) The registration statement as of its effective date or before the effective date in the case of an order denying effectiveness, an amendment under § 47-31B-305(i) as of its effective date, or a report under § 47-31B-305(h), is incomplete in a material respect or contains a statement that, in the light of the circumstances under which it was made, was false or misleading with respect to a material fact;
(2) This chapter or a rule adopted or order issued under this chapter or a condition imposed under this chapter has been willfully violated, in connection with the offering, by the person filing the registration statement; by the issuer, a partner, officer, or director of the issuer or a person having a similar status or performing a similar function; a promoter of the issuer; or a person directly or indirectly controlling or controlled by the issuer; but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer; or by an underwriter;
(3) The security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order issued under any federal, foreign, or state law other than this chapter applicable to the offering, but the director may not institute a proceeding against an effective registration statement under this paragraph more than one year after the date of the order or injunction on which it is based, and the director may not issue an order under this paragraph on the basis of an order or injunction issued under the securities act of another state unless the order or injunction was based on conduct that would constitute, as of the date of the order, a ground for a stop order under this section;
(5) With respect to a security sought to be registered under § 47-31B-303, there has been a failure to comply with the undertaking required by § 47-31B-303(b)(4); or
(6) The applicant or registrant has not paid the filing fee, but the director shall void the order if the deficiency is corrected.
(b) Institution of stop order. The director may not institute a stop order proceeding against an effective registration statement on the basis of conduct or a transaction known to the director when the registration statement became effective unless the proceeding is instituted within thirty days after the registration statement became effective.
(c) Summary process. The director may summarily revoke, deny, postpone, or suspend the effectiveness of a registration statement pending final determination of an administrative proceeding. Upon the issuance of the order, the director shall promptly notify each person specified in subsection (d) that the order has been issued, the reasons for the revocation, denial, postponement, or suspension, and that within fifteen days after the receipt of a request in a record from the person the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the director, within thirty days after the date of service of the order, the order becomes final. If a hearing is requested or ordered, the director, 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.
(3) Findings of fact and conclusions of law in a record in accordance with chapter 1-26.
(e) Modification or vacation of stop order. The director may modify or vacate a stop order issued under this section if the director finds that the conditions that caused its issuance have changed or that it is necessary or appropriate in the public interest or for the protection of investors.
Source: SL 2004, ch 278, § 15.
47-31B-307. Waiver and modification. The director may waive or modify, in whole or in part, any or all of the requirements of §§ 47-31B-302, 47-31B-303, and 47-31B-304(b) or the requirement of any information or record in a registration statement or in a periodic report filed pursuant to § 47-31B-305(h).
Source: SL 2004, ch 278, § 16.
47-31B-401. Broker-dealer registration requirement and exemptions. (a) Registration requirement. It is unlawful for a person to transact business in this state as a broker-dealer unless the person is registered under this chapter as a broker-dealer or is exempt from registration as a broker-dealer under subsection (b) or (d).
(ii) Within forty-five days after the customer's first transaction in this state, the person files an application for registration as a broker-dealer in this state and a further transaction is not effected more than seventy-five days after the date on which the application is filed, or, if earlier, the date on which the director notifies the person that the director has denied the application for registration or has stayed the pendency of the application for good cause;
(G) Not more than three customers in this state during the previous twelve months, in addition to those customers specified in subparagraphs (A) through (F) and under subparagraph (H), if the broker-dealer is registered under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities act of the state in which the broker-dealer has its principal place of business; and
(c) Limits on employment or association. It is unlawful for a broker- dealer, or for an issuer engaged in offering, offering to purchase, purchasing, or selling securities in this state, directly or indirectly, to employ or associate with an individual to engage in an activity related to securities transactions in this state if the registration of the individual is suspended or revoked or the individual is barred from employment or association with a broker-dealer, an issuer, an investment adviser, or a federal covered investment adviser by an order of the director under this chapter, the Securities and Exchange Commission, or a self-regulatory organization. A broker-dealer or issuer does not violate this subsection if the broker-dealer or issuer did not know and in the exercise of reasonable care could not have known, of the suspension, revocation, or bar. Upon request from a broker-dealer or issuer and for good cause, an order under this chapter may modify or waive, in whole or in part, the application of the prohibitions of this subsection to the broker-dealer.
(C) An individual who is present in this state, with whom the broker- dealer customer relationship arose while the individual was temporarily or permanently a resident in Canada or the other foreign jurisdiction; and
Source: SL 2004, ch 278, § 17.
47-31B-402. Agent registration requirement and exemptions. (a) Registration requirement. It is unlawful for an individual to transact business in this state as an agent unless the individual is registered under this chapter as an agent or is exempt from registration as an agent under subsection (b).
