Code of Massachusetts Regulations › 950 CMR - OFFICE OF THE SECRETARY OF THE COMMONWEALTH › Title 950 CMR 14.400 - GENERAL PROVISIONS › Section 14.401 - Definitions

Current through Register 1525, July 5, 2024
When used in M.G.L. c. 110A and
				950 CMR 10.00 through
				14.413,
				unless the context otherwise requires:
Act
means M.G.L. c. 110A.
Agent
includes every individual who
				represents or acts for a broker-dealer in effecting or attempting to effect
				transactions in securities, including any person who solicits transactions or
				new accounts, renders advice concerning the purchase or sale of securities to
				particular customers, executes trades for particular customers, or supervises
				any of the foregoing individuals. Representation may be in the form of
				employment or independent contract and compensation may be in any form
				including hourly, salaried, transaction-based or based on assets under
				management.
Agent
excludes:
(1) an investment company employee who performs merely
				administrative duties in connection with the sale of that company's
				securities.
(2) a lawyer, accountant, engineer or other professional
				adviser who engages in any activity set forth in M.G.L. c. 110A, § 401(b)
				incidental to the performance of professional services for his client and who
				receives no referral fee, finder's fee, commission or any part thereof, or
				similar transaction-based compensation either directly or indirectly.
(3) An officer, director, partner, or limited liability company
				manager of an issuer who represents the issuer in effecting or attempting to
				effect purchases or sales of the issuer's securities, provided such person
				complies with the following conditions:
(a) such person receives no commission or other compensation
				for or contingent upon the offering or sale of a security by such
				person;
(b) such person is not subject to any disqualification set
				forth in
				950 CMR 14.402(B)(9)(f)
				 or Section 3(a)(39) of the Securities
				Exchange Act of 1934; and,
(c) such person is in compliance with any applicable provisions
				of M.G.L. c. 110A and
				950 CMR 10.00 through
				14.413.
(4) An individual who represents an issuer in effecting
				transactions in covered securities exempted by Section 18(b)(4)(D) of the
				Securities Act of 1933, as amended, provided the filing mandated by
				950 CMR 14.402 with
				respect to the covered security has been timely made.
(5) A person who represents a registered broker-dealer in
				effecting or attempting to effect transactions solely with or for a customer
				who is temporarily present in the Commonwealth, with whom the person had a
bona fide
business-customer relationship for at least 30 days
				before the customer entered the Commonwealth.
(6) A person who represents an issuer in effecting transactions
				in any security, including a revenue obligation, issued or guaranteed by the
				Commonwealth or any political subdivision thereof or any agency or corporate or
				other instrumentality of one or more of the foregoing or any certificate of
				deposit for any of the foregoing.
Broker-dealer
excludes:
(1) private and institutional investors (including investment
				companies) effecting transactions as investors in their portfolio
				securities;
(2) a lawyer, accountant, engineer, or other professional
				adviser who engages in any activity set forth in M.G.L. c. 110A, § 401(c)
				incidental to the performance of professional services for his client and who
				receives no referral fee, finder's fee, commission or any part thereof, or
				similar transaction-based compensation either directly or indirectly;
				and
(3) an officer or employee of an issuer unless he receives
				remuneration directly or indirectly on account of purchases and sales of
				securities.
(4) A person who has no office or other physical presence in
				the Commonwealth, and complies with the following conditions:
(a) Only effects or attempts to effect transactions in
				securities:
1. With or through the issuers of the securities involved in
				the transactions, brokerdealers, banks, saving institutions, trust companies,
				insurance companies, investment companies (as defined in the Investment Company
				Act of 1940), pension or profit sharing trusts, or other financial institutions
				or institutional buyers, whether acting for themselves or as trustees;
2. During any period of 12 consecutive months, with or for
				fewer than five customers resident in the Commonwealth other than those listed
				in 950 CMR 14.401(C)(4)(a)1. and 4., each of whom had a
bona
				fide
business-customer relationship with the person for at least 30
				days before the customer moved to the Commonwealth;
3. With or for a customer who is temporarily present in the
				Commonwealth, with whom the person had a
bona fide
business-customer relationship for at least 30 days before the customer entered
				the Commonwealth; or
4. With or for a person previously or currently resident in
				Canada who is present in the Commonwealth, whose transactions are solely in a
				self-directed tax advantaged retirement plan in Canada of which the person is
				the holder or contributor; and
(b) If the person is effecting transactions with customers
				described in 950 CMR 14.401(C)(4)(a)4., files a notice in the form of his
				current application required by the state, province or territory in which his
				head office is located and a consent to service of process;
(c) If the person is resident in Canada, is a member of a
				self-regulatory organization or stock exchange in his home jurisdiction;
(d) Maintains his registration in his home state, province or
				territory and his membership in a self-regulatory organization or stock
				exchange in good standing; and,
(e) Is not in violation of M.G.L. c. 110A, § 101 and all
				the rules promulgated thereunder.
Certified
, when used in connection
				with financial statements, means certified by an independent public accountant
				in accordance with generally accepted accounting principles.
Commonwealth
means The Commonwealth of
				Massachusetts.
Control, Controlling, Controlled By, and Under
				Common Control With
means the possession, direct or indirect, of
				the power to direct or cause the direction of the management and policies of a
				person, whether through the ownership of voting securities, by contract, or
				otherwise.
