SF 3175

2nd Engrossment - 89th Legislature (2015 - 2016) Posted on 05/21/2016 12:05pm

A bill for an act
relating to commerce; regulating bullion product dealers; amending Minnesota
Statutes 2014, sections 80G.01; 80G.02; 80G.03; 80G.04; 80G.05; 80G.06;
80G.07, subdivision 1; 80G.08; 80G.10; repealing Minnesota Statutes 2014,
section 80G.07, subdivision 2.

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

Section 1.

Minnesota Statutes 2014, section 80G.01, is amended to read:

80G.01 DEFINITIONS.

Subdivision 1.

Scope.

For purposes of this chapter, the following terms have the
meanings given to them in this section.

Subd. 2.

Bullion coin product.

"Bullion coin product" means any coin, round, bar,
or ingot containing more than one percent by weight of silver, gold, platinum, palladium,
or other precious metal.

Subd. 3.

Bullion coin Dealer.

(a) Subject to the exceptions in paragraph (b), a
"bullion coin dealer" means any person who buys, sells, solicits, or markets bullion coins
products or investments in bullion coins products to consumers and is either:

(1) is incorporated, registered, domiciled, or otherwise located in this state, or who;

(2) has a dealer representative located in this state; or

(3) does business with a consumer domiciled, residing, or otherwise located in this
state at a location in this state, or delivers or ships a bullion product or makes a payment to
a consumer at an address in this state, unless the transaction occurs when the consumer is
at a business location outside of this state.

(b) A bullion coin dealer does not include any of the following persons:

(1) a person who engages only in wholesale bullion coin product transactions with
bullion coin other persons who engage only in wholesale bullion product transactions or
with dealers who buy or sell at retail and are properly registered under this chapter;

(2) a person who engages only in transactions at occasional garage or yard sales
held at the seller's residence, farm auctions held at the seller's residence, or estate sales
held at the decedent's residence;

(3) a person who is properly registered pursuant to chapter 80A, or the federal
Securities Exchange Act of 1934 and rules promulgated thereunder as a securities broker
dealer or broker dealer agent;

(4) an auctioneer who auctions coins at auction bullion products on behalf of an
owner, if the auctioneer does not take title or ownership of the coins bullion products, or
the operator of an Internet Web site that allows users to offer the sale of coins bullion
products through that Web site, does not set the price, is not the seller of record, and does
not take possession of any coins bullion products to be offered;

(5) a person who engages only in transactions at occasional no more than 12 trade
shows per year in this state where the consumer is present and the transaction is made at
the trade show; or

(6) a federally or state-chartered bank, bank and trust, savings bank, savings
association, or credit union or any operating subsidiary of them.

Subd. 4.

Coin Dealer representative.

"Coin Dealer representative" means any
natural person acting as an employee, contractor, or agent of a bullion coin dealer and
who has interactions with consumers for the purpose of the buying, selling, solicitation,
or marketing of bullion coins products or investments in bullion coins products. This
term does not mean a natural person who has interactions with consumers solely for
administrative purposes.

Subd. 5.

Commissioner.

"Commissioner" means the commissioner of commerce.

Subd. 6.

Owner.

"Owner" means any person who has an ownership interest in a
bullion coin dealer, regardless of whether directly or indirectly, of more than ten percent
and who is actively engaged in the direction, management, oversight, or operation of the
bullion coin dealer or its business affairs.

Subd. 7.

Person.

"Person" has the same meaning given in section 325F.68,
subdivision 3.

Subd. 8.

Precious metal content.

"Precious metal content" means the quantity,
measured in grams or troy ounces, of gold, silver, platinum, palladium, or other precious
metal in a coin bullion product and the percentage that the precious metal constitutes of
the total weight of the coin bullion product.

Sec. 2.

Minnesota Statutes 2014, section 80G.02, is amended to read:

80G.02 REGISTRATION.

Subdivision 1.

Registration required.

