SF 2319

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to securities; enacting and modifying the
2002 Uniform Securities Act of the National Conference
of Commissioners on Uniform State Laws; prescribing
criminal penalties; amending Minnesota Statutes 2004,
sections 60A.077, subdivision 9; 82.23; 82.43,
subdivision 7; 144A.01, subdivision 4; 245A.02,
subdivision 5a; 302A.011, subdivision 26; 302A.251,
subdivision 4; 308A.505; 308B.465, subdivision 2;
322B.03, subdivision 43; 322B.663, subdivision 4;
356A.06, subdivision 6; proposing coding for new law
in Minnesota Statutes, chapter 80A; repealing
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; 80A.31.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

UNIFORM SECURITIES ACT
GENERAL PROVISIONS

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 bank or savings institution if its activities as a
broker-dealer are limited to those specified in subsections
3(a)(4)(B)(i) through (vi), (viii) through (x), and (xi) if
limited to unsolicited transactions; 3(a)(5)(B); and 3(a)(5)(C)
of the Securities Exchange Act of 1934 (15 U.S.C. Sections
78c(a)(4) and (5)) or a bank that satisfies the conditions
described in subsection 3(a)(4)(E) of the Securities Exchange
Act of 1934 (15 U.S.C. Section 78c(a)(4));
new text end

new text begin (D) credit union; provided such activities are conducted in
accordance with such rules as may be adopted by the
commissioner;
new text end

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

new text begin (F) 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 shall
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 EXEMPTIONS FROM REGISTRATION OF SECURITIES

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 of a note, bond, debenture, or other evidence of
indebtedness issued by such a person, a rule may be adopted
under this chapter limiting the availability of this exemption
by classifying securities, persons, and transactions, imposing
different requirements for different classes, specifying with
respect to paragraph (B) the scope of the exemption and the
grounds for denial or suspension, and requiring an issuer:
new text end

new text begin (A) 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 and provide that the exemption
becomes effective if the administrator does not disallow the
exemption within the period established by the rule;
new text end

new text begin (B) to file a request for exemption authorization for which
a rule under this chapter may specify the scope of the
exemption, the requirement of an offering statement, the filing
of sales and advertising literature, the filing of consent to
service of process complying with section 80A.88, and grounds
for denial or suspension of the exemption; or
new text end

new text begin (C) to register under section 80A.52;
new text end

new text begin (8) a member's or owner's interest in, or a retention
certificate or like security given in lieu of a cash patronage
dividend issued by, a cooperative organized and operated as a
nonprofit membership cooperative under the cooperative laws of a
state, but not a member's or owner's interest, retention
certificate, or like security sold to persons other than bona
fide members of the cooperative; and
new text end

new text begin (9) an equipment trust certificate with respect to
equipment leased or conditionally sold to a person, if any
security issued by the person would be exempt under this section
or would be a federal covered security under Section 18(b)(1) of
the Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)).
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 it
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 such 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
commissioner a consent to service of process under section
80A.88 and has, not less than ten days prior to 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. This paragraph applies to
securities, other than securities issued as patronage dividends,
only when:
new text end

new text begin (i) the issuer, prior to the completion of the sale of such
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 paragraph 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 paragraph shall 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 shall 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) new text end [ENFORCEMENT RELATED POWERS.] new text begin 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) new text end [KNOWLEDGE OF ORDER REQUIRED.] new text begin 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 REGISTRATION OF SECURITIES AND
NOTICE FILING OF FEDERAL COVERED SECURITIES

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) new text end [FEDERAL COVERED SECURITIES.]

new text begin (1) new text end [REQUIRED FILING OF RECORDS.] new text begin 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) new text end [NOTICE FILING EFFECTIVENESS AND RENEWAL.] new text begin 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) new text end [NOTICE FILINGS FOR FEDERAL COVERED SECURITIES UNDER
SECTION 18(b)(4)(D).] new text begin 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) new text end [STOP ORDERS.] new text begin 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) new text end [SMALL CORPORATION OFFERING REGISTRATION.]

