Section 1. new text begin [80A.40] SECTION 101; SHORT TITLE. new text end

new text begin This chapter may be cited as the Uniform Securities Act (2002). new text end

Sec. 2.

new text begin [80A.41] SECTION 102; DEFINITIONS. new text end

new text begin In this chapter, unless the context otherwise requires: new text end

new text begin (1) "Administrator" means the commissioner of commerce. new text end

new text begin (2) "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. But 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 term. The term does not include an individual excluded by rule adopted or order issued under this chapter. new text end

new text begin (3) "Bank" means: new text end

new text begin (A) a banking institution organized under the laws of the United States; new text end

new text begin (B) a member bank of the Federal Reserve System; new text end

new text begin (C) any other banking institution, whether incorporated 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 Public Law 87-722 (12 U.S.C. Section 92a), and which is supervised and examined by a state or federal agency having supervision over banks, and which is not operated for the purpose of evading this chapter; and new text end

new text begin (D) a receiver, conservator, or other liquidating agent of any institution or firm included in subparagraph (A), (B), or (C). new text end

new text begin (4) "Broker-dealer" means a person engaged in the business of effecting transactions in securities for the account of others or for the person's own account. The term does not include: new text end

new text begin (A) an agent; new text end

new text begin (B) an issuer; new text end

new text begin (C) a depository institution; provided such activities are conducted in accordance with such rules as may be adopted by the administrator; new text end

new text begin (D) an international banking institution; or new text end

new text begin (E) a person excluded by rule adopted or order issued under this chapter. new text end

new text begin (5) "Depository institution" means: new text end

new text begin (A) a bank; or new text end

new text begin (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 Insurance Fund, or a successor authorized by federal law. The term does not include: new text end

new text begin (i) an insurance company or other organization primarily engaged in the business of insurance; new text end

new text begin (ii) a Morris Plan bank; or new text end

new text begin (iii) an industrial loan company that is not an "insured depository institution" as defined in section 3(c)(2) of the Federal Deposit Insurance Act, United States Code, title 12, section 1813(c)(2), or any successor federal statute. new text end

new text begin (6) "Federal covered investment adviser" means a person registered under the Investment Advisers Act of 1940. new text end

new text begin (7) "Federal covered security" means a security that is, or upon completion of a transaction will be, a covered security under Section 18(b) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)) or rules or regulations adopted pursuant to that provision. new text end

new text begin (8) "Filing" means the receipt under this chapter of a record by the administrator or a designee of the administrator. new text end

new text begin (9) "Fraud," "deceit," and "defraud" are not limited to common law deceit. new text end

new text begin (10) "Guaranteed" means guaranteed as to payment of all principal and all interest. new text end

new text begin (11) "Institutional investor" means any of the following, whether acting for itself or for others in a fiduciary capacity: new text end

new text begin (A) a depository institution or international banking institution; new text end

new text begin (B) an insurance company; new text end

new text begin (C) a separate account of an insurance company; new text end

new text begin (D) an investment company as defined in the Investment Company Act of 1940; new text end

new text begin (E) a broker-dealer registered under the Securities Exchange Act of 1934; new text end

new text begin (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 Employee Retirement Income Security Act of 1974, that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under this chapter, a depository institution, or an insurance company; new text end

new text begin (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 $10,000,000 or its investment decisions are made by a duly designated public official or by a named fiduciary, as defined in the Employee Retirement Income Security Act of 1974, that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under this chapter, a depository institution, or an insurance company; new text end

new text begin (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 subparagraph (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; new text end

new text begin (I) an organization described in Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Section 501(c)(3)), corporation, Massachusetts trust or similar business trust, 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; new text end

new text begin (J) a small business investment company licensed by the Small Business Administration under Section 301(c) of the Small Business Investment Act of 1958 (15 U.S.C. Section 681(c)) with total assets in excess of $10,000,000; new text end

new text begin (K) a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(22)) with total assets in excess of $10,000,000; new text end

new text begin (L) a federal covered investment adviser acting for its own account; new text end

new text begin (M) a "qualified institutional buyer" as defined in Rule 144A(a)(1), other than Rule 144A(a)(1)(i)(H), adopted under the Securities Act of 1933 (17 C.F.R. 230.144A); new text end

new text begin (N) a "major U.S. institutional investor" as defined in Rule 15a-6(b)(4)(i) adopted under the Securities Exchange Act of 1934 (17 C.F.R. 240.15a-6); new text end

new text begin (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 new text end

new text begin (P) any other person specified by rule adopted or order issued under this chapter; new text end

new text begin (12) "Insurance company" means a company organized as an insurance company whose primary business is writing insurance or reinsuring risks underwritten by insurance companies and which is subject to supervision by the insurance commissioner or a similar official or agency of a state. new text end

new text begin (13) "Insured" means insured as to payment of all principal and all interest. new text end

new text begin (14) "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 Securities Act of 1933. new text end

new text begin (15) "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. The term 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. The term does not include: new text end

new text begin (A) an investment adviser representative; new text end

new text begin (B) a lawyer, accountant, engineer, or teacher whose performance of investment advice is solely incidental to the practice of the person's profession; new text end

new text begin (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; new text end

new text begin (D) a publisher of a bona fide newspaper, news magazine, or business or financial publication of general and regular circulation; new text end

new text begin (E) a federal covered investment adviser; new text end

new text begin (F) a bank or savings institution; new text end

new text begin (G) any other person that is excluded by the Investment Advisers Act of 1940 from the definition of investment adviser; or new text end

new text begin (H) any other person excluded by rule adopted or order issued under this chapter. new text end

new text begin (16) "Investment adviser representative" means an individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or holds herself or himself out as providing investment advice, receives compensation to solicit, offer, or negotiate for the sale of or for selling investment advice, or supervises employees who perform any of the foregoing. The term does not include an individual who: new text end

new text begin (A) performs only clerical or ministerial acts; new text end

new text begin (B) is an agent whose performance of investment advice is solely incidental to the individual acting as an agent and who does not receive special compensation for investment advisory services; new text end

new text begin (C) is employed by or associated with a federal covered investment adviser, unless the individual has a "place of business" in this state as that term is defined by rule adopted under Section 203A of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-3a) and is new text end

new text begin (i) an "investment adviser representative" as that term is defined by rule adopted under Section 203A of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-3a); or new text end

new text begin (ii) not a "supervised person" as that term is defined in Section 202(a)(25) of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(25)); or new text end

new text begin (D) is excluded by rule adopted or order issued under this chapter. new text end

new text begin (17) "Issuer" means a person that issues or proposes to issue a security, subject to the following: new text end

new text begin (A) The issuer of a voting trust 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 manager pursuant to the trust or other agreement or instrument under which the security is issued. new text end

new text begin (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 is otherwise contractually responsible for assuring payment of the certificate. new text end

new text begin (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 lease, right, or royalty, whether whole or fractional, that creates fractional interests for the purpose of sale. new text end

new text begin (18) "Nonissuer transaction" or "nonissuer distribution" means a transaction or distribution not directly or indirectly for the benefit of the issuer. new text end

new text begin (19) "Offer to purchase" includes an attempt or offer to obtain, or solicitation of an offer to sell, a security or interest in a security for value. The term does not include a tender offer that is subject to Section 14(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78n(d)). new text end

new text begin (20) "Person" means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity. new text end

new text begin (21) "Place of business" of a broker-dealer, an investment adviser, or a federal covered investment adviser means: new text end

new text begin (A) an office at which the broker-dealer, investment adviser, or federal covered investment adviser regularly provides brokerage or investment advice or solicits, meets with, or otherwise communicates with customers or clients; or new text end

new text begin (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. new text end

new text begin (22) "Predecessor Act" means Minnesota Statutes 2002, sections 80A.01 to 80A.31. new text end

new text begin (23) "Price amendment" means the amendment to a registration statement filed under the Securities Act of 1933 or, if an amendment is not filed, the prospectus or prospectus supplement filed under the 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. new text end

new text begin (24) "Principal place of business" of a broker-dealer or an investment adviser means the executive office of the broker-dealer or investment adviser from which the officers, partners, or managers of the broker-dealer or investment adviser direct, control, and coordinate the activities of the broker-dealer or investment adviser. new text end

new text begin (24a) "Purchaser" does not include: new text end

new text begin (A) any relative, spouse, or relative of the spouse of a purchaser who has the same principal residence as the purchaser; new text end

new text begin (B) any trust or estate in which a purchaser and any of the persons related to him as specified in Regulation D, Rule 501(e)(1)(i) or (e)(1)(ii) collectively have more than 50 percent of the beneficial interest (excluding contingent interests); new text end

new text begin (C) any corporation or other organization of which a purchaser and any of the persons related to the purchaser as specified in Regulation D, Rule 501(e)(1)(i) or (e)(1)(ii) collectively are beneficial owners of more than 50 percent of the equity securities (excluding directors' qualifying shares) or equity interests; and new text end

new text begin (D) any accredited investor as defined by Regulation D, Rule 501(3). new text end

new text begin A corporation, partnership, or other entity must be counted as one purchaser. If, however, that entity is organized for the specific purpose of acquiring the securities offered and is not an accredited investor, then each beneficial owner of equity securities or equity interests in the entity shall count as a separate purchaser for all provisions of Regulation D, except to the extent provided in Regulation D, Rule 501(e)(1). new text end

new text begin A noncontributory employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 shall be counted as one purchaser where the trustee makes all investment decisions for the plan. new text end

new text begin (25) "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. new text end

new text begin (26) "Sale" includes every contract of sale, contract to sell, or disposition of, a security or interest in a security for value, and "offer to sell" includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value. new text end

new text begin (A) A security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing is considered to constitute part of the subject of the purchase and to have been offered and sold for value. new text end

new text begin (B) A gift of assessable stock is considered to involve an offer and sale. new text end

new text begin (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 security that gives the holder a present or future right or privilege to convert the security into another security of the same or another issuer, are each considered to include an offer of the other security. new text end

new text begin (27) "Securities and Exchange Commission" means the United States Securities and Exchange Commission. new text end

new text begin (28) "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; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas, or other mineral rights; put, call, straddle, option, or privilege on a security, certificate of deposit, or 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. The term: new text end

new text begin (A) includes both a certificated and an uncertificated security; new text end

new text begin (B) 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; new text end

new text begin (C) does not include an interest in a contributory or noncontributory pension or welfare plan subject to the Employee Retirement Income Security Act of 1974; new text end

new text begin (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 and a "common enterprise" means an enterprise in which the fortunes of the investor are interwoven with those of either the person offering the investment, a third party, or other investors; new text end

new text begin (E) includes as an "investment contract," among other contracts, an interest in a limited partnership and a limited liability company and an investment in a viatical settlement or similar agreement; and new text end

new text begin (F) does not include any equity interest of a closely held corporation or other entity with not more than 35 holders of the equity interest of such entity offered or sold pursuant to a transaction in which 100 percent of the equity interest of such entity is sold as a means to effect the sale of the business of the entity if the transaction has been negotiated on behalf of all purchasers and if all purchasers have access to inside information regarding the entity before consummating the transaction. new text end

new text begin (29) "Self-regulatory organization" means a national securities exchange registered under the Securities Exchange Act of 1934, a national securities association of broker-dealers registered under the Securities Exchange Act of 1934, a clearing agency registered under the Securities Exchange Act of 1934, or the Municipal Securities Rulemaking Board established under the Securities Exchange Act of 1934. new text end

new text begin (30) "Sign" means, with present intent to authenticate or adopt a record: new text end

new text begin (A) to execute or adopt a tangible symbol; or new text end

new text begin (B) to attach or logically associate with the record an electronic symbol, sound, or process. new text end

new text begin (31) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. new text end

new text begin (32) "Associated with" with respect to a person means any partner, officer, director, or manager of such person or any person occupying a similar status or performing similar functions or any person directly or indirectly controlling, controlled by, or in common control with, such person, but does not include a person whose primary duties are ministerial or clerical. new text end

Sec. 3.

new text begin [80A.42] SECTION 103; REFERENCES TO FEDERAL STATUTES. new text end

new text begin "Securities Act of 1933" (15 U.S.C. Section 77a et seq.), "Securities Exchange Act of 1934" (15 U.S.C. Section 78a et seq.), "Public Utility Holding Company Act of 1935" (15 U.S.C. Section 79 et seq.), "Investment Company Act of 1940" (15 U.S.C. Section 80a-1 et seq.), "Investment Advisers Act of 1940" (15 U.S.C. Section 80b-1 et seq.), "Employee Retirement Income Security Act of 1974" (29 U.S.C. Section 1001 et seq.), "National Housing Act" (12 U.S.C. Section 1701 et seq.), "Commodity Exchange Act" (7 U.S.C. Section 1 et seq.), "Internal Revenue Code" (26 U.S.C. Section 1 et seq.), "Securities Investor Protection Act of 1970" (15 U.S.C. Section 78aaa et seq.), "Securities Litigation Uniform Standards Act of 1998" (112 Stat. 3227), "Small Business Investment Act of 1958" (15 U.S.C. Section 661 et seq.), and "Electronic Signatures in Global and National Commerce Act" (15 U.S.C. Section 7001 et seq.) mean those statutes and the rules and regulations adopted under those statutes, as in effect on the date of enactment of this chapter, or as later amended. new text end

Sec. 4.

new text begin [80A.43] SECTION 104; REFERENCES TO FEDERAL AGENCIES. new text end

new text begin A reference in this chapter to an agency or department of the United States is also a reference to a successor agency or department. new text end

Sec. 5.

new text begin [80A.44] SECTION 105; ELECTRONIC RECORDS AND SIGNATURES. new text end

new text begin This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, but does not modify, limit, or supersede Section 101(c) of that act (15 U.S.C. Section 7001(c)) or authorize electronic delivery of any of the notices described in Section 103(b) of that act (15 U.S.C. 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 104(a) of that act (15 U.S.C. Section 7004(a)).new text end

