2005 Minnesota Statutes

CHAPTER 80A. Regulation of securities

     80A.01 Sales and purchases.  

    It is unlawful for any person, in connection with the 
 offer, sale or purchase of any security, directly or indirectly: 

    (a) to employ any device, scheme, or artifice to defraud; 

    (b) to make any untrue statement of a material fact or to 
 omit to state material facts necessary in order to make the 
 statements made, in the light of the circumstances under which 
 they are made, not misleading; or 

    (c) to engage in any act, practice, or course of business 
 which operates or would operate as a fraud or deceit upon any 
 person.  

    HIST: 1973 c 451 s 1 

     80A.02 Prohibited activities. 

    Subdivision 1.    Advisory activities and principal 
 transactions.  (a) It is unlawful for any person who receives, 
 directly or indirectly, any consideration from another primarily 
 for advising the other as to the value of securities or their 
 purchase or sale: 

    (1)  to employ any device, scheme, or artifice to defraud 
 the other; or 

    (2) to engage in any act, practice, or course of business 
 which operates or would operate as a fraud or deceit upon the 
 other. 

    (b) It is unlawful for an investment adviser to knowingly 
 sell any security to or purchase any security from a client 
 while acting as principal for the person's own account or 
 knowingly effect any sale or purchase of any security for the 
 account of a client while acting as broker for one other than 
 the client, unless the person discloses to the client in writing 
 before the execution of the transaction the capacity in which 
 the person is acting and obtains the consent of the client to 
 the transaction. 

    Subd. 1a.    Solicitation activities.  In the 
 solicitation of advisory clients, it is unlawful for any person 
 to make any untrue statements of material facts, or, in light of 
 the circumstances under which they are made, to omit to state 
 material facts necessary in order to make the statements made 
 not misleading.  

    Subd. 2.    Contract activities.  It is unlawful for any 
 investment adviser to enter into, extend, or renew any 
 investment advisory contract the terms of which are in 
 contravention of rules the commissioner prescribes as necessary 
 or appropriate in the public interest or for the protection of 
 investors.  

    Subd. 3.    Activities as custodian of certain funds.  
 It is unlawful for any investment adviser to take or have 
 custody of any securities or funds of any client in 
 contravention of rules the commissioner prescribes as necessary 
 or appropriate in the public interest or for the protection of 
 investors.  

    HIST: 1973 c 451 s 2; 1983 c 284 s 1; 1986 c 444; 1997 c 222 s 
 9 

     80A.03 Unlawful activities.  

    It is unlawful for any person to effect any transaction in, 
 or to induce the purchase or sale of any security by means of 
 any manipulative, deceptive or other fraudulent device or 
 contrivance, including any fictitious quotation.  The terms 
 "manipulative, deceptive, or other fraudulent device or 
 contrivance" shall include, but shall not be limited to, the 
 following practices: 

    (a) effecting any transaction in a security which involves 
 no change in the beneficial ownership thereof, or entering any 
 order or orders for the purchase or sale of any security with 
 the knowledge that an order or orders of substantially the same 
 size, at substantially the same time, and at substantially the 
 same price, for the sale or purchase of the security, have been 
 or will be entered by or for the same or affiliated persons, for 
 the purpose of creating a false or misleading appearance of 
 active trading in the security or a false or misleading 
 appearance with respect to the market for the security; 

    (b) effecting, alone or with one or more other persons, a 
 series of transactions in any security creating actual or 
 apparent active trading in the security or raising or depressing 
 the price of the security, for the purpose of inducing the 
 purchase or sale of the security by others; or 

    (c) inducing the purchase or sale of any security by the 
 circulation or dissemination of information to the effect that 
 the price of the security will or is likely to rise or fall 
 because of market operations of any one or more persons 
 conducted for the purpose of raising or depressing the price of 
 the security, if the person circulating or disseminating the 
 information is selling or offering to sell or purchasing or 
 offering to purchase the security or is receiving a 
 consideration, directly or indirectly, from any person to whom 
 the information is circulated or disseminated. 

    HIST: 1973 c 451 s 3; 1986 c 444 

     80A.04 Licensing. 