new text begin (1) new text end [REGISTRATION REQUIRED.] new text begin 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) new text end [AVAILABILITY.] new text begin 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) new text end [DISQUALIFICATION.] new text begin 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) new text end [FILING AND EFFECTIVENESS OF REGISTRATION STATEMENT.] new text begin 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) new text end [CONTENTS OF REGISTRATION STATEMENT.] new text begin 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) new text end [COPY TO PURCHASER.] new text begin 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) new text end [REGISTRATION PERMITTED.] new text begin 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) new text end [REQUIRED RECORDS.] new text begin 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) new text end [CONDITIONS FOR EFFECTIVENESS OF REGISTRATION
STATEMENT.] new text begin 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) new text end [NOTICE OF FEDERAL REGISTRATION STATEMENT
EFFECTIVENESS.] new text begin 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) new text end [EFFECTIVENESS OF REGISTRATION STATEMENT.] new text begin 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) new text end [REGISTRATION PERMITTED.] new text begin A security may be registered
by qualification under this section.
new text end

new text begin (b) new text end [REQUIRED RECORDS.] new text begin 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) new text end [CONDITIONS FOR EFFECTIVENESS OF REGISTRATION
STATEMENT.] new text begin 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) new text end [DELAY OF EFFECTIVENESS OF REGISTRATION STATEMENT.] new text begin 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) new text end [PROSPECTUS DISTRIBUTION MAY BE REQUIRED.] new text begin 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) new text end [WHO MAY FILE.] new text begin 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) new text end [STATUS OF OFFERING.] new text begin 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) new text end [INCORPORATION BY REFERENCE.] new text begin 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) new text end [NONISSUER DISTRIBUTION.] new text begin 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) new text end [ESCROW AND IMPOUNDMENT.] new text begin 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) new text end [FORM OF SUBSCRIPTION.] new text begin 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) new text end [EFFECTIVE PERIOD.] new text begin 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) new text end [PERIODIC REPORTS.] new text begin 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) new text end [POSTEFFECTIVE AMENDMENTS.] new text begin 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) new text end [STOP ORDERS.] new text begin 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) new text end [INSTITUTION OF STOP ORDER.] new text begin 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) new text end [SUMMARY PROCESS.] new text begin 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) new text end [PROCEDURAL REQUIREMENTS FOR STOP ORDER.] new text begin 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) new text end [MODIFICATION OR VACATION OF STOP ORDER.] new text begin 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 BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS,
INVESTMENT ADVISER REPRESENTATIVES, AND FEDERAL
COVERED INVESTMENT ADVISERS

Sec. 17.

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

new text begin (a) new text end [REGISTRATION REQUIREMENT.] new text begin 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) new text end [EXEMPTIONS FROM REGISTRATION.] new text begin 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) new text end [LIMITS ON EMPLOYMENT OR ASSOCIATION.] new text begin 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) new text end [FOREIGN TRANSACTIONS.] new text begin 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) new text end [REGISTRATION REQUIREMENT.] new text begin 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) new text end [EXEMPTIONS FROM REGISTRATION.] new text begin 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; or
new text end

new text begin (9) any other individual exempted by rule adopted or order
issued under this chapter.
new text end

new text begin (c) new text end [REGISTRATION EFFECTIVE ONLY WHILE EMPLOYED OR
ASSOCIATED.] new text begin 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) new text end [LIMIT ON EMPLOYMENT OR ASSOCIATION.] new text begin 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) new text end [LIMIT ON AFFILIATIONS.] new text begin 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) new text end [REGISTRATION REQUIREMENT.] new text begin 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) new text end [EXEMPTIONS FROM REGISTRATION.] new text begin The following persons
are exempt from the registration requirement of subsection (a):
new text end

