An Act To Adopt the Maine Uniform Securities Act
Maine Legislature, Session 122, LD 0509
Committee: Insurance and Financial Services
Sponsors: PERRY, MILLS, GLYNN, HARLOW, RICHARDSON, PLOWMAN, SULLN AN
Amends: 24-A MRSA §2517, 4 MRSA §152, 5 MRSA §100, 9-A MRSA §3-S, 9-B MRSA §10, 10 MRSA §1210-B, 13 MRSA §1756, 14 MRSA §1522, 24-A MRSA §1402, 24-A MRSA §3489, 24-A MRSA §6208, 24-A MRSA §681, 32 MRSA §1401, 32 MRSA §4668, 32 MRSA §1120, 38 MRSA §2212

Legislative Document 
No. 509 
H.P.384 
House of Representatives, February 1,2005 
An Act To Adopt the Maine Uniform Securities Act 
Submitted by the Department of Professional and Financial Regulation pursuant to Joint 
Rule 204. 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative PERRY of Calais. 
Cosponsored by Senator MILLS of Somerset and 
/J'l~ 117· 7T/P£~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: GLYNN of South Portland, HARLOW of Portland, McKANE of Newcastle, 
RICHARDSON of Warren, Senators: PLOWMAN of Penobscot, SULLN AN of York. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-t. 32 MRSA c. 105, as amended, is repealed. 
Sec. A-2. 32 MRSA c.13S is enacted to read: 
UlfIFORM SECURITIES ACT (2002) 
Prefatory Rote of the Rational Conference of Commissioners 
on Uniform State Laws 
There 
are 
two versions of the Uniform Securities Act 
currently in force. 
The Uniform Securities Act of 1956 ("1956 Act") has been 
adopted at one time or another, in whole or in part, by 37 
jurisdictions. 
The Revised Uniform Securities Act of 1985 ("RUSA") has been 
adopted in only a few States. 
Both Acts have been preempted in 
Secur i ties Markets Improvement Act of 
Litigation Uniform Standards Act of 1998. 
part by the 
1996 and the 
National 
Securities 
The need to modernize the Uniform Securities Act is a 
consequence 
of 
a 
combination of 
the 
new 
federal 
preemptive 
legislation, significant recent changes in the technology of 
securities 
trading 
and 
regulation, 
and 
the 
increasingly 
interstate and international aspects of securities transactions. 
The approach of this Act is to use the substance and 
vocabulary of the more widely adopted 1956 Act, when appropriate. 
The 
Act 
also 
takes 
into 
account 
RUSA, 
federal 
preemptive 
legislation, and the other developments that are described in 
this Preface and the Official Comments. 
The Act has been reorganized to follow in large part the 
National 
Conference 
of 
Commissioners 
on 
Uniform 
State 
Laws 
("NCCUSL") Procedural and Drafting Manual 15-41 (1997). 
This is a 
new Uniform Securities Act. Amendment of the 
earlier 1956 Act or RUSA would not have been wise given the 
different versions of the 1956 Act enacted by the States and the 
determination to seek enactment in all state jurisdictions of the 
new Uniform'Securities Act after it was adopted by the National 
Conference. 
Page l-LR0441(1) 
Nonetheless several sections of this Act are identical or 
substantively identical to sections of the 1956 Act or RUSA. It 
is not intended that adoption of a 
new Uniform Securities Act 
will 
reject earlier case decisions 
interpreting identical or 
substantively identical sections of the 1956 Act or RUSA unless 
specifically so stated in the Official Comments. 
The Act is solelY,a new Uniform Securities Act. It does not 
codify or append related regulations or guidelines. The Act also 
authorizes state administrators in Section 203 to adopt further' 
exemptions without statutory amendment. 
The Drafting Committee 
did not address state tender offer or control share provisions in 
its preparation of this Act. 
The Act includes subheadings wi thin sections as an aid to 
readers. Unlike section captions, subheadings are not a part of 
the 
official 
text. 
Each 
jurisdiction in 
which 
this 
Act 
is 
introduced may consider whether to adopt the subheadings as 
a 
part of the statute and whether to adopt a provision clarifying 
the effect, if any, to be given to the headings. 
The Drafting Committee reviewed several drafts in meetings 
between 1998 and 2002. The drafts were made available on NCCUSL's 
public website before the meetings. 
The meetings were publicly 
noticed and open to all who wished to attend. The Committee had 
the 
assistance 
of 
advisors, 
consultants, 
and 
observers 
from 
several interested groups, including, among others, the American 
Bankers Association, the American Bar Association, the American 
Council of Life Insurers, the Certified Financial Planner Board 
of Standards, the Financial Planning Association, the Investment 
Company Institute, the Investment Counsel Association of America, 
the National Association of Securities Dealers, 
Inc., 
the New 
York Stock Exchange, the North American Securities Administrators 
Association, 
the 
Securities 
and 
Exchange 
Commission, 
and 
the 
Secur i ties Industry Association. 
In addition, the Reporter and 
the 
Chair 
met 
on 
several 
occasions 
with 
committees 
or 
representatives of these and other groups. 
In drafting the 
new Act. 
the 
Reporter 
and the 
DrRf~ing 
Committee recognized two fundamental challenges. First, there was 
a general recognition among all involved of the desirability of 
drafting an Act that would receive br0~d suppnr~_ The success of 
RUSA had been limited because of fundamental differences among 
relevant constituencies on several issues. 
After the National 
Securities Markets Improvement Act of 1996 preempted specified 
aspects of state securities law with respect to federal covered 
securities,· the opportunity to draft an Act in a less contentious 
atmosphere was available. Given the number of industry, investor, 
and regulatory interests affected by the Act and the complexity 
of 
the 
Act 
itself, 
building 
consensus 
was 
significant drafting challenge. 
the 
Act's 
most 
Second, there was the technical challenge of drafting a new 
Act that could achieve the basic goal of uniformity among states 
and with applicable federal law against the backdrop of 46 years 
of experience with the 
1956 Act. 
Over time both Uniform and 
non-Uniform Act states have, to varying degrees, evolved local 
solutions 
to 
a 
number 
of 
securities 
law 
lssues. 
In 
an 
increasingly global securities market, 
the need for uniformity 
has 
become 
more 
important. 
Drafting language 
to 
achieve 
the 
greatest 
practicable 
uniformity, 
given 
differences 
In 
state 
practice, was a key aspiration of this Act. In a few instances, 
such 
as 
dollar 
amounts 
for 
fees, 
the 
Act 
defers 
to 
local 
practice. 
On 
a 
few 
other issues, 
bracketed 
language 
or 
the 
Official 
Comments 
articulate 
an 
alternative 
some 
states 
may 
choose to adopt rather than the language of the Act itself. 
The Act is in seven Articles: 
1. 
General Provisions 
2. 
Exemptions from Registration of Securities 
3. 
Registration of Securities and Notice Filing of Federal 
Covered Securities 
4. 
Broker-Dealers, Agents, Investment Advisers, Investment 
Adviser Representatives, and Federal Covered Investment 
Advisers 
5. 
Fraud and Liabilities 
6. 
Administration and Judicial Review 
7. 
Transition 
There are has three overarching themes of the Act. 
First, Section 608 articulates in greater detail than the 
1956 Act's Section 415 the obj ectives of uniformity, cooperation 
among relevant state and federal governments and self-regulatory 
organizations, 
investor 
protection 
and, 
to 
the 
extent 
practicable, cdpiLal formation. Section 608 is thc reciprocal of 
the instruction on these subjects giveIl by COllgress in 1996 to 
the Securities and Exchange Commission in Section 19 (c) of the 
Securities 
Act 
of 
1933. 
The 
theme 
of 
uniformity 
and 
the 
aspiration of coordination of federal and state securities law is 
particularly stressed in the Act and Official Comments. Section 
602(f), consistent with the Federal Securities Litigation Uniform 
Standard Act of 1998, is a new provision encouraging reciprocal 
state enforcement assistance. 
A 
second 
overarching 
theme 
of 
the 
Act 
is 
achieving 
consistency with the National Securities Markets Improvement Act 
of 
1996 
("NSMIA"). 
New 
definitions 
were 
added 
to 
define 
in 
Section 
Section 
102(6), 
102(7), 
federal 
covered 
investment 
federal 
covered 
security. 
adviser, 
and 
in 
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 
(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)(l)(A) and (2), 405 
and 411). 
A third theme of the Act involves facilitating electronic· 
records, signatures, and filing. 
New definitions were added to 
address filing (Section 102(8», record (Section 102(25», and 
sign (Section 102(30». Section 105 expressly permits the filing 
of 
electronic 
signatures 
and 
records. 
Collectively 
these 
provisions are intended to permit electronic filing in central 
information 
depositories 
such 
as 
the 
Web-CRD 
(Central 
Registration 
Depository), 
the 
Investment 
Adviser 
Registration 
Depository 
(lARD), 
the 
Securities 
and 
Exchange 
Commission's 
Electronic Data Gathering, Analysis and Retrieval System (EDGAR) 
or successor institutions. Electronic communication also has led 
to an amplification of the jurisdiction Section 610. 
The new Act makes several other significant changes compared 
to the 1956 Act or RUSA. 
(1) The definition of "security" in Section 102(28) has been 
modernized to take into account 
amendments 
to the counterpart 
federal 
provisions; 
add 
new 
language 
to 
expressly 
include 
uncertificated 
securities; 
exclude 
contributory 
or 
noncontributory 
ERISA 
plans; 
and 
amplify 
the 
definition 
of 
investment contract so that it can expressly reach interests in 
limited partnerships, 
limited liability companies, 
or viatical 
settlement agreements, 
among other contracts, when they satisfy 
the definition of investment contract. 
The new Act does not expressly exclude from the definition 
of security variable insurance pro(1)C'ts, hut does exempt variable 
insurance 
products 
from 
securities 
registration 
In 
Section 
201(4). 
The 
states 
are 
divided 
on 
the 
question 
of 
whether 
var iable insurance products should be excluded (and not subj ect 
to 
fraud 
enforcement) 
or 
exempted 
(and 
subj ect 
to 
fraud 
eIlIuL ceJllellL). for those states th0t \vich to continua to prouj r1 P 
or adopt an exclusion for variable insurance products from the 
definition of security, the brackets should be removed from the 
phrase 
"or 
variable." 
For 
those 
states 
that 
wish 
variable 
insurance products to be included in the definition of security, 
the bracketed phrase should be removed. 
(2) Nineteen new definitions were added to define "bank" 
(Section 
102(3», 
"depository 
institution" 
(Section 
102(5», 
"federal covered investment adviser" (Section 102 (6)), "federal 
covered security" 
(Section 102(7), 
"filing" 
(Section 102(8», 
"institutional investor" 
(Section 102(11», 
"insurance company" 
(Section 102(12», 
"insured" 
(Section 102(13», 
"international 
banking 
institution" 
(Section 
(14», 
"investment 
adviser 
representative" (Section 102(16», "offer to purchase" (Section 
102(19», 
"place of business" 
(Section 102(21», 
"predecessor 
act" 
(Section 
102(22», 
"price 
amendment" 
(Section 
102(23», 
"principal 
place 
of 
business" 
(Section 
102(24», 
"record"· 
(Section 102(25», "Securities and Exchange Commission" (Section 
102(27», 
"self-·regulatory organization" 
(Section 102(29», 
and 
"sign" (Section 102(30». The growth in definitions is suggestive 
of 
the 
increased 
complexity 
and 
detail 
of 
several 
revised 
provisions in the new Act. 
(3) 
Specific 
exemptions 
from 
securities registration are 
broadened. Most significant is Section 202(13) which builds on a 
new definition of institutional investors that parClllels 
Rule 
50l(a) of the Securities Act of 1933, but with $10 million rather 
than $5 million thresholds in Sections 102(1l)(F) through (K), 
and (0), and addresses specified employee plans, trusts, Internal 
Revenue 
Code 
Section 
50l(c)(3) 
organizations, 
small 
business 
investment companies licensed by the United States Small Business 
Administration, 
private 
business 
development 
companies 
under 
Section 202(a)(22) 
of 
the 
Investment Advisers 
Act, 
and other 
institutional 
purchasers. 
The 
definition 
of 
institutional 
investor also reaches qualified institutional buyers under Rule 
144A(a)(i) 
of 
the 
Securities 
Act 
of 
1933, 
major 
U.S. 
institutional investors as defined in Rule 15a-6(b) (4) (i) of the 
Securities Exchange Act of 1934, and federal covered investment 
advisers acting for their own accounts. 
The 
new institutional 
investor transaction exemption in Section 202(13) will also reach 
other persons specified by rule or order of the administrator. 
The 
limited 
offering 
transaction 
exemption 
in 
Section 
202(14) was broadened to reach 25 persons, in addition to those 
exempted by the institutional investor exemption, 
on condition 
that 
the 
transaction is part 
of 
a 
single 
issue, 
and 
other 
specified conditions are satisfied. 
If the SEC ddoJ?ts a new definition of qualified purchaser, 
as it has proposed under Rule 146(c) of the Securities Act of 
1933, there may ultimately be four preemptive or exemptive types 
of provision applicable tn the new Act: 
(1) the SEC qualified 
purchaser 
provision; 
(2) 
Section 
18(b) (4) (D) 
which 
provides 
preemptive treatment for Rule 506 offerings under the Securities 
Act of 1933; (3) specified investors in Section 202(13); and (4) 
limited offerings in Section 202(14). 
The options exemption in Section 201 (6) was broadened; the 
"manual" exemption in Section 202 (2) has been modernized for an 
electronic 
age; 
a 
broadened exemption has 
been provided for 
specified foreign securities in Section 202 (3); a new exemption 
has been added for nonissuer transactions in securities subject 
to Securities Exchange Act reporting in Section 202(4); 
a 
new 
exemption has been added for nonissuer transactions rated at the 
time of 
a 
transaction by 
a 
nationally recognized statistical 
rating organization in one of the four highest rating categories 
in Section 202(5)(A); and new exemptions were added for specified· 
exchange transactions in Section 202 (9), control transactions in 
Section 
202(18), 
specified 
out-of-state 
offers 
or 
sales 
in 
Section 202(20), specified sales transactions in Section 202(22), 
and specified foreign issuers whose securities are traded on 
designated securities markets in Section 202(23). 
The 
administrator 
may 
expressly authorize 
one 
of 
three 
regulatory plans for the offering of notes, bonds, debentures, or 
other evidences of indebtedness for nonprofit organizations under 
Section 
201(7). 
New 
conditions 
have 
been 
added 
to 
the 
unit 
secured transaction exemption in Section 202 (11) to address two 
substantial areas of state regulatory concern. 
The emphasis in the securities registration exemptive area 
is 
on flexibility. 
Securities administrators 
are given broad 
powers both to exempt other securities, transactions, or offers 
in Section 203 and to deny, suspend, condition or 1 imit. specified 
exemptions in Section 204. 
(4) Relatively modest changes were made to Article 3, which 
concerns 
registration 
of 
securities. 
A 
new 
notice 
filing 
pro~Jision 
"as 
added 
in 
Section 
for 
federal 
covered 
securities. A generic waiver and modification provision was added 
In Section 307. New procedural provisions for stop orders were 
added in Section 306(d) through (f). 
~·ler i t 
confro~,ted 
reguliJ.tion 
the 
RUSA 
was 
among the most 
Drafting 
Committee. 
divisivR issues that 
After 
the 
National 
4U 
Securities MarkeLb Iffip£ovement Act of 1996 preempted states from 
applying 
merit 
regulation 
provisions 
to 
federal 
covered 
securities, this became a less controversial issue. The approach 
In 
this 
Act 
retd.ills 
two 
widely 
iJ.dopt8d 
merit 
regulation 
provisions in Section 306(a)(7)(A) and (B): 
a. 
the offering "ill work or tend to work a fraud upon 
purchasers or would so operate; or 
b. 
the 
offering 
has 
been 
or 
unreasonable 
amounts 
of underwriters' 
would 
be 
and sellers' 
made 
with 
discounts, 
commissions, 
or 
other 
compensation, 
or promoters' 
profits 
or 
participations or unreasonable amounts or kinds of options. 
In addition, 
bracketed 
Section 306(a)(7)(C) 
includes 
the 
less widely adopted formulation, "the offering is being made on 
terms that are unfair, unjust, or inequitable." A new Section 
306(b) provides: "To the extent practicable the administrator, by 
rule adopted or order 
issued under 
this 
[Act] 
shall publish 
standards that provide notice of conduct that violates subsection 
(a) (7)." 
NASAA 
Guidelines 
provide 
this 
type 
of 
published 
standard. This hortatory Section is intended to address one type 
of criticism of merit regulation. 
(5) 
Article 
4, 
which 
concerns 
broker-dealers, 
agents, 
investment 
advisers, 
investment 
adviser 
representatives, 
and 
federal covered investment advisers was substantially revised to 
take into account NSMIA and significant changes in administrative 
practice such as those occasioned by the electronic WEB-CRD and 
the lARD. 
New developments had an impact on the definitions of 
"agent" 
(Section 
(2», 
"broker-dealer" 
(Section 
(4», 
"investment adviser" (Section 102 (15», 
and "investment adviser 
representative" 
(Section 102 (16) ). 
NSMIA 
led also to 
the 
new 
federal 
covered investment adviser notice filing procedure 
In 
Section 405. 
"[A] 
bank, 
savings 
institution 
or 
trust 
company" 
was 
excluded 
from 
the 
1956 
Act 
Section 
401(c) 
definition 
of 
broker-dealer. After the Gramm-Leach-Bliley Act was 
adopted In 
1999, 
the generic exclusion of 
banks 
from 
the definition of 
broker and dealer in Sections 3(a)(4) and (5) of the Securities 
Exchange 
Act 
of 
1934 
was 
rescinded 
in 
favor 
of 
functional 
regulation. At the federal level this means that banks, unless 
limiting 
their 
securities 
activities 
to 
a 
specific list of 
excluded activities, are required to register as broker-dealers. 
This Act generally follows the federal approach with exceptions 
for 
private 
securities 
offerings 
addressed 
by 
Section 
3(a)(4)(B)(vii) of the Securities Exchange Act of 1934 and de 
minimis transactions in Section 3(a)(4)(B)(xi) ,,'hich in the new 
Act are limited to unsolicitpd transactions. Ihe ddmiaistrator 
~~ 
given a 
residuCil 
power in Section 102(1) (E) 
to 
adopt furthpr 
exclusions for banks, 
by rule or order. 
Securities issued by 
banks, other depository institutions, and international banking 
insti tUtiUHS Cire exempt from 3ccuri ties registration in Sprt i on 
(3) . 
Banks, 
savings 
institutions, 
and 
other 
depository 
institutions, 
when 
not 
excluded 
from 
the 
definition 
of 
broker-dealer, will hp required to register by Section 401 and 
generally, 
like all other broker-dealers, 
be 
subject 
to 
the 
regulatory and liability provisions of the Act in Article 4 and 5. 
(6) Article 5 on fraud and liabilities and the definition of 
fraud in Section 102 (9) are substantively little changed. This 
includes the general fraud provision in Section 501, the filing 
of sales and advertising literature in Section 504, misleading 
filings 
In 
Section 
505, 
and 
misrepresentations 
concerning 
registration or exemption in Section 506. Technical changes were 
made 
to 
the evidentiary burden Section 
and the criminal 
penalties Section 508. 
Section 502(a), 
fraud in providing investment advice, 
is 
unchanged. New rulemaking authority was added in Sections 502(b) 
and (c) to succeed earlier statutory provisions in Section 102 of 
the 1956 Act. This will give the administrator broad flexibility 
and recognizes that most state provisions regulating investment 
advisers in recent years have been adopted through rules. 
Section 507 is a new qualified immunity provision to protect 
a 
broker-dealer or 
investment adviser 
from 
defamation claims 
based on information filed with the SEC, 
a state administrator, 
or 
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." This 
Section, which is consistent with most litigated cases to date 
and is 
a 
response 
to 
concerns that defamation lawsuits 
have 
deterred broker-dealers and investment advisers 
from full 
and 
complete disclosure of problems with departing employees. 
The 
Drafting Committee was also sensitive to the concern that such 
immuni ty could allow broker-dealers and investment advisers to 
unfairly 
characterize 
employees 
to 
protect 
their 
"book" 
of 
clients. Because of this concern the Drafting Committee rejected 
proposals for an absolute immunity. 
Section 510 is a new rescission offer provision that should 
be 
read with the definition of offer to purchase in Section 
102(19) 
and 
the 
exemption 
for 
rescission offers 
in 
Section 
(lY). Section 510 is consistent with administrative practice 
in many states today, although some states also have a filing 
requirement. 
More thought was devoted to the civil liability Section 509 
than any other provision. 
As 
ultimately drafted much in this 
SecLlon is little changed from the 1956 Act. New 
SDh~prtions were 
added to recognize the preemptive Securities Litigation Act of 
1998 (Section 509(a» 
and civil liability for investment advice 
(Sections 509(p) and (f». 
Significant changes were made in the statute of limitations 
Section 509(j). 
Current state 
law provides 
a 
wide 
range 
of 
statutes of limitations. 
The 
1956 Act contained a 
"two years 
after the contract of sale" statute of limitations. The new Act 
has 
two 
statute of limitations provisions. 
Section 509(j)(1) 
l.imi ts violations of registration provisions to "one year after 
the violation occurred." Section 509(j)(2) follows the pattern of 
federal securities law statutes of limitations, 
as amended in 
July 2002 by the Sarbanes-Oxley Act, and limits fraud violations 
to the earlier of "two years after the discovery of the facts 
constituting the violation or five years after such violation." 
The derivative liability provision in Section 509(g) is not 
intended to 
change the predicates for liability for 
one 
who 
"materially aids" violative conduct. 
(7) Several changes are made in Article 6, which concerns 
Administration and Judicial Review. Most are technical in nature. 
A 
new 
authorization 
for 
the 
administrator 
to 
develop 
and 
implement 
investor 
education 
initiatives 
has 
been 
added 
in 
Sections 601(d) and (e). 
Considerable attention was 
devoted to enforcement of the 
Act. The 1956 Act Section 408 was a slender provision providing 
for injunctions. Sections 603 
and 604, 
in contrast, provide a 
broad array of civil 
and administrative techniques 
including 
asset freezes, 
rescission orders, 
and 
civil penalties. 
Under 
Section 604 the administrator may issue a cease and desist order. 
Two other enforcement provisions in the Act are (1) stop orders 
in Sections 306(d) 
through (f), 
and 
(2) broker-dealer, 
agent, 
investment 
adviser. 
and 
investment 
adviser 
representative 
denials, 
revocations, 
suspensions, 
withdrawal, 
restrictions, 
condi tions, or limitations of registration in Section 412. Each 
of the enforcement provisions In the Act includes both summary 
process 
and 
due 
process 
requirements 
either 
through 
judicial 
process or guarantees 
of appropriate 
notice, 
opportunity 
for 
hearing, 
and 
findings 
of facts 
and conclusions of 
law in 
a 
written record. 
Section 607 
lS a new provision that clarifies the scope of 
nonpublic records and the 
admini~trator's discretion to diGclose 
in light of the extensive development of freeduli! of information 
and open records laws since the 1956 Act was adopted. 
The jurisdiction and service of process provisions, Sections 
and 611, generally follow Section 414 of the 1956 Act, but 
have 
been 
modernized 
to 
take 
into 
account 
electronic 
communications. 
(8) Section 
later amendments 
extent they are 
preserves the ability of the Act to reflect 
of specified federal statutes and rules to the 
preemptive or this is otherwise permitted by 
state law. 
All 
involved 
in 
the 
drafting 
of 
particular debt of gratitude to Richard 
our chair. His efforts were pivotal to 
project. 
His 
indefatigable 
leadership 
immeasurably improved the final Act. 
thi~ new 
Act 
owe 
a 
B. 
Smi th who served as 
the initiation of this 
and 
high 
standards 
UNIFORM SECURITIES ACT 
Legislative Note 
Each state, the District of Columbia, Guam, and Puerto Rico 
have 
enacted 
an 
administrative procedure 
act. 
The 
procedural 
provisions of the Act in some instances are intended to augment 
the state administrative procedure act. In so doing, 
this Act 
differs 
from 
other 
uniform acts 
promulgated 
by 
the National 
Conference of Commissioners 
on Uniform State Laws 
(NCCUSL) 
in 
that 
it 
contains 
procedural 
provisions 
on 
topics 
such 
as 
administrati ve rUlemaking and adj udication, service of process, 
judicial review of administrative adjudications, public records, 
public 
hearings, 
and 
use 
immunity. 
Normally 
a 
uniform 
act 
promulgated 
by 
NCCUSL 
defers 
to 
existing 
state 
procedural 
provisions on such matters. This Act reflects a policy decision 
that these matters should be addressed in this Act to promote 
uniformity 
in 
securities 
regulation. 
When 
a 
conflict exists 
between this Act and a state administrative procedure act, this 
Act is intended to supersede the state administrative procedure 
act. When, however, a reference is made in this Act to the state 
administrative procedure act, this Act is intended to follow the 
state's existing administrative procedure act. 
In general In this Act a rule will apply generally and an 
order 
will 
apply 
to 
a 
specific 
individual, 
transaction, 
or 
matter, although the term order may also apply generally in those 
states that permit orders of general applicability. 
CHAPTER 135 
MAINE UNIFORM SECURITIES ACT 
SUBCHAPTER 1 
GENERAL PROVISIONS 
§16l0l. 
Short title 
This chapter may be known and cited as "the Maine Uniform 
Securities Act. " 
§16l02. 
Definitions 
As 
used 
in this 
chapter, 
unless 
the 
context 
otherwise 
indicates, the following terms have the following meanings. 
1. 
Administrator. 
"Administrator" 
means 
the 
Securities 
Administrator under section 16601. 
2. 
Agent. 
"Agent" 
means 
an 
individual, 
other 
than 
a 
broker-dealer, 
who 
represents 
a 
broker-dealer in effecting or 
attempting 
to 
effect 
purchases 
or 
sales 
of 
securities 
or 
represents 
an 
issuer 
in 
effecting 
or 
attempting 
to 
effect 
purchases 
or 
sales 
of 
the 
issuer's 
securities. 
A 
partner~ 
officer or director of a broker-dealer or issuer or an individual 
having a similar status or performing similar functions is an 
agent only if the individual otherwise comes within the meaning 
of the term "agent." 
"Agent" does not include an individual 
excluded by rule adopted or order issued under this chapter. 
Rules adopted pursuant to this subsection are routine technical 
rules as defined in Title 5, chapter 375, subchapter 2-A. 
_3. 
Bank. "Bank" means: 
A. 
A banking institution organized under the laws of the 
United States; 
B. 
A member bank of the Federal Reserve System; 
C. 
A banking institution, 
whf't-her 
inCQrporCited 
or 
not, 
doing business under the laws of a state or of the United 
States, 
a 
substantial portion of 
the business 
of 
which 
consists 
of 
receiving 
deposits 
or 
exercising 
fiduciary 
powers 
similar 
to 
those 
permitted 
to 
be 
exercised 
by 
national banks under the authority of the Comptroller of the 
Currency pursuant to Section 1 of United States Public Law 
87-722, 
United States Code, 
Section 92a, 
and that is 
supervised and examined by a state or federal agency having 
supervision over banks 
and that is not operated for the 
purpose of evading this chaptpr; 
~n~ 
D. 
A receiver, conserV<ltor or other liquidat- i ng agent of 
any institution or firm described in paragraph At B or C. 
4. 
B.a:oKer dealer. "Broker dealer" means a re rsnn RD'JaIJed_in 
the business of effecting transactions in securities for 
the 
account 
of 
others 
or 
for 
the 
person's 
own 
account. 
"Broker-dealer" does not include: 
A. 
An agent; 
B. 
An issuer; 
C. 
A bank or savings institution if its activities as a 
broker dealer 
are 
limited to 
those 
specified in Section 
3(a)(4)(B)(i) to (vi) and (viii) to (x); Section 3(a)(S)(B); 
and Section 3 (a)( 5) (C) 
of the federal Securities Exchange 
Act of 1934, 15 United States Code, Sections 78c(a) (4) and 
tiLL 
D. 
An international banking institution; or 
E. 
Any other person the administrator excludes, by rule or 
order, consistent with the public interest and protection of 
investors. 
Rules 
adopted pursuant to this paragraph are 
routine technical rules as defined in Title 5, chapter 375, 
subchapter 2-A. 
5. 
Depository institution. "Depository institution" means: 
A. 
A bank; or 
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 Insuranc p 
rund or a successor 
authorized by federal law. 
~ository institution" does not include an insurance company or 
other 
organization 
primarily 
engaged 
in 
the 
business 
of 
insurance; a Morris Plan bank; or an industrial loan company. 
6. 
Federal covered investment adviser. 
"Federal 
covered 
investment adviser" means a person registered under the federal 
Investment Advisers Act of 1940. 
7. 
Federal 
covered security. 
"Federal 
covered security" 
means a security that 
~s, or upon completion of a transart-ion 
"rill be, 
a covered security under Section 18(b) of the federal 
Securities Act of 1933, 15 United States Code, Section 77r(b) or 
rules or regulatiuli~ 6dopted pursuant to that provision. 
8. 
Filing. "Filing" means the receipt under this chapter of 
a record by the administrator or a designee of the administrator. 
9. 
Fraud; deceit; defraud. "Fraud," "deceit" and "defraud" 
are not limited to common law deceit. 
Page l2-LR044l(1) 
10. 
Guaranteed. "Guaranteed" means guaranteed as to payment 
of 
all 
or 
substantially 
all 
of 
principal 
and 
interest 
or 
dividends. 
11. 
Institutional investor. "Institutional investor" means 
any of the following, whether acting for itself or for others in 
a fiduciary capacity: 
A. 
A 
depository 
institution 
or 
international 
banking 
institution; 
B. 
An insurance company; 
C. 
A separate account of an insurance company; 
D. 
An 
investment 
company 
as 
defined 
in 
the 
federal 
Investment Company Act of 1940; 
E. 
A broker-dealer registered under the federal Securities 
Exchange Act of 1934; 
F. 
An employee pension, profit-sharing or benefit. plan if 
the plan has total assets in excess of $10,000 ( 000 or its 
investment decisions 
are 
made 
by 
a 
named 
fiduciary, 
as 
defined in the federal Employee Retirement Income Security 
Act of 1974, that is a broker-dealer registered under the 
federal 
Securities 
Exchange 
Act 
of 
1934, 
an 
investment 
adviser registered or exempt 
from registration under 
the 
federal 
Investment 
Advisers 
Act 
of 
1940, 
an 
investment 
adviser 
registered 
under 
this 
chapter, 
a 
depository 
institution or an insurance company; 
G. 
A 
plan 
established 
and 
maintained 
by 
a 
state, 
a 
political 
subdivision 
of 
a 
state 
or 
an 
agency 
or 
instrumentality of a state or a political subdivision of a 
state for the benefit of its employees, if the plan has 
total assets in excess of 
$10,UUO,000 or its investment 
decisions are made by a duly designated public official or 
b:l' 
a 
named fiduci nry, 
as defined. in the federal Employee 
Retirement. 
Income 
Security 
Act 
of 
1974, 
t-hClt 
is 
a 
broker dealer 
registered 
under 
the 
federal 
Securities 
Exchange Act of 1934, 
an investment adviser registered or 
exelllJ?L 
from 
registr<:J.tion 
under 
the 
f,?(lorn 1 
Invest.ffis!nt 
Advisers Act of 1940, an investment adviser registered under 
this 
chapter, 
a 
depository 
institution or 
an 
insurance 
company; 
H. 
A 
trust, 
if 
it 
has 
total 
assets 
in 
excess 
of 
$10,000,000, its trustee is a depository institution and its 
participants are exclusively plans of the types identified 
in paragraph F or G, regardless of the size of their assets, 
except a trust that includes as participants self-directed 
individual 
retirement 
accounts 
or 
similar 
self-directed 
plans; 
1. 
An organization described in Section 50l(c) (3) of the 
Internal 
Revenue 
Code, 
United 
States 
Code, 
Section 
(c) (3), 
a corporation, 
a Massachusetts trust or similar 
business trust, a limited liability company or partnership, 
not 
formed 
for 
the 
specific 
purpose 
of 
acquiring 
the 
securities 
offered, 
with 
total 
assets 
in 
excess 
of . 
$10,000,000; 
J. 
A small business 
investment 
company licensed by the 
Dnited States Small Business Administration under Section 
30l(c) of the federal Small Business Investment Act of 1958, 
United States Code, Section 681(c) with total assets in 
excess of $5,000,000; 
K. 
A private business development 
company as defined in 
Section 202(a)(22) of the federal Investment Advisers Act of 
1940, 15 United States Code, Section 80b-2(a)(22) with total 
assets in excess of $5,000,000; 
L. 
A federal covered investment adviser acting for its own 
account; 
M. 
A qualified institutional buyer as defined in 17 Code of 
Federal Regulations, 230.144A(a)(1), except as defined in 17 
Code of Federal Regulations 230.l44A(a)(I)(i)(H); 
N. 
A maj or U. S. institutional investor as defined in 17 
Code of Federal Regulations, 240.15a-6(b)(4)(i); 
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 chapter; or 
P. 
Any other person specified by rule adopted or order 
issued under this chapter. 
Rules adopted pursuant to this 
paragraph are routine technical rules as defined in Title 5, 
ChdVL8( 375, subchapter 2-A. 
12. 
Insurance company. "Insurance company" means a company 
organized 
as 
an 
nsnrance 
comparur 
whose 
primary business 
is 
writing lnsurance or reinsuring risks underwritten by insurance 
companies 
and 
that 
is 
subject 
to 
supervision 
by 
the 
Superintendent of Insurance or a similar official or agency of a 
state. 
13. 
Insured. "Insured" means insured as to payment of' all 
or substantially all princigal and interest or dividends. 
14. 
International 
banking 
institution. 
"International 
banking institution" means an international financial institution 
of which the United States is a member and whose securities are 
exempt from registration under the federal Securities Act of 1933. 
15. 
Investment adviser. "Investment adviser" means a person 
that, 
for 
compensation, 
engages 
in the business 
of 
advising 
others, either directly or through pUblications or writings, as 
to the value of securities or the advisability of investing in, 
purchasing or selling securities or that, for compensation and as 
a part of a regular business, issues or promulgates analyses or 
reports concerning securities. 
"Investment adviser" includes 
a 
financial planner or other person that, as an integral component 
of other financially related services, provides investment advice 
to others for compensation as part of a business or that holds 
itself 
out 
as 
providing 
investment 
advice 
to 
others 
for 
compensation. "Investment adviser" does not include: 
A. 
An investment adviser representative: 
B. 
A 
lawyer , 
accountant , 
engineer 
or 
teacher 
whose 
performance of investment advice is solely incidental to the 
practice of the person's profession: 
C. 
A broker-dealer 
or 
its 
agents 
whose 
performance 
of 
investment advice is solely incidental to the conduct of 
business 
as 
a 
broker-dealer 
and 
that 
does 
not 
receive 
special compensation for the investment advice: 
D • 
A pub 1 i she r 
f 
a bo na fide new s",-p~a",p!..le~r!o...L' ~n""-",e2:'wC;;s~.!.!m!!;a~g:l-a~z-"i,",,n,,-,e,,-----,o~r 
business or 
financial publication of general 
and regular 
circulation: 
E. 
A federal covered investment adviser: 
F. 
A bank or savings institution: 
G. 
Any 
other 
person 
that 
is 
excluded 
by 
the 
federal 
Investment 
Advisers 
Act 
of 
1940 
from 
the definition of 
investment adviser; or 
H. 
Any other person excluded by 
rule adopted or order 
issued under this chapter. 
Rules adopted pursuant to this 
paragraph are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
16. 
Investment adviser representatives. "Investment adviser 
representatives" means individuals employed by or associated with 
an investment adviser or federal covered investment adviser and 
who make any recommendations or otherwise give investment advice 
regarding securities, manage accounts or portfolios of clients, 
determine 
which 
recommendation or 
advice 
regarding securities 
should be given, provide investment advice or hold themselves out 
as providing investment advice, receive compensation to solicit, 
offer or negotiate for the sale of or for selling investment 
advice or supervise employees who perform any of the foregoing. 
"Investment adviser representatives" does not include individuals· 
who: 
A. 
Perform only clerical or ministerial acts: 
B. 
Are 
solely 
agents whose 
incidental to 
performance of investment 
the individuals acting as 
advice is 
agents and 
who 
do 
not 
receive 
special 
compensation 
for 
investment 
advisory services: 
C. 
Are 
employed by or associated with a 
federal covered 
investment adviser, unless the individuals have a "place of 
business" in this State as that term is defined by rule 
adopted 
under 
Section 
203A 
of 
the 
federal 
Investment 
Advisers Act of 1940, 15 United States Code, Section 80b-3a, 
and are: 
(1) 
"Investment adviser representatives" as that term 
is defined by rule adopted under Section 203A of the 
federal 
Investment 
Advisers 
Act of 
1940, 
United 
States Code, Section 80b-3a: or 
( 2) 
Not "supervised persons" as 
in 
Section 
202(a)(25) 
of 
the 
Advisers Act of 1940, 
United 
80b-2(a)(25); or 
that term is defined 
federal 
Investment 
States Code, Section 
(D) 
Are excluded by rule adopted or order issued under this 
chapter. 
Rules 
adopted 
pursuant 
to 
this 
paragraph 
are 
routine technicdl rules as defined in Title 5, chal?tpr :n5, 
subchapter 2-A. 
l7. 
Issuer. 
"I~"uer" means a person that issues nr ])rnp05es 
to issue a security, SUbject to the following: 
1>.. 
The issuer of 
i4 
votinQ 
tru~t .certificate, collateral 
trust certificate, certificate of deposit for· a security or 
share in an investment company without a board of directors 
or individuals performing similar functions is the person 
performing the acts and assuming the duties of depositor or 
Page l6-LR0441(l) 
manager 
pursuant 
to 
the 
trust 
or 
other 
agreement 
or 
instrument under which the security is issued; 
B. 
The issuer of an equipment trust certificate or similar 
security serving the same purpose is the person by which the 
property is or will be used or to which the property or 
equipment is or will be leased or conditionally sold or that 
1S otherwise contractually responsible for ensuring payment 
of the certificate; 
C. 
The issuer of a fractional undivided interest in an oil, 
gas or other mineral lease or in payments out of production 
under a lease, right or royalty is the owner of an interest 
in the lease or in payments out of production under a lea~ 
right or royalty, whether whole or fractional, that creates 
fractional interests for the purpose of sale; or 
D. 
The issuer of 
a 
fractional or pooled interest 1n 
a 
viatical or life settlement contract 
1S 
the 
person 
who 
creates, for the purpose of sale, the fractional or pooled 
interest. 
The 
issuer 
of 
a 
viatical 
or 
life 
settlement 
contract that is not fractionalized or pooled is the person 
effecting 
the 
transaction 
with 
the 
investor 
ln 
such 
a 
contract but 
does 
not 
include 
a 
broker-dealer 
or 
sales 
representative. 
18. 
Nonissuer 
transaction; 
nonissuer 
distribution. 
"Nonissuer 
transaction" 
or 
"nonissuer 
distribution" 
means 
a 
transaction or distribution not directly or indirectly for the 
benefit of the issuer. 
19. 
Offer to purchase. 
"Offer 
to purchase" 
includes 
an 
attempt or offer to obtain, or solicitation of an offer to sell, 
a 
security or interest ln 
a 
securi~ for 
value. 
"Offer 
to 
purchase" does not include a 
tender offer that is subject to 
Section 14(d) of the federal Securities Exchange Act of 1934, 15 
United States Code, Section 78n(d). 
20. 
Person. 
"Person" 
mpr1n~ 
an 
individuaL 
CVf})oration; 
business trust; 
eslate; trust; 
partnership; 
limited liability 
company; 
association; 
joint venture; 
government; 
governmental 
2 
subdivision, 
agency or instrumentality; public corporation; 
or 
any other legal vi commercial entity. 
21. 
Place 
of 
business. 
"Place 
of 
~b~r~oLk~'~e~r~-~d~e~a~l~e~r~, __ ~a~n~ __ ~i~n~v~e~s~t~m~p~n~t~~a~d~v~i~sue~rL---yor 
investment adviser means: 
A. 
An office at which the broker-dealer, 
or 
federal 
covered 
investment 
adviser 
business" 
of 
a 
a 
federal 
covered 
investment adviser 
regularly provides 
brokerage or investment advice or solicits, meets with or 
otherwise communicates with customers or clients: or 
B. 
Any other location that is held out to the general 
public as a location at which the broker-dealer, investment 
adviser 
or 
federal 
covered 
investment 
adviser 
provides 
brokerage or investment advice or solicits, meets with or 
otherwise communicates with customers or clients. 
22. 
Predecessor act. 
"Predecessor act" means 
the 
former 
Revised Maine Securities Act. 
23. 
Price amendment. "Price amendment" means the amendment 
to a registration statement filed under the federal Securities 
Act of 1933 or, if an amendment is not filed, the prospectus or 
prospectus supplement filed under the federal Securities Act of 
1933 
that 
includes 
a 
statement 
of 
the 
offering 
price, 
underwriting 
and selling discounts or 
commissions, 
amount 
of 
proceeds, 
conversion 
rates, 
call 
prices 
and 
other 
matters 
dependent upon the offering price. 
24. 
Principal 
place 
of 
business. 
"Principal 
place 
of 
business" of a broker-dealer, an investment adviser or an issuer 
means 
the 
executive office 
of 
the 
broker-dealer, 
investment 
adviser or issuer from which the officers, partners or managers 
of 
the 
broker-dealer, 
investment 
adviser 
or 
issuer 
direct, 
control 
and 
coordinate 
the 
activities 
of 
the 
broker-dealer, 
investment adviser or issuer. 
25. 
Record. "Record," except in the phrases "of record, " 
"official record" and "public record," means information that is 
inscribed on a tangible medium or that is stored in an electronic 
or other medium and is retrievable in perceivable form. 
26. 
Sale; offer to sell. "Sale" includes every contract of 
sale of, 
contract to 
sell 
or 
disposition of 
a 
security or 
interest in a security for value. 
"Offer to sell" includes every 
attempt or offer to dispose 0[, 
UL solicitation of an offer to 
purchase, a security or lnterest in a security for value. 
"Sale" 
and "offer to sell" include: 
A. 
The gift of or delivery of a security with, or as 
a 
bonus on account of, a purchase of securities or any other 
thing constituting part of the subject of the purchase and 
having been offered and sold for value: 
B. 
A gift of assessable stock involving an offer and sale: 
and 
C. 
A sale or offer of a warrant or right to purchase or 
subscribe to another security of the same or another issuer 
and a sale or offer of a securl-cy that gives the holder a 
present or future right or privilege to convert the security 
into 
another 
security 
of 
the 
same 
or 
another 
issuer, 
including an offer of the other security. 
27. 
Securities and Exchange 
Commission. 
"Securities 
and 
Exchange 
Commission" 
means 
the 
United States 
Securities 
and 
Exchange Commission. 
28. 
Security. 
"Security" 
means 
a 
note: 
stock: 
treasury 
stock: 
security 
future: 
bond: 
debenture: 
evidence 
of 
indebtedness: 
certificate 
of 
interest 
or 
participation 
in 
a 
profit-sharing 
agreement: 
collateral 
trust 
certificate: 
preorganization certificate or subscription: transferable share: 
investment contract: investment in a viatical or life settlement 
contract: voting trust certificate: certificate of deposit for a 
security; fractional undivided interest in oil, 
gas 
or other 
mineral rights; documents of title to or certificates of interest 
or participation in an oil, gas or other mineral title or lease 
or in payments out of production under any title, lease, right or 
royalty; put, call, straddle, option or privilege on a security, 
certificate of depositor group or index of securities, including 
an interest therein or based on the value thereof: put, call, 
straddle, 
option 
or 
privilege 
entered 
into 
on 
a 
national 
securities exchange relating to foreign currency; or, in general, 
an interest or instrument commonly known as a "security"; or a 
certificate of interest or participation in, temporary or interim 
certificate for, receipt for, guarantee of or warrant or right to 
subscribe to or purchase any of the foregoing. "Security": 
A. 
Includes 
both 
a 
certificated 
and 
an 
uncertificated 
security; 
B. 
Does not include an insurance or endowment 
polic~ 
annuity contract under which an lnsurance company 1'Lon-,ises 
to pay a fixed or variable bUm of money either in a lump sum 
or periodically for lite or other spe~i[i8d period; 
C. 
Does 
not 
include 
an 
interest in 
a 
contributory or 
noncontributory 
pension 
or 
welfare 
plan 
subject 
to 
the 
federal Employee Retirement Income Security Act of 1974; 
D. 
Includes as an investment contract an investment in a 
common enterprise with the expectation of profits to be 
derived primarily from the efforts of a person other than 
the 
investor. 
For 
purposes 
of 
this 
paragraph, 
"common 
enterprise" means an enterpriSE: in which the fnrtnnRs of the 
investor are interwoven with those of either the person 
offering the investment, a 3rd party or other investors; and 
E. 
Includes 
as 
an 
investment 
contract, 
among 
other 
contracts, 
an 
interest 
in 
a 
limited partnership 
and 
a 
limited liability company. 
29. 
Self regulatory 
organization. 
"Self-regulatory 
organization" 
means 
a 
national securities 
exchange 
registered 
under the federal Securities Exchange Act of 1934, 
a national 
securities association of broker-dealers registered under the' 
federal 
Securities 
Exchange 
Act 
of 
1934, 
a 
clearing agency 
registered under the federal Securities Exchange Act of 1934 or 
the Municipal Securities Rulemaking Board established under the 
federal Securities Exchange Act of 1934. 
30. 
Sign. "Sign" means, with present intent to authenticate 
or adopt a record: 
A. 
To execute or adopt a tangible symbol; or 
B. 
To 
attach or logically associate with the record an 
electronic symbol, sound or process. 
31. 
State. "State" means a state of the United States, the 
District of 
Columbia, 
Puerto 
Rico, 
the United States Virgin 
Islands or any territor.Y.-.-.Q.I insular possession sUbject to the 
jurisdiction of the United States. 
32. 
Viatical or life settlement contract. "Viatical or life 
settlement contract" means a written agreement establishing the 
terms under which compensation or anything of value will be paid, 
which 
compensation or value is less 
than the expected death 
benefit of the insurance policy or certificate, in return for the 
assignment, 
transfer, 
sale, 
devise 
or 
bequest 
of 
the 
death 
benefit or ownership of any portion of an insurance policy or 
certificate of insurance. 
"Viatical or life settlemeut contract": 
A. 
Includes a.cpntract for 
a 
loan or other 
financing 
transaction secured primarily by an 
indivi~ual or group life 
insurance policy other than 
a 
loan by 
a 
life insurance 
company pursuant to the terms of the life insurance contract 
or a loan secured by the cash v~luR of a policy; 
B. 
Includes an agreement to transfer ownership or change 
the beneficiary designation of 
an insurance policy at 
a 
later date regardless of the date that compensation for the 
transfer or change is paid: and 
C. 
Does not include: 
(l) 
The assignment, transfer , 
of 
a 
death 
benefit. 
life 
certificate of insurance by the 
settlement provider pursuant to 
Settlements Act; 
( 2) 
The assignment, transfer , 
of a life insurance policy, for 
expected death benefit, by the 
family member who enters into 
agreement in a calendar year; 
sale , devise or bequest 
insurance 
policy 
or 
viator to the viatical 
the Viatical and Life 
sale , devise or bequest 
any value less than the 
viator to a friend or 
no more than one such 
(3) 
An 
assignment of a life insurance policy to 
a 
supervised lender, 
as defined in Title 
9-A, 
section 
1-301, subsection 39, as collateral for a loan; or 
( 4) 
The exerClse of accelerated benefits pursuant to 
the terms of the Maine Insurance Code and of a life 
insurance policy~ 
For purposes of this chapter, the individual insured who is the 
subject of the insurance policy or certificate of insurance does 
not have to be diagnosed as terminally ill or chronically iiI at 
the time a settlement contract is executed. 
Official Comments 
Prior Provisions: 1956 Act Section 401; RUSA 101. 
1. 
Under Section 605(a) the administrator has the power to 
define by rule any term, whether or not used in this Act, as long 
as the definitions are not inconsistent with the Act. 
2. 
example, 
include 
All 
definitions 
include 
corresponding 
"filing" would include "file" or "filed"; 
"sell." 
meanings. 
For 
"sale" would 
3. 
Prefatory Phrase: 
"In this 
[Act], 
unless the context 
otherwise 
Lequires": 
Prior 
Provisions: 
1956 
Ar~ 
Sp~~ion 401 
Preface; RUSA Section 101 Preface. This prefatory phrase which is 
in the counterpart provisions of the federal securities statutes, 
see, e.y., Securities Act of 
1933 
Section 2(c), 
provides the 
basis for the courts to take into account the statutory and 
factual context of each definition, see, e. g., Reves v. Ernst & 
Young, 
U.S. 
