NY Gen Bus L § 359-E (2021)
2021 New York Laws GBS - General Business Article 23-A - Fraudulent Practices in Respect to Stocks, Bonds and Other Securities 359-E - Definitions.

§ 359-e. Definitions. Registration requirements.   1.  The following terms, whenever used or referred to in this article, shall have the following meaning  unless  a  different  meaning  clearly appears from the context:  (a) A "dealer" shall mean and include any person, firm, association or corporation  engaged  in  the  business of buying and selling securities from or to the public within or from this  state  for  his  or  its  own account,  through  a broker or otherwise, except a bank unless such bank is considered a dealer under the  federal  securities  exchange  act  of 1934,  but does not include any person, firm, association or corporation in so far as he or it buys or sells securities for his or its bona  fide investment  account,  either individually or in some fiduciary capacity. The term "dealer" shall, except as otherwise provided in  this  article, also  include  a  person,  firm,  association  or corporation selling or offering for sale from or to  the  public  within  or  from  this  state securities  issued by it. No person shall be deemed to be a "dealer", as defined in this subdivision, or a broker, as defined in subdivision  (b) of  this section, solely by reason of the fact that he is engaged in the business of (i) selling, offering for sale, purchasing  or  offering  to purchase any security or securities to, from or through any bank, dealer or  broker, or to or from any syndicate, corporation or group formed for the specific purpose of acquiring such  securities  for  resale  to  the public  directly  or  through  other  syndicates  or groups, or (ii) any offer,  sale  or  distribution  by  an  issuer   of   stock   dividends, nontransferable  warrants  or  transferable  warrants exercisable within ninety days of  their  issuance  to  existing  stockholders,  securities issued  upon  conversion  of  convertible  securities  and  exercise  of warrants  and  securities  issued  as  part  of  a  recapitalization  or reclassification  to  existing stockholders of the same issuer, or (iii) selling, offering for sale,  purchasing  or  offering  to  purchase  any security   or  securities  on  the  floor  of  any  securities  exchange registered as  a  national  securities  exchange  under  the  securities exchange   act   of  nineteen  hundred  thirty-four.  No  person,  firm, association or corporation shall be deemed to be a "dealer", as  defined in  this  subdivision,  solely by reason of selling or offering for sale any  security  or  securities  to   any   bank,   corporation,   savings institution,  trust  company,  insurance company, investment company, as defined in the federal investment company act of nineteen hundred forty, pension or profit-sharing  trust,  or  other  financial  institution  or institutional  buyer,  whether  the  purchaser  is acting for himself or itself or in some fiduciary capacity, as part of a private placement  of securities.  (b) A "broker" shall mean and include any person, firm, association or corporation,  other  than a dealer, engaged in the business of effecting transactions in securities for the account of others within or from this state, but does not include a bank unless  such  bank  is  considered  a broker under the federal securities exchange act of 1934.  (c)  A  "salesman"  shall  mean and include every person employed by a broker or dealer as said terms are defined  in  this  section,  for  the purpose of representing such broker or dealer in the sale or purchase of securities to or from the public within or from this state.  (d) A "principal" shall mean and include every person or firm directly or indirectly controlling any broker or dealer.  (e)  A  "bank"  shall mean and include a state or national bank, trust company or savings institution incorporated under the laws  and  subject to  the  examination,  supervision  and  control  of any state or of the United States or of any insular possession thereof.    2. No dealer or broker shall sell or offer for sale to or purchase  or offer  to  purchase  from  the  public  within  or  from  this state, as principal, or broker, any securities issued or to be issued  unless  and until  a notice, to be known as the "state notice," containing the name, business  or  post  office  address  of  such  dealer or broker and if a corporation the state or country of  incorporation  thereof,  and  if  a partnership  the  names  of  the  partners, shall have been filed in the department of state. Such notice shall be in the following form:                                STATE NOTICE  Name(s) of dealer(s), broker(s) ........................................ Business address(es) or post office address(es) (state which) ........................................................................ If a corporation, the state or country in which incorporated. ........................................................................ If a partnership, the names of the partners ............................   