new text begin (1) a person without a place of business in the state that
is registered under the securities act of the state in which the
person has its principal place of business if its only clients
in this state are:
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) new text end [LIMITS ON EMPLOYMENT OR ASSOCIATION.] new text begin 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) new text end [NOTICE FILING REQUIREMENT.] new text begin 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) new text end [NOTICE FILING REQUIREMENT NOT REQUIRED.] new text begin 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) new text end [NOTICE FILING PROCEDURE.] new text begin 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) new text end [EFFECTIVENESS OF FILING.] new text begin 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) new text end [APPLICATION FOR INITIAL REGISTRATION.] new text begin 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) new text end [AMENDMENT.] new text begin 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) new text end [EFFECTIVENESS OF REGISTRATION.] new text begin 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) new text end [REGISTRATION RENEWAL.] new text begin 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) new text end [ADDITIONAL CONDITIONS OR WAIVERS.] new text begin 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) new text end [SUCCESSION.] new text begin 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) new text end [ORGANIZATIONAL CHANGE.] new text begin 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) new text end [NAME CHANGE.] new text begin 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) new text end [CHANGE OF CONTROL.] new text begin 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) new text end [NOTICE OF TERMINATION.] new text begin 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) new text end [TRANSFER OF EMPLOYMENT OR ASSOCIATION.] new text begin 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) new text end [WITHDRAWAL OF TEMPORARY REGISTRATION.] new text begin 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) new text end [POWER TO PREVENT REGISTRATION.] new text begin 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) new text end [TERMINATION OF REGISTRATION OR APPLICATION FOR
REGISTRATION.] new text begin 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
commissioner, the issuer shall submit an amended notice filing
to the commissioner 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 commissioner 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 commissioner 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 commissioner in connection with these
filings exceed $25,000,000 in a fiscal year, the commissioner
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
commissioner 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 commissioner 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 commissioner
shall by rule designate those amendments which require an order
of the commissioner.
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
commissioner 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 commissioner 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 commissioner deems
it necessary to incur any expense in connection with any
application or registration, the commissioner shall have the
power to require the interested person to make an advance
deposit with the commissioner 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
commissioner of commerce's investigation fund, from which fund
the commissioner 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 commissioner or an employee away from the office of
the commissioner, 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
commissioner shall be covered into the state treasury. When any
person is entitled to a refund under this section, the
commissioner 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) new text end [FINANCIAL REQUIREMENTS.] new text begin 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) new text end [FINANCIAL REPORTS.] new text begin 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) new text end [RECORD KEEPING.] new text begin 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) new text end [AUDITS OR INSPECTIONS.] new text begin 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) new text end [CUSTODY AND DISCRETIONARY AUTHORITY BOND OR
INSURANCE.] new text begin 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
$........ 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) new text end [REQUIREMENTS FOR CUSTODY.] new text begin 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) new text end [INVESTMENT ADVISER BROCHURE RULE.] new text begin 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) new text end [CONTINUING EDUCATION.] new text begin 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) new text end [DISCIPLINARY CONDITIONS-APPLICANTS.] new text begin 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) new text end [DISCIPLINARY CONDITIONS-REGISTRANTS.] new text begin 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) new text end [DISCIPLINARY PENALTIES-REGISTRANTS.] new text begin 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 not to
exceed a maximum of $....... for a single violation or $.......
for more than one 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) new text end [GROUNDS FOR DISCIPLINE.] new text begin 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) new text end [EXAMINATIONS.] new text begin 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) new text end [SUMMARY PROCESS.] new text begin 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) new text end [PROCEDURAL REQUIREMENTS.] new text begin 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) new text end [CONTROL PERSON LIABILITY.] new text begin 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) new text end [LIMIT ON INVESTIGATION OR PROCEEDING.] new text begin 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 FRAUD AND LIABILITIES

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) new text end [FRAUD IN PROVIDING INVESTMENT ADVICE.] new text begin 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) new text end [RULES DEFINING FRAUD.] new text begin 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) new text end [RULES SPECIFYING CONTENTS OF ADVISORY CONTRACT.] new text begin 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) new text end [CIVIL.] new text begin 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) new text end [CRIMINAL.] new text begin 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 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) new text end [FILING REQUIREMENT.] new text begin 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) new text end [EXCLUDED COMMUNICATIONS.] new text begin 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) new text end [CRIMINAL PENALTIES.] new text begin 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 that
$....... or imprisoned not more than ...... years, or both. An
individual convicted of violating a rule or order under this
chapter may be fined, but may not be imprisoned, if the
individual did not have knowledge of the rule or order.
new text end

new text begin (b) new text end [CRIMINAL REFERENCE NOT REQUIRED.] new text begin 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) new text end [NO LIMITATION ON OTHER CRIMINAL ENFORCEMENT.] new text begin 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) new text end [SECURITIES LITIGATION UNIFORM STANDARDS
ACT.] new text begin 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) new text end [LIABILITY OF SELLER TO PURCHASER.] new text begin 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) new text end [LIABILITY OF PURCHASER TO SELLER.] new text begin 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) new text end [LIABILITY OF UNREGISTERED BROKER-DEALER AND AGENT.] new text begin 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) new text end [LIABILITY OF UNREGISTERED INVESTMENT ADVISER AND
INVESTMENT ADVISER REPRESENTATIVE.] new text begin 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) new text end [LIABILITY FOR INVESTMENT ADVICE.] new text begin 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) new text end [JOINT AND SEVERAL LIABILITY.] new text begin 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 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) new text end [RIGHT OF CONTRIBUTION.] new text begin 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) new text end [SURVIVAL OF CAUSE OF ACTION.] new text begin 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) new text end [STATUTE OF LIMITATIONS.] new text begin 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) new text end [NO ENFORCEMENT OF VIOLATIVE CONTRACT.] new text begin 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) new text end NO CONTRACTUAL WAIVER.] new text begin 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) new text end [SURVIVAL OF OTHER RIGHT OR REMEDIES.] new text begin 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 ADMINISTRATION AND JUDICIAL REVIEW

Sec. 38.