S6 
(1990); 
Louis 
Loss 
& Joel 
Seligman, 
Securities Regulation 927-929 (3d ed. rev. 1999), and will allow 
the 
courts 
to 
harmoni ze 
thi s 
Ac t ' s 
de f ini tions 
with 
the 
counterpart 
federal 
securities 
definitions 
to 
the 
extent 
appropriate. Cf. Akin v. Q-L Inv., Inc., 959 F.2d 521, 532 (5th 
Cir. 
1992) 
("Texas courts generally look to decisions of the 
federal courts to interpret the Texas Securities Act because of 
obvious similarities between the state and federal laws"); Koch v 
Koch Indus., Inc. 203 F.3d 1202, 1235 (10th Cir. 2000) (following 
federal definition of materiality); Bia1es v. Young, 
S.E.2d 
482,484 
(S.C. 
1993) 
("Section 35-1-1490(2) 
is 
substantially 
similar to Section 12(1) of the Federal Securities Act"). 
4. 
Section 
102(2): 
Agent: 
Prior 
Provisions: 
1956 
Act 
Section 401(b); RUSA Section 101(14). Section (102)(2), in part, 
follows 
the 1956 
Act definition. 
The 
1956 
Act used the 
term" 
"agent" while 
the 
RUSA 
Section 101(14) 
used the 
term "sales 
representative." Given the broader enactment of the 1956 Act, 
this Act also uses the term "agent." Certain exclusions from the 
1956 Act are exemptions in this Act. See Section 402(b). 
Whether 
a 
particular 
individual 
who 
represents 
a 
broker-dealer or issuer is an "agent" depends upon much the same 
factors that create an agency relationship at common law. 
See, 
e.g., Norwest Bank Hastings v. Clapp, 394 N.W.2d 176, 179 (Minn. 
Ct. 
App. 
1986) 
(following Official 
Comment 
that establishing 
agency under the Uniform Securities Act "depends upon much the 
same factors which create an agency relationship at common law"); 
Shaughnessy & Co., Inc. v. Commissioner of Sec., 1971-1978 Blue 
Sky L. Rep. 
(CCH) 
~[71,348 (Wis. Cir. Ct. 1977) (unlicenced person 
who 
took 
information relevant 
to 
securities transactions 
and 
turned it over to securities agents was himself an agent). 
An individual can be an agent for a broker-dealer or issuer 
for 
a 
purpose 
other 
than effecting or 
attempting 
to 
effect 
purchases or sales of securities and not be 
a statutory agent 
under 
this 
Act. 
See, 
e.g., 
Baker, 
Watts 
& Co. 
v. 
Miles 
& 
Stockridge, 
A.2d 
356, 
(Md. 
Ct. 
App. 
1993) 
(attorney-client relationship is generally one of agency, 
but 
that alone does 
not bring 
an attorney within securities act 
definition of agent). 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. See, e.g., Abell v. Potomac Ins. Co., 
F.2d 1104 (5th Cir. 1988). 
Section 102(2) is intended to include any individual who 
acts as an agent, whether or not the individual is an employee or 
independent contractor. Cf. Hollinger v. Titan Capital Corp., 914 
F.2d 1564 (9th Cir. en banc 1990), cert. denied, 
U.S. 
(1991) . 
is 
The word "individual" in the 
limi ted to human beings 
and 
definition of the term "agent" 
does 
not include 
a 
juridical 
"person" such as 
a corporation. Cf. definition of "per-son" in 
Section 
102(20). 
The 
1956 
Act 
Section 
40l(b) 
similarly 
was 
limited to individuals and did not include juridical persons. 
See, 
e.g., Connecticut Nat'l Bank 
v. 
Giacomi, 
A.2d 10l, 
111-112 (Conn. 1997) ("agent" only includes natural persons when 
it used the term individual); Schpok v. Fodale, 236 N.W.2d 97, 99 
(Mich. Ct. App. 1975) (agent defined to be individual and did not 
include a corporation). 
An individual whose acts are solely clerical or ministerial 
would 
not 
be 
an 
agent 
under 
Section 
(2) . 
Cf. 
Section· 
402(b)(8).Ministerial or clerical acts might include preparing 
written communications or responding to inquiries. 
5. 
3(a)(6) 
Section 
(3) : 
Bank: 
Prior 
Provision: 
Subsection 
of the Securities Exchange Act of 1934. A United States 
branch of a foreign bank that otherwise satisfies this definition 
would be a bank. 
6. 
Section 102 (4): 
Broker-Dealer: 
Prior Provisions: 
1956 
Act 
Section 
401(c); 
RUSA 
Section 
101(2). 
This 
definition 
generally follows the definition of broker-dealer in the 1956 Act 
and RUSA. The use of the compound term is meant to include either 
a broker or a dealer. The recognized distinction is that a broker 
acts for the benefit of another while a dealer acts for itself in 
buying for or selling securities from its own inventory. 
The distinction between "a person enga.ged 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. See 6 Louis Loss & 
Joel Seligman, Securities Regulation 2980-2984 (3d ed. 1990). 
The 1956 Act Section 40l(c) excluded from the definition of 
broker-dealer a person who during any 12 consecutive months did 
not direct more than 15 offers to buy or sell in this State. In 
this Act exemptions from broker-dealer registration are provided 
~n Section 401(b). 
The 
Gramm-Leach-Bliley Act, 
signed into 
law 
in November 
1999, 
rescinded 
the 
blanket 
exemption 
of 
banks 
from 
the 
definition of broker and dealer in Sections 3 (a) (4) and (5) of 
the Securities Exchange Act of 1934. The Gramm-Leach-Bliley Act 
permits a bank to avoid registration as a broker or dealer at the 
federal 
level 
if 
the 
bank 
limits 
its 
activities 
to 
those 
specified in the Securities Exchange 
Act. 
This Act generally 
adopts the activity focused exceptions for banks included in the 
Gramm-Leach-Bliley Act, with minor modifications relating to the 
private placement and de minimis brokerage activities of banks 
(15 U.S.C. 
78c(a) (4) (B) (vii) 
and (xi». This Act also reaches 
savings institutions. 
A 
state 
may 
decide 
to 
adopt 
an 
exclusion 
in 
Section 
(4) (C) that fully conforms with the bank exceptions contained 
in 
the 
Gramm-Leach-Bliley 
Act. 
For 
states 
that 
choose 
this 
approach, the language of Section 102(4)(C) should read: 
(C) 
a 
bank or 
savings institution if its activities 
as 
broker-dealer 
are 
limited to 
those 
specified in Section 
3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934 
(15 
U.S.C. 
Section 78c(a)(4) 
and 
(5», 
or 
a 
bank 
that 
satisfies the conditions specified in Section 3(a)(4)(E) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4». 
Section 102(4)(E) 
of this Act 
also permits 
a 
securities 
administrator to adopt addi tiona1 exclusions that exclude banks 
and other depository institutions, in whole or in part, from the 
definition of "broker-dealer." 
States that promptly adopt this Act should consider whether 
it is appropriate to provide banks a transition period to comply 
with the Act's 
new activity focused exceptions. 
The activity 
focused exceptions for banks in the Gramm-Leach-Bliley Act were 
originally to become effective at the federal level on May 12, 
2001. However, the Securities and EXChange Commission has delayed 
the effective date of these activity focused exceptions and thus 
continued the blanket exemption for banks beyond May 12, 
2001, 
and commenced 
a 
rulemaking designed to clarify and define the 
scope of the bank exceptions in the Gramm-Leach-Bliley Act. See 
Sec. Ex .. 
z"ct Rels. 44,291, 74 SEC Dock. 
2155 (2001) (proposal); 
45,897,77 SEC Dock. 1555 (2002) (proposal). To avoid disrupting 
the 
activities 
of 
banks, 
states 
should 
consider 
delaying 
implementation of the activity focused exceptions in this Act 
until these exceptions are implemented at the federal level. 
Section 15(h) (1) of the Securities Exchange Act of 1934, as 
amended by the National Securities Markets 
Improvement Act of 
1996, preempts state law from "[establishing] capital, custody, 
margin, 
flnancial 
responsibility. 
making 
and 
keeping 
records. 
bonding, or financial or operational reporting requirements for 
brokers, 
dealers. 
municipal 
securities 
dealers, 
government 
secuIlLles Lrokers, or gO'v'crnment securities de2dprs t.hat differ 
from, 
or are in addition to the requirements 
in those areas 
established 
under 
[the 
Securities 
Exchange 
Act]." 
These 
preemptions 
orp 
recognized 
In 
the 
substantive 
broker-dealer 
provisions in Article 4. 
7. 
Section 
102(5): 
Depository 
institution: 
No 
Prior 
Provision. A depository institution's securities are addressed by 
the exemption in Section 201(3). A depository institution is an 
institutional investor in Section 102(11)(A). 
8. 
Section 102 (6): Federal covered investment adviser: No 
Prior Provision. This provision is necessitated by Section 203A 
of the Investment Advisers Act of 1940, added by Title III of the 
National 
Securities 
Markets 
Improvement 
Act 
of 
1996, 
which 
allocates to primary state regulation most advisers with assets 
under management of less than $25 million. 
SEC registration is 
permitted, 
but 
not 
required, 
for 
investment 
advisers 
having 
between $25 and $30 million of assets under management and is· 
required of investment advisers having at least $30 million of 
assets under management. 
Investment Advisers Act of 1940 Rule 
203A-1. Most advisers with assets under management of $25 million 
or 
more register solely under 
Section 203 
of 
the 
Investment 
Advisers Act of 1940 and not state law. This division of labor is 
intended 
to 
eliminate 
duplicative 
regulation 
of 
investment 
advisers. 
9. 
Section 
102(7): 
Federal 
covered 
security: 
No 
Prior 
Provision. 
The National Securities Markets 
Improvement Act of 
1996, as subsequently amended, partially preempted state law in 
the securities offering and reporting areas. Under Section 18(a) 
of the Securities Act of 1933, no state statute, rule, order, or 
other administrative action may apply to: 
(1) 
The registration of a "covered" security or a security 
that 
will 
be 
a 
coverpc1 
security 
upon 
completion 
of 
the 
transaction; 
(2)(A) any offering document prepared by or on behalf of the 
issuer of a covered security; 
(2)(B) any proxy statement, report to shareholders, or other 
disclosure document relating to a covered security or its issuer 
that is required to be 
filed with the 
SEC 
or 
any national 
securities 
association 
registered 
under 
Section 
15A 
of 
the 
Securities Exchange 
Act 
such 
as 
the National 
Association of 
Securities Dealers (NASD); or 
(3) the merits of a covered security or a security that will 
be a covered security upon completion of the transaction. 
Section 18(b) of the Securities Act of 1933 applies to four 
types of "covered securities": 
(1) Securities listed or authorized for l.isting 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 \vith 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 
wi th 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. Tb date the SEC 
has proposed, but not adopted, Rule 146(c) of the Securities Act 
of 1933; and 
(4) 
securities 
issued 
under 
the 
exemptions of the Securities Act of 1933: 
following 
specified 
by persons other than an 
and 
4(3) 
(dealers after 
only if the issuer files 
Sections 13 or 15 (d) of 
(A) 
Sections 4(1) 
(transactions 
issuer, 
underwriter 
or 
dealer), 
specified periods of time), but 
reports with the Commission under 
the Securities Exchange Act; 
(B) Section 4(4) (unsolicited brokerage transactions); 
(C) 
Securities 
Act 
exemptions 
in 
Section 3(a) 
with 
the 
exception of the charitable exemption in Section 3(a) (4), 
the exchange exemption in Section 3 (a) (10), the intrastate 
exemption in Section 3 (a) (11), and the municipal securities 
exemption In Section 3(a)(2) but only with "respect to the 
offer or sale of such [municipal] security in the State in 
vlhich the issuer of such security is located"; and 
(D) 
securities issued 
III compliance with SEC 
rules unnpr 
Section 4(2) (private placements). 
Section l8(c) (1) preserves state authority "to investigate 
dllJ bring enforcement actions with resppr~ to fraud or deceit, or 
unlawful 
conduct 
by 
a 
broker 
or 
dealer, 
in connection with 
securities or securities transactions." 
The National Securities Markets Improvement Act, in essence, 
preempts 
aspects of the securities registration and reporting 
processes for specified federal covered securities. The Act does 
not diminish state authority to investigate and bring enforcement 
actions generally with respect to securities transactions. 
The States are authorized to require filings of any document 
filed with the SEC for notice purposes "together with annual or 
periodic reports of the value of securities sold or offered to be 
sold to persons located in the State (if such sales data is not 
included in documents filed ,,,ith the Commission), 
solely for 
notice purposes and the assessment of any fee, together 'wi th a 
consent to service of process and any required fee." Section 
18(c)(2). However, no filing or fee may be required with respect 
to any listed security that is a covered security under Section 
18(b) (1) (traded on specified stock markets). Section 302 of this 
Act 
addresses 
notice 
filings 
and 
fees 
applicable 
to 
federal 
covered securities. 
10. 
Section 102(8): Filing: Prior Provision: 
RUSA Section 
101(4). The RUSA definition was revised to recognize that records 
may 
be 
filed 
in 
paper 
form 
or 
electronically 
with 
the 
administrator, 
or 
designees 
such 
as 
the 
Web-CRD 
(Central 
Registration 
Depository) 
or 
Investment 
Adviser 
Registration 
Depository 
(lARD) 
or the Securities 
and Exchange Commission's 
Electronic Data Gathering, Analysis and Retrieval System (EDGAR) 
or successor systems. 
In the RUSA definition, the term "filed" referred to "actual 
delivery of a document or application." This Act substitutes the 
term 
"record" 
"Thieh 
i~ defined in 
Section 
102(25) 
to 
refer 
broadly to "information that is inscribed on a tangible medium or 
that 
is 
stored 
1n 
an 
electronic 
or 
other 
medium 
and 
is 
retrievable in perishable 
form". 
This definition requires 
the 
receipt of a record. The definition does not limit filing to any 
specific medium 
such as maiL certified maiL or a particular 
electronic 
system. 
The 
definition is 
intended 
to 
permit 
an 
administrator to accept filings over the Internet or through a 
direct modem 
system, 
both of which are 
now used to transmit 
documents to EDGAR, 
or through new electronic systems as they 
evolve. 
"Receipt" refers to the actual rip-livery of a record to the 
administrator or a designee and does not refer to a subsequent 
examination 
of 
the 
record 
by 
the 
administrator. 
See, 
e.g., 
F8hrman 
v. 
Blunt, 
S.1'L2d 
(Mo. 
Ct. 
App. 
1992). 
If 
a 
deficient form was provided to a designee, but not provided to 
the administrator because of the deficiency, it would not be 
filp-d under this definition. 
11. 
Section 
(9): 
Fraud, 
deceit 
and 
defraud: 
Prior 
Provisions: 1956 Act Section 401(d); 
RUSA Section 101(6). This 
definition, which is identical to the 1956 Act and RUSA, codifies 
the holdings that "fraud" 
as 
used in the federal 
and state 
securities statutes is not limited to 
common 
law deceit. 
See 
generally 7 Louis Loss & Joel Seligman. Securities Regulation 
3421-3448 (3d ed. 1991). 
12. 
Section 102(10): Guaranteed: Prior Provisions: 1956 Act 
Section 401(e); RUSA Section 401(a)(1). The 1956 Act definition 
of 
"guaranteed" 
applies 
generally 
to 
payment 
of 
"principal, 
interest. 
or dividends." 
The 
RUSA definition of "guaranteed," 
which was solely applicable to exempt securities, applied to the 
guarantee of "all or substantially all of principal and interest· 
or dividends." 
Section 102 (10) 
follows the 1956 Act approach and applies 
generally to the guarantee of "all principal and all interest." 
Any method of guarantee that results in a guarantee of payment of 
all 
principal 
and 
all 
interest will 
suffice 
including. 
for 
example, an irrevocable letter of credit. 
This definition does not address whether or not a guarantee. 
whether whole or partial, 
lS itself a security. That issue is 
addressed by the definition of "security" in Section 102(28). 
13. 
Provisions: 
Section 
102(11): 
Institutional 
RUSA Section 101(5); Securities 
investor: 
Act of 1933 
Prior 
Rules 
144A and 501(a). 
Sections 102(11)(A) through (K) are based on Rule 501(a) of 
the Securities Act of 1933. but do not include the paragraphs of 
Rule 
501(a) 
that 
address 
individuals. 
Given 
the 
significant 
period of time since Rule 501(a) was adopted. this Act has used a 
$10 
million 
minimum 
for 
several 
categories 
of 
institutional 
investor rather than $5 million minimum used in Rule 501(a). 
Section 102(11)(H) concludes with an except clause meant to 
exclude self-directed plans for individuals from this deflnition. 
With respect to the exclusion of Rule 144A(a) (1) (H) 
from 
Section 102(11)(M). the substance uf Rule 144A(a)(1)(H) appears 
in SecLion 102(11)(1), but with a requirement of total assets in 
excess of $10,000,000. 
Section 102(11) (0) 
is meant to 
reach 
ppr~nns similar to 
those 
listed 
In 
Sections 
102(11)(A) 
through 
(N), 
but 
not 
otherwise 
listed. 
Under 
Section 
503. 
if 
challenged 
in 
a 
proceeding, 
t-hA 
burden 
of 
provinq 
the 
availability 
of 
an 
exemption is on the person claiming it. An interpretive opinion 
may be sought from the administrator under Section 605(d). 
14. 
Section 102 (12) : 
This 
definition is based 
2(a)(l3). 
Insurance company: No Prior Provision. 
on 
Securities 
Act 
of 
1933 
Section 
15. 
Section 102(13): Insured: Prior Provision: RUSA Section 
401(a) (2). 
The 
RUSA definition of "insured," which was solely 
applicable to exempt securities, applied to the insurance of "all 
or 
substantially all 
of 
principal, 
interest, 
or 
dividends." 
Section 
102(13) 
is 
applicable 
generally 
but 
1S 
limited 
to 
"payment of all principal and all interest." 
16. 
Section 102 (14): International banking institution: No 
Prior 
Provision. 
Securities 
issued 
or 
guaranteed 
by 
the 
International Bank for Reconstruction and Development, 
U. S. C. 
Section 286k-1(a); the Inter-American Development Bank, 22 U.S.C. 
Section 283h(a); the Asian Development Bank, 
U.S.C. 
Section 
285h(a); the African Development Bank, 22 U.S.C. Section 290i-9; 
and the International Finance Corporation, see 22 U. S. C. Section 
282k; are treated as exempt securities under Section 3(a)(2) of 
the Securities Act of 1933, see generally 3 Louis Loss 
& Joel 
Seligman, Securities Regulation 1191-1194 (3d ed. rev. 1999), and 
are within this term. 
17. 
Section 102 (15): Investment adviser: Prior Provisions: 
1956 Act Section 401(f); RUSA Section 101(7). This term generally 
follows the definition in Section 202(a)(11) of the Investment 
Advisers Act of 1940, but has been updated to take into account 
new media such as the Internet. 
The first sentence in Section 102 (15) is identical to the 
first sentence in the 1956 Act Section 401(f) and the counterpart 
language in Section 202(a) (11). The RUSA definition deleted the 
phrases "either directly or through pUblications or writings" and 
"regular" before business. 
These 
terms 
have 
been returned to 
Section 102(15) because of the intention that this definition be 
construed uniformly with the definition in Section 202(a)(11) of 
the Investment Advisers Act of 1940. This first sentence would 
not reach ll"le au tho l' of a boole who did not rE'C'Plve compensation 
as part of a regular business for providing investment advicp. 
The 
second 
sentence 
in 
the 
term. 
addressing 
financial 
planners is new. 
The 
purpose of this sentence is to achieve 
functional 
regulation 
of 
financial 
planners 
who 
satisfy 
the 
defini tion of 
investment adviser. 
Cf. 
Investment Advisers Act 
Release 
1092, 
SEC 
Dock. 
(1987) 
(similar 
approach in 
Securities and Exchange Commission interpretative Release). This 
reference is not intended to preclude persons who hold a formally 
recognized 
financial 
planning 
or 
consulting 
designation 
or 
certification from using this designation. The use by a person of 
a title, designation or certification as a financial planner or 
other similar title, designation, or certification alone does not 
require registration as an investment adviser. 
Sections 102(15)(A) through (H) are exclusions from the term 
"investment adviser." An excluded person can be held liable for 
fraud in providing investment advice, see Section 502, but would 
not be subj ect to the registration and regulatory provisions in 
Article 4. 
Sections 
102(15)(A) 
and 
(E) 
are 
new 
and 
recognize that 
investment adviser representatives and federal covered investment 
advisers are separately treated in this Act. See definitions in 
Sections 
102(6) 
and 
102(16); 
registration 
and 
exemptions 
in 
Sections 404-405. 
Sections 
102(15) (B), 
(C), 
and 
(G) 
are 
substantively 
identical to the 1956 Act, RUSA, and the Investment Advisers Act 
of 1940. 
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 
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. On the other hand, that portion of clause 
[( C)] vlhich refers to 'special compensation' amounts to an 
equally clear recognition that a broker or dealer who is 
specially compensated for the rendition of advice should be 
considered an investment adviser and not be excluded from 
the purview of the Act merely because he is also engaged in 
effecting market 
transactions 
In securities. 
The 
essential distinction to be borne in mind in considering 
borderline 
cases 
is 
the 
distinction' 
between 
compensation for advice itself and compensation for services 
of another ChdL deter to which 0d','ice is merely inr; r'h>ntal. 
Similarly, other broker-dealer employees such as research 
analysts who receive no special compensation from third parties 
for 
investment 
advice 
would 
not 
be 
required 
to 
register 
as 
investment advisers. 
The 1956 Act definition added the word "paid" in Section 
401(f) (4) to the counterpart exclusion in Section 202(a) (11) of 
the 
Investment Advisers 
Act 
"to 
emphasize," 
as 
the Official 
Comment explained, "that a person who periodically distributes a 
'tipster sheet' 
free as 
a 
way to get paying clients is not 
excluded from the definition as a 'publisher. '" 
After the 1956 Act was published, the United States Supreme 
Court construed the definition of investment adviser in L01-re v. 
SEC, 472 U.S. 181 (1985), and concluded: 
Congress did not intend to exclude publications that are 
distributed by investment advisers as a normal part of the 
business of servicing their clients. 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. 
On 
the other hand, 
Congress, 
plainly sensitive to First Amendment concerns, 
wanted to 
make 
clear that it did not 
seek 
to regulate the press 
through 
the 
licensing 
of 
nonpersonalized 
publishing 
activities. 
Id. at 185. 
Responsive to this language RUSA rewrote this exclusion to 
provide: 
that 
a publisher, 
employee, 
or columnist of 
a 
newspaper, 
news 
magazine, or business or financial publication, or an owner, 
operator, 
or 
employee 
of 
a 
cable, 
radio, 
or television 
network, 
station, 
or production facility, 
if, 
In either 
case, 
the 
financial 
or 
business 
news 
published 
or 
disseminated is made ovailable to the general public and the 
content does not consist of rendering advice on the basis of 
the specific investment situation of each client. 
Recent experience at the 
the 1956 Act and RUSA 
federal and state 
approaches may be 
levels suggest 
too broad. 
The 
retention of the Investment Advisers 
Act 
approach provides 
a 
better balance between First Amendment concerns and protection of 
investors from non-"bona fide" publicizing of investment advice. 
The 
exclusion 
In 
Section 
102(15)(D) 
is 
intended 
to 
exclude 
publishers of 
Internet or electronic media, 
but only if the 
Internet or electronic media publication or website satisfies the 
"bUIld. fide" and "publication of general and 
n~gular circulation" 
requirements. Cf. SEC v. Park, 99 F. Supp. 2d 889, 895-896 (N.D. 
Ill. 
2000) 
(court 
declined 
to 
dismiss 
complaint 
against 
an 
Internet website whcn there were allegotinns that the website was 
not "bona fide" or of "general and regular circulation"). 
The 
National 
exclusion 
described 
exclusion in Section 102(15)(G) 
is 
required by the 
Securities 
Markets 
Improvement 
Act 
of 
1996. 
This 
will 
reach 
banks 
and 
bank 
holding 
companies 
as 
in Investment Advisers Act Section 202(a) (11) (A) 
and 
persons whose advice solely concerns United States government 
securities as described in Section 202(a)(11)(E). 
18. 
Section 102(16): Investment adviser representative: No 
Prior Provision. Investment adviser representatives have not been 
required to register under the Investment Advisers Act, before or 
after the National Securities Markets Improvement Act. 
The term investment adviser representative is not intended 
to preclude persons who 
hold a 
formally recognized financial 
planning or consulting title, designation, or certification from· 
using such 
a 
designation. 
The 
use 
by 
a 
person of 
a title, 
designation or certification as 
a financial planner, or other 
similar title, 
designation, 
or 
certification alone 
does 
not 
require registration as an investment adviser representative. 
19. 
Section 102(17): 
Issuer: 
Prior Provisions: 
1956 Act 
Section 
401(g); 
RUSA 
Section 
101(8). 
This 
Section generally 
follows the 1956 Act and RUSA. 
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. 
It would 
also 
reach 
guarantors. 
20. 
Section 102 (18): 
Nonissuer transaction or nonissuer 
distribution: Prior Provisions: 
1956 Act Section 401 (h); 
RUSA 
Section 101 (9). This definition is relevant to several exempt 
transactions in Section 202. 
In TechnoMedical Labs, Inc. v. Utah Sec. Div., 744 P.2d 320 
(Utah Ct. 
App. 
1987), 
the court declined to limit the 
term 
benefit 
to 
monetary 
benefits 
and 
instead 
held 
a 
spinoff 
transaction could provide direct or indirect benefits to 
an 
issuer. Id. at 323-324, following SEC v. Datronics Eng'r, Inc., 
F.2d 250 (4th Cir. 1973), cert. denied, 416 U.S. 937; SEC v. 
Harwin Indus. 
Corp., 
F. 
Supp. 
(S.D.N.Y. 
1971). 
In a 
similar fashion, transactions by officers, directors, promoters, 
and other insiden:; of the issuer may hAnAfit the issuer and may 
not qualify as nonissuer transactions. 
21. 
Section 102(19): Offer 
~n purchase: No Prior Provision: 
A rescission offer 
under 
Section 
would 
be 
an offer to 
purchase with respect to a security that earlier had been sold. 
4fi 
22. 
Section 102(20): Person: Prior Provisions: 
1956 Act 
Section 401(i); 
RUSA 
Section 
101(10). 
This 
is 
the 
standard 
definition used by the National Conference of Commissioners for 
Uniform 
State 
Laws 
with 
the 
addition of 
"limited liability 
use of 
entity" 
company" to reflect current usage. 
The 
phrase "or any other legal or commercial 
be broad enough to include other forms of 
may be created or popularized in the future. 
business 
the concluding 
is intended to 
enti ties that 
23. 
Section 102(21): Place of business: Prior Provision: 
Rules 203A-3(b) and 222-1 of the Investment Advisers Act of 1940. 
24. 
Section 102(23): Price amendment: Prior Provision: RUSA 
Section 101(11). A price amendment may be used in a registration 
coordinated with the Securities and Exchange Commission procedure 
in Section 303(d). 
In the case of noncash offerings, required 
information concerning such matters as the offering price and 
underwriting 
arrangements 
is 
normally 
filed 
in 
a 
"price" 
amendment after the rest of the registration statement has been 
reviewed by the Securities and Exchange Commission staff. See 
<;Jenera11y 
Louis Loss 
& Joel Seligman, Securities Regulation 
542-550 (3d ed. rev. 1998). 
25. 
Section 102(24): 
Principal place of business: 
Prior 
Provision: Rule 222-1(b) of the Investment Advisers Act of 1940. 
26. 
Section 
(25) : 
Record: 
Prior 
Provision: 
Uniform 
Electronic Transactions Act Section 2 (13). Cf. Section 3 (a) (37) 
of the Securities Exchange Act of 1934. The Uniform Electronic 
Transactions Act §2(13) defines record in nearly identical terms. 
The Official Comment explains: 
This is a standard definition designed to embrace all means 
of communicating or storing information except human memory. 
It 
includes 
any 
method 
for 
storing 
or 
communicating 
information, 
including "writings." 
A record need not 
be 
indestructible or permanent, but the term does not include 
oral 
or 
other 
communications 
which 
are 
not 
stored 
or 
preserved by some means. 
This term is intended to embrace new forms of records that 
are created or popuJ~rized in the future. A record would include, 
but 
not 
be 
limited 
to, 
a 
registration 
statement, 
report, 
application, book, 
publication, account, paper, 
correspondence, 
memorandum, 
agreement, 
document, 
computer 
file, 
or 
disk, 
microfilm, photograph, or audio or visual tape. 
27. 
Section 
102(26): 
Sale: 
Prior 
Provisions: 
1956 
Act 
Section 401(j); RUSA Section 101(13). Both the 1956 Act and RUSA 
definition of 
"sale" 
are 
modeled 
on Section 2(a)(3) 
of 
the 
Securities Act of 1933. 
Language in Section 401(j) of the 1956 Act addressed the now 
rescinded SEC "no sale" doctrine and has been eliminated. Merger 
transactions are usually sales under Section 102(26), but may be 
exempted from the securities registration requirements by Section 
202(18). 
28. 
Section 102(28): Security: Prior Provisions: 1956 Act 
Section 401(1); RUSA Section 101(16). Much of the definition in 
Section 102(28), like the definitions in the 1956 Act Section 
401(1) and RUSA Section 101(16), is identical to the definition 
in 
Section 
2(a)(1) 
of 
the 
Securities 
Act. 
State 
courts 
interpreting the Uniform Securities Act definition of security 
have often looked to interpretations of the federal definition of· 
security. See generally 2 Louis Loss & Joel Seligman, Security 
Regulation 923-1138.19 (3d ed. rev. 1999). 
The 
most 
recent 
amendments 
to 
Section 
2(a)(1) 
of 
the 
Securities Act of 1933 
were added by the Commodities Futures 
Modernization Act of 2000 which added or revised language in the 
Secur i ties Act addressing security futures and securities puts, 
calls, straddles, options, or privileges. Identical language has 
been 
included 
in 
Section 
102(28) 
of 
this 
Act 
to 
harmonize 
interpretation 
of 
the 
federal 
and 
state 
definition 
of 
a 
"security." With respect to a security futures product, Section 
28(a) of the Securities Exchange Act of 1934, as amended by the 
Commodi ty Futures Modernization Act of 2000, 
further provides: 
"No pro·vision of any State law regarding the offer, sale or 
distribution of securities shall apply to any transaction in a 
security futures product, except that this sentence shall not be 
construed 
as 
limiting 
any 
State 
antifraud 
law 
of 
general 
applicability." 
Preorganization certificates or subscriptions are included 
in this term, obviating the need for a separate definition as was 
included in RUSA Section 402(13). 
Section 102 (28) uses RUSA' s "fractional undivided interest 
in 
oil, 
gas 
or 
other 
mineral 
rights" 
formulation, 
which 
originated in Section 2(a)(l) of the Securities Act of 1933, 
rather thctll the 19S6 Act formul<ltion, "certificate of interp~t or 
participation in an oil, 
Yd.S or mining title." In recent years F 
courts interpreting Section 2(a)(1) of the Securities Act of 1933 
have found certain oil, gas or mineral rights to be investment 
contracts (that is, securities). 
Louis Loss 
& Joel Seligman, 
Securities Regulation 979-982 (3d ed. rev. 1999). 
A new sentence was added in Section 102(28)(A) referring to 
certificated or uncertificated securities to indicate that the 
term is intended to apply whether or not a security is evidenced 
by a writing. Section 102(28)(A) is intended to reject Thomas v. 
State of Tex., 65 S.W.3d 38 (Tex. Crim. App. 2001) (Under Texas 
law evidence of indebtedness requires a writing). 
Insurance or 
endowment policies or 
endowment 
or 
annuity 
contracts, 
other 
than 
those 
on 
which 
an 
insurance 
company 
promises to make variable payments, are excluded from this term. 
Variable insurance products are also excluded in many states and 
are 
exempted 
from 
securities 
registration 
in 
others 
under 
provisions sU,ch as Section 201 (4). 
When variable products are 
included 
in 
the 
definition 
of 
security 
and 
exempted 
from 
registration 
state 
securities 
administrators 
can 
bring 
enforcement actions concerning variable insurance sales practices. 
The Drafting Committee recognized that the decision whether 
to exclude variable annuities from the definition of security 
will be made on a state-by-state basis. Those states which intend 
to exclude variable products 
from 
the definition of security 
should add the words "or variable" to Section 102(28)(B) so that 
it will read: 
(B) 
The 
term does not include an insurance or endowment 
policy or annuity contract under which an insurance company 
promises to pay a fixed or variable sum of money either in a 
lump sum or periodically for life or other specified period. 
In the view of the American Council of Life Insurers: 
The 
brackets 
around 
the 
words 
"or 
variable" 
should 
be 
removed 
to 
follow 
the 
majority 
of 
jurisdictions. 
Thirty-seven 
jurisdictions 
[including 
Guam] 
currently 
exclude all insurance, endowment and annuity contracts from 
the definition of security. Removal of the brackets around 
the words "or variable," therefore, would incorporate the 
approach taken in the majority of jurisdictions. The removal 
of these brackets also prevents a statutory conflict with 
[up 
to] 
jurisdictions 
that 
grant 
the 
insurance 
commissioner exclusive jurisdiction to regulate the issuance 
and sale of variable contracts. 
Moreover, 
this 
approach 
recognizes that the issuance and sale of variable contracts 
is comprehensively regulated by the Securities and Exchange 
Commission, the National 
A~sociation of Securities Dealers, 
state insurance departments, 
anel. 
in the case of group 
life and annuities, the Department of Labor. Like all other 
financial products, this approach imposes only one, rather 
LllCii1 two, levels of regulation in ei3ch st,ate and reflects 
the philosophy of financial services modernization. 
In the view of the North American Securities Administrators 
Association 
variable 
products 
should 
be 
exempted 
from 
registration, not excluded from the definition of securities: 
One of the goals of this Act is to align state and federal 
law. The United States Supreme Court ruled that a variable 
annuity is 
a 
security in 
SEC 
v. 
Variable 
Annuity Life 
Insurance 
Company 
of America, 
U.S. 
(1959). 
More 
recently, it has 
been confirmed that variable 
insurance 
products are "covered securities" as defined in the National 
Securities Markets Improvement Act of 1996 (NSMIA) 
and in 
the Securities Litigation Uniform Standards 
Act 
of 1998 
(SLUSA), see Lander v. Hartford Life Annuity Ins., 251 F.3d 
(2d Cir. 2001). 
When variable products are included in the definition of 
security and exempted from registration, state securities 
administrators 
can 
bring 
enforcement 
actions 
concerning 
variable insurance sales practices. 
This approach 
toward 
functional 
regulation 
is 
supported 
by 
the 
National 
Association of Securities Dealers as evidenced by a February 
2001 letter 
from 
Mary Schapiro, 
President of Regulatory 
Policy & Oversight: "Based on our experience, we have found 
that 
variable 
products' 
sales-related 
problems 
parallel 
those of mutual funds and other securities. 
. Because of 
the substantial similarities between variable contracts and 
other securities products, we believe it is incongruous for 
agents and sales practices involved in variable annuities 
not to be covered by state securities laws." 
State 
securities 
regulators 
support 
the 
functional 
regulation of agents because: 1) insurance companies are not 
affected since state securities regulators are preempted 
from requiring the registration of variable products; 2) the 
vast majority of broker-dealer subsidiaries of 
insurance 
companies are already registered to sell securities in most 
states; 
and 
3) 
the vast majority of agents are already 
dually licensed to sell insurance and securities in most 
states. 
Section 102(28)(C) includes the exclusion Ul RUSA from the 
1956 definition of security for "an interest in a contributory or 
noncontributory pension or welfdLe plan subject to the Employee 
Retilellient Income Security Act of 1974." 
The first clause in Section 102(28)(D) is derived from the 
leading case of SEC v. W.J. Howey Co., 328 U.S. 293 (1946), which 
has been widely followed by federal and state courts. The second 
clause in Section 102(28) (D) is based, in part, on the leading 
case of SEC v. Glenn W. 
Turner Enter., Inc., 474 F.2d 476, 482 
n.7 (9th Cir. 1973), cert. denied, 419 U.S. 900 (1974). 
The 
courts have divided over 
the interpretation of 
the 
"common enterprise" element of an investment contract. The courts 
')0 
.. v 
')0 
..>U 
generally recognize that "horizontal" commonality (for example, 
the pooling of an investment by two or more investors) is a 
common enterprise. A small minority of the federal circuits ,·,ill 
also find a common enterprise in a "vertical" relationship when a 
single investor is dependent upon the expertise of 
a 
single 
commodities broker. Since two or more persons do not share in the 
profitability of an undertaking, it is difficult to argue that 
there 
is 
a 
common 
enterprise. 
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 tyro persons even if, for example, 
one 
1S 
a 
conventional 
investor 
and 
one is 
a 
promoter. 
See 
generally 2 Louis Loss & Joel Seligman, Securities Regulation 
989-997 (3d ed. Rev. 1999). 
In interpreting all elements of the investment contract, the 
courts 
have 
emphasized 
SUbstance, 
not 
form. 
A 
conventional 
partnership involving two individuals who actively participate in 
its management 
and 
who 
each own 
percent interest of its 
profits 
has 
consistently 
not 
been 
viewed 
as 
an 
investment 
contract because profits do not come from the efforts of others. 
On the other hand, investments in limited partnership interests 
which are traded on stock exchanges consistently have been held 
to be investment securities because profits do come substantially 
from the efforts of others. Indeed, interests in an entity called 
a 
general 
partnership 
may 
be 
a 
security 
when 
the 
general 
partnership functions like 
a 
limited partnership. 
See, 
e.g., 
Williamson v. Tucker, 
F.2d 404, 424 (5th Cir. 1981), cert. 
denied, 454 U.S. 
(1981); see generally 2 Loss 
& Seligman, 
supra, at 1019-1033. 
Section 102(28)(E) 
1S 
consistent with state 
and federal 
securities 
laws 
which 
have 
recognized 
interests 
in 
limited 
liability 
companies 
and 
limited 
partnerships 
in 
some 
circumstances as "securities," see 2 Louis Loss & Joel Seligman, 
Securities 
Regulation 
1028-1031 
(3d 
ed. 
rev. 
1999), 
when 
consistent with the court decisions interpreting the investment 
contract concept. This Act 
i'\lso refers to an investment in a 
viatical settlement or a similar agreement to make unequivocally 
clear that viatical settlement 
and similar 
C'grRements, 
which 
otherwise satisfy the definition of an investment contract, are 
securities. This is intended to reject the holding of one court 
that a viatical contract could not be a 
secDri~y. See SEC v. Life 
Partners Inc., 87 F.3d 536 (D.C. Cir. 1996), reh'g denied, 102 
F.3d 587 (D.C. Cir. 1996). A number of states have done so by 
statute. 
Judicial construction 
been the most frequently 
"security." 
See 
Gabaldon, 
of the term "investment contract" has 
litigated issue concerning the 
term 
A Sense of 
Security: 
An 
Empirical 
Study, 25 J. Corp. L. 307 (2000), explaining that there had been 
cases decided to that date in which the definition of a 
security played a prominent role. Id. at 308. Some 461 of the 792 
cases (58 percent) concerned investment contracts. Id. at 322. A 
number of states, by statute, rule, or case law have also adopted 
the "risk capital" test to find a security when an investment is 
subject to the risks of an enterprise with the expectation of 
profit or other valuable benefit and the investor has no direct 
control over the management of the enterprise. See, e.g., 2 Loss 
& Seligman, supra, at 939-940 n.50. 
29. 
Section 102(29): 
Self-regulatory organization: 
Prior 
Provision: 
RUSA Section 101(17). This definition was added by 
RUSA and is based on a counterpart provision in the American Law 
Institute Federal Securities Code. At the current time. national 
securities 
exchanges 
are 
registered 
under 
Section 
of 
the 
Securities Exchange Act of 1934; national securities associations 
under Section 15A; clearing agencies under Section 17A; and the 
Municipal Securities Rulemaking Board under Section 15B. 
30. 
definition 
the extent 
Section 
102(30): 
Sign: 
No 
is intended to facilitate 
permitted by Section 105. 
Prior 
Provision. 
This 
electronic signatures, to 
31. 
Section 102(31): 
State: 
Prior Provisions: 
1956 
Act 
Section 
401(m); 
RUSA 
Section 
101(18). 
This 
is 
the 
standard 
defini tion used by the National Conference of Commissioners on 
Uniform StotP. Laws. It does include territories and possessions 
of the United States, as well as the District of Columbia and 
Puerto Rico, 
but does 
not include foreign governments, 
their 
terr i tor ies, or their possessions. In this Act "foreign" always 
refers to activity, a government, or person outside of the United 
States, not a different state within the United States. 
Maine Comments 
1. 
Section 16102(4) (B): 
The definition of "broker-dealer" 
in the Revised Maine Securities Act ("predecessor act") similarly 
excluded issuers, but explicitly stated that the exclusion does 
not apply to issuers "effecting transactions other than with 
respect to its own securities." 
Maine has not retained this 
explicit statement because it is 
rlp~r that the issuer exclusion 
is 
not 
intended 
to 
apply 
to 
issuers 
that 
are 
effecting 
transactions other than with respect to their own securities. 
2. 
Section 16102 (11) (J -K) : 
For these selected paragraphs, 
Maine 
has 
adopted 
a 
threshold of $5,000,000 
(similar to the 
Revised 
Maine 
Securities Act) 
rather 
than the 
model 
Uniform 
Securities Act threshold of $lO,OcrO,OOO. 
3. 
Section 16102(15) (B): 
This paragraph excludes from the 
definition of "investment adviser" certain professionals .. ;hose 
performance of investment advice is "solely incidental" to the 
practice of their profession. 
Consistent with the predecessor 
act, 
receiving 
additional 
compensation 
solely 
for 
investment 
advice 
negates 
this 
definitional 
exclusion, 
because 
specific 
compensation indicates that the advice was not incidental in 
nature. 
4. 
Section 16102(17)(D): 
Maine has modified the model 
Uniform Securities Act by adding paragraph (D), 
"[t]he issuer of 
a fractional or pooled interest in a viatical or life settlement 
contract," 
within 
the definition of 
issuer, 
similar 
to 
the 
predecessor act. 
5. 
Section 16102(28): 
Maine has modified the model Uniform 
Securities Act definition of security so as to place investments 
in a viatical and life settlement contract wi thin the main body 
of 
the 
definition 
(as 
they 
appeared 
in 
the 
Revised 
Maine 
Securities Act) 
and not 
as examples of investment contracts. 
This modification is intended to ensure that the same standards 
will 
be 
applied 
in 
Maine 
when 
determining 
whether 
such 
investments fall within the definition. 
Further, Maine has added 
into the body of the definition certain oil and gas interests 
that were also included in the Revised Maine Securities Act as a 
type of security. 
6. 
Section 16102(28)(B): 
Maine 
has 
elected to 
exclude 
variable annuities in the definition of a security, an option 
included in the model Uniform Securities Act. 
In evaluating this 
option, Maine determined that it would be appropriate to update 
the Maine Insurance Code to include rule-making authority for the 
Super intendent 
of 
Insurance 
to 
adopt 
rules 
regarding 
the 
suitability of sales of variable annuities. 
7. 
Section 16102(28)(D): 
The 
term "profits" 
should be 
interpreted 
in 
light 
of 
the 
United 
States 
Supreme 
Court's 
decision 
in 
SEC 
v. 
Edwd.Lds, 
S. 
Ct. 
(2004), 
,.rhich 
clarified the meaning of the 
investmen~ contract definition first 
set forth in SEC v. Howey, 
S. Ct. 1100 (1946). 
Referring to 
Howey, the Court stated: 
"[W]e were speaking of the profits that 
investors seek on their investmen~, not the profits of the scheme 
in which they invest. 
We used 'profits' in the sense of income 
or return, 
to include for example, 
dividends, 
other periodic 
pnyments, or the increased value of the investment. 
There is no 
reason 
to distinguish between promises 
of 
fixed 
returns 
and 
promises 
of 
variable 
returns 
for 
purposes 
of 
the 
test, 
so 
understood." 
Edwards, 124 S. Ct. at 897. 
8. 
Section 16102(32): 
Maine reinstates a definition of 
"viatical 
or 
life settlement contract." 
Viatical 
settlement 
contracts 
were 
defined 
in 
the 
predecessor 
act; 
this 
new 
definition conforms to the nomenclature used in the Viatical and 
Life Settlements Act (the Maine Revised Statutes, Title 24-A, 
chapter 85). 
§16l03. 
References to federal statutes 
Securities Act of 1933, 15 United States Code, Section 77a 
et seg., Securities Exchange Act of 1934, 15 United States Code, 
Section 78a et seg., Public Utility Holding Company Act of 1935, 
United States Code, Section 79 et seg., Investment Company Act 
of 1940, 15 United States Code, Section 80a-l et seg., Investment 
Advisers Act of 1940, 15 United States Code, 
Section 80b-l et 
seg., Employee Retirement Income Security Act of 1974, 29 United 
States 
Code, 
Section 1001 et seg., National Housing Act, 
United States Code, Section 1701 et seg., Commodity Exchange Act, 
United States Code, Section 1 et seq., Internal Revenue Code, 
United States Code, Section 1 et seq., Securities Investor 
Protection Act of 1970, 15 United States Code, Section 78aaa et 
seq., Securities Litigation Uniform Standards Act of 1998, 
Stat. 
3227, 
Small Business Investment Act of 1958, 
United 
States Code, Section 661 et seq. 
and Electronic Signatures in 
Global and National Commerce Act. 15 United States Code t 
Section 
7001 et seq. 
mean those federal 
laws 
of those names, 
those 
statutes and the rules and regulations adopted under those laws 
and statutes, as nmended. 
Official Comments 
Prior Provisions: 
1956 
Act Section 401(k); 
RUSA 
Section 
101(15). 
1. 
There are a large number of references to other laws in 
this Act, particularly to the federal securities laws identified 
in Section 103, 
and to rules 
adopted by the Securities and 
Exchange Commission under those laws. One of the main objectives 
of this Act is to take account of those provisions in the federal 
laws 
that 
are 
preemptive, 
and 
to 
coordinate 
with 
other, 
nonpreemptive provisions of the federal laws where coordination 
between 
federal 
and state securities 
law is 
in 
the 
public 
interest. 
2. 
Section 
(d) 
of 
the 
Uniform 
Statute 
and 
Rule 
Construction Act, adopted by NCCUSL in 1995, provides: "A statute 
or rule that incorporates by reference 
a statute or rule of 
another jurisdiction does not incorporate a later enactment or 
adoption 
or 
amendment 
of 
the 
other 
statute 
or 
rule." 
Nevertheless, it is not 
uncommon for States to permit later 
amendments 
to 
statutes 
and 
rules 
referenced 
in 
enacted 
legislation to become automatically effective. In those states 
the final bracketed language in this Section should be included 
in the Act. 
3. 
In 
those 
states 
which 
do 
not 
permit 
automatic 
effectiveness of later amendments and that follow Section 12 (d) 
of the Uniform Statute and Rule Construction Act, this problem 
has been addressed by either giving the administrator the power 
to update by rule or the duty to notify the legislature when 
amendment 
is 
necessary. 
When 
the 
legislature 
notification· 
approach is adopted, to prevent a gap period, the administrator 
might be given the power to act by rule until the legislature has 
acted. 
4. 
After enactment, 
amendments 
to 
a 
preemptive 
federal 
statute, to rules adopted by a federal agency under a preemptive 
provision of a federal statute, or to amendments to such rules 
should be enforced in all states under the Supremacy Clause of 
the United States Constitution. A number of such references are 
in this Act. 
Maine Comments 
1. 
Maine courts have held that it is unconstitutional for 
the Legislature, when incorporating federal laws and standards 
into state legislation, to incorporate any future Congressional 
revisions or amendments to those federal laws and standards. 
By 
citing the federal acts, and rules and regulations adopted under 
them, "as amended," the intent is to include the version of the 
act 
and those 
amendments 
existing at 
the 
time 
this 
Act 
is 
enacted. 
It is also the intent of the administrator to notify 
the 
Legislature 
when 
amendments 
are 
necessary 
to 
conform 
provisions of 
this 
Act 
to 
revised or 
amended 
provisions 
of 
relevant federal laws. 
§16104. 
References to federal agencies 
A reference in thiE; chapter to an agency nr C1<"partment of 
the United States is also a reference to a successor agency or 
department. 
Official Comment 
No Prior Provision. 
§16105. 
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, 
United States Code, 
Section 7001(c) or authorize electronic 
delivery of any of the notices described in Section 103 (b) of 
that Act, 15 United States Code, Section 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 
(a) 
of that Act, 
United States Code, 
Section 
7004 (a) . 
Rules adopted under this section are routine technical rules as· 
defined in Title 5, chapter 375, subchapter 2-A. 
Official Comment 
No Prior Provision. The purpose of this Section is to permit 
the filing of electronic signatures and electronic records. 
