Code of Vermont Rules › Agency 21 - DEPARTMENT OF FINANCIAL REGULATION › Sub-Agency 030 - SECURITIES DIVISION › Chapter 001 - VERMONT SECURITIES REGULATIONS (S-2016-01) › Section 21 030 001 - VERMONT SECURITIES REGULATIONS (S-2016-01)

Current through June,
				2024
CHAPTER 1 TITLE,
				AUTHORITY, AND DEFINITIONS
V.S.R. § 1-1 Title; Authority.
Regulations V.S.R. § 1-1. through V.S.R. § 8-4 (the
				  "Vermont Securities Regulations") are promulgated pursuant to the provisions of
				  the Vermont Uniform Securities Act (2002) (the "Act"), codified at Chapter
				  15
				  0, Title 9 of the Vermont Statutes Annotated, and the powers of the
				  commissioner of the Department of Financial Regulation. To the extent any
				  provision or requirements under the Act are not contained within these
				  regulations, such provision is construed as the commissioner's policy position
				  with respect to the subject of such provision.
V.S.R. § 1-2 Definition of Terms.
The following terms as used in the Act, these regulations,
				  forms, instructions, and orders of the commissioner have the meaning set forth
				  in this regulation, unless the context indicates otherwise.
(a) "3(c)(1) fund" means a qualifying private
				fund exempt from the definition of an investment company pursuant to
				15 U.S.C. §
											80a-3(c)(1).
(b) "3(c)(7) fund" means a private fund
				exempt from the definition of an investment company pursuant to
				15 U.S.C. §
											80a-3(c) (7).
(c) "Accredited investor" means an accredited
				investor as defined in Rule 501 of Regulation D of the Securities Act of 1933
				(15
				U.S.C. 77b(a)(15)(ii);
				17
				C.F.R. § 230.501) .
(d)
				"Adjusted net worth" means the excess of total assets over total liabilities as
				determined in conformity with GAAP and adjusted by excluding the following
				assets and liabilities:
(1) Prepaid expenses,
				deferred charges, goodwill, franchise rights, organizational expenses, patents,
				copyrights, marketing rights, unamortized debt discounts and expenses, and all
				other assets of an intangible nature;
(2) Advances or loans to a controlling person
				or employee of the investment adviser; and
(3) Homes, home furnishings, automobiles, and
				any other personal assets of a sole proprietor that would not be liquidated in
				the ordinary course of business.
(e) "Affiliate" means a person who directly
				or indirectly controls, is controlled by, or is under common control with
				another person.
(f) "Agency cross
				transaction" for an investment advisory client as used in V.S.R. § 7-3(g)
				means a transaction in which a person acts as an investment adviser in relation
				to a transaction in which such investment adviser, or any person controlling,
				controlled by, or under common control with the investment adviser, including
				an investment adviser representative, acts as a broker for both the advisory
				client and another person on the other side of the transaction. A person acting
				in this capacity is required to be registered as a broker-dealer in this state
				unless excluded from the definition of broker-dealer under
				9 V.S.A. §
											5102(3).
(g) "Authentication" means the allowed
				activities of legitimate users, mediating every attempt by a user to access a
				resource in a given system.