3. It shall be unlawful for any dealer, broker or salesman to sell  or offer  for  sale  to  or  purchase  or offer to purchase from the public within or from this state, any securities issued or to be issued, unless and until such dealer, broker or salesman  shall  have  filed  with  the department  of  law  a registration statement as provided herein. A real estate broker or salesman licensed under article twelve-A  of  the  real property  law  who  is  not  acting as a dealer shall be deemed to be in compliance with such registration  statement  filing  requirements  with respect  to the sale of securities constituting cooperative interests in real estate, including shares  of  cooperative  apartment  corporations, commercial  cooperative  corporations,  condominiums,  and  interests in homeowners associations.  (a) The registration statement relating to dealers and brokers, to  be known  as  the  "broker-dealer statement" shall contain such information pertaining to the business history for the last  preceding  five  years, criminal  record, and educational background of the applicant and his or its partners, officers, directors or  other  principals  thereof  deemed pertinent  by  the  attorney-general. The attorney-general may prescribe forms for the use of such applicants.  (b) The registration statement relating to salesmen, to  be  known  as the "salesman's statement," shall contain such information pertaining to the  business history for the last preceding five years, criminal record and educational background of the  applicant  deemed  pertinent  by  the attorney-general.  The  attorney-general  may prescribe forms for use of such applicants and, as a condition of registration, shall require  that prior  to the filing of such a registration statement any such applicant shall undertake and successfully complete the uniform  securities  agent state  law  examination  ("series 63") or the uniform combined state law examination ("series 66") as administered by or on behalf of  the  North American  Securities  Administrators  Association,  Inc.  (NASAA) by any national  securities  association  or  national   securities   exchange; provided  that,  if  an  applicant  registers  with the attorney-general solely for the purpose of selling condominiums,  shares  of  cooperative apartment corporations or commercial cooperative corporations, interests in  homeowners  associations  or  interests  in timeshare projects, such applicant  shall  not  be  required  to  undertake  the   aforementioned examination as a condition of registration.  (c)  The  registration  of  brokers, dealers and salesmen shall be for periods of four years commencing  on  January  fifth,  nineteen  hundred sixty.  Such  statements for brokers, dealers or salesmen shall be filed every four years within sixty days prior to the expiration of  the  four  year period, provided that previously filed statements shall continue to be  effective  for a period of ninety days following the end of the four year period. Initial statements for those having no previous filing  may be made at any time and shall be effective from the date of filing for a period  of four years. All statements filed pursuant to prior provisions of law shall remain in effect  until  January  fifth,  nineteen  hundred sixty.   4. The attorney-general may by rule or order provide for the filing of supplemental  statements  prescribed  by  him  which  shall contain such information  as  the  attorney-general  may  deem  necessary   to   keep reasonably current the information on file.   5.  The department of law shall collect the following fees: (a) twelve hundred dollars for each broker-dealer's statement; (b)  twelve  hundred dollars  for  each  broker-dealer's  statement  filed by a person, firm, association or corporation selling or offering for sale from or  to  the public  within or from this state securities issued by it for any amount in excess of five hundred thousand dollars; (c)  three  hundred  dollars for  each broker-dealer's statement filed by a person, firm, association or corporation selling or offering for sale from or to the public within or from this state securities issued  by  it  for  any  amount  of  five hundred  thousand  dollars  or  less; (d) three hundred dollars for each broker-dealer's statement  filed  by  a  person,  firm,  association  or corporation  solely for the purpose of selling or offering for sale from or to the public within or from  this  state  securities  consisting  of condominiums, shares of cooperative apartment corporations or commercial cooperative   corporations,  interests  in  homeowners  associations  or interests in timeshare projects, plus fifteen dollars for each  partner, officer,  director  or  principal  of  any  such  firm,  association  or corporation;  (e)  one  hundred  fifty  dollars  for   each   salesman's statement; (f) thirty dollars for each supplemental statement; (g) three hundred dollars for each application granted pursuant to subdivision two of  section  three  hundred  fifty-nine-f  of  this article; and (h) two hundred twenty-five dollars for the issuance of a  "no  filing  required letter";  these fees shall obtain for both original statements and their renewals. No fee, however, shall be collected for filing a  supplemental statement  by  a  salesman  cancelling  his  prior  registration as such salesman.   