Sec. 6.

new text begin [80A.45] SECTION 201; EXEMPT SECURITIES. new text end

new text begin The following securities are exempt from the requirements of sections 80A.49 through 80A.54 and 80A.71: new text end

new text begin (1) a security, including a revenue obligation or a separate security as defined in Rule 131 (17 C.F.R. 230.131) adopted under the 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 Congress; or a certificate of deposit for any of the foregoing; new text end

new text begin (2) 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; new text end

new text begin (3) a security issued by and representing or that will represent an interest in or a direct obligation of, or be guaranteed by: new text end

new text begin (A) an international banking institution; new text end

new text begin (B) a banking institution organized under the laws of the United States; a member bank of the Federal Reserve System; or a depository institution a substantial portion of the business of which consists or will consist of receiving deposits or share accounts that are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law or exercising fiduciary powers that are similar to those permitted for national banks under the authority of the Comptroller of Currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. Section 92a); or new text end

new text begin (C) any other depository institution, unless by rule or order the administrator proceeds under section 80A.48; new text end

new text begin (4) 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; new text end

new text begin (5) a security issued or guaranteed by a railroad, other common carrier, public utility, or public utility holding company that is: new text end

new text begin (A) regulated in respect to its rates and charges by the United States or a state; new text end

new text begin (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 new text end

new text begin (C) a public utility holding company registered under the Public Utility Holding Company Act of 1935 or a subsidiary of such a registered holding company within the meaning of that act; new text end

new text begin (6) a federal covered security specified in Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. 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; a subscription right on or with respect to such securities; or an option or similar derivative security on a security or an index of securities or foreign currencies issued by a clearing agency registered under the Securities Exchange Act of 1934 and listed or designated for trading on a national securities exchange, a facility of a national securities exchange, or a facility of a national securities association registered under the Securities Exchange Act of 1934 or an offer or sale, of the underlying security in connection with the offer, sale, or exercise of an option or other security that was exempt when the option or other security was written or issued; or an option or a derivative security designated by the Securities and Exchange Commission under Section 9(b) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78i(b)); new text end

new text begin (7) a security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, social, athletic, or reformatory purposes, or as a chamber of commerce, and not for pecuniary profit, no part of the net earnings of which inures to the benefit of a private stockholder or other person, or a security of a company that is excluded from the definition of an investment company under Section 3(c)(10)(B) of the Investment Company Act of 1940 (15 U.S.C. Section 80a-3(c)(10)(B)); except that with respect to the offer or sale, an issuer of such a note, bond, debenture, or other evidence of indebtedness is required to file a notice specifying the material terms of the proposed offer or sale and copies of any proposed sales and advertising literature to be used together with the fee required by section 80A.65 and provided that this exemption shall be effective if the administrator does not disallow the exemption in writing within 15 days following the date of the notice filing. new text end

Sec. 7.

new text begin [80A.46] SECTION 202; EXEMPT TRANSACTIONS. new text end

new text begin The following transactions are exempt from the requirements of sections 80A.49 through 80A.54 and 80A.71: new text end

new text begin (1) isolated nonissuer transactions, consisting of sale to not more than ten purchasers in Minnesota during any period of 12 consecutive months, whether effected by or through a broker-dealer or not; new text end

new text begin (2) a nonissuer transaction by or through a broker-dealer registered, or exempt from registration under this chapter, and a resale transaction by a sponsor of a unit investment trust registered under the 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, at the date of the transaction: new text end

new text begin (A) the issuer of the security is engaged in business, the issuer is not in the organizational stage or in bankruptcy or receivership, and the issuer is not 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 engage in a merger or combination of the business with, or an acquisition of, an unidentified person; new text end

new text begin (B) the security is sold at a price reasonably related to its current market price; new text end

new text begin (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 security or a redistribution; new text end

new text begin (D) a nationally recognized securities manual or its electronic equivalent designated by rule adopted or order issued under this chapter or a record filed with the Securities and Exchange Commission that is publicly available contains: new text end

new text begin (i) a description of the business and operations of the issuer; new text end

new text begin (ii) the names of the issuer's executive officers and the names of the issuer's directors, if any; new text end

new text begin (iii) an audited balance sheet of the issuer 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 an audited balance sheet, a pro forma balance sheet for the combined organization; and new text end

new text begin (iv) an audited income statement for each of the issuer's two 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 new text end

new text begin (E) any one of the following requirements is met: new text end

new text begin (i) the issuer of the security has a class of equity securities listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934 or designated for trading on the National Association of Securities Dealers Automated Quotation System; new text end

new text begin (ii) the issuer of the security is a unit investment trust registered under the Investment Company Act of 1940; new text end

new text begin (iii) the issuer of the security, including its predecessors, has been engaged in continuous business for at least three years; or new text end

new text begin (iv) 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; new text end

new text begin (3) a nonissuer transaction by or through a broker-dealer registered or exempt from registration 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; new text end

new text begin (4) a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in an outstanding security if the guarantor of the security files reports with the Securities and Exchange Commission under the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Sections 78m or 78o(d)); new text end

new text begin (5) a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter in a security that: new text end

new text begin (A) is rated at the time of the transaction by a nationally recognized statistical rating organization in one of its four highest rating categories; or new text end

new text begin (B) has a fixed maturity or a fixed interest or dividend, if: new text end

new text begin (i) a default has not occurred during the current fiscal year or within the three previous fiscal years or during the existence of the issuer and any predecessor if less than three fiscal years, in the payment of principal, interest, or dividends on the security; and new text end

new text begin (ii) the issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not and has not been within 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 engage in a merger or combination of the business with, or an acquisition of, an unidentified person; new text end

new text begin (6) a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter effecting an unsolicited order or offer to purchase; new text end

new text begin (7) a nonissuer transaction executed by a bona fide pledgee without the purpose of evading this chapter; new text end

new text begin (8) 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; new text end

new text begin (9) 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 in such exchange and partly for cash, if the terms and conditions of the issuance and exchange or the delivery and exchange and the fairness of the terms and conditions have been approved by the administrator after a hearing; new text end

new text begin (10) a transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters; new text end

new text begin (11) a transaction in a note, bond, debenture, or other evidence of indebtedness secured by a mortgage or other security agreement if: new text end

new text begin (A) the note, bond, debenture, or other evidence of indebtedness is offered and sold with the mortgage or other security agreement as a unit; new text end

new text begin (B) a general solicitation or general advertisement of the transaction is not made; and new text end

new text begin (C) a commission or other remuneration is not paid or given, directly or indirectly, to a person not registered under this chapter as a broker-dealer or as an agent; new text end

new text begin (12) a transaction by an executor, administrator of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator; new text end

new text begin (13) a sale or offer to sell to: new text end

new text begin (A) an institutional investor; new text end

new text begin (B) an accredited investor as that term is defined in Regulation D, Rule 501(a); new text end

new text begin (C) a federal covered investment adviser; or new text end

new text begin (D) any other person exempted by rule adopted or order issued under this chapter; new text end

new text begin (14) a sale or an offer to sell securities by an issuer, if the transaction is part of a single issue in which: new text end

new text begin (A) not more than 35 purchasers are present in this state during any 12 consecutive months, other than those designated in paragraph (13); new text end

new text begin (B) a general solicitation or general advertising is not made in connection with the offer to sell or sale of the securities; new text end

new text begin (C) a commission or other remuneration is not paid or given, directly or indirectly, to a person other than a broker-dealer registered under this chapter or an agent registered under this chapter for soliciting a prospective purchaser in this state; and new text end

new text begin (D) the issuer reasonably believes that all the purchasers in this state, other than those designated in paragraph (13), are purchasing for investment; new text end

new text begin (15) 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; new text end

new text begin (16) an offer to sell, but not a sale, of a security not exempt from registration under the Securities Act of 1933 if: new text end

new text begin (A) a registration or offering statement or similar record as required under the Securities Act of 1933 has been filed, but is not effective, or the offer is made in compliance with Rule 165 adopted under the Securities Act of 1933 (17 C.F.R. 230.165); and new text end

new text begin (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; new text end

new text begin (17) an offer to sell, but not a sale, of a security exempt from registration under the Securities Act of 1933 if: new text end

new text begin (A) a registration statement has been filed under this chapter, but is not effective; new text end

new text begin (B) a solicitation of interest is provided in a record to offerees in compliance with a rule adopted by the administrator under this chapter; and new text end

new text begin (c) a stop order of which the offeror is aware has not been issued by the administrator under this chapter and an audit, inspection, or proceeding that may culminate in a stop order is not known by the offeror to be pending; new text end

new text begin (18) 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; new text end

new text begin (19) a rescission offer, sale, or purchase under section 80A.77; new text end

new text begin (20) 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; new text end

new text begin (21) 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: new text end

new text begin (A) directors; general partners; trustees, if the issuer is a business trust; officers; consultants; and advisors; new text end

new text begin (B) family members who acquire such securities from those persons through gifts or domestic relations orders; new text end

new text begin (C) former employees, directors, general partners, trustees, officers, consultants, and advisors if those individuals were employed by or providing services to the issuer when the securities were offered; and new text end

new text begin (D) insurance agents who are exclusive insurance agents of the issuer, or the issuer's subsidiaries or parents, or who derive more than 50 percent of their annual income from those organizations; new text end

new text begin (22) a transaction involving: new text end

new text begin (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; new text end

new text begin (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 new text end

new text begin (C) the solicitation of tenders of securities by an offeror in a tender offer in compliance with Rule 162 adopted under the Securities Act of 1933 (17 C.F.R. 230.162); new text end

new text begin (23) a nonissuer transaction in an outstanding security by or through a broker-dealer registered or exempt from registration 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; 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 rule adopted or order issued under this chapter, or is a security of the same issuer that is of senior or substantially 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 chapter 14, the administrator, by rule adopted or order issued under this chapter, may revoke the designation of a securities exchange under this paragraph, if the administrator finds that revocation is necessary or appropriate in the public interest and for the protection of investors; new text end

new text begin (24) any transaction effected by or through a Canadian broker-dealer exempted from broker-dealer registration pursuant to section 80A.56(b)(3); or new text end

new text begin (25)(A) the offer and sale by a cooperative organized under chapter 308A, or under the laws of another state, of its securities when the securities are offered and sold only to its members, or when the purchase of the securities is necessary or incidental to establishing membership in the cooperative, or when the securities are issued as patronage dividends. This paragraph applies to a cooperative organized under the laws of another state only if the cooperative has filed with the administrator a consent to service of process under section 80A.88 and has, not less than ten days before the issuance or delivery, furnished the administrator with a written general description of the transaction and any other information that the administrator requires by rule or otherwise; new text end

new text begin (B) the offer and sale by a cooperative organized under chapter 308B of its securities when the securities are offered and sold to its existing members or when the purchase of the securities is necessary or incidental to establishing patron membership in the cooperative, or when such securities are issued as patronage dividends. The administrator has the power to define "patron membership" for purposes of this paragraph. This paragraph applies to securities, other than securities issued as patronage dividends, only when: new text end

new text begin (i) the issuer, before the completion of the sale of the securities, provides each offeree or purchaser disclosure materials that, to the extent material to an understanding of the issuer, its business, and the securities being offered, substantially meet the disclosure conditions and limitations found in rule 502(b) of Regulation D promulgated by the Securities and Exchange Commission, Code of Federal Regulations, title 17, section 230.502; and new text end

new text begin (ii) within 15 days after the completion of the first sale in each offering completed in reliance upon this exemption, the cooperative has filed with the administrator a consent to service of process under section 80A.88 (or has previously filed such a consent), and has furnished the administrator with a written general description of the transaction and any other information that the administrator requires by rule or otherwise; and new text end

new text begin (C) a cooperative may, at or about the same time as offers or sales are being completed in reliance upon the exemptions from registration found in this subpart and as part of a common plan of financing, offer or sell its securities in reliance upon any other exemption from registration available under this chapter. The offer or sale of securities in reliance upon the exemptions found in this subpart will not be considered or deemed a part of or be integrated with any offer or sale of securities conducted by the cooperative in reliance upon any other exemption from registration available under this chapter, nor will offers or sales of securities by the cooperative in reliance upon any other exemption from registration available under this chapter be considered or deemed a part of or be integrated with any offer or sale conducted by the cooperative in reliance upon this paragraph. new text end

Sec. 8.

new text begin [80A.47] SECTION 203; ADDITIONAL EXEMPTIONS AND WAIVERS. new text end

new text begin A rule adopted or order issued under this chapter may exempt a security, transaction, or offer; a rule under this chapter may exempt a class of securities, transactions, or offers from any or all of the requirements of sections 80A.49 through 80A.54 and 80A.71; and an order under this chapter may waive, in whole or in part, any or all of the conditions for an exemption or offer under sections 80A.45 and 80A.46. new text end

Sec. 9.

new text begin [80A.48] SECTION 204; DENIAL, SUSPENSION, REVOCATION, CONDITION, OR LIMITATION OF EXEMPTIONS. new text end

new text begin (a) Enforcement related powers. Except with respect to a federal covered security or a transaction involving a federal covered security, an order under this chapter may deny, suspend application of, condition, limit, or revoke an exemption created under section 80A.45(3)(C), (7) or (8) or 80A.46 or an exemption or waiver created under section 80A.47 with respect to a specific security, transaction, or offer. An order under this section may be issued only pursuant to the procedures in section 80A.54(d) or 80A.81 and only prospectively. new text end

new text begin (b) Knowledge of order required. A person does not violate sections 80A.49, 80A.51 through 80A.54, 80A.71, or 80A.77 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.new text end

Sec. 10.

new text begin [80A.49] SECTION 301; SECURITIES REGISTRATION REQUIREMENT. new text end

new text begin It is unlawful for a person to offer or sell a security in this state unless: new text end

new text begin (1) the security is a federal covered security; new text end

new text begin (2) the security, transaction, or offer is exempted from registration under sections 80A.45 through 80A.47; or new text end

new text begin (3) the security is registered under this chapter. new text end

Sec. 11.