(h)
				"Bad actor" means an issuer; any predecessor of an issuer; any affiliated
				issuer; any director, executive officer, other officer participating in an
				offering, general partner or managing member of the issuer; any beneficial
				owner of twenty percent (20%) or more of the issuer's outstanding voting equity
				securities, calculated on the basis of voting power; any promoter connected
				with the issuer in any capacity at the time of such sale (including any
				director, executive officer, other officer participating in the offering,
				general partner or managing member of the promoter); any investment manager of
				an issuer that is a pooled investment fund; any person that has been or will be
				paid (directly or indirectly) remuneration for solicitation of purchasers in
				connection with such sale of securities; any general partner or managing member
				of any such investment manager or solicitor; or any director, executive officer
				or other officer participating in the offering of any such investment manager
				or solicitor or general partner or managing member of such investment manager
				or solicitor; who:
(1) Was convicted, within
				ten (10) years before such sale (or five (5) years, in the case of issuers,
				their predecessors and affiliated issuers), of any felony or misdemeanor:
(A) In connection with the purchase or sale
				of any security;
(B) Involving the
				making of any false filing with the commissioner or the SEC; or
(C) Arising out of the conduct of the
				business of an underwriter, broker, dealer, municipal securities dealer,
				investment adviser or paid solicitor of purchasers of securities;
(2) Is subject to any order,
				judgment or decree of any court of competent jurisdiction, entered within five
				(5) years before such sale that, at the time of such sale, restrains or enjoins
				such person from engaging or continuing to engage in any conduct or practice:
(A) In connection with the purchase or sale
				of any security;
(B) Involving the
				making of any false filing with the commissioner or the SEC; or
(C) Arising out of the conduct of the
				business of an underwriter, broker, dealer, municipal securities dealer,
				investment adviser or paid solicitor of purchasers of securities;
(3) Is subject to a final order of
				a state securities administrator (or an agency or officer of a state performing
				like functions); a state authority that supervises or examines banks, savings
				associations, or credit unions; a state insurance commission (or an agency or
				officer of a state performing like functions); any foreign financial regulatory
				authority or supervisory agency; an appropriate federal banking agency; the
				U.S. Commodity Futures Trading Commission; or the National Credit Union
				Administration that:
(A) At the time of such
				sale, bars the person from:
(i) Association
				with an entity regulated by such commission, authority, agency, or
				officer;
(ii) Engaging in the
				business of securities, insurance or banking; or
(iii) Engaging in savings association or
				credit union activities; or
(B) Constitutes a final order based on a
				violation of any law or regulation that prohibits fraudulent, manipulative, or
				deceptive conduct entered within ten (10) years before such sale;
(4) Is subject to an order of the
				SEC entered pursuant to
				15 U.S.C. §
												78o(b) or (c) or
				15
				U.S.C. § 80b-3(e) or (f) that, at the time of such sale:
(A) Suspends or revokes such person's
				registration as a broker, dealer, municipal securities dealer or investment
				adviser;
(B) Places limitations on
				the activities, functions or operations of such person; or
(C) Bars such person from being associated
				with any entity or from participating in the offering of any penny
				stock;
(5) Is subject to
				any order of the SEC entered within five (5) years before such sale that, at
				the time of such sale, orders the person to cease and desist from committing or
				causing a violation or future violation of:
(A) Any scienter-based antifraud provision of
				the federal securities laws, including without limitation
				15 U.S.C. §
													77q(a)(1),
				15
				U.S.C. § 78j(b) and
				17 C.F.R. §
													240.10b-5, 15 U.S.C. § 78o(c)(1) and
				15 U.S.C. §
													80b-6(1), or any other rule
				or regulation thereunder; or
(B)
												15
				U.S.C. §
													77e;
(6) Is suspended or expelled from membership
				in, or suspended or barred from association with a member of a registered
				national securities exchange or a registered national, or affiliated securities
				association or any foreign securities exchanges and SROs that enforce financial
				and sales practice requirements for their members for any act or omission to
				act constituting conduct inconsistent with just and equitable principles of
				trade;
(7) Has filed (as a
				registrant or issuer), or was or was named as an underwriter in, any
				registration statement or Regulation A offering statement filed with the SEC
				that, within five (5) years before such sale, was the subject of a refusal
				order, stop order, or order suspending the Regulation A exemption, or is, at
				the time of such sale, the subject of an investigation or proceeding to
				determine whether a stop order or suspension order should be issued;
				or
(8) Is subject to a United
				States Postal Service false representation order entered within five (5) years
				before such sale, or is, at the time of such sale, subject to a temporary
				restraining order or preliminary injunction with respect to conduct alleged by