    Subdivision 1.    Requirement.  It is unlawful for any person to 
 transact 
 business in this state as a broker-dealer or agent unless 
 licensed under this chapter.  

    Subd. 2.    Agent license.  It is unlawful for any broker-dealer 
 or issuer to 
 employ an agent as a representative in this state unless the 
 agent is licensed.  The licensing of an agent is not effective 
 during any period when the agent is not associated with a 
 specified broker-dealer licensed under this chapter or a 
 specified issuer.  No agent shall at any time represent more 
 than one broker-dealer or issuer, except that where 
 broker-dealers affiliated by direct common control are licensed 
 under this chapter, an agent may represent the broker-dealer.  
 When an agent begins or terminates employment with a 
 broker-dealer or issuer, or begins or terminates those 
 activities which make that person an agent, the agent as well as 
 the broker-dealer or issuer shall promptly notify the 
 commissioner or the commissioner's designated representative. 

    A broker-dealer or investment adviser is affiliated by 
 direct common control when 80 percent or more of the equity of 
 each broker-dealer or investment adviser is beneficially owned 
 by the same person or group of persons. 

    Subd. 3.    Investment adviser license.  It is unlawful for any 
 person to transact 
 business in this state as an investment adviser unless that 
 person is so licensed or licensed as a broker-dealer as 
 described in section 80A.14, subdivision 9, clause (3), or 
 unless:  (1) that person's only clients in this state are 
 investment companies as defined in the Investment Company Act of 
 1940, other investment advisers, broker-dealers, banks, trust 
 companies, savings associations, federal covered advisers 
 insurance companies, corporations with a class of equity 
 securities registered under section 12(b) or 12(g) of the 
 Securities Exchange Act of 1934, small business investment 
 companies, and government agencies or instrumentalities, whether 
 acting for themselves or as trustees with investment control, or 
 other institutional buyers; or (2) that person has no place of 
 business in this state and during the preceding 12-month period 
 has had fewer than six clients who are residents of this state. 

    Subd. 4.    Renewal.  Every license or notice filing expires on 
 December 31 of each year unless an application for renewal has 
 been received by the commissioner by November 15. 

    Subd. 5.    Federal covered adviser limitations.  Except with 
 respect to advisers whose only 
 clients are those described in subdivision 3, it is unlawful for 
 a federal covered adviser to conduct advisory business in this 
 state unless the person complies with section 80A.05, 
 subdivision 1a. 

    HIST: 1973 c 451 s 4; 1981 c 140 s 1; 1983 c 284 s 2,3; 1986 c 
 444; 1995 c 202 art 1 s 25; 1997 c 222 s 10-12; 3Sp1997 c 3 s 4; 
 2000 c 483 s 37,38 

     80A.041 Exemption. 

    A real estate broker or agent licensed under chapter 82 who 
 arranges for the sale of a contract for deed is exempt from the 
 license requirement of section 80A.04 if the real estate broker 
 or agent receives no compensation in addition to the brokerage 
 commission or fee and represents the seller, buyer, lessor, or 
 lessee in the sale, lease, or exchange of the subject property. 

    HIST: 1992 c 555 art 1 s 1 

     80A.05 Licensing procedure. 

    Subdivision 1.    Broker-dealer, agent, or investment 
 adviser.  A broker-dealer, agent, or investment adviser may 
 obtain an initial or renewal license by filing with the 
 commissioner or a designee an application together with a 
 consent to service of process pursuant to section 80A.27, 
 subdivision 7.  The application shall be on a form prescribed by 
 the commissioner and shall contain whatever information the 
 commissioner requires concerning such matters as the applicant's 
 form and place of organization, proposed method of doing 
 business and financial condition, the qualifications and 
 experience of the applicant, including, in the case of a 
 broker-dealer or investment adviser, the qualifications and 
 experience of any partner, officer, director or controlling 
 person, any injunction or administrative order or conviction of 
 a misdemeanor involving securities and any conviction of a 
 felony.  The commissioner may by order, with respect to any 
 particular application, require the submission of information 
 concerning any other matters which the commissioner determines 
 are relevant to the application.  The commissioner may by rule 
 or order require an applicant for an initial license to publish 
 an announcement of the application in one or more specified 
 newspapers published in this state. 