(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. § 78(o)(2));
(2) An individual who represents a broker-dealer that is exempt under § 47-31B-401(b) or (d);
(4) An individual who represents an issuer and who effects transactions in the issuer's securities exempted by § 47-31B-202, other than § 47-31B-202(11) and (14);
(5) An individual who represents an issuer that effects transactions solely in federal covered securities of the issuer, but an individual who effects transactions in a federal covered security under Section 18(b)(3) or 18(b)(4)(D) of the Securities Act of 1933 (15 U.S.C. § 77r(b)(3) or 77r(b)(4)(D)) is not exempt if the individual is compensated in connection with the agent's participation by the payment of commissions or other remuneration based, directly or indirectly, on transactions in those securities;
(6) An individual who represents a broker-dealer registered in this state under § 47-31B-401(a) or exempt from registration under § 47-31B-401(b) in the offer and sale of securities for an account of a nonaffiliated federal covered investment adviser with investments under management in excess of one hundred million dollars acting for the account of others pursuant to discretionary authority in a signed record;
(d) Limit on employment or association. It is unlawful for a broker- dealer, or an issuer engaged in offering, selling, or purchasing securities in this state, to employ or associate with an agent who transacts business in this state on behalf of broker-dealers or issuers unless the agent is registered under subsection (a) or exempt from registration under subsection (b).
Source: SL 2004, ch 278, § 18.
47-31B-404. Investment adviser representative registration requirement and exemptions. (a) Registration requirement. It is unlawful for an individual to transact business in this state as an investment adviser representative unless the individual is registered under this chapter as an investment adviser representative or is exempt from registration as an investment adviser representative under subsection (b).
(1) An individual who is employed by or associated with an investment adviser that is exempt from registration under § 47-31B-403(b) or a federal covered investment adviser that is excluded from the notice filing requirements of § 47-31B-405; and
(c) Registration effective only while employed or associated. The registration of an investment adviser representative is not effective while the investment adviser representative is not employed by or associated with an investment adviser registered under this chapter or a federal covered investment adviser that has made or is required to make a notice filing under § 47-31B-405.
(d) Limit on affiliations. An individual may transact business as an investment adviser representative for more than one investment adviser or federal covered investment adviser unless a rule adopted or order issued under this chapter prohibits or limits an individual from acting as an investment adviser representative for more than one investment adviser or federal covered investment adviser.
(e) Limits on employment or association. It is unlawful for an individual acting as an investment adviser representative, directly or indirectly, to conduct business in this state on behalf of an investment adviser or a federal covered investment adviser if the registration of the individual as an investment adviser representative is suspended or revoked or the individual is barred from employment or association with an investment adviser or a federal covered investment adviser by an order under this chapter, the Securities and Exchange Commission, or a self-regulatory organization. Upon request from a federal covered investment adviser and for good cause, the director, by order issued, may waive, in whole or in part, the application of the requirements of this subsection to the federal covered investment adviser.
(f) Referral fees. An investment adviser registered under this chapter, a federal covered investment adviser that has filed a notice under § 47-31B-405, or a broker-dealer registered under this chapter is not required to employ or associate with an individual as an investment adviser representative if the only compensation paid to the individual for a referral of investment advisory clients is paid to an investment adviser registered under this chapter, a federal covered investment adviser who has filed a notice under § 47-31B-405, or a broker-dealer registered under this chapter with which the individual is employed or associated as an investment adviser representative.
Source: SL 2004, ch 278, § 20.
47-31B-405. Federal covered investment adviser notice filing requirement. (a) Notice filing requirement. Except with respect to a federal covered investment adviser described in subsection (b), it is unlawful for a federal covered investment adviser to transact business in this state as a federal covered investment adviser unless the federal covered investment adviser complies with subsection (c).
(2) A federal covered investment adviser without a place of business in this state if the person has had, during the preceding twelve months, not more than five clients that are resident in this state in addition to those specified under paragraph (1); and
(c) Notice filing procedure. A person acting as a federal covered investment adviser, not excluded under subsection (b), shall file a notice, a consent to service of process complying with § 47-31B-611, and such records as have been filed with the Securities and Exchange Commission under the Investment Advisers Act of 1940 required by rule adopted or order issued under this chapter and pay the fees specified in § 47-31B-410(e).
(d) Effectiveness of filing. The notice under subsection (c) becomes effective upon its filing.
Source: SL 2004, ch 278, § 21.