				the United States Postal Service to constitute a scheme or device for obtaining
				money or property through the mail by means of false representations;
(A) Subdivision (8) above does not apply:
(i) Upon a showing of good cause and without
				prejudice to any other action by the commissioner, if the commissioner
				determines that it is not necessary under the circumstances that an exemption
				be denied;
(ii) If, before the
				relevant sale, the court or regulatory authority that entered the relevant
				order, judgment or decree advises in writing (whether contained in the relevant
				judgment, order or decree or separately to the commissioner) that
				disqualification under subdivision (8) above should not arise as a consequence
				of such order, judgment or decree; or
(iii) If the issuer establishes that it did
				not know and, in the exercise of reasonable care, could not have known that a
				disqualification existed under subdivision (8) above;
(iv) Instruction to subdivision (8) above: An
				issuer will not be able to establish that it has exercised reasonable care
				unless it has made, in light of the circumstances, factual inquiry into whether
				any disqualifications exist. The nature and scope of the factual inquiry will
				vary based on the facts and circumstances concerning, among other things, the
				issuer and the other offering participants;
(B) For purposes of subdivision (8) above,
				events relating to any affiliated issuer that occurred before the affiliation
				arose will be not considered disqualifying if the affiliated entity is not:
(i) In control of the issuer; or
(ii) Under common control with the issuer by
				a third party that was in control of the affiliated entity at the time of such
				events;
(9)
				Is subject to court-imposed sanctions in the United States or in any foreign
				jurisdiction within a five (5) year period before such sale due to a conviction
				on state, federal or international criminal charges for tax evasion or tax
				fraud, or subject to any of the following in connection with such conviction:
(i) Tax liens;
(ii) Court ordered judgements;
(iii) Wage garnishments;
(iv) Bank levies; or
(v) Treasury or refund offsets.
(i) "Blank check
				company" means 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 acquisition with an unidentified company or companies, or
				other entity or person.
(j) "Branch
				office"
(1) "Broker-dealer branch office"
				means any location where one (1) or more agents regularly conduct business on
				behalf of a broker-dealer or that is held out as such a location, with the
				exception of the following locations:
(A) Any
				location that is established solely for customer service or back office-type
				functions, where no sales activities are conducted, and that is not held out to
				the public as a branch office;
(B)
				Any location that is the agent's primary residence if all of the following
				conditions are met:
(i) Only agents who reside
				at the location and are members of the same immediate family conduct business
				at the location;
(ii) The location
				is not held out to the public as an office, and the agent does not meet with
				customers at the location;
(iii)
				Neither customer funds nor securities are handled at the location;
(iv) The agent is assigned to a designated
				branch office, and the designated branch office is reflected on all business
				cards, stationery, advertisements, and other communications to the public by
				the agent or investment adviser representative;
(v) The agent's correspondence and
				communications with the public are subject to the supervision of the
				broker-dealer with which the agent is associated;
(vi) Electronic communications are made
				through the electronic system of the broker-dealer;
(vii) All orders for securities are entered
				through the designated branch office or an electronic system established by a
				brokerdealer;
(viii) Written
				supervisory procedures pertaining to supervision of activities conducted at
				residence locations are maintained by the broker-dealer; and
(ix) A list of all residence locations is
				maintained by the broker-dealer;
(C) Any location, other than a primary
				residence, that is used for securities or investment advisory business for less
				than thirty (30) business days in any one (1) calendar year, if the
				broker-dealer complies with the provisions of subdivisions (ii)-(viii) above.
				For purposes of this subdivision, a business day does not include any partial
				business day if the agent spends at least four (4) hours of the business day at
				the agent's designated branch office during the hours that the office is
				normally open for business;
(D)
				Any office of convenience, where associated persons occasionally and
				exclusively by appointment meet with customers, that is not held out to the
				public as an office;
(E) Any
				location that is used primarily to engage in non-securities activities and from
				which the agents effect no more than twenty-five (25) securities transactions
				in any one (1) calendar year, if any advertisement or sales literature
				identifying the location also sets forth the address and telephone number of
				the location from which the agents conducting business at the non-branch
				locations are directly supervised;
(F) The floor of a registered national
				securities exchange where a broker-dealer conducts a direct access business
				with public customers; and
(G) A
				temporary location established in response to the implementation of a business
				continuity plan;
(2)
				"Investment adviser branch office" means a place of business as defined in
				9 V.S.A. §
												5102(21).