SUBCHAPTER 2 
EXEMPTIONS FROM REGISTRATION OF SECURITIES 
Official Comments 
Section 
includes 
exempt 
securities 
and 
Section 
includes exempt transactions. Both exempt securities and exempt 
transactions are exempt from the securities registration, notice 
filing 
requirement 
of 
Section 
302, 
and 
the 
filing of 
sales 
literature Section 
of this Act. 
Neither Section 
nor 
Section 
provides 
an 
exemption 
from 
the 
Act's 
antifraud 
provisions in Article 5, nor the broker-dealer, agent, investment 
adviser, 
or 
investment 
adviser 
registration 
requirements 
in 
Article 4. 
A Section 201 exempt security retains its exelllpL.iclll when 
initially issued and in subsequent trading. 
A Section 202 transaction exemption must be established for 
each transaction. 
Neither the exempt security nor 
are meant to be mutually exclusive. A 
qualify for two or more exemptions. 
the rransaction exemptions 
security or transaction may 
Article 2 is not available to any security, transaction, or 
offer that, 
although in technical compliance with 
a 
specific 
section in Article 2, is part of an unlawful plan or scheme to 
evade the registration provisions of Article 3. In such cases 
registration is required. 
Cf. 
Prelim. 
Note 
to Regulation D 
adopted under the Securities Act of 1933. 
§16201. Exempt securities 
The following securities are exempt from the requirements of 
sections 16301 to 16306 and section 16504: 
1. 
United 
States 
Government. 
state 
and 
municipa1 
securities. 
A security, 
including 
a 
revenue obligation or 
a 
separate security as defined in 17 Code of Federal Regulations, 
230.131 adopted under the federal Securities Act of 1933, issued, 
insured or guaranteed by the United States; by a state; by a 
political subdivision of a state; by a public authority, agency 
or 
instrumentality 
of 
one 
or 
more 
states; 
by 
a 
political 
subdivision of one or more states; or by a person controlled or 
supervised by and acting as 
an instrumentality of the United 
States under authority granted by the Congress; or a certificate 
of deposit for any of the foregoing; 
2. 
Foreign 
government 
securities. 
A 
security 
issued, 
insured or guaranteed by 
a 
foreign government with which the 
United States maintains 
diplomatic 
relations, 
or 
any of its 
political subdivisions, if the security is recognized as a valid 
obligation by the issuer, insurer or guarantor; 
3. 
Depository 
institution 
institution securities. 
A security 
that will represent an interest in 
be guaranteed by: 
and 
international 
banking 
issued by and representing or 
or a direct obligation of or 
A. 
An international banking institution; 
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 
deposi ts or share accounts that are insured to the maximum 
amount 
authorized 
by 
statute 
by 
the 
Federal 
Deposit 
Insurance 
Corporation, 
the 
Natinno.l 
C'redit 
Union 
Shaxe 
Insurance Fund or a successor authorized by federal law or 
exercising 
fiduciary 
powers 
that 
are 
similar 
to 
those 
permi tted for national banks 
llnner the authority of the 
Comptroller of Currency pursuant to Section 
of United 
States Public Law 87 722, 12 United States Code, Section 92a 
or a holding company of such a depository institution; or 
C. 
Any other depository institution, 
unless by rule or 
order the administrator proceeds under section 16204; 
4. 
Insurance company securities. 
A security issued by and 
representing 
an 
interest 
in, 
or 
a 
debt 
of, 
or 
insured 
or 
guaranteed by an insurance company authorized to do business in 
this State; 
5. 
Common 
carriers 
and 
public utility securities. 
A 
security 
issued 
or 
guaranteed 
by 
a 
railroad, 
other 
common 
carrier, public utility or public utility holding company that is: 
A. 
Regulated in respect to its rates and charges by the 
United States or a state; 
B. 
Regulated in respect to the issuance or guarantee of the 
security by the United States, a state, Canada or a Canadian 
province or territory; or 
C. 
A public utility holding company registered under the 
federal Public Utility Holding Company Act of 1935 or 
a 
subsidiary of such a registered holding company wi thin the 
meaning of that Act; 
6. 
Federal covered securities. 
A federal covered security 
specified in Section l8(b) (1) of the federal Securities Act of 
1933, 15 United States Code, Section 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 or 
a 
subscript-inn right on or with respect to such a federal covered 
security; 
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 federal 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 federal 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 all option or a derivative security designated by the 
Securities and Exchange 
~ommissinn under Section 
9oCb) 
of the 
federal Securities Exchange Act of 1934, 15 United States Code, 
Section 78iCb); 
7. 
Nonprofit organization securities. 
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 
federal 
Investment Company Act of 1940, 15 United States Code, Section 
80a-3(c)(10)(B)j 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 
and 
imposing 
different 
requirements for different classes; 
8. 
Cooperatives. 
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 
mOember' s 
or owner's 
interest, retention certificate or like security sold to persons 
other than bona fide members of the cooperative; and 
9. 
Equipment 
trust 
certificates. 
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 l8(b)(l) of the federal Securities Act of 1933,15 
United States Code, Section 77r(b)(1). 
Rules adopted under this section are routine technical rules 
as defined in Title 5, chapter 375, subchapter 2-A. 
Official Comments 
Prior Provisions: 
1956 
Act 
Section 402(a); 
RUSA 
Section 
40l(b). 
1. 
Section 201 (1): United States government and municipal 
securities: Prior Provisions: 
1956 Act Section 402(a)(1); 
RUSA 
Section 40l(b)(1). This exemption generally follows the 1956 Act 
except 
that 
it 
adds 
securities 
"insured" 
by 
a 
specified 
government to those "issued" or "guaranteed." RUSA, 
in contrast, 
also addressed foreign governments, which in this Act are treated 
separately 
ln 
Section 
(2). 
Rule 
issued 
under 
the 
Securities Act of 1933 defines Separi'lt:.e securities issued under 
governmental obligations. 
A significant minority of states have excluded from 
the 
Section 201 (1) 
exemption industrial revenue bonds. 
Interest on 
these securities is solely repayable from revenues received from 
a nongovernmental industrial or commercial enterprise. Typically 
this exclusion will not operate if (A) the payments are made or 
unconditionally 
guaranteed 
by 
a 
person 
whose 
securities 
are 
exempt from registration under Section 18(b)(1) of the Securities 
Act of 1933, or (B) in accordance with a rule under this [Act], 
the 
of 
1ssuer first files a notice in 
the 
proposed offer 
or 
sale 
a record specifying the terms 
and 
a 
copy 
of 
the 
offering 
statement and the administrator does not disallow the exemption 
within the time period established by the rule. 
2. 
Section 201(2): 
Foreign government 
securities: 
Prior 
Provisions: 1956 Act Section 402(a)(2); 
RUSA Section 401(b)(2). 
The 
1956 
Act, 
as 
amended, 
and 
RUSA 
both 
reached 
foreign 
governments as specified in Section 201(2) and separately treated 
"a security issued, insured, or guaranteed by Canada, a Canadian 
province or territory, 
a political subdivision of Canada or a· 
Canadian province or territory, an agency or corporate or other 
instrumentality of one or more of the foregoing." The separate 
treatment of Canadian securities 1S largely redundant and has 
been eliminated from this Section. 
3. 
Section 201(3): Depository institution and international 
banking institution securities: Prior Provision: RUSA 401(b) (3). 
Section 402(a)(3) 
of the 
1956 
Act exempts specified bank 
and 
similar 
depository 
institutions; 
Section 
402(a)(4) 
exempts 
specified 
savings 
and 
loan 
and 
similar 
thrift 
institution 
securities; and Section 402(a)(6) exempts specified credit union 
securities. 
RUSA Section 401(b) (3) 
combines the three types of 
depository 
institutions 
into 
a 
common 
definition 
(see 
RUSA 
Section 101(13» 
which are adopted in this Act as Sections 102(3) 
and 102(5» 
and a 
common exemption (see RUSA Section 401(b)(3» 
which is adopted in this subsection. 
Banks specified in Section 3 (a) (2) of the Securities Act of 
1933 issue federal covered securities under Section 18(b)(4)(C) 
of 
the Securities Act of 1933. 
Section 201(3)(C) 
applies to 
securities issued by depository institutions without depository 
insurance. 
Under Section 204, 
the administrator will have the 
ability to revoke or limit this exemption. 
4. 
Section 
(4) : 
Insurance 
company 
Provisions: 
l':J~b Act Section 402(a)(5); 
RUSA 
The 
issuance, 
insurance, 
or 
guarantee 
of 
1nsurance 
COIIIPdllY 
.L~ 
exlellsively regulated 
commissions or other state agencies. 
securities: 
Prior 
Section 40l(b)(4). 
securities 
by 
an 
by state insurance 
Under this 
Act 
insurance, 
endowment policies, 
or annuity 
contracts under which an insurance company prnmiRRR to pay fixed 
sulllS are excluded from the definition of 
0. security in Section 
102(28)(B). 
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. 
See 
SEC v. 
Variable Annuity 
Life Ins. Co. of Am., 359 u.s. 65 (1959); SEC v. United Benefit 
Life Ins. Co., 387 U.S. 202 (1967). 
A 
variable 
annuity 
or 
other 
variable 
insurance 
product 
issued by an investment company registered with the Securities 
and Exchange Commission under the Investment Company Act of 1940 
would be a "federal covered security," see Section 102(7). See 
Lander v. Hartford Life & Annuity Ins. Co., 251 F.3d 101 (2d Cir. 
2001) . 
A variable annuity or other variable insurance product not· 
issued by a registered investment company would be exempted by 
Section 201(4), but would be subject to the antifraud provisions 
in Article 5. 
5. 
Section 
201(5): 
Common 
carrier 
and 
public 
utility 
securities: Prior Provisions: 
1956 Act Section 401(a)(7); 
RUSA 
Section 40l(b)(5). Both the 1956 Act and RUSA include references, 
omitted 
here, 
to 
the 
Interstate 
Commerce 
Commission, 
whose 
enabling legislation subsequently was 
repealed. 
Public utility 
holding companies covered by this exemption are subject both to 
the Public Utility Holding Company Act and to state or Canadian 
utility regulation. 
6. 
Section 201 (6): 
Certain options and rights: 
No 
Prior 
Provision. The 1956 Act Section 402 (a) (8) provided an exemption 
for securities listed on the New York, 
American, 
Midwest 
(now 
Chicago), 
or 
other 
designated 
stock 
exchanges, 
senior 
or 
substantially equal securities of the saioe issuer listed on the 
exchange 
and 
any 
security 
covered 
by 
listed 
or 
approved 
subscription rights 
or warrants, 
or 
any warrant or right to 
purchase 
or 
subscribe 
to 
any 
security 
exempted 
by 
Section 
402(a)(8). 
RUSA 
essentially 
retained 
this 
exemption 
in 
Section 
40l(b) (7) 
and added securities designated for inclusion in the 
National Market System by the National Association of Securities 
Dealers in Section 40l(b) (8) 
and specified options issued by a 
clearing agency Lt:!g.isle.ced under the Securities Exchange Act of 
1934 in Section 40l(b)(9). 
In 1996 Congress enacted the National Securities Markets 
Improvement Act and provided in Section 18 (b) (1) 
th~t ~pr.lld t.i es; 
listed on the New York, American or Nasdaq Stock Exchange, or 
designated by rule of the Securities and Exchange Commission, as 
well 
as 
any 
security of 
the 
same 
issuer 
that is 
equal 
in 
seniority or senior to any of these securities will be a federal 
covered security. 
Under 
Rule 
the 
SEC 
has 
designated 
as 
federal covered secur i ties under Section 18 (b) (1) Tier I of the 
Pacific Exchange; Tier I of the Philadelphia Stock Exchange; and 
The Chicago Board Options Exchange on condition that the relevant 
listing standards continue to be substantially similar to those 
of 
the 
New 
York, 
American, 
or 
Nasdaq 
stock 
markets. 
See 
Reporter 0 s 
Note to Section 102 (7). 
A federal covered security 
subject to Section 18(b) (1) of the Securities Act of 1933 will 
not be subject to the securities registration requirements of 
Sections 301 and 303 through 306. 
The exemption in Section 201(6) addresses specified options, 
warrants, 
and rights that are not federal 
covered securities 
under 
Section 
18(b)(I) 
of 
the 
Securities 
Act 
of 
1933, 
but-
generally would have been exempted under 
RUSA. 
The 
1956 Act, 
which was narrower, was drafted before the computerized Nasdaq 
stock market began trading the National Market List and the 
development of standardized options markets. 
The final clause of Section 201(6) 
makes clear that any 
offer or sale of the underlying security that occurs as a result 
of the offer or sale of an option or other derivative security 
exempted under this provision or as the result of the exercise of 
the 
option or 
other derivative 
security, 
is 
covered 
by 
the 
exemption if the option met the terms of the exemption at the 
time such derivative security was written (that is, 
sold) 
or 
issued. The sale of the underlying security when an option is 
exercised would be exempt even if the underlying security is not 
at that time subject to any exemption under the Act. This is 
consistent with existing precedent under federal law suggesting 
R 
thBt. the legality of the sale of an underlying security when an 
option is exercised should be determined by the status of the 
security at the time the option was written rather than at the 
time of exercise. See, e.g., H. 
Kook 
& Co., Inc. v. Scheinman, 
Hochstin 
& 
Trotta, 
Inc., 
F.2d 
(2d 
Cir. 
1969). 
Any 
transaction in 
an 
underlying security that 
results 
from 
the 
offer, sale, or exercise of any derivative security issued by a 
registered clearing agency and traded on a national securities 
exchange or association is exempt if the derivative security when 
written was exempt under Section 201(6). 
The Securities and Exchange Commission has adopted Rule 9b-l 
under Section 9(b). 
7. 
Section 201(7): Nonprofit organization securities: Prior 
Provision: Section 3(a)(4) of the Securities Act nf lq33. Section 
402(a)(9) of the 1956 Act and Section 401(b)(10) of RUSA exempt 
specified 
nonprofit 
securities. 
Both 
are 
modeled 
on 
Section 
3(a)(4) of the Securities Act, which was subsequently amended. 
Securities issued under Section 3(a)(4) of the Securities 
Act of 1933 are not treated as federal covered securities in 
Section 
18(b)(4)(C), 
although 
a 
separate 
Section 
3(a)(13) 
exemption which 
addresses 
certain church plan securities are 
federal covered securities under Section 18(b)(4)(C). 
RUSA included an optional notice and review requirement for 
nonprofit securities in Section 401(b) (10) "if at least ten days 
before 
a 
sale of the security the person has filed with the 
administrator a notice setting forth the material terms of the 
proposed sale and copies of any sales and advertising literature 
to be used and the administrator by order does not disallow the 
exemption within the next five full business days." 
The nonprofit exemption is of particular concern to state 
securities administrators. See, e.g., State Regulators Announce 
Dramatic Rise in Religious Scams; 
Tens of Thousands Lured, 
Sec. Reg. & L. Rep. (BNA) 1189 (2001). 
Under 
S~ction 6 of the Philanthropy Protection Act, Congress 
preempted application of the registration provisions of state 
securities laws 
to 
issuance of securities covered by Section 
(c) (10) 
of the Investment Company Act of 1940 unless states 
acted within three years of enactment 
(December 1998) to pass 
special 
state 
legislation cancelling 
federal 
preemption. 
Ten 
states enacted such legislation. Those states may preserve this 
treatment of Section 3(c)(10) securities by deleting from Section 
(7) the phrase "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." 
Section 201 (7) provides statutory authority for the states 
to ad'opt rules with respect to notes, bonds, debentures and other 
evidences of indebtedness issued by nonprofit organizations. 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). 
For 
states 
that 
do 
not wish 
to 
provide an automatic exemption from registration for a particular 
type of nonprofit debt instrument or offering, Section 201(7) 
creates 
three 
categories 
of 
regulatory 
review 
that 
may 
be 
required by rule: (a) exemption by notice filing, (b) exemption 
by state authorization, 
and (c) 
registration hy qUrl1ification. 
These categories are consistent with the manner in which many 
states 
currently 
review 
different 
types 
of 
nonprofit 
debt 
securities. 
See 
Horner 
6-
McKe:ns, 
SRC'llrit:iRs 
Regulation 
of 
Religious and Other Nonprofit Organizations, 27 Stetson L. 
Rev. 
(1997). 
8. 
Section 
201(8): 
Cooperatives: 
Prior 
Provision: 
RUSA 
Section 401(b)(13). Section 201(8) is derived from RUSA Section 
401(b)(13) 
which was 
included in that act, after 
a 
number of 
states 
had 
adopted 
exemptions 
for 
securities 
issued 
by 
cooperatives. Section 201(8) 
lS not intended to be available if 
securities are offered or sold to the public generally. 
The 
1956 
Act 
Section 
402(a)(12) 
had 
instead 
provided: 
"insert any desired exemption for cooperatives." The Reporter for 
the 1956 Act had found such sharp variation among the 18 states 
that then had adopted a cooperative exemption that "no common 
pattern can be 
found." Louis Loss, 
Commentary on the Uniform 
Securities Act 118 (1976). 
9. 
Section 
201(9): 
Equipment 
trust certificates: 
Prior· 
Provision: 
RUSA 
Section 401(b)(6). 
The Securities Act of 1933 
Section 
3(a)(6) 
includes 
a 
narrower 
exemption 
for 
railroad 
equipment 
trusts. 
Section 
201(9) 
follows 
RUSA. 
The 
Official 
Comment to RUSA Section 401(b)(6) explained: 
The new paragraph (b)(6) reflects the extensive development 
of 
equipment 
lease 
financing 
through 
leveraged 
leases, 
condi tional sales, and other devices. The underlying premise is 
that if the securities of the person using such a 
financing 
device would be exempt under some other paragraph of Section 401, 
the 
equipment trust certificate or 
other 
security issued to 
acquire the property in question also is exempt. 
Maine Comments 
1. 
Section 16201(3 )(B): 
Bank holding company language was 
added to this paragraph, consistent with the predecessor act. 
2. 
Section 16201 (7) : 
As noted in Official Comment 7, this 
subsection is modeled on a similar federal provision that exempts 
nonprofit 
securities. 
Like 
the 
federal 
provision, 
this 
subsection refers to persons organized and operated "not for 
pecuniary profit." 
Al though the corresponding provision in the 
Revised Maine Securities Act instead usee. 
the 
term "private" 
profit, it is not intended that this difference will alter which 
persons are covered under this subsection. 
§16202_ Exempt transactions 
The following transactions are exempt from the requirements 
of sections 16301 tn 16306 and In504: 
1. 
Isolated nonissuer transaction. 
An isolated nonissuer 
transaction, whether effected by or through a broker-dealer or 
2. 
Manual exemption. 
A nonissuer transaction by or through 
a broker-dealer licensed under or exempt from licensing under 
this chapter and a resale transaction by a 
sponsor of a unit 
investment trust registered under the federal Investment Company 
Act of 1940 in a security of a class that has been outstanding in 
the hands of the public for at least 90 days, if, on the date of 
the transaction: 
A. 
The issuer of the security is engaged in business, the 
issuer is not in the organizational stage or in bankrup-tcy 
or receivership and the issuer is not a blank check, blind 
pool or shell company that has no specific business plan or 
purpose or that has indicated that its primary business plan 
is to engage in a 
merger or combination of the business 
with, or an acquisition of, an unidentified person; 
B. 
The security is sold at a price reasonably related to 
its current market price; 
C. 
The security does not constitute the whole or part of an 
unsold allotment to, or a subscription or participation by, 
the broker-dealer as an underwriter of the secarity or a 
redistribution; 
D. 
A 
nationally 
recognized 
securities 
manual 
or 
its 
electronic equivalent designated by routine technical rule 
as defined in Title 5, chapter 375, subchapter 2-A adopted 
under this chapter or order issued under this chapter or a 
publicly available 
record filed with the 
Securities 
and 
Exchange Commission contains: 
(1) 
A description of the business and operations of 
the issuer; 
( 2) 
The names of the issuer's executive officers and 
the names of the issuer's directors, if any; 
(3) 
An audited balance sheet of the issuer as of a 
date 
wi thin 
months 
before 
the 
date 
of 
tho 
transaction or, 
in the 
case of 
a 
reorganization or 
merger when the _ J:Li:!1 ti~:, Lv Lbe .levrganization or merger 
each had an audited balance sheet, a pro forma balance 
sheet for the combined organization; and 
(4) 
An 
audited 
income 
statpment 
fnr 
e~rh nf 
rhA 
issuer's 2 immediately previous fiscal years or for the 
period 
of 
existence 
of 
the 
issuer, 
whichever 
is 
shorter, or, in the case of a reorganization or merger 
when each party to the reorganization or merger had 
audited 
income 
statements, 
a 
pro 
forma 
income 
statement; and 
E. 
Anyone of the following requirements is met: 
(1) 
The issuer of the security has a class of equity 
securities listed on 
a 
national securities exchange 
registered under Section 6 of the federal Securities 
Exchange Act of 1934 or designated for trading on the 
National Association of Securities Dealers Automated 
Quotation System; 
( 2) 
The issuer of the 
trust registered under 
Act of 1940; 
ill 
The 
issuer 
of 
predecessors , 
has been 
security is a unit investment 
the federal Investment Company' 
the 
secur i ty , 
including 
its 
engaged in continuous business 
for at least 3 years; or 
(4) The issuer of the security has total assets of at 
least $2,000,000 based on an audited balance sheet as 
of 
a 
date within 18 
months before the date of the 
transaction or, 
in the case of 
a 
reorganization or 
merger when the parties to the reorganization or merger 
each had such an audited balance sheet, 
a pro forma 
balance sheet for the combined organization; 
3. 
Nonissuer 
transactions 
in 
specified 
foreign 
transactions. 
A 
nonissuer 
transaction 
by 
or 
through 
a 
broker-dealer licensed under or exempt from licensing under this 
chapter in a 
security of 
a 
foreign issuer that is 
a 
margin 
security defined in regulations or rules adopted by the Board of 
Governors of the Federal Reserve System; 
4. 
Nonissuer transactions in securities where guarantor is 
subject 
to 
Securities 
Exchange 
Act 
reporting. 
A 
nonissuer 
transaction by or 
through 
a 
broker-dealer 
licensed under 
or 
exempt 
from 
licensing 
under 
this 
chapter 
in 
an 
outstanding 
security if the guarantor of the security files reports with the 
Securities 
and 
Exchange 
Commission 
under 
the 
reporting 
~.<;ruir.ellleIlt~ u[ SecLioll 13 
OJ: 
lS(d2 of the federal Securities 
Exchange 
P.ct of 1934, 
United States Code, 
Section 78m or 
78o(d): 
5. 
Nonissuer 
transactions 
in 
specified 
fixed 
income 
securities. 
A 
nonissuer 
transaction 
by 
or 
through 
a 
broker-dealer licensed under or exempt from licensing under this 
chapter in a security that: 
A. 
Is rated at the time of the transaction by a nationally 
recognized statistical rating organization in one of its 4 
highest rating categories; or 
B. 
Has a fixed maturity or a fixed interest or dividend if: 
(1) 
A default has not occurred during the current 
fiscal year or within the 3 previous fiscal years or 
during the existence of the issuer and any predecessor 
if 
less 
than 
fiscal 
years 
in 
the 
payment 
of 
principal, interest or dividends on the security; and 
(2) 
The issuer is engaged in business, is not in the 
organizational stage or in bankruptcy or receivership· 
and is not and has not been wi thin the previous 12 
months a blank check, blind pool or shell company that 
has 
no 
specific 
business 
plan 
or 
purpose 
or 
has 
indicated that its primary business plan is to en~ 
in a merger or combination of the business with, or an 
acquisition of, an unidentified person; 
6. 
Unsolicited 
brokerage 
transactions. 
A 
nonissuer 
transaction by 
or 
through 
a 
broker-dealer licensed 
under 
or 
exempt from licensing under this chapter effecting an unsolicited 
order or offer to purchase; 
7. 
Nonissuer 
transactions 
by 
pledgees. 
A 
nonissuer 
transaction executed by a bona fide pledgee without the purpose 
of evading this chapter; 
8. 
Nonissuer transactions with federal covered investment 
advisers. 
A 
nonissuer 
transaction 
by 
a 
federal 
covered 
investment adviser with investments under management in excess of 
$100,000,000 acting in the exercise of discretionary authority in 
a signed record for the account of others; 
9. 
Specified exchange transactions. 
A 
transaction in 
a 
security, whether or not the security or transaction is otherwise 
exempt, 
in 
exchange 
for 
one 
or 
more 
bona 
fide 
outstanding 
securities, 
claims 
or 
property 
interests 
or 
partly 
1n 
such 
exchange and partly for cash, if the terms and conditions of the 
.LbbUdIlCe 
dIHl 
exchdu<,Je 
t.he 
eleliver,l' 
duel 
exchdI1<,J8 
d.ud 
Ll18 
fairness of the terms and conditions have been approved by the 
administrator after 
a 
hearing. 
The 
administrator 
may 
impose 
actual costs and a reasonable fee for conducting a hearing under 
this subsection; 
10. 
Underwriter transactions. 
A transaction between the 
issuer or other person on whose behalf the offering is made and 
an underwriter, or among underwriters; 
11. 
Mortgage secured unit transactions. 
A transaction in a 
note, bond, debenture or other evidence of indebtedness secured 
by a mortgage or other security agreement if: 
A. 
The 
note, 
bond, 
debenture 
or 
other 
evidence 
of 
indebtedness is offered and sold with the mortgage or other 
security agreement as a unit; 
B. 
A general solicitation or general advertisement of the 
transaction is not made; 
C. 
A commission or other remuneration is not paid or given, 
directly or indirectly, to a person not licensed under this 
chapter as a broker-dealer or as an agent; and 
D. 
The outstanding principal amount of all notes or other 
evidence of indebtedness that is secured by the mortgage or 
other securitv agreement does not exceed the fair market 
value of the property at the time of the transaction, or the 
issuer 
otherwise 
proves 
that 
it 
relied 
on 
reasonable 
evidence that the fair market value was not so exceeded at 
the time of the transaction; 
12. 
Personal 
representative, 
guardian 
transactions. 
A 
transaction by a personal representative, 
as defined in Title 
18-A, section 1-201, subsection 30, executor, administrator of an 
estate, 
sheriff, 
marshal, 
receiver, 
trustee 
in 
bankruptcy, 
9J!,ardian or conservator acting in their official capacities; 
13. 
Transactions with specified investors. 
A sale or offer 
to sell to: 
A. 
An institutional investor: 
B. 
A federal covered investment adviser; or 
C. 
Any other person exempted by routine technical rule, as 
uefilleu ill Tille 5, chapter 37S, subchapter 2-A, adopted or 
order issued under this chapter; 
14. 
Limited private offering transactions, any issuer. 
A 
sale or 
an 
offer 
to sell securities of 
an 
issuer, 
if the 
transaction is part of a single issue in which: 
A. 
Not more than 10 purchasers are present in this State 
during 
any 
consecutive 
months, 
other 
than 
those 
designated in subsection 13: 
B. 
A general solicitation or general advertising is not 
made in connection with the offer to sell or sale of the 
securities; 
c. 
A commission or other remuneration is not paid or given, 
directly 
or 
indirectly, 
to 
a 
person 
other 
than 
a 
broker-dealer 
licensed 
under 
this 
chapter 
or 
an 
agent 
licensed under this chapter for soliciting a 
prospective 
purchaser in this State; and 
D. 
The lssuer reasonably believes that all the purchasers' 
in this State, other than those designated in subsection 13, 
are purchasing for investment; 
15. 
Limited private offering transactions. Maine issuer. 
A 
sale or an offer to sell securities of a corporation, limited 
partnership or limited liability company organized under the laws 
of this State or any issuer determined by the administrator by 
order to have its principal place of business in this State, if 
the transaction is part of a single issue in which: 
A. 
Not more than 25 purchasers are present in this State 
during 
any 
consecutive 
months, 
other 
than 
those 
designated in subsection 13; 
B. 
A general solicitation or general advertising is not 
made in connection with the offer to sell or sale of the 
securities; 
c. 
A commission or other remuneration is not paid or given, 
directly 
or 
indirectly, 
to 
a 
person 
other 
than 
a 
broker dealer 
licensed 
under 
this 
chapter 
or 
an 
agent 
licensed under this chapter for soliciting a 
prospective 
purchaser in this State; 
D. 
The issuer reasonably believes that all the purchasers 
in this State, other than those designated in subsection 13, 
are purchasing for investment; 
E. 
The issuer files with the administrator a notification 
for exemption that must be in such form as may be prescribed 
by the administrator by order or by routine technical rule, 
as defined in Title 5, chapter 375, subchapter 2-A; and 
f. 
The 
issuer 
provides 
a 
copy 
of 
the notification of 
exemption to each offeree of securities sold in reliance on 
this 
exemption, 
which must contain such 
legends 
as 
the 
administrator prescribes, 
notifying the offeree that the 
securities have not been registered with the administrator. 
that they may be considered restricted securities and that 
the issuer is under 
an obligation to make 
a 
reasonable 
finding that the securities are a suitable investment for 
the offeree: 
16. 
Transactions 
with 
existing 
securities 
holders. 
A 
transaction under an offer to existing security holders of the 
issuer, including persons that at the date of the transaction are 
holders of convertible securities, options or warrants, if a 
commission 
or 
other 
remuneration, 
other 
than 
a 
standby 
commission, is not paid or given, directly or indirectly, for 
soliciting a security holder in this State: 
• 
Offerings 
filed 
but 
not 
effective, 
nonexempt 
securities. 
An offer to sell, but not a sale, of a security not 
exempt from registration under the federal Securities Act of 1933 
A. 
A registration or offering statement or similar record 
as required under the federal Securities Act of 1933 has 
been filed, but is not effective, or the offer is made In 
compliance with 17 Code of Federal Regulations, 230.165; and 
B. 
A stop order of which the offeror is aware has not been 
issued against 
the offeror 
by 
the 
administrator 
or 
the 
Securities and Exchange Commission and an audit, inspection 
or proceeding that is public and that may culminate in a 
stop order is not known by the offeror to be pending; 
18. 
Offerings filed but not effective, exempt securities. 
An offer to sell, but not a sale, of a security exempt from 
registration under the federal Securities Act of 1933 if: 
A. 
A registration statement has 
been filed under this 
chapter, but is not effective; 
B. 
A solicitation of interest is provided in a record to 
offerees in compliance with a 
routine technical rule, 
as 
defined in Title 5, chapter 375, subchapter 2-A, adopted by 
the administrator under this chapter; and 
C. 
A stop order of which the offeror is aware has not been 
issued against the offeror 
by 
the 
administrator or the 
Securities and El1change Commission and an audit, inspection 
or proceeding that may culminate in a 
stop order is not 
known by the offeror to be pending; 
19. 
Control 
transactions. 
A 
transaction 
involving 
the 
distribution of the securities of an issuer to 
the security 
holders 
of 
another 
person 
in 
connection 
with 
a 
merger, 
consolidation, exchange of securities, sale of assets or other 
reorganization to which the issuer, or its parent or subsidiary, 
and the other person, or its parent or subsidiary, are parties; 
20. 
Rescission offers. A rescission offer, sale or purchase 
under section 16510; 
21. 
Not 
violative 
of 
laws 
of 
foreign 
state 
or 
jurisdiction. 
An offer or sale of a security to a person not a 
resident of this State and not present in this State if the offer 
or sale does not constitute a violation of the laws of the state 
or foreign jurisdiction in which the offeree or purchaser is· 
present and is not part of an unlawful plan or scheme to evade 
this chapter. 
22. 
Employee benefit plans. 
An employees' stock purchase, 
savings, 
option, profit-sharing, pension or similar employees' 
benefit 
plan, 
including 
any 
securities, 
plan 
interests 
and 
guarantees 
issued 
under 
a 
compensatory 
benefit 
plan 
or 
compensation contract, contained in a record, established by the 
issuer, 
its 
parents, 
its majority-owned 
subsidiaries 
or 
the 
majority-owned 
subsidiaries 
of 
the 
issuer's 
parent 
for 
the 
participation of their employees including offers or sales of 
such securities to: 
A. 
Directors; general partners; trustees, if the issuer is 
a business trust; officers; and consultants and advisors, as 
permi tted by 17 Code of Federal Regulations, 230.701 (c till 
(2003): 
B. 
Family members who acquire such securities from those 
persons through gifts or domestic relations orders; 
C. 
Former employees, directors, general partners, trustees, 
officers and consultants and advisors, as permitted by 17 
Code of Federal Regulations, 230. 701(c) (1) (2003), if those 
individuals were employed by or providing services to the 
issuer when the securities were offered; and 
D. 
Insurance agents who are exclus ive insurance a<;rents of 
the issuer, or the issuer's subsidiaries or parents, or who 
derive more 
than 
50% 
of their annual 
income 
from those 
organizations; 
23. 
Specified 
dividends, 
tender 
offers, 
judicially 
recognized reorganizations. 
A transaction involving: 
A. 
A stock 
dividend or equivalent equity distribution, 
whether 
the 
corporation 
or 
other 
business 
organization 
distributing the dividend or equivalent equity distribution 
is the issuer or not, if nothing of value is given by 
stockholders or other equity holders for the dividend or 
equivalent equity distribution other than the surrender of a 
right to a cash or property dividend if each stockholder or 
other equity holder 
may elect to 
take 
the 
dividend or 
equivalent equity distribution in cash, property or stock: 
B. 
An act incident to a judicially approved reorganization 
in which a security is issued in exchange for one or more 
outstanding securities, 
claims or property interests, 
or 
partly in such exchange and partly for cash; or 
C. 
The solicitation of tenders of securities by an offeror 
In a tender offer In compliance with 17 Code of Federal 
Regulations, 230.162; 
24. 
Nonissuer transactions 
in specified foreign issuers 
securities. A nonissuer transaction in an outstanding security by 
or 
through 
a 
broker-dealer 
licensed 
under 
or 
exempt 
from 
licensing under this chapter, if the issuer is a reporting issuer 
in a foreign jurisdiction designated by this paragraph or by rule 
adopted or order issued under this chapter; the issuer has been 
subject 
to 
continuous 
reporting 
requirements 
in 
the 
foreign 
jurisdiction for not >less than 180 days before the transaction; 
and 
the 
security 
is 
listed 
on 
the 
foreign 
jurisdiction's 
securities exchange that has been designated by this paragraph or 
by routine technical rule, as defined in Title 5, chapter 375, 
subchapter 2-A, adopted or order issued under this chapter, or is 
a security of the same issuer that is nf seninr or suhstantii'1}ly 
equal rank to the listed security or is a warrant or right to 
purchase or subscribe to any of the foregoing. For purposes of 
this 
paragraph, 
Canada, 
together 
with 
its 
provinces 
and 
territories, is a designated foreign jurisdiction and the Toronto 
Stock Exchange, Inc. is a designated securities exchange. After 
an 
administrative 
hearing 
in 
compliance 
with 
the 
Maine 
Administrative Procedure Act, the administrator, by order issued 
under this chapter, may revoke the designation of a securities 
exchange under this paragraph if the administrator finds that 
rpvocation is nprpssary or appropriate in the puhlir intprpst 
i'1n~ 
for the protection of investors; 
25. 
Investments in viatical or life settlement contracts. 
Any offer or 
sale 
of 
an 
investment 
in 
a 
viatical 
or life 
settlement contract, if: 
A. 
The underlying viatical 
with the viator was not in 
Life Settlements Act; 
or life settlement transaction 
_~iolqtion of the ViaticaL ___ ~nd 
B. 
Such disclosure documents as the administrator, by rule 
or 
order, 
requires 
are 
delivered 
to 
each 
offeree 
or 
purchaser; and 
C. 
Prior to any offer In this State, a notice specifying 
the 
terms of the offer 
lS 
filed with the administrator 
together with a consent to service of process complying with 
section 16611, signed by the issuer, 
and a filing fee of 
$300 for each type or class of security being offered in 
this State and the administrator does not by order disallow 
the exemption within the next 5 full business days; or 
26. 
Nonpublic offerings under 4(2). 
A security offered in 
a nonpublic offering under Section 4(2) of the federal Securities 
Act of 1933,15 United States Code, Section 77M2) if, no later 
than 15 days after the first sale in this State, 
a 
notice on 
~'Torm 
D," 
inc.luding 
the 
Appendix, 
as 
promulgated 
by 
the 
Securities 
and 
Exchange 
Commission, 
is 
filed 
with 
the 
administrator 
together with 
a 
consent to 
service of process 
complying 
with 
section 
16611, 
signed 
by 
the 
issuer, 
and 
a 
nonrefundable filing fee 
of 
$300 
for 
each type or 
class of 
security sold. 
An additional nonrefundable late filing fee of 
$500 must be paid for a filing made between 16 and 30 days after 
the first sale in this State. 
Official Comments 
Prior Provisions: 1956 Act Section 402(b); RUSA Section 402. 
1. 
Sections 
202(1) 
through 
(8) 
are 
available 
only 
for 
nonissuer 
transactions. 
An 
issuer 
selling 
securities 
In 
an 
initial public 
offering 
or 
other 
offering 
may 
not 
rely 
on 
Sections 202 (1) through (8). 
A nonissuer, however, can rely on 
any issuer transaction exemption such as Section 202 (l3), when 
the 
exemption 
would 
be 
applicable 
to 
a 
nonissuer. 
The 
term 
"nonissuer transaction or nonissuer distribution" is defined in 
Section 102 (18); the term" issuer" is defined in Section 102 (17). 
2. 
Section 202 (1): Isolated nonissuer transactions: Prior 
Provisions: 1956 Act Section 402(b)(l); RUSA Section 402(1). The 
term "isolated transaction" is not defined in this Act, but left 
to the states to develop. Historically under state law there has 
been somewhat varied case law development of the term "isolated 
transactions." 
See, 
e.g., 
Blinder, 
Robinson 
& 
Co., 
Inc. 
v. 
Goettsch, 
N. W. 2d 
(Iowa 
1987) 
(isolated 
nonissuer 
transaction exelilption is not unconstitutionally vague); Allen v. 
Schauf, 
P.2d 1010 
(Kan. 
1969) 
(regulation defined isolated 
transactions to not exceed· four persons solicited in a 
month 
period); Nelson v. State, 355 P.2d 413, 420 (Okla. Ct. Crim. App. 
1960) ("[a]n isolated sale means one standing alone, disconnected 
from any other"); see generally 1 Louis Loss 
& Joel Seligman, 
Securities Regulation 125-130 (3d ed. rev. 1998). 
In 
general 
this 
subsection 
is 
intended 
to 
cover 
the 
occasional sale by a 
person. It would not exempt multiple or 
successive transactions by a person or group, whether those sales 
are sufficient to constitute a 
"distribution" as that term is 
used for purposes of the federal securities laws, 
see 2 Louis 
Loss 
& Joel Seligman, Securities Regulation 1138.50-1138.52 (3d 
ed. 
rev. 
1999), 
or 
merely 
too 
frequent 
to 
be 
considered 
"isolated" under the relevant state law. 
Limited 
addressed in 
issuer 
offering 
Section 202(14). 
transactions 
are 
separately 
3. 
Section 
202(2): 
Nonissuer 
transactions 
in 
specified 
outstanding 
securities: 
Prior 
Provisions: 
1956 
Act 
Section 
402(b)(2); RUSA Sections 402(3) and (4). This Section represents 
a 
modernization of the securities manual 
exemption which 
was 
included In both the 1956 Act and 
RUSA. 
NASAA 
recommended an 
amendment to the 1956 Act Section 402(b) after discussion with 
the Securities Industry Association and others in the securities 
industry. This Section generally follo",s the NASAA amendment. 
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 
acquisi tion 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. A "shell company" is also similar and 
would 
involve 
an entity which, 
to date, 
has 
no 
significant 
business assets, plan, or purpose. 
4. 
Section 
202(3): 
Nonissuer 
transactions 
in 
specified 
foreign 
transactions: 
No 
Prior 
Provision. 
The 
NASAA 
recommendation that was the basis of Section 202(2) also included 
specified foreign 
nonissuer transactions 
subject 
to 
a 
manual 
exemption when there was disclosure of the issuer's officers and 
directors In the issuer's country of domicile. This subsection 
uses margin securities as 
an al ternati ve approach to identify 
sufficiently seasoned foreign 
secuL.i ties. Margin sccuri ties are 
required to be in compliance with Regulation T which was adopted 
by the Board of Governors of the Federal Reserve System. 
5. 
Section 
202(4): 
Nonissuer 
subject to Securities Exchange Act 
RUSA 
Section 402(2). 
RUSA 
added 
nonissuer secondary trading in the 
transactions in securities 
reporting: Prior Provision: 
this 
exemption 
to 
authorize 
securities of issuers that 
were 
subject 
to 
the 
periodic 
reporting 
requirements 
of 
the 
Securities Exchange 
Act 
of 
1934. 
To 
bar 
immediate 
secondary 
trading in nonregistered initial public offerings, there was a 
further 
requirement that these securities be 
subject 
to 
the 
reporting requirements of Sections 13 or 15(d) of the Securities 
Exchange Act of 1934 for not less than 90 days. Section 202 (4) 
only covers the guarantor because if the issuer of the security 
is 
a 
reporting 
company 
under 
Sections 
or 
15(d) 
of 
the 
Securities Exchange Act of 1934, the transaction is preempted by 
Section 18(b)(4)(A) of the Securities Act of 1933. 
Section 
18(b)(4)(A) 
of 
the 
National 
Securities 
Markets 
Improvement 
Act 
of 
1996 defines 
nonissuer 
transactions 
under 
Section 4(1) 
of the Securities Act of 1933 
("transactions by 
persons 
other 
than 
an 
issuer, 
underwriter, 
or 
dealer") 
as 
"federal covered securities," see Section 102(7), if the issuer 
files reports with the Securities and Exchange Commission under 
Sections 13 or 15(d) of the Securities Exchange Act of 1934. 
Under 
Section 18(a) 
of the Securities Act of 
1933 
no state 
statute, rule, order, or other administrative action with respect 
to registration of securities or reporting requirements may apply 
to a federal covered security. To harmonize Section 202(4) with 
Sections 18(a) and 18(b)(4)(A) of the Securities Act of 1933, the 
day reporting period in RUSA Section 402(2) is not adopted in 
this Act. 
6. 
Section 
202(5): 
Nonissuer 
transactions 
in 
specified 
fixed 
lnCUme 
securities: 
Prior 
Provisions: 
1956 
Act 
Section 
402(b)(2)(B); RUSA Section 402(4). The concept of a fixed income 
security rated by 
a 
nationally recognized statistical rating 
organization 
in 
one 
of 
its 
four 
highest 
rating 
categories 
described in Section 202(5) (A) 
is well established in federal 
securities law in Form S-3 adopted under the Securities Act of 
1933 and the net capital Rule 15c3-1(c)(2)(vi)(F) adopted under 
the Securities Exchange Act of 1934. 
See 
Louis Loss 
& Joel 
Seligman, 
Securities 
Regulation 
649-653 
(3d 
ed. 
rev. 
1999). 
Nationally recognized statistical rating organizations have been 
identified by the Securities and Exchange Commission and include 
such organizations as Moody's and Standard and Poor's. Rating 
categories typically begin with AAA 
and under this Act would 
include BBB as the fourth highest rating category. 
Section 202 (5) (B) followti 
the 1956 Act iJ.nd RUSA, 
but also 
addresses blank check and similar offerings, which became major 
concerns at the state and federal levels during the past two 
decades. 
Cf. 
Securities Act 
of 
1933 
Rule 
419. 
See 
Official 
Comment (3). 
This subsection includes both debt securities with fixed 
maturity or a fixed interest rate and preferred stock with fixed 
dividend provisions. 
7. 
Section 
(6) : 
Unsolicited 
brokerage 
transactions: 
Prior 
Provisions: 
1956 
Act 
Section 
402(b)(3); 
RUSA 
Section 
402(5). Section 18(b)(4)(B) of the Securities Act of 1933 defines 
as federal covered securities those subject to Section 4 (4) of 
the Securities Act of 1933: "brokerage transactions executed upon 
customers' 
orders on 
any 
exchange or in the over-the-counter 
market but not the solicitation of such orders." Section 202 (6) 
is intended to provide exemption for nonagency transactions by 
dealers not within the scope of Section 4(4). 
The 
1956 
Act 
Section 
402(b)(3) 
had 
provided 
that 
the 
administrator "may by rule require that the customer acknowledge 
upon a specified form that the same was unsolicited, and that a 
signed copy of each such form be preserved by the broker-dealer 
for a specified period." This type of requirement is preempted by 
Section 18(a) of the Securities Act of 1933 for federal covered 
securities and is viewed as unnecessary for the limited class of 
dealer nonagency transactions that will be exempted by Section 
(6) . 
8. 
Section 
202(7): 
Nonissuer 
transactions 
Prior 
Provisions: 
1956 
Act 
Section 
402(b)(7); 
402(9). 
This 
subsection 
is 
identical 
to 
the 
substantively identical to RUSA. 
by 
pledgees: 
RUSA 
Section 
1956 
Act 
and 
9. 
Section 
202(8): 
Nonissuer 
transactions 
with 
federal 
covered investment advisers: No Prior Provision. This exemption 
was 
added 
because 
of 
a 
recognition 
that 
federal 
covered 
investment 
advisers 
are 
sophisticated 
financial 
professionals 
capable of 
determining the merits 
of 
a 
security and 
do 
not 
require the protections provided by requiring registration in a 
particular ~~ate. 
10. 
Section 
202(9): 
Specified 
exchange transactions: 
No 
Prior Provision. Section 202(9) provides a stat.e counteI:pciLt to 
the exemption in Section 3(a)(10) of the Securities Act of 1933. 
11. 
Section 
(10) : 
Underwriter 
transactions: 
Prior 
Provisions: 1956 Act Section 402(b)(4); RUSA Section 402(6). ThiR 
subsection is substantively identical to the 1956 Act and RUSA. 
12. 
Section 
(11) : 
Unit 
secured 
transactions: 
Prior 
Provisions: 1956 Act Section 402 (b) (5); RUSA Section 402 (7). In 
recent years the application of this exemption has been one of 
concern to state securities administrators. The conditions that 
conclude this exemption are new and are intended to address these 
concerns. 
13. 
Section 202 (12): Bankruptcy, guardian, or conservator 
transactions: Prior Provisions: 1956 Act Section 402 (b) (6); RUSA 
Section 402(8). This subsection is identical to that in the 1956 
Act and RUSA. 
14. 
Section 202(13): Transactions with specified investors: 
Prior 
Provision: 
1956 
Act 
Section 
402(b)(8). 
The 
1956 
Act 
contains 
similar 
but 
less 
inclusive 
language 
in 
Section' 
402(b)(8). If the Securities and Exchange Commission adopts a 
rule defining "qualified purchaser" as used in Section 18(b) (3) 
of the Securities Act to specify certain purchasers of federal 
covered 
securities, 
part or 
all 
of this 
exemption will 
be 
redundant. As of September 2002, the Commission has proposed, but 
not adopted, Rule 146(c). 
Section 
202(13)(B) 
is 
limited 
to 
transactions 
for 
the 
account 
of 
a 
federal 
covered 
investment adviser 
and 
is 
not 
intended to 
reach transactions 
on 
behalf of 
others 
by 
such 
adviser. 
15. 
Section 202 (14): Limited offering transactions: Prior 
Provisions: 1956 Act Section 402(b)(9); RUSA Section 402(11). The 
reference in the prefatory language to "a single issue" signifies 
that two 
or more 
issues can be 
"integrated" 
and potentially 
destroy 
the 
exemption. 
There 
are 
two 
general 
tests 
for 
integ-ration 
under 
the 
federal 
securities 
laws. 
The 
states 
similarly have 
followed generally these types 
of integration 
principles with respect to securities transaction exemptions. 
First, there is a six month "buffer" before and after an offer, 
offer to sell, or sale of a 
transaction exempt under Section 
202(14) 
during which 
no 
other 
issue 
can 
be 
distributed if 
integration automatically is' to be avoided. See Rule 147(b) (2) 
and Rule 502(a) of the Securities Act of 1933. Second, if two 
issues occur within six months, integration may occur depending 
upon the following factors: 
(i) are the offerings part of a single plan of financing; 
(ii) do the offerings involve issuance of the same class of 
securities; 
(iii) are the offerings made at Ui about thc Eame time; 
(iv) is the same type of consideration to be received; and 
(v) are the offerings made for the same general purpose. 
See generally 3 Louis Loss & Joel Seligman, Secur"ities Regulation 
1231-1248 (3d ed. rev. 1999). 
Section 402(b)(9) of the 1956 Act and Section 402(11) of the 1985 
Act provide alternative limited offering transaction exemptions. 
The 1956 Act was limited to offers to no more than ten persons 
(other 
than 
institutional 
investors 
specified 
in 
Section 
402(b)(8»; all purchasers 
In the State had to purchase 
for 
investment; 
and 
no 
remuneration 
was 
given 
for 
soliciting 
prospective purchasers 
In 
the State. 
RUSA, 
in contrast, 
was 
limited to no more than 25 purchasers (other than financial or 
institutional investors); no general solicitation or advertising; 
and 
no 
remuneration 
was 
paid 
to 
a 
person 
other 
than 
a 
broker-dealer for soliciting a prospective purchaser. 