47-31B-406. Registration by broker-dealer, agent, investment adviser, and investment adviser representative. (a) Application for initial registration. A person shall register as a broker-dealer, agent, investment adviser, or investment adviser representative by filing an application and a consent to service of process complying with § 47-31B-611, and paying the fee specified in § 47-31B-410 and any reasonable fees charged by the designee of the director for processing the filing. The application must contain:
(2) Upon request by the director, any other financial or other information or record that the director determines is appropriate.
(b) Amendment. If the information or record contained in an application filed under subsection (a) is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.
(c) Effectiveness of registration. If an order is not in effect and a proceeding is not pending under § 47-31B-412, registration becomes effective at noon on the forty-fifth day after a completed application is filed, unless the registration is denied. A rule adopted or order issued under this chapter may set an earlier effective date or may defer the effective date until noon on the forty-fifth day after the filing of any amendment completing the application.
(d) Registration renewal. A registration is effective until midnight on December thirty-first of the year for which the application for registration is filed. Unless an order is in effect under § 47-31B-412, a registration may be automatically renewed each year by filing such records as are required by rule adopted or order issued under this chapter, by paying the fee specified in § 47-31B-410, and by paying costs charged by the designee of the director for processing the filings.
(e) Additional conditions or waivers. A rule adopted or order issued under this chapter may impose such other conditions, not inconsistent with the National Securities Markets Improvement Act of 1996. An order issued under this chapter may waive, in whole or in part, specific requirements in connection with registration as are in the public interest and for the protection of investors.
Source: SL 2004, ch 278, § 22.
47-31B-407. Succession and change in registration of broker-dealer or investment advisor. (a) Succession. A broker-dealer or investment adviser may succeed to the current registration of another broker-dealer or investment adviser or a notice filing of a federal covered investment adviser, and a federal covered investment adviser may succeed to the current registration of an investment adviser or notice filing of another federal covered investment adviser, by filing as a successor an application for registration pursuant to § 47-31B-401 or 47-31B-403 or a notice pursuant to § 47-31B-405 for the unexpired portion of the current registration or notice filing.
(b) Organizational change. A broker-dealer or investment adviser that changes its form of organization or state of incorporation or organization may continue its registration by filing an amendment to its registration if the change does not involve a material change in its financial condition or management. The amendment becomes effective when filed or on a date designated by the registrant in its filing. The new organization is a successor to the original registrant for the purposes of this chapter. If there is a material change in financial condition or management, the broker-dealer or investment adviser shall file a new application for registration. A predecessor registered under this chapter shall stop conducting its securities business other than winding down transactions and shall file for withdrawal of broker-dealer or investment adviser registration within forty-five days after filing its amendment to effect succession.
(d) Change of control. A change of control of a broker-dealer or investment adviser may be made in accordance with a rule adopted or order issued under this chapter.
Source: SL 2004, ch 278, § 23.
47-31B-411. Postregistration requirements. (a) Financial requirements. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o(h) ) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-22), a rule adopted or order issued under this chapter may establish minimum financial requirements for broker-dealers registered or required to be registered under this chapter and investment advisers registered or required to be registered under this chapter.
(b) Financial reports. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o(h)) or Section 222(b) of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-22), a broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall file such financial reports as are required by a rule adopted or order issued under this chapter. If the information contained in a record filed under this subsection is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.
(c) Record keeping. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-22):
(2) Broker-dealer records required to be maintained under paragraph (1) may be maintained in any form of data storage acceptable under Section 17(a) of the Securities Exchange Act of 1934 (15 U.S.C. § 78q(a)) if they are readily accessible to the director; and
(d) Audits or inspections. The records of a broker-dealer registered or required to be registered under this chapter and of an investment adviser registered or required to be registered under this chapter are subject to such reasonable periodic, special, or other audits or inspections by a representative of the director, within or without this state, as the director considers necessary or appropriate in the public interest and for the protection of investors. An audit or inspection may be made at any time and without prior notice. The director may copy, and remove for audit or inspection copies of, all records the director reasonably considers necessary or appropriate to conduct the audit or inspection. The director may assess a reasonable charge for conducting an audit or inspection under this subsection.
(e) Custody and discretionary authority bond or insurance. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-22), a rule adopted or order issued under this chapter may require a broker-dealer or investment adviser that has custody of or discretionary authority over funds or securities of a customer or client to obtain insurance or post a bond or other satisfactory form of security in an amount not to exceed fifty thousand dollars. The director may determine the requirements of the insurance, bond, or other satisfactory form of security. Insurance or a bond or other satisfactory form of security may not be required of a broker-dealer registered under this chapter whose net capital exceeds, or of an investment adviser registered under this chapter whose minimum financial requirements exceed, the amounts required by rule or order under this chapter. The insurance, bond, or other satisfactory form of security must permit an action by a person to enforce any liability on the insurance, bond, or other satisfactory form of security if instituted within the time limitations in § 47-31B-509(j)(2).