new text begin [80A.50] SECTION 302; FEDERAL COVERED SECURITIES; SMALL CORPORATE OFFERING REGISTRATION. new text end

new text begin (a) Federal covered securities. new text end

new text begin (1) Required filing of records. With respect to a federal covered security, as defined in Section 18(b)(2) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(2)), that is not otherwise exempt under sections 80A.45 through 80A.47, a rule adopted or order issued under this chapter may require the filing of any or all of the following records: new text end

new text begin (A) before the initial offer of a federal covered security in this state, all records that are part of a federal registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933 and a consent to service of process complying with section 80A.88 signed by the issuer; new text end

new text begin (B) after the initial offer of the federal covered security in this state, all records that are part of an amendment to a federal registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933; and new text end

new text begin (C) to the extent necessary or appropriate to compute fees, a report of the value of the federal covered securities sold or offered to persons present in this state, if the sales data are not included in records filed with the Securities and Exchange Commission. new text end

new text begin (2) Notice filing effectiveness and renewal. A notice filing under subsection (a) is effective for one year commencing on the later of the notice filing or the effectiveness of the offering filed with the Securities and Exchange Commission. On or before expiration, the issuer may renew a notice filing by filing a copy of those records filed by the issuer with the Securities and Exchange Commission that are required by rule or order under this chapter to be filed. A previously filed consent to service of process complying with section 80A.88 may be incorporated by reference in a renewal. A renewed notice filing becomes effective upon the expiration of the filing being renewed. new text end

new text begin (3) Notice filings for federal covered securities under section 18(b)(4)(D). With respect to a security that is a federal covered security under Section 18(b)(4)(D) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(4)(D)), a rule under this chapter may require a notice filing by or on behalf of an issuer to include a copy of Form D, including the Appendix, as promulgated by the Securities and Exchange Commission, and a consent to service of process complying with section 80A.88 signed by the issuer not later than 15 days after the first sale of the federal covered security in this state. new text end

new text begin (4) Stop orders. Except with respect to a federal security under Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)), if the administrator finds that there is a failure to comply with a notice or fee requirement of 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 corrected, the stop order is void as of the time of its issuance and no penalty may be imposed by the administrator. new text end

new text begin (b) Small corporation offering registration. new text end

new text begin (1) Registration required. A security meeting the conditions set forth in this section may be registered as set forth in this section. new text end

new text begin (2) Availability. Registration under this section is available only to the issuer of securities and not to an affiliate of the issuer or to any other person for resale of the issuer's securities. The issuer must be organized under the laws of one of the states or possessions of the United States. The securities offered must be exempt from registration under the Securities Act of 1933 pursuant to Rule 504 of Regulation D (15 U.S.C. section 77c). new text end

new text begin (3) Disqualification. Registration under this section is not available to any of the following issuers: new text end

new text begin (A) an issuer subject to the reporting requirements of section 13 or 15(d) of the Securities Exchange Act of 1934; new text end

new text begin (B) an investment company; new text end

new text begin (C) a development stage company that either 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; new text end

new text begin (D) an issuer if the issuer or any of its predecessors, officers, directors, governors, partners, ten percent stock or equity holders, promoters, or any selling agents of the securities to be offered, or any officer, director, governor, or partner of the selling agent: new text end

new text begin (i) has filed a registration statement that is the subject of a currently effective registration stop order entered under a federal or state securities law within five years before the filing of the small corporate offering registration application; new text end

new text begin (ii) has been convicted within five years before the filing of the small corporate offering registration application of a felony or misdemeanor in connection with the offer, purchase, or sale of a security or a felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud; new text end

new text begin (iii) is currently subject to a state administrative enforcement order or judgment entered by a state securities administrator or the Securities and Exchange Commission within five years before the filing of the small corporate offering registration application, or is subject to a federal or state administrative enforcement order or judgment in which fraud or deceit, including, but not limited to, making untrue statements of material facts or omitting to state material facts, was found and the order or judgment was entered within five years before the filing of the small corporate offering registration application; new text end

new text begin (iv) is currently subject to an order, judgment, or decree of a court of competent jurisdiction temporarily restraining or enjoining, or is subject to an order, judgment, or decree of a court of competent jurisdiction permanently restraining or enjoining the party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of a false filing with a state or with the Securities and Exchange Commission entered within five years before the filing of the small corporate offering registration application; or new text end

new text begin (v) is subject to a state's administrative enforcement order, or judgment that prohibits, denies, or revokes the use of an exemption for registration in connection with the offer, purchase, or sale of securities, new text end

new text begin (I) except that clauses (i) to (iv) do not apply if the person subject to the disqualification is duly licensed or registered to conduct securities-related business in the state in which the administrative order or judgment was entered against the person or if the dealer employing the party is licensed or registered in this state and the form BD filed in this state discloses the order, conviction, judgment, or decree relating to the person, and new text end

new text begin (II) except that the disqualification under this subdivision is automatically waived if the state securities administrator or federal agency that created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances to deny the registration. new text end

new text begin (4) Filing and effectiveness of registration statement. A small corporate offering registration statement must be filed with the administrator. If no stop order is in effect and no proceeding is pending under section 80A.54, such registration statement shall become effective automatically at the close of business on the 20th day after filing of the registration statement or the last amendment of the registration statement or at such earlier time as the administrator may designate by rule or order. new text end

new text begin (5) Contents of registration statement. A small corporate offering registration statement under this section shall be on Form U-7, including exhibits required by the instructions thereto, as adopted by the North American Securities Administrators Association, or such alternative form as may be designated by the administrator by rule or order and must include: new text end

new text begin (A) a consent to service of process complying with section 80A.88; new text end

new text begin (B) a statement of the type and amount of securities to be offered and the amount of securities to be offered in this state; new text end

new text begin (C) 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 security to be registered; new text end

new text begin (D) a signed or conformed copy of an opinion of counsel concerning the legality of the securities being registered which states whether the securities, when sold, will be validly issued, fully paid, and nonassessable and, if debt securities, binding obligations of the issuer; new text end

new text begin (E) the states (i) in which the securities are proposed to be offered; (ii) in which a registration statement or similar filing has been made in connection with the offering including information as to effectiveness of each such filing; and (iii) in which a stop order or similar proceeding has been entered or in which proceedings or actions seeking such an order are pending; new text end

new text begin (F) a copy of the offering document proposed to be delivered to offerees; and new text end

new text begin (G) a copy of any other 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 80A.46(17)(B). new text end

new text begin (6) Copy to purchaser. A copy of the offering document as filed with the administrator must be delivered to each person purchasing the securities prior to sale of the securities to such person. new text end

Sec. 12.

new text begin [80A.51] SECTION 303; SECURITIES REGISTRATION BY COORDINATION. new text end

new text begin (a) Registration permitted. A security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination under this section. new text end

new text begin (b) Required records. A registration statement and accompanying records under this section must contain or be accompanied by the following records in addition to the information specified in section 80A.53 and a consent to service of process complying with section 80A.88: new text end

new text begin (1) a copy of the latest form of prospectus filed under the Securities Act of 1933; new text end

new text begin (2) a copy of the articles of incorporation and bylaws or their substantial equivalents currently in effect; a copy of any agreement with or among underwriters; a copy of any indenture or other instrument governing the issuance of the security to be registered; and a specimen, copy, or description of the security that is required by rule adopted or order issued under this chapter; new text end

new text begin (3) copies of any other information or any other records filed by the issuer under the Securities Act of 1933 requested by the administrator; and new text end

new text begin (4) an undertaking to forward each amendment to the federal prospectus, other than an amendment that delays the effective date of the registration statement, promptly after it is filed with the Securities and Exchange Commission. new text end

new text begin (c) 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 of the following conditions are satisfied: new text end

new text begin (1) a stop order under subsection (d) or section 80A.54 or issued by the Securities and Exchange Commission is not in effect and a proceeding is not pending against the issuer under section 80A.54; and new text end

new text begin (2) the registration statement has been on file for at least 20 days or a shorter period provided by rule adopted or order issued under this chapter. new text end

new text begin (d) Notice of federal registration statement effectiveness. The registrant shall promptly notify the administrator in a record of the date when the federal registration statement becomes effective and the content of any price amendment and shall promptly file a record containing the price amendment. If the notice is not timely received, the administrator may issue a stop order, without prior notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this section. The administrator shall promptly notify the registrant of an order by telegram, telephone, or electronic means and promptly confirm this notice by a record. If the registrant subsequently complies with the notice requirement of this section, the stop order is void as of the date of its issuance. new text end

new text begin (e) Effectiveness of registration statement. If the federal registration statement becomes effective before each of the conditions in this section is satisfied or is waived by the 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 80A.54. The notice by the administrator does not preclude the institution of such a proceeding. new text end

Sec. 13.

new text begin [80A.52] SECTION 304; SECURITIES REGISTRATION BY QUALIFICATION. new text end

new text begin (a) Registration permitted. A security may be registered by qualification under this section. new text end

new text begin (b) Required records. A registration statement under this section must contain the information or records specified in section 80A.53, a consent to service of process complying with section 80A.88, and, if required by rule adopted under this chapter, the following information or records: new text end

new text begin (1) with respect to the issuer and any significant subsidiary, its name, address, and form of organization; the state or foreign jurisdiction and date of its organization; the general character and location of its business; a description of its physical properties and equipment; and a statement of the general competitive conditions in the industry or business in which it is or will be engaged; new text end

new text begin (2) with respect to each director and officer of the issuer, and other person having a similar status or performing similar functions, the person's name, address, and principal occupation for the previous five 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 three years or proposed to be effected; new text end

new text begin (3) with respect to persons covered by paragraph (2), the aggregate sum of the remuneration paid to those persons during the previous 12 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; new text end

new text begin (4) with respect to a person owning of record or owning beneficially, if known, ten percent or more of the outstanding shares of any class of equity security of the issuer, the information specified in paragraph (2) other than the person's occupation; new text end

new text begin (5) with respect to a promoter, if the issuer was organized within the previous three years, the information or records specified in paragraph (2), any amount paid to the promoter within that period or intended to be paid to the promoter, and the consideration for the payment; new text end

new text begin (6) 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 three years or proposed to be effected, and a statement of the reasons for making the offering; new text end

new text begin (7) the capitalization and long-term debt, on both a current and pro forma basis, of the issuer and any significant subsidiary, including a description 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, or anything else of value, for which the issuer or any subsidiary has issued its securities within the previous two years or is obligated to issue its securities; new text end

new text begin (8) 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 finders' 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; new text end

new text begin (9) 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; new text end

new text begin (10) a description of any stock options or other security options outstanding, or to be created in connection with the offering, and the amount of those options held or to be held by each person required to be named in paragraph (2), (4), (5), (6), or (8) and by any person that holds or will hold ten percent or more in the aggregate of those options; new text end

new text begin (11) the dates of, parties to, and general effect 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 or in part at or after the filing of the registration statement or that was made within the previous two years, and a copy of the contract; new text end

new text begin (12) 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; new text end

new text begin (13) 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 80A.46(17)(B); new text end

new text begin (14) 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 security to be registered; new text end

new text begin (15) 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, which 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; new text end

new text begin (16) a signed or conformed copy of a consent of any accountant, engineer, appraiser, or other person whose profession gives authority for a statement made by the person, if the person is named as having prepared or certified a report or valuation, other than an official record, that is public, which is used in connection with the registration statement; new text end

new text begin (17) a balance sheet of the issuer as of a date within four months before the filing of the registration statement; a statement of income and a statement of case flows for each of the three fiscal years preceding the date of the balance sheet and for any period between the close of the immediately previous fiscal year and the date of the balance sheet, or for the period of the issuer's and any predecessor's existence if less than three years; and, if any part of the proceeds of the offering is to be applied to the purchase of a business, the financial statements that would be required if that business were the registrant; and new text end

new text begin (18) any additional information or records required by rule adopted or order issued under this chapter. new text end

new text begin (c) 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: new text end

new text begin (1) a stop order is not in effect and a proceeding is not pending under section 80A.54; new text end

new text begin (2) the administrator has not issued an order under section 80A.54 delaying effectiveness; and new text end

new text begin (3) the applicant or registrant has not requested that effectiveness be delayed. new text end

new text begin (d) Delay of effectiveness of registration statement. The 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. new text end

new text begin (e) Prospectus distribution may be required. A rule adopted or order issued under this chapter may require as a condition of registration under this section that a prospectus containing a specified part of the information or record specified in subsection (b) be sent or given to each person to which an offer is made, before or concurrently, with the earliest of: new text end

new text begin (1) the first offer made in a record to the person otherwise than by means of a public advertisement, by or for the 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 a participant in the distribution; new text end

new text begin (2) the confirmation of a sale made by or for the account of the person; new text end

new text begin (3) payment pursuant to such a sale; or new text end

new text begin (4) delivery of the security pursuant to such a sale. new text end

Sec. 14.