This Section would apply to preorganization limited offerings as 
well as operating company limited offerings. The Securities Act 
of 1933 Sections 3(b) and 4(2) also apply to both. In contrast, 
the 1956 Act Section 402(b)(10) 
and RUSA Section 402(12) used 
similar concepts in separate Sections to apply to preorganization 
limited offerings. 
Section 18(b) (4) (D) 
of the Securities Act of 1933 defines as 
federal 
covered securities those 
issued under Securities 
and 
Exchange Commission rules under Section 4 ( 2 ) of the Securities 
Act. 
This would include Rule 
506, 
which uses the "accredited 
investor" definition in Rule 501(a). When a transaction involves 
Rule 
506, 
Section 
18(b) (4) (D) 
further 
provides 
"that 
this 
paragraph does not prohibit a state from imposing notice filing 
requirements that are substantially similar to those required by 
rule or regulation under Section 4 (2) 
that are in effect on 
September 
1, 
1996," 
These 
notice 
requirements 
are 
found 
in 
Section 302(c) of this Act. 
A majority of states have adopted a Uniform Limited Offering 
Exemption, coordinate to varying degrees with Regulation D. 
The 
authority to adopt this and other exemptive rules is provided in 
Section 203. 
16. 
Section 202(15): Transactions with existing security 
holders: 
Prior 
Provisions: 
1956 
Act 
Section 402(b)(11); 
RUSA 
Section 402(14). Section 3(a)(9) of the SecuriticE Act of 1933 
exempts exchange offerings with existing security holders. Under 
Section 18(b)(4)(C) transactions subject to Section 3(a)(9) are 
federal 
covered 
securities. 
See 
Section 
102(7). 
Notice 
requirements in the earlieL 1956 Act and FTTRA accordingly would 
be preempted by the Securities Act of 1933. See Section 18(a) of 
the 
Securities 
Act 
of 
1933. 
Otherwise 
this 
exemption 
is 
~ubstantivcly identi~R1 to the 1956 Act and RUSA. 
17. 
Section 202 (16): Offerings registered under this [Act] 
and 
the 
Securities Act 
of 
1933: 
Prior Provisions: 
1956 
Act 
Section 
402(b)(12); 
RUSA 
Section 
402(15). 
This 
exemption 
generally 
follows 
the 
1956 
Act 
and 
RUSA. 
Rule 
of 
the 
Securities Act of 1933, which was adopted in 1999, allows the 
offeror of securities in a business combination to make written 
communications 
that 
offer 
securities 
for 
sale 
before 
a 
registration statement is filed as long as specified conditions 
are satisfied. 
RUSA Section 402 (15) (ii) also required that a registration 
statement be filed under this Act, but not yet be effective. By 
eliminating the filing requirement this exemption will reach the 
offer (but not the sale) of a security that is anticipated to be" 
a 
federal covered security by applying for listing on the New 
York 
Stock 
Exchange 
or 
other 
exchange 
specified 
in 
Section 
18(b) (1) 
of 
the Securities Act of 1933, 
but the listing and 
federal covered security status has not yet become effective. 
18. 
Section 202 (17): Offerings when registration has been 
filed, but is not effective under this [Act] and exempt from the 
Securities Act of 1933: Prior Provisions: RUSA Section 402(16). 
If 
a 
rule is adopted by the administrator 
a 
solicitation of 
interest document must accompany a registration by qualification 
as specified in Section 304(b)(13). 
Oral offers may be made 
been filed, both before and 
effective. 
after 
after 
a registration 
a registration 
statement has 
statement is 
This exemption does not operate unless the administrator 
adopts a rule under 202(17)(B). 
19. 
Section 202(18): Control transactions: Prior ProvisiDn: 
RUSA Section 402(17). Until 1972 mergers and similar transactions 
were not considered to involve sales and did not have to register 
under the Securities Act of 1933. 
In 1972 the Securities and 
Exchange Commission adopted Rule 145 defining many mergers and 
similar transactions to be sales and abandoned its earlier "no 
sale" doctrine. 
See 
Louis 
Loss 
& Joel Seligman, Securities 
3D 
P. ... '}111"1tinn 1262-1280 (3d ed. rev. 1999). 
Because 
most 
merger 
and 
similar 
transactions 
require 
shareholder approval and shareholders often have appraisal rights 
if they choose to dissent, the potential for abuse is less than 
in an offering of securities for 
cacho 
When 
appropriate 
the 
administrator can deny, condition, limit or revoke this exemption 
under 
Section 
204. 
Section 
(18) 
does 
not 
follow 
the 
requirelllel1t in RUSA Section 402(17) that written notice of the 
transactions and a copy of the solicitation materials be given to 
the 
administrator 
days 
before 
the 
consummation 
of 
the 
transaction and, that the administrator is empowered to disallow 
the exemption within the next 10 days. 
20. 
Section 202(19): Rescission offers: No Prior Provision. 
See Section 510 for discussion of rescission offers. 
21. 
Section 202 (20): Out-of-state offers or sales: Source 
of law: Colo. Section 11-51-102(7). Compare A.S. Go1dmen & Co., 
Inc. v. New Jersey Bur. of Sec., 163 F.3d 780 (3d Cir. 1999), 
which held that under the United States Constitution's Commerce 
Clause 
a 
State could authorize 
a 
securities administrator to 
prevent a broker-dealer from selling securities from a State to 
purchasers in other States where purchase of the securities was· 
authorized. The concluding phrase "and is not part of an unlawful 
plan or 
scheme to evade this 
[Act]" is intended to preclude 
reliance on this exemption by boiler rooms and others engaged in 
illegal activities. 
Section 
(20) 
provides 
an 
exemption 
from 
securities 
registration and does not address an administrator's power to 
investigate and bring enforcement actions under Articles 5 and 6. 
22. 
Section 
202(21): 
Employee 
benefit 
plans: 
Prior 
Provision: 
RUSA 
Section 
401(b)(12). 
The 
1956 
Act 
Section 
(a) (11) 
was 
limited 
to 
investment 
contracts 
issued 
in 
connection 
with 
specified 
employee 
benefit 
plans 
if 
the 
administrator was given 30 days written notice. 
In 1979, 
the United States Supreme Court in International 
Bhd. or Teamsters v. Daniel, 439 U.S. 
(1979), held that a 
noncontributory, mandatory pension plan subject to the Employee 
Retirement Income Security Act of 1974 (ERISA) was not a security 
within 
the 
meaning 
of 
the 
Securities 
Act 
of 
1933 
or 
the 
Securities Exchange 
Act of 
1934. 
The 
Securities 
and Exchange 
Commission 
staff 
subsequently 
took 
the 
position 
that 
the 
interests of employees in involuntary, contributory plans are not 
securities. Sec. Act ReI. 
6188, 
SEC Dock. 
465, 
(1980). 
Both contributory and noncontributory pension or welfare plans 
subject to ERISA are excluded from the definition of security in 
Section 102(28). 
In 
this 
definition, 
the 
term 
"advisors" 
does 
not 
mean 
"investment advisers," as defined in Section 102(15). 
With respect tv 811,ployee benefit plans that are sprllrities, 
Section 202 (21) provides an exemption, but follows RUSA in not 
limiting the exemption to investment contracts and not requiring 
days notice to the administrator. 
Section 202(21) is modeled, in part, on Rule 701(c) adopted 
under the Securities Act of 1933. Compliance with Rule 701 will 
provide compliance with this exemption. 
Both the 1956 Act and RUSA, 
employee benefit plans as exempt 
securities 
transactions. 
There 
reason to do so. 
for unstated reasons, treated 
secur i ties, rather than exempt 
appears 
to 
be 
no 
appropriate 
Resale of employee benefit plan 
appropriate section 202 transaction 
lS not intended to provide 
a 
new 
securities 
exemptions. 
method of 
can occur under 
Section 202 (21) 
publicly issuing 
securities. 
The administrator, 
when appropriate, 
can deny, 
condition, 
limit, or revoke an exemption under Section 202(21). See Section 
204. 
23. 
Section 202 (22): Specified dividends and tender offers 
and judicially recognized reorganizations: Prior Provision: 1956 
Act 
Section 401(j)(6)(B) 
and 
(D); 
RUSA 
Section 101(13)(vi). 
Section 202(22) (A) 
and (B) generally follow exclusions from the 
definition of sale in the 1956 Act and RUSA. Section 202(22)(C) 
lS new and corresponds to Rule 162, recently adopted under the 
Securi ties Act of 1933, 
which allows 
the offeror in a 
stock 
exchange 
offer 
to 
solicit 
tenders 
of 
securities 
before 
a 
registration statement is effective as long as no securities are 
purchased until the registration statement is effective and the 
tender offer has expired. 
24. 
Section 
(23) : 
Nonissuer 
transactions 
lnvolving 
specified 
foreign 
issuer 
securities 
traded 
on 
designated 
securities exchanges. 
This 
exemption expressly 
covers 
Toronto 
Stock Exchange issuers that are public reporting companies under 
Canadian securities law and meet the 180 day continuous reporting 
requirement. 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. The exemption also provides authority for an 
administrator 
to 
revoke 
any 
designation 
if 
necessary 
or 
appropr iate in the public intere::;t and for the protection of 
investors. 
Maine Comments 
1. 
Section 16202(11) (D): 
Maine 
has 
added this paragraph 
based on a similar provision in Pennsylvania law. 
In determining 
a property's fair market value at the time of the transaction, it 
is intended that issuers will rely on reasonable evidence of fair 
market value, such as generally accepted appraisal standards set 
forth in the Uniform 
(USPAP), 
promulgated 
Appraisal Foundation. 
Standards of Professional Appraisal Practice 
by the Appraisal Standards Board of the 
2. 
Section 16202(14): 
The model Uniform Security Act's 
version of this provision used a higher "de minimis" number of 
purchasers 
(25). 
Maine 
has 
instead used 
a 
lower 
number 
of 
purchasers 
(10) 
to provide more protection for investors and 
because the lower number is more consistent with the relatively 
small size of this State. 
3. 
Section 16202(15): 
Maine has added this limited private 
offering exemption for Maine issuers, up to 25 purchasers, which 
is based on section 10502(2)(Q) of the Revised Maine Securities 
Act. 
4. 
Section 16202(21)(A) 
and (C): 
Maine has limited the 
availability of this exemption to offers or sales of securities 
In an employees' stock purchase or similar plan to only those 
consultants and advisors who are permitted to participate in such 
a plan under SEC Rule 70l(c)(1). 
5. 
Section 16202 (24) : 
Maine has reinstated the exemption 
for viatical settlement contracts similar to that which appeared 
in the Revised Maine Securities Act. 
6. 
Section 16202(26): 
Maine has added this 
nonpublic 
offerings 
made 
under 
Section 
4(2) 
of 
Securities Act of 1933 to maintain the exemption 
section 10502(2)(R) of the predecessor act. 
exemption for 
the 
federal 
contained in 
§16203. 
Additional exemptions and waivers 
If the administrator finds that it is consistent with the 
public interest and the protection of investors, a rule adopted 
or order issued under this 
chapter 
may: 
exempt 
a 
secur~ 
transaction or offer; exempt a class of securities, transactions 
or offers from any or all of the requirements of sections 16301 
to 16306 and 16504; and waive, in whole or in part, any or all of 
the conditions for an exemption or offer under sections 16201 and 
16202. 
In any rule or order establishing an exemption for which 
a 
filing is 
required, 
the 
administrator 
may 
provide 
for 
a 
nonrefundable 
tiling fee 
nul 
to 
exceed 
$500. 
Rulps 
ndQpted 
pursuant to this section are routine technical rules as defined 
in Title 5, chapter 375, subchapter 2-A. 
Official Comments 
Prior Provision: RUSA Section 403. 
1. 
Under this type of authority, 
of 53 
jurisdictions 
through September 2002 had adopted the Uniform Limited Offering 
Exemption 
(ULOE) 
or 
a 
Regulation 
D 
exemption, 
and 
jurisdictions had adopted a Rule 144A exemption. This Act does 
not incorporate ULOE or a Rule 144A exemption because of their 
complexity and 
the 
likelihood of periodic 
updating of their 
provisions. Rule 144A, 
and similar exemptions in ULOE, 
can be 
most effectively implemented by rule rather than statute. 
2. 
Under Section 203 
a state would also be authorized to 
adopt by rule or order new exemptions as circumstances warrant· 
for new technologies such as the Internet. Cf. NASAA Resolution 
Regarding Securities Offered on Internet, NASAA Rep. ,[7040 (Jan. 
7, 1996). 
3. 
It is the intent of this Section that ULOE, Rule 144A, 
and additional exemptions 
or waivers 
be adopted uniformly by 
states, to the extent this is practicable. 
§16204. Denial, suspension, revocation. condition or limitation of 
exemptions 
1. 
Enforcement related powers. 
Notwithstanding the Maine 
Administrative Procedure Act, 
an order under this chapter may 
deny, 
suspend application of, 
condition, 
limit or 
revoke 
an 
exemption created under section 16201, subsect{on 3, paragraph C, 
section 16201, subsection 7 or 8 or section 16202 or an exemption 
or waiver created under section 16203 with 
r:e~pect to a specific 
security, transaction or offer if the administrator finds that 
the 
order 
is 
consistent 
with 
the 
public 
interest 
and 
the 
protection of the public. 
An order under this section may be 
issued 
only 
pursuant 
to 
the 
procedures 
in 
section 
16306, 
subsection 4 or section 16604 and only prospectively. 
2. 
Knowledge of order required. 
A person does not violate 
section 16301, sections 16303 to 16306, section .16504 or .section 
16510 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. 
Official Comments 
Prior Provisions: 1956 Act Section 402(c); RUSA Section 404. 
1. 
Section 204 is potentially far reaching. The ability to 
deny, 
condition, limit, or revoke the exemptions specified in 
Sections 
201(3)(C), 
201(7), 
201(8), 
202, 
or 
is 
adopted 
concomitant with the breadth of these exemptions. 
One or more 
than one security, transaction, or offer can be covered by a 
Section 204 order. 
2. 
The 
courts 
have 
given 
a 
securities 
administrator's 
decision to deny or revoke an exemption substantial deference 
when 
there 
was 
compliance 
with 
applicable 
due 
process 
and 
statutory requirements. See, e.g., Johnson-Bowles Co., Inc. v. 
Div. of Sec., 829 P.2d 101 (Utah Ct. App. 1992). 
Maine Conunents 
1. 
Section 16204(1): 
The 
model 
Uniform Securities Act 
explicitly excluded federal covered securities and transactions 
involving such securities from the scope of this section. 
Maine 
has removed this language as unnecessary because the Securities 
Administrator's authority to issue orders under this subsection 
is necessarily limited by preemption provisions in federal law. 
SUBCHAPTER 3 
REGISTRATION OF SECURITIES AND NOTICE 
FILING OF FEDERAL COVERED SECURITIES 
§1630l. 
Securities registration requirement 
It is unlawful for a person to offer or sell a security in 
this State unless: 
1. 
Federal covered security. 
The security is a 
federal 
covered security; 
2. 
Exempt from registration. 
The security, transaction or 
offer is 
exempted 
from 
registration under 
sections 
16201 
to 
16203; or 
3. 
Registered. 
The 
security is 
registered 
under 
this 
chapter. 
Official Conunents 
prior Provi~iulls: 1956 Act Section 301; RUSA Section 301. 
1. 
This Section is substantively identical to the 1956 Act 
and RUSA except for the addition of Section 301(1), which is 
necessitated by the Nation<'l.l Securities Markets Improvement Act 
of 1996. See Section 102(7). 
2. 
Except 
for 
federal 
covered 
securities, 
exempt 
securities, or securities offered or sold in exempt transactions, 
c 
38· 
no sale of 
a 
security may be made in this State before the 
security is registered. "Sale" 1S defined 1n Section 102(26); Hin 
this 
State" 
is 
addressed 
in 
Section 
610; 
and 
securities 
registration is addressed in Sections 303 through 306. 
3. 
The Securities Act of 1933 permits certain types of 
offers 
during 
the 
"waiting 
period" 
between 
the 
filing 
and 
effectiveness 
of 
a 
registration 
statement. 
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. 
4. 
Notice filings and fees applicable to federal covered 
securities, see Section 102(7), are addressed in Section 302. 
§16302. 
Notice filing 
1. 
Notice filings for 
federal 
covered securities under 
Section 18(b)(2) 
of the federal 
Securities Act 
of 1933. 
A 
federal covered security, as defined in Section 18(b) (2) of the 
federal Securities Act of 1933, 15 United States Code, Section 
77r(b) (2), that is not otherwise exempt under sections 16201 to 
16203 may not be offered or sold in this State unless before the 
initial offer in this State the following are filed with the 
administrator: 
A. 
The uniform invesbnent company notice filing form; 
B. 
A consent to service of process complying with section 
16611 signed by the issuer; and 
C. 
The payment of a nonrefundable fee of $1,000 for each 
type or class of security offered. 
2. 
Notice 
filing effectiveness 
and 
renewal. 
A notice 
filing under subsection 1 is effective for one year commencing on 
the date of the notice filing, the date of effectiveness of the 
Qffering filed with the Securities and Exchange Commission or a 
date selected by the filer, whichever date is latest. 
On or 
before expiration, a notice filing may be renewed by filing the 
1.miform investment company notice filing form and by paying a 
nonrefundable renewal fee of $1,000 for each 1-YPE: or class of 
security offered. 
A previOUSly filed consent 
to 
service of 
process 
complying with section 16611 
may 
be 
incorporated by 
reference 
1n 
a 
lenewal. 
A 
rpnew~ notice 
filing 
becomes 
effective upon the expiration of the filing being renewed. 
3. 
Notice filings for federal 
covered securities under 
Section 18(b)(4){D). 
A 
security that 
is 
a 
federal 
covered 
security under Section l8(b)(4)(D) of the federal Securities Act 
of 1933, 15 United States Code, Section 77r(b) (4) (D) that is not 
otherwise exempt under sections 16201 to 16203 may not be sold in 
this State 
unless 
the 
following 
records 
are filed with 
the 
administrator no later than 15 days after the first sale in this 
State: 
A. 
A notice 
on 
"Form 
D," 
including the 
Appendix, 
as 
promulgated by the Securities and Exchange Commission; 
B. 
A consent to service of process complying with Section· 
16611, signed by the issuer; and 
C. 
The payment of a nonrefundable fee of $300 per type or 
class of security sold. 
A notice filer making a filing between 16 and 30 days after 
the first 
sale 
in this 
State 
shall 
pay 
an 
additional 
nonrefundable late filing fee of $500. 
4. Stop orders. 
Except wi th respect to a federal covered 
security under Section l8(b)(l) of the federal Securities Act of 
1933, 
United 
States 
Code, 
Section 
77r(b)(l), 
if 
the 
administrator finds that there 
lS 
a failure to comply with a 
notice or fee requirement of this section or any rule adopted 
under this section, 
the administrator may issue a 
stop order 
suspending the offer and sale of a federal covered security in 
this State. If the deficiency is correctAd, the stop order is 
void as of the time of its issuance and no penalty may be imposed 
by the administrator. 
5. 
Other 
federal 
covered 
securities. 
Unless 
the 
administrator 
provides 
otherwise 
by 
rule, 
any 
other 
federal 
covered security 
may 
be 
offered 
and 
sold in this State in 
reliance on its being a federal covered security without the 
filing of a notice or the payment of a fee. 
6. 
Rulemaki.ng. 
Rules adopted pursuant to this section are 
L~~tine technical 
rules 
as 
defined in Title 
subchapter 2-A. 
5, 
chapter 
375, 
Official Cummentc 
No Prior Provision. 
1. 
The little used "registrBt-.ion by notification" 
1956 Act Section 302 or "registration by filing" in RUSA 
are omitted from 
this Act because of the notice 
approach required by Section l8(b) (2) of the Securities 
in the 
Section 
filing 
Act of 
1933 for federal covered securities, which, l.n essence, replaces 
the need for registration by notification. 
2. 
For Rule 506 offerings which are addressed by Section 
18(d) (4) (D) 
of the Securities Act of 1933, the Securities and 
Exchange Commission requires the filing of Form D. See Rule 503. 
When an issuer meets the conditions of Rule 506, Section 302 (c) 
is intended to limit required state filings to no more than a 
requirement of filing a copy of Form D, including the Appendix, a 
consent to service of process, and a fee. 
3. 
The definition of "filing" in Section 102(8) will permit 
states 
to 
receive 
electronic 
filing 
of 
records 
under 
this 
Section. An administrator may also accept under this Section a 
signed 
consent 
filed electronically with 
a 
designee 
of 
the 
administrator. See Section 105. 
4. 
If a State prefers to have the fees 
l.n this section 
established by rule, replace the phrase "a fee of $[_J" l.n 
subsections ( a) , (b) , and ( c) with the phrase "a fee established 
by the administrator by rule" . See Comment 3 to Section 410. 
Maine Comments 
1. 
The "registration by notification" provision (§10402 of 
the Revised Maine Securities Act) 
is omitted because issuers 
rarely used it to register their securities. 
The issuers who are 
able to utilize the notice filing provisions for federal covered 
securities in Section 18(b)(2) of the federal Securities Act of 
1933 
are 
not 
the 
same 
issuers 
who 
qualified 
to 
use 
the 
"registration by notification" provision of the Revised Maine 
Securities Act. 
2. 
Section 16302(3): 
A notice filing under this subsection 
made between 16 and 30 days after the first sale in this State is 
effective so long as the notice filer pays the late filing fee. 
A notice filing made after 30 days is not effective. 
The first 
sale in this State occurs when the investor delivers to the 
offeror either the funds to pUfchase the investment or a signed 
subscription agreement evidencing an intention to invest such 
funds. 
§16303. 
Securities registration by coordination 
1. 
Registration 
permitted. 
A 
security 
for 
which 
a 
registration 
statement 
has 
been 
filed 
under 
the 
federal 
Securities Act of 1933 in connection with the same offering may 
be registered by coordination under this section. 
2. 
Reguired 
records. 
A 
registration 
statement 
and 
accom12an~ing records 
under 
this 
section must 
contain or 
be 
accom12anied 
b~ 
the 
following 
records 
in 
addition 
to 
the 
information s12ecified in section 16305 and a consent to service 
of 12rocess com121~ing with section 16611 : 
A. 
A c012~ of the latest form of 12rospectus filed under the 
federal Securities Act of 1933; 
B. 
If 
requested 
b~ the 
administrator, 
a 
cop~ of 
the 
articles of incor12oration and 
b~laws or their substantial· 
equivalents 
currentl~ in effect; 
a 
cop~· of 
an~ agreement 
with or among underwriters; a 
co12~ of an~ indenture or other 
instrument governing the issuance of the 
securit~ to be 
registered; 
and 
a 
s12ecimen, 
co12~ or description of 
the 
security; 
C. 
C012ies of any other information or 
an~ other records 
filed by the issuer under the federal Securities Act of 1933 
requested by the administrator; and 
D. 
An undertaking to forward each amendment to the federal 
prospectus, 
other 
than 
an 
amendment 
that 
dela~s 
the 
effective date of the registration statement, 
prom12tl~ after 
it is filed with the Securities and Exchange Commission. 
3. 
Conditions for effectiveness of registration statement. 
A registration statement under this section becomes effective 
simultaneously with or subsequent to the federal registration 
statement when all the following conditions are satisfied: 
JD 
A. 
A stop order under subsection 4 or section 16306 or 
~i-"s,-"s"-,u",-e",-""d~b~y_t""h~e,--",S"",e",c,-,u",r"-=i-"t,-"i,-"ee..!s",------,a,",n,,,"d,,,---~E~x-,=c~hange C omm iss ion is no tin 
effect and a proceeding is not pending against the issuer 
under section 16306; and 
B. 
The registration statement has been on file for at least 
days or a shorter period provided by order issued under 
Ulis chLlpter. 
4. 
Notice of federal registration statement effectiveness. 
The 
registrant shall promptly notify the 
administrator in 
a 
record 
of 
the 
date 
when 
the 
federal 
regisrrntion 
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, rhe administrator ma~ issue a 
stop 
order, 
without 
prior 
notice 
or 
hearing, 
retroactivel~ 
denying effectiveness to the registration statement or suspending 
its 
effectiveness 
until 
compliance 
with 
this 
section. 
The 
administrator shall 12rom12tly notify the registrant of an order b~ 
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 within 15 days of the 
issuance of the stop order, the stop order is void as of the date 
of its issuance. 
5. 
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 
administrator, 
the 
registration 
statement 
is 
automatically 
effective 
under 
this 
chapter 
when 
all 
the 
conditions 
are 
satisfied or waived. If the registrant notifies the administrator 
of the date when the federal registration statement is expected 
to become effective, the administrator 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 
administrator 
intends 
the 
institution of 
a 
proceeding 
under 
section 16306. The notice by the administrator does not preclude 
the institution of such a proceeding. 
6. 
Prospectus delivery. 
When 
a 
security is registered 
under 
this 
section, 
the 
prospectus 
filed 
under 
the 
federal 
Securities Act of 1933 must be delivered at the time mandated by 
the 
prospectus 
delivery 
requirements 
of 
that 
Act 
to 
each 
purchaser in this State. 
Official Comments 
Prior Provisions: 1956 Act Section 303; RUSA Section 303. 
1. 
Registration 
by 
coordination 
was 
one 
of 
the 
key 
innovations of the 1956 Act. 
As 
ll1 the 1956 Act, Section 303 
streamlines the content of the registration statement and the 
procedure by which a registration statement becomes effective, 
but not the substantive standards governing the effectiveness of 
a registration statement. 
2. 
The phrase "in connection with the same offering" in 
Section 
does 
not 
require 
that 
the 
federal 
and 
state 
registration 
statements 
be 
filed 
simultaneously 
or 
become 
effective simultaneously. A registration by coordination can be 
filed 
lil 
a 
State 
after 
the 
effectiveness 
nf 
~he 
federal 
registration statement as 
long as 
the administrator does 
not 
conclude that the interval was too long to consider the State 
registration statement "the same offerinq." 
3. 
Section 303 is similar to the 1956 Act except 
provisions have been modernized to include electronic 
electronic notification. Cf. Sections 102(8), 102(25), 
that these 
filing and 
105. It is 
anticipated that this will facilitate simultaneous filing with 
the Securities and Exchange Commission and the States which is 
consistent with the uniformity intended by this Act. Simultaneous 
or sequential filing could be administered through a 
designee 
similar 
to 
the 
current 
Web-CRD 
or 
in 
conjunction with 
the 
Secur i ties and Exchange Commission's Electronic Data Gathering, 
Analysis, and Retrieval (EDGAR) system or otherwise. 
4. 
Section 
303(b) 
is 
not 
intended 
to 
limit 
the 
administrator to requiring only the information and records filed 
with the Securities and Exchange Commission. 
5. 
Sections 303(c) through (e) describe the conditions to 
be satisfied to achieve effectiveness of a coordinated filing. 
"Price 
amendment" 
is 
defined 
in 
Section 
102(23). 
The 
administrator 
retains 
the 
right 
to 
test 
the 
registration 
statement by the substantive standards of Section 306(a) and may 
issue a stop or denial order if the administrator believes any of 
those provisions are applicable. 
Maine Conunents 
1. 
Section 
16303(6) 
reinstates 
the 
prospectus 
delivery 
requirement of the Revised Maine Securities Act. 
§16304. 
Securities registration by qualification 
1. 
Registration permitted. 
A security may be registered by 
qualification under this section. 
2. 
Required records. 
A registration statement under this 
section must contain the information or 
records specified in 
section 16305, 
a consent to service of process complying with 
section 16611 and the following information or records: 
A. 
With 
respect 
to 
the 
issuer 
and 
any 
significant 
subsidiClry, its name, address Find form of organization; the 
state or foreign jurisdiction and date of its organization; 
the 
<Jeneral 
character 
and 
location 
of 
its business ;_9 
description of its physical properties and equipment; and a 
statement 
of 
the 
general 
competitive 
conditions 
in 
the 
industlY vi business in which it is or \'Till bp pngnged; 
B. 
With respect to each director and officer of the issuer, 
and 
other 
pRrson having 
a 
similar 
status or 
performing 
similar functions, the person's name, address and principal 
occupation 
for 
the 
previous 
years; 
the 
amount 
of 
securities of the issuer held by the person as of the 30th 
day before the filing ,of the registration statement; 
the 
amount 
of 
the 
securities 
covered 
by 
the 
registration 
statement to which the person has indicated an intention to 
subscribe; and a description of any material interest of the 
person in any material transaction with the issuer or 
a 
significant subsidiary effected within the previous 3 years 
or proposed to be effected; 
c. 
With respect to persons covered by paragraph B, 
the 
aggregate 
sum of 
the 
remuneration paid to 
those persons 
during the previous 
months 
and estimated to be paid 
during the next 12 months, directly or indirectly, by the· 
issuer 
and 
all 
predecessors, 
parents, 
subsidiaries 
and 
affiliates of the issuer; 
D. 
With respect to 
a 
person owning of record or owning 
beneficially, 
if known, 
10% 
or 
more 
of 
the 
outstanding 
shares of any class of equity security of the issuer, the 
information specified in paragraph B other than the person's 
occupation; 
E. 
With respect to a promoter, if the issuer was organized 
within the previous 
years, 
the information or 
records 
specified in paragraph B, 
any amount paid to the promoter 
within that period or intended to be paid to the promoter 
and the consideration for the payment; 
r. 
With respect to a person on whose behalf any part of the 
offering is to be 
made 
In 
a 
nonissuer distribution, 
the 
person's name and address; the amount of securities of the 
issuer held by the person as of the date of the filing of 
the registration statement; 
a 
description of any material 
interest of the person in any material transaction with the 
issuer or 
any significant subsidiary effected within the 
previous 3 years or proposed to be effected; and a statement 
of the reasons for making the offering; 
G. 
The capitalization and long-term debt, on both d current 
and pro 
forma basis, 
of the 
lssuer 
and 
any significant 
subsidiary, 
including 
a 
descriptiull 
of 
each 
security 
outstanding or being registered or otherwise offered, and a 
statement of the amount and kind of consideration, whether 
In the form of cash, 
physical assets, services, patents, 
goodwill Of anything else of value, for whirh t.he issuer 0.1:. 
any subsidiary has issued its securities within the previous 
years or is obligated to issue its securities; 
H. 
The kind and amount of securities to be offered; the 
proposed offering price or the method by which it is to be 
computed; 
any 
variation 
at 
which 
a 
proportion 
of 
the 
offering is to be made to a person or class of persons other 
than the underwriters, with a specification of the person or 
class; the basis on which the offering is to be made if 
otherwise 
than 
for 
cash; 
the 
estimated 
aggregate 
underwriting 
and 
selling 
discounts 
or 
commissions 
and 
finder's 
fees, 
including 
separately 
cash, 
securities, 
contracts 
or 
anything else 
of 
value 
to 
accrue 
to 
the 
underwriters or finders in connection with the offering or, 
if the selling discounts or commissions are variable, the 
basis of determining them 
and their maximum 
and minimum 
amounts; 
the estimated amounts of other selling expenses, 
including legal, 
engineering 
and 
accounting charges; 
the· 
name and address of each underwriter and each recipient of a 
finder's fee; 
a copy of any underwriting or selling group 
agreement under which the distribution is to be made or the 
proposed form of any such agreement whose terms have not yet 
been 
determined; 
and 
a 
description 
of 
the 
plan 
of 
distribution 
of 
any 
securities 
that 
are 
to 
be 
offered 
otherwise than through an underwriter; 
I. 
The estimated monetary proceeds to be received by the 
issuer 
from 
the 
offering; 
the 
purposes 
for 
which 
the 
proceeds are to be used by the issuer; the estimated amount 
to be used for each purpose; the order or priority in which 
the proceeds will 
be 
used for 
the purposes stated; 
the 
amounts of any funds to be raised from other sources to 
achieve the purposes stated; the sources of the funds; and, 
if a part of the proceeds is to be used to acquire property, 
including goodwill, otherwise than in the ordinary course of 
business, 
the 
names 
and 
addresses 
of 
the 
vendors, 
the 
purchase price, the names of any persons that have received 
commissions 
in connection with 
the 
acquisition 
and 
the 
amounts of the commissions and other expenses in connection 
with the acquisition, including the cost of borrowing money 
to finance the acquisition; 
J. 
A description of any stock options or other security 
options outstanding, or to be created in connectio~ with the 
offering, and the amount of thnsp options held or to be held 
by each person required to be named in paragraph B, D, E, F 
or H and by 
tilly person that holds or will hold 10% or more 
in the aggregate of those options; 
K. 
The dale::, of, pal'ties to and general effert concisely 
stated of each managerial or other material contract made or 
to be made otherwise than in the ordinary course of business 
to be performed in whole Qr in part at or after the filing 
of the registration statement or that was made wi thin the 
previous 2 years and a copy of the contract; 
L. 
A description of 
any 
pending litigation, 
action or 
proceeding 
to 
which 
the 
issuer 
is 
a 
party 
and 
that 
materially 
affects 
its 
business 
or 
assets 
and 
any 
litigation, action or proceeding known to be contemplated by 
governmental authorities; 
M. 
A 
copy 
of 
any 
prospectus, 
pamphlet, 
circular, 
form 
letter, advertisement or other sales literature intended as 
of the effective date to be used in connection with the 
offering and any solicitation of interest used in compliance 
with section 16202, subsection 18, paragraph B; 
N. 
A specimen or copy of the security being registered, 
unless 
the 
security 
is 
uncertificated; 
a 
copy 
of 
the 
issuer's articles 
of 
incorporation 
and 
bylaws 
or 
their 
substantial 
equivalents, 
in effect; 
and 
a 
copy 
of 
any 
indenture or other instrument covering the secur i ty to be 
registered; 
O. 
A signed or conformed copy of an opinion of counsel 
concerning the legality of the security being registered, 
with an English translation if it is in a 
language other 
than English, that states whether the security when sold 
will be validly issued, fully paid and nonassessable and, if 
a debt security, a binding obligation of the issuer; 
P. 
A 
signed 
or 
conformed 
copy 
of 
a 
consent 
of 
any 
accountant, 
engineer , 
appraiser 
or 
other 
person 
whose 
profession gives 
authority 
for 
a 
statement 
made 
bv 
the 
person, 
if 
the 
person 
is 
named 
as 
having 
prepared 
or 
certified a 
report or valuation, 
other than an official 
record, that 1S public and that is used in connection wi th 
the registration statement; 
O. 
A balance sheet of the issuer as of a date within 4 
months before the filing of the registration statement; 
a 
statement of income and a statement of cash flows for each 
of the 
fiscal years preceding the date of the balance 
sheet 
and 
for 
any 
period 
betweetl 
the 
close 
of 
the 
immediately previous fiscal ycar and the date of rhe balance 
sheet 
or 
for 
the 
period 
of 
the 
issuer's 
and 
any 
predecessor's existence if less than 3 years; and, if any 
part of the proceeds of the offering is to bp ~rplied to the 
purchase of a business, the financial statements that would 
be required if that business were the registrant; and 
R. 
Any additional information or records reguired by rule 
adopted or order issued under this chapter. 
3. 
Conditions for effectiveness of registration statement. 
A registration statement under this section becomes effective 30 
days, 
or any shorter period provided by rule adopted or order 
issued 
under 
this 
chapter, 
after 
the 
date 
the 
registration 
statement or the last amendment other than a price amendment is 
filed if: 
A. 
A stop order is not in effect and a proceeding is not 
pending under section 1630~ 
B. 
The administrator has not issued an order under section' 
16306 delaying effectiveness; or 
C. 
The 
applicant 
or registrant has 
not 
requested that 
effectiveness be delayed. 
administrator may delay effectiveness once for not more than 90 
days if the administrator determines the registration statement 
is not complete in all material respects and promptly notifies 
the 
applicant 
or 
registrant 
of 
that 
determination. 
The 
administrator may also delay effectiveness for a further period 
of not more than 30 days if the administrator determines that the 
delay is necessary or appropriate. 
5. 
Prospectus or offering document distribution may be 
required. 
An order issued under this chapter may require as a 
condition of registration under this section that a prospectus or 
offering document containing a specified part of the information 
or record specified J.n subsection 2 
be sent or given to each 
person to whom an offer is made, before or concurrently, with the 
earliest of: 
A. 
The first offer made in a record to the person otherwise 
than by 
means 
of 
a 
public advertisement 
by 
or 
for 
the 
~n 
account of the issuer or another person on whose behalf the 
offering is being made or by an underwriter or broker-dealer 
that is offering part of an unsold allotment or sUbscription 
taken by the person as M pCl.rt~~nt ill the distribution; 
B. 
The confirmation of a sale made by or for the account of 
the person; 
C. 
Payment pursuant to such a sale; or 
D. 
Delivery of thespruri~y pursuant to such a sale. 
6. 
Simplified statement. 
for purposes of simplifying the 
registration 
statement 
for 
smaller 
offerings 
and 
promoting 
uniformitv with other states, 
the administrator may adopt , 
by 
rule, 
a 
form 
to 
be 
used 
as 
the 
registration statement 
for 
securities 
being 
registered 
under 
this 
section 
and 
sold 
In 
offerings in which the aggregate offering price does not exceed 
the maximum 
amount specified In the rule. 
The 
form need not 
require all the information included in this section and may 
require information not included in this section. 
7. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine 
technical 
rules 
as 
defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
Official Comments 
Prior Provisions: 1956 Act Section 304; RUSA Section 304. 
1. 
This Section generally follows the 1956 Act and RUSA. 
Any security may be registered by qualification, whether or not 
another type of registration is available. Ordinarily, however, 
registration by qualification will only be used by an issuer when 
no other procedure is available. 
2. 
Section 304(b) originally was modeled on Schedule A of 
the Securities Act of 1933. 
3. 
In Section 304(b)(12) 
pending litigation can include 
litigation that has not yet been filed. 
4. 
Section 304(b)(17) 
11SPS t_he same terminology as is used 
currently 
In 
Regulation 
S-X 
of 
the 
Securities 
and 
Exchange 
Commission. 
Under Sections 605(a) 
and (c) the administrator 
lS 
authorized to specify the form and content of rules and forms 
governing registration statements 
and the form and content of 
financial statements required under this Act. 
5. 
Under Sections 304(b) (18) and 307 the administrator may 
require additional information or may waive in whole or in part 
or condition any of the requirements of Section 304(b). 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. Section 304(b)(18) would also 
authorize that securities of designated classes under 
a 
trust 
indenture contain additional specified information. 
Maine Comments 
1. 
Section 
16304(6) 
reinstates 
the 
authority 
for 
the 
administrator 
to 
adopt 
a 
simplified statement 
for 
securities 
registration, as was allowed under the Revised Maine Securities 
Act. 
§16305. 
Securities registration filings 
1. 
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. 
2. 
Filing fee. 
A person filing a registration statement 
shall pay a nonrefundable filing fee of $1,000 for each type or 
class 
of 
security 
offered, 
except 
that 
for 
a 
registration 
statement filed under section 16304 for an offering for which the· 
total amount raised in state and out of state does not exceed 
~,OOO,OOO the nonrefundable filing fee is $300 for each type or 
class of security offered. 
3. 
Status of offering. 
A registration statement filed 
under section 16303 or 16304 must specify: 
A. 
The amount of securities to be offered in this State; 
B. 
The states in which a registration statement or similar 
record in connection with the offering has been or is to be 
filed; 
C. 
Any 
adverse 
order, 
judgment 
or 
decree 
issued 
1n 
connection 
with 
the 
offering 
by 
a 
state 
securities 
regulator, 
the 
Securities 
and 
Exchange 
Commission 
or 
a 
court; and 
D. 
The states in which a registration statement was filed 
and withdrawn. 
4. 
Incorporation by reference. 
A record filed under this 
chapter or the predecessor act within 
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. 
5. 
Nonissuer distribution. 
In the case of 
a 
nonissuer 
distribution, infonnation or a record may not be u>quired under 
subsection 9 or section 16304 unless it is known to the person 
filing the registration statement or 
to the person on 
whose 
behalf the 
distL~buti0n is to 
be 
made 
or unlpsR it can be 
furnished by those persons without unreasonable effort or expense. 
6. 
Escrow and impoundment. 
A rule adopted or order issued 
under this chapter may require as a condition of registration 
that a 
security issued within the previous 
years or to be 
issued to a promoter for a consideration substantially less than 
the public offering price 9r to a person for a 
consideration 
other than cash be deposited in escrow; and that the proceeds 
from 
the 
sale of 
the 
registered security in this State 
be 
impounded until the issuer receives a specified amount from the 
sale of the security either 1n this State or elsewhere. 
The 
conditions 
of 
any 
escrow 
or 
impoundment 
required 
under 
this 
subsection may be established by rule adopted or order issued 
under 
this chapter, 
but 
the 
administrator 
may 
not reject 
a 
depository institution solely because of its location in another 
state. 
7. 
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 5 years. 
8. 
Effective period. 
Except while 
a 
stop order is in 
effect under section 16306, 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 be; ng 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 administrator. 
9. 
Periodic reports. 
While 
a 
registration statement 
1S 
effective, a rule adopted V1 
vLde~ issued under this chapter may 
reguire the person that filed the registration stateIllenL Lv [1.le 
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. 
10. 
Posteffective amendments. 
A registration statement may 
be amended after its effective date. The posteffective amendment 
becomes 
effective 
when 
the 
administrator 
so 
orders. 
If 
a 
posteffective 
amendment 
is 
made 
to 
increase 
the 
number 
of 
securities specified to be offered or sold, the person filing the 
amendment shall pay a nonrefundable registration fee of $300. 
A 
posteffective amendment relates back to the date of the offering 
of rhe 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. 
11. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine technical rules as defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
Official Comments 
Prior Provisions: 1956 Act Section 305; RUSA Section 305. 
1. 
Section 305 generally follows 
the 1956 Act and RUSA 
except 
that 
earlier 
provisions 
in 
both 
Acts 
referring 
to 
Investment Company Act of 
1940 securities, 
which are federal 
covered securities, see Section 102(7), have been deleted. 
2. 
Section 
is 
applicable 
both 
to 
coordination, 
see 
Section 
303, 
and 
to 
qualification, see Section 304. 
registration 
registration 
by 
by 
3. 
Section 305(a) expressly authorizes registration by "a 
person on whose behalf "the offering is to be made." This would 
permi t 
a nonissuer, cf. Section 102 (18), or a broker-dealer to 
file a registration statement independent of the issuer. 
4. 
This Act is intended, to the extent practicable, to be 
revenue neutral in its impact on existing state law, see Comment 
to Section 608. Accordingly, Section 305 (b) does not specify 
what fees states should provide. If a State prefers to have the 
fees in this section established by rule, replace the phrase "a 
fee of $[ __ ]" in subsections (b) and (j) with the phrase "a fee 
established by the administrator by rule pursuant to the [state 
administrative procedure act]" and replace the phrase "$ [ __ ] of 
the fee" in subsection (b) with the phrase "an amount of the fee 
established by the administrator by rule". 
See 
Comment 
to 
Section 410. 
5. 
Section 305(c), which generally follows the 1956 Act and 
RUSA, 
does not requi[8 
U1 Section 305 (c) (3) disclosure of an 
order permitting the withdrawal of a registration statement. The 
administrator 
may, 
however, 
require 
disclosure 
of 
this 
information in 
a 
Legistration by 
qualific~rion under Section 
304(b)(18). 
6. 
Section 305(c), 
like every other provision concerned 
with the content of the registration statement, must be read with 
Section 306 (a) (1) which judges the accuracy and completeness of 
the registration statement as of its effective date unless an 
order denying effectiveness had been entered before the effective 
date. A registration statement must be kept current with changing 
developments until the effectiveness date, 
but a 
registration 
statement is not required to be amended after the effective date 
except to correct inaccuracies or deficiencies which existed as 
of the effective date. An administrator, however, separately may 
require 
under 
Section 
305(i) 
or 
(j) 
periodic 
reports 
or 
amendments to keep reasonably current the information contained 
in the registration statement. 
7. 
Under 
Section 
305(d) 
incorporation 
by 
reference 
1S 
permitted as a matter of administrative practice. 
8. 
Section 
(e) 
is 
the 
substantive 
equivalent 
to 
provisions in the 1956 Act and RUSA. This subsection is designed 
to address nonissuer offerings where the seller cannot obtain 
certified 
financial 
statements 
and 
other 
normally 
required 
records. 
The 
phrase 
"without unrec.sonable effort or 
expense" 
originated in Section 10(a)(3) of the Securities Act of 1933. It 
is 
not 
meant 
to 
apply 
to 
expenses 
incidental 
to 
supplying 
required information required for registration in the case of a 
nonissuer distribution by a person in a control relationship with 
the issuer or otherwise having access to or contractual rights to 
obtain the required information. Section 305 (e) applies only to 
registration by qualification under 
Section 
and periodic 
reports for either registration by coordination or registration 
by qualification under Section 305(i). 
9. 
Section 
(f), 
follow~ 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. This Section 
is limited to a security issued within the past five years or to 
be 
issued 
to 
a 
promoter 
for 
a 
consideration 
substantially 
different from the public offering price or to a person for a 
consideration other than cash. The typical distribution subject 
to 
Section 
305(f) 
will 
be 
a 
relatively 
new 
promotional 
or 
speculative offering. Section 305(f) 
follows the 1956 Act and 
RUSA 
and 
provides 
that 
the 
administrator 
may 
not 
reject 
a 
depository solely because 
of its 
location 
in another state. 
Unlike the statute in Schwaemmle Const. Co. v. Michigan Dep't of 
Commerce, 
N.W.2d 141 (Mich. 
1984), Section 305(f) broadly 
provides that Lbe administro.tor "may determi np the conditions of 
any 
escrow 
or 
impoundment 
under 
this 
subsection." 
As 
1n 
Schwaemmle, 
this power will operate only until the 
impounded 
funds or escrowed shares are released. 
10. 
Section 305(g) follows the 1956 Act 1n authorizing the 
administrator to specify the 
form 
of 
a 
sUbscription or sale 
contract. 
11. 
Section 305(h) generally follows the 1956 Act and RUSA. 
The term "nonissuer transaction" or "nonissuer distribution" is 
defined in Section 102(18). A sale by a nonissuer would have to 
be registered under Section 301 unless it is exempted or involves 
a 
federal 
covered security. 
Section 
(1) 
exempts 
"isolated 
nonissuer transactions." 
When 
a 
nonissuer transaction is not 
exempt under Section 202(1), it may still be exempted under other 
transaction exemptions. 
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. Under the first sentence of 
Section 305(h) each registration statement remains effective for 
at least one year and for any longer period the administrator may 
determine. However, no registration statement is effective while 
a stop order with respect to it is in effect under Section 306. 
For the purposes of a nonissuer transaction, all outstanding 
securities 
of 
the 
same 
class 
as 
a 
registered security are 
considered to be registered as long as the registration statement 
remains effective. This means that during the effective period of 
a 
registration 
statement 
under 
this 
Act 
all 
outstanding 
secur i ties of the same class can be traded by anyone, including 
nonissuers, as if they were registered. 
Section 305(h) also provides that, unless the administrator 
determines 
othenlise, 
a 
registration 
statement 
cannot 
be 
withdrawn 
until 
one 
year 
after 
its 
effective 
date 
if 
any 
securities of the same class are outstanding. This is designed to 
protect sellers who would be unaware of a withdrawal from being 
subject to civil liability. 
12. 
Section 305 (j) follows RUSA and a procedure limited to 
investment companies in the 1956 Act in allowing posteffective 
date 
amendments. 
Under 
Section 
305(j), 
when 
a 
posteffective 
amendment increases the number of securities to be offered or 
sold, 0n additional re~isrration fee is required. 
§16306. 
Denial, suspension and revocation 
of securities registration 
L 
Stop orders. 
The administrator may issue a stop order 
denying 
effectiveness 
to, 
or 
suspending 
or 
revoking 
the 
effectiveness of, a registration statement if the administrator 
finds that the order is in the public interest and that: 
A. 
The registration statement as of i ts effective date or 
before the effective date in the case of an order denying 
effectiveness, an amendment under section 16305, subsection 
as of its effective date or a report under section 16305, 
subsection 9 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; 
B. 
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 or 
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; 
C. 
The secu.r i ty registered or sought to be registered lS 
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 
administrator 
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 
pdministrator 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; 
D. 
The issuer's enterprise or method of business includes 
or 
would 
include 
activities 
that 
are 
unlawful 
where 
performed; 
=E'-'.'------'-'W'-"i'-'t=-'h"'--=r-"e'_'s:,pt'-"'e-"'c'-'t~_"'t""o'___'a"'__=s'_"e'_'c"'_u==r__"i'_'t"_.1l-·--",s,-"o,-,u",g;>.h~t~t=-()0c--=b,-,e~ __ 
r~e,-,g,,-,l,",-,' s t ere d un d Eo r 
section 16303, there has been a failure to comply with the 
undertaking 
required 
by 
section 
16303, 
subsection 
2, 
paragraph D; 
F. 