Any partner, officer, director or principal who is named as such in  a broker-dealer  statement and who shall act as a salesman for such broker or dealer, shall not be required to register as a salesman.   6. Any false statement of  a  material  fact  contained  in  any  such broker-dealer  or  salesman's  statement or supplemental statement or in any certificate attached thereto shall constitute a  violation  of  this section within the meaning of section three hundred fifty-nine-g of this article.   7. Any person, partnership, corporation, company, trust or association representing  in any manner that the state, the department of law or any officer thereof has recommended the purchase of any  stocks,  bonds,  or other securities, in advertising or offering such stocks, bonds or other securities  for  sale  shall  be  guilty  of a misdemeanor punishable as provided in subdivision two of section  three  hundred  fifty-nine-g  of this article.   8.  After  this  subdivision  as hereby amended takes effect no dealer shall sell or offer  for  sale  to  the  public  within  this  state  as principal  or agent, any securities issued or to be issued which are not exempted from the  provisions  of  this  subdivision  by  section  three hundred and fifty-nine-f hereof unless and until such dealer shall cause to  be  filed a "further state notice" containing the information, other  than the names of partners, required to be published by subdivision  two of  this  section,  but  opposite  the  heading "name of dealer", if the person or persons causing such notice to be filed are acting pursuant to the  provisions  of  this  subdivision,  there shall be added either the words "syndicate manager" or "syndicate managers" as the  case  may  be; and  in  addition  thereto and as part of each such further state notice the name of the security or securities, name, post  office  address  and state  or  country  of incorporation or organization of the corporation, association, common law trust or  similar  organization  issuing  or  to issue  the security or securities to be sold or offered for sale, in the following form:                            FURTHER STATE NOTICE  Name of security or securities ......................................... Name of issuer of securities ........................................... Post Office address of issuer of securities ............................ The state or country in which organized ................................    Two or more  dealers  may  jointly  file  such  further  state  notice required  by  this  subdivision,  and  a  dealer or exchange must file a further state notice for each issue about to be offered  which  has  not heretofore  been  published  by  the  issuer.  A  syndicate  manager  or co-manager with an office in this state may file on behalf of an  entire syndicate.   9.  A  broker-dealer  or  salesman registration statement or any other document is filed when it is received in the New York city office of the attorney-general.   10. The attorney-general may from time to time in the public  interest make,  amend,  and  rescind such forms as are necessary to carry out the provisions  of  this  act,  including   forms   governing   registration statements   and   applications.   For   the   purpose   of  forms,  the attorney-general may classify securities, persons and matters within his jurisdiction, and may prescribe different  forms  and  requirements  for different classes.   11.  It  is  unlawful  for  any  broker or dealer to employ a salesman unless the salesman is registered. The registration  of  a  salesman  is suspended  during any period when he is not associated with a particular broker or dealer registered under this act or a particular issuer.  When a salesman begins or terminates a connection with a broker or dealer, or begins  or  terminates  those  activities which make him a salesman, the salesman as well as the broker  or  dealer  shall  promptly  notify  the attorney-general.   12.  All persons, including partners, officers, directors and salesmen employed by a member or a member organization of a  national  securities exchange, a national securities association, or any other broker-dealer, registered with the federal securities exchange commission or any broker or  dealer required to be registered with the department of law pursuant to this article except those dealers required to be registered solely by reason of the fact that they are engaged in selling or offering for sale securities  issued  by  themselves,  and  any  employee  of  a  clearing corporation  affiliated  with  any  such  registered national securities exchange or with any national securities association registered with the federal securities exchange commission, employed on or  after  September first,  nineteen  hundred  sixty-nine, who are regularly employed within the  state  of  New  York  shall,  as  a  condition  of  employment,  be fingerprinted.   Every  set  of  fingerprints  taken  pursuant  to  this subdivision shall be promptly submitted  to  the  attorney  general  for  appropriate   processing,   except  that  individuals  fingerprinted  in compliance with the rules of the securities and exchange commission need not file  with  the  attorney  general  so  long  as  records  of  those fingerprints,  as  well  as  information  received  in response to their filing, are available  to  the  attorney  general  for  inspection.  