(k) "Business continuity plan"
				means written processes and procedures reasonably designed to ensure that
				critical business functions continue through a disaster or other significant
				business interruption and mitigate the risk of adverse effects on the
				investment adviser's clients resulting from the unexpected loss or death of key
				personnel.
(l) "CFTC" means the
				U.S. Commodity Futures Trading Commission.
(m) "Close family relationship" means either
				a person within the third degree of relationship, by blood or adoption, or a
				spouse, stepchild, or fiduciary of a person within the third degree of
				relationship.
(n) "Commissioner"
				has the same meaning as defined in
				9 V.S.A. §
											5102(4), or the
				commissioner's designee.
(o)
				"Control" means the power, directly or indirectly, to direct the management or
				policies of a company, whether through ownership of securities, by contract, or
				otherwise. A presumption of control exists for any person who:
(1) Is a director, general partner, member,
				or manager of a limited liability company, or officer exercising executive
				responsibility (or has similar status or functions);
(2) Has the right to vote twenty percent
				(20%) or more of a class of voting securities or the power to sell or direct
				the sale of twenty percent (20%) or more of a class of voting securities;
				or
(3) In the case of a partnership
				or limited liability company, has the right to receive upon dissolution, or has
				contributed, twenty percent (20%) or more of the capital.
(p) "CRD" means the FINRA Central
				Registration Depository, the central licensing and registration system for the
				U.S. securities industry and its regulators.
(q) "Current brochure" and "current brochure
				supplement" mean the most recent versions of the brochure or brochure
				supplements, including all sticker amendments.
(r) "Custody" means holding, directly or
				indirectly, client funds or securities, or having any authority to obtain
				possession of them or the ability to appropriate them.
(s) "Cybersecurity" is the protection of
				investor and firm information from compromise through the use--in whole or in
				part--of electronic digital media, (e.g., computers, mobile devices or Internet
				protocol-based telephony systems). 'Compromise' refers to a loss of data
				confidentiality, integrity or availability.
(t) "Depository Institution" shall have same
				meaning as in
				9 V.S.A. §
											5102(5).
(u) "Designated security" for purposes of
				V.S.R. § 3-2(g) (Prohibited Conduct. Designated Security Transactions)
				means any equity security other than securities:
(1) Registered, or approved for registration
				upon notice of issuance, on a national securities exchange;
(2) Authorized, or approved for authorization
				upon notice of issuance, for listing on the national market system of the
				NASDAQ stock market;
(3) Issued by
				an investment company registered under The Investment Company Act of
				1940;
(4) That is a put option or
				call option issued by the options clearing corporation; or
(5) Whose issuer has net tangible assets in
				excess of four million dollars ($ 4,000,000) as demonstrated by financial
				statements dated within the previous fifteen (15) months that the broker-dealer
				has reviewed and has a reasonable basis to believe are true and complete in
				relation to the date of the transaction with the person, if either of the
				following conditions is met:
(A) The issuer is
				not a foreign private issuer, and the financial statements are the most recent
				financial statements for the issuer that have been audited and reported on by a
				certified public accountant in accordance with the provisions of
				17 C.F.R. §
													210.2-02; or
(B) The issuer is a foreign private issuer,
				and the financial statements are the most recent financial statements for the
				issuer that have been filed with the SEC; furnished to the SEC pursuant to 17
				C.F.R. § 240.12g3-2(b); or prepared in accordance with GAAP in the country
				of incorporation, audited in compliance with the requirements of that
				jurisdiction, and reported on by an accountant duly registered and in good
				standing in accordance with the regulations of that jurisdiction.
(v) "Eligible privately
				held company" for purposes of V.S.R. § 3-4. (Registration Exemption for
				Merger and Acquisition BrokerDealers) means a company meeting the following
				conditions:
(1) The company does not have any
				class of securities registered, or required to be registered, with the SEC
				under Section 12 of the Securities Exchange Act of 1934,
				15 U.S.C. §
												781, or with respect to which the company
				files, or is required to file, periodic information, documents, and reports
				under
				15 U.S.C. §
												78o(d); and
(2) In the fiscal year ending immediately
				before the fiscal year in which the services of the merger and acquisition
				broker are initially engaged with respect to the securities transaction, the
				company meets either or both of the following conditions (determined in
				accordance with the historical financial accounting records of the company):
(A) The earnings of the company before
				interest, taxes, depreciation, and amortization are less than twenty-five
				million dollars ($ 25,000,000); or
(B) The gross revenues of the company are
				less than twenty hundred and fifty million dollars ($ 250,000,000).