The applicant or registrant has not paid the filing fee, 
but the administr~tor shall void the order if the deficiency 
is corrected; or 
G. 
The offering: 
(1) 
Will work or tend to work a fraud upon purchasers 
or would so operate; 
(2) 
Has 
been 
or 
would 
be 
made 
with 
unreasonable 
amounts 
of 
underwriters' 
and 
sellers' 
discounts, 
commissions 
or 
other 
compensation, 
or 
promoters' 
prof its or participations , 
or unreasonable amounts or 
kinds of options; or 
(3) 
Is being made on terms that are unfair, unjust or 
inequitable. 
2~ 
Standards under subsection 1, paragraph G. 
For purposes 
of 
promoting uniformity in the 
application of subsection I, 
paragraph G, the administrator may take into consideration, among 
other factors, any relevant rules promulgated by the Securities 
and 
Exchange 
Commission 
and 
by 
the 
administrators 
in other 
jurisdictions. 
3. 
Institution of stop order. 
The administrator may not 
institute 
a 
stop 
order 
proceeding 
against 
an 
effective 
registration statement on the basis of conduct or a transaction 
known to the administrator when the registration statement became 
effective unless the proceeding is instituted within 
days 
after the registration statement became effective. 
4. 
Swmnary 
process. 
The 
administrator 
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 
administrator shall 
promptly notify each person specified in 
subsection 5 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. If a hearing is not 
requested and none is ordered by the administrator, within 30 
days after the date of service of the order, the order becomes 
final. 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 vacatp rhp order or extend 
the order until final determination. 
5. 
Procedural reg:uirements for stop order. 
may not be issued under this section without: 
A stOl? Qrder 
A. 
Appropriate notice to the applicant or registrant, the 
issuer and the person on whose behalf the securities are to 
be or have been offered; 
B. 
An opportunity for hearing; and 
C. 
Findings of fact and conclusions of law In a record In 
accordance with the Maine Administrative Procedure Act. 
6. 
Modification 
or 
vacation 
of 
stop 
order. 
The 
administrator may modify or vacate a stop order issued under this 
section if the 
administrator finds 
that the 
conditions that 
caused its issuance have 
changed or tbat it is necessary or 
appropriate in the public interest or for 
the protection of 
investors. 
Official Comments 
Prior Provisions: 1956 Act Section 306; RUSA Section 306. 
1. 
This Section generally follows the 1956 Act and RUSA and 
applies to both registration by coordination under Section 303 
and registration by qualification under Section 304. 
2. 
Section 306(a)(1) 
follows 
the 
1956 
Act 
and 
RUSA 
in 
testing in a suspension or revocation proceeding the completeness 
and accuracy of a registration statement as of the registration 
statement's effective date. A registration statement that becomes 
misleading 
because 
of 
a 
development 
that 
occurs 
after 
its 
effective date is not a ground for the issuance of a stop order 
under Section 306 (a) (1). 
An administrator, however, may require 
periodic 
reports 
under 
Section 
305(i) 
or 
a 
posteffective 
amendment under Section 305(j). 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. 
3. 
On 
the meaning of "willfully," see 
Comment 
under 
Section 508. 
::HS 
4. 
A violation 
whether the issuer has 
a 
broker-dealer 
[~le 
registration 
statement 
independently. 
by 
an issuer has 
the 
same 
consequences 
filed a registration statemeul or has had 
it. Dut this is not the case when 
the 
lS 
file0 
by 
a 
broker-dG0lcr 
acting 
5. 
The verb "is" at the beginning of Section 306(a)(3) 
means that a stop order or injunction that has expired or been 
vacated is not the ground for action under thic paragraph. 
6. 
Section 306(a)(4) applies to activity that is conducted 
in a State where that activity is illegal. It does not apply if 
the 
activity is 
not 
illegal 
under 
that 
State's 
law. 
This 
paragraph is not meant to apply to activity which is lawful where 
conducted but would be illegal if conducted in the State where 
the registration statement is filed. 
7. 
Sections 306(a)(5) and (6) follow the 1956 Act and RUSA. 
8. 
Sections 306(a)(7) 
and 
(b) 
address merit regulation. 
Sections 306(E) and (F) of the 1956 Act authorized a stop order 
when an "offering has worked or tended to work 
a 
fraud upon 
purchasers or would so operate" or "the offering has been or 
would 
be made 
with unreasonable 
amounts of underwriters' 
and 
sellers' 
discounts, 
commissions, 
or 
other 
compensation, 
or . 
promoters' profits or participation, or unreasonable amounts or 
kinds of options." By 1985 a majority of states which had adopted 
the 1956 Act had adopted this approach to merit regulation rather 
than the earlier and broader 
"unfair, 
unjust or inequitable" 
standard that then appljprl in a minority of States. 
RUSA 
Sections 
306(a)(5) 
and 
(6) 
adopted 
provisions 
substantively identical to the 1956 Act and included in brackets 
an "unfair, unjust, or inequitable" alternative. 
The National 
Securities 
subsequently 
preempted 
merit 
securities. See Section 102(7). 
Markets 
Improvement 
Act 
regulation 
of 
federal 
of 
1996 
covered 
Sections 
306(a)(7) 
and 
(b) 
take 
a 
different 
approach. 
Subj ect to the National Securities Markets 
Improvement Act of 
1996, merit standards are retained bu~ hortatory paragraph 306(b) 
encourages 
the 
administrator, 
to 
the 
extent practicable, 
to 
adopt, by rule or order, standards that provide notice to issuers 
of a state's merit standards. Notice will address one criticism 
of merit regulation. See generally 1 Louis Loss & Joel Seligman, 
Securities Regulation 111-124 (3d ed. rev. 1998). Statements of 
Policy of the North American Securities Administrator Association 
that 
have 
been 
adopted 
by 
a 
state 
would provide 
notice 
ln 
compliance with Section 306 (b). Similarly other state rules or 
orders could be adopted in the future to address new types of 
securities as they occur. 
4U 
An 
order 
under 
Section 
306(b) 
can 
be 
adopted 
after 
a 
securities registration statement has been filed. Under Section 
306(b) 
an administrator, 
by rule or order, for example, 
could 
adopt a 
:stdllUd..r:d that would pro':ide tha basis for a stop order 
denying effectiveness to a development stage company that has no 
specific business purpose 
or plan or has 
indicated that its 
primary business plan lS to engage in a merger or acquisition 
with an unidentified company, 
entity, or person. 
"Blank check 
offerings" are subject to Rule 419 adopted under the Securities 
Act of 1933. See Comment 3 to Section 202. 
9. 
Section 306 (c) follows the 1956 Act and RUSA and allows 
an administrator up to 30 days after a 
registration statement 
becomes effective to institute a 
stop order proceeding on the 
basis 
of 
a 
fact 
or 
transaction 
known 
when 
the 
registration 
statement became effective. This is to avoid the necessity of an 
administrator issuing a stop order prematurely. 
10. 
Sections 306(d) and (e) assure each person subject to a 
stop order of notice, opportunity for a hearing, and findings of 
fact and conclusions of law contained in a record. 
11. 
An administrator must consider the public interest when 
issuing a stop order and may under Section 306(f) consider the 
public interest when modifying or vacating a 
stop order. 
See, 
e.g., TechnoMedical Lab., Inc. v. Utah Sec. Div., 744 P.2d 320, 
324-325 (Utah Ct. App. 1987) (a state has a valid public interest 
in stopping the issuance 
of 
hundreds of 
thousands 
of public 
shares that did not comply with the disclosure requirements of 
securities registration); cf. stop orders under the Securities 
Act 
of 
1933, 
see 
Louis 
Loss 
& Joel 
Seligman, 
Securities 
Regulation 576-589 (3d ed. rev. 1998). 
12. 
As 
of September 
2002 
jurisdictions had adopted a 
form of Section 306(a)(7)(A) ("will tend to work a fraud or would 
so operate"); 
jurisdictions had adopted 
a 
form 
of Section 
306(a)(7)(B) ("unreasonable amounts of underwriters' and sellers' 
discounts, 
commissions, 
or 
other 
compensation, 
or 
promoter 
profits or participations, or unreasonable amounts or kinds of 
options"); and 16 jurisdictions had adopted a form of bracketed 
Section 
306(a)(7)(C) 
("terms 
that 
are 
unfair, 
unjust, 
or 
inequi table") . 
Maine Comments 
1. 
Section 16306(2): 
The 
model 
Uniform 
Security Act's 
version 
of 
this 
subsection 
gave 
specific 
authority 
for 
the 
Securities Administrator to issue rules 
or orders 
that would 
define 
conduct 
violating 
subsection 
(l)(G). 
Because 
of 
the 
inherent difficulty in trying to define 
r.] 1 
ronollct that would 
violate 
subsection 
(l)(G), 
Maine 
has 
adopted 
alternative 
language. 
For 
purposes 
of 
promoting 
uniformity 
in 
the 
applicCltion of cubc8ction 
(1) (G), 
th", 
Sp(,llritjps Administrator 
may take into consideration any relevant rules promulgated by the 
United 
States 
Securities 
and 
Exchange 
Commission 
and 
by 
administrators in other jurisdictions. 
§16307. 
Waiver and modification 
By rule issued or order adopted under this chapter, 
the 
administrator may waive or modify, in whole or in part, any or 
all of the requirements of sections 16302, 16303, and 16304 or 
the requirement of any information or record in a registration 
statement or in 
a 
periodic report filed pursuant to section 
16305, subsection 9. 
Rules adopted pursuant to this section are 
routine technical rules 
as 
defined in Title 
5, 
chapter 
375, 
subchapter 2-A. 
Official Comments 
Prior Provision: 
RUSA Section 303 Ch). 
Section 307 follows 
RUSA Section 303 Ch) 
and empowers the administrator to waive or 
modify 
any 
of 
the 
requirements 
of 
302, 
303, 
304(b), 
or 
the 
requirement 
of 
any 
information 
or 
record 
in 
a 
registration 
statement. 
An 
example would be the expedited procedure several 
IS 
states have adopted to coordinate with shelf registration under 
Rule 415 of the Securities Act of 1933. In waiving or modifying 
requirements the administrator must make a finding satisfying the 
requirements of Section 605(b). 
BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, 
INVESTMENT ADVISER REPRESENTATIVES AND FEDERAL 
COVERED INVESTMENT ADVISERS 
3C 
§1640l. 
Broker-dealer licensing requirement and exemptions 
l. 
Licensing requirement. 
It is unlawful for a person to 
transact business in this State as 
a broker-dealer unless the 
.2erson lS licensed under this cha12ter as a broker-dealer or is 
. exemj2t from licensing as a broker-dealer under subsection 2 or 4 . 
2. 
Exemptions 
from licensing. 
The following persons are 
exem12t from the licensili9-Xeauirement of subsection I: 
4G 
'--."''-"._---'A'-'-~L~l-''0'-'){-'-'-e=c-~r_-._"'d'-'e'_'a~l-"'e-"-r _ 
__'v,;'__'· i"--t",-h~o,--"u,-,t~-,a"'----J;;'p-"lc'oi3,-,('=-,p~_(),-,--=f_ ... 
b'--lu,,-,s,,,-i ne s.s in th i s 
State if its only transactions effected in this State are 
(1) 
The 
issuer 
of 
the 
securities 
involved 
In 
the 
transactions; 
(2) 
10. broker-dealer licensed as a broker-dealer under 
this 
cha12ter 
or 
not 
r~uired to 
be 
licensed 
as 
a 
broker-dealer 
under 
this 
cha12ter, 
excej2t 
when 
the 
person is acting as a clearing broker-dealer; 
(3) An institutional investor; 
(4) 
A nonaffiliated federal covered investment adviser 
with 
investments 
under 
management 
in 
excess 
of 
$100,000,000 acting for the account of others pursuant 
to discretionary authority in a signed record; 
(5) 
A bona fide preexisting customer whose principal 
place of residence is not in this State and the person 
is 
registered as 
a 
broker-dealer 
under 
the 
federal· 
Securities Exchange Act of 1934 or not required to be 
registered under the federal Securities Exchange Act of 
1934 and is registered or licensed under the securities 
act of the state in which the customer maintains 
a 
principal place of residence; 
(6) 
A bona fide preexisting customer whose principal 
place of residence is in this State but was not present 
in 
this 
State 
when 
the 
customer 
relationship 
was 
established, if: 
(a) 
The 
broker-dealer 
is 
registered 
under 
the 
federal 
Securities Exchange Act of 
1934 
or not 
required 
to 
be 
registered 
under 
the 
federal 
Secur i ties Exchange Act of 1934 and is registered 
or licensed under the securities laws of the state 
in which the customer relationship was established 
and where the customer had maintained a principal 
place of residence; and 
(b) 
Within 
days 
after 
the 
customer's first 
transaction in this State, 
the person files 
an 
application for licensing as 
a 
broker-dealer in 
this 
State 
and 
no 
further 
transactions 
are 
effected until 
the 
license 
is 
effective. 
Any 
broker-dealer 
may 
seek 
an 
order 
granting 
a 
temporary exemption under subparagraph (7) 
while 
the application is pending; and 
(7) Any other person exempted by rule adopted or order 
issued under this chapter; and 
B. 
A person that deals solely in United States government 
securities 
and 
is 
supervised 
as 
a 
dealer 
In 
government 
spruri t-iF's hy the Board of Go_yernors of the Federal Reserve 
System, 
the Federal Deposit 
Insurance Corporation or the 
United States Department of the Treasury, Office of Thrift 
Supervision or Comptroller of the Currency. 
3. 
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 license 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 administrator 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 sustains the burden of proof that 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 reguest 
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. 
4. 
Foreign transactions. 
A rule adopted or order issued 
under this chapter may permit: 
A. 
A broker-dealer that is registered or licensed in Canada 
or other foreign jurisdiction and that does not have a place 
of 
business 
in 
this 
State 
to 
effect 
transactions 
in 
securities with or for, or attempt to effect the purchase or 
sale of any securities by: 
i.ll An 
individual 
jurisdiction who is 
and 
with 
whom. the 
customer relationship 
United States; 
from 
Canada 
or 
other 
foreign 
temporar ily present in this State 
broker dealer 
had 
a 
bona 
fide 
before the individual entered the 
(2) 
An 
individual 
from 
Canada 
or 
other 
foreign 
jurisdiction who is present in this State and whose 
transactions 
are 
in 
a 
self-directed 
tax 
advantaged 
retirement plan of which -the individual is the holder 
or contributor in that foreign juris~iction; or 
(3) 
An individual who is 
whom 
the 
broker-dco.lcr 
while 
the 
individual 
was 
resident in Canada or the 
present in this State with 
customer 
relationship 
arose 
temporarily or 
permanently 
other foreign jurisdiction; 
B. 
An agent who represents a broker-dealer that is exempt 
under this subsection to effect transactions in securities 
or attempt to effect the purchase or sale of securities in 
this State as permitted for 
a broker-dealer described in 
paragraph A. 
5. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine 
technical rules 
as defined 
~n Title 
5, 
chapter 
375, 
subchapter 2-A. 
Official Comments 
Prior 
Provisions: 
1956 
Act 
Section 
201; 
RUSA 
Sections' 
201-202. 
1. 
"Broker-dealer" is defined in Section 102 (4). The scope 
of the Section 401(a) reference "to transact business in this 
State" is specified in Section 610. "Transacts a business" has 
been held to mean "more than a trivial or de minimis business." 
United States v. 
Schwartz, 
F.2d 499,506 
(2d Cir. 
1972), 
cert. denied, 409 U.S. 1009 (1972). 
2. 
Under 
Section 
401(a) 
a 
person 
can 
be 
required 
to 
register 
as 
a 
securities 
broker-dealer 
only 
if 
the 
person 
transacts business in securities. See, e.g., 
AMR Realty Co. v. 
State, 373 A.2d 1002 (N.J. Supr. Ct. App. Div. 1977) (requirement 
that the transactions involve securities). 
3. 
"Bona fide" is a much construed term particularly in the 
U.C.C. context. See, e.g., MCC 
Proceeds, Inc. v. Advest, Inc., 
N.Y.S.2d 1 
(N.Y. 
A.D. 
2002) 
(comparing bona fide to good 
f ai th standard). 
4. 
Section 401(b)(1)(D) 
was 
situations 
where 
a 
broker-dealer 
sophisticated financial professional 
decisions for its customers. 
added to provide relief in 
is 
accepting orders 
from 
a 
who is making the investment 
5. 
Under 401(b)(1)(E) and (F) preexisting customers must be 
bona fide. A principal place of residence, for example, normally 
would be the residence where the customer spends a majority of 
time. 
These 
exemptions 
were 
intended 
to 
facilitate 
ongoing 
broker-customer Lelationships with customers who have established 
a second or other residence fer such purposes as a winter home 
(i.e. "snowbirds"). 
6. 
Section 401(c) prohibits a broker-dealer or issuer from 
employing or associating with an individual 
~n a 
capacity for 
which that individu2'l has been suspended by the administrator. 
Violation of this provision does not result in strict liability. 
In 
order 
for 
a 
broker-dealer 
or 
issuer 
to 
be 
liable, 
the 
broke:r-dealer or issuer must have known or should have known of 
the administrator's order to the individual suspended or barred. 
Cf. Comment 17 to Section 412. 
7. 
Section 401(d) recognizes the increasingly transnational 
nature of securities brokerage and permits, if the administrator 
adopts a rule or order, transactions by a Canadian or a foreign 
broker-dealer 
with 
a 
person 
from 
Canada 
or 
other 
foreign 
jurisdiction who is resident in this State. This subsection is 
not self-executing and 
lS effective only if the administrator 
adopts a rule or order. 
8. 
To give effect to action taken by rule or order under 
Section 
(d), 
there 
must 
be 
a 
transaction 
registration 
exemption that will enable securities transactions to take place 
in customer 
accounts 
involving the broker-dealers 
and 
agents 
contemplated in Section 401(d). See Sections 202 and 203. 
Maine Connnents 
1. 
Al though the model Uniform Securities Act uses the term 
"registratio:}," 
Maine 
retains 
the 
term 
"licensing" 
from 
the 
Revised Maine Securities Act for the sake of continuity and to 
avoid confusion with the registration of securities. 
2. 
Section 16401(1): 
The last sentence and citation in 
Official Comment 1 relate to the broker-dealer definition, not to 
whether a broker-dealer must be licensed in Maine. 
3. 
Section 
protection, 
Maine 
16401(2)(A)(2): 
For 
retains 
the 
Revised 
the purpose of investor 
Maine 
Securities Act's 
language that excludes clearing brokers from this exemption. 
4. 
The model Uniform Securities Act contained an additional 
exemption, 
section 401 (b) (1) (G), 
which would apply in certain 
situations in which a broker-dealer has 3 or fewer customers in 
Maine in the past year. 
Maine rejected this exemption to better 
protect investoL s ill MCiille, 
a state Ul which brokcr-dcalcrc are 
more 
likely 
to 
have 
only 
a 
few 
clielllb. 
In 
this 
State's 
regulatory experience, enforcement of such "de minimus" customer 
exemptions is complicated because of the inherent difficulty in 
determining 
the 
number 
of 
Maine 
clients 
of 
any 
given 
bl-oker-dealer. 
Further, pursuant to subsection 16401(2) (A) (H), 
the 
administrator 
may 
Wdlve 
t.he 
licensing 
requirements 
on 
a 
case-by-case basis. 
Under the predecessor act, the administrator 
issued exclusion orders fJr 
some 
broker-dealers with 
a 
small 
number 
of 
Maine 
clients. 
The 
administrator 
maintains 
such 
discretion under this Act. 
§16402. 
Agent licensing requirement and exemptions 
1. 
Licensing requirement. 
It is unlawful for an individual 
to transact business 
in this 
State 
as 
an 
agent 
unless 
the 
individual 1S 
licensed under this chapter as 
an agent or is 
exempt from licensing as an agent under subsection 2. 
2. 
Exemptions 
from licensing. 
The following individuals 
are exempt from the licensing requirement of subsection 1: 
A. 
An 
individual 
who 
represents 
a 
broker-dealer 
in 
effecting 
transactions 
in 
this 
State 
limited 
to 
those 
described 
1n Section 15(h)(2) 
of the 
federal 
Securities 
Exchange 
Act 
of 
1934, 
United 
States 
Code, 
Section 
78(0)(2); 
B. 
An individual who 
represents 
a broker-dealer that is 
exempt under section 16401, subsection 2 or 4; 
C. 
An individual who represents an issuer with respect to 
an offer or sale of the issuer's own securities or those of 
the issuer's parent or any of the issuer's subsidiaries and 
who 1S not compensated in· connection with the individual's 
participation 
by 
the 
payment 
of 
commissions 
or 
other 
remuneration based, directly or indirectly, on transactions 
in those securities; 
D. 
An 
individual who is 
a 
bona fide officer, director, 
partner or member of the issuer, or an individual occupying 
a similar status or performing similar functions, or a bona 
fide employee of the issuer who represents an issuer and who 
effects transactions in the issuer's securities exempted by 
section 16202, other than section 16202, subsections II, 25 
and 26; 
E. 
An 
individual who 
represents 
an issuer that effects 
transactions solely ln federal 
covered securities of the 
issuer, 
but 
an individual 
who 
effects transactions in a 
federal 
covered 
security ~~ 
__ ~ectionL8Lb) (3) 
or 
18(b) (4) (D) of the federal SecuritieS Act of 1933, 15 United 
States Code, Section 77r(b)(l) or 77r(h)(4)(D) is not exem:gt 
if the individual is compensated in connection with the 
agent's participation by the payment of commissions or other 
ramunaration based, dir<>rt-ly or 
i nil i r<>rr 1 y, on tranSflctiQllS. 
in those securities; 
F. 
An individual who represents a broker-dealer licensed in 
this State under section 16401, subsection 1 or exempt from 
licensing under section 16401, subsection 2 in the offer and 
sale of securities for an account of a nonaffiliated federal 
covered investment adviser with investments under management 
in excess of $100,000,000 acting for the account of others 
pursuant to discretionary authority in a signed record; 
G. 
An individual who represents an issuer in connection 
with the purchase of the issuer's own securities; 
H. 
An individual who represents an issuer and who restricts 
participation to performing clerical or ministerial acts; or 
I. 
Any other individual exempted by rule adopted or order 
issued under this chapter. 
3. 
License effective only while employed or associated. 
The license of an agent is effective only while the agent is 
employed by or associated with a broker-dealer licensed under 
this chapter or an issuer that is offering, selling or purchasing 
its securities in this State and is effective only with respect 
to transactions effected as an employee or otherwise on behalf of 
said broker-dealer or issuer. 
4. 
Limit on employment or association. 
It lS unlawful for 
a broker-dealer t 
or an issuer engaged In offering, selling or 
P-ll£chasing 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 licensed under 
subsection 1 or exempt from licensing under subsection 2. 
5. 
Limit on affiliations. 
An individual may not act as an 
agent for more than one broker-dealer or one issuer at a time, 
unless the broker-dealers and the issuers for which the agent 
acts are affiliated by direct or indirect common control or are 
authorized by rule or order under this chapter. 
6. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine technical rules 
as defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
Official CUllUTlents 
Prior Provisions: RUSA Sections 201-202. 
1. 
"Agent" is defined in Section 102(2). The scope of the 
Section 402 (a) reference to "transact business in this State" is 
specified in Section 610. An administrator may by rule or order 
take action under Section 401(d)(2) to address an agent. 
2. 
An independent contractor must be either a broker-dealer 
or 
an 
agent 
if 
the 
individual 
transacts 
business 
as 
a 
broker-dealer or agent. There is no other status permitted under 
this Act for securities activities. 
3. 
A broker-dealer in violation of Section 402 (a) may be 
disciplined under 
Section 
and 
be 
subject to 
a 
civil or 
administrative enforcement action under Section 603 or 604. 
4. 
Under Sections 402(b)(3) and (5) an agent may be exempt 
if acting for an issuer and receiving compensation (for example, 
as a corporate executive), as long as the compensation is not a 
commission or other remuneration based on transactions in the 
issuer's own securities. Such an agent could receive 
a 
salary 
with conventional benefits, including an annual bonus (related to· 
his or her performance) as an executive, and still be within this 
exemption unless the agent is also being compensated directly or 
indirectly 
for 
participation 
in 
the 
specified 
securities 
transactions. 
5. 
Section 
402(b)(6) 
was 
added 
to 
provide 
relief 
In 
situations 
where 
an 
agent 
is 
accepting 
orders 
from 
a 
sophisticated financial professional who is making the investment 
decisions for its customers. 
6. 
Ministerial or clerical acts in Section 402(b)(8) might 
include preparing routine written communications or responding to 
inquiries. 
7. 
Section 402(e) limits agents to a single employment or 
affiliation 
unless 
a 
rule 
or 
order 
of 
the 
administrator 
authorizes multiple affiliations. In any event an agent must be 
registered, see Section 402 (a), or exempt from registration, see 
Section 402 (b). Registration is effective only while an agent is 
employed by or associated with a broker-dealer or an issuer. See 
Section 402(c). 
Maine Conunents 
1. 
Section 16402(2)(D): 
Maine has modified this paragraph 
to reinstate t.he predecessor act's limitation on the type of 
unlicensed 
persons 
who 
may 
act 
as 
agents 
of 
an 
issuer 
in 
effecting transactions exempt under section l6202 to "bona fide" 
officers, 
directors, 
partners, 
members 
or 
employees 
of 
the 
issuer. 
By 
qualifying 
these 
persons 
as 
"bona 
fide," 
it is 
Haine' E intent that this exemption not 
hI" 
C1\TC1i Inb1 e 
to persons 
employed 
by 
the 
issuer 
solely 
to 
effectuate 
securities 
transactions. 
§16403. 
Investment adviser licensing requirement and exemptions 
1. 
Licensing requirement. 
It is unlawful for a person to 
transact business in this State as an investment adviser unless 
the 
person is licensed under 
this 
chapter 
as 
an 
investment 
adviser or is exempt 
from licensing as 
an investment adviser 
under subsection 2. 
2. 
Exemptions 
from licensing. 
The 
followir.g persons are 
exempt from the licensing requirement of subsection 1: 
A. 
A person without a place of business in this State that 
is registered or licensed under the securities act of the 
state 
in 
which 
the 
person 
has 
its principal 
place 
of 
business if its only clients in this State are: 
(1) 
Federal 
covered 
investment 
advisers, 
investment 
advisers licensed under this chapter or broker-dealers 
licensed under this chapter; 
(2) Insti tutional investor~ 
~Bona fide 
preexisting 
clients 
whose 
principal 
places 
of 
residence 
are 
not 
in this State if the 
investment adviser is registered or licensed under the 
securities 
act 
of 
the 
state 
In 
which 
the 
clients 
maintain principal places of residence; or 
L4J Any other client exempted by rule adopted or order 
issued under this chapter; 
B. 
A person without a place of business In this State if 
the person has had, during the preceding 12 months, not more 
than 5 clients that are resident In this State in addition 
to those specified under paragraph A; or 
C. 
Anv other persbn exempted by 
rule adopted or order 
issued under this chapter. 
3. 
Limits on employment or association. 
It is unlawful for 
an 
investment 
adviser, 
directly or 
indirectly, 
to 
employ or 
associate with an individual to engage in an activity related to 
investment advice in this State if the license Qf the individual 
is 
suspended 
or 
revoked 
or 
the 
individual 
is 
barred 
from 
employment or association with 
an 
investment adviser, 
federal 
covered investment adviser or broker-dealer by 
an order under 
this 
chapt~r{ 
thp 
Spruritips 
and 
Exrhanap 
rommissinn 
or 
~ 
self-regulatory 
organization, 
unless 
the 
investment 
adviser 
~ustains the burden of proof that the investment adviser did not 
know, 
and In the exercise of reasonable care 
could not have 
known, 
of the suspension, revocation or bar. 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. 
4. 
Investment adviser representative licensing required. 
It is unlawful for an investment adviser to employ or associate 
with an individual required to be licensed under this chapter as 
an investment adviser representative who transacts business in 
this 
State 
on 
behalf 
of 
the 
investment 
adviser 
unless 
the 
individual is licensed under section 16404, subsection 1 or is 
exempt from licensing under section 16404, subsection 2. 
5. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine technical rules 
as 
defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
Official Comments 
Prior 
Provisions: 
1956 
Act 
Section 
201; 
RUSA 
Sections 
203-204. 
1. 
"Investment adviser" is defined in Section 102(15). The 
scope of the Section 403 (a) reference to "transact business ln 
this State" is specified in Section 610. 
2. 
Excluded from the definition of investment adviser in 
Section 102(15) (C) 
1S 
a broker-dealer who 
receives no special 
compensalion 
for 
investment 
advisory 
services. 
Such 
a 
broker-dealer would not have to register as both a broker-dealer 
and investment adviser in this State. A broker-dealer that does 
receive special compensation, on the other hand, would also meet 
the 
statutory definition of 
investment 
adviser 
and 
would 
be 
required to register in both capacities. 
3. 
Section 
403(b)(2) 
is 
consistent 
with 
the 
National 
Securities Markets 
Improvement 
Act of 
1996 which prohibits 
a 
State from regulating an investment adviser that does not have a 
place of business in this State and had fewer than six clients 
who were state residents during the preceding 12 months. 
4. 
Section 403(c) 
prohibits 
an 
investment 
adviser 
from 
employing an individual who is pruhibited from such employment or 
association by the <J.dminiGtrator. 
Violation of t.his provision 
does not result in strict liability. To be liable the investment 
adviser 
must 
have 
known 
or 
should 
have 
known 
of 
the 
dJmiaistrator's order to the individual suspended nr h~rred. 
§16404. 
Investment adviser representative licensing requirement 
and 
exemptions 
1. 
Licensing requirement. 
It is unlawful for an individual 
to transact business 
in this State 
as 
an 
investment adviser 
representative 
unless 
the 
individual 
lS 
licensed 
under 
this 
chapter as an investment adviser representative or is exempt from 
licensing 
as 
an 
investment 
adviser 
representative 
under 
subsection 2. 
2. 
Exemptions 
from licensing. 
The following individuals 
are exempt from the licensing requirement of subsection 1: 
A. 
An individual who is employed by or associated with an 
investment 
adviser 
that 
lS 
exempt 
from 
licensing 
under 
section 16403, subsection 2 or a federal covered investment· 
adviser that is excluded from the notice filing requirements 
of section 16405; and 
B. 
Any other individual exempted by rule adopted or order 
issued under this chapter. 
3. 
License effective only while employed or associated. 
The license of an investment adviser representative is effective 
only while the investment adviser representative is employed by 
or associated with 
an 
investment adviser licensed under this 
chapter or a federal covered investment adviser that has made or 
is required to make a notice filing under section 16405 and is 
effective only with respect to conduct engaged in as an employee 
or otherwise on behalf of said investment adviser. 
4. 
Limit 
on 
affiliations. 
An 
individual 
may 
transact 
business as an investment adviser representative for more than 
one 
investment 
adviser or federal 
covered 
in7estment 
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. 
5. ___ L~im~i~t~s~o~n~~e~mp~1~o~ym~e=n~t~o~r~~a~s~s~o~c~i~a~t=i~o~n~. ___ I~t~i~s~~u~n~l~a~w~f~u~l~~f~o~r 
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 license of the individual as an investment adviser 
representative 
lS 
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 
E~change 
Commission 
or 
a 
self-regulatory organization. Upon request from a federal covered 
investment adviser 
and for 
good cause, 
the administrator, 
by 
order issued, may waive, In whole or _in parL_the __ i':l.ppli.catj,-.P_1L_OJ:: 
the 
requirements 
of 
this 
subsection 
to 
the 
federal 
covered 
investment adviser. 
6. 
Referral fees. 
An 
investment adviser licensed under 
this chapter, a federal covered investment adviser that has filed 
a notice under section 16405 or a broker-dealer licensed under 
this chapter lS 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 licensed under 
this chapter, a federal covered investment adviser who has filed 
a notice under section 16405 or a broker-dealer licensed under 
this chapter with which the individual is employed or associated 
as an investment adviser representative. 
7. 
Rulemaking. 
Rules 
routine technical rules 
as 
subchapter 2-A. 
3dopted pursuant to this section are 
defined in Title 5, 
chapter 
375, 
Official Comments 
No Prior Provision. 
1. 
"Investment 
adviser 
representative" 
is 
defined 
in 
Section 102 (16). 
The scope of the Section 404 (a) reference to 
"transacts business In this State" is specified in Section 610. 
the 
1956 
Act 
nor 
RUSA 
provided 
2. 
Neither 
registr2tion of 
investment adviser representatives. 
the states increasingly have done so. 
years, however, 
for 
the 
In 
recent 
3. 
Under this Act a sole practitioner may register as an 
investment 
adviser. 
See 
Section 
403. 
The 
Investment 
Adviser 
Registration Depository currently provides for entry of the legal 
name of the individual as the investment adviser and the entry of 
any name the individual is doing business under that is different 
from the individual's name. A sole practitioner is not required 
to 
register 
under 
Section 
as 
an 
investment 
adviser 
representative, 
unless 
the 
administrator 
requires 
such 
registration. 
4. 
Section 
404(e) 
prohibits 
an 
investment 
adviser 
representative from association with a federal covered investment 
adviser when such association is prohibited by an order of the 
administrator. Unlike similar provisions in Sections 401 and 403, 
there is no culpability requirement thCl.t the investment: arlviser 
representative 
"knows 
or 
in the exercise of 
reasonable 
care 
should have 
known" of 
a 
suspension or bar because the order 
should be received by the investment adviser representative. As 
with Sections 
and 
403, 
the administrator may walve this 
prohibition. Cf. Comment 17 to Section 412. 
5. 
The 
administrator 
may 
adopt 
rules 
or 
orders 
under 
Section 404(f) in accordance with Section 605. The Securities and 
Exchange Commission has adopted a rule that addresses referral 
fees In Rule 206(4)-3 of the Investment Advisers Act of 1940. 
6. 
For a state that intends to extend Section 404 (f) to 
those broker-dealers and investment advisers who are not required 
to register and those federal covered investment advisers not 
required to file a notice, this subsection should read: 
(f) [Referral Fees.] An investment adviser registered under 
this [Act], 
a federal covered investment adviser that has 
filed 
a 
notice 
under 
Section 
405, 
or 
a 
broker-dealer 
registered under this [Act] 
lS not required to employ or 
associate 
with 
an 
individual 
as 
an 
investment 
adviser 
representative 
j f 
thf' 
only 
compensation 
paid 
to 
the 
individual for a referral of investment advisory clients is 
paid to an investment adviser registered under this [Act], 
or not required to register under this 
[Act], 
a 
federal 
covered investment who has filed a notice under Section 405 
~r is not required to file a notice under Section 405, or a 
broker-dealer registered under this [Act] or not required to 
register 
under 
this 
[Act] 
with which 
the 
individual is 
employed 
or 
associated 
as 
an 
investment 
adviser 
representative. 
§16405. 
Federal 
covered 
investment 
adviser 
notice 
filing 
requirement 
1. 
Notice filing requirement. 
Except with respect to a 
federal covered investment adviser described in subsection 2, 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 3. 
• 
Noti ee 
f i l ing ---,ro.-'e"-,q~u""i,-",r~,e~m",e~n,-,t~-",n."o,-,t,=--,r,-,e",-q",-"u""i~r,-,e",-",d,,,.,--------"T""h",e"---,f:..>o",-",-l±l.",o,-,w,-,i,,-,n,,,-g':j. 
federal covered investment advisers 
Flrp not re<;ru,ired _ tOCJ~Iill2 . .lY 
with subsection 3: 
A. 
A federal covered i:'1vestment adviser without a place of 
business in this State if its only clients in this State are: 
(1) 
Federal 
covered 
investment 
advisers, 
investment 
advisers licensed under this chapter and broker-dealers 
licensed under this chapter; 
~Institutional investors; 
(3) 
Bona 
fide 
preexisting 
clients 
whose 
principal 
places of residence are not in this State; or 
(4) Other clients specified by rule adopted or order 
issued under this chapter; 
B. 
A federal covered investment adviser without a place of 
business In this State if the person has had, during the 
preceding 
months, 
not 
more 
than 
clients 
that are 
resident in this State in addition to those specified under 
paragraph A; and 
C. 
Any other person excluded by rule adopted or order 
issued under this chapter. 
3. 
Notice filing procedure. 
A person acting as a federal 
covered investment adviser that is not excluded under subsection 
shall file a notice, a consent to service of process complying 
with section 16611, and such records as have been filed with the 
Securities and Exchange Commission under the federal Investment 
Advisers Act of 1940 and pay the fees specified in section 16410, 
subsection 1, paragraph E~ 
4. 
Effectiveness of filing. 
The notice under subsection 3 
becomes effective upon its filing. 
5. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine technical 
rules 
as 
defined in Title 
5, 
chapter 
375, 
subchapter 2-A. 
Official Comments 
No Prior Provision. 
1. 
"Federal 
covered 
investment 
adviser" 
is 
defined 
in 
Section 102 (6). 
The scope of the Section 405 (a) 
reference to 
"transacts business in this State" is specified in Section 610. 
2. 
Section 
405(b)(2) 
lS 
necessitated 
by 
the 
National 
Securities Markets Improvement Act of 1996 and is intencip.d to 
coordinate this Act with the Investment Advisers Act of 1940. 
') 
..J • 
employed 
adviser. 
Section 
by 
or 
404(c) 
provides 
associated with 
1.L1I1.L ts 
on 
a 
federal 
those 
whn 
can be 
covered 
investment 
4. 
The succession provision of Section 407 (a) is available 
to a federal covered investment adviser who has filed a notice 
under Section 405. 
§16406. 
Licensing of broker-dealers. agents. investment advisers 
investment adviser representatives 
1. 
Application 
for 
initial license. 
A 
person 
becomes 
licensed 
as 
a 
broker-dealer, 
agent, 
investment 
adviser 
or 
investment adviser representative by filing an application and a 
consent to service of process complying with section 16611 and 
paying the fee specified in section 16410 and any fees charged by 
the designee of the administrator for processing the filing. The 
application must contain: 
A. 
The information or record required for the filing of a 
uniform application; and 
B. 
Upon request by the administrator, any other financial 
or 
other 
information 
or 
record 
that 
the 
administrator 
determines is appropriate. 
2. 
Amendment. 
If the information or record contained in an 
application filed under subsection 1 is or becomes inaccurate or 
incomplete In a material respect, 
the licensee shall promptly 
file a correcting amendment. 
3. 
Effectiveness of licensing. 
If an order is not in 
effect and a proceeding lS not pending under section 16412, 
a 
license becomes effective no later than noon on the 45th da;L 
after 
a 
com121eted 
a1212licatinn 
is 
t:il~d, 
provided 
that 
all 
examination 
and 
training 
requirements 
imposeo 
under 
section 
16412, 
subsection 5 have been satisfied and provided that the 
license has not been denied. 
The administrator may authorize an 
earlier effective date of licensing~ 
4. 
License renewal. 
A license is effective until midnight 
on December 
31st of the 
;Lear 
for 
which 
the 
ap121ication 
for 
1fi 
licensir.g is filed. Unless an order is In effect under section 
16412, a license ma;L be automatically renewed each ;Lear by tiling 
such records as are required by the administratoI, b;L paying the 
fee specified in section 16410 and b;L pa;Ling costs charged by Lhe 
designee of the administrator for processing the filings. 
5. 
Additional conditions or waivers. 
A rule adopted or 
order issued under this chapter ma;L impose other conditions on 
licensing 
or 
may 
waive, 
in 
whole 
or 
in 
part, 
specific 
requirements in connection with licensing as are In the 12ublic 
interest and for the 12rotection of investors. 
Rules 
adopted 
pursuant to this section are routine technical rules as defined 
in Title 5, chapter 375, subchapter 2-A. 
Official Comments 
Prior Provisions: 1956 Act Section 202; 
RUSA Sections 205, 
208. 
1. 
Under Section 406(a), the administrator is authorized to 
accept standardized forms such as Form B-D for broker-dealers; 
Form U-4 for agents and .investment adviser representatives; and 
Form ADV for investment advisers, which are filed today through 
such 
designees 
as 
the 
Web-CRD 
or 
the 
Investment 
Adviser 
Registration 
Depository 
(lARD). 
While 
this 
Act 
generally 
encourages uniformity, Sections 406 (a) 
and (e) are intended to· 
give the administrator authority to augment or waive disclosure 
requirements in appropriate cases. 
2. 
Section 
406(a) 
eliminates 
the 
listing of 
specified 
information delineated in Section 202 of the 1956 Act. 
As with 
RUSA Section 205, the intent is to facilitate coordination with 
widely used standardized forms. 
3. 
Under this Act a single person may act both as an agent 
and 
investment adviser representative if the person satisfies 
applicable registration requirements 
to be both an 
agent 
and 
investment adviser representative. 
Maine Comments 
1. 
Section 16406(1): 
As implied by Official Comment No.1, 
the 
Securities 
Administrator 
may 
designate 
the 
Central 
Registration Depository and the Investment Adviser Registration 
Depository to 
receive applications 
submitted pursuant to this 
section. 
§16407. 
Succession and change ln licensing of broker-dealer or 
investment adviser 
1. 
Succession. 
A broker dealer or investment adviser may 
succeed 
to 
the 
current 
license 
of 
another 
broker-dealer 
or 
invest-mpnt-
adviser 
o£ a 
notice 
filing of 
a 
federal 
covered 
investment adviser, and a federal covered investment adviser may 
succeed to the current license of an investment adviser or notice 
filing of another federal covered investment adviser, by filing 
as a successor an applicatiull [01." licensing purcuant to section 
16401 or 16403 or a notice pursuant to section 16405 for the 
unexpired portion of the current license or notice filing. 
2. 
Organizational change. 
A broker-dealer or investment 
adviser 
that 
changes 
its 
form 
of 
organization 
or 
state 
of 
incorporation or organization may continue its license by filing 
an amendment to its license 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 licensee in its filing. The new organization is a successor 
to the original licensee 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 
licensing. 
A predecessor licensed 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 
licensing within 
days 
after filing its amendment to effect succession. 
3. 
Name change. 
A broker-dealer or investment adviser that 
changes its name may continue its license by filing an amendment 
to its license. The amendment becomes effective when filed or on 
a date designated by the licensee. 
4. 
Change of ownership or control. 
A change of ownership 
or control of a broker-dealer or investment adviser may require 
the filing of a new application pursuant to a rule adopted or 
order issued under this chapter. 
Rules adopted pursuant to this 
section are 
routine 
technical 
rules 
as 
defined in Title 
5, 
chapter 375, subchapter 2-A. 
Official Comments 
Prior Provisions: 1956 Act Section 202(c); 
1. 
Section 
is 
intended 
to 
interruptions 
of 
business 
by 
specifying 
successor broker-dealer or investment adviser; 
RUSA 210. 
avoid 
unnecessary 
procedures 
for 
a 
a broker-dealer or 
investment adviser to maintain its 
form of organization or name; or, 
order 
adopted 
under 
this 
Act, 
broker-dealer or investment adviser. 
registration if it changes its 
In accordance with a rule or 
a 
change 
of 
control 
of 
a 
2. 
There is no filing fee under Section 407. 
Maine Comments 
1. 
Section 16407 (3) and (4). 
A broker-dealer or investment 
adviser 
may 
succeed 
to 
the 
current 
license 
ot 
another 
broker-dealer or investment adviser by filing an amendment to its 
Form BD or Form ADV for any name change or for any changes that 
do 
not 
involve 
a 
material 
change 
l11 
financial 
condition or 
management. 
Any succession that involves a material change in 
fi.nancial condition or management, or a change in ownership or 
control, requires that the brOker-dealer or investment adviser 
file 
a 
license application under 
Section 
16406 
and 
pay 
the 
appropriate filing fee for an initial license application under 
Section 16410. 
2. 
Section 16407(4): 
It is intended that a rule adopted or 
order issued under this subsection will adopt a concept similar 
to the definition of "successor firm" that appeared in Section 
10501(21) of the Revised Maine Securities Act. 
§16408. 
Termination of employment or association of agent and 
investment 
adviser 
representative 
and 
transfer 
of' 
employment or 
association 
1. 
Notice of termination. 
If an agent licensed under this 
chapter 
terminates 
employment 
by 
or 
association 
with 
a 
broker-dealer 
or 
issuer, 
or 
if 
an 
investment 
adviser 
representative licensed under this chapter terminates employment 
by or association with an investment adviser or federal covered 
investment adviser, or if either licensee terminates activities 
that 
require 
licensing 
as 
an 
agent 
or 
investment 
adviser 
representative, the broker-dealer, issuer, investment adviser or 
federal covered investment adviser shall promptly file a notice 
of termir.ation. If the licensee learns that the 
broker-deal~ 
issuer, investment adviser or federal covered investment adviser 
ha~ not filed the notice, the licensee shall promptly file it. 
2. 
Transfer of employment or association. 
If an agent 
licensed 
under 
this 
chapter 
terminates 
employment 
by 
or 
association with a broker-dealer licensed under this chapter and 
begins employment by or association with another broker-dealer 
licensed 
under 
this 
chapter, 
or 
if 
an 
investment 
adviser 
representative licensed under this chapter terminates employment 
by or association with an investment adviser licensed under this 
chapter or a federal covered investment adviser that has filed a 
notice 
under 
section 
16405 
and 
begins 
employment 
by 
or 
association with another investment adVlser licensed under this 
chapter or a federal covered investment adviser that has filed a 
notice under sectiQnn16405, upon the filing by or on behalf of 
the 
licensee, 
within 
days 
after 
the 
termination, 
of 
an 
application for licensing that complies with the requirement of 
section 
16406, 
subsection 
and 
pavment 
of 
the 
filing 
fee 
required 
under 
section 
16410, 
the 
license 
of 
the 
agent 
or 
investment adviser representative is: 
8. 
Immediately effective as of the date of the completed 
filing if the agent's Central Registration Depository record 
or 
successor 
record 
or 
the 
investment 
adviser 
representative's Investment Adviser Registration Depository 
record or successor record does not contain a new or amended 
disciplinary disclosure within the previous 12 months; or 
B. 
Temporarily effective as of the date of the completed 
filing if the agent's Central Registration Depository record 
or 
successor 
record 
or 
the 
investment 
adviser 
representati ve' s 
Investment Adviser Registration Depository 
record 
or 
successor 
record 
contains 
a 
new 
or 
amended 
disciplinary disclosure within the previous 12 months. 
3. 
Withdrawal of temporary license. 
The administrator may 
wi thdraw a temporary license if there are or were grounds for 
discipline as specified in section 16412 and the administrator 
does so within 30 days after the filing of the application. If 
the administrator does not withdraw the temporary license within 
the 30-day period, licensing becomes automatically effective on 
the 31st day after filing. 
4. 
Power 
to 
prevent 
licensing. 
The 
administrator 
may 
prevent the effectiveness of a transfer of an agent or investment 
adviser representative under subsection 2, paragraph A or B based 
on the public interest and the protection of investors or based 
upon a request for other information pursuant to section 16406, 
subsection I, paragraph B. 
5. 
Termination of license or application for licensing. 
If 
the administrator determines that a licensee or applicant for 
licensing is no longer in existence or has ceased to act as a 
broker-dealer, 
agent, 
investment adviser or investment adviser 
representative, 
or 
is 
the 
subject 
of 
an 
adjudication 
of 
incapacity 
or 
is 
subject 
to 
the 
control 
of 
a 
committee, 
conservator or guardian, or can not reasonably be located, a rule 
adopted or 
order 
issued 
under 
this chapter 
may 
require 
the 
license be canceled or terminated or the application denied. The 
administrator may reinstate 
a 
canceled or terminated license, 
with or without hearing, and may make the license retroactive. 
Rules 
adopted pursuant to this section are routine technical 
rules as defined in Title 5, chapter 375, subchapter 2-A. 
Official Comments 
Prior Provision: 1956 Act Section 204(d). 
1. 
Under Sections 402(c) 
and 404(c) 
registration of an 
agent or 
investment 
adviser representative is effective 
only 
while the agent or investment adviser representative is employed 
by or associated with 
a 
broker-dealer, issuer, 
or investment 
adviser, as may be the case. Section 408(a) specifies a procedure 
to inform the administrator of a notice of termination. 
2. 
To 
expedite 
transfer 
to 
a 
new 
broker-dealer 
or 
investment adviser, Section 408(b) provides a procedure by which 
agents or investment adviser representative registration will be 
effective immediately as of the date of new employment when there 
is 
no 
new 
or 
added disciplinary disclosure 
1n the 
relevant 
Central Research Depository or Investment Adviser Registration 
Deposi tory 
records. 
Both 
electronic 
systems 
are 
currently 
administered by the National Association of Securities Dealers. 
Section 408(d) is intended to ensure that the administrator has 
the authority to prevent immediate effectiveness in appropriate 
cases. 
Maine Conunents 
1. 
Section 16408 (4) : 
delay the effectiveness of 
under section 16406(1)(B). 
§16409. 