The department  of law shall collect from a member or member organization of a national securities exchange, a national  securities  association,  or any   registered   broker-dealer   as  described  above  or  a  clearing corporation affiliated with  any  such  registered  national  securities exchange  or  with  any  such registered national securities association submitting fingerprints to the attorney general for processing a fee  in the  amount  prescribed  therefor  by  the  division of criminal justice services for each set of fingerprints submitted. Failure to comply  with this  section  shall  be deemed a violation of and a fraudulent practice within the meaning of this article.   12-a. Any employee of  a  national  securities  exchange  or  national securities  association  registered  with  the  federal  securities  and exchange commission, and any  employee  of  a  clearing  corporation  or securities  information  processor  affiliated  with any such registered national securities exchange or national securities association, and who are regularly employed within  the  state  of  New  York,  shall,  as  a condition  of  employment,  be  fingerprinted. Every national securities exchange,  national  securities  association,  clearing  corporation  or securities information processor that is required to submit fingerprints pursuant  to  this  section  shall  also  obtain  fingerprints  from any individual not employed by such organization who  provides  services  to such  organization  within  the  state  of  New  York  provided that the individual has  access  to  records  including  electronic  records,  as defined  by  section  three  hundred two of the state technology law, or other material or secure buildings or secure property, which  place  the security of such organization at risk.   Every  set of fingerprints taken pursuant to this subdivision shall be promptly submitted to  the  federal  bureau  of  investigation  for  the purpose  of  a  nationwide criminal history check. Such reports received from the federal bureau of investigation  shall  be  kept  confidential, although  the  contents  of any such report may be disclosed to exchange officials involved in personnel and security matters,  to  the  attorney general,  to  law  enforcement  authorities  and  to  the securities and exchange commission. Unless inconsistent with federal law,  fingerprints supplied  by  such employee or employment applicant shall be returned to such person upon termination or denial of such employment.  Fingerprints supplied  by such other individuals providing services shall be returned upon completion of such services.   12-b. Any employee of a designated contract market, as  that  term  is defined  in  the  Commodity  Exchange  Act,  under  the authority of the federal Commodity Futures Trading Commission,  and  any  employee  of  a derivatives  clearing  organization,  as  that term is defined under the Commodity Exchange Act, that is  affiliated  with  any  such  designated contract  market, and who are regularly employed within the state of New York, shall, as a  condition  of  employment,  be  fingerprinted.  Every designated contract market and derivatives clearing organization that is required  to  submit  fingerprints  pursuant  to this section shall also obtain  fingerprints  from  any  individual   not   employed   by   such organization who provides services to such organization within the state of New York provided that the individual has access to records including electronic records, as defined by section three hundred two of the state technology  law,  or  other  material  or  secure  buildings  or  secure property, which place the security of such organization at risk.    Every set of fingerprints taken pursuant to this subdivision shall  be promptly  submitted  to  the  federal  bureau  of  investigation for the purpose of a nationwide criminal history check.  Such  reports  received from  the  federal  bureau  of investigation shall be kept confidential, although  the contents of any such report may be disclosed to designated contract market or derivatives clearing organization officials  involved in  personnel  and  security  matters,  to  the attorney general, to law enforcement authorities and to the Commodity Futures Trading Commission. Unless inconsistent with federal  law,  fingerprints  supplied  by  such employee  or  employment applicant shall be returned to such person upon termination or denial of such employment. Fingerprints supplied by  such other  individuals  providing services shall be returned upon completion of such services.   13. (a) The attorney general may by regulation, rule or order  provide an  alternative  method  of  registration by which any dealer, broker or salesman acting as such or as principal in more than one  state  or  who engages  in  multi-state securities offerings may supply the information otherwise required to be furnished in  the  state  notice,  registration statement,  supplemental statements and further state notice mandated by subdivisions  two,  three,  four  and  eight  of  this   section.   