new text begin [80A.53] SECTION 305; SECURITIES REGISTRATION FILINGS. new text end

new text begin (a) Who may file. A registration statement may be filed by the issuer, a person on whose behalf the offering is to be made, or a broker-dealer registered under this chapter. new text end

new text begin (b) Status of offering. A registration statement filed under section 80A.51 or 80A.52 must specify: new text end

new text begin (1) the amount of securities to be offered in this state; new text end

new text begin (2) the states in which a registration statement or similar record in connection with the offering has been or is to be filed; and new text end

new text begin (3) any adverse order, judgment, or decree issued in connection with the offering by a state securities regulator, the Securities and Exchange Commission, or a court. new text end

new text begin (c) Incorporation by reference. A record filed under this chapter or the predecessor act within five years preceding the filing of a registration statement may be incorporated by reference in the registration statement to the extent that the record is currently accurate. new text end

new text begin (d) Nonissuer distribution. In the case of a nonissuer distribution, information or a record may not be required under subsection (i) or section 80A.52, unless it is known to the person filing the registration statement or to the person on whose behalf the distribution is to be made or unless it can be furnished by those persons without unreasonable effort or expense. new text end

new text begin (e) 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 five years or to be issued to a promoter for a consideration substantially less than the public offering price or 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 in 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. new text end

new text begin (f) Form of subscription. A rule adopted or order issued under this chapter may require as a condition of registration that a security registered under this chapter be sold only on a specified form of subscription or sale contract and that a signed or conformed copy of each contract be filed under this chapter or preserved for a period specified by the rule or order, which may not be longer than five years. new text end

new text begin (g) Effective period. Except while a stop order is in effect under section 80A.54, a registration statement is effective for one year after its effective date, or for any longer period designated in an order under this chapter during which the security is being offered or distributed in a nonexempted transaction by or for the account of the issuer or other person on whose behalf the offering is being made or by an underwriter or broker-dealer that is still offering part of an unsold allotment or subscription taken as a participant in the distribution. For the purposes of a nonissuer transaction, all outstanding securities of the same class identified in the registration statement as a security registered under this chapter are considered to be registered while the registration statement is effective. If any securities of the same class are outstanding, a registration statement may not be withdrawn until one year after its effective date. A registration statement may be withdrawn only with the approval of the administrator. new text end

new text begin (h) Periodic reports. While a registration statement is effective, a rule adopted or order issued under this chapter may require the person that filed the registration statement to file reports, not more often than quarterly, to keep the information or other record in the registration statement reasonably current and to disclose the progress of the offering. new text end

new text begin (i) 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 registration fee. A posteffective amendment relates back to the date of the offering of the additional securities being registered if, within one year after the date of the sale, the amendment is filed and the additional registration fee is paid. new text end

Sec. 15.

new text begin [80A.54] SECTION 306; DENIAL, SUSPENSION, AND REVOCATION OF SECURITIES REGISTRATION. new text end

new text begin (a) 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: new text end

new text begin (1) the registration statement as of its effective date or before the effective date in the case of an order denying effectiveness, an amendment under section 80A.53(j) as of its effective date, or a report under section 80A.53(i), 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; new text end

new text begin (2) this chapter or a rule adopted or order issued under this chapter or a condition imposed under this chapter has been willfully violated, in connection with the offering, by: new text end

new text begin (A) the person filing the registration statement, if the person is directly or indirectly controlled by or acting for the issuer; new text end

new text begin (B) the issuer; new text end

new text begin (C) a partner, officer, or director of the issuer or a person having a similar status or performing similar functions; new text end

new text begin (D) a promoter of the issuer; new text end

new text begin (E) a person directly or indirectly controlling or controlled by the issuer; or new text end

new text begin (F) an underwriter; new text end

new text begin (3) the security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order issued under any federal, foreign, or state law other than this chapter applicable to the offering, but the 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 administrator 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; new text end

new text begin (4) the issuer's enterprise or method of business includes or would include activities that are unlawful where performed; new text end

new text begin (5) with respect to a security sought to be registered under section 80A.51, there has been a failure to comply with the undertaking required by section 80A.51(b)(4); or new text end

new text begin (6) the applicant or registrant has not paid the filing fee, but the administrator shall void the order if the deficiency is corrected. new text end

new text begin (b) 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 30 days after the registration statement became effective. new text end

new text begin (c) Summary 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 (d) 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 vacate the order or extend the order until final determination. new text end

new text begin (d) Procedural requirements for stop order. A stop order may not be issued under this section without: new text end

new text begin (1) appropriate notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered; new text end

new text begin (2) an opportunity for hearing; and new text end

new text begin (3) findings of fact and conclusions of law in a record in accordance with chapter 14. new text end

new text begin (e) 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 that it is necessary or appropriate in the public interest or for the protection of investors. new text end

Sec. 16.

new text begin [80A.55] SECTION 307; WAIVER AND MODIFICATION. new text end

new text begin The administrator may waive or modify, in whole or in part, any or all of the requirements of sections 80A.50, 80A.51, and 80A.52(b) or the requirement of any information or record in a registration statement or in a periodic report filed pursuant to section 80A.53(i).new text end

Sec. 17.

new text begin [80A.56] SECTION 401; BROKER-DEALER REGISTRATION REQUIREMENT AND EXEMPTIONS. new text end

new text begin (a) Registration requirement. It is unlawful for a person to transact business in this state as a broker-dealer unless the person is registered under this chapter as a broker-dealer or is exempt from registration as a broker-dealer under subsection (b) or (d). new text end

new text begin (b) Exemptions from registration. The following persons are exempt from the registration requirement of subsection (a): new text end

new text begin (1) a broker-dealer without a place of business in this state if its only transactions effected in the state are with: new text end

new text begin (A) the issuer of the securities involved in the transactions; new text end

new text begin (B) a broker-dealer registered under this chapter or not required to be registered as a broker-dealer under this chapter; new text end

new text begin (C) an institutional investor; new text end

new text begin (D) 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; new text end

new text begin (E) 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 Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities act of the state in which the customer maintains a principal place of residence; new text end

new text begin (F) 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: new text end

new text begin (i) the broker-dealer is registered under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities laws of the state in which the customer relationship was established and where the customer had maintained a principal place of residence; and new text end

new text begin (ii) within 45 days after the customer's first transaction in this state, the person files an application for registration as a broker-dealer in this state and a further transaction is not effected more than 75 days after the date on which the application is filed, or, if earlier, the date on which the administrator notifies the person that the administrator has denied the application for registration or has stayed the pendency of the application for good cause; new text end

new text begin (G) not more than three customers in this state during the previous 12 months, in addition to those customers specified in subparagraphs (A) through (F) and under subparagraph (H), if the broker-dealer is registered under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities act of the state in which the broker-dealer has its principal place of business; and new text end

new text begin (H) any other person exempted by rule adopted or order issued under this chapter; and new text end

new text begin (2) a person that deals solely in United States government securities and is supervised as a dealer in government securities by the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Office of Thrift Supervision; and new text end

new text begin (3) a broker-dealer that is registered in Canada and who has no office or other physical presence in this state if the broker-dealer complies with the following conditions: new text end

new text begin (A) the broker-dealer is registered with or is a member of a self-regulatory organization in Canada, a stock exchange in Canada, or the Bureau des services financiers; new text end

new text begin (B) the broker-dealer maintains in good standing its provincial or territorial registration and its registration with or membership in a self-regulatory organization in Canada, a stock exchange in Canada, or the Bureau des services financiers; and new text end

new text begin (C) the broker-dealer effects or attempts to effect transactions in securities: new text end

new text begin (i) with or for a person from Canada who is temporarily present in this state, with whom the broker-dealer had a bona fide broker-dealer-client relationship before the person entered the United States; or new text end

new text begin (ii) with or for a person from Canada who is present in this state, whose transactions are in a Canadian self-directed tax advantaged retirement account of which the person is the holder or contributor. new text end

new text begin (c) Limits on employment or association. It is unlawful for a broker-dealer, or for an issuer engaged in offering, offering to purchase, purchasing, or selling securities in this state, directly or indirectly, to employ or associate with an individual to engage in an activity related to securities transactions in this state if the registration of the individual is suspended or revoked or the individual is barred from employment or association with a broker-dealer, an issuer, an investment adviser, or a federal covered investment adviser by an order of the 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 did not know and in the exercise of reasonable care could not have known, of the suspension, revocation, or bar. Upon request from a broker-dealer or issuer and for good cause, an order under this chapter may modify or waive, in whole or in part, the application of the prohibitions of this subsection to the broker-dealer. new text end

new text begin (d) Foreign transactions. A rule adopted or order issued under this chapter may permit: new text end

new text begin (1) a broker-dealer that is registered 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: new text end

new text begin (A) an individual from Canada or other foreign jurisdiction who is temporarily present in this state and with whom the broker-dealer had a bona fide customer relationship before the individual entered the United States; new text end

new text begin (B) an individual from Canada or other foreign jurisdiction who is present in the 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 jurisdiction; or new text end

new text begin (C) an individual who is present in this state, with whom the broker-dealer customer relationship arose while the individual was temporarily or permanently resident in Canada or the other foreign jurisdiction; and new text end

new text begin (2) 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 (1). new text end

Sec. 18.

new text begin [80A.57] SECTION 402; AGENT REGISTRATION REQUIREMENT AND EXEMPTIONS. new text end

new text begin (a) Registration requirement. It is unlawful for an individual to transact business in the state as an agent unless the individual is registered under this chapter as an agent or is exempt from registration as an agent under subsection (b). new text end

new text begin (b) Exemptions from registration. The following individuals are exempt from the registration requirement of subsection (a): new text end

new text begin (1) an individual who represents a broker-dealer in effecting transactions in this state limited to those described in Section 15(h)(2) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78(o)(2)); new text end

new text begin (2) an individual who represents a broker-dealer that is exempt under section 80A.56(b) or (d); new text end

new text begin (3) 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 is 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; new text end

new text begin (4) an individual who represents an issuer and who effects transactions in the issuer's securities exempted by section 80A.46, other than section 80A.46(11) and (14); new text end

new text begin (5) an individual who represents an issuer that effects transactions solely in federal covered securities of the issuer, but an individual who effects transactions in a federal covered security under Section 18(b)(3) or 18(b)(4)(D) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(3) or 77r(b)(4)(D)) is not exempt if the individual is compensated in connection with the agent's participation by the payment of commissions or other remuneration based, directly or indirectly, on transactions in those securities; new text end

new text begin (6) an individual who represents a broker-dealer registered in this state under section 80A.56(a) or exempt from registration under section 80A.56(b) in the offer and sale of securities for an account of a nonaffiliated federal covered investment adviser with investments under management in excess of $100,000,000 acting for the account of others pursuant to discretionary authority in a signed record; new text end

new text begin (7) an individual who represents an issuer in connection with the purchase of the issuer's own securities; new text end

new text begin (8) an individual who represents an issuer and who restricts participation to performing clerical or ministerial acts; new text end

new text begin (9) an individual who represents an issuer in effecting transactions in a security exempted by section 80A.45; new text end

new text begin (10) an individual who represents an issuer in effecting transactions with existing employees, partners, or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state; new text end

new text begin (11) an individual who represents one or more issuers with respect to an offer or sale of the issuer's securities if the offer or sale of the securities is exempted by section 80A.46 and the individual complies with or satisfies each of the following conditions: new text end

new text begin (A) the individual (i) would not be deemed disqualified pursuant to section 80A.50 (b)(3)(D)(ii) to (iv); (ii) is not employed by or associated with a broker-dealer; and (iii) has not been the subject of (a) an action, order, or decision by any self-regulatory organization, commodities exchange, or securities exchange resulting in a censure or other sanction within 12 months prior to the offer or sale or (b) a denial, revocation, or restriction of any license or membership by any self-regulatory organization, commodities exchange, or securities exchange that has been effective at any time within 12 months prior to the offer or sale; new text end

new text begin (B) neither the individual nor any person associated with the individual handles or takes possession of funds or securities; new text end

new text begin (C) the individual files with the administrator a consent to service of process complying with Section 611 before commencing any such representation; and new text end

new text begin (D) the individual files with the administrator a notice that contains (i) the full legal name, address, and phone of the individual; (ii) any other names used by the individual in the prior five years; (iii) a statement whether the individual is, or within the last prior years has been, licensed by or registered with any state or federal government, government agency, or any self-regulatory organization, commodities exchange, or securities exchange as a broker-dealer, registered representative, investment advisor, or investment advisor representative, including, if applicable, the individual's IARD/CRD number; (iv) an undertaking to notify the administrator in writing of a change in any of the foregoing within five business days of such change; and (v) any additional information that may be required by rule adopted or order issued under this chapter. This notice must be filed before the individual commences any issuer representation. The notice is effective through December 31 of the year following the year in which it is filed and may be renewed annually in such manner as prescribed by the administrator; and new text end

new text begin (12) any other individual exempted by rule adopted or order issued under this chapter. new text end

new text begin (c) Registration effective only while employed or associated. The registration of an agent is effective only while the agent is employed by or associated with a broker-dealer registered under this chapter or an issuer that is offering, selling, or purchasing its securities in this state. new text end

new text begin (d) Limit on employment or association. It is unlawful for a broker-dealer, or an issuer engaged in offering, selling, or purchasing securities in this state, to employ or associate with an agent who transacts business in the state on behalf of broker-dealers or issuers unless the agent is registered under subsection (a) or exempt from registration under subsection (b). new text end

new text begin (e) 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-dealer or the issuer for which the agent acts are affiliated by direct or indirect common control or are authorized by rule or order under this chapter. new text end

Sec. 19.

new text begin [80A.58] SECTION 403; INVESTMENT ADVISER REGISTRATION REQUIREMENT AND EXEMPTIONS. new text end

new text begin (a) Registration requirement. It is unlawful for a person to transact business in this state as an investment adviser unless the person is registered under this chapter as an investment adviser or is exempt from registration as an investment adviser under subsection (b). new text end

new text begin (b) Exemptions from registration. The following persons are exempt from the registration requirement of subsection (a): new text end

new text begin (1) any person whose only clients in this state are: new text end

new text begin (A) federal covered investment advisers, investment advisers registered under this chapter, or broker-dealers registered under this chapter; new text end

new text begin (B) institutional investors; new text end

new text begin (C) bona fide preexisting clients whose principal places of residence are not in this state if the investment adviser is registered under the securities act of the state in which the clients maintain principal places of residence; or new text end

new text begin (D) any other client exempted by rule adopted or order issued under this chapter; new text end

new text begin (2) a person without a place of business in this state if the person has had, during the preceding 12 months, not more than five clients that are resident in this state in addition to those specified under paragraph (1); or new text end

new text begin (3) any other person exempted by rule adopted or order issued under this chapter. new text end

new text begin (c) 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 registration of 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 chapter, the Securities and Exchange Commission, or a self-regulatory organization, unless 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. new text end