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

new text begin (a) new text end [ADMINISTRATION.] new text begin The administrator shall administer
this chapter.
new text end

new text begin (b) new text end [UNLAWFUL USE OF RECORDS OR INFORMATION.] new text begin 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) new text end [NO PRIVILEGE OR EXEMPTION CREATED OR DIMINISHED.] new text begin 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) new text end [INVESTOR EDUCATION.] new text begin 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

new text begin (e) new text end [THE SECURITIES INVESTOR EDUCATION AND TRAINING
FUND.] new text begin The Securities Investor Education and Training Fund is
created to provide funds for the purposes specified in
subsection (d). All money received by the state by reason of
civil penalties pursuant to this chapter must be deposited in
the Securities Investor Education and Training Fund and are
appropriated to the administrator.
new text end

Sec. 39.

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

new text begin (a) new text end [AUTHORITY TO INVESTIGATE.] new text begin 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) new text end [ADMINISTRATOR POWERS TO INVESTIGATE.] new text begin 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) new text end [PROCEDURE AND REMEDIES FOR NONCOMPLIANCE.] new text begin 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 of not less than $....... and
not greater than $....... 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) new text end [APPLICATION FOR RELIEF.] new text begin 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) new text end [USE IMMUNITY PROCEDURE.] new text begin 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) new text end [ASSISTANCE TO SECURITIES REGULATOR OF ANOTHER
JURISDICTION.] new text begin 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) new text end [CIVIL ACTION INSTITUTED BY ADMINISTRATOR.] new text begin 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) new text end [RELIEF AVAILABLE.] new text begin 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 $....... for a single
violation or up to $....... for more than one 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) new text end [NO BOND REQUIRED.] new text begin 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) new text end [ISSUANCE OF AN ORDER OR NOTICE.] new text begin 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) new text end [SUMMARY PROCESS.] new text begin 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) new text end [PROCEDURE FOR FINAL ORDER.] new text begin 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) new text end [CIVIL PENALTY.] new text begin In a final order under subsection (c),
the administrator may impose a civil penalty up to $....... for
a single violation or up to $....... for more than one violation.
new text end

new text begin (e) new text end [COSTS.] new text begin 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) new text end [FILING OF CERTIFIED FINAL ORDER WITH COURT; EFFECT OF
FILING.] new text begin 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) new text end [ENFORCEMENT BY COURT; FURTHER CIVIL PENALTY.] new text begin 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 not less than $....... but not greater
than $....... 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) new text end [ISSUANCE AND ADOPTION OF FORMS, ORDERS, AND
RULES.] new text begin 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) new text end [FINDINGS AND COOPERATION.] new text begin 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) new text end [FINANCIAL STATEMENTS.] new text begin 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) new text end [INTERPRETATIVE OPINIONS.] new text begin 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) new text end [EFFECT OF COMPLIANCE.] new text begin 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) new text end [PRESUMPTION FOR PUBLIC HEARINGS.] new text begin 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) new text end [PUBLIC REGISTER OF FILINGS.] new text begin 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) new text end [PUBLIC AVAILABILITY.] new text begin The administrator shall make all
rules, forms, interpretative opinions, and orders available to
the public.
new text end

new text begin (c) new text end [COPIES OF PUBLIC RECORDS.] new text begin 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) new text end [PRESUMPTION OF PUBLIC RECORDS.] new text begin 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) new text end [NONPUBLIC RECORDS.] new text begin 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) new text end [ADMINISTRATOR DISCRETION TO DISCLOSE.] new text begin 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) new text end [OBJECTIVE OF UNIFORMITY.] new text begin 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) new text end [POLICIES TO CONSIDER.] new text begin 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) new text end [SUBJECTS FOR COOPERATION.] new text begin 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) new text end [JUDICIAL REVIEW OF ORDERS.] new text begin 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) new text end [JUDICIAL REVIEW OF RULES.] new text begin 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) new text end [SALES AND OFFERS TO SELL.] new text begin 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) new text end [PURCHASES AND OFFERS TO PURCHASE.] new text begin 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) new text end [OFFERS IN THIS STATE.] new text begin 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) new text end [ACCEPTANCES IN THIS STATE.] new text begin 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) new text end [PUBLICATIONS, RADIO, TELEVISION, OR ELECTRONIC
COMMUNICATIONS.] new text begin 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) new text end [INVESTMENT ADVICE AND MISREPRESENTATIONS.] new text begin 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) new text end [SIGNED CONSENT TO SERVICE OF PROCESS.] new text begin 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) new text end [CONDUCT CONSTITUTING APPOINTMENT OF AGENT FOR
SERVICE.] new text begin 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) new text end [PROCEDURE FOR SERVICE OF PROCESS.] new text begin 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) new text end [SERVICE IN ADMINISTRATIVE PROCEEDINGS OR CIVIL ACTIONS
BY ADMINISTRATOR.] new text begin 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) new text end [OPPORTUNITY TO DEFEND.] new text begin 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 TRANSITION