    If no denial order is in effect, no proceeding is pending 
 under section 80A.07, and all of the requirements of this 
 subdivision and subdivision 3 have been complied with, the 
 licensing becomes effective 30 days after an application is 
 filed.  The commissioner may by rule or order specify an earlier 
 effective date, and may by order defer the effective date until 
 30 days after the filing of any amendment.  

    An application that is incomplete will be considered 
 withdrawn if no activity occurs with respect to the application 
 for a period of 120 days.  Notwithstanding section 80A.28, 
 subdivision 1, paragraph (c), no part of the filing fee shall be 
 returned if a registration statement is withdrawn according to 
 this subdivision. 

    Subd. 1a.    Federal covered advisers.  Except with 
 respect to federal covered advisers whose only clients are those 
 described in section 80A.04, subdivision 3, clause (2), a 
 federal covered adviser shall file with the commissioner, before 
 acting as a federal covered adviser in this state, all documents 
 required by the commissioner that have been filed with the 
 Securities and Exchange Commission.  Notwithstanding any other 
 provision of this section, until October 10, 1999, the 
 commissioner may require the registration of any federal covered 
 investment adviser who has failed to promptly pay the fees 
 required by section 80A.28 after being notified in writing by 
 the commissioner of the nonpayment or underpayment of such 
 fees.  A person shall be considered to have promptly paid such 
 fees if the fees are remitted to the commissioner within 15 days 
 following the receipt of written notification from the 
 commissioner. 

    Subd. 2.    Successors.  A licensed broker-dealer or 
 investment adviser may file an application for licensing of a 
 successor, whether or not the successor is then in existence, 
 for the unexpired portion of the license.  There shall be no 
 filing fee.  

    Subd. 3.    Examination and training; rulemaking.  The 
 commissioner may by rule prescribe standards of qualification 
 with respect to training, experience and knowledge of the 
 securities business and provide for examinations, which may be 
 written or oral or both, to be taken by any class of or all 
 applicants, as well as persons who represent or will represent 
 an investment adviser, and the commissioner may by order require 
 an examination of a licensed broker-dealer, agent or investment 
 adviser for due cause.  

    Subd. 4.    Financial requirements; rulemaking.  The 
 commissioner may by rule require a minimum capital for 
 broker-dealers, subject to the limitations of section 15 of the 
 Securities Act of 1934, and establish minimum financial 
 requirements for investment advisers, subject to the limitations 
 of section 222 of the Investment Advisers Act of 1940 which may 
 include different requirements for those investment advisers who 
 maintain custody of clients' funds or securities or who have 
 discretionary authority over the funds or securities and those 
 investment advisers who do not. 

    Subd. 5.    Surety bonds; rulemaking.  The commissioner 
 may by rule require licensed broker-dealers, agents and 
 investment advisers who have custody of or discretionary 
 authority over client funds or securities, to post surety bonds 
 in amounts as the commissioner may prescribe subject to the 
 limitations of section 15 of the Securities Exchange Act of 1934 
 for broker-dealers and section 222 of the Investment Advisers 
 Act of 1940 for investment advisers and may by rule or order 
 determine their conditions.  Any appropriate deposit of cash or 
 securities shall be accepted in lieu of any bond so required.  
 No bond may be required of any broker-dealer whose net capital, 
 which may be defined by rule, exceeds the amounts required by 
 the commissioner.  Every bond shall provide for suit thereon by 
 any person who has a cause of action under section 80A.23 and, 
 if the commissioner by rule or order requires, by any person who 
 has a cause of action not arising under sections 80A.01 to 
 80A.31.  Every bond shall provide that no suit may be maintained 
 to enforce any liability on the bond unless brought within three 
 years after the sale or other act upon which it is based.  

    Subd. 6.    General authority of commissioner.  The 
 commissioner may by rule or order impose other conditions in 
 connection with the issuance of licenses under this chapter as 
 the commissioner deems appropriate in the public interest and 
 for the protection of investors.  