Withdrawal 
of 
investment 
The Securities Administrator may also 
licensing pursuant to a request made 
licensing 
of 
broker-dealer, 
agent, 
adviser and investment adviser representative 
Withdrawal 
of 
licensing 
by 
a 
broker-dealer, 
agent, 
investment adviser or investment adviser representative becomes 
effective 60 days after the filing of the application to withdraw 
or within any shorter period authorized by the administrator, 
unless a revocation or suspension proceeding is pending when the 
application 
1S 
filed. 
If 
a 
proceeding 
is 
pending, 
the 
administrator shall make 
a 
determination with respect to the 
withdrawal 
application 
as 
part 
of 
the 
proceeding. 
The 
administrator may institute a revocation or suspension proceeding 
under section 16412 wi thin one year after the withdrawal became 
effective automatically and 
issue 
a 
revocation or 
suspension 
order as of the last date on which licensing was effective. 
Official Conunents 
Prior Provisions: 1956 Act Section 204(e); RUSA Section 214 
1. 
This section generally follows 
the 1956 Act Section 
204(e) and RUSA Section 214. This section does not affect any 
applicant's 
privilege 
of 
withdrawal 
of 
an 
application 
from 
registration before the registration becomes effective. It is 
simply 
designed 
to 
prevent 
withdrawal 
of 
an 
effective 
registration under fire. The last sentence preserves the ability 
of the administrator to initiate an action under Section 412 when 
the 
administrator 
does 
not 
know 
of 
a 
reason 
to 
object 
to 
withdrawal until after withdrawal has become effective. 
2. 
Ordinarily today a registrant will file a standardized 
form such as Form U-5, BD-W or ADV-W to withdraw registration. 
Official Comments 
Prior Provisions: 1956 Act Section 202(b); RUSA Section 206. 
1. 
Each state should determine the appropriate fee for each 
type of registration and for each type of renewal, denial, or 
withdrawal of a registration. 
to 
fee 
2. 
remove 
for 
Similarly each state should determine whether it wishes 
the brackets from Section 410(g) and charge a single 
dually 
registered 
agents 
and 
investment 
adviser 
representatives. 
3. 
If a State prefers to have the fees in this section 
established by 
rule, 
amend this section to 
read as 
follows, 
inserting the appropriate reference to the State's administrative 
procedure act: 
§164l0. 
Filing fees 
1. 
Fees established by administrator. 
The administrator 
shall establish by rule fees in accordance with the fOllowing: 
A. 
A fee not to exceed $500 for an initial filing of an 
application as a broker-dealer and renewal of an application 
by a broker-dealer for licensing. 
If the filing results in 
a denial or withdrawal, the administrator shall retain the 
fee; 
B. 
A 
fee 
not 
to 
exceed 
$200 
for 
an 
application 
for 
licensina as an agent and renewal of licensing as an agent. 
If 
the 
filing 
results 
in 
a 
denial 
or 
withdrawal, 
the 
administrator shall retain the fee; 
c. 
A 
fee 
not 
to 
exceed 
$500 
for 
an 
application 
for 
licensing as an investment 
i:l.dvi~el 
dlH.l rellewal of licensing 
as an investment adviser. 
If the filing results in a denial 
or withdrawal, the administrator shall retain the fee; 
D. 
A 
fee 
not 
to 
e~ceed $200 
for 
an 
application 
fnr 
licensing 
as 
an 
investment 
adviser 
representative 
and 
renewal 
of 
licensing 
as 
an 
investment 
adviser 
representative. 
If 
the 
filing results 
in 
a 
denial 
or 
withdrawal, the administrator shall retain the fee; 
E. 
An 
amount not to exceed $500 for an initial fee and 
annual notice fee for a federal covered investment adviser 
required to file 
a 
notice under section 16405. 
If the 
filing results 
in 
a 
withdrawal, 
the 
administrator shall 
retain the fee; and 
F. 
A amount not to exceed $200 for an initial fee and 
annual renewal fee for each branch office in this State. 
If 
the filing results in a withdrawal, the administrator shall 
retain the fee. 
For purposes of this paragraph, 
"branch 
office" means any office of a broker-dealer or investment 
adviser located in this State, 
other than the principal 
place 
of 
business 
of 
the 
broker-dealer 
or 
investment 
adviser. 
Only one branch office fee is due if an office is 
a branch office of both a broker-dealer and an investment 
adviser affiliated by direct or indirect common control. 
2. 
Payment. 
A person required to pay a filing or notice 
fee under this section may transmit the fee through or to a 
designee as a rule or order provides under this chapter. 
3. 
Rulemaking. Rules adopted pursuant to this section are 
routine technical rules as defined in Title 
, 
chapter 
, 
subchapter 2-A. 
Maine Comments 
1. 
Section 16410: 
This section provides fee caps within 
which the administrator may estBb1 i ~h licensing and renewal fees 
by rule. 
Fees are not refundable. 
2. 
Section 
16410(1) (F): 
This 
paragraph 
allows 
the 
administrator to set branch office licensing and renewal fees 
within a 
fee 
cap. 
Maine 
has 
added this provis":"on based on 
section 10306, subsections (l)(E), 
(2)(E), 
( 3 ) 
and 
(4 ) of the 
Revised Maine Securities Act, which have no counterparts in the 
model Uniform Securities Act. 
§16411. 
Postlicensing requirements 
1. 
Financial requirements. 
A rule adopted or order issuerl 
under this chapter may establish minimum financial requirements 
for broker-dealers licensed or required to be licensed under this 
chapter 
and 
investment 
advisers 
licensed 
or 
requirpd 
~o 
hp 
licensed under this chapter. 
If 
a 
licensed broker-dealer or 
investment adviser believes, or has reasonable cause to believe, 
that any rpqllirement imposed under this subsection is not being 
met, 
the 
licensed broker-dealer 
or 
investment 
adviser 
shall 
promptly 
notify 
the 
administrator 
of 
its 
current 
financial 
condition. 
2. 
Financial reports. 
A broker-dealer licensed or required 
to be 
licensed under this chapter 
and 
an investment adviser 
licensed or required to be licensed under this chapter shall file 
such financial and other reports as are required by 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 licensee shall promptly 
file a correcting amendment. 
3. 
Record 
keeping. 
Record-keeping 
requirements 
are 
as 
follows: 
A. 
A broker-dealer licensed or required to be 
licensed 
under this chapter and an investment adviser licensed or 
required to be licensed under this chapter shall make and 
maintain those accounts, correspondence, memoranda, papers, 
books and other records that are: 
(1) 
Required by rule adopted or order issued under 
this chapter; or 
(2) 
If no rule or order as set forth in subparagraph 
(1) has been adopted under this chapter, in compliance 
with the 
record-keeping requirements 
of the federal 
Securities 
Exchange 
Act 
of 
1934 
in the 
case 
of 
a 
broker-dealer or the federal Investment Advisers Act of 
1940 in the case of an investment adviser; 
B. 
Broker-dealer records required to be maintained under 
paragraph 
A 
may 
be maintained 
In 
computer 
or microform 
format or any other form of data storage, provided that the 
records are readily accessible to the administrator; 
c. 
Investment adviser records 
required to be maintained 
under paragraph A may be maintained in any form of data 
storage required by rule adopted or order issued under this 
chapter; and 
0. 
Records required to 
must be pL"eSel'ved for 6 
rule, 
specifies either 
particular type or class 
be maintained nnder this sec.tion 
years unless the administrator , 
by 
a 
longer or shorter period for 
a 
of records. 
4. 
Audits or inspections. 
The records of a broker-dealer 
licensed or required to be licensed under this chapter and of an 
investment adviser licensRd or reguired to be licensed under this 
chapter are subject to such periodic, special or other audits or 
inspections by a representative of the administrator, within or 
wi thout this State, as the administrator considers necessary or 
appropriate in the public interest and for the protection of 
investors. An auditor inspection may be made at any time and 
without l?rior notice. 
The administrator may 
cOl?Y, 
require the 
licensee to cOl?Y and remove for audit or insl?ection cOl?ies of all 
records 
the 
administrator 
reasonably 
considers 
necessary 
or 
al?l?rol?riate to conduct the auditor insl?ection. 
Broker-dealers, 
agents, 
investment 
advisers 
and 
investment 
adviser 
rel?resentatives 
shall 
make 
their 
records 
available 
to 
the 
administrator in a readable form. 
The administrator may assess a 
reasonable charge for conducting an auditor insl?ection under 
this subsection. 
5. 
Custody and discretionary authority bond or insurance. 
A rule adol?ted or order issued under this chal?ter 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 l?ost a bond or other satisfactory 
form 
of 
security. 
The 
administrator 
may 
determine 
the 
requirements of the insurance, bond or other satisfactory form of 
security. 
The 
insurance, 
bond or other satisfactory form of 
security must 
l?ermit 
an 
action 
by 
a 
l?erson 
to 
enforce 
any 
liability on the insurance, bond or other satisfactory form of 
security if instituted within 'the time limitations in section 
16509, subsection 10, l?aragral?h B. 
6. 
Requirements for custody. 
Subject to Section 15(h) of 
the federal Securities Exchange Act of 1934, 
United States 
Code, 
Section 78o(h) or Section 222 of the federal Investment 
Advisers Act of 1940, 15 United States Code, Section 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 
excel?t 
under 
the 
sUl?ervision 
of 
an 
investment adviser or 
a 
federal covered investment adviser. 
A 
rule adol?ted or order issued under this chal?ter may l?rohibi t , 
limi t 
or iml?ose 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. 
7. 
Investment adviser brochure rule. 
With resl?ect to an 
investment adviser licensed or required to be licensed under this 
chal?ter, 
a rule adol?ted or order issued under this chal?ter may 
require 
that 
information 
or 
other 
record 
be 
furnished 
or 
disseminated to t;lieLlts or l?rospecti ve clients in this Statp rlS 
necessary or appropriate in the public interest and for the 
protection of investors and advisory clients. 
8. 
Continuing education. 
A rule adol?ted or order issued 
under 
this chapter 
may 
require 
an 
individual 
licensed under 
section 16402 or 16404 to participate in a continuing education 
program aPl?roved by the Securities and Exchange Commission and 
administered 
by 
a 
self-regulatory 
organization 
or 
another 
continuing education program approved by the administrator. 
9. 
Privacy 
provisions. 
A 
broker-dealer 
licensed 
or 
required to be licensed under this chapter and an investment 
adviser licensed or required to be licensed under this chapter: 
shall 
comply 
with 
the 
privacy 
provisions 
of 
the 
federal 
Gramm-Leach-Bliley Act, 
United States Code, Section 6801 et 
seq. (1999) and the implementing Regulation S-P, federal Privacy 
of 
Consumer 
Financial 
Information, 
Code 
of 
Federal 
Regulations, 
Part 
(2001) 
adopted 
by 
the 
Securities 
and" 
Exchange Commission. This subsection is not intended to permit 
the release of health care information except as permitted by 
Title 22, section 1711-C or Title 24-A, chapter 24. 
10. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine technical rules 
as 
defined in Title 5, 
chapter 375, 
subchapter 2-A. 
Official Comments 
Prior Provisions: 1956 Act Sections 102(c), 202(d) and (e) 
and 203; RUSA Sections 209, 211 and 215. 
1. 
Sections 
41l(a) 
through 
(c) 
and 
(e) 
through 
(f) 
implici tly 
refer 
to 
"capitaL 
custody, 
margin, 
financial 
responsibility, making and 
keepin~ re~ords, bonding, or financial 
or 
operational 
reporting 
requirements. " 
Under 
the 
National 
Securities Markets Improvement Act of 1996, States may not impose 
such 
requirements 
on 
advisers greater than 
Securities Exchange Act 
Advisors Act of 1940. 
covered 
broker-dealers 
and 
investment 
those specified in Section 15(h) of the 
of 1934 and Section 222 of the Investment 
2. 
Minimum financial requirements must be maintained during 
the entire time a person is registered and not merely at the time 
of the registration. See, e.g. , National Grange Mut. Ins. Co. v. 
Prioleau, 
S.E.2d 
(S. C. 
1977) 
(continuing 
bond 
requirement); 
Ridgeway, 
McLeod 
& 
Assoc. , 
A.2d 
(N.J. 
Super. 
Ct. 
App. 
Div. 
1971 ) 
(continuing 
minimum 
capital 
requirement). 
3. 
The 
duty 
in 
Section 
411(b) 
to 
correct 
or 
update 
information is limited to material information which a reasonable 
investor would continue to consider important in deciding whether 
to purchase or sell securities. Cf. TSC Indus., Inc. v. Northway, 
Inc., 426 U.S. 438, 444-450 (1970); Securities Act Release No. 
6084, 17 SEC Dock. 1048, 1054 (1979) ("persons are continuing to 
rely on all or any material portion of the statements"). 
4. 
Section 
411(c)(l) 
authorizes 
require 
all 
records 
to 
be 
preserved 
administrator prescribes by rule or order. 
the 
for 
administrator 
the 
period 
to 
the 
5. 
Rule 17a-4 is the current rule under Section 17(a) of 
the Securities Exchange Act referred to in Section 411(c)(2) that 
addresses acceptable forms of data storage. 
6. 
The administrator's power to copy and examine records in 
Section 411(d) 
is subject to all applicable privileges. See,' 
e.g., 
Louis 
Loss 
& Joel 
Seligman, 
Securities 
Regulation 
4921-4925 n.69 (3d ed. rev. 1996). The power in Section 411(d) to 
conduct 
audits 
or 
inspections 
is 
distinguishable 
from 
the 
administrator's enforcement powers under Section 602. No subpoena 
is 
necessary 
under 
Section 411(d). 
Failure 
to 
submit 
to 
a 
reasonable auditor inspect.ion is a violation of this Act which 
may 
result in 
an action 
by 
the 
administrator 
under 
Section 
412(d)(8), 
a 
criminal 
prosecution 
under 
Section 
508, 
or 
an 
injunction under Section 603. An unreasonable audit, inspection 
or 
demand 
for 
information or 
documents 
would 
be 
subject to 
challenge in an appropriate court. 
7. 
Section 411(f) broadens 1956 Act Section 102(c) and RUSA 
Section 215 to apply to agents as well as investment adviser 
representatives. 
Subject 
to 
Section 
15(h) 
of 
the 
Securities 
Exchange Act of 1934 and Section 222 of the Investment Adviser 
Act 
of 
1940, 
the 
administrator is given broad authority to 
prohibit, limit, or condition custody arrangements. 
8. 
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. 
::l R 
Maine Conu .... ents 
1. 
Section 16411(3) (B): 
The model Uniform Securities Act 
version of this section cited to a provision of federal law as to 
acceptable forms of data storage. 
That federal provision is also 
cited in Official 
Comment 
5. 
So 
as 
to 
avoid 
incorporating 
federal standards by reference, Maine has deleted this citation 
in favor of a provision from the Revised Maine Securities Act 
that 
sets 
forth 
an 
objective 
standard 
that 
is 
nonetheless 
compatible 
with 
current 
federal 
law 
and 
with 
the 
Uniform 
Electronic Transactions Act. 
2. 
Section l64ll(3)(D): 
regarding record preservation 
Revised Maine Securities Act, 
model Uniform Securities Act. 
Maine has 
added this provision 
based on section 10310 (6) of the 
which had no counterpart in the 
3. 
Section l64ll( 4): 
The records of agents and investment 
adviser representatives are records of the broker-dealers 
and 
S 
investment advisers that employ them. 
4. 
Section 
16411(9): 
Maine 
regarding pr i vacy based 
Maine Securities Act, 
Uniform Securities Act. 
on section 
which had 
no 
has 
added 
103l3(1)(L) 
counterpart 
this 
provision 
of the Revised' 
in the 
model 
§164l2. 
Denial, revocation, suspension, withdrawal, 
restriction, condition or limitation of licensing 
L 
Disciplinary 
conditions, 
applicants. 
If 
the 
administrator finds that the order is in the public interest and 
subsection 4 authorizes the action, an order issued under this 
chapter 
may 
deny 
an application, 
or 
may 
condition or 
limit 
licensing, 
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. 
2. 
Disciplinary 
conditions, 
licensees. 
If 
the 
administrator finds that the order is in the public interest and 
subsection 4 authorizes the action, an order issued under this 
chapter may revoke, suspend, condition or limit the license of a 
licensee and, if the licensee is a broker dealer or investment 
adviser, the license 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. 
Notwithstanding 
this 
subsection, 
the 
administrator may not: 
A. 
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 administrator or a 
designee of the aUlJIiIlistrator more them one year after thFd-
state's order is reported; or 
B. 
Under subsection 4, 
pnragraph E, 
sub-paragraph 
(1) 
or 
(2), issue an order on the basis of an order issued under 
the securities act of another state unless the other state's 
order was based on conduct for which subsection 4 
would 
authorize the action had the conduct occurred in this State. 
3. 
Disciplinary penalties. licensees. 
If the administrator 
finds that the order is in the public interest and subsection 4, 
paragraphs A to F, H, I and J or paragraphs Land M authorize the 
action, an order under this chapter may censure, impose a bar on 
or impose a civil penalty in an amount not to exceed a maximum of 
$5,000 per violation on a licensee and, if the licensee is a 
broker-dealer 
or 
investment 
adviser, 
any 
partner, 
officer, 
director or person having a similar status or performing similar 
functions, or any person directly or indirectly in control, of 
the broker-dealer or investment adviser. 
4. 
Grounds for discipline. 
A person may be disciplined 
under subsections 1 to 3 if the person: 
A. 
Has filed an application for licensing in this State 
under 
this 
chapter 
or 
the 
predecessor 
act 
within 
the 
previous 
years 
that, 
as 
of 
the 
effective 
date 
of 
licensing or as of any date after filing in the case of an 
order denying effectiveness, was incomplete in any material 
respect or 
contained 
a 
statement that, 
in light of the 
circumstances 
under 
which 
it 
was 
made, 
was 
false 
or 
misleading with respect to a material fact; 
B. 
Intentionally or knowingly violated or intentionally or 
knowingly 
failed 
to 
comply 
with 
this 
chapter 
or 
the 
predecessor act or a rule adopted or order issued under this 
chapter or the predecessor act within the previous 10 years; 
C. 
Has 
pleaded guilty or 
nolo 
contendere 
to 
or 
been 
convicted of a Class A, 
B or C crime or a felony or within 
the previous 10 years has pleaded guilty or nolo contendere 
to 
or 
been 
convicted 
of 
a 
Class 
D 
or 
E 
crime 
or 
a 
misdemeanor 
inVOlving 
a 
security, 
a 
commodity 
future 
or 
option 
contract 
or 
an 
aspect 
of 
a 
business 
involving 
securi ties, commodities, investments, franchises, insurance, 
banking or finance or any crime indicating a lack of fitness 
to engage in the securities businpss; 
D. 
Is 
enjoined or 
restrained by 
a 
court 
of 
competent 
jurisdiction in any action from engaging in or continuing an 
act~ practice or course of business involving an aspect of a 
LUS.LIleSS 
involving 
aGcuri tieL, 
commodities l 
i nvp.st.mgnts, 
franchises, insurance, banking or finance; 
E. 
Is the subject of an order, 
issued after notice and 
opportunity for hearing by: 
(1) 
The 
securities 
or 
other 
financial 
services 
regulator of a state or by the Securities and Exchange 
Commission, 
a 
self-regulatory organization or 
other 
federal agency denying, revoking, barring or suspending 
registration or licensing as 
a broker-dealer, agent, 
investment adviser, 
investment adviser representative 
or federal covered investment adviser; 
(2) 
The 
securities 
regulator 
of 
a 
state 
or 
the 
Securities 
and 
Exchange 
Commission 
against 
a 
broker-dealer, 
agent, 
investment 
adviser, 
investment 
adviser representative or federal 
covered investment 
adviser; 
(3) 
The 
Securities 
and 
Exchange 
Commission 
or 
a 
self-regulatory organization 
suspending 
or 
expelling 
the 
registrant 
or 
licensee 
from 
membership 
in the 
self-regulatory organization; 
(4) A court adjudicating a United States Postal Service 
fraud order; 
(5) 
The 
insurance 
regulator 
of 
a 
state 
denying, 
suspending or revoking registration or licensing as an 
insurance producer or its equivalent; 
(6) 
A depository institution 
or 
fina!1cial 
services 
regulator suspending or barring the person from the 
depository 
institution 
or 
other 
financial 
services 
business; or 
(7) 
The 
United 
States 
Commodity 
Futures 
Trading 
Commission denying, suspending or revoking registration 
under the federal Commodity Exchange Act; 
F. 
I~ the subject of an adjudication or determination, 
after notice and opportunity for hearing, by the Securities 
and Exchange Commission, the United States Commodity Futures 
Trading Commission, the Federal Trade Commission, a federal 
depository 
institution 
regulator 
or 
a 
depository 
institution, insurance or other financial services regulator 
of 
a 
state that 
the 
person 
intentionally or 
knowingly 
violated the federal Securities Act of 1933, 
the federal 
Securities 
Exchange 
Act of 
1934, 
the 
federal 
Investment 
Advisers Act of 1940, the federal Investment Company Act of 
1940, the federal Commodity Exchange Act, the securities or 
commodities law of a state or a federal or state law under 
which 
a 
business 
involving 
investments, 
franchises, 
insurance, banking or finance is regulated; 
G. 
Is insolvent, either because the person's liabilities 
exceed the person's assets or because the person can not 
meet 
the 
person's 
obligations 
as 
they 
mature. 
The 
administrator may not enter an order against an applicant or 
licensee 
under 
this 
paragraph 
without 
a 
finding 
of 
insolvency as to the applicant or licensee; 
H. 
Refuses to allow or otherwise impedes the administrator 
from conducting an audit or inspection under section 16411, 
subsection 4 or refuses access to a licensee's office to 
conduct 
an 
auditor 
inspection 
under 
section 
16411, 
subsection 4; 
I. 
Has failed to reasonably supervise an agent, investment 
adviser representative or other individual if the agent, 
investment adviser representative or other individual was 
subject 
to 
the 
person's 
supervision 
and 
committed 
a 
violation of this chapter or the predecessor act or a rule 
adopted 
or 
order 
issued 
under 
this 
chapter 
or 
the 
predecessor act or engaged in conduct that would be grounds 
for discipline under this subsection within the previous 10 
years; 
J. 
Is subject to an order entered by a court of competent 
jurisdiction or entered after notice and opportunity for 
hearing by 
a 
federal or state licensing agency denying, 
suspending, revoking or restricting the person's license to 
sell real estate, 
insurance or any investment other than 
securities, 
provided 
that 
the 
order 
resulted 
from 
allegations of misconduct. This paragraph also applies when 
the denial, 
suspension, 
revocation or restriction of the 
license 
1S 
pursuant to 
a 
consent agreement 
between 
the 
person and the licensing agency, whether or not the agency 
also issues an order; 
K. 
After notice and opportunity for a hearing, has been 
found within the previous 10 years: 
(1) 
By 
a 
court 
of 
competent 
jurisdiction 
to 
have 
intentionally and 
knowingly violated the 
laws 
of 
a 
£nrp.ign 
jurisdiction 
uuder 
which 
the 
busincGG 
of 
securities, 
commodities, 
investmpn~, 
franchises, 
insurance, banking or finance is regulated; 
(2) 
To 
have 
been 
the 
subjpc~ 
nf 
an 
Qrder 
of 
Q 
securities regulator of a foreign jurisdiction denying, 
revoking or 
suspending 
the right to 
engage 
1n 
the 
business 
of 
securities 
as 
a 
broker-dealer, 
agent, 
investment adviser, 
investment adviser representative 
or similar person; or 
Page l2l-LR0441(1) 
(3) To have been suspended or expelled from membership 
by 
or 
participation 
in 
a 
securities 
exchange 
or 
securities association operating under the securities 
laws of a foreign jurisdiction; 
L. 
Is the subject of a cease and desist order issued by the 
Securities 
and 
Exchange 
Commission 
or 
issued 
under 
the 
securi ties, 
commodities, 
investment, 
franchise, 
banking, 
finance or insurance laws of a state; 
M. 
Has 
engaged 
in 
unlawful, 
dishonest 
or 
unethical 
practices 
in 
the 
securities, 
commodities, 
investment, 
franchise, banking, finance or insurance business within the 
previous 10 years; or 
N. 
Is 
not qualified on 
the basis of 
factors 
such 
as 
training, 
experience 
and 
knowledge 
of 
the 
securities 
business; except that, in the case of an application by an 
agent 
for 
a 
broker-dealer 
that 
1S 
a 
member 
of 
a 
self-regulatory 
organization 
or 
by 
an 
individual 
for 
licens ing 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 5. The administrator may require an applicant for 
licensing under section 16402 or 16404 who has not been 
registered 
or 
licensed 
in 
a 
state within 
the 
years 
preceding the filing of 
an application in this State to 
successfully complete an examination. 
5. 
Examinations. 
A rule adopted or order issued under this 
chapter may require that training or an examination, including an 
examination 
developed 
or 
approved 
by 
an 
organization 
of 
secur i ties 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, 
training 
or 
an 
examination as to an individual or training or an examination as 
to a class of individuals if the administrator deterflli.nes that 
the trainiIlSJ or examination 1S not necessary or appropriate in 
the public interest and for the .l?lotection of investors. 
6. 
Summary 
process. 
Notwithstanding Title 
5, 
sections 
10003 and 10004, if the public interest or the protection of 
investors so requires, the administrator may suspend or deny an 
application summarily; restrict, condition, limit or suspend a 
license; or censure, bar or impose a civil penalty on a licensee 
before final determination of an administrative proceeding. Upon 
the issuance of an order, the administrator shall promptly notify 
each person subject to the order that the order has been issued, 
the reasons for the action and that wi thin 15 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 administrator wi thin 30 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 
administrator, 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. 
7. 
Procedural requirements. 
An order issued may not be 
issued under this section, except under subsection 6, without: 
A. 
Appropriate notice to the applicant or licensee; 
B. 
Opportunity for hearing; and 
C. 
Findings of fact and conclusions of law in a record in 
accordance with Title 5, chapter 375. 
8. 
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 administrator under 
subsections 1 to 3 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. 
9. 
Limit on investigation or proceeding. 
The administrator 
may not institute a proceeding under subsection 1, 2 or 3 based 
solely on material facts actually known 
by the administrator 
unless an investigation or the proceeding is instituted wi thin 
one year after the administrator actually acquires knowledge of 
the material facts. 
Official Comments 
Prior Provisions: 1956 Act Section 204; RUSA Section::; 207, 
212-2l3. 
1. 
~ection 412 generally folluws Section 204 of the 1956 
Act and Sections 207 and 212-213 of RUSA, but has been modified 
to reflect subsequent developments that have broadened the scope 
and remedies of counterpart federal and state statutes. 
2. 
Section 
authorizes 
the 
administrator 
to 
seek 
a 
sanction 
based 
on 
the 
seriousness 
of 
the 
misconduct. 
Under 
Section 
the 
administrator 
must 
prove 
that 
the 
denial, 
revocation, 
suspension, 
cancellation, 
withdrawal, 
restriction, 
condi tion, or limitation both is (1) in the public interest and 
(2) involves one of the enumerated grounds ln Section 412(d). 
See, e.g., Mayflower Sec. Co., Inc. v. Bureau of Sec., 312 A.2d 
(N.J. 
1973). 
The 
"public interest" is 
a 
much 
litigated 
concept that has corne to have settled meanings. See generally 6 
L. Loss & J. Seligman, Securities Regulation 3103.5-3103.18 (3d 
ed. 
rev. 
2002) 
(under 
federal 
securities 
laws). 
The 
public 
interest will not require imposition of a 
sanction for every 
minor or technical violation of subsection (d). 
3. 
The term "foreign" means a jurisdiction outside of the 
United States, not a different state within the United States. 
4. 
Section 412(a) through (c) authorizes the administrator· 
to proceed against an entire firm, 
regardless of whether the 
administrator proceeds against any individual, when an individual 
partner, 
officer, 
or director or person occupying 
a 
similar 
status or performing similar functions, or a controlling person 
is disciplined 
under 
subsection (d), 
but only if proceeding 
against the entire firm is in the public interest. The discipline 
of such an individual may not automatically be used against a 
broker-dealer or investment adviser. 
When, 
however, there is a 
failure to reasonably supervise, see Section 412(d)(9) or control 
person 
liability, 
see 
Section 
4l2(h), 
the 
administrator 
is 
empowered to proceed against a firm in an appropriate case. In 
Section 412, 
"any partner, 
officer, 
or director, 
any person 
occupying a similar status or performing similar function." can 
include 
a 
branch manager, 
assistant branch manager, 
or other 
supervisor. 
5. 
In Section 412(d)(1) the completeness and accuracy of an 
effective 
application 
for 
registration is tested 
as 
of 
the 
appropriate 
effective 
date. 
An 
application 
that 
becomes 
incomplete or inaccurate after its effective date is not a ground 
for discipline under paragraph (d)(l). In an appropriate case, an 
action might be available under paragraph (d)(2) 
and Section 
406(b). On the other hand, in a proceeding to deny effectiveness 
to a pending application for registration, the completeness and 
accuracy of the application is not limited to the effective date 
and can be judged on any date after filing. 
6. 
The term "willfully" in Section 412(J)(2) and (ll)(A) is 
discussed in Comment 2 to Section 508. 
7. 
There is 
felony 
convictions 
disciplinary action. 
no time 
imi t 
in 
Section 
or statute 
412(d)(3) 
of 
as 
limitations 
a 
ground 
on 
for 
8. 
The present tense of the verb "is" ln Sections 412 (d) (4) 
through 
(6) 
and 
(12) 
means 
that 
an 
injunction, 
order, 
adjudication, or determination that has expired or been vacated 
is no longer a ground for discipline. 
9. 
In Sections 4l2(d)(5) and (6) 
required to prove the validity of the 
earlier disciplinary order. 
the administrator is 
ground which led to 
not 
the 
10. 
Under 
Section 4l2(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. 
11. 
Section 412(d)(8) 
can be violated by 
a 
refusal to 
cooperate with an administrator's reasonable audit or inspection, 
including 
by 
withholding 
or 
concealing 
records, 
refusing 
to 
furnish 
required 
records, 
or 
refusing 
the 
administrator 
reasonable access to any office or location within an office to 
conduct an audit or inspection under this Act. However, a request 
by a person subject to an audit or inspection for a reasonable 
delay to obtain assistance of counsel 
does 
not constitute 
a 
violation of Section 412(d)(8). 
12. 
The term "failed to supervise reasonably" in Section 
(d) (9) includes not having reasonable supervisory procedures 
in place as well as a proper system of supervision and internal 
control. Cf. Hollinger v. Titan Capital Corp., 914 F.2d 1564 (9th 
Cir. 
1990), 
cert. 
denied, 
U.S. 
(1991). 
Section 
15(b) (4) (E) 
of the Securities Exchange 
Act of 1934 similarly 
addresses "failure to supervise reasonably." See 6 Louis Loss 
& 
Joel Seligman, Securities Regulation 3097-3101 (3d ed. rev. 2002). 
13. 
The term "dishonest and unethical practices" in Section 
4l2(d)(13) has been held not to be unconstitutionally vague. See, 
e.g., Brewster v. Maryland Sec. Comm'n, 
A.2d 157, 160 (M.D. 
Ct. Spec. App. 1988) ("a broad statutory standard is not vague if 
it has 
a meaningful referent in business practice, 
custom or 
usage"); Johnson-Bowles Co. 
v. Division of Sec., 829 P.2d 101, 
(Utah Ct. App. 
1992) 
(such legislative language bespeaks a 
legislative 
intent 
to 
delegate 
the 
interpretation 
of 
what 
constitutes "dishonest and unethical practices" in the securities 
industry 
to 
the 
administrator) . 
Ministerial 
or 
clerical 
violations o[ 
a 
statute or rule, if immaterial and occurring 
wi thout intent or recklessness, typically would not constitute 
dishonest or unethical practices. 
14. 
Under the counterparts 
applicants 
to 
become 
agents of 
standardized tests administered 
Securities Dealers, Inc. 
to Section 412(d)(14) and (e) 
broker-dealers typically take 
by the National Association of 
15. 
found in 
Sections 412 (f) 
Section 204(f) 
and (g) amplify the earlier procedures 
of the 1956 Act and are intended to 
facilitate 
summary 
disciplinary 
proceedings, 
appropriate. 
when 
these 
are 
16. 
Section 412(i) parallels the language of Section 204 of 
the 1956 Act and Section 212(b) of RUSA with some significant 
changes. The time period in which the administrator can act has 
been extended to one year from 30 days in the 1956 Act and 90 
days in RUSA. The limitation on instituting a proceeding can also 
be tolled by instituting a formal investigation. The addition of 
the 
word 
"solely" 
is 
intended 
to 
make 
it 
clear 
that 
an 
administrator may consider the prior history of an applicant or· 
registrant even if that prior history had been 
known to the 
administrator for more than one year if there are additional 
material facts which are actually 
known 
to the administrator 
within the last year. 
17. 
"Actually known" in Section 412 (i) is used to signify 
that 
the 
mere 
filing 
of 
material 
facts 
in 
the 
Central 
Registration 
Depository 
or 
Investment 
Advisory 
Registration 
Depository systems does not constitute actual knowledge, unless 
that information was received by the administrator, or, but for a 
decision by the administrator, would have been received by the 
administrator. 
Maine Conunents 
1. 
The model Uniform Securities Act version of this section 
and other 
sections 
referred to 
"'<lillful" 
violations 
of 
law, 
whereas 
the Revised Maine 
Securities Act referred instead to 
"intentional or knowing" violations of law. 
Maine retains the 
words "intentional or knowing" because that language is used in 
the 
Maine 
Criminal 
Code. 
Further. 
under 
Maine 
law the 
term 
"willful" is construed to mean the same thing as "intentional or 
knowing." 
SUBCHAPTER 5 
FRAuv AND LIABILITIES 
§1650l. 
General fraud 
It l::; lllilawful for a perGon, in connection Hith t-hp offer. 
sale or purchase of a security, directly or indirectly: 
~ Device, scheme, artifice. 
To employ a device, scheme or 
artifice to defraud; 
2. 
Untrue statement of or omission of material fact. 
To 
make an untrue statement of a material fact or to omit to state a 
material fact necessary in order to make the statements made, in 
light of 
the 
circumstances 
under 
which 
they were 
made, 
not 
misleading; or 
3. 
Fraud, deceit. 
To engage in an act, practice or course 
of business that operates or would operate as a fraud or deceit 
upon another person. 
Official Comments 
Prior Provisions: 1956 Act Section 101; RUSA Section 501. 
1. 
Section 501, which was Section 101 in the 1956 Act, was 
modeled on Rule 10b-5 adopted under the Securities Exchange Act 
of 1934 and on Section 17(a) of the Securities Act of 1933. There 
has been significant later case 
Cleve lopment interpreting Rule 
10b-5, Section 17(a), and Section 101 of the 1956 Act. Section 
is not identical to either Rule IOb-5 or Section 17(a). 
2. 
There are no exemptions from Section 501. 
3. 
Section 501 applies to any securities offer, sale or 
purchase, 
including 
offers, 
sales, 
or 
purchases 
involving 
registered, exempt, or federal covered securities. It would also 
apply to a rescission offer under Section 510. 
4. 
The possible consequences of violating Section 501 are 
litany. 
These 
include 
denial, 
suspension, 
or 
revocation 
of 
securities registration under Section 306; denial, 
revocation, 
suspension, withdrawal, restriction, condition or limitation of a 
broker-dealer, agent, investment adviser, or investment adviser 
representative 
registration 
under 
Section 
412; 
criminal 
prosecution 
under 
Section 
508; 
civil 
enforcement 
proceedings 
under Sections 603; and administrative proceedings under 604. 
5. 
Because Section 501, 
like Rule 10b-5, 
reaches market 
manipulation, 
see 
Louis 
Loss 
& Joel 
Seligman, 
Securities 
Regulation Ch.10.D (3d ed. 1991), this Act does not include the 
RUSA market manipulation Section 502, which had no counterpart in 
the 1956 Act. 
6. 
The culpability required to be pled or proved under 
Section 501 
lS 
ctu.u.u:,sseJ in the relev;).nt cnforcement context. 
See, e.g., Section 508, criminal penalties, where "willfulness" 
must be proven; Section 509, civil liabilities, which includes a 
reasonable care defense; or cj vi 1 and administrative enforcement 
actions 
under Sections 
and 
604, 
where 
no 
culpability is 
required to be pled or proven. 
7. 
There is no private cause of action, express or implied, 
under Section 501. Section 509 (m) expressly provides that only 
Section 509 provides a private cause of action for conduct that 
could violate Section 501. 
Maine Comments 
1. 
Official 
Comment 
states that because section 
"reaches market manipulation" the model Uniform Securities A.ct 
did not contain a separate section on market manipulation. 
For· 
this reason, Maine does not retain section 10202 of the Revised 
Maine 
Securities 
A.ct, 
which 
set 
forth 
certain 
prohibited 
practices relating to market manipulation. 
However, the conduct 
described in former section 10202, set out below, 
would result 
in liability under this section. 
Without limiting the general applicability of section 10201, 
a person may not: 
1. 
Fictitious quotations. 
Quote 
a 
fictitious price with 
respect to a security; 
2. No change in beneficial ownership. Effect a transaction 
in a 
security that involves no 
change 
~n the beneficial 
ownership of the security for the purpose of creating a 
false 
or 
misleading 
appearance 
of 
active 
trading in 
a 
security or with respect to the market for the security; 
3. Orders for purchases. Enter an order for the purchase of 
a security with the knowledge that an order of substantially 
the same size and at substantially the same time and price 
for the sale of the security has been, or will be, entered 
by or for the same, or affiliated, person for the purpose of 
creating a false or misleading appearance of active trading 
in a security or with respect to the market for the security; 
4. 
Orders 
for sale. 
Enter 
an order 
for 
the sale of 
a 
securi ty wi th the knowledge that an order of substantially 
the Game size and at substantially the same time and price 
for the purchase of the security has been, 
or will be, 
entered by or for the same, or affiliated, person for the 
purpose of creating a 
false or misJeaning appearance of 
active trading in a security or with respect to the market 
for the security; or 
5. 
Deceptive 
practices. 
fraudulent device, 
scheme 
market in a security. 
Employ 
any 
other 
deceptive 
or artifice to manipulate 
or 
the 
§16502. 
Prohibited conduct in providing investment advice 
1. 
Fraud 1n providing investment advice. 
It is unlawful 
for 
a 
person 
that 
advises 
others 
for 
compensation, 
either 
directly or indirectly or through publications or writings, as to 
the value of securities or the advisability of investing in, 
purchasing or selling securities or that, for compensation and as 
part of a regular business, issues or promulgates analyses or 
reports relating to securities: 
A. 
To 
employ 
a 
device, 
scheme 
or artifice to 
defraud 
another person; or 
B. 
To engage in an act, practice or course of business that 
operates or would operate as a fraud or deceit upon another 
person. 
2. 
Rules defining fraud. 
A rule adopted under this chapter 
may define an act, practice or course of business of a person 
described 
in 
subsection 
as 
fraudulent, 
deceptive 
or 
manipulative and prescribe means reasonably designed to prevent 
investment advisers and investment adviser representatives from 
engaging in acts, practices and courses of business defined as 
fraudulent, deceptive or manipulative. 
3. 
Rules specifying contents of advisory contract. 
A rule 
adopted 
under 
this 
chapter 
may 
specify 
the 
contents 
of 
an 
investment advisory contract entered into, extended or renewed b~ 
an investment adviser. 
4. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine technical rules 
as 
defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
Official Comments 
Prior Provision~: 1956 Act Section 102(a); RUSA Section 503. 
1. 
Section 502(a) applies to any person that commits fraud 
in providing irlVestment advice. Section 502(b) is not limjt.ed to 
persons registered as investment advisers or investment adviser 
representatives. 
2. 
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. 
3. 
The rulemaking authority under 
would 
provide 
the basis 
for existing 
Sections 502(b) and (c) 
NASAA 
rules 
concerning 
investment advisers, to the extent these rules are not preempted 
by the National Securities Markets Improvement Act of 1996. 
4. 
Under Section 203A(b)(2) of the Investment Advisers Act 
States 
retain 
their 
authority 
to 
investigate 
and 
bring 
enforcement actions "ith respect to fraud or deceit against a 
federal covered investment adviser or a person associated with a 
federal covered investment adviser. Under Section 502 (a), which 
applies to any person, a State could bring an enforcement action 
against a federal covered investment adviser, including a federal 
covered 
investment 
adviser 
excluded 
from 
the 
definition 
of 
investment adviser in Section 102(15)(E). 
5. 
There is no private cause of action, express or implied, 
under Section 502. Section 509 (m) 
expressly provides that only 
Section 509 provides for a private cause of action for prohibited 
conduct in providing investment advice that could violate Section 
502. 
§16503. 
Evidentiary burden 
1. 
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 exemption, exception, preemption or exclusion. 
2. 
Criminal. 
In a criminal proceeding under this chapter, 
a 
person 
claiming 
an 
exemption, 
exception, 
preemption 
or 
exclusion has the burden to prove by 
a 
preponderance of the 
evidence any such affirmative defense. 
Official Comment 
Prior Provisions: 1956 Act Section 402(d); RUSA Section 608. 
1. 
As 
specified 
In 
Section 
(a), 
in 
a 
civil 
or 
administrative 
action, 
the 
person 
claiming 
an 
exemption, 
exception, preemption, or exclusion has the burden of persuasion. 
2. 
In contrast, in a criminal action under Section 503 (b), 
the prosecutor is required to prove each element of a 
crime 
"beyond a reasonable doubL." The defendant only h;)'G the burden of 
producing evidence of 
an exemption, 
exception, 
preemption, 
or 
exclusion. Some court decisions have characterized this burden as 
;).n affirmative defense. See, e.g., United States ex. reI. Schott 
v. Tehan, 365 F.2d 191, 195 (6th Cir. 1966) (Ohio blue sky law 
constitutionally 
shifts 
burden 
of 
production 
to 
defendant); 
Commonwealth 
v. 
David, 
N.E.2d 
484, 
(Mass. 
1974) 
(exemption is an affirmative defense); State v. Frost, 387 N.E.2d 
235, 238-239 (Ohio 1979) (it is not unconstitutional to require 
the 
burden 
of 
proof 
as 
an 
affirmative 
defense 
to 
prove 
a 
securities law exemption); State v. Andersen, 773 A.2d 328 (Conn. 
2001) (an exemption from registration is an affirmative defense 
to the charge of selling unregistered securities). 
Maine Comments 
1. 
Section 16503(2): 
The model Uniform Securities Act used 
a "burden of going forward" standard with respect to the defenses· 
mentioned in this subsection. 
In order to comport with the 
established standard in the Revised Maine Securities Act, Maine 
instead uses the "preponderance of the evidence" burden. 
§16504. 
Filing of sales and advertising literature 
1. 
Filing requirement. A rule adopted or order issued under 
this chapter may require the filing of a prospectus, a pamphlet, 
a circular, 
a 
form letter, an advertisement, sales literature, 
some 
other 
advertising 
record 
relating 
to 
a 
security 
or 
investment advice or a business plan addressed or intended for 
distribution 
to 
prospective 
investors, 
including 
clients 
or 
prospective clients of 
a 
person 
licensed or 
required to 
be 
licensed as 
an investment adviser 
under this chapter. 
Rules 
adopted pursuant to this section are routine technical rules as 
defined in Title 5, chapter 375, subchapter 2-A. 
2. 
Excluded communications. 
This section does not apply to 
sales and advertising literature specified in subsection 1 that 
relates 
to 
a 
federal 
covered 
security, 
a 
federal 
covered 
investment 
adviser 
or 
a 
security or 
transaction exempted 
by 
section 16201, 
16202 or 16203 except as required pursuant to 
section 16201, subsection 7 and section 16202, subsections 15 and 
24. 
Official Comments 
prior Provisions: 1956 Act Section 403; RUSA Section 405. 
1. 
The prospectuses, 
pamphlets, 
circulars, 
form letters, 
advertisements, sales literature or advertising communications, 
inClude material disseminateu electronically or o.·vo.ilo.ble on a 
web site. 
2. 
The administrator may brinq n civil enforcement action 
in 
a 
court 
under 
Section 
or 
institute 
administrative 
enforcement under Section 604 to prevent publication, circulation 
or use of any materials required by the administrator to be filed 
under Section 504 that have not been filed. 
3. 
Section 504(b) is meant to refer to the communications 
described in Section 504(a). 
§16505. 
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 
omi t 
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. 
Official Comment 
Prior Provisions: 1956 Act Section 404; RUSA Section 504. 
The 
definition of 
"materiality" 
in 
TSC 
Indus., 
Inc. 
v. 
Northway, Inc., 426 U.S. 
438, 
(1976) 
("an omitted fact is 
mater ial if there is a substantial likelihood that a reasonable 
shareholder would consider it important in deciding how to vote") 
has generally been followed in both federal and state securities 
law. 
See 
Louis 
Loss 
& Joel Seligman, 
Securities Regulation 
2071-2105 (3d ed. rev. 2000). 
§16506. 
Misrepresentations concerning licensing, registration or 
exemption 
The filing of an application for licensing, registration, a 
registration statement, a notice filing under this chapter, the 
.11censing 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 administrator that a 
record filed under this 
chapter 
is 
true, 
complete 
and 
not 
misleading. 
The 
filing, 
licensing or registration or the availability of an exemption, 
exception, 
preemption 
or 
exclusion 
for 
a 
security 
or 
a 
transaction does not mean thClt the administrator has pn.ssed upon 
the merits or qualifications of, or recommended or given approval 
to, a person, security or transaction. It is unlawful to make or 
cause tu be made to a purchClGcr, customer, client nr prospective 
customer 
or 
client 
a 
representation 
inconsistent 
with 
this 
section. 
Official Comment 
Prior Provisions: 1956 Act Section 405; RUSA Section 505. 
This Section follows the 1956 Act and RUSA, as well as state 
securities 
statutes 
generally, 
in 
providing 
that 
a 
misrepresentation 
concerning 
registration 
or 
an 
exemption 
is 
unlawful. 
§16507. 
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 administrator or designee 
of the administrator, 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. 
Official Comments 
Source of Law: National Association of Securities Dealers, 
Inc. 
Proposal 
Relating 
to 
Qualified 
Immunity 
in Arbitration 
Proceedings for Statements Made in Forms U-4 and U-5. 
1. 
In 1994 The Securities and Exchange Commission Division 
of Market Regulation published The Large Firm Project: A Review 
of Hiring, 
Retention, 
and Supervisory Practices 
(1994), 
which 
found that a small number of "rogue brokers" were responsible for 
a 
significant proportion of 
customer disciplinary complaints. 
These brokers in some instances moved from one broker-dealer firm 
to 
another, 
it 
was 
explained, 
without 
full 
and 
complete 
disclosure of disciplinary problems by the broker-dealer, because 
of broker-dealer firms' fear of state law defamation claims. See 
also 
GAO, 
Actions Needed to Better Protect Investors against 
Unscrupulous Brokers 3 (1994); Testimony of SEC Chairman Arthur 
Levitt 
Concerning 
the 
Large 
Firm 
Project, 
Subcomm. 
on 
Telecommunications 
& Fin., 
House 
Comm. 
on 
Energy 
& Commerce 
(Sept. 14, 1994), reprinted in 1994-1995 Fed. Sec. L. Rep. 
(CCH) 
~r 8 5 , 4 3 3 (19 9 4 ) . 
2. 
In 1998, the National Association of Securities Dealers 
proposed qualified immunity for statements made in Forms U-4 and 
U-5 to 
address this problem. 
This proposal 
was 
reprinted ln 
Securities Exchange Act Release 39,892, 66 SEC Dock. 2473 (1998). 
This proposal was limited to arbitration proceedings. It was not 
acted on by the Securities and Exchange Commission. 
3. 
An alternative approach would be a standard providing 
for 
absolute 
immunity. 
See 
generally 
Anne 
Wright, 
Form 
U-5 
Defamation, 
Wash. 
& Lee 
L. 
Rev. 
1299 
(1995); 
Acciardo v. 
Millennium 
Sec. 
Corp., 
F. 
Supp. 
2d 
(S.D.N.Y. 
2000) 
(discussing both New York qualified and absolute im~unity cases). 
4. 
Securities 
administrators 
or 
self-regulatory 
organizations generally are subject to absolute 
or qualified 
immunity for actions of their employees within the course of 
their official duties. 
See 
Louis 
Loss 
& Joel 
Seligman, 
Securities Regulation 4818-4821 (3d ed. rev. 1996). 
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. 1998). 
6. 
An agent who has been the subject of a Form U-5, Uniform 
Termination Notice 
for 
Securities 
Industry 
Registration, 
may 
respond to specified adverse disclosures and have her or his 
responses reprinted on the published version of Form U-5. 
7. 
Through September 2002 no state had adopted an immunity 
provision in its 
securities 
statute. 
No 
state 
has 
rejected 
immunity in this context by judicial decision. A number of states 
have adopted qualified immunity by judicial decision. See, e.g., 
Eaton Vance Distrib., Inc. v. Ulrich, 692 So.2d 915 (Fla. Dist. 