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) new text end [APPLICABILITY OF PREDECESSOR ACT TO PENDING
PROCEEDINGS AND EXISTING RIGHTS.] new text begin 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) new text end [CONTINUED EFFECTIVENESS UNDER PREDECESSOR ACT.] new text begin 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) new text end [APPLICABILITY OF PREDECESSOR ACT TO OFFERS OR
SALES.] new text begin 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, are
repealed.
new text end

Sec. 52. new text begin EFFECTIVE DATE.
new text end

new text begin This act is effective January 1, 2006.
new text end

ARTICLE 2

CONFORMING CHANGES

Section 1.

Minnesota Statutes 2004, section 60A.077,
subdivision 9, is amended to read:

Subd. 9.

Membership interests.

A membership interest in
a domestic mutual insurance holding company does not constitute
a security as defined in section deleted text begin 80A.14, subdivision 18
deleted text end new text begin 80A.41(28) new text end . No member of a mutual insurance holding company may
transfer or pledge membership in the mutual insurance holding
company or any right arising from the membership except as
attendant to the valid transfer or assignment of the member's
policy in any reorganized company that gave rise to the member's
membership interest. A member of a mutual insurance holding
company is not, as a member, personally liable for the acts,
debts, liabilities, or obligations of the company. No
assessments of any kind may be imposed upon the members of a
mutual insurance holding company by the directors or members, or
because of any liability of any company owned or controlled by
the mutual insurance holding company or because of any act,
debt, or liability of the mutual insurance holding company. A
member's interest in the mutual insurance holding company shall
automatically terminate upon cancellation, nonrenewal,
expiration, or termination of the member's policy in any
insurance company that gave rise to the member's membership
interest.

Sec. 2.

Minnesota Statutes 2004, section 82.23, is amended
to read:

82.23 EXCEPTIONS.

Unless a person is licensed or otherwise required to be
licensed under this chapter, the term real estate broker does
not include:

(a) a licensed practicing attorney if the attorney complies
in all respects with the trust account provisions of this
chapter;

(b) a receiver, trustee, administrator, guardian, executor,
or other person appointed by or acting under the judgment or
order of any court;

(c) any person owning and operating a cemetery and selling
lots therein solely for use as burial plots;

(d) any custodian, janitor, or employee of the owner or
manager of a residential building who leases residential units
in the building;

(e) any bank, trust company, savings association,
industrial loan and thrift company, regulated lender under
chapter 56, public utility, or land mortgage or farm loan
association organized under the laws of this state or the United
States, when engaged in the transaction of business within the
scope of its corporate powers as provided by law;

(f) public officers while performing their official duties;

(g) employees of persons enumerated in clauses (b), (e),
and (f), when engaged in the specific performance of their
duties;

(h) any person who acts as an auctioneer bonded in
conformity with section 330.02, when that person is engaged in
the specific performance of duties as an auctioneer, and when
that person has been employed to auction real estate by a person
licensed under this chapter or when the auctioneer has engaged a
licensed attorney to supervise the real estate transaction;

(i) any person who acquires real estate for the purpose of
engaging in and does engage in, or who is engaged in the
business of constructing residential, commercial or industrial
buildings for the purpose of resale if no more than 25 such
transactions occur in any 12-month period and the person
complies with section 82.50;

(j) any person who is licensed as a securities
broker-dealer or is licensed as a securities agent representing
a broker-dealer pursuant to chapter 80A and who offers to sell
or sells an interest or estate in real estate which is a
security as defined in section deleted text begin 80A.14, subdivision 18
deleted text end new text begin 80A.41(28) new text end , and is registered or exempt from registration or
part of a transaction exempt from registration pursuant to
chapter 80A, when acting solely as an incident to the sale of
these securities;