    HIST: 1973 c 451 s 5; 1981 c 140 s 2; 1986 c 444; 1996 c 439 
 art 2 s 2; 1997 c 222 s 13-15 

     80A.06 Postlicensing provisions. 

    Subdivision 1.    Record keeping.  Every licensed broker-dealer 
 and investment 
 adviser shall make and keep all accounts, correspondence, 
 memoranda, papers, books and other records which the 
 commissioner by rule prescribes by rule or order, except as 
 provided by section 15 of the Securities Act of 1934 in the case 
 of a broker-dealer and section 222 of the Investment Advisers 
 Act of 1940 in the case of an investment adviser.  All records 
 required shall be preserved for three years unless the 
 commissioner by rule prescribes otherwise for particular types 
 of records.  All required records shall be kept within the state 
 or shall, at the request of the commissioner, be made available 
 at any time for examination by the commissioner either in the 
 principal office of the licensee or by production of exact 
 copies thereof in this state. 

    Subd. 2.    Reports.  Every licensed broker-dealer and 
 investment 
 adviser shall file such reports as the commissioner by rule or 
 order prescribes except as provided in section 15 of the 
 Securities Exchange Act of 1934 in the case of a broker-dealer 
 and section 222 of the Investment Advisers Act of 1940 in the 
 case of an investment adviser.  

    Subd. 3.    Correcting amendments.  If the information contained 
 in any document 
 filed with the commissioner is or becomes inaccurate or 
 incomplete in any material respect, the licensee or federal 
 covered adviser shall within 30 days file a correcting amendment 
 unless notification of the correction has been given under 
 section 80A.04, subdivision 2.  

    Subd. 4.    Examinations.  The commissioner shall make periodic 
 examinations, within or without this state, of the business and 
 records of each licensed broker-dealer and investment adviser, 
 at such times and in such scope as the commissioner determines.  
 The examinations may be made without prior notice to the 
 broker-dealer or investment adviser.  For the purpose of 
 avoiding unnecessary duplication of examinations, the 
 commissioner, insofar as the commissioner deems it practicable 
 in administering this subdivision, may cooperate with securities 
 administrators of other states, the securities and exchange 
 commission, and any national securities exchange or national 
 securities association registered under the Securities Exchange 
 Act of 1934.  

    Subd. 5.    Remuneration and charges.  (a) Except as otherwise 
 provided in paragraph 
 (b), no investment adviser who shall recommend the purchase or 
 sale of a security to a client, and no licensed broker-dealer 
 acting as a broker-dealer for a customer in the purchase or sale 
 of a security shall take or accept any remuneration or other 
 thing of value from any person other than the client or customer 
 in connection with the purchase or sale unless, prior to or 
 contemporaneously with the recommendation in the case of an 
 investment adviser and prior to or contemporaneously with the 
 confirmation of the transaction in the case of a licensed 
 broker-dealer so acting, written disclosure to the client or 
 customer is made of the acceptance or intended acceptance of the 
 remuneration or other thing of value and of the amount of it.  
 All charges made by an investment adviser for services and all 
 charges by a licensed broker-dealer for services rendered as a 
 broker-dealer or for advice with respect to securities shall be 
 reasonable, and except in compliance with rules adopted by the 
 commissioner, no charges shall be based upon or measured by 
 profits accrued or to accrue from transactions recommended or 
 carried out by an investment adviser, or licensed 
 broker-dealer.  This subdivision shall not be construed to 
 prohibit charges by an investment adviser based upon the total 
 value of the assets under management averaged over a definite 
 period, or as of definite dates, or taken as of a definite date, 
 nor charges based upon the performance of the managed assets as 
 compared to an established index in compliance with rules 
 adopted by the commissioner.  

    (b) Disclosure of payment received by a licensed investment 
 advisor or licensed broker-dealer for directing order flow need 
 not comply with paragraph (a) if the disclosure is made in 
 compliance with rules governing disclosure of payments for 
 directing order flow adopted by the securities and exchange 
 commission. 