Corporation
includes any corporation
				organized under the laws of the U.S., Canada, any state or territory of the
				U.S. and any Canadian province. It shall also include any business entity
				registered as an investment company under the Investment Company Act of 1940,
				as amended, and any entity which has provisions in its chartering agreement
				which provide substantially similar protections to security holders with
				respect to the transactions at issue as provided by the state corporate laws of
				the jurisdiction where such entity is domiciled.
Director
means the Director of the
				Securities Division.
Division
means the Securities Division
				in the Office of the State Secretary.
Employee
, as used in M.G.L. c. 110A,
				§ 402(a)(11), includes an officer, director, trustee, independent
				contractors and consultants.
Federal Registration Statement
means a
				registration statement filed under the Securities Act of 1933.
FINRA
means the Financial Industry
				Regulatory Authority, Inc.
Institutional Buyer
, as used in M.G.L.
				c. 110A, § 401(c) and M.G.L. c. 110A, § 402(b)(8), includes, but is
				not limited to, the following:
(1) a Small Business Investment Company licensed by the U.S.
				Small Business Administration under the Small Business Investment Act of
				1958;
(2) a private business development company as defined in
				Section 202(a)(22) of the Investment Advisers Act of 1940;
(3) a Business Development Company as defined in Section
				2(a)(48) of the Investment Company Act of 1940;
(4) an entity with total assets in excess of $5 million and
				which is either:
(a) a company (whether a corporation, a Massachusetts or
				similar business trust, partnership, limited liability company or limited
				liability partnership) not formed for the specific purpose of acquiring the
				securities offered; a substantial part of whose business activities consists of
				investing, purchasing, selling or trading in securities issued by others and
				whose investment decisions are made by persons who are reasonably believed by
				the seller to have such knowledge and experience in financial and business
				matters as to be capable of evaluating the merits and risks of investment;
				or
(b) an organization described in Section 501(c)(3) of the
				Internal Revenue Code; and
(5) a Qualified Institutional Buyer as defined in
				17 CFR
				230.144A(a).
Investment Company Shares
means
				securities issued by a face amount certificate company, or redeemable
				securities issued by an open-end management company or unit investment
				trust.
Investment Contract
, as used in M.G.L.
				c. 110A, § 401(k), includes:
(1) any investment in a common enterprise with the expectation
				of profit to be derived through the essential managerial efforts of someone
				other than the investor. As used in 950 CMR 14.401, a "common enterprise" means
				an enterprise in which the fortunes of the investor are interwoven with and
				dependent upon the efforts and successes of those seeking the investment or a
				third party; and
(2) any investment by which an offeree furnishes initial value
				to an offer or, and a portion of this initial value is subject to the risks of
				the enterprise, and the furnishing of the initial value is induced by the
				offeror's promises or representations which give rise to a reasonable
				understanding that a valuable benefit of some kind over and above the initial
				value will accrue to the offeree as a result of the operation of the
				enterprise, and the offeree does not receive the right to exercise practical
				and actual control over the management of the enterprise.
Merger
includes:
(1) a transaction in which a subsidiary of the issuer is merged
				with another corporation; and
(2) the acquisition by a corporation of all or substantially
				all of the outstanding capital stock of another corporation pursuant to a plan
				of acquisition or similar procedure adopted and carried out in accordance with
				applicable state, federal or provincial law.
NASAA
means North American Securities
				Administrators Association, Inc.
Officer
means a president,
				vice-president, treasurer, secretary, clerk, managing member and any other
				person who performs for a broker-dealer or an issuer, whether incorporated or
				unincorporated, functions corresponding to those ordinarily performed by the
				foregoing.
Pension or Profit-sharing Trust
, as
				used in M.G.L. c. 110A, § 401(c) and M.G.L. c. 110A, § 402(b)(8),
				includes the following:
(1) any entity with total assets in excess of $5 million and
				which is:
(a) an employee benefit plan within the meaning of the Employee
				Retirement Income Security Act of 1974 (ERISA); or
(b) a self-directed employee benefit plan within the meaning of
				ERISA, with investment decisions made by a person that is an accredited
				investor as defined in § 501(a) of SEC Regulation D (17 CFR
				230.501(a)) ; or
(2) any employee benefit plan within the meaning of ERISA with
				investment decisions made by a plan fiduciary, as defined in Section 2(21) of
				ERISA, which is either a bank, savings and loan association, insurance company
				or registered investment adviser; or
(3) an employee benefit plan established and maintained by a
				state, its political subdivisions, or any agency or instrumentality of a state
				or its political subdivisions.
Person
includes a limited liability
				company and a limited liability partnership.
Principal
means general or managing
				partner in the case of a partnership, officer in the case of a corporation, or
				trustee in the case of a business trust.
Registration Under Prior Law
as used
				in St. 1972, c. 694, § 7, means filings of the Notice of Intention to Sell
				required by M.G.L. c. 110A, § 5 which St. 1972, c. 694, § 1
				repealed.
Rule
or
Rules
refers to
				950 CMR 10.00 through
				14.413.
SEC
means the United States Securities
				and Exchange Commission.
Stockholders
and
Shareholders
mean holders of shares, transferable
				certificates of participation, or other equity interests in any
				corporation.