(k) any person who offers to sell or sells a business
opportunity which is a franchise registered pursuant to chapter
80C, when acting solely to sell the franchise;

(l) any person who contracts with or solicits on behalf of
a provider a contract with a resident or prospective resident to
provide continuing care in a facility, pursuant to the
Continuing Care Facility Disclosure and Rehabilitation Act
(chapter 80D), when acting solely as incident to the contract;

(m) any broker-dealer or agent of a broker-dealer when
participating in a transaction in which all or part of a
business opportunity or business, including any interest
therein, is conveyed or acquired pursuant to an asset purchase,
merger, exchange of securities, or other business combination,
if the agent or broker-dealer is licensed pursuant to chapter
80A;

(n) an accountant acting incident to the practice of the
accounting profession if the accountant complies in all respects
with the trust account provisions of this chapter.

Sec. 3.

Minnesota Statutes 2004, section 82.43,
subdivision 7, is amended to read:

Subd. 7.

Application for recovery.

When any aggrieved
person obtains a final judgment in any court of competent
jurisdiction regardless of whether the judgment has been
discharged by a bankruptcy court against an individual licensed
under this chapter, on grounds of fraudulent, deceptive, or
dishonest practices, or conversion of trust funds arising
directly out of any transaction when the judgment debtor was
licensed and performed acts for which a license is required
under this chapter, or performed acts permitted by section
327B.04, subdivision 5, the aggrieved person may, upon the
judgment becoming final, and upon termination of all
proceedings, including reviews and appeals, file a verified
application in the court in which the judgment was entered. The
application shall state with specificity the grounds upon which
the application seeks to recover from the fund, and request an
order directing payment out of the fund of the amount of actual
and direct out of pocket loss in the transaction, but excluding
any attorney's fees, interest on the loss and on any judgment
obtained as a result of the loss, up to the sum of $150,000 of
the amount unpaid upon the judgment, provided that nothing in
this chapter shall be construed to obligate the fund for more
than $150,000 per claimant, per transaction, subject to the
limitations set forth in subdivision 14, regardless of the
number of persons aggrieved or parcels of real estate involved
in the transaction, provided that regardless of the number of
claims against a licensee, nothing in this chapter may obligate
the fund for more than $250,000 per licensee. An aggrieved
person who has a cause of action under section deleted text begin 80A.23 deleted text end new text begin 80A.76
new text end shall first seek recovery as provided in section deleted text begin 80A.05,
subdivision 5 deleted text end new text begin 80A.66(e) new text end , before the commissioner may order
payment from the recovery fund. For purposes of this section,
persons who are joint tenants or tenants in common are deemed to
be a single claimant. A copy of the verified application shall
be served upon the commissioner and upon the judgment debtor,
and a certificate or affidavit of service filed with the court.
For the purpose of this section, "aggrieved person" does not
include a government agency, financial institution, or other
entity that purchases, guarantees, or insures a loan secured by
real estate, and does not include a licensee unless (1) the
licensee is acting in the capacity of principal in the sale of
interests in real property owned by the licensee; or (2) the
licensee is acting in the capacity of principal in the purchase
of interests in real property to be owned by the licensee.
Under no circumstances shall a licensee be entitled to payment
under this section for the loss of a commission or similar fee.

For the purposes of this section, recovery is limited to
transactions where the property involved is intended for the
direct personal habitation or commercial use of the buyer.

Except for securities permitted to be sold by a licensee
pursuant to section 82.41, subdivision 8, for any action
commenced after July 1, 1993, recovery under this section is not
available where the buyer's participation is for investment
purposes only, and is limited to providing capital to fund the
transaction.

Sec. 4.

Minnesota Statutes 2004, section 144A.01,
subdivision 4, is amended to read:

Subd. 4.

Controlling person.

"Controlling person" means
any public body, governmental agency, business entity, officer,
nursing home administrator, or director whose responsibilities
include the direction of the management or policies of a nursing
home. "Controlling person" also means any person who, directly
or indirectly, beneficially owns any interest in:

(a) Any corporation, partnership or other business
association which is a controlling person;

(b) The land on which a nursing home is located;

(c) The structure in which a nursing home is located;

(d) Any mortgage, contract for deed, or other obligation
secured in whole or part by the land or structure comprising a
nursing home; or

(e) Any lease or sublease of the land, structure, or
facilities comprising a nursing home.