    HIST: 1973 c 451 s 6; 1986 c 444; 1987 c 336 s 9; 1995 c 148 s 
 1; 1996 c 439 art 2 s 3; 1997 c 222 s 16-18 

     80A.07 Denial, suspension, and revocation of licenses. 

    Subdivision 1.    General grounds.  The commissioner may 
 by order deny, suspend, or revoke any license or may censure the 
 licensee, if the commissioner finds (a) that the order is in the 
 public interest and (b) that the applicant or licensee or, in 
 the case of a broker-dealer or investment adviser, any partner, 
 officer, or director, any person occupying a similar status or 
 performing similar functions, or any person directly or 
 indirectly controlling the broker-dealer or investment adviser: 

    (1) has filed an application for license which as of its 
 effective date, or as of any date after filing in the case of an 
 order denying effectiveness, was incomplete in any material 
 respect or contained any statement which was, in light of the 
 circumstances under which it was made, false or misleading with 
 respect to any material fact; 

    (2) has willfully violated or failed to comply with any 
 provision of this chapter or a predecessor law or any provision 
 of the Securities Act of 1933, the Securities Exchange Act of 
 1934, the Investment Advisers Act of 1940, the Investment 
 Company Act of 1940, the Commodity Exchange Act, or any rule or 
 order under any of these statutes, of which that person has 
 notice and is subject; 

    (3) has been convicted, within the past ten years, of any 
 misdemeanor involving a security or any aspect of the securities 
 business, or any felony; 

    (4) is permanently or temporarily enjoined by any court of 
 competent jurisdiction from engaging in or continuing any 
 conduct or practice involving any aspect of the securities 
 business; 

    (5) is the subject of an order of the commissioner denying, 
 suspending, or revoking a license as a broker-dealer, agent or 
 investment adviser; 

    (6) is the subject of an order entered within the past five 
 years by the securities administrator of any other state or by 
 the Securities and Exchange Commission, or any national 
 securities exchange or national securities association 
 registered under the Securities Exchange Act of 1934, denying or 
 revoking registration or license as a broker-dealer, agent, or 
 investment adviser, or is the subject of an order of the 
 Securities and Exchange Commission or any national securities 
 exchange or national securities association registered under the 
 Securities Exchange Act of 1934, suspending, barring, or 
 expelling that person from a national securities exchange or 
 association registered under the Securities Exchange Act of 
 1934, or is the subject of a United States post office fraud 
 order.  The commissioner may not institute a revocation or 
 suspension proceeding under this clause more than one year from 
 the date of the order relied on, and may not enter an order 
 under this clause on the basis of an order under another state 
 law unless the order was based on facts which would currently 
 constitute a ground for an order under this section; 

    (7) has engaged in dishonest or fraudulent practices in the 
 securities business; 

    (8) has failed to maintain the minimum net capital or to 
 comply with the limitation on aggregate indebtedness which the 
 commissioner by rule prescribes; 

    (9) is not qualified on the basis of such factors as 
 training, experience, and knowledge of the securities business; 

    (10) has failed reasonably to supervise agents, investment 
 adviser representatives, or employees to assure their compliance 
 with this chapter; 

    (11) has failed to pay the proper filing fee, but the 
 commissioner shall vacate the order when the deficiency has been 
 corrected; 

    (12) has offered or sold securities in this state through 
 any unlicensed agent; 

    (13) has made any material misrepresentation to the 
 commissioner, or upon request reasonably made by the 
 commissioner, has withheld or concealed information from, or 
 refused to furnish information to, the commissioner; 

    (14) has failed to reasonably supervise agents, investment 
 adviser representatives, or employees if that person has assumed 
 or has been designated to carry out the supervisory procedures 
 of the broker-dealer or investment adviser; or 

    (15) has failed, within 20 business days after receiving 
 written instructions from a customer, to do any of the following:

    (a) transfer or deliver securities that have been 
 purchased; 

    (b) transfer or deliver any free credit balances reflecting 
 completed transactions; or 

    (c) transfer or deliver a customer's account securities 
 positions and balances to another broker-dealer. 