Such alternative  method,  when complied with, shall be deemed to fulfill the filing requirements of subdivisions two, eight and nine of this section, and shall be in lieu thereof. The  regulation,  rule  or  order  of  the attorney  general  may  also  provide for alternative filing periods and expiration dates and an alternate method for the payment of fees, to  be known  as  "in  lieu  filing fees", which shall be collected pursuant to such regulation, rule or order of  the  attorney  general  in  the  same amounts  as,  and  for  the  same  information  otherwise required to be collected for statements filed as specified by subdivision five of  this section.  (b)  No  alternative  method  may  be provided by the attorney general which does not have, as its  purpose,  the  facilitation  of  a  central registration   depository  whereby  brokers,  dealers  or  salesmen  can centrally or simultaneously register and pay  fees  for  all  states  in which  they  plan  to transact business which requires registration. The attorney general is hereby authorized to  enter  into  an  agreement  or otherwise   facilitate   such   alternative  method  with  any  national securities   association,   national   securities   exchange,   national association of state securities administrators or similar association or agents thereof to effectuate the provisions of this subdivision.  (c) Any false statement of a material fact contained in any substitute for  a  broker-dealer  statement or salesman's statement or supplemental statement  which  is  provided  pursuant  to  the   attorney   general's regulation,   rule   or   order  specified  in  paragraph  (a)  of  this subdivision, shall constitute a violation of  this  section  within  the meaning of section three hundred fifty-nine-g of this article.  (d) It shall be unlawful for any dealer, broker or salesman to sell or offer  for  sale  to  or  purchase  or offer to purchase from the public within or from this state, any securities issued or to be issued, unless and until such dealer, broker or salesman shall have complied  with  the requirements  of  either:  (i)  the  regulation,  rule  or  order of the attorney general specified in paragraph (a) of this subdivision; or (ii) the filing of a state notice and registration statement and supplemental statements and further state notice as applicable to said dealer, broker or salesman, in accordance with subdivisions two, three, four and  eight of this section.  (e)  To  the  extent  inconsistent  therewith,  the provisions of this subdivision shall supersede the provisions of any other  subdivision  of this section.   14.  (a)  Definitions.  For purposes of this subdivision the following definitions shall apply:  (i) "Commodity" means, except as otherwise specified by  the  attorney general  by  rule, regulation or order, any agricultural, grain, animal, chemical, metal or mineral product or byproduct,  any  gem  or  gemstone (whether  characterized  as  precious,  semi-precious or otherwise), any fuel (whether liquid, gaseous or otherwise), any foreign  currency,  and any other good, article, or material.  (ii) "Commodity contract" means any account, agreement or contract for the  purchase  or  sale  of, or any option or right to purchase or sell, primarily for speculation or investment purposes  and  not  for  use  or consumption  by  the  offeree  or  purchaser,  one  or more commodities, whether for immediate or subsequent delivery or for storage and  whether or not delivery is intended by the parties, and whether characterized as a  cash  contract,  deferred  shipment  or  deferred  delivery contract, forward contract, futures  contract,  installment  or  margin  contract, leverage  contract, option, privilege, indemnity, bid, offer, put, call, advance guaranty, decline guaranty or otherwise. Any commodity  contract offered  for  sale or sold to a person other than a producer, processor, merchant, handler, commercial user or ultimate consumer of the commodity shall, in the absence of evidence to the contrary,  be  presumed  to  be offered for sale or sold for speculation or investment purposes.  (iii)  "Commodity  broker-dealer"  means  any  person  engaged  in the business of selling or offering to sell  commodities  through  commodity contracts to the public within or from the state of New York.  (iv)   "Commodity   salesperson"  means  any  person  employed  by  or representing a commodity broker-dealer in selling or offering  for  sale commodities through commodity contracts to the public within or from the state of New York.  (v)   "Commodity   investment  advisor"  means  any  person  who,  for compensation, within or from the state  of  New  York,  engages  in  the business  of  advising members of the public, either directly or through publications or writings,  as  to  the  advisability  of  investing  in, purchasing, selling or holding commodity contracts.  (b)   Any  person  acting  as  a  commodity  broker-dealer,  commodity salesperson or commodity investment advisor and any person  who  manages or  supervises any such broker-dealer, salesperson or investment advisor shall file a registration statement  with  the  attorney  general  as  a commodity  broker-dealer, commodity salesperson, or commodity investment advisor relating to the activity actually engaged in.  (c) The attorney general may adopt rules and regulations governing the form and content of such registration statements for each such  activity which may include information pertaining to the business history for the last  preceding  five  years, record of criminal convictions, litigation history,  and  educational  background  of  the   registrant   and   the registrant's  partners,  officers,  directors or other principals deemed pertinent by the attorney general and the names of persons  employed  as commodity   salespersons   or   commodity  investment  advisors  by  the registrant.  (d) The registration statement shall be effective for a period of  one year from the date of filing.  (e)  The  attorney general shall by rule or regulation provide for the method of renewing such registration  statements  and  may  require  the filing  of  supplemental statements which shall contain such information  as the attorney general may deem necessary to  keep  reasonably  current the information on file.  (f)  The attorney general shall collect the following annual fees: one hundred dollars for each commodity broker-dealer registration  statement or  commodity  investment  advisor  registration  statement; twenty-five dollars for each commodity salesperson registration statement;  and  ten dollars for each supplemental statement.  (g)  The  provisions  of  this  subdivision shall not apply to (i) any person who is a member or member firm of a national securities exchange, board of trade designated as a contract market by the Commodity  Futures Trading  Commission  pursuant to the commodity exchange act, as amended, the National Association of Securities Dealers, Inc.,  or  the  National Futures Association, Inc., or is an affiliate of such a member or member firm,  or employed by such a member or member firm or by an affiliate of such a member or member firm; (ii) any board of trade  designated  as  a contract  market  as  aforesaid;  (iii)  any  other  person  registered, temporarily licensed, or exempt from registration  under  the  commodity exchange  act,  as  amended,  or  the  rules and regulations promulgated thereunder  where  such  registration,  license  or  exemption   relates directly  to the activity engaged in; and (iv) any bank or trust company as defined in this article or any person acting as an  employee  of  any bank  or  trust  company  or  any licensed money transmitter or employee thereof.  (h) In addition to those persons exempt under paragraph  (g)  of  this subdivision,  no  person  shall  be  required to register as a commodity investment advisor pursuant to paragraph (b) of this subdivision who  is (i)  a  lawyer,  accountant, engineer, or teacher who renders investment advice solely incidental to the practice of his or her profession;  (ii) a  broker  or  dealer  in  securities  or a commodity broker-dealer or a commodity salesperson who renders investment advice solely incidental to the conduct of his or her business as a broker or dealer  in  securities or  a  commodity  broker-dealer or a commodity salesperson respectively, and who receives no  special  compensation  for  such  advice;  (iii)  a publisher  of,  editor  of,  or writer for a bona fide newspaper or news magazine, whether published in print or by electronic means; or  (iv)  a person  who  during  the  course  of the preceding twelve months has not advised more than fifteen persons as to the  advisability  of  investing in,  purchasing, selling or holding commodity contracts and who does not hold himself out generally to the public  as  engaging  in  any  of  the activities set forth in subparagraph (iii), (iv) or (v) of paragraph (a) of this subdivision.  (i) The provisions of this subdivision shall not apply to any contract or  transaction involving the sale of commodities by the owner or lessee of real property upon which such commodities are grown  or  raised,  the sale  of  items by art dealers or licensed auctioneers at public auction or the sale or resale by  a  distributor  or  wholesaler  of  goods  for consumption by the public.  (j)  Any  person  required to be registered by this subdivision who is not registered shall be guilty of a misdemeanor punishable  as  provided in the penal law.  (k)  Any person who engages in a business requiring registration under this article and who knowingly employs  two  or  more  persons  for  the purpose  of  engaging  in  conduct requiring registration as a commodity broker-dealer, commodity salesperson  or  commodity  investment  advisor under  this  article  with the knowledge that they are not so registered shall be guilty of a class E felony.  (l) A violation of this  subdivision  shall  constitute  a  fraudulent practice as that term is used in this article.  (m) If any provision of this subdivision or the application thereof to any  persons  or  circumstances  is  held  invalid,  the validity of the remainder of this subdivision or of the application of such provision to other persons and circumstances shall not be affected thereby.