(f) Requirements for custody. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. § 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-22), an agent may not have custody of funds or securities of a customer except under the supervision of a broker-dealer and an investment adviser representative may not have custody of funds or securities of a client except under the supervision of an investment adviser or a federal covered investment adviser. A rule adopted or order issued under this chapter 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.
(h) Continuing education. A rule adopted or order issued under this chapter may require an individual registered under § 47-31B-402 or 47-31B-404 to participate in a continuing education program approved by the Securities and Exchange Commission and administered by a self-regulatory organization or, in the absence of such a program, a rule adopted or order issued under this chapter may require continuing education for an individual registered under § 47-31B-404.
Source: SL 2004, ch 278, § 27.
47-31B-412. Denial, revocation, suspension, withdrawal, restriction, condition, or limitation of registration. (a) Disciplinary conditions--applicants. If the director finds that the order is in the public interest and subsection (d) authorizes the action, an order issued under this chapter may deny an application, or may condition or limit registration of an applicant to be a broker-dealer, agent, investment adviser, or investment adviser representative, and, if the applicant is a broker-dealer or investment adviser, of a partner, officer, director, or person having a similar status or performing similar functions, or a person directly or indirectly in control, of the broker-dealer or investment adviser.
(b) Disciplinary conditions--registrants. If the director finds that the order is in the public interest and subsection (d) authorizes the action, an order issued under this chapter may revoke, suspend, condition, or limit the registration of a registrant and, if the registrant is a broker-dealer or investment adviser, of a partner, officer, director, or person having a similar status or performing similar functions, or a person directly or indirectly in control, of the broker-dealer or investment adviser. However, the director may not:
(1) Institute a revocation or suspension proceeding under this subsection based on an order issued under a law of another state that is reported to the director or a designee of the director more than one year after the date of the order on which it is based; or
(c) Disciplinary penalties--registrants. If the director finds that the order is in the public interest and subsection (d)(1) through (6), (8), (9), (10), or (12) and (13) authorizes the action, an order under this chapter may censure, impose a bar, or impose a civil penalty in an amount not to exceed a maximum of ten thousand dollars per violation, on a registrant, and, if the registrant is a broker-dealer or investment adviser, a partner, officer, director, or person having a similar status or performing similar functions, or a person directly or indirectly in control, of the broker-dealer or investment adviser.
(4) Is enjoined or restrained by a court of competent jurisdiction in an action instituted by the director under this chapter or the predecessor act, a state, the Securities and Exchange Commission, or the United States from engaging in or continuing an act, practice, or course of business involving an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance;
(7) Is insolvent, either because the person's liabilities exceed the person's assets or because the person cannot meet the person's obligations as they mature, but the director may not enter an order against an applicant or registrant under this paragraph without a finding of insolvency as to the applicant or registrant;
(8) Refuses to allow or otherwise impedes the director from conducting an audit or inspection under § 47-31B-411(d) or refuses access to a registrant's office to conduct an audit or inspection under § 47-31B-411(d);
(10) Has not paid the proper filing fee within thirty days after having been notified by the director of a deficiency, but the director shall vacate an order under this paragraph when the deficiency is corrected;
(14) Is not qualified on the basis of factors such as training, experience, and knowledge of the securities business. 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). The director may require an applicant for registration under § 47-31B-402 or 47-31B-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.
(e) Examinations. A rule adopted or order issued under this chapter may require that an examination, including an examination developed or approved by an organization of securities regulators, be successfully completed by a class of individuals or all individuals. An order issued under this chapter may waive, in whole or in part, an examination as to an individual and a rule adopted under this chapter may waive, in whole or in part, an examination as to a class of individuals if the director determines that the examination is not necessary or appropriate in the public interest and for the protection of investors.
(f) Summary process. The director may suspend or deny an application summarily; restrict, condition, limit, or suspend a registration; or censure, bar, or impose a civil penalty on a registrant before final determination of an administrative proceeding. Upon the issuance of an order, the director shall promptly notify each person subject to the order that the order has been issued, the reasons for the action, and that within fifteen days after the receipt of a request in a record from the person the matter will be scheduled for a hearing. If a hearing is not requested and none is ordered by the director within thirty days after the date of service of the order, the order becomes final by operation of law. If a hearing is requested or ordered, the director, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend the order until final determination.
(h) Control person liability. A person that controls, directly or indirectly, a person not in compliance with this section may be disciplined by order of the director under subsections (a) through (c) to the same extent as the noncomplying person, unless the controlling person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct that is a ground for discipline under this section.