 This clause shall not serve as a basis for denial, suspension, 
 or revocation of a broker-dealer's or agent's license if:  (i) 
 the transfer or delivery is between broker-dealers and meets the 
 rules and requirements established by the New York Stock 
 Exchange with regard to the transfer or delivery; or (ii) the 
 delivery of securities to a customer cannot be accomplished 
 within 20 business days, and the broker-dealer or agent has 
 notified the customer in writing of the inability to deliver the 
 securities and the reasons for the nondelivery within 20 
 business days of receiving the customer's written instructions.  

    Subd. 1a.    Investment adviser representatives.  The 
 commissioner, by order, shall censure or place limitations on 
 the activities of any investment adviser representative or 
 person seeking to become an investment adviser representative, 
 or suspend or bar any person from being an investment adviser 
 representative, if the commissioner finds, after notice and 
 opportunity for hearing, that the censure, placing of 
 limitations, suspension, or bar is in the public interest and 
 that the person has committed or omitted any act or omission 
 enumerated in subdivision 1.  It shall be unlawful for any 
 person as to whom an order suspending or barring that person 
 from being an investment adviser representative is in effect 
 willfully to become, or to be, associated with an investment 
 adviser without the consent of the commissioner, and it shall be 
 unlawful for any investment adviser to permit this person to 
 become, or remain, an investment adviser representative without 
 the consent of the commissioner, if the investment adviser knew, 
 or in the exercise of reasonable care, should have known of the 
 order.  

    Subd. 2.    Limitation.  The commissioner may not 
 institute a suspension or revocation proceeding solely on the 
 basis of a fact or transaction known to the commissioner when 
 the initial license was issued unless the proceeding is 
 instituted within the next 30 days after the issuance of the 
 initial license. 

    Subd. 3.    Order to show cause.  The commissioner may 
 issue an order requiring a licensee or an applicant for a 
 license to show cause why the license should not be revoked or 
 the application denied.  The order shall be calculated to give 
 reasonable notice of the time and place for hearing thereon, and 
 shall state the reasons for the entry of the order.  The 
 commissioner may by order summarily suspend a license, or in the 
 case of an investment adviser representative or person seeking 
 to become an investment adviser representative, summarily 
 suspend or bar that person from acting in that capacity, pending 
 final determination of any order to show cause.  If a license is 
 suspended pending final determination of an order to show cause, 
 a hearing on the merits shall be held within 30 days of the 
 issuance of the order of suspension.  All hearings shall be 
 conducted in accordance with the provisions of chapter 14.  
 After the hearing, the commissioner shall enter an order making 
 a disposition of the matter as the facts require.  If the 
 licensee or applicant fails to appear at a hearing of which that 
 person has been duly notified, the person shall be deemed in 
 default and the proceeding may be determined against that person 
 upon consideration of the order to show cause, the allegations 
 of which may be deemed to be true.  The commissioner may adopt 
 rules of procedure concerning all proceedings conducted pursuant 
 to this subdivision. 

    Subd. 4.    Specific grounds.  If the commissioner finds 
 that any licensee or applicant is no longer in existence or has 
 ceased to do business as a broker-dealer, agent or investment 
 adviser, or is subject to an adjudication of mental incompetence 
 or to the control of a committee, conservator or guardian, or 
 cannot be located after reasonable search, the commissioner may 
 by order revoke the license or deny the application. 

    Subd. 5.    Withdrawals.  Withdrawal from the status of 
 a licensed broker-dealer, agent or investment adviser becomes 
 effective 30 days after receipt of an application to withdraw or 
 within such shorter period as the commissioner determines unless 
 a revocation or suspension proceeding is pending when the 
 application is filed or a proceeding to revoke or suspend or to 
 impose conditions upon the withdrawal is instituted within 30 
 days after the application is filed. If a proceeding is pending 
 or instituted, withdrawal becomes effective at such time and 
 upon such conditions as the commissioner by order determines.  
 If no proceeding is pending or instituted and withdrawal 
 automatically becomes effective, the commissioner may institute 
 a revocation or suspension proceeding under subdivision 1, 
 clause (b) within two years after withdrawal became effective 
 and enter a revocation or suspension order as of the last date 
 on which the license was in effect. 