Ct. App. 1997); Bavarati v. Josephal, Lyon & Ross, Inc., 28 F.3d 
(7th Cir. 1994) (Illinois); Andre"rs v. PrudentiCl.l Sec., Inc., 
F.3d 304 (6th Cir. 1998) (Michigan); Prudential Sec., Inc. v. 
Dalton, 929 F. Supp. 1411 (N.D. Okla. 1996) (Oklahoma); Glennon 
v. 
Dean Witter 
Reynolds 
Inc., 
F.3d 
(6th Cir. 
1996) 
(Tennessee). 
§16508. 
Criminal penalties 
1. 
Criminal penalties. 
A person that intentionally or 
knowingly violates this chapter, 
or 
a 
rule 
adopted or order 
issued under this chapter, except section 16504 or the notice 
filing 
requirements 
of 
section 
16302 
or 
16405, 
or 
that 
intentionally 
O~ knowingly violates section 16505 
knowing the 
statement made to be false or misleading in a material respect, 
upon conviction, commits a Class C crime. An individual convicted 
of violating d lule or order under this ch~pter may be fined, but 
may not be imprisoned, if the individual did not have knowledge 
of the rule or order. 
2. 
Referral to Attorney General. 
The 
administrator may 
refer such evidence as is available concerning violations of this 
chapter or any rule or order issued under this chapter to the 
Attorney General, who may, with or without such a reference from 
the administrator, institute the appropriate criminal proceedings 
under this chapter. 
The Attorney General may request assistance 
from the administrator or employees of the administrator. 
3. 
No 
limitation 
on other 
criminal 
enforcement. 
This 
chapter does not limit the power of this State to punish a person 
for conduct that constitutes a crime under other laws of this 
State. 
4. 
Venue. 
When a person pursuant to one scheme or course 
of conducL 
whether upon the same person or several persons,· 
engages in fraudulent or other prohibited practices, engages in 
unlawful transactions of business or other unlawful conduct or 
engages in unlawful offers to sell or purchase or unlawful sales 
or purchases under this chapter, the State may opt for a single 
Class C counL 
and, 
in that circumstance, prosecution may be 
brought in any venue in which one or more of the unlawful acts 
were committed. 
Prior Provisions: 
Securities Exchange Act 
1. 
This Section 
Official Comments 
1956 Act Section 409; 
RUSA 
of 1934 Section 32(a). 
follows 
the 
1956 
Act 
and 
Section 604; 
the 
federal 
securities laws in imposing criminal penalties for any willful 
violation of the Act. 
RUSA 
Section 604 distinguished between 
felonies and misdemeanors, limiting willful violations of cease 
and desist orders to a misdemeanor. 
2. 
The term "willfully" has the same meaning in Section 508 
as it did in the 1956 Act. 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. Proof of evil motive or intent to 
violate the law or knowledge that the law was being violated is 
not required. 
3. 
The fina.l sentence of Section 508(a) is based on Section 
32(a) of the Securities Exchdllge Act of 1934, which provides: 
"[N]o person shall be subject to imprisonment under this section 
in violation of any rule or regulation if he proves that he had 
no 
knowledge of such rule or regulation." The 
"no knowledge" 
clause in Section 508(a) is relevant only to sentencing. 
The 
person 
convicted has 
the 
burden 
of 
persuasion 
to 
prove 
no 
knowledge at sentencing. Because this does not impose a burden on 
the defendant to disprove the elements of a crime, Section 32(a) 
of the Securities Exchange Act of 1934 has been held not to raise 
a constitutional problem. United States v. Mandel, 296 F. Supp. 
1038, 1040 (S.D.N.Y. 1969). 
4. 
The appropriate state prosecutor under Section 508(b) 
may decide whether to bring a criminal action under this statute, 
another statute, 
or, 
when 
applicable, 
common 
law. 
In certain 
states the administrator has full or limited criminal enforcement 
powers. 
5. 
This section does not specify maximum dollar amounts for 
criminal fines, maximum terms for imprisonment, nor the years of 
limi tation, 
but 
does 
provide 
for 
each 
state 
to 
specify 
appropriate magnitudes for criminal fines or maximum terms for 
imprisonment. 
6. 
The definition of willfulness in Comment 
to Section 
has been followed by most courts. See, e.g., State v. Hodge, 
P.2d 596,604 (Kan. 1969) ("No specific intent is necessary 
to constitute the offense where one violates the securities act 
except the intent to do the act denounced by the statute"); State 
v. 
Nagel, 
N.W.2d 
911, 
(S.D. 
1979) 
("[I]t 
J.S 
widely 
understood that the legislature may forbid the doing of an act 
and make its commission a crime without regard to the intent or 
knowledge of the doer"); 
State v. Fries, 
N.W.2d 398, 
(Neb. 
1983) 
(proof 
of 
a 
specific 
intent, 
evil 
motive, 
or 
knowledge that the law '''as being violated is not required to 
sustain a 
criminal conviction under 
a 
state's blue sky law); 
People v. Riley, 708 P.2d 1359, 1362 (Colo. 1985) ("A person acts 
'knowingly' or 'willfully' with respect to conduct 
. when he 
is aware that his conduct 
exists"); State v. Larsen, 865 
P.2d 1355, 
1358 
(Utah 1993) 
(willful implies a willingness to 
commit the act, not an intent to violate the law or to injure 
another or acqui re any advantage); State v 
. Montgomery, 17 P. 3d 
292,294 (Idaho 2001) (bad faith is not required for a violation 
of a state securities a,ct; willful implies "simply a purpose or 
willingness to commit the act or make the omission referred to"); 
State v. Dumke, 901 S.\'L2d 100, 102 (Mo. Ct. App. 1995) (mens rea 
not required); State v. Mueller, 
N.W.2d 455, 
(Wis. ct. 
App. 1996) (willfulness does not require proof that the defendant 
acted with intent to 
defraud or 
knowledge 
that 
violated); United !::itates v. LillEeY, 
F. Supp. 
Tex. 
1968) 
("no 
knowledge" 
clause 
-1-11 
federal 
available to defendant claiming lack of knowledge 
SEC rule). 
Maine Comments 
the 
lCiw 
was 
989, 
(S.D. 
statute 
not 
of particular 
1. 
Section 16508(1): 
The 
model 
Uniform Securities 
Act 
version of this section and other sections referred to "willful" 
violations 
of 
law, 
whereas 
the 
Revised Maine 
Securities 
Act 
referred instead to "intentional or knowing" violations of law. 
Maine retains the words "intentional or knowing" because that 
language is used In the Maine 
Maine law the term "willful" is 
as "intentional or knowing." 
§16509. 
Civil liability 
Criminal 
Code. 
Further, 
under 
construed to mean the same thing 
1. 
Securities 
Litigation 
Uniform 
Standards 
Act. 
Enforcement of civil liability under this section is subject to 
the federal Securities Litigation Uniform Standards Act of 1998. 
2. 
Liability of seller to purchaser. 
A person is liable to 
the purchaser if the person sells 
a security in violation of 
sec t ion 
6 3 0 1 ; 
sec t ion 
3 0 3 , 
sub sec t ion 
; 
sec t ion 
3 04 , 
subsection 5; or section 16305, subsection 6 or by means of an 
untrue statement of a material fact or an omission to state a 
material fact necessary in order to make the statement made, In 
light 
of 
the 
circumstances 
under 
which 
it 
is 
made, 
not 
misleading, the purchaser not knowing of the untruth or omission 
and the seller not sustaining the burden of proof that the seller 
did not know and, in the exercise of reasonable care, could not 
have 
known of the untruth or omission. 
An 
action under this 
subsection is governed by the following. 
A. 
The purchaser may maintain an action to recover 
the 
consideration paid for the security, less the amount of any 
income received on the security, 
and the interest at the 
legal rate of interest from the date of the purchase, costs 
and reasonable attorney's fees determined by the court, upon 
the 
tender 
of 
the 
security, 
or 
for 
actual 
damages 
as 
provided in paragraph C. 
B. 
The tender referred to in paragraph A may be made any 
time before entry of judgment. Tender requires only notice 
in a record of ownership of the security and willingness to 
exchange the security for the amount specified. A purchaser 
that no longer owns the security may recover actual damages 
as provided in paragraph C. 
C. 
Actual 
damages 
in 
an 
action 
arising 
under 
this 
subsection are the amount that would be recoverable upon a 
tender less the value of the security when the purchaser 
disposed 
of it and 
the 
interest at 
the 
legal 
rate 
of 
interest from the ddl8 of the purchase, costs 0 nn reasQpable 
attorney's fees determined by the court. 
3. 
Liability of purchaser 1-0 seller._ A person is liable to 
the seller if the person buys a security by means of an untrue 
statement of a material fact or omission to state a material fact 
necessary in order to make the statement made, in light of the 
circumstances under which it is made, not misleading, the seller 
Page l37-LR0441(1) 
not knowing of the untruth or omission and the purchaser not 
sustaining the burden of proof that the purchaser did not know 
and, in the exercise of reasonable care, could not have known of 
the 
untruth or 
omission. 
An 
action under this 
subsection is 
governed by the following. 
A. 
The 
seller 
may 
maintain 
an 
action 
to 
recover 
the 
security and any income received on the security, costs and 
reasonable attorney's fees determined by the court, upon the 
tender of the purchase price, 
or 
for 
actual 
damages 
as 
provided in paragraph C. 
B. 
The tender referred to in paragraph A may be made any 
time before entry of judgment. Tender requires only notice 
lna record 
of 
the 
present ability to 
pay 
the 
amount 
tendered and willingness to take delivery of the security 
for the amount specified. If the purchaser no longer owns 
the 
security, 
the 
seller 
may 
recover 
actual 
damages 
as 
provided in paragraph C. 
C. 
Actual 
damages 
ln 
an 
action 
arising 
under 
this 
subsection are the difference between the price at which the 
security was sold and the value the security would have had 
at the time of the sale in the absence of the purchaser's 
conduct causing liability and the interest at the legal rate 
of interest from the date of the sale of the security, costs 
and reasonable attorney's fees determined by the court. 
4. 
Liability of unlicensed 
broker-deal~r and 
agent. 
A 
person acting as a broker-dealer or agent that sells or buys a 
secur i ty ln violation of section 16401, 
subsection 1; section 
16402, subsection 1; or section 16506 is liable to the customer. 
The customer, if a purchaser, may maintain an action for a remedy 
as specified in subsection 2, paragraphs A to C or, if a seller, 
for a remedy as specified in subsection 3, paragraphs A to C. 
in 
5. 
Liability 
of 
unlicensed 
investment 
adviseI 
and 
investment 
adviser 
representative. 
A 
person 
acting 
as 
an 
investment 
adviser 
or 
investment 
adviser 
re~!e5entative that 
provides 
investment 
advice 
for 
compensation 
in 
viol~tiQn of 
section 16403, 
subsection 1; 
section 16404, 
subsection 1; 
or 
section 16506 is liable to the client. The client may maintain an 
action to recover the conbideration paid for the advirp, interest 
at the legal rate of interest from the date of payment, costs and 
reasonable attorney's fees determined by the court. 
6. 
Liability for investment advice. 
A 
directly or indirectly any consideration for 
advice to another person and that employs 
artifice to defraud the other person or 
Page l38-LR0441(1) 
person that receives 
providing investment 
a device, 
scheme or 
engages 
in an act, 
practice or course 
a 
fraud or deceit 
person. 
An 
action 
fOllowing. 
of business that operates or would operate as 
on the other person is liable to the other 
under 
this 
subsection is governed 
by 
the 
A. 
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 attorney's fees determined by 
the court, 
less the 
amount of 
any 
income received as a· 
result of the fraudulent conduct. 
B. 
This subsection does not apply to a broker-dealer or its 
agents 
if 
the 
investment 
advice 
provided 
is 
solely 
incidental to transacting business as a broker-dealer and no 
special compensation is received for the investment advice. 
7. 
Joint and several liability. 
The following persons are 
liable jointly and severally with and to the 
same extent as 
persons liable under subsections 2 to 6: 
A. 
A person that directly or indirectly controls a person 
liable under subsections 
to 
6, 
unless 
the controlling 
person sustains the burden of proof that the person did not 
know and, in the exercise of reasonable care, could not have 
known of the existence of conduct by reason of which the 
liability is alleged to exist; 
B. 
An 
individual 
who 
is 
a 
managing partner, 
executive 
officer or director of a person liable under subsections 2 
to 6, 
including an individual having a similar status or 
performing similar functions, unless the individual sustains 
the burden of proof that the individual did not know and, in 
the exercise of reasonable care, could not have known of the 
existence of conduct by reason of which the liability lS 
alleged to exist; 
c. 
An individual who is an employee of or associated with a 
person liable under subsect ions 
;:> 
to 
fi 
and who materially 
aids. the conduct giving rise to the liability, unless the 
individual sustains the burden of proof that the individual 
did not kno1,T ani!., 
in the pxprrise of reasonable care, c_o_uld 
not have 
known of the existence of conduct by reason of 
which the liability is alleged to exist; and 
D. 
A person that is 
a 
broker-dealer, 
agent, 
investment 
adviser or investment adviser representative that materially 
aids 
the 
conduct 
giving 
rise 
to 
the 
liability 
under 
subsections 2 to 6, unless the person sustains the burden of 
Page l39-LR044l(1) 
proof that the person did not know and, in the exercise of 
reasonable care, could not have known of the existence of 
conduct by reason of which the liability is alleged to exist. 
8. 
Right of contribution. 
A person liable under this 
section has 
a 
right of contribution as in cases of contract 
against any other person liable under this section for the same 
conduct. 
• 
Survival of cause of action. 
A cause of action under 
this section survives the death of an individual who might have· 
been a plaintiff or defendant. 
10. 
Statute of limitations. 
A person may not obtain relief: 
A. 
Under subsection 2 for violation of section 16301 or 
under subsection 4 
or 5, 
unless the action is instituted 
within 2 years after the violation occurred; or 
B. 
Under subsection 2, other than for violation of section 
16301, or under subsection 3 or 5, 
unless the action is 
instituted within the earlier of 2 years after discovery of 
the facts constituting the violation or 5 years after the 
violation. 
11. 
No enforcement of violative contract. A person that has 
made, 
or 
has 
engaged in the 
performance of, 
a 
contract 
In 
violation of this chapter or a rule adopted or order issued under 
this chapter, or that has acquired a purported right under the 
contract with knowledge of conduct by reason of which its making 
or performance was in violation of this chapter, may not base an 
action on the contract. 
12. 
No 
contractual waiver. 
A condition, 
stipulation or 
provision binding a person purchasing or selling a security or 
receiving investment advice to waive compliance with this chapter 
or a rule adopted or order issued under this chapter is void. 
13. 
Survival of other rights or remedies. 
The rights and 
L-ernedies provided by this chapter are in addi tinn to any other 
rights or remedies that mav exist, but this chapter does not 
create a cause of action not specified in this section or section 
IG411, subsection 5. 
Prior 
Provisions: 
605-607, 609, 802. 
Official Comments 
1956 
Act 
Section 
410; 
RUSA 
Sections 
1. 
Under Section 509 violations of two or more sections can 
be proven, but the remedy is limited either to rescission or 
actual 
damages. 
Actual 
damages 
means 
compensatory 
damages. 
Puni ti ve or "double" damages are not provided by this section 
which also is the standard under Section 28(a) of the Securities 
Exchange 
Act 
of 
1934. 
See 
Louis 
Loss 
& Joel 
Seligman, 
Securities Regulation 4408-4427 (3d ed. rev. 1992). 
2. 
The Securities Litigation Uniform Standards Act of 1998 
cited in Section 509(a) modifies the entire Section 509. 
3. 
As with Section 12(a)(2) of the Securities Act of 1933, 
Section 509(b) contains a type of privity requirement in that the 
purchaser is required to bring an action against the seller. 
Section 509(b) is broader than Section 12(a)(2) in that it will 
reach all sales in violation of Section 301, not just sales "by 
means of a prospectus" as is the law under Section 12 (a) (2). See 
Gustafson v. A110yd Co., Inc., 513 U.S. 561 (1995). 
4. 
Unlike the current standards on implied rights of action 
under Rule 10b-5, neither causation nor reliance has been held to 
be an element of a private cause of action under the precursor to 
Section 509(b). See Gerhard W. Gohler, IRA v. Wood, 919 P.2d 561 
(Utah 1996); Ritch v. Robinson-Humprhey Co., 748 So. 2d 861 (Ala. 
1999); Kaufman v. I-Stat Corp., 754 A.2d 1188 (N.J. 2000). 
5. 
The measure of damages in Section 509(b)(3) is that 
contemplated by Section 12 of the Securities of 1933. 
S~e 9 Louis 
Loss and Joel Seligman, Securities Regulations 4242-4246 (3d ed. 
1992). The measure of damages in Section 509 (c) (3), however, is 
that 
contemplated 
by 
Rule 
10b-5. 
Sec. 
id. 
4408-4427. 
In 
providing for damages as an alternative to rescission, Section 
509(b)(3) follows the 1956 Act and is an improvement upon many 
earlier state provisions, which conditioned the plaintiff's right 
of recovery on his or her being in a position to make a good 
tender. A plaintiff is not given the right under this type of 
statutory formula to retain stock and also seek damages. 
6. 
Sections 509 (e) and (f) are based 
OIl 
d 
proposed NASAA 
amendment to the Urliform Securities Act adopted in order 
"t.O 
establish civil liability for individuals who willfully violate 
Section 
dealing with 
fraudulent 
practices 
pertaining 
to 
advisory activities." Neither provision is intended to limit 
other state law claims for providing investment advice. 
7. 
Broker-dealer employees, 
including research analysts, 
who 
receive 
no 
special 
compensation 
from 
third parties 
for 
investment advice would not be liable under Section 509(f). 
8. 
modeled 
Louis 
(3d ed. 
The control liability prov~s~on in Section 509(g)(1) is 
on that in the 1956 Act. On the meaning of "control," see 
Loss 
& Joel Seligman, Securities Regulations 1703-1727 
rev. 2000). 
9. 
The defense of lack of knowledge in Sections 509 (g) is 
also modeled on the 1956 Act. 
10. 
Under 
Section 
509(g) (2) 
partners, 
officers, 
and 
directors are liable, subject to the defense afforded by that 
subsection, without proof that they aided in the sale. In Section· 
509(g)(2), 
the 
term 
"partner" 
is intended 
to 
be 
limited to 
partners with management responsibilities, rather than a partner 
with a passive investment. 
11. 
Under 509 (g) (4), the performance by a clearing broker 
of the clearing broker's contractual 
functions 
even though 
necessary to the processing of a transaction -
without more would 
not constitute material aid or result in liability under this 
subsection. See, e.g., Ross v. 
Bolton, 
F.2d 819 
(2d Cir. 
1990). 
12. 
The "reasonable attorneys' fees" specified in Section 
are permissive, not mandatory. See, e.g., Andrews v. Blue, 
F.2d 367, 377 (10th Cir. 1973), (Colorado statute). 
13. 
The 
contribution provision 
in Section 
509(h) 
is 
a 
safeguard to 
avoid 
the 
common 
law principle that prohibited 
contribution among joint tortfeasors. 
14. 
The 
statute of limitations 
~n Section 509(j) 
is 
a 
hybrid of the 1956 Act and federal securities law approaches. The 
1956 Act Section 410(p) provided that: "No person may sue under 
this section more than two years after the contract of sale." 
Under 
this provision, 
the 
state courts generally decline 
to 
extend a statute of limitations period on grounds of fraudulent 
concealment or equitable tolling. 
Before the July 2002 enactment of the SC1.lbanes-Oxley Act, 
Rule 10b-5 of the Securities Exchange P.ct as construed by thf' 
United States Supreme Court in Lampf, 
Pleva, Lipkind, Prepis 
& 
Petigrew v. Gilbertson, 501 U.S. 350 (1991), prohibited equitable 
tulling under the federal securities law one year after ais~overy 
and three years after the act formula. 
See generally 10 Louis 
Loss 
& Joel Seligman, Securities Regulation 4505-4525 (3d. ed. 
rev. 1996). The Sarbanes-Oxley Act added 28 U.S.C. §1658(b) which 
provides 
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. 78c(a)(47», may be brought not later 
than the earlier of 
(1) 
years 
after 
the 
discovery 
constituting the violation; or 
of 
the 
facts 
(2) 5 years after such violation. 
Section 509(j)(1), 
as 
with the 
1956 
statute of repose, requiring an action to be 
year 
after 
a 
violation 
occurred. 
It 
is 
equitable tolling be permitted. 
Act, 
is 
a 
unitary 
commenced within one 
not 
intended 
that 
Section 
(j) (2) , 
in 
contrast, 
generally 
follows 
the 
federal securities law model. 
An action must be brought within 
the earlier of two years after discovery or five years after the 
violation. 
As 
with federal 
courts 
construing the 
statute of 
limitations under Rule 10b-5, it is intended that the plaintiff's 
right to proceed is limited to two years after actual discovery 
"or after such discovery should have been made by the exercise of 
reasonable diligence" (inquiry notice), see, e.g., Law v. Medco 
Research, Inc., 113 F.3d 781 (7th Cir. 1997), or five years after 
the violation. 
The rationale for replicating the basic federal statute of 
limitations in this Act is to discourage forum shopping. If the 
statute 
of 
limitations applicable 
to 
Rule 
10b-5 
were 
to 
be 
changed 
in the 
future, 
identical 
changes 
should 
be 
made 
in 
Section 509(j)(2). 
15. 
Section 509(k) 
is similar to Section 29(b) 
of the 
Securities Exchange Act and is intended to apply only to actions 
to enforce illegal contracts. See Louis Loss, Commentary on the 
Uniform Securities Act 150 (1976). 
16. 
Section 509(m) follows the 1956 Act. 
17. 
Section 509 and Section 411(e) provide the exclusive 
private causes of actioa under this Act. 
l-
is not 
partner. 
Maine Conunents 
Section 16509 (7) : 
The reference to 
restricted to those 
who 
carry the 
Consistent with Official Comment 
"managing partner" 
title of managing 
10, this subsection 
reaches all partners who 
have management responsibilities, 
as 
opposed 
to 
those 
partners 
who 
participate 
only 
as 
passive 
investors. 
Whether a partner (or person having a similar status 
or 
performing 
similar 
functions) 
is 
subject 
to 
potential 
derivative 
liability 
should 
be 
based 
on 
tne 
facts 
and 
circumstances in each case and not on the person's title. 
2. 
Section 16509(10) (A): 
The model Uniform Securities Act 
allowed a one-year statute of limitation for purchaser lawsuits 
involving 
unregistered securities 
or 
unlicensed 
conduct. 
To 
better protect investors, Maine has retained the 2-year statute· 
of limitations found in the Revised Maine Securities Act. 
§16510. 
Rescission offers 
1. 
Requirements. 
A 
purchaser, 
seller 
or 
recipient 
of 
investment advice may not maintain an action under section 16509 
A. 
The purchaser ( seller or recipient of investment advice 
receives in a record, before the action is instituted: 
(1) 
An offer stating the respect ln which liability 
under section 16509 may have arisen and fairly advising 
the purchaser, seller or recipient of investment advice 
of that person's rights in connection with the offer 
and 
any financial or other information necessary to 
correct all material misrepresentations or omissions in 
the information that was required by this chapter to be 
furnished to that person at the time of the purchase, 
sale or investment advice; 
(2) If the basis for relief under this section may have 
been a violation of section 16509, 
subsection 2 ( 
an 
offer to repurchase the security for cash, payable on 
delivery of the security, equal to the consideration 
paid and interest at the legal rate of interest from 
the date of the purchase, less the amount of any income 
received 
on 
the 
security, 
or, 
if the 
purchaser 
no 
longer owns thG 
~ecurity, an offer to pay ~he purchaser 
upon acceptance of the offer damages in an amount that 
would be recoverable upon a tender, less the value of 
the security vlhcn 
the purchaser 
disrn~pn of it a@ 
interest at the legal rate of interest from the date of 
the purchase in cash equal to the damages computed in 
~he manner provided in this subsection; 
~f 
the basis for relief under this section may have 
been 
a violation of section 16509, 
subsection 3, 
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 the legal rate of interest 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 the legal rate of interest from the date of" 
the sale: 
(4) If the basis for relief under this section may have 
been a violation of section 16509, 
subsection 4, 
an 
offer to pay as specified in subparagraph (2) if the 
customer is a purchaser or an offer to tender or to pay 
~ecified in subparagraph (3) if the customer is a 
seller: 
(5) If the basis for relief under this section may have 
been 
a violation of section 16509, 
subsection 5, 
an 
offer to reimburse in cash the consideration paid for 
the advice and interest at the legal rate of interest 
from the date of payment: or 
(6) If the basis for relief under this section may have 
been a violation of section 16509, 
subsection 6, 
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; 
B. 
The offer under paragraph A states that it must 
be 
accepted by the purchaser, seller or recipient of investment 
advice wi thin 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 
days, 
that 
the 
administrator, by order, specifies; 
C. 
The offeror has the present ability to pay the amount 
offered or to tender the security undpr r~r~gr~ph A; 
D. 
The 
offer 
under 
paragraph 
A 
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 
E. 
The purchaser, seller or recipient of investment advice 
that accepts the offer under paragraph A in a record within 
the period specified under paragraph B is paid in accordance 
with the terms of the offer. 
2. 
Form of offer. 
The administrator, by rule or order, may 
prescribe 
the 
form 
in 
which 
the 
information 
specified 
in 
subsection 1 must be contained in any offer made under subsection 
1. 
Rules 
adopted 
pursuant 
to 
this 
subsection 
are 
routine 
technical rules as defined in Title 5, chapter 375, subchapter 
2-A. 
3. 
Statute of limitation tolled. 
If an 
offer 
1S 
not 
performed in accordance with its terms, suit by the offeree under 
section 16509 is permitted without regard to this section, and 
Lhe sta_tute of limitations toll s from th~ time of receipt of the 
offer until 120 days after the rescission or settlement offer was 
to have been performed. 
Official Comments 
Prior Provisions: 1956 Act Section 410(e); RUSA Section 607. 
1. 
A rescission offer must meet the specific requirements 
of Section 
for civil liability under 
Section 
to be 
extinguished. Cf. Binder v. Gordian Sec., Inc., 742 F. Supp. 663, 
(N.D. Ga. 1990). See generally Rowe, Rescission Offers under 
Federctl aDd State Securities Law, 12 J. rorp. L. 383 (1987). 
2. 
A rescission offer that does not comply with Section 510 
is subject to civil liability, administrative enforcement, 
or 
criminal 
penalties 
under 
this 
Act. 
A rescission offer, 
for 
example, could violate Section 501, the general fraud provision. 
3. 
The 
vJi th Section 
could be used 
administrator may publish a form that would comply 
510, but the form would not be the only one that 
by the parties. 
4. 
A valid rescission offer will be exempt from securities 
registration. See Section 202(19). 
5. 
If a state chooses to add a notice or filing provision, 
it could provide tlLlS provision in Section 510 (6), which would 
state: 
(6) The offer [or a notice] is required to be filed with the 
administrator 
business 
days 
before 
the 
offering 
and 
conform in form and content with a rule prescribed by the 
administrator. 
Maine Comments 
1. 
Section 16510: 
Maine has added subsections (2) and (3) 
based on provisions in the Revised Maine Securities Act. 
The 
content of subsection (2) is also reflected in Official Comment 
5. 
The 
content 
of 
subsection 
(3) 
prevents 
unfairness 
to 
investors who wait in good faith to see whether sellers will 
perform on their rescission offers. 
§16511. 
Right to rescission applicable to sales of viatical or 
life settlement contracts 
1. 
Right to rescind transaction. 
In addition to any other 
rights provided for under this chapter or otherwise, an investor, 
other than an institutional investor, who purchases a viatical or 
life settlement contract may rescind the investment by giving 
written notice of rescission to the entity designated for such 
notice in the disclosure documents, 
by ordinary mail postage 
prepaid, within 30 business days following the later of: 
A. 
The 
day 
on 
which 
the 
investor 
received 
the 
final 
disclosure 
document 
pertaining 
to 
the 
transaction 
as 
required under this chapter and the rules or orders under 
this chapter; and 
B. 
The 
day 
on 
which 
the 
investor 
paid 
the 
required 
consideration for 
the 
purchase 
of 
the viatical 
or life 
settlement contract. 
2. 
Form of notice. 
The notice is sufficient if addressed 
to the entity designated for such notice at the address given in 
the disclosure statement pertaining to the transaction. Notice of 
rescission is effective upon deposit in the United States mail. 
The notice of rescission need not take a particular form and 1S 
sufficient if it expresses the intention of the purchas8r to 
rescind the transaction. 
Maine Comment6 
1. 
Section 16511: 
Maine has added this se.ction based on a 
provision in the Revised Maine Securities Act. 
ADMINISTRATION AND JUDICIAL REVIEW 
§16601. 
Administration 
L 
Office of Securities; administrator. 
There is created 
wi thin the Department of Professional and Financial Regulation 
the Office of Securities. 
The Office of Securities is directed 
by the Securities Administrator, referred to in this chapter as 
the "administrator," who is responsible for the administration 
and enforcement of this chapter, the Maine Commodi ty Code and 
chapter 69-B. 
A. 
The administrator is appointed by the Commissioner of 
Professional and Financial Regulation. The administrator is· 
appointed for a term that is coterminous with the term of 
the· 
Governor 
or 
until 
a 
successor 
is 
appointed 
and 
qualified. 
Any 
vacancy 
occurring 
must 
be 
filled 
by 
appointment 
for 
the 
unexpired portion of 
the 
term. 
The 
administrator may be removed from office for cause by the 
commissioner, and Title 5, section 931, 
subsection 2 
does 
not apply. 
A person appointed as administrator must have 
knowledge of, or experience in, the theory and practice of 
securities. 
B. 
With the approval of the Commissioner of Professional 
and Financial Regulation, the administrator shall organize 
the 
Office 
of 
Securities 
ln 
such 
a 
manner 
as 
the 
administrator 
considers 
necessary 
to 
carry 
out 
the 
administrator's responsibilities. 
C. 
The administrator may employ personnel as the business 
of the Office of Securities may require, 
subject to the 
Commissioner 
of 
Professional 
and 
Financial 
Regulation's 
approval and in accordance with the Civil Service Law. The 
qualifications of the personnel must reflect the needs and 
responsibilities 
of 
the Office 
of Securities' 
regulatory 
functions. The administrator may authorize senior personnel 
of the Office of Securities to carry out the administrator's 
duties and authority. The administrator may employ or engage 
such expert, 
professional or other assistance as 
may 
be 
necessary to assist the Office of Securities in carrying out 
its 
functions. 
In 
addition 
to 
salaries 
or 
wages, 
all 
employees of the Office of Securities must receive their 
actual 
expenses 
incurred 
ln 
the 
performance 
of 
their 
official duties. 
D. 
At 
the 
expense 
of 
the 
Office 
of 
Securities, 
the 
administrator may train the Office of Securities' employees, 
or 
havp 
t-hp.m 
trained, 
in 
a 
manner 
the 
administrator 
determines 
desirable, 
to 
carry out 
the 
purposes 
of 
the 
Office of Securities. 
2. 
Unlawful use of records or information. 
It is unlawful 
for 
the 
administrator 
or 
an 
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 is not public under section 16607, subsection 
2. 
This 
chapter 
does 
not 
authorize the 
administrator or 
an 
officer, employee or designee of the administrator to disclose 
the record or information, 
except in accordance with section 
16602, section 16607, subsection 3 or section 16608. 
3. 
No privilege or exemption created or diminished. 
Thi s . 
chapter does not create or diminish a privilege or exemption that 
exists at common law or by statute or rule or otherwise. 
4. 
Investor education. 
The administrator may develop and 
implement investor education initiatives to inform the public 
about investing in securities, with particular emphasis on the 
prevention and detection of securities fraud. In developing and 
implementing these initiatives, the administrator may collaborate 
with public 
and 
nonprofit organizations 
with 
an 
interest 
In 
investor 
education. 
The 
administrator may 
accept 
a 
grant or 
donation from a person that is not affiliated with the securities 
industry or from a nonprofit organization, regardless of whether 
the organization is affiliated with the securities industry, to 
develop 
and 
implement 
investor 
education 
ini tiati ves. 
This 
subsection 
does 
not 
authorize 
the 
administrator 
to 
require 
participation or monetary contributions of a registrant in an 
investor education program. 
5. 
Waiver of fee. 
The administrator may, by order, waive 
the filing fee required to register a security, 
to perfect a 
notice filing for a federal covered security or to secure an 
exemption from registration upon a written finding that the fee 
would be unreasonably high In light of the maximum potential 
proceeds from the sale of the security in the State or that the 
imposition of the fee would otherwise be unreasonable. 
6. 
Nonlapsing operating fund. 
There is established 
an 
operating fund to be used to carrJ': out the 
12urJ;!0ses of this 
cha£ter and any other statutory duties of the administrator. The 
operating fund consists of all annual renewal license fees for 
sales 
representatives 
and 
investment 
adviser· representatives 
received pursuant to this chapter. 
Any balance in the operating 
fund does not lapse, but must be carried forward to be used for 
the same purposes. 
Official Conunents . 
Prior 
Provisions: 
1956 
Act 
Section 
406; 
RUSA 
Sections 
701-702. 
1. 
Section 601(b) should be read with Section 607. Section 
601(b) 
prohibits 
the 
administrator 
or 
the 
administrator's 
officers and employees from using for personal benefit records or 
information that 
Section 
607(b) 
specifies 
do 
not 
constitute 
public records. 
Section 601(b) 
is not intended to limit the 
operation of Section 607(a). Neither Section 601(b) nor 607(b) is 
intended to impede the ability of the agencies specified in 
Section 608(a) 
from 
sharing records or other 
information in 
connection with an examination or an investigation. 
2. 
Section 601(c) 
makes clear that nothing in this Act 
alters the availability of evidentiary privileges. That question 
is left to the general law of the particular state. 
3. 
Sections 601(d) and (e) were adopted in recognition of 
the importance of investor education. 
An increasing number of 
jurisdictions are earmarking specific funds for this purpose. The 
lack of financial acumen among public investors, seniors, 
and 
students continues to be demonstrated in recent industry and 
regulatory studies. The importance of investor financial literacy 
is increasingly crucial given the decades long shift from defined 
benefit retirement plans toward defined contribution plans where 
employees are left to direct their own retirement accounts. 
Maine Connnents 
1. 
Section 16601: 
Maine has added subsections (5) and (6) 
based 
on 
provisions 
in 
the 
Revised 
Maine 
Securities 
Act. 
Subsection (5) is intended for situations in which the filing fee 
is disproportionately high given the scope and nature of the 
offering. 
Subsection (6) describes how the Office of Securities 
is funded. 
§16602. 
Investigations and subpoenas 
.1. 
Authority to invesTigate. 
TIH~ S:\UJlI,ill.i.." L.l ClL0~ l"u,Y; 
A. 
Conduct 
public 
or 
private 
investigations 
within 
or 
outside 
of 
this 
State 
that 
the 
administrator 
considers 
necessary or appropriate to detprmine whpthF'r a person has 
violated, is violating or is about to violate this chapter 
or a rule adopted or order issued under this chapter or to 
nid in the enforcement of this chapter or in the adoption of 
rules and forms under this chapter; 
B. 
Require or permit a person to testify, file a statement 
or 
produce 
a 
record, 
under 
oath 
or 
otherwise 
as 
the 
administrator 
determines, 
as 
to 
all 
the 
facts 
and 
circumstances 
concerning 
a 
matter to 
be 
investigated or 
about which an action or proceeding is to be instituted: and 
C. 
Publish a 
record concerning an action, proceeding or 
investigation under, or a violation of, this chapter or a 
rule adopted or order issued under this chapter if the 
administrator determines it is necessary or appropriate in 
the public interest and for the protection of investors. 
2. 
Administrator powers to investigate. 
For the purpose of 
an investigation under this chapter, 
the administrator or the 
administrator's 
designated 
officer 
may 
administer 
oaths 
and 
affirmations, subpoena witnesses, seek compulsion of attendance, 
take evidence, require the filing of statements and require the 
production 
of 
any 
records 
that 
the 
administrator 
considers 
relevant or material to the investigation. 
It is unlawful to 
fail to provide any statement or record if requested. 
3. 
Procedure and remedies for noncompliance. 
If a person 
does 
not appear or refuses 
to testify, file 
a 
statement or 
produce records or otherwise does not obey a subpoena as required 
by the administrator under this chapter, the administrator may 
request that the Attorney General apply to either the Superior 
Court located in Kennebec County or the Superior Court where 
service may be obtained on the person refusing to testify or 
produce or a court of another state to enforce compliance. The 
court may: 
A. 
Hold the person in contempt: 
B. 
Order the person to appear before the administrator: 
C. 
Order 
the person to testify about 
the matter under 
investigation or in guestion; 
D. 
Order the production of records; 
E. 
Grant 
injunctive 
relief, 
including 
restricting 
or 
prohibiting the offer or sale of securities or the providing 
of investment advice: 
F. 
Impose 0. civil fine not to exceed $10,000 J?"'r uiolrltinn; 
and 
G. 
Grant any other necessary or appropriate relief. 
4. 
Application for relief. 
This section does not preclude 
a person from applying to the Superior Court located in Kennebec 
County or a court of another state for relief from a request to 
appear, 
testify, file 
a 
statement, 
produce records or obey 
a 
subpoena. 
5. 
Assistance 
to 
securities 
regulator 
of 
another 
jurisdiction. 
At the 
request of 
the securities regulator of 
another state or a foreign jurisdiction, the administrator may 
provide assistance if the requesting regulator states that it is 
conducting an investigation to determine whether 
a 
person has 
violated, is violating or is about to violate a law or rule of 
the other state or foreign jurisdiction relating to securities 
matters that the requesting regulator administers or enforces.· 
The 
administrator 
may 
provide 
the 
assistance 
by 
using 
the 
authority to investigate and the powers conferred by this section 
as the administrator determines is necessary or appropriate. The 
assistance may be provided without regard to whether the conduct 
described in the request would also constitute a violation of 
this chapter or other law of this State if occurring in this 
State. 
In 
deciding 
whether 
to 
provloe 
the 
assistance, 
the 
administrator may consider whether the requesting regulator is 
permitted 
and 
has 
agreed 
to 
provide 
assistance 
reciprocally 
within its state or foreign jurisdiction to the administrator on 
securities matters when requested, 
whether compliance with the 
request would violate or prejudice the public policy of this 
State and the availability of resources 
and employees of the 
administrator to carry out the request for assistance. 
Official Comments 
Prior Provisions: 1956 Act Section 407; RUSA Section 601. 
1. 
Sections 602 (a) and (b) follow the 1956 Act, which was 
modeled generally on Sections 21(a) through (d) of the Securities 
Exchange Act of 1934 as it then read. 
2. 
Standards for issuance of subpoenas have been generally 
established in federal and state securities law. 
See, e.g., 10 
Louis Loss & Joel Seligman, Securities Regulation 4917-4937 (3d 
ed. rev. 
1996) 
(discussing Oklahoma Press Pub. 
Co. v. Walling, 
U.S. 
(1946) 
and other cases). 
The 
scope v[ 
subpoena 
enforcemeuL 
.L!l 
each state is 
a 
general matter 
for 
judicial 
determination. 
Under Section 602, 
an individual 
subpoenaed to 
testify by the administrator is not compelled to testify within 
the mectu.i..l!Y of these sections simply by seruice ()f 
i'l. 
subpoena. 
Under 
Section 
602(b) 
the 
individual 
can 
be 
subpoenaed 
and 
compelled to attend. Once in attendance an individual can assert 
4fi 
an 
evidentiary 
privilege 
or 
exemption, 
see 
Section 
601(c), 
including 
the 
Fifth 
Amendment 
privilege 
against 
self-incrimination. If an individual refuses to testify or give 
evidence, the administrator may apply (or have the appropriate 
State attorney apply) to the appropriate court for the relief 
specified 
in 
Section 
602(c). 
If 
the 
individual 
invokes 
the 
privilege against self-incrimination, Section 602(d) allows the 
administrator 
to 
apply 
to 
the 
appropriate 
court 
to 
compel 
testimony under the "use immunity" provision barring the record 
compelled 
or 
other 
evidence 
obtained 
from 
being 
used 
in 
a 
criminal case. See People v. District Co. of Arapahoe County, 894 
P.2d 739 
(Colo. 
19.95). 
The phrase "directly or indirectly" in 
Section 602(e) is intended to include testimony, other evidence, 
or 
other 
information 
derived 
from 
immunized 
testimony, 
statements, records, or evidence. 
3. 
Section 602 is intended to apply generally to securities 
offers and sales under Article 3 and broker-dealer and investment 
adviser activity under Article 4, 
when there is noncompliance 
with the first sentence of Section 602(c). This subsection does 
not limit the powers of an administrator under other provisions 
of this Act. 
4. 
A court 
may quash 
a 
subpoena for 
good 
cause 
under 
Section 602(d). The court may decline to enforce a subpoena that 
is arbitrary, capricious, or oppressive. 
5. 
Where appropriate under Section 602(f), an administrator 
could 
move 
to 
authorize 
admission 
of 
a 
requesting 
state's 
attorney under existing pro hac vice rules. 
6. 
Section 
602(0 
is 
consistent 
with 
the 
Securities 
Litigation Uniform Standard Act of 1998 which provides in Section 
102(e): 
The Securities and Exchange Commission, In consultation 
with 
State 
securities 
commissions 
(or 
any 
agencies 
or 
offices performing like functions), shall seek to encourage 
the 
adoption 
of 
State 
laws 
providing 
for 
reciprocal 
enforcement by State securities commissions 
of 
subpoenas 
issued by another State securities commission seeking to 
compel persons to attend, testify in, or produce documents 
or records in connection with an action or investigation by 
a 
State securities commission of an alleged violation of 
State securities laws. 
7. 
There are limitations on financial institutions being 
su.bject to visitori<:ll powers by State officials, Sllch as those 
affecting national banks contained in 12 U.S.C. 484 and 12 C.F.R. 
Sec. 7.4000. 
Law outside this Act may place similar limits on 
state 
chartered 
financial 
institutions 
being 
subjected 
to 
visitorial powers. This Act does not negate these limitations. 
Maine Conunents 
1. 
The model Uniform Securities Act contained a provision 
(section 602(e» 
that Maine wholly rejected. 
Maine thus moved up 
subsection (f) of the model act to become section 16602(5). 
2. 
Maine does not concur with the implications in Official 
Comment 
as to federal limitations on the State's visitorial 
powers. 
There is ongoing litigation and disagreement over the 
scope and applicability of such limitations. 
§16603. 
Civil enforcement 
1. 
Civil 
action 
instituted 
by 
administrator. 
If 
the 
administrator believes that a person has engaged, is engaging or 
lS about to engage in an actr 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 actr practice or course of business that 
materially aids a violation of this chapter or a rule adopted or 
order issued under this chapter, 
the administrator may request 
that the Attorney General bring an action in the Superior Court 
of the county in which the person resides or has the principal 
place of business or in the Superior Court of Kennebec County 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. 
2. 
Relief available. 
In an action under this section and 
4fi 
on a proper showing, the court may: 
A. 
Issue a permanent or temporary injunction, restraining 
order or declaratory judgment; 
B. 
Order other appropriate or ancillary relief , which may 
include: 
(1) 
An asset freeze, 
accounting, writ of attachment, 
writ of general or specific execution and appointment 
of 
a 
receiver 
or 
conservator, 
which 
may 
be 
the 
administrator, 
for 
the 
defendant or 
the 
defendant's 
assets; 
(2) 
Ordering 
the 
~dminictrator to 
take 
rh~rgp 
~nd 
control of a defendant's property, including investment 
accounts 
and 
accounts 
in 
a 
depository 
institution, 
rents_ and prnfi ts, to collect debts and to acquire and 
dispose of property; 
(3) 
Imposing a civil fine not to exceed $10,000 per 
violation or 
an order of rescission, 
restitution or 
Page l54-LR044l(1) 
disgorgement directed to a person that has engaged in 
an act, practice or course of business constituting a 
violation of this chapter or the predecessor act or a 
rule adopted or order issued under this chapter or the 
~decessor act; and 
(4) 
Ordering 
the 
pavment 
of 
prejudgment 
and 
post judgment interest; or 
C. 
Order 
such 
other 
relief 
as 
the 
court 
considers 
appropriate. 
3. 
No bond required. 
The administrator is not required to 
oost a bond In an action or proceeding under this chapter. 
4. 
Securities agency of another state. 
Upon a showing by 
the administrator or securities agency of another state that a 
person has violated any provision of the securities act of that 
state or any rule or order of the administrator or securities 
agency of that state, the Superior Court may grant appropriate 
legal and equitable remedies. 
Official Comments 
Prior Provisions: 1956 Act Section 408; RUSA Section 603 
1. 
Section 408 of the J9Sn 
A~t was limited to injunctions. 
This 
Section 
follows 
RUSA 
In 
broadening 
the 
civil 
remedies 
available when the administrator believes that a violation has 
occurred. 
A primary 
purpose 
of 
a 
broad 
range 
of 
potential 
sanctions 
is 
to 
enable 
administrators 
to 
better 
tailor 
appropriate sanctions to particular misconduct. 
2. 
The 
administrator alternatively may 
proceed 
to 
seek 
administrati ve enforcement under Section 604; to deny, 
suspend, 
or revoke 
a 
securities registration under Section 306; 
or to 
deny, 
suspend, 
revoke, 
or 
take 
other 
action 
against 
a 
broker-dealer, agent, 
investment adviser, or investment adviser 
representative registration under Section 412. 
3. 
Constitutional due process considerations can also be 
addressed 
by 
rulcm3Jeing 
or 
incorporation 
of 
t:hp 
npplicable 
administrative procedure act provisions of each jurisdiction. The 
term "upon a proper shOl.,ing" has a settled meaning in the federal 
securitie~ lnws. See, e.g., Securities Act of 1933 Section 20(b). 
4. 
As with Sections 509(g)(3) and (4), materially aid in 
Section 603(a) does not include ministerial or clerical acts. 
Maine Comments 
1. 
Section 16603(4): 
Maine has added this subsection based 
on a provision in the Revised Maine Securities Act, though former 
references to specifically available remedies have been deleted 
as unnecessary. 
§16604. 
Administrative enforcement 
1. 
Issuance 
of 
order 
or 
notice. 
If 
the 
administrator 
determines that a person has engaged, is engaging or is about to 
engage in an act r 
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 administrator may: 
A. 
Issue an order directing the person to cease and desist 
from engaging in the act, practice or course of business or 
to take other action necessary or appropriate to comply with 
this chapter; 
B. 
Issue 
an 
order 
denying, 
suspending, 
revoking 
or 
condi tioning 
the 
exemptions 
for 
a 
broker-dealer 
under 
section 16401, subsection 2, paragraph A, 
subparagraph (4) 
or 
(6) 
or 
an 
investment 
adviser 
under 
section 
16403, 
subsection 2, paragraph A, subparagraph (3); or 
C. 
Issue an order under section 16204. 
2. 
Summary 
process. 
An 
order 
under 
subsection 
is 
effective on the date of issuance. Upon issuance of the order, 
the administrator 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 of any civil 
fine 
UI 
costs of investigation the 3.dmini[;trator "Till seek, 
a 
statement of the reasons for the ULuer and notice that, within 15 
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 
administrator wi thin 30 days after the date of service of the 
order, the order, including the imposition of a civil penalty or 
requirement for payment of the costs of investigation sought in a 
statement In the order, 
becomes 
final 
as to that person by 
operation of 
law. 
A summary order issued against any person 
becomes 
a 
final order 
days after the administrator mails 
notice to the interested parties of the right to request 
a 
hearing if they fail to request a hearing or on the date of the 
hearing if the person reguesting the hearing fails to appear. 
If a hearing is reguested or ordered, the administrator, 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. 
3. 
Procedure for final order. 
If a hearing is reguested or 
ordered pursuant to subsection 2, a hearing must be held pursuant 
to the Maine Administrative Procedure Act. A final order may not 
be issued unless the administrator makes findings of fact and 
conclusions of 
law ln 
a 
record in accordance with the Maine· 
Administrative Procedure Act. 
The final order may make final, 
vacate or modify the order issued under subsection 1. 
4. 
Civil fine; final orders and remedies. 
In a final order 
under 
subsection 
3, 
the 
administrator 
may: 
order 
remedies 
described in subsection 1; censure that person; bar that person 
from 
association with any issuer, broker-dealer or 
investment 
adviser in this State; or 
impose 
a 
civil fine not to exceed 
$5,000 per violation. 
5. 
Costs. 
In a final order, the administrator 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. 
6. 
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 section 16609, the administrator 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. 
7. 
Enforcement by court; further civil. fine. 
If a person 
does 
not 
comply 
with 
an 
order 
under 
this 
section, 
the 
administrator may reguest that the Attorney General petition a 
court of competent jurisdiction to enforce the order. The court 
may not reguire the administratoL Lo post a bond in an action or 
proceeding under this section. I f 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 
cODlempt of the order. The court may impose a 
fDr~hpr civil fine 
against the person for 
contempt in 
an 
amount 
not 
to 
exceed 
$10,000 per violation and may grant anv other relief the court 
detprminps is just and proper in the circumstances. 