Sec. 20.

new text begin [80A.60] SECTION 405; FEDERAL COVERED INVESTMENT ADVISER NOTICE FILING REQUIREMENT. new text end

new text begin (a) Notice filing requirement. Except with respect to a federal covered investment adviser described in subsection (b), it is unlawful for a federal covered investment adviser to transact business in this state as a federal covered investment adviser unless the federal covered investment adviser complies with subsection (c). new text end

new text begin (b) Notice filing requirement not required. The following federal covered investment advisers are not required to comply with subsection (c): new text end

new text begin (1) a federal covered investment adviser without a place of business in this state if its only clients in this state are: new text end

new text begin (A) federal covered investment advisers, investment advisers registered under this chapter, and broker-dealers registered under this chapter; new text end

new text begin (B) institutional investors; new text end

new text begin (C) bona fide preexisting clients whose principal places of residence are not in this state; or new text end

new text begin (D) other clients specified by rule adopted or order issued under this chapter; new text end

new text begin (2) a federal covered investment adviser without a place of business in this state if the person has had, during the preceding 12 months, not more than five clients that are resident in this state in addition to those specified under paragraph (1); and new text end

new text begin (3) any other person excluded by rule adopted or order issued under this chapter. new text end

new text begin (c) Notice filing procedure. A person acting as a federal covered investment adviser, not excluded under subsection (b), shall file a notice, a consent to service of process complying with section 80A.88, and such records as have been filed with the Securities and Exchange Commission under the Investment Advisers Act of 1940 required by rule adopted or order issued under this chapter and pay the fees specified in section 80A.65(e). new text end

new text begin (d) Effectiveness of filing. The notice under subsection (c) becomes effective upon its filing. new text end

Sec. 21.

new text begin [80A.61] SECTION 406; REGISTRATION BY BROKER-DEALER, AGENT, AND INVESTMENT ADVISER. new text end

new text begin (a) Application for initial registration. A person shall register as a broker-dealer, agent, or investment adviser by filing an application and a consent to service of process complying with section 80A.88, and paying the fee specified in section 80A.65 and any reasonable fees charged by the designee of the administrator for processing the filing. The application must contain: new text end

new text begin (1) the information or record required for the filing of a uniform application; and new text end

new text begin (2) upon request by the administrator, any other financial or other information or record that the administrator determines is appropriate. new text end

new text begin (b) Amendment. If the information or record contained in an application filed under subsection (a) is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment. new text end

new text begin (c) Effectiveness of registration. If an order is not in effect and a proceeding is not pending under section 80A.67, registration becomes effective at noon on the 45th day after a completed application is filed, unless the registration is denied. A rule adopted or order issued under this chapter may set an earlier effective date or may defer the effective date until noon on the 45th day after the filing of any amendment completing the application. new text end

new text begin (d) Registration renewal. A registration is effective until midnight on December 31 of the year for which the application for registration is filed. Unless an order is in effect under section 80A.67, a registration may be automatically renewed each year by filing such records as are required by rule adopted or order issued under this chapter, by paying the fee specified in section 80A.65, and by paying costs charged by the designee of the administrator for processing the filings. new text end

new text begin (e) Additional conditions or waivers. A rule adopted or order issued under this chapter may impose such other conditions, not inconsistent with the National Securities Markets Improvement Act of 1996. An order issued under this chapter may waive, in whole or in part, specific requirements in connection with registration as are in the public interest and for the protection of investors. new text end

Sec. 22.

new text begin [80A.62] SECTION 407; SUCCESSION AND CHANGE IN REGISTRATION OF BROKER-DEALER OR INVESTMENT ADVISER. new text end

new text begin (a) Succession. A broker-dealer or investment adviser may succeed to the current registration of another broker-dealer or investment adviser or a notice filing of a federal covered investment adviser, and a federal covered investment adviser may succeed to the current registration of an investment adviser or notice filing of another federal covered investment adviser, by filing as a successor an application for registration pursuant to section 80A.56 or 80A.58 or a notice pursuant to section 80A.60 for the unexpired portion of the current registration or notice filing. new text end

new text begin (b) Organizational change. A broker-dealer or investment adviser that changes its form of organization or state of incorporation or organization may continue its registration by filing an amendment to its registration if the change does not involve a material change in its financial condition or management. The amendment becomes effective when filed or on a date designated by the registrant in its filing. The new organization is a successor to the original registrant for the purposes of this chapter. If there is a material change in financial condition or management, the broker-dealer or investment adviser shall file a new application for registration. A predecessor registered under this chapter shall stop conducting its securities business other than winding down transactions and shall file for withdrawal of broker-dealer or investment adviser registration within 45 days after filing its amendment to effect succession. new text end

new text begin (c) Name change. A broker-dealer or investment adviser that changes its name may continue its registration by filing an amendment to its registration. The amendment becomes effective when filed or on a date designated by the registrant. new text end

new text begin (d) Change of control. A change of control of a broker-dealer or investment adviser may be made in accordance with a rule adopted or order issued under this chapter. new text end

Sec. 23.

new text begin [80A.63] SECTION 408; TERMINATION OF EMPLOYMENT OR ASSOCIATION OF AGENT AND TRANSFER OF EMPLOYMENT OR ASSOCIATION. new text end

new text begin (a) Notice of termination. If an agent registered under this chapter terminates employment by or association with a broker-dealer or issuer, or terminates activities that require registration as an agent, the broker-dealer, or issuer shall promptly file a notice of termination. If the registrant learns that the broker-dealer or issuer has not filed the notice, the registrant may do so. new text end

new text begin (b) Transfer of employment or association. If an agent registered under this chapter terminates employment by or association with a broker-dealer registered under this chapter and begins employment by or association with another broker-dealer registered under this chapter, then upon the filing by or on behalf of the registrant, within 30 days after the termination, of an application for registration that complies with the requirement of section 80A.61(a) and payment of the filing fee required under section 80A.65, the registration of the agent is: new text end

new text begin (1) immediately effective as of the date of the completed filing, if the agent's Central Registration Depository record or successor record does not contain a new or amended disciplinary disclosure within the previous 12 months; or new text end

new text begin (2) temporarily effective as of the date of the completed filing, if the agent's Central Registration Depository record or successor record contains a new or amended disciplinary disclosure within the preceding 12 months. new text end

new text begin (c) Withdrawal of temporary registration. The administrator may withdraw a temporary registration if there are or were grounds for discipline as specified in section 80A.67 and the administrator does so within 30 days after the filing of the application. If the administrator does not withdraw the temporary registration within the 30 day period, registration becomes automatically effective on the 31st day after filing. new text end

new text begin (d) Power to prevent registration. The administrator may prevent the effectiveness of a transfer of an agent under subsection (b)(1) or (2) based on the public interest and the protection of investors. new text end

new text begin (e) Termination of registration or application for registration. If the administrator determines that a registrant or applicant for registration is no longer in existence or has ceased to act as a broker-dealer, agent, or investment adviser, or is the subject of an adjudication of incapacity or is subject to the control of a committee, conservator, or guardian, or cannot reasonably be located, a rule adopted or order issued under this chapter may require the registration be canceled or terminated or the application denied. The administrator may reinstate a canceled or terminated registration, with or without hearing, and may make the registration retroactive. new text end

Sec. 24.

new text begin [80A.64] SECTION 409; WITHDRAWAL OF REGISTRATION OF BROKER-DEALER, AGENT, AND INVESTMENT ADVISER. new text end

new text begin Withdrawal of registration by a broker-dealer, agent, or investment adviser becomes effective 60 days after the filing of the application to withdraw or within any shorter period as provided by rule adopted or order issued under this chapter unless a revocation or suspension proceeding is pending when the application is filed. If a proceeding is pending, withdrawal becomes effective when and upon such conditions as required by rule adopted or order issued under this chapter. The administrator may institute a revocation or suspension proceeding under section 80A.67 within one year after the withdrawal became effective automatically and issue a revocation or suspension order as of the last date on which registration was effective if a proceeding is not pending. new text end

Sec. 25.

new text begin [80A.65] SECTION 410; FEES AND EXPENSES. new text end

new text begin Subdivision 1. new text end

new text begin Registration or notice filing fee. new text end

new text begin (a) There shall be a filing fee of $100 for every application for registration or notice filing. There shall be an additional fee of one-tenth of one percent of the maximum aggregate offering price at which the securities are to be offered in this state, and the maximum combined fees shall not exceed $300. new text end

new text begin (b) When an application for registration is withdrawn before the effective date or a preeffective stop order is entered under section 80A.54, all but the $100 filing fee shall be returned. If an application to register securities is denied, the total of all fees received shall be retained. new text end

new text begin (c) Where a filing is made in connection with a federal covered security under section 18(b)(2) of the Securities Act of 1933, there is a fee of $100 for every initial filing. If the filing is made in connection with redeemable securities issued by an open end management company or unit investment trust, as defined in the Investment Company Act of 1940, there is an additional annual fee of 1/20 of one percent of the maximum aggregate offering price at which the securities are to be offered in this state during the notice filing period. The fee must be paid at the time of the initial filing and thereafter in connection with each renewal no later than July 1 of each year and must be sufficient to cover the shares the issuer expects to sell in this state over the next 12 months. If during a current notice filing the issuer determines it is likely to sell shares in excess of the shares for which fees have been paid to the administrator, the issuer shall submit an amended notice filing to the administrator under section 80A.50, together with a fee of 1/20 of one percent of the maximum aggregate offering price of the additional shares. Shares for which a fee has been paid, but which have not been sold at the time of expiration of the notice filing, may not be sold unless an additional fee to cover the shares has been paid to the administrator as provided in this section and section 80A.50. If the filing is made in connection with redeemable securities issued by such a company or trust, there is no maximum fee for securities filings made according to this paragraph. If the filing is made in connection with any other federal covered security under Section 18(b)(2) of the Securities Act of 1933, there is an additional fee of one-tenth of one percent of the maximum aggregate offering price at which the securities are to be offered in this state, and the combined fees shall not exceed $300. Beginning with fiscal year 2001 and continuing each fiscal year thereafter, as of the last day of each fiscal year, the administrator shall determine the total amount of all fees that were collected under this paragraph in connection with any filings made for that fiscal year for securities of an open-end investment company on behalf of a security that is a federal covered security pursuant to section 18(b)(2) of the Securities Act of 1933. To the extent the total fees collected by the administrator in connection with these filings exceed $25,000,000 in a fiscal year, the administrator shall refund, on a pro rata basis, to all persons who paid any fees for that fiscal year, the amount of fees collected by the administrator in excess of $25,000,000. No individual refund is required of amounts of $100 or less for a fiscal year. new text end

new text begin Subd. 2. new text end

new text begin Registration application and renewal filing fee. new text end

new text begin Every applicant for an initial or renewal registration shall pay a filing fee of $200 in the case of a broker-dealer, $50 in the case of an agent, and $100 in the case of an investment adviser. When an application is denied or withdrawn, the filing fee shall be retained. A registered agent who has terminated employment with one broker-dealer shall, before beginning employment with another broker-dealer, pay a transfer fee of $25. The fee for a filing made according to section 80A.56 is $100. new text end

new text begin Subd. 3. new text end

new text begin Amendment fee. new text end

new text begin Any amendment to an existing registration requiring an order of the administrator shall require payment of an amendment fee of $25. If the amendment increases the aggregate amount of securities to be registered, there shall be an additional fee calculated in accordance with subdivision 1, provided the maximum additional fees, if applicable, have not previously been paid. The administrator shall by rule designate those amendments which require an order of the administrator. new text end

new text begin Subd. 4. new text end

new text begin Periodic report fee. new text end

new text begin Every periodic report required by section 80A.53 shall be accompanied by a fee of $100. new text end

new text begin Subd. 5. new text end

new text begin Exemption filing fee. new text end

new text begin The filing of any exemption for which notice is required to be given the administrator under section 80A.45 shall be accompanied by a fee of $50. new text end

new text begin Subd. 6. new text end

new text begin Rescission offer filing fee. new text end

new text begin The filing of a rescission offer under section 80A.77 shall be accompanied by the fees as calculated in subdivision 1. new text end

new text begin Subd. 7. new text end

new text begin Written opinion request fee. new text end

new text begin Every request for a written opinion from the administrator shall be accompanied by a fee of $50. new text end

new text begin Subd. 7a. new text end

new text begin Excess securities registration filing fee. new text end

new text begin If securities of an issuer are sold in this state in excess of the quantity registered, the excess securities may be registered by paying a filing fee of $100, and an additional fee in the amount of three times that which is prescribed under subdivision 1, for the excess securities to be registered. There shall be no maximum combined fees under this subdivision, notwithstanding the limitation set forth in subdivision 1, clause (a). new text end

new text begin Registration of the excess securities shall be effective retroactively to the date of sale. new text end

new text begin Subd. 8. new text end

new text begin Expense deposits. new text end

new text begin When the administrator deems it necessary to incur any expense in connection with any application or registration, the administrator shall have the power to require the interested person to make an advance deposit with the administrator in an amount estimated as sufficient to cover such expense. All such deposits shall be covered into the state treasury and credited to the state administrator's investigation fund, from which fund the administrator shall have power to make disbursements to pay for expenses necessarily incurred in the investigation. Any unexpended portion shall be refunded. On field examinations made by the administrator or an employee away from the office of the administrator, a per diem of $10 for each such person may be charged in addition to actual expenses. Where additional technical, expert, or special services are used, the actual cost of such services may be charged in addition to actual expenses. new text end

new text begin Subd. 9. new text end

new text begin Generally. new text end

new text begin No filing for which a fee is required shall be deemed to be filed or given any effect until the proper fee is paid. All fees and charges collected by the administrator shall be covered into the state treasury. When any person is entitled to a refund under this section, the administrator shall certify to the commissioner of finance the amount of the fee to be refunded to the applicant, and the commissioner of finance shall issue a warrant in payment thereof out of the fund to which such fee was credited in the manner provided by law. There is hereby appropriated to the person entitled to such refunds from the fund in the state treasury to which such fees were credited an amount to make such refunds and payments. new text end