(3) Inflation Adjustment. On the
				date that is five (5) years after the date of the enactment of this section,
				and every five (5) years thereafter, each dollar amount in subdivisions
				(2)(A)-(B) above must be adjusted by:
(A)
				Dividing the annual value of the Employment Cost Index For Wages and Salaries,
				Private Industry Workers (or any successor index), as published by the Bureau
				of Labor Statistics, for the calendar year preceding the calendar year in which
				the adjustment is being made by the annual value of such index (or successor)
				for the calendar year ending December 31, 2012; and
(B) Multiplying such dollar amount by the
				quotient obtained under subdivision (1).
(4) Rounding. Each dollar amount determined
				under subdivision (2) above must be rounded to the nearest multiple of one
				hundred thousand dollars ($ 100,000).
(w) "Eligible adult" means:
(1) An individual sixty-five (65) years of
				age or older; or
(2) An individual
				eighteen (18) years of age or older who the reporting person reasonably
				believes has a mental or physical impairment that renders the individual unable
				to protect his or her own interests.
(x) "Encryption" is the protection of the
				confidentiality of data by ensuring that only approved users can view the
				data.
(y) "Entering Into," in
				reference to an investment advisory contract under V.S.R. § 7-6 does not
				include an extension or renewal unless the extension or renewal involves a
				material change to the contract.
(z) "FDIC" means the Federal Deposit
				Insurance Corporation.
(aa)
				"Financial exploitation" means:
(1) The
				wrongful or unauthorized taking, withholding, appropriation, or use of money,
				assets or property of an eligible adult; or
(2) Any act or omission taken by a person,
				including through the use of a power of attorney, guardianship, or
				conservatorship of an eligible adult, to:
(A)
				Obtain control, through deception, intimidation or undue influence, over the
				eligible adult's money, assets or property to deprive the eligible adult of the
				ownership, use, benefit, or possession of his or her money, assets or property;
				or
(B) Convert money, assets or
				property of the eligible adult to deprive such eligible adult of the ownership,
				use, benefit or possession of his or her money, assets, or property.
(bb) "FINRA" means the
				Financial Industry Regulatory Authority. FINRA is the successor to the National
				Association of Securities Dealers, Inc. (NASD) and the member regulation,
				enforcement, and arbitration operations of the New York Stock
				Exchange.
(cc) "GAAP" means
				Generally Accepted Accounting Principles in the United States.
(dd) "General solicitation" means an offer to
				one (1) or more persons by any of the following means or as a result of contact
				initiated through any of these means:
(1)
				Television, radio, or any broadcast medium;
(2) Newspaper, magazine, periodical, or any
				other publication of general circulation;
(3) Poster, billboard, internet posting, or
				other communication posted for the general public;
(4) Brochure, flier, handbill, or similar
				communication, unless the offeror has a substantial preexisting business
				relationship or close family relationship with each of the offerees;
(5) Seminar or group meeting, unless the
				offeror has a substantial preexisting business relationship or close family
				relationship with each of the offerees; or
(6) Telephone, facsimile, mail, delivery
				service, or electronic communication, unless the offeror has a substantial
				preexisting business relationship or close family relationship with each of the
				offerees.
(ee) "IARD"
				means the NASAA Investment Adviser Registration Depository.
(ff) "Independent party" for purposes of
				V.S.R. §§ 7-2 and 7-5 means a person that meets the following
				conditions:
(1) Is engaged by an investment
				adviser to act as a gatekeeper for the payment of fees, expenses, and capital
				withdrawals from a pooled investment;
(2) Does not control, is not controlled by,
				and is not under common control with the investment adviser; and
(3) Does not have, and has not had within the
				past two (2) years, a material business relationship with the investment
				adviser.