(i) Limit on investigation or proceeding. The director may not institute a proceeding under subsection(a), (b), or (c) based solely on material facts actually known by the director unless an investigation or the proceeding is instituted within one year after the director actually acquires knowledge of the material facts.
Source: SL 2004, ch 278, § 28.
47-31B-501. General fraud. It is unlawful for a person, in connection with the offer, sale, or purchase of a security, directly or indirectly:
47-31B-503. Evidentiary burden. (a) Civil. In a civil action or administrative proceeding under this chapter, a person claiming an exemption, exception, preemption, or exclusion has the burden to prove the applicability of the claim.
Source: SL 2004, ch 278, § 31.
47-31B-504. Filing of sales and advertising literature. (a) Filing requirement. Except as otherwise provided in subsection (b), a rule adopted or order issued under this chapter may require the filing of a prospectus, pamphlet, circular, form letter, advertisement, sales literature, or other advertising record relating to a security or investment advice, addressed or intended for distribution to prospective investors, including clients or prospective clients of a person registered or required to be registered as an investment adviser under this chapter.
Source: SL 2004, ch 278, § 32.
47-31B-505. Misleading filings. It is unlawful for a person to make or cause to be made, in a record that is used in an action or proceeding or filed under this chapter, a statement that, at the time and in the light of the circumstances under which it is made, is false or misleading in a material respect, or, in connection with the statement, to omit to state a material fact necessary to make the statement made, in the light of the circumstances under which it was made, not false or misleading.
Source: SL 2004, ch 278, § 33.
47-31B-506. Misrepresentations concerning registration or exemption. The filing of an application for registration, a registration statement, a notice filing under this chapter, the registration of a person, the notice filing by a person, or the registration of a security under this chapter does not constitute a finding by the director that a record filed under this chapter is true, complete, and not misleading. The filing or registration or the availability of an exemption, exception, preemption, or exclusion for a security or a transaction does not mean that the director has passed upon the merits or qualifications of, or recommended or given approval to, a person, security, or transaction. 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.
Source: SL 2004, ch 278, § 34.
47-31B-507. Qualified immunity. A broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative is not liable to another broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative for defamation relating to a statement that is contained in a record required by the director, or designee of the director, the Securities and Exchange Commission, or a self-regulatory organization, unless the person knew, or should have known at the time that the statement was made, that it was false in a material respect or the person acted in reckless disregard of the statement's truth or falsity.
Source: SL 2004, ch 278, § 35.
47-31B-508. Criminal penalties. (a) Criminal penalties. It is a Class 4 felony for any person that willfully violates this chapter, or a rule adopted or order issued under this chapter, except § 47-31B-504 or the notice filing requirements of § 47-31B-302 or 47-31B-405, or that willfully violates § 47-31B-505 knowing the statement made to be false or misleading in a material respect. An individual convicted of violating a rule or order under this chapter may be fined, but may not be imprisoned, if the individual did not have knowledge of the rule or order. A subsequent violation is a Class 3 felony.
Source: SL 2004, ch 278, § 36; SL 2006, ch 130, § 17.
47-31B-510. Rescission offers. A purchaser, seller, or recipient of investment advice may not maintain an action under § 47-31B-509 if:
(B) If the basis for relief under this section may have been a violation of § 47-31B-509(b), an offer to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid, and interest at Category D § 54-3-16 from the date of the purchase, less the amount of any income received on the security, or, if the purchaser no longer owns the security, an offer to pay the purchaser upon acceptance of the offer damages in an amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it, and interest at Category D § 54-3-16 from the date of the purchase in cash equal to the damages computed in the manner provided in this subsection;
(C) If the basis for relief under this section may have been a violation of § 47-31B-509(c), an offer to tender the security, on payment by the seller of an amount equal to the purchase price paid, less income received on the security by the purchaser and interest at Category D § 54-3-16 from the date of the sale; or if the purchaser no longer owns the security, an offer to pay the seller upon acceptance of the offer, in cash, damages in the amount of the difference between the price at which the security was purchased and the value the security would have had at the time of the purchase in the absence of the purchaser's conduct that may have caused liability and interest at Category D § 54-3-16 from the date of the sale;
(D) If the basis for relief under this section may have been a violation of § 47-31B-509(d); and if the customer is a purchaser, an offer to pay as specified in subparagraph (B); or, if the customer is a seller, an offer to tender or to pay as specified in subparagraph (C);
(E) If the basis for relief under this section may have been a violation of § 47-31B-509(e), an offer to reimburse in cash the consideration paid for the advice and interest at Category D § 54-3-16 from the date of payment; or
(F) If the basis for relief under this section may have been a violation of § 47-31B-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 Category D § 54-3-16 from the date of the violation causing the loss;
Source: SL 2004, ch 278, § 38.