Sec. 26.

new text begin [80A.66] SECTION 411; POSTREGISTRATION REQUIREMENTS. new text end

new text begin (a) Financial requirements. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a rule adopted or order issued under this chapter may establish minimum financial requirements for broker-dealers registered or required to be registered under this chapter and investment advisers registered or required to be registered under this chapter. new text end

new text begin (b) Financial reports. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222(b) of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall file such financial reports as are required by a rule adopted or order issued under this chapter. If the information contained in a record filed under this subsection is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment. new text end

new text begin (c) Record keeping. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22): new text end

new text begin (1) a broker-dealer registered or required to be registered under this chapter and an investment adviser registered or required to be registered under this chapter shall make and maintain the accounts, correspondence, memoranda, papers, books, and other records required by rule adopted or order issued under this chapter; new text end

new text begin (2) broker-dealer records required to be maintained under paragraph (1) may be maintained in any form of data storage acceptable under Section 17(a) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78q(a)) if they are readily accessible to the administrator; and new text end

new text begin (3) investment adviser records required to be maintained under paragraph (1) may be maintained in any form of data storage required by rule adopted or order issued under this chapter. new text end

new text begin (d) Audits or inspections. The records of a broker-dealer registered or required to be registered under this chapter and of an investment adviser registered or required to be registered under this chapter are subject to such reasonable periodic, special, or other audits or inspections by a representative of the administrator, within or without this state, as the administrator considers necessary or appropriate in the public interest and for the protection of investors. An audit or inspection may be made at any time and without prior notice. The administrator may copy, and remove for audit or inspection copies of, all records the administrator reasonably considers necessary or appropriate to conduct the audit or inspection. The administrator may assess a reasonable charge for conducting an audit or inspection under this subsection. new text end

new text begin (e) Custody and discretionary authority bond or insurance. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a rule adopted or order issued under this chapter may require a broker-dealer or investment adviser that has custody of or discretionary authority over funds or securities of a customer or client to obtain insurance or post a bond or other satisfactory form of security in an amount not to exceed $25,000. The administrator may determine the requirements of the insurance, bond, or other satisfactory form of security. Insurance or a bond or other satisfactory form of security may not be required of a broker-dealer registered under this chapter whose net capital exceeds, or of an investment adviser registered under this chapter whose minimum financial requirements exceed, the amounts required by rule or order under this chapter. The insurance, bond, or other satisfactory form of security must permit an action by a person to enforce any liability on the insurance, bond, or other satisfactory form of security if instituted within the time limitations in section 80A.76(j)(2). new text end

new text begin (f) Requirements for custody. Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. 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 except under the supervision of an investment adviser or a federal covered investment adviser. A rule adopted or order issued under this chapter may prohibit, limit, or impose conditions on a broker-dealer regarding custody of funds or securities of a customer and on an investment adviser regarding custody of securities or funds of a client. new text end

new text begin (g) Investment adviser brochure rule. With respect to an investment adviser registered or required to be registered under this chapter, a rule adopted or order issued under this chapter may require that information or other record be furnished or disseminated to clients or prospective clients in this state as necessary or appropriate in the public interest and for the protection of investors and advisory clients. new text end

new text begin (h) Continuing education. A rule adopted or order issued under this chapter may require an individual registered under section 80A.57 or 80A.59 to participate in a continuing education program approved by the Securities and Exchange Commission and administered by a self-regulatory organization or, in the absence of such a program, a rule adopted or order issued under this chapter may require continuing education for an individual registered under section 80A.59. new text end

Sec. 27.

new text begin [80A.67] SECTION 412; DENIAL, REVOCATION, SUSPENSION, WITHDRAWAL, RESTRICTION, CONDITION, OR LIMITATION OF REGISTRATION. new text end

new text begin (a) Disciplinary conditions-applicants. If the administrator finds that the order is in the public interest and subsection (d) authorizes the action, an order issued under this chapter may deny an application, or may condition or limit registration of an applicant to be a broker-dealer, agent, or investment adviser, 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. new text end

new text begin (b) Disciplinary conditions-registrants. If the administrator finds that the order is in the public interest and subsection (d) authorizes the action an order issued under this chapter may revoke, suspend, condition, or limit the registration of a registrant and, if the registrant is a broker-dealer or investment adviser, of a partner, officer, director, or person having a similar status or performing similar functions, or a person directly or indirectly in control of the broker-dealer or investment adviser. However, the administrator may not: new text end

new text begin (1) institute a revocation or suspension proceeding under this subsection based on an order issued under a law of another state that is reported to the administrator or a designee of the administrator more than one year after the date of the order on which it is based; or new text end

new text begin (2) under subsection (d)(5)(A) or (B), issue an order on the basis of an order issued under the securities act of another state unless the other order was based on conduct for which subsection (d) would authorize the action had the conduct occurred in this state. new text end

new text begin (c) Disciplinary penalties-registrants. If the administrator finds that the order is in the public interest and subsection (d)(1) through (6), (8), (9), (10), or (12) and (13) authorizes the action, an order under this chapter may censure, impose a bar, or impose a civil penalty in an amount up to $10,000 for each violation, on a registrant, and, if the registrant is a broker-dealer or investment adviser, a partner, officer, director, person having a similar status or performing similar functions, or a person directly or indirectly in control, of the broker-dealer or investment adviser. new text end

new text begin (d) Grounds for discipline. A person may be disciplined under subsections (a) through (c) if the person: new text end

new text begin (1) has filed an application for registration in this state under this chapter or the predecessor act within the previous ten years, which, as of the effective date of registration 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; new text end

new text begin (2) willfully violated or willfully 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 ten years; new text end

new text begin (3) has been convicted of a felony or within the previous ten years has been convicted of a misdemeanor involving a security, a commodity future or option contract, or an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance; new text end

new text begin (4) is enjoined or restrained by a court of competent jurisdiction in an action instituted by the administrator under this chapter or the predecessor act, a state, the Securities and Exchange Commission, or the United States from engaging in or continuing an act, practice, or course of business involving an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance. new text end

new text begin (5) is the subject of an order, issued after notice and opportunity for hearing by: new text end

new text begin (A) the securities, depository institution, insurance, or other financial services regulator of a state or by the Securities and Exchange Commission or other federal agency denying, revoking, barring, or suspending registration as a broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative; new text end

new text begin (B) 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; new text end

new text begin (C) the Securities and Exchange Commission or a self-regulatory organization suspending or expelling the registrant from membership in the self-regulatory organization; new text end

new text begin (D) a court adjudicating a United States Postal Service fraud order; new text end

new text begin (E) the insurance regulator of a state denying, suspending, or revoking registration as an insurance agent; or new text end

new text begin (F) a depository institution regulator suspending or barring the person from the depository institution business; new text end

new text begin (6) is the subject of an adjudication or determination, after notice and opportunity for hearing, by the Securities and Exchange Commission, the 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 willfully violated the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, or the 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; new text end

new text begin (7) is insolvent, either because the person's liabilities exceed the person's assets or because the person cannot meet the person's obligations as they mature, but the administrator may not enter an order against an applicant or registrant under this paragraph without a finding of insolvency as to the applicant or registrant; new text end

new text begin (8) refuses to allow or otherwise impedes the administrator from conducting an audit or inspection under section 80A.66(d) or refuses access to a registrant's office to conduct an audit or inspection under section 80A.66(d); new text end

new text begin (9) 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 within the previous ten years; new text end

new text begin (10) has not paid the proper filing fee within 30 days after having been notified by the administrator of a deficiency, but the administrator shall vacate an order under this paragraph when the deficiency is corrected; new text end

new text begin (11) after notice and opportunity for a hearing, has been found within the previous ten years: new text end

new text begin (A) by a court of competent jurisdiction to have willfully violated the laws of a foreign jurisdiction under which the business of securities, commodities, investment, franchises, insurance, banking, or finance is regulated; new text end

new text begin (B) to have been the subject of an order of a securities regulator of a foreign jurisdiction denying, revoking, or suspending the right to engage in the business of securities as a broker-dealer, agent, investment adviser, investment adviser representative, or similar person; or new text end

new text begin (C) 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; new text end

new text begin (12) is the subject of a cease and desist order issued by the Securities and Exchange Commission or issued under the securities, commodities, investment, franchise, banking, finance, or insurance laws of a state; new text end

new text begin (13) has engaged in dishonest or unethical practices in the securities, commodities, investment, franchise, banking, finance, or insurance business within the previous ten years; or new text end

new text begin (14) is not qualified on the basis of factors such as training, experience, and knowledge of the securities business. However, in the case of an application by an agent for a broker-dealer that is a member of a self-regulatory organization or by an individual for registration as an investment adviser representative, a denial order may not be based on this paragraph if the individual has successfully completed all examinations required by subsection (e). The administrator may require an applicant for registration under section 80A.57 or 80A.59 who has not been registered in a state within the two years preceding the filing of an application in this state to successfully complete an examination. new text end

new text begin (e) Examinations. A rule adopted or order issued under this chapter may require that an examination, including an examination developed or approved by an organization of securities regulators, be successfully completed by a class of individuals or all individuals. An order issued under this chapter may waive, in whole or in part, an examination as to an individual and a rule adopted under this chapter may waive, in whole or in part, an examination as to a class of individuals if the administrator determines that the examination is not necessary or appropriate in the public interest and for the protection of investors. new text end

new text begin (f) Summary process. The administrator may suspend or deny an application summarily; restrict, condition, limit, or suspend a registration; or censure, bar, or impose a civil penalty on a registrant before final determination of an administrative proceeding. Upon the issuance of an order, the administrator shall promptly notify each person subject to the order that the order has been issued, the reasons for the action, 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 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. new text end

new text begin (g) Procedural requirements. An order issued may not be issued under this section, except under subsection (f), without: new text end

new text begin (1) appropriate notice to the applicant or registrant; new text end

new text begin (2) opportunity for hearing; and new text end

new text begin (3) findings of fact and conclusions of law in a record in accordance with chapter 14. new text end

new text begin (h) Control person liability. A person that controls, directly or indirectly, a person not in compliance with this section may be disciplined by order of the administrator under subsections (a) through (c) to the same extent as the noncomplying person, unless the controlling person did not know, or knowingly or recklessly disregarded evidence, of the existence of conduct that is a ground for discipline under this section. new text end

new text begin (i) Limit on investigation or proceeding. The administrator may not institute a proceeding under subsection (a), (b), or (c) based solely on material facts actually known by the administrator unless an investigation or the proceeding is instituted within one year after the administrator actually acquires knowledge of the material facts.new text end

Sec. 28.

new text begin [80A.68] SECTION 501; GENERAL FRAUD. new text end

new text begin It is unlawful for a person, in connection with the offer, sale, or purchase of a security, directly or indirectly: new text end

new text begin (1) to employ a device, scheme, or artifice to defraud; new text end

new text begin (2) to make an untrue statement of a material fact or to omit to state a material fact necessary in order to make a statement made, in the light of the circumstances under which it is made, not misleading; or new text end

new text begin (3) to engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person. new text end

Sec. 29.

new text begin [80A.69] SECTION 502; PROHIBITED CONDUCT IN PROVIDING INVESTMENT ADVICE. new text end

new text begin (a) Fraud in 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: new text end

new text begin (1) to employ a device, scheme, or artifice to defraud another person; or new text end

new text begin (2) to engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person. new text end

new text begin (b) Rules defining fraud. A rule adopted under this chapter may define an act, practice, or course of business of an investment adviser or an investment adviser representative, other than a supervised person of a federal covered investment adviser, as fraudulent, deceptive, or manipulative, and prescribe means reasonably designed to prevent investment advisers and investment adviser representatives, other than supervised persons of a federal covered investment adviser, from engaging in acts, practices, and courses of business defined as fraudulent, deceptive, or manipulative. new text end

new text begin (c) 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 by an investment adviser. new text end

Sec. 30.

new text begin [80A.70] SECTION 503; EVIDENTIARY BURDEN. new text end

new text begin (a) Civil. In a civil action or administrative proceeding under this chapter, a person claiming an exemption, exception, preemption, or exclusion has the burden to prove the applicability of the claim. new text end

new text begin (b) Criminal. In a criminal proceeding under this chapter, a person claiming an exemption, exception, preemption, or exclusion has the burden of going forward with evidence of the claim. new text end

Sec. 31.

new text begin [80A.71] SECTION 504; FILING OF SALES AND ADVERTISING LITERATURE. new text end

new text begin (a) Filing requirement. Except as otherwise provided in subsection (b), a rule adopted or order issued under this chapter may require the filing of a prospectus, pamphlet, circular, form letter, advertisement, sales literature, or other advertising record relating to a security or investment advice, addressed or intended for distribution to prospective investors, including clients or prospective clients of a person registered or required to be registered as an investment adviser under this chapter. new text end

new text begin (b) Excluded communications. This section does not apply to sales and advertising literature specified in subsection (a) which relates to a federal covered security, a federal covered investment adviser, or a security or transaction exempted by section 80A.45, 80A.46, or 80A.47 except as required pursuant to section 80A.45(7). new text end

Sec. 32.

new text begin [80A.72] SECTION 505; MISLEADING FILINGS. new text end

new text begin 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 other than a contested case hearing, a statement that, at the time and in the light of the circumstances under which it is made, is false or misleading in a material respect, or, in connection with the statement, to omit to state a material fact necessary to make the statement made, in the light of the circumstances under which it was made, not false or misleading. new text end

Sec. 33.