Beginning July 1, 2014, It shall be is
unlawful for a bullion coin dealer or coin dealer representative to solicit, market, buy,
sell, or deliver bullion coins products or investments in bullion coins products to a
consumer without being registered by the commissioner as provided for in this chapter,
if the bullion coin dealer has engaged in a bullion coin transaction or transactions with
consumers during the 12-month period prior to July 1, 2014, that exceed $5,000 in
the aggregate, as determined by the transactions' sale prices. If a bullion coin dealer
was not required to be registered beginning on July 1, 2014, the bullion coin. A dealer
must submit an application to register itself and each of its coin dealer representatives
within 30 45 days of reaching $5,000 $25,000 in the aggregate of bullion coin product
transactions with consumers in any 12-month period prior to between July 1 and June 30
of any calendar year, as determined by the transactions' sale or purchase prices. Once a
bullion coin dealer is required to register itself and its coin dealer representatives, the
coin dealer must thereafter renew its registration and the registration of each of its coin
dealer representatives in accordance with this chapter, regardless of the aggregate annual
amount of transactions, unless the person ceases to be a bullion coin dealer. A coin dealer
representative may not buy, sell, solicit, or market bullion coins products or investments
in bullion coins products on behalf of a bullion coin dealer unless the dealer is properly
registered with the commissioner under this section.

Subd. 2.

Registration obligations.

Registrations issued or renewed by the
commissioner under this chapter shall expire on June 30 and must be renewed.

Subd. 3.

Registration application and renewal.

The application and renewal
forms shall include the following information, as applicable, which shall be considered by
the commissioner in determining whether to issue a registration and whether to thereafter
renew the registration:

(1) the name, assumed names, doing business as names, including caller
identification names, and business addresses of the bullion coin dealer, the name of
each owner and officer, and the name and primary work location of each coin dealer
representative. A bullion coin dealer who desires to carry on business in more than one
location shall identify each address where business is conducted;

(2) if a bullion coin dealer is doing business under any name other than the dealer's
legal name, documentation that the assumed name has been properly filed with the
secretary of state or appropriate government office;

(3) the dealer's primary telephone numbers, including cellular phone numbers
number, electronic mail addresses e-mail address, and Web site domain names name used
or intended to be used by the bullion coin dealer and its coin dealer representatives to
buy, sell, solicit, market, or deliver to consumers bullion coin products or investments
in bullion coin products;

(4) the disclosure of all criminal convictions by any court, including military courts,
within the last ten years, except those relating to misdemeanor traffic citations and
misdemeanor convictions involving driving under the influence, driving while intoxicated,
driving without a license, reckless driving, or driving with a suspended or revoked license,
and juvenile offenses, for the bullion coin dealer and each officer and owner of the bullion
coin dealer and for each of its coin dealer representatives;

(5) the disclosure of any civil judgments in favor of a government entity or
government entity orders entered, filed, or issued against the bullion coin dealer, its
officers and owners, or its coin dealer representatives within the last ten years for violation
of consumer protection laws or unfair trade practice laws or for failure to account to a
consumer for money or property received from the consumer;

(6) the disclosure of any settlement or other agreement with any government entity
within the last ten years resolving concerns that the bullion coin dealer, its officers and
owners, or its coin dealer representatives violated consumer protection or unfair trade
practice laws, or for failure to account to a consumer for money or property received
from the consumer; and

(7) the disclosure of any instance in which the bullion coin dealer, its officers and
owners, and its coin dealer representatives were at any time permanently or temporarily
prohibited by any court of competent jurisdiction or ordered to cease and desist as the
result of a government agency action from engaging in buying, selling, soliciting, or
marketing of bullion coin products or investments in bullion coin products. A bullion
coin dealer may rely on the screening process provided for in section 80G.05 and the
statements of its coin dealer representatives for the purposes of complying with the
disclosure requirements of this clause relating to coin dealer representatives, provided that
such reliance is reasonable, in good faith, and the bullion coin dealer has no knowledge of
information suggesting that the screening results or statement are inaccurate.

Subd. 4.

Notice of change in registration information.

A bullion coin dealer must
provide the commissioner written notice of a change in the dealer's name, assumed names,
doing business as names, business addresses, including all business addresses at which it or
its coin dealer representatives conduct business, owners, electronic mail e-mail addresses,
Web site domain names, or primary telephone numbers number used by it or its coin
dealer representatives to buy, sell, solicit, or market to consumers bullion coin products or
investments in bullion coin products no later than ten 30 days after the change occurs.

Subd. 5.

Registration fee.

(a) The fee for each registration under this chapter
shall be as follows:

(1) bullion coin dealers, $25; and

(2) coin dealer representatives, $10.

(b) The commissioner, based on the cost of processing registrations, may adjust the
registration fee on an annual basis as needed.