47-31B-603. Civil enforcement. (a) Civil action instituted by director. If the director believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has, is, or is about to engage in an act, practice, or course of business that materially aids a violation of this chapter or a rule adopted or order issued under this chapter, the director may maintain an action in the circuit court to enjoin the act, practice, or course of business and to enforce compliance with this chapter or a rule adopted or order issued under this chapter.
47-31B-604. Administrative enforcement. (a) Issuance of an order or notice. If the director determines that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has materially aided, is materially aiding, or is about to materially aid an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter, the director may:
(2) Issue an order denying, suspending, revoking, or conditioning the exemptions for a broker-dealer under § 47-31B-401(b)(1)(D) or (F) or an investment adviser under § 47-31B-403(b)(1)(C); or
(3) Issue an order under § 47-31B-204.
(b) Summary process. An order under subsection (a) is effective on the date of issuance. Upon issuance of the order, the director shall promptly serve each person subject to the order with a copy of the order and a notice that the order has been entered. The order must include a statement whether the director will seek a civil penalty or costs of the investigation, a statement of the reasons for the order, and notice that, within fifteen days after receipt of a request in a record from the person, the matter will be scheduled for a hearing. If a person subject to the order does not request a hearing and none is ordered by the director within thirty days after the date of service of the order, the order, which may include a civil penalty or costs of the investigation if a civil penalty or costs were sought in the statement accompanying the order, becomes final as to that person by operation of law. If a hearing is requested or ordered, the director, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend it until final determination.
(c) Procedure for final order. If a hearing is requested or ordered pursuant to subsection (b), a hearing must be held pursuant to chapter 1-26. A final order may not be issued unless the director makes findings of fact and conclusions of law in a record pursuant to chapter 1-26. The final order may make final, vacate, or modify the order issued under subsection (a).
(d) Civil penalty. In a final order under subsection (c), the director may impose a civil penalty up to ten thousand dollars for each violation.
(e) Costs. In a final order, the director may charge the actual cost of an investigation or proceeding for a violation of this chapter or a rule adopted or order issued under this chapter.
(f) Filing of certified final order with court; effect of filing. If a petition for judicial review of a final order is not filed in accordance with § 47-31B-609, the director may file a certified copy of the final order with the clerk of a court of competent jurisdiction. The order so filed has the same effect as a judgment of the court and may be recorded, enforced, or satisfied in the same manner as a judgment of the court.
(g) Enforcement by court; further civil penalty. If a person does not comply with an order under this section, the director may petition a court of competent jurisdiction to enforce the order. The court may not require the director to post a bond in an action or proceeding under this section. If the court finds, after service and opportunity for hearing, that the person was not in compliance with the order, the court may adjudge the person in civil contempt of the order. The court may impose a further civil penalty against the person for contempt in an amount not more than ten thousand dollars, for each violation and may grant any other relief the court determines is just and proper in the circumstances.
Source: SL 2004, ch 278, § 42.
47-31B-605. Rules, forms, orders, interpretive opinions, and hearings. (a) Issuance and adoption of forms, orders, and rules. The director may:
(1) Issue forms and orders and, after notice and comment, may adopt and amend rules necessary or appropriate to carry out this chapter and may repeal rules, including rules and forms governing registration statements, applications, notice filings, reports, and other records;
(b) Findings and cooperation. Under this chapter, a rule or form may not be adopted or amended, or an order issued or amended, unless the director finds that the rule, form, order, or amendment is necessary or appropriate in the public interest or for the protection of investors and is consistent with the purposes intended by this chapter. In adopting, amending, and repealing rules and forms, § 47-31B-608 applies in order to achieve uniformity among the states and coordination with federal laws in the form and content of registration statements, applications, reports, and other records, including the adoption of uniform rules, forms, and procedures.
(c) Financial statements. Subject to Section 15(h) of the Securities Exchange Act and Section 222 of the Investment Advisers Act of 1940, the director may require that a financial statement filed under this chapter be prepared in accordance with generally accepted accounting principles in the United States and comply with other requirements specified by rule adopted or order issued under this chapter. A rule adopted or order issued under this chapter may establish:
(d) Interpretative opinions. The director may provide interpretative opinions or issue determinations that the director will not institute a proceeding or an action under this chapter against a specified person for engaging in a specified act, practice, or course of business if the determination is consistent with this chapter. A fifty dollar fee is required for interpretative opinions and no action letters.
(e) Effect of compliance. A penalty under this chapter may not be imposed for, and liability does not arise from conduct that is engaged in or omitted in good faith believing it conforms to a rule, form, or order of the director under this chapter.