(gg)
				"Independent representative" means a person who meets the following conditions:
(1) Acts as an agent for an advisory client,
				which may include a person who acts as an agent for limited partners of a
				pooled investment vehicle structured as a limited partnership, members of a
				pooled investment vehicle structured as a limited liability company, or other
				beneficial owners of another type of pooled investment vehicle;
(2) Is obliged by law or contract to act in
				the best interest of the advisory client or the limited partners, members, or
				other beneficial owners;
(3) Does
				not control, is not controlled by, and is not under common control with the
				investment adviser; and '
(4) Does
				not have, and has not had within the past two (2) years, a material business
				relationship with the investment adviser.
(hh) "Insolvent" shall have the same meaning
				as in
				9A V.S.A. §
											1-201(b)(23), and, in
				addition, in the case of broker-dealers, a broker-dealer shall be deemed
				insolvent if it does not demonstrate compliance with the SEC's net capital rule
				(17 CFR § 240.15c3-3) or with the SEC's customer protection rule (17 CFR
				§ 240.15c3-3) .
(ii)
				"Investment-related" for purposes of V.S.R. § 7-3. (Dishonest and
				Unethical Practices of Investment Advisers, Investment Adviser Representatives,
				and Federal Covered Investment Advisers) means pertaining to securities,
				commodities, banking, insurance, or real estate (including, but not limited to,
				acting as or being associated with a broker-dealer, investment company,
				investment adviser, government securities broker or dealer, municipal
				securities dealer, bank, savings and loan association, entity or person
				required to be registered under the Commodity Exchange Act
				7
				U.S.C. §
											1 et seq. or
				fiduciary).
(jj) "Investment
				supervisory services" for purposes of V.S.R. § 7-2. (Recordkeeping
				Requirements for Investment Advisers) means the giving of continual advice
				about the investment of funds on the basis of each client's individual
				needs.
(kk) "Management person"
				means a person with power to exercise, directly or indirectly, a controlling
				influence over the management or policies of an investment adviser that is a
				company or to determine the general investment advice given to
				clients.
(ll) "Merger and
				acquisition broker-dealer" means any broker-dealer and any person associated
				with a broker-dealer engaged in the business of effecting securities
				transactions solely in connection with the transfer of ownership of an eligible
				privately held company, regardless of whether that broker-dealer acts on behalf
				of a seller or buyer, through the purchase, sale, exchange, issuance,
				repurchase, or redemption of, or a business combination involving, securities
				or assets of the eligible privately held company if:
(1) the merger and acquisition broker-dealer
				reasonably believes that upon consummation of the transaction, any person
				acquiring securities or assets of the eligible privately held company, acting
				alone or in concert, will control and, directly or indirectly, will be active
				in the management of the eligible privately held company or the business
				conducted with the assets of the eligible privately held company; and
(2) any person offered securities in exchange
				for securities or assets of the eligible privately held company, prior to
				becoming legally bound to consummate the transaction, will receive or have
				reasonable access to the most recent fiscal year-end financial statements of
				the issuer of the securities as customarily prepared by its management in the
				normal course of operations and, if the financial statements of the issuer are
				audited, reviewed, or compiled, any related statement by the independent
				accountant; a balance sheet dated not more than one hundred twenty (120) days
				before the date of the exchange offer; and information pertaining to the
				management, business, results of operations for the period covered by the
				foregoing financial statements, and any material loss contingencies of the
				issuer.
(mm) "NASAA"
				means the North American Securities Administrators Association, Inc.
(nn) "NASDAQ" means the Nasdaq stock market,
				comprising the Nasdaq National Market ("NMS"), which trades large, active
				securities and the Nasdaq Small Cap Market that trades emerging growth
				companies.
(oo) "National
				securities exchange" means a securities exchange that has registered with the
				SEC as a national securities exchange under
				15 U.S.C. §
											78f.
(pp) "NCUA" means the National Credit Union
				Administration.
(qq) "Networking
				arrangement" and "brokerage affiliate arrangement" mean a contractual or other
				arrangement between a brokerdealer or investment adviser and a depository
				institution pursuant to which the broker-dealer or investment adviser conducts
				broker-dealer or investment advisory services for customers of the depository
				institution and the general public on the premises of such depository
				institution where retail deposits are taken.