Sec. 3.

Minnesota Statutes 2014, section 80G.03, is amended to read:

80G.03 REGISTRATION DENIAL, NONRENEWAL, REVOCATION, AND
SUSPENSION.

Subdivision 1.

Authority.

The commissioner may, by order, suspend, revoke, or
refuse to issue or renew a bullion coin dealer or coin dealer representative registration for
any one or more of the following causes:

(1) providing incorrect, false, misleading, or incomplete information to the
commissioner or refusing to allow a reasonable inspection of information and documents
in the possession of the bullion coin dealer, coin dealer representative, or a third party or
to allow a reasonable inspection of premises;

(2) obtaining or attempting to obtain a registration through misrepresentation or fraud;

(3) having a bullion coin dealer or coin dealer representative registration or its
equivalent, including licensure under section 325F.73, denied, suspended, or revoked by
any locality within the state or other state, province, district, or territory;

(4) being permanently or temporarily enjoined by any court of competent jurisdiction
or being ordered to cease and desist by a government agency from engaging in or continuing
any conduct or practice involving the buying, selling, soliciting, or marketing of bullion
coins products, investments in bullion coins products, or precious metal to consumers;

(5) violating the provisions of this chapter or sections 45.027, 325D.43 to 325D.48,
325F.67, 325F.68 to 325F.69, 325F.694, and 325F.73 to 325F.744, or federal or state
taxation or labor law; or

(6) violating a subpoena or order of the commissioner or a court issued pursuant
to this chapter or sections 45.027, 325D.43 to 325D.48, 325F.67, 325F.68 to 325F.69,
325F.694, 325F.70, and 325F.73 to 325F.744.

Subd. 2.

Bullion coin Dealer responsibility for actions of coin dealer
representatives.

The commissioner may take action against a bullion coin dealer for
any violations of this chapter by its coin dealer representatives conducting activities on
behalf of or at the direction of the bullion coin dealer. The commissioner may also take
action against the coin dealer representative.

Subd. 3.

Other authority of the commissioner.

If a registration lapses, is
surrendered, withdrawn, terminated, or otherwise becomes ineffective, the commissioner
may institute a proceeding under this subdivision within two years after the registration
was last effective and enter a revocation order as of the last date on which the registration
was in effect, and impose a civil penalty as provided for in section 45.027, subdivision 6.

Subd. 4.

Effect of revocation.

A revocation of a registration prohibits the bullion
coin dealer or coin dealer representatives from making a new application for a registration
for at least two years from the effective date of the revocation.

Sec. 4.

Minnesota Statutes 2014, section 80G.04, is amended to read:

80G.04 CRIMINAL CONVICTIONS.

Subdivision 1.

Bullion coin Dealer registration precluded.

The commissioner
must deny an application for registration or renewal of a bullion coin dealer, or revoke such
registration, if the bullion coin dealer or its owners or officers have within the last ten years
been convicted in any court of any financial crime or other crime involving fraud or theft.

Subd. 2.

Coin Dealer representative registration precluded.

The commissioner
must deny an application for registration or renewal of a coin dealer representative, or
revoke such registration, if the coin dealer representative has within the last ten years been
convicted in any court of any financial crime or other crime involving fraud or theft.

Sec. 5.

Minnesota Statutes 2014, section 80G.05, is amended to read:

80G.05 SCREENING.

Subdivision 1.

Screening process required.

Each bullion coin dealer must
establish procedures to screen each of its owners and officers and each of its coin
dealer representatives prior to submitting the application to the commissioner for initial
registration and at each renewal. The results of such screenings shall be kept on file by the
dealer and, if requested by the commissioner, provided to the commissioner as part of the
initial registration and all renewal registrations if requested by the commissioner.

Subd. 2.

Initial screening.

The screening process for initial registration must be
done no more than 60 days before the submission of an application for registration. The
process must include a national criminal history record search, a judgment search, and a
county criminal history search for all counties where the owner, officer, or coin dealer
representative has resided within the immediately preceding ten years. Each bullion coin
dealer shall use a reputable, reliable, and accurate vendor authorized to do business in
Minnesota any state to conduct the background screening process on its owners, officers,
and coin dealer representatives.

Subd. 3.

Renewal screening.