    HIST: 1973 c 451 s 7; 1977 c 33 s 1; 1981 c 140 s 3; 1982 c 
 424 s 130; 1983 c 284 s 4-6; 1986 c 444; 1987 c 336 s 10; 1995 c 
 11 s 1; 2000 c 483 s 39 

     80A.08 Registration requirement. 

    It is unlawful for any person to offer or sell any security 
 in this state unless (a) it is registered under sections 80A.01 
 to 80A.31 or (b) the security or transaction is exempted under 
 section 80A.15 or (c) it is a federal covered security.  

    HIST: 1973 c 451 s 8; 1997 c 222 s 19 

     80A.09 Registration by notification. 

    Subdivision 1.    Authority.  The following securities 
 may be registered by notification:  any securities issued by a 
 person organized exclusively for social, religious, educational, 
 benevolent, fraternal, charitable, reformatory, athletic, 
 chamber of commerce, trade, industrial development, or 
 professional association purposes and not for pecuniary gain, 
 and no part of the net earnings of which inures to the benefit 
 of any private stockholder or individual; provided that no 
 securities issued by any person offering and furnishing a burial 
 service or funeral benefit, directly or indirectly for financial 
 consideration, may be registered under this section.  

    Subd. 2.    Contents.  A registration statement under 
 this section shall contain the consent to service of process 
 required by section 80A.27, subdivision 7, and such additional 
 information as the commissioner by rule or otherwise requires.  

    Subd. 3.    When effective.  If no stop order is in 
 effect, no proceeding is pending under section 80A.13, and no 
 order has been issued under subdivision 4, a registration 
 statement under this section automatically becomes effective at 
 5:00 in the afternoon on the fifth full business day after the 
 filing of the registration statement or the last amendment, or 
 at such earlier time as the commissioner by order determines.  

    Subd. 4.    Condition of registration.  The commissioner 
 may by order require that any security otherwise permitted to be 
 registered under this section be registered by qualification 
 under section 80A.11 if the commissioner determines that 
 registration by qualification is in the public interest and is 
 necessary for the protection of investors.  

    Subd. 5.    Withdrawal.  A registration statement that 
 is incomplete will be considered withdrawn if no activity occurs 
 with respect to the application for a period of 120 days.  
 Notwithstanding section 80A.28, subdivision 1, paragraph (c), no 
 part of the filing fee shall be returned if a registration 
 statement is withdrawn according to this subdivision. 

    HIST: 1973 c 451 s 9; 1983 c 284 s 7; 1985 c 210 art 1 s 2; 
 1986 c 444; 1987 c 336 s 11; 1996 c 439 art 2 s 4 

     80A.10 Registration by coordination. 

    Subdivision 1.    Authority.  Any 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.  

    Subd. 2.    Contents.  A registration statement under 
 this section shall contain the following information and be 
 accompanied by the following documents in addition to the 
 information specified in section 80A.12 and the consent to 
 service of process required by section 80A.27, subdivision 7: 

    (a) one copy of the latest form of prospectus filed under 
 the Securities Act of 1933; 

    (b) if the commissioner by rule or otherwise requires, a 
 copy of the articles of incorporation and bylaws (or their 
 substantial equivalent) currently in effect, a copy of any 
 agreements with or among underwriters, a copy of any indenture 
 or other instrument governing the issuance of the security to be 
 registered, and a specimen or copy of the security; 

    (c) if the commissioner requests, any other information, or 
 copies of any other documents, filed under the Securities Act of 
 1933; and 

    (d) an undertaking to forward all amendments to the federal 
 prospectus, other than an amendment which merely delays the 
 effective date of the registration statement, not later than the 
 first business day after the day they are forwarded to or filed 
 with the Securities and Exchange Commission or such longer 
 period as the commissioner permits.  