(f) Presumption for public hearings. A hearing in an administrative proceeding under this chapter must be conducted in public unless the director for good cause consistent with this chapter determines that the hearing will not be so conducted.
Source: SL 2004, ch 278, § 43.
47-31B-606. Administrative files and opinions. (a) Public register of filings. The director shall maintain, or designate a person to maintain, a register of applications for registration of securities; registration statements; notice filings; applications for registration of broker-dealers, agents, investment advisers, and investment adviser representatives; notice filings by federal covered investment advisers that are or have been effective under this chapter or the predecessor act; notices of claims of exemption from registration or notice filing requirements contained in a record; orders issued under this chapter or the predecessor act; and interpretative opinions or no action determinations issued under this chapter.
(b) Public availability. The director shall make all rules, forms, interpretative opinions, and orders available to the public.
(c) Copies of public records. The director shall furnish a copy of a record that is a public record or a certification that the public record does not exist to a person that so requests. A rule adopted under this chapter may establish a reasonable charge for furnishing the record or certification. A copy of the record certified or a certificate by the director of a record's nonexistence is prima facie evidence of a record or its nonexistence.
Source: SL 2004, ch 278, § 44.
47-31B-607. Public records--Confidentiality. (a) Presumption of public records. Except as otherwise provided in subsection (b), records obtained by the director or filed under this chapter, including a record contained in or filed with a registration statement, application, notice filing, or report, are public records and are available for public examination.
(1) A record obtained by the director in connection with an audit or inspection under § 47-31B-411(d) or an investigation under § 47-31B-602;
(2) A part of a record filed in connection with a registration statement under §§ 47-31B-301 and 47-31B-303 through 47-31B-305 or a record under § 47-31B-411(d) that contains trade secrets or confidential information if the person filing the registration statement or report has asserted a claim of confidentiality or privilege that is authorized by law;
(3) A record that is not required to be provided to the director or filed under this chapter and is provided to the director only on the condition that the record will not be subject to public examination or disclosure;
(4) A nonpublic record received from a person specified in § 47-31B-608(a); and
(5) Any social security number, residential address unless used as a business address, and residential telephone number unless used as a business telephone number, contained in a record that is filed; and
(6) A record obtained by the director through a designee of the director or that a rule or order under this chapter determines has been:
(A) Expunged from the director's records by the designee; or
(B) Determined to be nonpublic or nondisclosable by that designee if the director finds the determination to be in the public interest and for the protection of investors.
(c) Director discretion to disclose. If disclosure is for the purpose of a civil, administrative, or criminal investigation, action, or proceeding or to a person specified in § 47-31B-608(a), the director may disclose a record obtained in connection with an audit or inspection under § 47-31B-411(d) or a record obtained in connection with an investigation under § 47-31B-602.
Source: SL 2004, ch 278, § 45.
47-31B-608. Uniformity and cooperation with other agencies. (a) Objective of uniformity. The director shall, in its discretion, cooperate, coordinate, consult, and, subject to § 47-31B-607, share records and information with the securities regulator of another state, Canada, a Canadian province or territory, a foreign jurisdiction, the Securities and Exchange Commission, the United States Department of Justice, the Commodity Futures Trading Commission, the Federal Trade Commission, the Securities Investor Protection Corporation, a self-regulatory organization, a national or international organization of securities regulators, a federal or state banking and insurance regulator, and a governmental law enforcement agency to effectuate greater uniformity in securities matters among the federal government, self-regulatory organizations, states, and foreign governments.
(b) Policies to consider. In cooperating, coordinating, consulting, and sharing records and information under this section and in acting by rule, order, or waiver under this chapter, the director shall, in its discretion, take into consideration in carrying out the public interest the following general policies:
(7) Coordinating registrations under §§ 47-31B-301 and 47-31B-401 through 47-31B-404 and exemptions under § 47-31B-203;
(8) Sharing and exchanging records, subject to § 47-31B-607;
Source: SL 2004, ch 278, § 46.
47-31B-609. Judicial review. (a) Judicial review of orders. A final order issued by the director under this chapter is subject to judicial review in accordance with chapter 1-26.
(b) Judicial review of rules. A rule adopted under this chapter is subject to judicial review in accordance with chapter 1-26.
Source: SL 2004, ch 278, § 47.
47-31B-610. Jurisdiction. (a) Sales and offers to sell. Sections 47-31B-301, 47-31B-302, 47-31B-401(a), 47-31B-402(a), 47-31B-403(a), 47-31B-404(a), 47-31B-501, 47-31B-506, 47-31B-509, and 47-31B-510 do not apply to a person that sells or offers to sell a security unless the offer to sell or the sale is made in this state or the offer to purchase or the purchase is made and accepted in this state.