new text begin [80A.73] SECTION 506; MISREPRESENTATIONS CONCERNING REGISTRATION OR EXEMPTION. new text end

new text begin The filing of an application for registration, a registration statement, a notice filing under this chapter, the registration of a person, the notice filing by a person, or the registration of a security under this chapter does not constitute a finding by the administrator that a record filed under this chapter is true, complete, and not misleading. The filing or registration or the availability of an exemption, exception, preemption, or exclusion for a security or a transaction does not mean that the administrator has passed upon the merits or qualifications of, or recommended or given approval to, a person, security, or transaction. It is unlawful to make, or cause to be made, to a purchaser, customer, client, or prospective customer or client a representation inconsistent with this section. new text end

Sec. 34.

new text begin [80A.74] SECTION 507; QUALIFIED IMMUNITY. new text end

new text begin 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 is was false in a material respect or the person acted in reckless disregard of the statement's truth or falsity. new text end

Sec. 35.

new text begin [80A.75] SECTION 508; CRIMINAL PENALTIES. new text end

new text begin (a) Criminal penalties. A person that willfully violates this chapter, or a rule adopted or order issued under this chapter, except section 80A.71 or the notice filing requirements of section 80A.50 or 80A.60, or that willfully violates section 80A.72 knowing the statement made to be false or misleading in a material respect, upon conviction, shall be fined not more than $10,000 or imprisoned not more than five years or both. Each of the acts specified constitutes a separate offense and a prosecution or conviction for any such offense does not bar prosecution or conviction for any other offense. new text end

new text begin (b) Criminal reference not required. The attorney general with or without a reference from the administrator, may institute criminal proceedings under this chapter. new text end

new text begin (c) 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. new text end

Sec. 36.

new text begin [80A.76] SECTION 509; CIVIL LIABILITY. new text end

new text begin (a) Securities Litigation Uniform Standards Act. Enforcement of civil liability under this section is subject to the Securities Litigation Uniform Standards Act of 1998. new text end

new text begin (b) Liability of seller to purchaser. A person is liable to the purchaser if the person sells a security in violation of section 80A.49 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 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: new text end

new text begin (1) 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 interest from the date of the purchase, costs, and reasonable attorneys' fees determined by the court, upon the tender of the security, or for actual damages as provided in paragraph (3). new text end

new text begin (2) The tender referred to in paragraph (1) 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 (3). new text end

new text begin (3) 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 interest from the date of the purchase, costs, and reasonable attorneys' fees determined by the court. new text end

new text begin (c) Liability of purchaser to 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 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: new text end

new text begin (1) The seller may maintain an action to recover the security, and any income received on the security, costs, and reasonable attorneys' fees determined by the court, upon the tender of the purchase price, or for actual damages as provided in paragraph (3). new text end

new text begin (2) The tender referred to in paragraph (1) may be made any time before entry of judgment. Tender requires only notice in a 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 (3). new text end

new text begin (3) Actual damages in 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 interest from the date of the sale of the security, costs, and reasonable attorneys' fees determined by the court. new text end

new text begin (d) Liability of unregistered broker-dealer and agent. A person acting as a broker-dealer or agent that sells or buys a security in violation of section 80A.56(a), 80A.57(a), or 80A.73 is liable to the customer. The customer, if a purchaser, may maintain an action for recovery of actual damages as specified in subsections (b)(1) through (3), or, if a seller, for a remedy as specified in subsections (c)(1) through (3). new text end

new text begin (e) Liability of unregistered investment adviser and investment adviser representative. A person acting as an investment adviser or investment adviser representative that provides investment advice for compensation in violation of section 80A.58(a), 80A.59(a), or 80A.73 is liable to the client. The client may maintain an action to recover the consideration paid for the advice, interest from the date of payment, costs, and reasonable attorneys' fees determined by the court. new text end

new text begin (f) Liability for investment advice. A person that receives directly or indirectly any consideration for providing investment advice to another person and that employs a device, scheme, or artifice to defraud the other person or engages in an act, practice, or course of business that operates or would operate as a fraud or deceit on the other person, is liable to the other person. An action under this subsection is governed by the following: new text end

new text begin (1) 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 from the date of the fraudulent conduct, costs, and reasonable attorneys' fees determined by the court, less the amount of any income received as a result of the fraudulent conduct. new text end

new text begin (2) 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. new text end

new text begin (g) Joint and several liability. The following persons are liable jointly and severally with and to the same extent as persons liable under subsections (b) through (f): new text end

new text begin (1) a person that directly or indirectly controls a person liable under subsections (b) through (f), 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; new text end

new text begin (2) an individual who is a managing partner, executive officer, or director of a person liable under subsections (b) through (f), 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 have known, of the existence of conduct by reason of which the liability is alleged to exist; new text end

new text begin (3) an individual who is an employee of or associated with a person liable under subsections (b) through (f) and who materially aids the conduct giving rise to the liability, 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 is alleged to exist; and new text end

new text begin (4) 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 (b) through (f), unless the 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 liability is alleged to exist. new text end

new text begin (h) Right of contribution. A person liable under this section has a right of contribution as in cases of tort against any other person liable under this section for the same conduct. new text end

new text begin (i) 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. new text end

new text begin (j) Statute of limitations. A person may not obtain relief: new text end

new text begin (1) under subsection (b) for violation of section 80A.49, or under subsection (d) or (e), unless the action is instituted within one year after the violation occurred; or new text end

new text begin (2) under subsection (b), other than for violation of section 80A.49, or under subsection (c) or (f), unless the action is instituted within the earlier of two years after discovery of the facts constituting the violation or five years after the violation. new text end

new text begin (k) 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. new text end

new text begin (l) 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. new text end

new text begin (m) Survival of other right or remedies. The rights and remedies provided by this chapter are in addition to any other rights or remedies that may exist, but this chapter does not create a cause of action not specified in this section or section 80A.66(e). new text end

Sec. 37.

new text begin [80A.77] SECTION 510; RESCISSION OFFERS. new text end

new text begin A purchaser, seller, or recipient of investment advice may not maintain an action under section 80A.76 if: new text end

new text begin (1) the purchaser, seller, or recipient of investment advice receives in a record, before the action is instituted: new text end

new text begin (A) an offer stating the respect in which liability under section 80A.76 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 this purchase, sale, or investment advice; new text end

new text begin (B) if the basis for relief under this section may have been a violation of section 80A.76(b), an offer to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid, and interest from the date of the purchase, less the amount of any income received on the security, or, if the purchaser no longer owns the security, an offer to pay the purchaser upon acceptance of the offer damages in an amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it, and interest from the date of the purchase in cash equal to the damages computed in the manner provided in this subsection. new text end

new text begin (C) if the basis for relief under this section may have been a violation of section 80A.76(c), an offer to tender the security, on payment by the seller of an amount equal to the purchase price paid, less income received on the security by the purchaser and interest 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 from the date of the sale. new text end

new text begin (D) if the basis for relief under this section may have been a violation of section 80A.76(d); and if the customer is a purchaser, an offer to pay as specified in subparagraph (B); or, if the customer is a seller, an offer to tender or to pay as specified in subparagraph (C); new text end

new text begin (E) if the basis for relief under this section may have been a violation of section 80A.76(e), an offer to reimburse in cash the consideration paid for the advice and interest from the date of payment; or new text end

new text begin (F) if the basis for relief under this section may have been a violation of section 80A.76(f), an offer to reimburse in cash the consideration paid for the advice, the amount of any actual damages that may have been caused by the conduct, and interest from the date of the violation causing the loss; new text end

new text begin (2) the offer under paragraph (1) states that it must be accepted by the purchaser, seller, or recipient of investment advice within 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 three days, that the administrator, by order, specifies; new text end

new text begin (3) the offeror has the present ability to pay the amount offered or to tender the security under paragraph (1); new text end

new text begin (4) the offer under paragraph (1) 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 new text end

new text begin (5) the purchaser, seller, or recipient of investment advice that accepts the offer under paragraph (1) in a record within the period specified under paragraph (2) is paid in accordance with the terms of the offer. new text end

Sec. 38.

new text begin [80A.78] SECTION 601; ADMINISTRATION. new text end

new text begin (a) Administration. The administrator shall administer this chapter. new text end

new text begin (b) Unlawful use of records or information. It is unlawful for the administrator or an officer, 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 are not public under section 80A.84(b). 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 80A.79, 80A.84(c), or 80A.85. new text end

new text begin (c) No privilege or exemption created or diminished. This chapter does not create or diminish a privilege or exemption that exists at common law, by statute or rule, or otherwise. new text end

new text begin (d) 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 initiatives. This subsection does not authorize the administrator to require participation or monetary contributions of a registrant in an investor education program. new text end

Sec. 39.

new text begin [80A.79] SECTION 602; INVESTIGATIONS AND SUBPOENAS. new text end

new text begin (a) Authority to investigate. The administrator may: new text end

new text begin (1) conduct public or private investigations within or outside of this state which the administrator considers necessary or appropriate to determine whether 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 aid in the enforcement of this chapter or in the adoption of rules and forms under this chapter; new text end

new text begin (2) 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 new text end

new text begin (3) publish a record concerning an action, proceeding, or an 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. new text end

new text begin (b) Administrator powers to investigate. For the purpose of an investigation under this chapter, the administrator or its 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. new text end

new text begin (c) Procedure and remedies for noncompliance. If a person does not appear or refuses to testify, file a statement, produce records, or otherwise does not obey a subpoena as required by the administrator under this chapter, the administrator may refer the matter to the attorney general, who may apply to the district court or a court of another state to enforce compliance. The court may: new text end

new text begin (1) hold the person in contempt; new text end

new text begin (2) order the person to appear before the administrator; new text end

new text begin (3) order the person to testify about the matter under investigation or in question; new text end

new text begin (4) order the production of records; new text end

new text begin (5) grant injunctive relief, including restricting or prohibiting the offer or sale of securities or the providing of investment advice; new text end

new text begin (6) impose a civil penalty up to $10,000 for each violation; and new text end

new text begin (7) grant any other necessary or appropriate relief. new text end

new text begin (d) Application for relief. This section does not preclude a person from applying to the district court or a court of another state for relief from a request to appear, testify, file a statement, produce records, or obey a subpoena. new text end

new text begin (e) Use immunity procedure. An individual is not excused from attending, testifying, filing a statement, producing a record or other evidence, or obeying a subpoena of the administrator under this chapter or in an action or proceeding instituted by the administrator under this chapter on the ground that the required testimony, statement, record, or other evidence, directly or indirectly, may tend to incriminate the individual or subject the individual to a criminal fine, penalty, or forfeiture. If the individual refuses to testify, file a statement or produce a record or other evidence on the basis of the individual's privilege against self-incrimination, the administrator may apply to the district court to compel the testimony, the filing of the statement, the production of the record, or the giving of other evidence. The testimony, record, or other evidence compelled under such an order may not be used, directly or indirectly, against the individual in a criminal case, except in a prosecution for perjury or contempt or otherwise failing to comply with the order. new text end

new text begin (f) 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 provide 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. new text end

Sec. 40.

new text begin [80A.80] SECTION 603; CIVIL ENFORCEMENT. new text end

new text begin (a) Civil action instituted by administrator. If the administrator believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has, is, or is about to engage in an act, practice, or course of business that materially aids a violation of this chapter or a rule adopted or order issued under this chapter, the administrator may maintain an action in the district court to enjoin the act, practice, or course of business and to enforce compliance with this chapter or a rule adopted or order issued under this chapter. new text end

new text begin (b) Relief available. In an action under this section and on a proper showing, the court may: new text end

new text begin (1) issue a permanent or temporary injunction, restraining order, or declaratory judgment; new text end

new text begin (2) order other appropriate or ancillary relief, which may include: new text end

new text begin (A) an asset freeze, accounting, writ of attachment, writ of general or specific execution, and appointment of a receiver or conservator, that may be the administrator, for the defendant or the defendant's assets; new text end

new text begin (B) ordering the administrator to take charge and control of a defendant's property, including investment accounts and accounts in a depository institution, rents, and profits; to collect debts; and to acquire and dispose of property; new text end

new text begin (C) imposing a civil penalty up to $10,000 for each violation; an order of rescission, restitution, or 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 predecessor act; and new text end

new text begin (D) ordering the payment of prejudgment and postjudgment interest; or new text end

new text begin (3) order such other relief as the court considers appropriate. new text end

new text begin (c) No bond required. The administrator may not be required to post a bond in an action or proceeding under this chapter. new text end

Sec. 41.

new text begin [80A.81] SECTION 604; ADMINISTRATIVE ENFORCEMENT. new text end

new text begin (a) Issuance of an order or notice. If the administrator determines that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter or that a person has materially aided, is materially aiding, or is about to materially aid an act, practice, or course of business constituting a violation of this chapter or a rule adopted or order issued under this chapter, the administrator may: new text end

new text begin (1) 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; new text end

new text begin (2) issue an order denying, suspending, revoking, or conditioning the exemptions for a broker-dealer under section 80A.56(b)(1)(D) or (F) or an investment adviser under section 80A.58(b)(1)(C); or new text end

new text begin (3) issue an order under section 80A.48. new text end

new text begin (b) Summary process. An order under subsection (a) 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 whether the administrator will seek a civil penalty or costs of the investigation, a statement of the reasons for the order, 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 within 30 days after the date of service of the order, the order, which may include a civil penalty or costs of the investigation if a civil penalty or costs were sought in the statement accompanying the order, becomes final as to that person by operation of law. If a hearing is requested or ordered, the administrator, after notice of an opportunity for hearing to each person subject to the order, may modify or vacate the order or extend it until final determination. new text end

new text begin (c) Procedure for final order. If a hearing is requested or ordered pursuant to subsection (b), a hearing must be held under chapter 14. A final order may not be issued unless the administrator makes findings of fact and conclusions of law in a record according to chapter 14. The final order may make final, vacate, or modify the order issued under subsection (a). new text end

new text begin (d) Civil penalty. In a final order under subsection (c), the administrator may impose a civil penalty up to $10,000 for each violation. new text end

new text begin (e) 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. new text end

new text begin (f) Filing of certified final order with court; effect of filing. If a petition for judicial review of a final order is not filed in accordance with section 80A.86, 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. new text end

new text begin (g) Enforcement by court; further civil penalty. If a person does not comply with an order under this section, the administrator may petition a court of competent jurisdiction to enforce the order. The court may not require the administrator to post a bond in an action or proceeding under this section. If the court finds, after service and opportunity for hearing, that the person was not in compliance with the order, the court may adjudge the person in civil contempt of the order. The court may impose a further civil penalty against the person for contempt in an amount up to $10,000 for each violation and may grant any other relief the court determines is just and proper in the circumstances. new text end