The screening process for the renewal of a
registration must include a national criminal history record search, a judgment search, and
county criminal history search for all counties where the owner, officer, or coin dealer
representative has resided since satisfactorily completing the last screening process
conducted pursuant to this section. Screening for renewal of the owner, officer, and coin
dealer representative registrations must take place no more than 60 days before the
submission of an application for renewal of a registration.

Sec. 6.

Minnesota Statutes 2014, section 80G.06, is amended to read:

80G.06 SURETY BOND.

Subdivision 1.

Surety bond requirement.

Every bullion coin dealer shall maintain a
current, valid surety bond issued by a surety company admitted to do business in Minnesota
in an amount based on the transactions (purchases from and sales to consumers at retail)
during the 12-month period prior to registration, or renewal, whichever is applicable.

The amount of the surety bond shall be as specified in the table below:

Transaction Amount in Preceding 12-month Period	Surety Bond Required
$0 $25,000 to $200,000	$25,000
$200,000.01 to $500,000	$50,000
$500,000.01 to $1,000,000	$100,000
$1,000,000.01 to $2,000,000	$150,000
Over $2,000,000	$200,000

Subd. 2.

Action on bond permitted.

A consumer injured in money or property
by a bullion coin dealer's or coin dealer representative's failure to provide bullion coins
products that the consumer has paid for or failure to remit money or goods owed to the
consumer in connection with the consumer's sale of bullion coins products may file a
claim with the surety and if the claim is not paid, is authorized to bring an action based
on the bond and recover against the surety. The commissioner or attorney general may
also file a claim and bring an action on the bond and recover against the surety on behalf
of a consumer so injured.

Sec. 7.

Minnesota Statutes 2014, section 80G.07, subdivision 1, is amended to read:

Subdivision 1.

Sales practices.

No bullion coin dealer or coin dealer representative
shall:

(1) prior to a transaction regarding bullion coins products, or concurrent with the
delivery thereof, fail to provide to the consumer in writing an invoice, which, in a clear
and conspicuous manner, discloses the dealer's registration number, the Department of
Commerce's e-mail address and telephone number, the sale or purchase price and, the
precious metal content quantity of the bullion coins products involved in the transaction,
and specifically identifies and describes the bullion products. The written notice shall
also include the bullion coin dealer's registration identification information issued by the
commissioner, and the Department of Commerce's e-mail address and telephone number.
A copy of the written notice shall be provided to the consumer and a copy retained by the
bullion coin dealer, as well as their precious metal content, but only if it differs from the
precious metal content specified by a government mint issuing the product and struck on
the product, or if the product is not issued by a government mint;

(2) fail to investigate any consumer complaint and retain records of all consumer
complaints, the results of its investigations, and the dealer's response and resolution of
the complaint;

(3) fail to deliver by common carrier bullion coins products to a consumer within
the time agreed upon with the consumer or, if no such agreement exists, within 30 days
after the consumer has paid for the coins bullion products;

(3) (4) fail to pay a consumer for purchased bullion coins products within the time
agreed upon with the consumer or, if no such agreement exists, within 30 days after the
consumer has provided the coins bullion products;

(4) fail to provide a written invoice at the time of the transaction specifically
identifying and describing the bullion coins involved in the transaction, the quantity of
bullion coins involved in the transaction, and the bullion coins' sale or purchase price and
precious metal content. The written invoice shall include the bullion coin dealer registration
identification information issued by the commissioner, and the Department of Commerce's
e-mail address and telephone number. A copy of the transaction documentation shall be
provided to the consumer and a copy retained by the bullion coin dealer;

(5) misrepresent the delivery date of bullion coins products or payment for bullion
coins products, or the dealer or representative's professional qualifications, affiliations,
or registration;

(6) misrepresent any material aspect of a bullion coin product, including its
performance, efficacy, nature, investment value, central characteristics, liquidity, earnings
potential, or profitability;

(7) misrepresent the manner in which any bullion coins products a consumer
provides will be stored or otherwise handled once received;

(8) renegotiate the terms of a sale or purchase after receiving a consumer's payment
or bullion coins products without first obtaining the consumer's agreement to renegotiate
and offering the consumer the option to have the payment fully refunded or the entirety of
the bullion coins products returned;

(9) fail to respond within three business days to a consumer inquiry about the delivery
status of bullion coins products that the consumer has paid for but not yet received or the
status of a payment for bullion coins products that the consumer has already provided;