(b) Purchases and offers to purchase. Sections 47-31B-401(a), 47-31B-402(a), 47-31B-403(a), 47-31B-404(a), 47-31B-501, 47-31B-506, 47-31B-509, and 47-31B-510 do not apply to a person that purchases or offers to purchase a security unless the offer to purchase or the purchase is made in this state or the offer to sell or the sale is made and accepted in this state.
(e) Publications, radio, television, or electronic communications. An offer to sell or to purchase is not made in this state when a publisher circulates or there is circulated on the publisher's behalf in this state a bona fide newspaper or other publication of general, regular, and paid circulation that is not published in this state, or that is published in this state but has had more than two thirds of its circulation outside this state during the previous twelve months or when a radio or television program or other electronic communication originating outside this state is received in this state. A radio or television program, or other electronic communication is considered as having originated in this state if either the broadcast studio or the originating source of transmission is located in this state, unless:
(f) Investment advice and misrepresentations. Sections 47-31B-403(a), 47-31B-404(a), 47-31B-405(a), 47-31B-502, 47-31B-505, and 47-31B-506 apply to a person if the person engages in an act, practice, or course of business instrumental in effecting prohibited or actionable conduct in this state, whether or not either party is then present in this state.
Source: SL 2004, ch 278, § 48.
47-31B-611. Service of process. (a) Signed consent to service of process. A consent to service of process complying with this section required by this chapter must be signed and filed in the form required by a rule or order under this chapter. A consent appointing the director the person's agent for service of process in a noncriminal action or proceeding against the person, or the person's successor or personal representative under this chapter or a rule adopted or order issued under this chapter after the consent is filed, has the same force and validity as if the service were made personally on the person filing the consent. A person that has filed a consent complying with this subsection in connection with a previous application for registration or notice filing need not file an additional consent.
(b) Conduct constituting appointment of agent for service. If a person, including a nonresident of this state, engages in an act, practice, or course of business prohibited or made actionable by this chapter or a rule adopted or order issued under this chapter and the person has not filed a consent to service of process under subsection (a), the act, practice, or course of business constitutes the appointment of the director as the person's agent for service of process in a noncriminal action or proceeding against the person or the person's successor or personal representative.
(c) Procedure for service of process. Service under subsection (a) or (b) may be made by providing a copy of the process to the office of the director, but it is not effective unless:
(1) The plaintiff, which may be the director, promptly sends notice of the service and a copy of the process, return receipt requested, to the defendant or respondent at the address set forth in the consent to service of process or, if a consent to service of process has not been filed, at the last known address, or takes other reasonable steps to give notice; and
(2) The plaintiff files an affidavit of compliance with this subsection in the action or proceeding on or before the return day of the process, if any, or within the time that the court, or the director in a proceeding before the director, allows.
(d) Service in administrative proceedings or civil actions by director. Service pursuant to subsection (c) may be used in a proceeding before the director or by the director in a civil action in which the director is the moving party.
(e) Opportunity to defend. If process is served under subsection (c), the court, or the director in a proceeding before the director, shall order continuances as are necessary or appropriate to afford the defendant or respondent reasonable opportunity to defend.
Source: SL 2004, ch 278, § 49.
47-31B-612. Severability clause. If any provision of this chapter or its application to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this chapter that can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.
Source: SL 2004, ch 278, § 50.
47-31B-701, 47-31B-702. Reserved
47-31B-703. Application of chapter to existing proceeding and existing rights and duties. (a) Applicability of predecessor act to pending proceedings and existing rights. The predecessor act exclusively governs all actions or proceedings that are pending on July 1, 2004 or may be instituted on the basis of conduct occurring before July 1, 2004, but a civil action may not be maintained to enforce any liability under the predecessor act unless instituted within any period of limitation that applied when the cause of action accrued or within five years after July 1, 2004, whichever is earlier.
(b) Continued effectiveness under predecessor act. All effective registrations under the predecessor act, all administrative orders relating to the registrations, rules, statements of policy, interpretative opinions, declaratory rulings, no action determinations, and conditions imposed on the registrations under the predecessor act remain in effect while they would have remained in effect if this chapter had not been enacted. They are considered to have been filed, issued, or imposed under this chapter, but are exclusively governed by the predecessor act.
(c) Applicability of predecessor act to offers or sales. The predecessor act exclusively applies to an offer or sale made within one year after July 1, 2004 pursuant to an offering made in good faith before July 1, 2004 on the basis of an exemption available under the predecessor act.
Source: SL 2004, ch 278, § 53.