(rr) "Officer" means a person charged with
				managerial responsibility or control over a person, including the president,
				vice president, secretary, treasurer, partner, and any other controlling
				person.
(ss) "Predecessor" means a
				person, a major portion of whose business, assets, or control has been acquired
				by another.
(tt) "Private fund
				adviser" means an investment adviser who solely provides advice to one (1) or
				more qualifying private funds.
(uu)
				"Promoter" means a person who, acting alone or in conjunction with one (1) or
				more other persons, directly or indirectly founds, organizes, reorganizes, or
				controls the business, financing, or operations of an issuer.
(vv) "Prospectus" means any prospectus
				defined in
				15
				U.S.C. §
											77b(a)(10).
				This term does not include any communication meeting the requirements of
				9 V.S.A. §
											5202(16) or
				17 C.F.R. §
											230.134.
(ww) "Public Shell Company" for purposes of
				V.S.R. § 3-4. (Registration Exemption for Merger and Acquisition
				Broker-Dealers) means a company that at the time of a transaction with an
				eligible privately held company:
(1) Has any
				class of securities registered, or required to be registered, with the SEC
				under
				15 U.S.C. §
												78o(b), or with respect to
				which the company files, or is required to file, periodic information,
				documents, and reports under
				15 U.S.C. §
												78o(d);
(2) Has no or nominal operations;
				and
(3) Has:
(A) No or nominal assets;
(B) Assets consisting solely of cash and cash
				equivalents; or
(C) Assets
				consisting of any amount of cash and cash equivalents and nominal other
				assets.
(xx)
				"Qualified client" means a qualified client as defined in
				17
				C.F.R. §
											275.205-3.
(yy) "Qualified custodian" means any of the
				following independent institutions or entities:
(1) A bank or savings association that has
				deposits insured by the FDIC;
(2) A
				broker-dealer registered under the Act who holds client assets in customer
				accounts;
(3) A futures commission
				merchant registered under
				7 U.S.C.
				§
												6f, who holds client assets in
				customer accounts, but only with respect to clients' funds and security
				futures, or other securities incidental to transactions in contracts for the
				purchase or sale of a commodity and options of the commodity for future
				delivery; and
(4) A foreign
				financial institution that customarily holds financial assets for its
				customers, if the foreign financial institution keeps the advisory clients'
				assets in customer accounts segregated from its proprietary assets.
(zz) "Qualified individual", as
				used in V.S.R. § 8-4. (Protection of Vulnerable Adults from Financial
				Exploitation) means any brokerdealer agent, investment adviser representative
				or person who serves in a supervisory, compliance, or legal capacity for a
				brokerdealer or investment adviser.
(aaa) "Qualifying private fund" means a
				private fund that meets the definition of a qualifying private fund in 17
				C.F.R. § 275.203(m)-1(d)(5).
(bbb) "Registrant" means a person registered
				under the Act.
(ccc) "Sales and
				advertising literature" means the following, if intended for distribution to
				prospective investors:
(A) Any advertisement,
				pamphlet, circular, brochure, form letter, or other written or electronic sales
				literature or material; and
(B)
				Any script for an oral advertisement or promotional effort.
(ddd) "SCOR" means Small Company
				Offering Registration.
(eee) "SEC"
				means the U.S. Securities and Exchange Commission.
(fff) "Solicitor" means any individual,
				person, or entity who, directly or indirectly, receives a cash fee or any other
				economic benefit for soliciting, referring, offering or otherwise negotiating
				for the sale or selling of investment advisory services to clients or
				prospective clients on behalf of an investment adviser.
(ggg) "Sponsor" of a wrap fee program as used
				in V.S.R. § 7-6(b)(4) means an investment adviser that is compensated
				under a wrap fee program for sponsoring, organizing, or administering the
				program, or for selecting or providing advice to clients regarding the
				selection of other investment advisers in the program.
(hhh) "Third party portal" means an entity
				engaging in activities limited to operating an internet website or platform
				effecting securities transactions.
(iii) "Tombstone advertisement" means sales
				and advertising literature in which the content is limited to the information
				specified in
				17 C.F.R. §
											230.134(a).