(10) telephone or solicit a consumer, or sell or provide the consumer's name to
any other bullion coin dealer or coin dealer representative, after the consumer requests
not to be contacted;

(11) violate a subpoena or order of the commissioner or a court;

(12) make any communication to a potential buyer or seller of bullion coins products
that misrepresents the relationship, if any, between the bullion coin dealer or coin dealer
representative and any government agency or mint;

(13) improperly withhold, misappropriate, or convert any money or properties
received in the course of buying, selling, soliciting, or marketing bullion coins products or
investments in bullion coins products to consumers;

(14) misrepresent the terms of an actual or proposed purchase or sale of bullion coins
products or investment in bullion coins products to a consumer; or

(15) violate any other federal, state, or local law or rule related to selling, purchasing,
soliciting, or marketing of bullion coin products, investments in bullion coin products,
or precious metals, or any federal, state, or local law related to fraudulent, coercive, or
dishonest practices, or federal, state, or local law related to taxation or labor standards.

Sec. 8.

Minnesota Statutes 2014, section 80G.08, is amended to read:

80G.08 CRIMINAL VIOLATION.

A person who conducts business as a bullion coin dealer or as a coin dealer
representative without having first registered with the commissioner as required in section
80G.02, subdivision 1, or who carries on such business after the revocation, suspension,
or expiration of a registration, or who violates section 80G.07, subdivision 1, clause (2)
or (3) or (4), is guilty of a misdemeanor.

Sec. 9.

Minnesota Statutes 2014, section 80G.10, is amended to read:

80G.10 INVESTIGATIONS AND CIVIL ENFORCEMENT.

Subdivision 1.

Civil action instituted by commissioner.

If the commissioner
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 commissioner 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.

Subd. 2.

Relief available.

In an action under this section and on a proper showing,
the court may:

(1) issue a permanent or temporary injunction, restraining order, or declaratory
judgment;

(2) order other appropriate or ancillary relief, which may include:

(i) an asset freeze, accounting, writ of attachment, writ of general or specific
execution, and appointment of a receiver or conservator, that may be the commissioner,
for the defendant or the defendant's assets;

(ii) ordering the commissioner 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;

(iii) imposing a civil penalty up to $10,000 for each violation; an order of rescission,
restitution, or disgorgement directed to a person that has engaged in an act, practice, or
course of business constituting a violation of this chapter or a rule adopted or order issued
under this chapter or the predecessor act; and

(iv) ordering the payment of prejudgment and postjudgment interest; or

(3) order such other relief as the court considers appropriate.

Subd. 3.

No bond required.

The commissioner may not be required to post a bond
in an action or proceeding under this chapter.

Subd. 4.

Commissioner authority.

(a) If the commissioner determines that a
person has engaged, is engaged, or is about to engage in an act, practice, or course of
conduct 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 conduct constituting a violation of this chapter or rule
adopted or order issued under this chapter the commissioner may:

(1) issue an order directing the person to cease and desist from engaging in the
act, practice, or conduct or to take other action necessary or appropriate to comply with
this chapter; or

(2) issue an order denying, suspending, revoking, or conditioning the registration of
the bullion coin dealer or coin dealer representative.

(b) Upon issuance of an order, the commissioner shall promptly serve each person
subject to the order with a copy of the order and a notice that the order has been
issued. The order must include a statement of the reasons for the order and whether the
commissioner will seek a civil penalty or costs of the investigation, and notice that the
person must within 30 days of being served with the order, request in writing a hearing
and that within 15 days after receipt of a written hearing request from the person, the
matter will be scheduled for a hearing. If a person subject to the order does not request a
hearing within 30 days after the date of service of the order, the order becomes final as to
that person by operation of law. If a hearing is requested, the commissioner, 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.

(c) If a hearing is requested pursuant to paragraph (b), a hearing must be held under
chapter 14 and a final order may not be issued unless the commissioner 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 paragraph (a).

(d) If a petition for judicial review of a final order is not filed in accordance with
chapter 14, the commissioner 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.

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

(f) In addition to the authority granted under this chapter, the commissioner has all
the authority provided under section 45.027 to ensure compliance with this chapter.

Sec. 10. REPEALER.

Minnesota Statutes 2014, section 80G.07, subdivision 2, is repealed.

Sec. 11. EFFECTIVE DATE.

Sections 1 to 10 are effective July 1, 2016.