Sec. 42.

new text begin [80A.82] SECTION 605; RULES, FORMS, ORDERS, INTERPRETATIVE OPINIONS, AND HEARINGS. new text end

new text begin (a) Issuance and adoption of forms, orders, and rules. The administrator may: new text end

new text begin (1) issue forms and orders and, after notice and comment, may adopt and amend rules necessary or appropriate to carry out this chapter and may repeal rules, including rules and forms governing registration statements, applications, notice filings, reports, and other records; new text end

new text begin (2) by rule, define terms, whether or not used in this chapter, but those definitions may not be inconsistent with this chapter; and new text end

new text begin (3) by rule, classify securities, persons, and transactions and adopt different requirements for different classes. new text end

new text begin (b) Findings and cooperation. Under this chapter, a rule or form may not be adopted or amended, or an order issued or amended, unless the 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 this chapter. In adopting, amending, and repealing rules and forms, section 80A.85 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. new text end

new text begin (c) Financial statements. Subject to Section 15(h) of the Securities Exchange Act and Section 222 of the Investment Advisers Act of 1940, the administrator may require that a financial statement filed under this chapter be prepared in accordance with generally accepted accounting principles in the United States and comply with other requirements specified by rule adopted or order issued under this chapter. A rule adopted or order issued under this chapter may establish: new text end

new text begin (1) subject to Section 15(h) of the Securities Exchange Act and Section 222 of the Investment Advisors Act of 1940, the form and content of financial statements required under this chapter; new text end

new text begin (2) whether unconsolidated financial statements must be filed; and new text end

new text begin (3) whether required financial statements must be audited by an independent certified public accountant. new text end

new text begin (d) Interpretative opinions. The administrator may provide interpretive opinions or issue determinations that the administrator will not institute a proceeding or an action under this chapter against a specified person for engaging in a specified act, practice, or course of business if the determination is consistent with this chapter. A rule adopted or order issued under this chapter may establish a reasonable charge for interpretative opinions or determinations that the administrator will not institute an action or a proceeding under this chapter. new text end

new text begin (e) Effect of compliance. A penalty under this chapter may not be imposed for, and liability does not arise from conduct that is engaged in or omitted in good faith believing it conforms to a rule, form, or order of the administrator under this chapter. new text end

new text begin (f) 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. new text end

Sec. 43.

new text begin [80A.83] SECTION 606; ADMINISTRATIVE FILES AND OPINIONS. new text end

new text begin (a) Public register of filings. The administrator shall maintain, or designate a person to maintain, a register of applications for registration of securities; registration statements; notice filings; applications for registration of broker-dealers, agents, investment advisers, and investment adviser representatives; notice filings by federal covered investment advisers that are or have been effective under this chapter or the predecessor act; notices of claims of exemption from registration or notice filing requirements contained in a record; orders issued under this chapter or the predecessor act; and interpretative opinions or no action determinations issued under this chapter. new text end

new text begin (b) Public availability. The administrator shall make all rules, forms, interpretative opinions, and orders available to the public. new text end

new text begin (c) 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 or certification. A copy of the record certified or a certificate by the administrator of a record's nonexistence is prima facie evidence of a record or its nonexistence. new text end

Sec. 44.

new text begin [80A.84] SECTION 607; PUBLIC RECORDS; CONFIDENTIALITY. new text end

new text begin (a) Presumption of public records. Except as otherwise provided in subsection (b), records obtained by the administrator or filed under this chapter, including a record contained in or filed with a registration statement, application, notice filing, or report, are public records and are available for public examination. new text end

new text begin (b) Nonpublic records. The following records are not public records and are not available for public examination under subsection (a): new text end

new text begin (1) a record obtained by the administrator in connection with an audit or inspection under section 80A.66(d) or an investigation under section 80A.79; new text end

new text begin (2) a part of a record filed in connection with a registration statement under sections 80A.49 and 80A.51 through 80A.53 or a record under section 80A.66(d) that contains trade secrets or confidential information if the person filing the registration statement or report has asserted a claim of confidentiality or privilege that is authorized by law; new text end

new text begin (3) a record that is not required to be provided to the administrator or filed under this chapter and is provided to the administrator only on the condition that the record will not be subject to public examination or disclosure; new text end

new text begin (4) a nonpublic record received from a person specified in section 80A.85(a); new text end

new text begin (5) any social security number, residential address unless used as a business address, and residential telephone number contained in a record that is filed; and new text end

new text begin (6) a record obtained by the administrator through a designee of the administrator that a rule or order under this chapter determines has been: new text end

new text begin (A) expunged from the administrator's records by the designee; or new text end

new text begin (B) 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. new text end

new text begin (c) 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 80A.85(a), the administrator may disclose a record obtained in connection with an audit or inspection under section 80A.66(d) or a record obtained in connection with an investigation under section 80A.79. new text end

Sec. 45.

new text begin [80A.85] SECTION 608; UNIFORMITY AND COOPERATION WITH OTHER AGENCIES. new text end

new text begin (a) Objective of uniformity. The administrator shall, in its discretion, cooperate, coordinate, consult, and, subject to section 80A.84, share records and information with the securities regulator of another state, Canada, a Canadian province or territory, a foreign jurisdiction, the Securities and Exchange Commission, the United States Department of Justice, the Commodity Futures Trading Commission, the Federal Trade Commission, the Securities Investor Protection Corporation, a self-regulatory organization, a national or international organization of securities regulators, a federal or state banking and insurance regulator, and a governmental law enforcement agency to effectuate greater uniformity in securities matters among the federal government, self-regulatory organizations, states, and foreign governments. new text end

new text begin (b) Policies to consider. In cooperating, coordinating, consulting, and sharing records and information under this section and in acting by rule, order, or waiver under this chapter, the administrator shall, in its discretion, take into consideration in carrying out the public interest the following general policies: new text end

new text begin (1) maximizing effectiveness of regulation for the protection of investors; new text end

new text begin (2) maximizing uniformity in federal and state regulatory standards; and new text end

new text begin (3) minimizing burdens on the business of capital formation, without adversely effecting essentials of investor protection. new text end

new text begin (c) Subjects for cooperation. The cooperation, coordination, consultation, and sharing of records and information authorized by this section includes: new text end

new text begin (1) establishing or employing one or more designees as a central depository for registration and notice filings under this chapter and for records required or allowed to be maintained under this chapter; new text end

new text begin (2) developing and maintaining uniform forms; new text end

new text begin (3) conducting a joint examination or investigation; new text end

new text begin (4) holding a joint administrative hearing; new text end

new text begin (5) instituting and prosecuting a joint civil or administrative proceeding; new text end

new text begin (6) sharing and exchanging personnel; new text end

new text begin (7) coordinating registrations under sections 80A.49 and 80A.56 through 80A.59 and exemptions under section 80A.47; new text end

new text begin (8) sharing and exchanging records, subject to section 80A.84; new text end

new text begin (9) formulating rules, statements of policy, guidelines, forms, and interpretative opinions and releases; new text end

new text begin (10) formulating common systems and procedures; new text end

new text begin (11) notifying the public of proposed rules, forms, statements of policy, and guidelines; new text end

new text begin (12) attending conferences and other meetings among securities regulators, which may include representatives of governmental and private sector organizations involved in capital formation, deemed necessary or appropriate to promote or achieve uniformity; and new text end

new text begin (13) 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. new text end

Sec. 46.

new text begin [80A.86] SECTION 609; JUDICIAL REVIEW. new text end

new text begin (a) Judicial review of orders. A final order issued by the administrator under this chapter is subject to judicial review in accordance with chapter 14. new text end

new text begin (b) Judicial review of rules. A rule adopted under this chapter is subject to judicial review in accordance with chapter 14. new text end

Sec. 47.

new text begin [80A.87] SECTION 610; JURISDICTION. new text end

new text begin (a) Sales and offers to sell. Sections 80A.49, 80A.50, 80A.56(a), 80A.57(a), 80A.58(a), 80A.59(a), 80A.68, 80A.73, 80A.76, and 80A.77 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. new text end

new text begin (b) Purchases and offers to purchase. Sections 80A.56(a), 80A.57(a), 80A.58(a), 80A.59(a), 80A.68, 80A.73, 80A.76, and 80A.77 do not apply to a person that purchases or offers to purchase a security unless the offer to purchase or the purchase is made in this state or the offer to sell or the sale is made and accepted in this state. new text end

new text begin (c) 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: new text end

new text begin (1) originates from within this state; or new text end

new text begin (2) is directed by the offeror to a place in this state and received at the place to which it is directed. new text end

new text begin (d) Acceptances in 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: new text end

new text begin (1) 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 new text end

new text begin (2) has not previously been communicated to the offeror, orally or in a record, outside this state. new text end

new text begin (e) Publications, radio, television, or electronic communications. An offer to sell or to purchase is not made in this state when a publisher circulates or there is circulated on the publisher's behalf in this state a bona fide newspaper or other publication of general, regular, and paid circulation that is not published in this state, or that is published in this state but has had more than two-thirds of its circulation outside this state during the previous 12 months or when a radio or television program or other electronic communication originating outside this state is received in this state. A radio or television program, or other electronic communication is considered as having originated in this state if either the broadcast studio or the originating source of transmission is located in this state, unless: new text end

new text begin (1) the program or communication is syndicated and distributed from outside this state for redistribution to the general public in this state; new text end

new text begin (2) 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; new text end

new text begin (3) the program or communication is an electronic communication that originates outside this state and is captured for redistribution to the general public in this state by a community antenna or cable, radio, cable television, or other electronic system; or new text end

new text begin (4) 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. new text end

new text begin (f) Investment advice and misrepresentations. Sections 80A.58(a), 80A.59(a), 80A.60(a), 80A.69, 80A.72, and 80A.73 apply to a person if the person engages in an act, practice, or course of business instrumental in effecting prohibited or actionable conduct in this state, whether or not either party is then present in this state. new text end

Sec. 48.

new text begin [80A.88] SECTION 611; SERVICE OF PROCESS. new text end

new text begin (a) Signed consent to service of process. A consent to service of process complying with this section required by this chapter must be signed and filed in the form required by a rule or order under this chapter. A consent appointing the 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 registration or notice filing need not file an additional consent. new text end

new text begin (b) Conduct constituting appointment of agent for service. If a person, including a nonresident of this state, engages in an act, practice, or course of business prohibited or made actionable by this chapter or a rule adopted or order issued under this chapter and the person has not filed a consent to service of process under subsection (a), the act, practice, or course of business constitutes the appointment of the 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. new text end

new text begin (c) Procedure for service of process. Service under subsection (a) or (b) may be made by providing a copy of the process to the office of the administrator, but it is not effective unless: new text end

new text begin (1) 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 consent to service of process has not been filed, at the last known address, or takes other reasonable steps to give notice; and new text end

new text begin (2) the plaintiff files an affidavit of compliance with this subsection in the action or proceeding on or before the return day of the process, if any, or within the time that the court, or the administrator in a proceeding before the administrator, allows. new text end

new text begin (d) Service in administrative proceedings or civil actions by administrator. Service pursuant to subsection (c) may be used in a proceeding before the administrator or by the administrator in a civil action in which the administrator is the moving party. new text end

new text begin (e) Opportunity to defend. If process is served under subsection (c), 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. new text end

Sec. 49.

new text begin [80A.89] SECTION 612; SEVERABILITY CLAUSE. new text end

new text begin If any provision of this chapter or its application to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this chapter that can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.new text end

Sec. 50.

new text begin [80A.90] SECTION 703; APPLICATION OF ACT TO EXISTING PROCEEDING AND EXISTING RIGHTS AND DUTIES. new text end

new text begin (a) 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 five years after the effective date of this chapter, whichever is earlier. new text end

new text begin (b) Continued effectiveness under predecessor act. All effective registrations under the predecessor act, all administrative orders relating to the registrations, rules, statements of policy, interpretative opinions, declaratory rulings, no action determinations, and conditions imposed on the registrations under the predecessor act remain in effect while they would have remained in effect if this chapter had not been enacted. They are considered to have been filed, issued, or composed under this chapter, but are exclusively governed by the predecessor act. new text end

new text begin (c) 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. new text end

Sec. 51.

new text begin REPEALER. new text end

new text begin Minnesota Statutes 2004, sections 80A.01; 80A.02; 80A.03; 80A.04; 80A.041; 80A.05; 80A.06; 80A.07; 80A.08; 80A.09; 80A.10; 80A.11; 80A.115; 80A.12; 80A.122; 80A.125; 80A.13; 80A.14; 80A.15; 80A.16; 80A.17; 80A.18; 80A.19; 80A.22; 80A.23; 80A.24; 80A.25; 80A.26; 80A.27; 80A.28; 80A.29; 80A.30; and 80A.31, new text end new text begin are repealed. new text end

Sec. 52.

new text begin EFFECTIVE DATE. new text end

new text begin This act is effective August 1, 2007. new text end

Office of the Revisor of Statutes

Minnesota Session Laws - 2006, Regular Session

Resources

Chapter 196

CHAPTER 196--H.F.No. 2514

ARTICLE 1

UNIFORM SECURITIES ACT GENERAL PROVISIONS

Section 1.

new text begin [80A.40] SECTION 101; SHORT TITLE. new text end