"Controlling person" does not include:

(a) A bank, savings bank, trust company, savings
association, credit union, industrial loan and thrift company,
investment banking firm, or insurance company unless the entity
directly or through a subsidiary operates a nursing home;

(b) An individual state official or state employee, or a
member or employee of the governing body of a political
subdivision of the state which operates one or more nursing
homes, unless the individual is also an officer or director of a
nursing home, receives any remuneration from a nursing home, or
owns any of the beneficial interests not excluded in this
subdivision;

(c) A natural person who is a member of a tax-exempt
organization under section 290.05, subdivision 1, clause (i),
unless the individual is also an officer or director of a
nursing home, or owns any of the beneficial interests not
excluded in this subdivision; and

(d) A natural person who owns less than five percent of the
outstanding common shares of a corporation:

(1) whose securities are exempt by virtue of section
deleted text begin 80A.15, subdivision 1, clause (f) deleted text end new text begin 80A.45(6) new text end ; or

(2) whose transactions are exempt by virtue of section
deleted text begin 80A.15, subdivision 2, clause (b) deleted text end new text begin 80A.46(7) new text end .

Sec. 5.

Minnesota Statutes 2004, section 245A.02,
subdivision 5a, is amended to read:

Subd. 5a.

Controlling individual.

"Controlling
individual" means a public body, governmental agency, business
entity, officer, owner, or managerial official whose
responsibilities include the direction of the management or
policies of a program. For purposes of this subdivision, owner
means an individual who has direct or indirect ownership
interest in a corporation, partnership, or other business
association issued a license under this chapter. For purposes
of this subdivision, managerial official means those individuals
who have the decision-making authority related to the operation
of the program, and the responsibility for the ongoing
management of or direction of the policies, services, or
employees of the program. Controlling individual does not
include:

(1) a bank, savings bank, trust company, savings
association, credit union, industrial loan and thrift company,
investment banking firm, or insurance company unless the entity
operates a program directly or through a subsidiary;

(2) an individual who is a state or federal official, or
state or federal employee, or a member or employee of the
governing body of a political subdivision of the state or
federal government that operates one or more programs, unless
the individual is also an officer, owner, or managerial official
of the program, receives remuneration from the program, or owns
any of the beneficial interests not excluded in this
subdivision;

(3) an individual who owns less than five percent of the
outstanding common shares of a corporation:

(i) whose securities are exempt under section deleted text begin 80A.15,
subdivision 1, clause (f) deleted text end new text begin 80A.45(6) new text end ; or

(ii) whose transactions are exempt under section deleted text begin 80A.15,
subdivision 2, clause (b) deleted text end new text begin 80A.46(2) new text end ; or

(4) an individual who is a member of an organization exempt
from taxation under section 290.05, unless the individual is
also an officer, owner, or managerial official of the program or
owns any of the beneficial interests not excluded in this
subdivision. This clause does not exclude from the definition
of controlling individual an organization that is exempt from
taxation.

Sec. 6.

Minnesota Statutes 2004, section 302A.011,
subdivision 26, is amended to read:

Subd. 26.

Security.

"Security" has the meaning given it
in section deleted text begin 80A.14, subdivision 18 deleted text end new text begin 80A.41(28) new text end .

Sec. 7.

Minnesota Statutes 2004, section 302A.251,
subdivision 4, is amended to read:

Subd. 4.

Elimination or limitation of liability.

A
director's personal liability to the corporation or its
shareholders for monetary damages for breach of fiduciary duty
as a director may be eliminated or limited in the articles. The
articles shall not eliminate or limit the liability of a
director:

(a) for any breach of the director's duty of loyalty to the
corporation or its shareholders;

(b) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law;

(c) under section 302A.559 or deleted text begin 80A.23 deleted text end new text begin 80A.76 new text end ;

(d) for any transaction from which the director derived an
improper personal benefit; or

(e) for any act or omission occurring prior to the date
when the provision in the articles eliminating or limiting
liability becomes effective.

Sec. 8.

Minnesota Statutes 2004, section 308A.505, is
amended to read:

308A.505 SUBJECT TO SECURITIES LAW.

Cooperatives are subject to the provisions of chapter 80A,
except as specifically provided in deleted text begin section 80A.15 deleted text end new text begin sections
80A.45 and 80A.46 new text end .

Sec. 9.

Minnesota Statutes 2004, section 308B.465,
subdivision 2, is amended to read:

Subd. 2.

Restrictions on liability limitation.