(jjj) "Venture capital fund" means a private
				fund that meets the definition of a venture capital fund in 17 C.F.R. §
				275.203(1)-1.
(kkk) "Vermont
				certified investor" as used in V.S.R. § 5-11. (Vermont Crowdfunding) means
				any person who comes within any of the following categories, or who the issuer
				reasonably believes comes within any of the following categories, at the time
				of the sale of the securities to that person:
(1) Any plan established and maintained by a
				state, its political subdivisions, or any agency or instrumentality of a state
				or its political subdivisions, for the benefit of its employees, if such plan
				has total assets in between two million five hundred thousand dollars ($
				2,500,000) and five million dollars ($ 5,000,000); any employee benefit plan
				within the meaning of the Employee Retirement Income Security Act of 1974 if
				the investment decision is made by a plan fiduciary, as described in
				29
				U.S.C. §
												1002, which is either a bank,
				savings and loan association, insurance company, or registered investment
				adviser, or if the employee benefit plan has total assets in between two
				million five hundred thousand dollars ($ 2,500,000) and five million dollars ($
				5,000,000) or, if a self-directed plan, with investment decisions made solely
				by persons that are certified investors;
(2) Any organization described in
				26 U.S.C.
				§
												501(c)(3),
				corporation, Massachusetts Trust or similar business trust, or partnership, not
				formed for the specific purpose of acquiring the securities offered, with total
				assets in between two million five hundred thousand dollars ($ 2,500,000) and
				five million dollars ($ 5,000,000);
(3) Any natural person whose individual
				liquid net worth, or joint net worth with that person's spouse, exceeds five
				hundred thousand dollars ($ 500,000);
(A)
				Except as provided in paragraph (3)(B) below, for purposes of calculating net
				worth under this paragraph (3)(A):
(i) The
				person's primary residence is not included as an asset;
(ii) Indebtedness that is secured by the
				person's primary residence, up to the estimated fair market value of the
				primary residence at the time of the sale of securities, is not included as a
				liability (except that if the amount of such indebtedness outstanding at the
				time of sale of securities exceeds the amount outstanding sixty (60) calendar
				days before such time, other than as a result of the acquisition of the primary
				residence, the amount of such excess is included as a liability); and
(iii) Indebtedness that is secured by the
				person's primary residence in excess of the estimated fair market value of the
				primary residence at the time of the sale of securities is included as a
				liability;
(B) Paragraph
				(3)(A) above does not apply to any calculation of a person's net worth made in
				connection with a purchase of securities in accordance with a right to purchase
				such securities, provided that:
(i) Such right
				was held by the person on July 20, 2010;
(ii) The person qualified as an accredited
				investor on the basis of net worth at the time the person acquired such right;
				and
(iii) The person held
				securities of the same issuer, other than such right, on July 20,
				2010.
(4) Any
				natural person who had an individual income in excess of one hundred thousand
				dollars ($ 100,000) in each of the two (2) most recent years or joint income
				with that person's spouse in excess of one hundred fifty thousand dollars ($
				150,000) in each of those years and has a reasonable expectation of reaching
				the same income level in the current year;
(5) Any trust, with total assets between two
				million five hundred thousand dollars ($ 2,500,000) and five million dollars ($
				5,000,000), not formed for the specific purpose of acquiring the securities
				offered, whose purchase is directed by a sophisticated person as described in
				17
				C.F.R. §
												230.506(b)(2)(ii);
				and
(6) Any entity in which all of
				the equity owners are Vermont certified investors.
(lll) "Vermont main street investor" as used
				in V.S.R. § 5-11. (Vermont Crowdfunding) means any person who does not
				come within the definition of "Vermont certified investor" or "accredited
				investor."
(mmm) "Wrap fee program"
				means an advisory program under which one (1) or more specified fees, not based
				directly upon transactions in a client's account, are charged for investment
				advisory services and the execution of client transactions. The investment
				advisory services may include portfolio management or advice concerning the
				selection of other investment advisers.
(Authorized by and implementing
				  9
				  V.S.A. §
												5605(a)(2).)