8. 
Appointment of presiding officer. 
For purposes of any 
hearing conducted pursuant to this section, the administrator may 
appoint a gualified person to preside at the hearing and to make 
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flaw. 
The 
responsibility for the entry of the final findings of fact and 
conclusions of law and for the issuance of any final order remain 
with the administrator. 
Official Comments 
Prior Provisions: RUSA Sections 602, 712. 
1. 
Section 604, unlike Section 603, may be 
administrator without prior judicial process or 
The section, among other matters, empowers the 
act summarily in appropriate circumstances. 
initiated by the 
a prior hearing. 
administrator to 
2. 
Sections 603 and 604 are intended to be available to the 
administrator against persons not subject to stop orders under 
Section 
or proceedings 
against registered broker-dealers, 
agents, 
investment 
advisers, 
or 
investment 
adviser 
representatives under Section 412. All persons or securities not 
subject to Section 306 or 412 will be subject to Sections 603 and 
604. A person must be covered by either (1) Sections 306 or 412 
or (2) Sections 603 or 604. 
3. 
Service of an order or notice under this Section is not 
effective unless made in accordance with Section 611. 
Maine Comments 
1. 
Section 16604(4): 
Maine has added the administrator's 
power to censure and bar in order to maintain the administrative 
enforcement authority found in the Revised Maine Securities Act. 
2. 
Section 16604(8): 
appointment of a presiding 
Revised 
Maine 
Securities 
administrative 
efficiency 
hearing process. 
Maine has added this subsection on 
officer based on a provision in the 
Act. 
It 
allows 
for 
greater 
and 
fairness 
in 
the 
administrative 
§16605. 
Rules, 
forms, 
orders, 
interpretative 
opinions 
and 
hearings 
1. 
Issuance and adoption of forms, orders and rules. 
In 
addition to specific authority granted elsewhere in this chapter, 
the administrator~ 
A. 
Issue forms and orders and, after notice and comment-L 
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. 
By rule, 
define terms, 
whether or not used in this 
chapter, but those definitions may not be inconsistent with 
this chapter; and 
c. 
By rule, clas sify securities, persons and transactions 
and adopt different requirements for different classes. 
2. 
Findings and cooperation. 
Under this chapter, a rule or· 
form 
may 
not be 
adopted or 
amended, 
or 
an 
order 
issued or 
amended, 
unless the 
administrator 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 th:is chapter,-In adopting, amending 
and repealing rules and forms, section 16608 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. 
3. 
Financial 
statements. 
The 
administrator 
may 
require 
that a financial statement filed under this chapter be prell.9-red 
ln 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 m8Y pstablish; 
A. 
The form and content of financial statements required 
under this chapter; 
B. 
Whether 
unconsolidated 
financial 
statements 
must 
be 
filed; and 
C. 
Whether required financial statements must be audited by 
an independent certified public accountant. 
4. 
Interpretative opinions. 
The Cl.c1ministrCl_tor may provide 
interpretative 
Opiflions, 
or 
issue 
determinCl.t; ons 
that 
~the 
administrator will not institute a proceeding or an action under 
this 
chapter 
against 
a 
specified 
person 
for 
engaging 
in 
a 
specified 
act, 
l'LC1(;tice 
or 
cource 
of 
bl]s;npss 
.if 
tb~ 
determination is consistent with this chapter. A rule adopted or 
order issued under this chapter may establish a reasonable charge 
for 
interpretative 
0D; nion~L determinations 
whether 
the 
administrator will institute an action or a proceeding under this 
chapter. 
5. 
Declaratory 
rulings. 
The 
administrator, 
in 
the 
administrator's discretion, 
may conduct a 
hearing and issue a 
declaratory ruling under Title 5, section 9001, subsection 3 as 
to 
the applicability of this chapter, 
any provision of this 
chapter or any rule or order of the administrator to any person 
or transaction or as to the meaning of any term used in this 
chapter or any rule or order of the administrator. 
6. 
Conformity with rule, form or order. 
No provision of 
this chapter imposing any liability applies to any act done or 
omi tted in good faith in conformity with a rule, order or form' 
adopted 
by 
the 
administrator, 
notwithstanding that the rule, 
order or form may later be amended or rescinded or be determined 
by judicial or other authority to be invalid for any reason. 
7. 
Presumption 
for 
public hearings. 
A 
hearing 
in 
an 
administrative proceeding under this chapter must be conducted in 
public unless the administrator for good cause consistent with 
this chapter determines that the hearing will not be so conducted. 
8. 
Rulemaking. 
Rules adopted pursuant to this section are 
routine technical 
rules 
as 
defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
Official Comments 
2() 
Prior Provisions: 1956 Act Spc:tion 412; RUSA Sections 705, 
707. 
1. 
It is anticipated that the administrator will propose 
amendments 
or 
make 
rules 
under 
Section 
(a) 
to 
remain 
coordinate with relevant federal 
law, 
as well 
as 
appropriate 
rules of the National Association of Securities Dealers, and to 
achieve uniformity among the States. 
2. 
Uniform forms such as 
today common In the securities 
form B-D, 
U-4, U-5, 
and NF are 
industry and are authorized by 
Section 605(b). 
3. 
Section 605 (c) 
refer::; to generally aceeptecl ac:c:ounting 
principles in the United States which currently are promulgated 
by the Financial Accounting Standards Board and the Securities 
and Exchonge Commission. 
4. 
It is anticipated that the states will employ websites, 
e-mail or othpr electronic means to provide notice of proposed 
rulemaking or adoption of new rules, rule amendments, 
forms or 
form amendments, statements of policy or interpretations adopted 
by the administrator, and issuance of orders to registrants and 
others who have provided a current e-mail or similar address and 
expressed an interest in receiving such notice. 
5. 
Section 605(e) 
interpretative opinions, 
statements 
of 
policy 
administrator. 
does not apply to staff no action or 
but does apply to rules, forms, orders, 
or 
interpretations 
adopted 
by 
the 
Maine Conanents 
1. 
Section 
16605(5). 
regarding declaratory rulings, 
the 
Revised 
Maine 
Securities 
Securities Act. 
Maine 
has 
added 
subsection 
(5) 
the substance of which appeared in 
Act 
but 
not 
the 
model 
Uniform 
2. 
Section 16605(6): 
Maine has replaced the model Uniform 
Security 
Act's 
provision 
regarding 
effect 
of 
compliance, 
originally subsection (e), with a provision regarding good faith 
conformity found in the Revised Maine Securities Act. 
§16606. 
Administrative files and opinions 
1. 
Public 
register 
of 
filings. 
Subject 
to 
state 
record-keeping requirements, the administrator shall maintain, or 
designate 
a 
person 
to 
maintain, 
records 
or 
a 
register 
of: 
applications 
for 
registration 
of 
securities; 
registration 
statementsj 
notice 
filingsj 
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 
recordj orders issued under this chapter or the predecessor act: 
and interpretative opinions or no action determinations issued 
under this chapter. 
Records may be maintained in computer or 
microform format or any other form of data storage, as long as 
3tl 
the records are readily accessible. 
2. 
Public availability. 
The administrator shall make all 
rules, forms, interpretative opinions, advisory rulings, consent 
agreements and orders available to the public. 
3. 
Copies 
of public 
records. 
The 
administrator 
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, not to exceed $.50 
per page, or for certification, not to exceed $10 per certified 
record. A copy of the record certified or a certificate by the 
Page l61-LR044l(1) 
administrator of a record's nonexistence is prima facie evidence 
of a record or its nonexistence. 
Rules adopted pursuant to this 
section are 
routine 
technical 
rules 
as 
defined 
in Title 
5, 
chapter 375, subchapter 2-A. 
Official Comments 
Prior Provisions: 1956 Act Section 413; RUSA Section 709. 
1. 
"Record" is defined in Section 102(25). 
2. 
Compliance 
with 
a 
state records 
law will typically 
satisfy the requirements of Section 606(a). 
§16607. 
Public records; confidentiality 
1. 
Presumption of public records. 
Except 
as 
otherwise 
provided in subsection 2, records obtained by the administrator 
or filed under this chapter, including a record contained in or 
filed .. lith a registration statement, application, notice filing 
or 
report, 
are 
public 
records 
and 
are 
available 
for 
public 
examination in accordance with Title I, chapter 13, subchapter 1. 
2. 
Nonpublic records. 
The follo"ling records are not public 
records 
and 
are 
not 
available 
for 
public 
eXamination 
under 
subsection 1: 
4fi 
A. 
A record obtained by the administrator in 
wi th an auditor inspection under section 16411, 
or an investigation under section 16602; 
connection 
subsection 
B. 
A 
part 
of 
a 
record 
filed 
in 
connection 
with 
a 
registration 
statement 
under 
section 
16301 
and 
sections 
16303 to 16305 or a record under section 16411, subsection 4 
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; 
c. 
A record that is not required to 
b,::. 
rrovided to 
th_e 
administrator or filed ~nder this chapter and is provided to 
the administrator only on the condition that the record will 
Ilul be subject to public CJL3.mination or disclnsllrR; 
D. 
A record received from 
.lQ608 L 
subs.,,..,t; on 1 that has 
by the agency furnishing the 
a person specified in section 
:Qe.en designated as confidential 
record; 
E. 
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; 
F. 
A 
record 
obtained 
by 
the 
administrator 
through 
a 
designee of the administrator that. pursuant to a routine 
technical 
rule, 
as 
defined 
In 
Title 
5, 
chapter 
375, 
subchapter 2-A, or an order under this chapter, has been: 
G. 
(1) 
Expunged from the administrator's records by the 
designee; or 
(2) 
Determined to be nonpublic or nondisclosable by 
that 
designee 
if 
the 
administrator 
finds 
the 
determination to be in the public interest and for the 
protection of investors; 
Records to the extent that they relate solely to the 
administrator's 
internal 
personnel 
rules 
and 
practices, 
including, 
but 
not 
limited 
to, 
protocols, 
guidelines, 
manuals 
and 
memoranda of procedure for employees 
of the 
Office of Securities; 
H. 
Interagency 
or 
intra-agency 
memoranda 
or 
letters, 
including generally records that reflect discussions between 
or consideration by the administrator and employees of-
the 
Office of Securities of any action taken or proposed to be 
taken by the administrator or employees of the Office of 
Securities, 
including, 
but 
not 
limited 
to, 
reports, 
summaries, 
analyses, 
conclusions or other work product of 
the administrator or employees of the Office of Securities, 
except those that by law would routinely be discoverable in 
litigation; and 
1. 
Records to the extent that disclosure could reasonably 
be 
expected 
to 
constitute 
an 
unwarranted 
invasion 
of 
personal privacy. 
3. 
Administrator 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 
section 16608, 
subsection 1, 
the administrator may disclose a 
record obtained in connection wi th an audi t 
or inspection under 
section 16411, cubsection 4 or a record obtain p r11 n rnnnpct.ion 
with an investigation under section 16602. 
Prior to disclosure 
to 
a 
person 
specified 
in 
section 
16608, 
subsection 
1, 
the 
administratoXITLCll'-----Lequire the requesting agency to certify that 
under applicable law reasonable protections exist to preserve the 
integrity, 
confidentiality 
and 
security 
of 
the 
information 
comparable to the protections existing under the laws of this 
State. 
4. 
Public 
disclosure 
for 
enforcement 
purposes. 
The 
administrator may disclose to the public any information obtained 
in connection with 
an investigation that would otherwise 
be 
nonpublic information, but only if the administrator determines 
that disclosure is necessary for the protection of investors or 
the public. 
Official Comments 
Prior 
Provisions: 
RUSA 
Section 
703; 
SEC 
Rule 
Section 
200.80(b)(4); Securities Exchange Act of 1934 Sections 24(d) and 
(e) . 
1. 
Section 607(a) 
reflects the 
freedom of information and open records 
was adopted. 
extensive development of 
laws since the 1956 Act 
2. 
records 
freedom 
Section 
607(b) 
may 
insulate 
or other information that may be 
of information or open records 
from 
public 
disclosure 
available under a state 
act. Unless the state 
freedom 
of 
information 
or 
open 
records 
act 
implements 
a 
constitutional provision, this Act as the later and more specific 
enactment should control as a matter of statutory construction. A 
state may amend its freedom of information act, open records act 
or this section to eliminate any inconsistencies. 
3. 
Records 
and 
other 
information 
obtained 
by 
an 
administrator In connection with an audit or inspection under 
subsection 411(d) or an investigation under Section 602 may be 
made public in the enforcement action, even if records and other 
information would otherwise be subject to subsection 607(b)(1). 
4. 
An administrator may orally disclose information under 
Section 607(c) to a person specified in Section 608(a) for the 
purposes specified in Section 607(c). 
Maine Comments 
1. 
Section 16607 (2) (G-I) : 
Maine has added these paragraphs 
based on SEC rules that had been referenced in the predecessor 
act. 
§16608. 
Uniformity and cooperation with other agencies 
1. 
Objective 
of 
uniformity 
and 
cooperation. 
The 
administrator may, in the administrator's discretion, cooperate, 
coordinate, consult and, subject to section 16607 , share records 
and information with the secur i ties 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 or insurance regulator or a governmental regulatory 
or law enforcement agency to, among other objectives, effectuate 
greater 
uniformity 
in 
securities 
matters 
among 
the 
Federal 
Government, 
self-regulatory organizations, 
states 
and 
foreign 
governments. 
2. 
Policies to consider. 
In 
cooperating, 
coordinating, 
consulting and sharing records and information under this section 
and in acting by rule, order or waiver under thi s chapter, the 
administrator may, 
in the administrator's discretion, take into 
consideration in carrying out the public interest the following 
general policies: 
A. 
Maximizing 
effectiveness 
of 
regulation 
for 
the 
protection of investors; 
B. 
Maximizing uniformity in federal and state regulatory 
stanc'l.ards; and 
C. 
Minimizing burdens on the business of capital formation 
without 
adversely 
affecting 
essentials 
of 
investor 
orotection. 
3. 
Subjects 
for 
cooperation. 
The 
cooperation, 
coordination, consultation and sharing of records and information 
authorized by this section includes: 
A. 
Establishing or employing one or more designees as 
a 
central depository for licensing, 
registration and 
~otice 
filings 
under 
this 
chapter 
and 
for 
records 
required or 
allowed to be maintained under this chapter; 
B. 
Developing and maintaining uniform forms; 
C. 
Conducting a joint examination or investigation; 
D. 
Holding a joint 0dministrative hearing; 
E. 
Instituting 
and 
prosecuting 
a 
joint 
civil 
or 
administrative proceeding; 
F. 
Sharing and exchanging personnel; 
G. 
Coordinating 
registrations 
under 
section 
16301 
and 
licensing under sections 16401 to 16404 and exemptions under 
section 16203; 
H. 
Sharing and exchanging records, subject to section 16607; 
I. 
Formulating rules, 
statements 
of policy, 
guidelines, 
forms and interpretative opinions and releases; 
J. 
Formulating common systems and procedures; 
K. 
Notifying 
the 
public 
of 
proposed 
rules, 
forms , 
statements of policy and guidelines; 
L. 
Attending 
conferences 
and 
other 
meetings 
among 
securities regulators, which may include representatives of 
governmental 
and private sector organizations involved ln 
capital formation, 
considered necessary or appropriate to 
promote or achieve uniformity; and 
M. 
Developing and maintaining a 
uniform exemption from 
registration for small issuers and taking other steps to 
reduce the burden of raising investment capital by small 
businesses. 
Official Comments 
Prior Provisions: 1956 Act Section 415; 
RLlSA Sections 704 
and 803; 19(c) of the Securities Act of 1933. 
1. 
Uniformity 
of 
regulation 
among 
the 
states 
and 
coordination with the Securities and Exchange Commission is a 
principal objective of this Act. 
Section 
is intended to 
encourage such cooperation to the 
maximum extent appropriate. 
Operative phrases such as "shall, in its discretion" in Sections 
60S(a) and (b) are intended to be precisely coordinate with the 
directive that 
Congress 
gave 
to 
the 
Securities 
and 
Exchange 
Commission in Section 19(c) of the Securities Act of 1933. 
2. 
The 
goals 
of 
uniformity 
among 
the 
states 
and 
coordination 
with 
related 
federal 
regulation, 
including 
self 
regulatory organizations, 
may 
be 
enhanced 
by greater 
use 
of 
informo.tion 
technology 
systems 
such 
as 
the 
Web-eRD, 
the 
Investment 
Adviser 
Registration 
Depository 
(lARD) , 
or 
the 
Securities 
and 
Exchange 
Commission Electronic 
Data Gathering, 
Analysis and Retrieval System (EDGAR). These types of techniques 
are consistent with a potential system of "one stop filing" of 
all federal and state forms that is encouraged by this Act. 
3. 
This Act is intended, to the extent practicable, to be 
revenue neutral in its impact on existing state laws. 
4. 
which 
Section 
might 
be 
608(c) lists 
undertaken. 
some j oint or coordinated efforts 
Other 
appropriate 
cooperative 
activities are also encouraged. 
5. 
Court decisions interpreting the securities laws have 
construed these acts to achieve "broad protection to investors," 
a 
remedial 
approach that 
"embodies 
a 
flexible rather than 
a 
static principle, one that is capable of adaption to meet the· 
countless and variable schemes devised by those who seek to use 
the money of others on the promise of profits." SEC v. W.J. Howey 
Co, 328 U.S. 293, 299, 301 (1946). 
Maine Conunents 
1. 
Section 16608(1): 
The 
Revised Maine 
Securities Act 
contained a specific provision, 
in section 10702(1), that the 
administrator has the discretion to bear the costs of cooperation 
with other regulators. 
Maine does not retain that provision here 
because the administrator has 
such discretion even without 
a 
specific provision to that effect. 
§16609. 
Judicial review 
1. 
Judicial review of orders. 
Notwithstanding Title 10, 
section 8003, subsection 5, any person aggrieved by a final order 
of the administrator may obtain judicial review of the order In 
the Superior Court of Kennebec County by filing a petition in 
accordance with Title 5, 
section 11001 and the Maine Rules of 
Civil Procedure, Rule 80C. 
J8 
..,2'-'.'__--'J"-u"""'d""i,.,c~l~· ",a=l~~r-"e,,-,v,,-,l~· e"'-'!w'----'=o'2f"--.2r'-'u~l52e'_"s~.'_____'A==_~r._u~l.se'__...5a~d~o~p-"t'-'e"-'d='------'u~n"'-"'d"'e'-'r~ t his 
chapter is subject to judicial reVlew in accordance with the 
Maine Administrative Procedure Act. 
Official Conunents 
Prior Provisions: 1056 hct Section 411; RDSA Section 711(b). 
1. 
The 
1956 
Act 
Section 
specified procedures 
for 
judicial review of orders, in part modeled on Section 12 of the 
Model 
Administrative 
Procedure 
Act, 
Handbook 
of 
National 
Conference of Commissioners on Uniform State Laws 334 (1944) and 
partly on Section 25 of the Securities Exchange Act. 
2. 
A rule adopted under this Act may be subject to judicial 
review in accordance with the state administrative procedure act. 
3. 
In those states in which judicial review of rules is 
permitted, 
a state may choose to add Section 609(b). In those 
states 
in which 
judicial 
review of 
rules 
is 
not permitted, 
Section 609(b) should be deleted. 
§166l0. 
Jurisdiction 
1. 
Sales and offers to sell. 
The following sections 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: 
A. 
Section 16301; 
B. 
Section 16302; 
C. 
Section 16401, subsection l' 
, 
D. 
Section 16402, subsection l' 
, 
E. 
Section 16403, subsection l' 
, 
F. 
Section 16404, subsection l' , 
G. 
Section 16501; 
H. 
Section 16506; 
1. 
Section 16509; and 
J. 
Section 16510. 
2. 
Purchases and offers to purchase. The following sections 
do not apply to a person that purchases or offers lo purchase a 
security unless the offer to purchase or the purchase is made in 
this State or the offer to sell 01 the sale is made and accepted 
in this State: 
A. 
Section 16401, subsection l' 
, 
B. 
Section 16402, subsection l' 
, 
C. 
Section 16403, subsection l' , 
D. 
Section 16404, subsection l' , 
E. 
Section 16501; 
F. 
Section 16506; 
G. 
Section 16509; and 
H. 
Section 16510. 
3. 
Offers in this State. 
For the purpose of this section, 
an offer to sell or to purchase a security is made in this State, 
whether or not either party is then present in this State, if the 
offer: 
A. 
Originates from within this State; or 
B. 
Is directed by the offeror to a place in this State and 
received at the place to which it is directed. 
4. 
Acceptances ln this State. 
For the purpose of this 
section , 
an offer to purchase or to sell is accepted in this 
State, whether or not either party is then present in this State, 
if the acceptance: 
A. 
Is communicated to the offeror In this State and the 
offeree reasonably believes the offeror to be present In 
this State and the acceptance is received at the place In 
this State to which it is directed; and 
B. 
Has not previously been communicated to the offero£L 
orally or in a record, outside this State. 
5. 
Publications, 
radio, 
television or 
other 
electronic 
conununications. 
An offer to sell or to purchase a security lS 
not made in this State when a publisher circulates or there lS 
circulated on the publisher's behalf in this State a bona fide 
newspaper 
or 
other publication of general, 
regular 
and ~aid 
circulation that is not published In this State or 
that is 
published in this State 
but 
has 
had 
more 
than 
2/3 
of 
its 
circulation out::;ide thi::; State during the previou::; 12 month::; or 
when 
a 
radiu 
ur 
televisiun 
prugram 
ur 
uther 
electrunic 
communication, except specifically addressed electronic mail or 
messaging, 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: 
A. 
The 
program 
or 
communication 
is 
syndicated 
and 
distributed from outside this State for redistribution to 
the general public in this State; 
B. 
The program or communication is supplied by 
a radio,' 
television or other electronic network with the electronic 
signal 
originating 
from 
outside 
this 
State 
for 
redistribution to the general public in this State; 
C. 
The 
program 
or 
communication 
is 
an 
electronic 
communication that originates outside this State 
and 
lS 
captured for redistribution to the general public in this 
State 
by 
a 
community 
antenna 
or 
cable, 
radio, 
cable 
television or other electronic system; or 
D. 
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. 
for purposes of this subsection, when a publication is published 
in editions, each edition is considered a separate publication 
except for material common to all editions. 
Radio or television 
programs, 
or 
other 
electronic 
communications, 
with 
changes, 
alterations or additions made prior to local redistribution, are 
considered as originating in this State. 
6. 
Investment advice and misrepresentations. 
The following 
sections apply to 
a 
person if the person engages in an act f 
practice 
or 
course 
of 
business 
instrumental 
in 
effecting 
prohibi ted or actionable conduct in this State, whether or not 
either party is then present in this State: 
A. 
Section 16403, subsection l' 
f 
B. 
Section 16404, subsection l' , 
C. 
Section 16405, subsection l' 
f 
D. 
Section 16502; 
E. 
SectiuIl 1G505; and 
r. 
Section 
16506. 
Official Comments 
Source of Law: 1956 Act Section 414; RUSA Section 801. 
1. 
Section 
defines 
the 
application of 
the 
Act 
to 
interstate or international transactions when only some 
elements of a violation occur in this State. This Section 
to 
all 
types 
of 
proceedings 
specified 
by 
the 
of the 
applies 
Act 
administrative, civil, and criminal. The law is now settled that 
a person may violate the law of a particular state without ever 
being within the state or performing each act necessary to 
violate the law within that state. 
2. 
Section 610 generally follows Section 414 of the 1956 
Act, but has been modernized to reflect the development of the 
Internet and other electronic communications after 1956. 
3. 
Section 610 can be illustrated in the context of a civil 
action under Section 509(b) by a purchaser in State A against a' 
seller in State B: 
Section 610 (a) 'would apply when an "offer to sell is made ln 
this State." 
Section 610(c) provides that an offer which originates in 
State B and is directed to State A is made in both states. The 
securi ties act of State A would apply under Section 610 (c) (2). 
The act of State B would apply also, under Section 610(c)(1). The 
intent is to prevent a seller in State B from using that state as 
a base of operations for defrauding person in other states. 
Section 610 (e) addresses offers made through publications, 
radio, television, or electronic communications. The subsection 
provides 
a 
series 
of 
safe 
harbors 
for 
advertisements 
in 
newspapers, 
magazines, 
radio, 
television, 
or electronic media 
that either originate outside State A or that originate in State 
A but are directed outside the state to the general public. With 
respect to bona fide newspapers or other publications of general, 
regular, and paid circulation, the safe harbor requires that more 
than 
two thirds of its circulation be outside State A. 
With 
respect to radio, television, or other electronic communications, 
safe harbors are specified in Sections 610(e)(1) through (4). 
Section 610(d), however, provides that a person in State A 
who 
makes 
an offer to PUU:;11dse 
as 
a 
result of communication 
described in Section 610(e) may cause the act to be applicable if 
the offeror accepts the offer "in thi:; Slate." Section 610 (d) 
defines when an offer is accepted "in this State." 
If 
a 
selling broker-dealer 
in State 
B 
solely 
sends 
a 
confirmation into State A, 
or the purchaser in Stetp A sends a 
check from wi thin State A, 
the act will not apply unless, under 
Section 610(d), 
the 
confirmation or delivery constitutes 
the 
seller's E1cceptance of the purchaser's offer to buy in State A. 
The applicability of the act to purchaser is addressed by 
Section 6l0(b) which is the converse of Section 6l0(a). Under 
Section 509(c) there can be liability of purchasers to sellers. 
Section 
jurisdictions 
610(f) 
In 
is 
cases 
a 
new 
provision 
that 
involving 
investment 
specifies 
advice 
and 
misrepresentations. 
4. 
Under subsection 202 (20) certain out-of-state offers or 
sales are exempt from securities registration. 
5. 
The phrase "other electronic means" is coextensive with 
computer or other information technology permitted by subsections 
102(8), 102(25). 
6. 
Under 
Section 
the 
administrator 
may 
adopt 
interpretative rules or orders to specify when particular uses of 
new electronic communications, including the Internet, involve an 
offer to sell or to purchase a security, acceptance of an order 
to purchase or sell a security, or an act or practice involving 
prohibi ted conduct, wi thin a State, whether or not a purchaser, 
seller, or other party is then present in the State. The NASAA 
Interpretive 
Order 
Concerning 
Broker-Dealers, 
Agents, 
and 
Investment Adviser Representatives Using the Internet for General 
Dissemination of Information for Products and Services (Apr. 23, 
1997) is an illustration of an interpretative order that would be 
In compliance wi th the administrator's authority under Section 
610. 
Under 
this 
Order, 
broker-dealers, 
agents, 
investment 
advisers, and investment adviser representatives who distribute 
information 
on 
available 
products 
and 
serVlces 
through 
communications on the Internet generally to anyone having access 
to the Internet such as postings on a bulletin board or home page 
shall not be deemed to be transacting business In a State if 
specified conditions are satisfied including a 
legend clearly 
stating that the 
broker~dealer, agent, 
investment adviser, 
or 
investment adviser representative may transact business in that 
State 
only 
if 
first 
registered, 
excluded 
or 
exempted 
from 
applicable registration requirements. 
Maine Comments 
1. 
Sec Lion 10707(3) 
of the 
provided that receipt in this State 
a 
post 
office 
in this 
State. 
Revised Maine Securities Act 
may include mail delivered to 
Maine 
does 
not 
retain that 
pluvibion here because such a delivery is covered under the terms 
of this section. 
2. 
Section l66H)(5): 
M<'line has added the phrase "except 
specifically addressed electronic mail or messaging" to clarify 
that 
specifically 
directed 
electronic 
communications 
by 
electronic mail or messaging originating outside of Maine 
and 
received in Maine is an offer made in Maine. 
§16611. 
Service of process 
1. 
Signed consent to service of process. 
A consent to 
service of process must be signed and filed on a form designated 
by the administrator. 
A consent appointing the administrator 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 
licensing 
or 
registration 
or 
a 
previous exemption or notice filing need not file an additional 
consent. 
2. 
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 I, 
the 
act, 
practice 
or 
course 
of 
business constitutes the appointment of the administrator 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. 
3. 
Procedure 
for 
service 
of 
process. 
Service 
under 
subsection 1 or 2 may be made by providing a copy of the process 
to the office of the administrator, 
but it is not effective 
unless: 
A. 
The plaintiff, which may be the administrator, 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 concent to cer?ice of procecc hac not been filed, 
at the last known address or takes other reasonable steps to 
give notice; and 
B. 
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 wi thin the time that 
the court, or the administrator in a proceeding before the 
administrator, allows. 
4. 
Service in administrative proceedings or civil- actions 
by administrator. 
Service pursuant to subsection 3 may be used 
Page l73-LR044l(1) 
in a proceeding before the administrator or by the administrator 
in a civil action in which the administrator 1S the moving party. 
5. 
Opportunity to defend. 
If process 
is 
served under 
subsection 3, 
the court, or the administrator in a proceeding 
before 
the 
administrator, 
shall 
order 
continuances 
as 
are 
necessary or appropriate to afford the defendant or respondent 
reasonable opportunity to defend. 
Official Comments 
Prior Provisions: 1956 Act Sections 414(g) 
and (h); 
RUSA 
Section 708. 
1. 
Section 611 follows the 1956 Act and RUSA in providing 
for a signed consent t.o service of process in Section 611(a); a 
substituted service of process in Section 611(b); and process and 
opportunity to defend in Sections 611(c) through (e). 
2. 
An issuer 1S not required to file a consent to service 
of process unless it proposes to offer a security in this State 
through 
someone 
acting 
on 
an 
agency basis. 
Since 
the civil 
liability provisions of Section 509(b) apply only in a suit by a 
purchaser against 
a 
seller, 
the 
issuer in a 
firm 
commitment 
underwriting is civilly liable only to the underwriter, Who, 
1n 
turn, may be liable to the dealer, who, in turn, may be liable to 
the purchaser. In contrast, in a best efforts underv.rriting, when 
the security is sold on an agency basis and title passes directly 
to the purchaser, the issuer can be liable to the purchaser. 
3. 
Section 611(b) generally follows Section 414 (h) of the 
1956 Act and Section 708(c) of RUSA. The intent is to provide for 
substituted service of process when a seller in one state directs 
an offer into a second state either in violation of the laws of 
the 
second state 
or 
fraudulently. 
Under 
Section 
611(b) 
the 
purchaser may sue the seller in the purchaser's state and then 
bring an action on the 
judgment 
in the seller's state. 
The 
constitutionality of this type of statute has long been sustained. 
4. 
This 
section 
was 
originally based 
on 
the 
type 
of 
nonresident 
motorist 
statute 
whose 
constitutionality 
was 
sustained 
in 
Hess 
v. 
Pawlowski, 
U.S. 
(1927) 
and 
s u.Lsequently in other contexte. See, e. g. ( 
Interncd~ i nni'll Shoe Co. 
v. State of Wash., 326 U.S. 310 (1945); Travelers Health Ass'n v. 
Commonwealth of Va., 339 U.S. 643 (1950). 
§166l2. 
Liability of control persons 
In an administrative action brought by the administrator, or 
a civil action brought by the Attorney General for a violation of 
any provision of this chapter or any rule or order adopted or 
issued by 
the 
administrator pursuant to 
this 
chapter, 
every 
person who directly or indirectly controls another person liable 
for the violation, every partner, officer or director of that 
other 
person, 
every 
person 
occupying 
a 
similar 
status 
or 
performing similar functions, every employee of that other person 
who materially aids in the act or transaction constituting the 
violation and every broker-dealer, agent, investment adviser or 
investment adviser representative who materially aids in the act 
or transaction constituting the violation is liable to the same 
extent 
as 
that 
other 
person, 
unless 
the 
person 
otherwise· 
secondarily liable under this chapter proves that the person did 
not know, and in the exercise of reasonable care could not have 
known, 
of the existence of the facts by reason of which the 
liability is alleged to exist. Any of the remedies authorized by 
section 16603, 
subsection 2 
may be granted with respect to 
a 
person secondarily liable under this section. This section is not 
intended to abrogate any right to contribution that may exist at 
common law ''lith respect to an award of restitution. 
Maine Comments 
1. 
In the model Uniform Securities Act, Section 612 was a 
severability provision that was not necessary in Maine because of 
the general severability section in Title 1 of the Maine Revised 
Statutes. 
2. 
Section 16612: 
Maine has added this section based on a 
provision in the Revised Maine Securities Act, section 10602(3), 
allowing 
for 
control 
person 
liability 
ln 
administrative 
proceedings and in civil actions brought by the Attorney General. 
§16613. 
Administrative determination of abandonment 
A 
pending 
license 
application, 
registration 
statement, 
exemption filing or notice filing may be considered abandoned if 
the administrator has not received a 
response to ing:uiries or 
deficiency notices 
for 
a 
period 
of 
at least 
days. 
The 
administrator shall send an abandonment notice to the last kn01,rn 
address of the applicant or filer. The applicant or filer must 
respond to the abandonment notice within 30 days to avoid an 
abandonment determination. Th'" abandonment of an arrlicC1tinn r30es 
not 
preclude 
the 
filing 
of 
a 
subseg:uent 
application 
for 
licensing, 
registration statement, 
exemption filing or notice 
filing. 
Maine Comment 
1. 
This 
section incorporates 
the 
abandonment provisions 
within sections 10313(7), 10406(5) and 10502(8) of the Revised 
Maine Securities Act, 
which had no 
counterparts in the model 
Uniform Securities Act. 
SUBCHAPTER 7 
TRANSITION 
§1670l. 
Effecti ve date. 
This chapter takes effect January 1, 
§16702. 
Application 
The application of this chapter to existing proceedings and 
existing rights and duties lS described in this section. 
1. 
Applicability of predecessor act to pending proceedings 
and existing rights. 
The predecessor act exclusively governs all 
actions or proceedings that are pending on the effective date of 
this 
chapter 
or 
may 
be 
instituted 
on 
the 
basis 
of 
conduct 
occurring before the effective date of this chapter, 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 5 years 
after the effective date of this chapter, whichever is earlier. 
2. 
Continued effectiveness 
under 
predecessor act. 
All 
effective licenses and registrations under any 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 
lj censes and registrations under any 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 that predecessor act. 
3. 
Applicability of predecessor act to offers or sales. The 
predecessor act exclusively applies to an offer or sale made 
within one year after the effective date of this chapter pursuant 
to an offering made in good faith before the effective date of 
this chapter on the basis of an exemption available under the 
predecessor act. 
Official Comments 
Prior Provisions: 1956 Act Section 418; RUSA Section 807. 
Prior 
law 
governs 
all 
suits, 
actions, 
prosecutions, 
or 
proceedings which are pending or may be initiated on the basis of 
facts or circumstances occurring before the effective date of a 
State blue sky statute. See Hilton v. Mumaw, 
F.2d 588,600 
( 9 th C i r. 197 5) . 
PARTB 
Sec. B-1. 24-A MRSA §2517, sub-§3 is enacted to read: 
3. 
The 
superintendent 
shall 
adopt 
rules 
regarding 
the 
sui tabili ty of sales of annuities for the purpose of protecting 
the 
consumer 
and 
furthering 
uniformity 
of 
laws 
with 
other 
states. 
Rules 
adopted pursuant to this section are 
routine 
technical rules pursuant to Title 5, chapter 375, subchapter 2-A. 
PARTC 
Sec. C-l. 4 MRSA §152, sub-§9, as amended by PL 2001, c. 229, 
§1, is further amended to read: 
9. 
Licensing jurisdiction. 
Except as provided in Title 5, 
section 10004; Title 8, section 279-B; Title 10, section 8003, 
subsection 5; Title 20-A, sections 10712 and 10713; Title 29-A; 
Title 32, chapters 2-B.. 
lG.§--aBa 114 and 135; and Title 35-A, 
section 3132, exclusive jurisdiction upon complaint of an agency 
or, if the licensing agency fails or refuses to act wi thin a 
reasonable time, upon complaint of the Attorney General to revoke 
or suspend licenses issued by the agency. 
The District Court has 
original jurisdiction upon complaint of a 
licensing agency to 
determine whether renewal or reissuance of 
a 
license of that 
agency 
may 
be 
refused. 
The 
District 
Court 
has 
original 
concurrent jurisdiction to grant equitable relief in proceedings 
initiated by an agency or the Department of the Attorney General 
alleging any violation of a license or llcensing laws or rules. 
Notwithstanding any other provisions of 
may 
not 
reinstate 
or 
otherwise 
affect 
revoked or modified by the District Court 
filed 
by 
the 
Attorney 
General 
without 
Attorney General; 
law, 
a licensing agency 
a 
license 
suspended, 
pursuant to a complaint 
the 
approval 
of 
the 
Sec. C-2. 5 MRS A §194-B, sub-§2, ~B, as enacted by PL 2001, c. 
550, Pt. A, §2, is amended to read: 
B. 
Sales or transfers for fair market value of: 
(1) 
Any 
interest in property 
charity 
or 
any 
wholly 
owned 
proceeds of which are paid solely 
or any wholly owned subsidiary; or 
owned 
by 
the 
public 
subsidiary, 
the 
net 
to the public charity 
( 2 ) 
Money or monetary equivalents owned by a public 
charity or any wholly owned subsidiary in exchange for 
an 
interest 
in 
property, 
including 
securities 
as 
defined in Title 32, section 1G§G1 16102, subsection 18 
£a, 
to be held by the public charity or any wholly 
owned subsidiary; 
Sec. C-3. 5 MRSA §100Sl, sub-§l, as amended by PL 
2003, c. 
505, §l, is further amended to read: 
as 
provided 
In section 
10004; 
l. 
Jurisdiction. 
Except 
Title 8, 
section 279-B; 
Title 10, 
section 
8003; 
Title 
20-A, 
29-A; and Title 32, chapters 2-B, 
sections 10712 and 10713 ; Title 
1G~---aBE! 
and 
5, 
the 
District 
Court 
has 
exclusive 
jurisdiction upon complaint of any agency or, if the licensing 
agency fails or refuses to act wi thin a 
reasonable time, 
upon 
complaint of the Attorney General to revoke or suspend licenses 
issued by the agency and has original jurisdiction upon complaint 
of an agency to determine whether renewal or reissuance of 
a 
license of that agency may be refused. 
Sec. C-4. 9-A MRSA §3-S06, as amended by PL 1987, c. 129, 
§62, is further amended to read: 
§3-506. Limitation 
This Part sRa±± does not apply to any transaction covered by 
section 8-204, nor SRa±± does it apply to any sale, by any dealer 
or agent or salesman of a registered dealer, registered pursuant 
to Title 32, chapter lG§ 135, of stocks, bonds, debentures or 
securities representing stocks, 
bonds or debentures registered 
pursuant to Title 32, chapter lG§ 135 or expressly exempt from 
registration thereof. 
Sec. C-S. 9-B MRSA §10S3. sub-§4, lIB, as enacted by PL 1993, 
c. 257, §6, is amended to read: 
B. 
OfferG or G;)lcG that arc elrcmpt from registration by 
virtue of Title 32, section 
lG§G6T--s-ub-s-e-€-t-i-€rfl--6-r-pa~aE3~apR 
br-W-eF-R 16202, subsections 16, 19 or 26. 
Sec. C-6. 10 MRSA §1210-B, sub-§3, as enacted by PL 2001, c. 
471, Pt. E, §2, is amended to read: 
a 
3. 
Securities. 
dealer registered 
A sale by a dealer or agent or salesman of 
pursuant to Title 32, 
chapter 
±G§ 135 of 
stocks, 
bonds, 
debentures 
or 
securities 
bonds or debentures registered pursuant to 
or expressly exempt from registration 
chapter ±G§ l35; 
representing 
stocks, 
Title 32, chapter ±G§ 
pursuant to Title 32, 
Sec. C-7. 13 MRSA §1756, last~, as enacted by PL 1993, c. 300, 
§l, is amended to read: 
Notwi thstanding any other provision of law to the contrary, 
the offer of membership, shares or other ownership interests in a 
cooperative 
affordable 
housing 
corporation 
or 
any 
other 
corporation 
or 
unincorporated 
association 
organized 
for 
the 
primary purpose of providing housing on a cooperative basis as a 
consumer cooperative under subchapter I 1 or otherwise is not the 
offer of a security pursuant to Title 32, chapter ±G§ 135 or any 
other provision of law. 
Sec. C-8. 14 MRSA §1522, sub-§1. ~L, as enacted by PL 1991, c. 
9, Pt. G, §2, is amended to read: 
L. 
Title 32, section ±G§G2 16603; 
Sec.C-9. 20-AMRSA§11482, as enacted by PL 1997, c. 732, 
§4, is amended to read: 
§11482. Exemption from registration 
A participation agreement offered pursuant to this chapter 
lS not a security as defined in Title 32, section :bG§G:b 16102, 
subsection ±g lQ. 
The authority may obtain written advice of 
legal counselor written advice from the United States Securities 
and 
Exchange 
Commission, 
or 
both, 
that 
the 
offering 
of 
a 
participation agreement is not subject to federal securities laws 
but is in compliance with those laws and is not in violation of 
other applicable laws. 
Sec. C-I0. 24-A MRSA §1402, sub-§4, ~D, CiS 
CililellUed by PL 1999, 
c. 225, §2, is further amended to read: 
D. 
"Consultant" does not include: 
(1) 
An attorney licensed to practice who is actively 
practicing law in this State; 
( 2 ) 
the 
An insurance 
Society 
of 
Actuaries; 
actuary and member or 
Actuaries 
or 
American 
associate 
Academy 
of 
of 
( 3 ) 
A 
chapter 
public 
or 
certified under 
public practice; 
accountant certified under Title 
32, 
a certified public accountant who is 
Title 32, 
chapter 113 
and in active 
(4) 
A licensed insurance producer who receives a fee 
in lieu of a commission pursuant to section 1450 if the 
insurance producer receives 
a 
fee 
for the insurance 
transaction and not for other services provided; 
(5) 
A financial institution or a financial institution 
holding company if the insurance advice is given as 
part of its trust department rendering insurance advice 
in a fiduciary capacity; or 
(6) 
A person authorized to act as or on behalf of an 
in-vestment advisor in accordance with Title 32, section 
lG ~ G ~ --a£.e- -l-O-3-04-,--s-1.±B-&e-G-t-i-G-B- - 2 -A 16403 and 16404 to the 
extent 
such 
acti -vi ties 
entail 
providing 
insurance 
advice incidental to financial planning advice. 
Sec. C-l1. 24-A MRSA §3489, sub-§l,1[C, as enacted by PL 1999, 
c. 656, §5, is amended to read: 
C. 
"Public offering" means an offer that includes an offer 
to individuals that is made by means of public advertising 
or general solicitation. 
"Public offering" does not include: 
(1) 
Issuance of stock to the mutual hJlding company or 
any related stock holding company; or 
(2) 
An offer or sale that is exempt from registration 
by virtue of Title 32, 
section HI§G2 r --6-ub-6-e-c-t-i-on---2 r 
FaFaE:fFapR--±,-....[,..,--N r -0----G-F---R 16202, subsections 13, 15, 
16, 19 or 26. 
Sec. C-12. 24-A MRSA §3489, sub-§6. as enac ted by FL 1999, c. 
656, §5, is amended to read: 
6. 
Membership interest. 
A membership interest in a mutual 
holding company does not coastitute a security under Title 32, 
section lG§Gl 16102, subsection 1& N 
or any other law of this 
State and is not transferable. 
Sec. C-13. 24-A MRSA §6208, 2nd 1[, as amended by PL 2001, c. 
182, §8, is further amended to read: 
I f 
a 
registration statement 
with the Office of Securities, 
Uniform Securities Act, Title 32, 
for the cooperative is filed 
pursuant to the Revises Maine 
chapter lG§ 135, a copy must be 
simul taneously filed with the superintendent and a copy must be 
given to every purchaser of a membership interest or share in the 
cooperative at least 10 days prior to the sale of the interest or 
share. 
Any 
information 
required 
to 
be 
filed 
with 
the 
superintendent pursuant to this chapter 
and contained in the 
referenced registration materials may be filed in that format 
with the superintendent and need not be submitted under separate 
cover. If a registration statement is not filed with the Office 
of Securities, a disclosure statement containing, to the extent 
applicable, all the information required to register a security 
by qualification, pursuant to Title 32, section lG4G4 16304, must 
be filed with the superintendent and given to every subscriber at 
least 10 days prior to the sale. In the alternative, a provider 
may elect to provide 
each 
subscriber 
a 
disclosure 
statement 
containing those provisions stated in section 6209 determined to 
be required by the superintendent. 
Sec. C-14. 24-A MRSA §681S. sub-§2, as amended by PL 2003, c. 
636, §15, is further amended to read: 
2. 
Securities 
registration. 
Any 
sale 
by 
a 
settlement 
provider of settlement contracts, policies acquired pursuant to 
settlement 
contracts 
or 
interests 
therein that 
constitute 
a 
"security" within the meaning of the United States Securities Act 
of 1933, as amended, or the ReviseS. Maine Uniform Securities Act, 
as amended, must be registered under those statutes unless there 
is an available exemption from registration under those statutes. 
Sec. C-1S. 24-A MRS A §681S-A, as enacted by PL 2003, c. 636, 
§16, is amended to read: 
§6815-A. Regulatory requirements under Maine Uniform 
Securities Act 
This chapter does not preempt the regulatory requir3ments 
set forth 
in 
the 
ReviseS. 
Maine 
Uniform 
Securities 
Act, 
as 
amended, 
including 
but 
not 
limited 
to 
the 
regulation 
of 
securities 
transactions 
ln 
settlement 
contracts 
or 
viatical 
settlement contracts and the licensing of any person or entity 
engaged in the sale of securities. 
Sec. C-16. 32 MRSA §1401, sub-§l, ~B, as enacted by PL 1999, 
c. 258, §2 and affected by §3, is amended to read: 
B. 
The payee shall deposit the money in either a federally 
insured deposit or share accollnt or a trust account; 
the 
type of account must 
be disclosed to the payor or 
the 
payor's representative and a deposit in a trust account may 
be invested in or used to purchase only the following: 
(1) 
Federally insured deposit or share accounts; 
(2) 
Securities issued, insured or guaranteed by the 
Uni ted States or by any 
ag~ncy or corporate or other 
instrumentality of the United States; 
(3) 
Municipal 
securities 
that 
are 
registration 
under 
Title 
32, 
section 
subsection IT-~aFa~Fa~R-A; and 
exempt 
from 
±Q§Q& 
16201, 
(4) 
Permanent life insurance, other than variable life 
insurance and annuities, from an insurer authorized to 
transact 
insurance 
in 
this 
State, 
subject 
to 
the 
provisions 
of Title 
24-A, 
chapter 
27. 
A payee or 
mortuary trustee may not receive any commission, fee or 
other consideration from an insurer in connection with 
the procurement or purchase of insurance permitted by 
this subparagraph. 
Except for fees allowed by this section, all investments 
made with trust assets remain trust assets. 
Sec. C-l7. 32 MRSA §4668, sub-§ 1. ~C, as enac ted by PL 200 L 
c. 276, §l, is amended to read: 
c. 
_~ sale by a dealer or-
agent or salesman of a dealer 
registered pursuant to chapter 
±G§ 
of stocks, 
bonds, 
debentures 
or 
securities 
representing 
Etocks, 
bonds 
or 
debentures 
registered 
pursuant 
to 
chapter 
±Q§ 
or 
expressly exempt from registration pursuant to chapter 
±G§ 
5; 
Sec. C-lS. 32 MRSA §1120S, as amended by PL 1989, c. 
542, 
§74, is further amended to read: 
§11208. Securities laws unaffected 
Nothing 
in this chapter impairs, 
derogates 
or otherwise 
affects the authority or powers of the administrator under the 
R8Vi589 Maine Uniform Securities Act or thG applic3tion of any 
provision to that Act to any person or transaction subject to 
that Act. 
Sec. C-l9. 32 MRSA §l4701, sub-§4, as enacted by PL 200L c. 
324, §12, is amended to read: 
4. 
Merchandise. 
"Merchandise" includes any objects, wares, 
goods, 
promises, 
commodities, 
intangibles, 
services 
or 
other 
things 
of 
value but 
does 
not 
include 
food 
or technical 
or 
vocational 
schools 
located 
outside 
of 
the 
State 
that 
are 
Page l82-LR044l(1) 
registered pursuant to Title 20-A, section 9501. 
"Merchandise" 
does not include securities that are registered or exempt from 
registration pursuant to 
chapter 
lG§ 
135, 
the 
Revised Maine 
Uniform Securities Act and rules adopted pursuant to that Act. 
Sec. C-20. 38 MRSA §2212, sub-§15, as enacted by PL 1989, c. 
585, Pt. A, §7, is amended to read: 
15. 
Application. 
Provide financial assistance by means of 
revenue obligation securities which are not subject to Title 32, 
chapter lG§ 135, relating to dealers in securities. 
SUMMARY 
Part A of this bill enacts the Maine Uniform Securities Act. 
Part B authorizes the Superintendent of Insurance to adopt 
certain rules. 
Part C corrects cross refer~nces.