The
articles or bylaws may not eliminate or limit the liability of a
director:

(1) for a breach of the director's duty of loyalty to the
cooperative or its members;

(2) for acts or omissions that are not in good faith or
involve intentional misconduct or a knowing violation of law;

(3) for knowing violations of securities laws deleted text begin under section
80A.23 deleted text end or for illegal distributions;

(4) for a transaction from which the director derived an
improper personal benefit; or

(5) for an act or omission occurring before the date when
the provision in the articles or bylaws eliminating or limiting
liability becomes effective.

Sec. 10.

Minnesota Statutes 2004, section 322B.03,
subdivision 43, is amended to read:

Subd. 43.

Security.

"Security" has the meaning given it
in section deleted text begin 80A.14, subdivision 18 deleted text end new text begin 80A.41(28) new text end .

Sec. 11.

Minnesota Statutes 2004, section 322B.663,
subdivision 4, is amended to read:

Subd. 4.

Elimination or limitation of liability.

A
governor's personal liability to the limited liability company
or its members for monetary damages for breach of fiduciary duty
as a governor may be eliminated or limited in the articles of
organization or a member control agreement. Neither the
articles nor a member control agreement may eliminate or limit
the liability of a governor:

(1) for any breach of the governor's duty of loyalty to the
limited liability company or its members;

(2) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law;

(3) under section deleted text begin 80A.23 deleted text end new text begin 80A.76 new text end or 322B.56;

(4) for any transaction from which the governor derived an
improper personal benefit; or

(5) for any act or omission occurring before the date when
the provision in the articles of organization or a member
control agreement eliminating or limiting liability becomes
effective.

Sec. 12.

Minnesota Statutes 2004, section 356A.06,
subdivision 6, is amended to read:

Subd. 6.

Limited list of authorized investment
securities.

(a) Except to the extent otherwise authorized by
law, a covered pension plan may invest its assets only in
investment securities authorized by this subdivision if the plan
does not:

(1) have assets with a book value in excess of $1,000,000;

(2) use the services of an investment advisor registered
with the Securities and Exchange Commission in accordance with
the Investment Advisers Act of 1940, or deleted text begin licensed deleted text end new text begin registered new text end as
an investment advisor in accordance with sections deleted text begin 80A.04,
subdivision 4 deleted text end new text begin 80A.58 new text end , and deleted text begin 80A.14, subdivision 9 deleted text end new text begin 80A.59 new text end , for the
investment of at least 60 percent of its assets, calculated on
book value;

(3) use the services of the State Board of Investment for
the investment of at least 60 percent of its assets, calculated
on book value; or

(4) use a combination of the services of an investment
advisor meeting the requirements of clause (2) and the services
of the State Board of Investment for the investment of at least
75 percent of its assets, calculated on book value.

(b) Investment securities authorized for a pension plan
covered by this subdivision are:

(1) certificates of deposit issued, to the extent of
available insurance or collateralization, by a financial
institution that is a member of the Federal Deposit Insurance
Corporation or the Federal Savings and Loan Insurance
Corporation, is insured by the National Credit Union
Administration, or is authorized to do business in this state
and has deposited with the chief administrative officer of the
plan a sufficient amount of marketable securities as collateral
in accordance with section 118A.03;

(2) savings accounts, to the extent of available insurance,
with a financial institution that is a member of the Federal
Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation;

(3) governmental obligations, including bonds, notes,
bills, or other fixed obligations, issued by the United States,
an agency or instrumentality of the United States, an
organization established and regulated by an act of Congress or
by a state, state agency or instrumentality, municipality, or
other governmental or political subdivision that:

(i) for the obligation in question, issues an obligation
that equals or exceeds the stated investment yield of debt
securities not exempt from federal income taxation and of
comparable quality;

(ii) for an obligation that is a revenue bond, has been
completely self-supporting for the last five years; and

(iii) for an obligation other than a revenue bond, has
issued an obligation backed by the full faith and credit of the
applicable taxing jurisdiction and has not been in default on
the payment of principal or interest on the obligation in
question or any other nonrevenue bond obligation during the
preceding ten years;

(4) corporate obligations, including bonds, notes,
debentures, or other regularly issued and readily marketable
evidences of indebtedness issued by a corporation organized
under the laws of any state that during the preceding five years
has had on average annual net pretax earnings at least 50
percent greater than the annual interest charges and principal
payments on the total issued debt of the corporation during that
period and that, for the obligation in question, has issued an
obligation rated in one of the top three quality categories by
Moody's Investors Service, Incorporated, or Standard and Poor's
Corporation; and

(5) shares in an open-end investment company registered
under the federal Investment Company Act of 1940, if the
portfolio investments of the company are limited to investments
that meet the requirements of clauses (1) to (4).