    Subd. 3.    When effective.  A registration statement 
 under this section automatically becomes effective at the moment 
 the federal registration statement becomes effective if all the 
 following conditions are satisfied:  (a) no stop order is in 
 effect and no proceeding is pending under section 80A.13; (b) 
 the registration statement has been on file with the 
 commissioner for at least 20 days; and (c) a statement of the 
 maximum proposed offering prices and the maximum underwriting 
 discounts and commissions has been on file for two full business 
 days or such shorter period as the commissioner permits by rule 
 or otherwise and the offering is made within those limitations.  
 The registrant shall promptly notify the commissioner by 
 telephone or telegram or similar electronic means of 
 communication of the date and time when the federal registration 
 statement became effective and the content of the price 
 amendment, if any, and shall promptly file an amendment 
 containing the information and documents in the price 
 amendment.  "Price amendment" means the final federal amendment 
 which 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.  Upon failure to receive the required 
 notification with respect to the price amendment, the 
 commissioner may enter a stop order, without notice or hearing, 
 retroactively denying effectiveness to the registration 
 statement or suspending its effectiveness until compliance with 
 this subsection, if the commissioner promptly notifies the 
 registrant by telephone or telegram or similar electronic means 
 of communication (and promptly confirms by letter or telegram 
 when the commissioner notifies by telephone) of the issuance of 
 the order.  If the registrant proves compliance with the 
 requirements of this subdivision as to notice and price 
 amendment, the stop order is void as of the time of its entry.  
 The commissioner may by rule or otherwise waive either or both 
 of the conditions specified in clauses (b) and (c).  If the 
 federal registration statement becomes effective before all the 
 conditions in this subdivision are satisfied and they are not 
 waived, the registration statement automatically becomes 
 effective as soon as all the conditions are satisfied.  If the 
 registrant advises the commissioner of the date when the federal 
 registration statement is expected to become effective, the 
 commissioner shall promptly advise the registrant by telephone 
 or telegram or similar electronic means of communication, at the 
 registrant's expense, whether all the conditions are satisfied 
 and whether the commissioner then contemplates the institution 
 of a proceeding under section 80A.13; but this advice by the 
 commissioner does not preclude the institution of such a 
 proceeding at any time.  

    Subd. 4.    Withdrawal.  A registration statement that 
 is pending effectiveness will be considered withdrawn if no 
 activity occurs with respect to the application for a period of 
 120 days.  Notwithstanding section 80A.28, subdivision 1, 
 paragraph (c), no part of the filing fee shall be returned if a 
 registration statement is withdrawn according to this 
 subdivision. 

    HIST: 1973 c 451 s 10; 1985 c 251 s 2; 1986 c 444; 1996 c 439 
 art 2 s 5; 2000 c 483 s 40 

     80A.11 Registration by qualification. 

    Subdivision 1.    Authority.  Any security may be 
 registered by qualification.  

    Subd. 2.    Contents.  A registration statement under 
 this section shall contain the information specified in section 
 80A.12 and the consent to service of process required by section 
 80A.27, subdivision 7, and shall contain such further 
 information and be accompanied by such further documents as the 
 commissioner by rule or otherwise requires.  

    Subd. 3.    When effective.  A registration statement 
 under this section becomes effective when the commissioner so 
 orders.  

    Subd. 4.    Condition of registration.  The commissioner 
 may by rule or order require as a condition of registration 
 under this section that a prospectus containing any designated 
 part of the information specified in subdivision 2 be sent or 
 given to each person to whom an offer is made before or 
 concurrently with (a) the first written offer made to that 
 person(otherwise than by means of a public advertisement) by or 
 for the account of the issuer or any other person on whose 
 behalf the offering is being made, or by any underwriter or 
 broker-dealer who is offering part of an unsold allotment or 
 subscription taken by that person as a participant in the 
 distribution, (b) the confirmation of any sale made by or for 
 the account of any such person, (c) payment pursuant to any such 
 sale, or (d) delivery of the security pursuant to any such sale, 
 whichever first occurs.  

    Subd. 5.    Withdrawal.  A registration statement that 
 is pending effectiveness will be considered withdrawn if no 
 activity occurs with respect to the application for a period of 
 120 days.  Notwithstanding section 80A.28, subdivision 1, 
 paragraph (c), no part of the filing fee shall be returned if a 
 registration statement is withdrawn according to this 
 subdivision. 

    HIST: 1973 c 451 s 11; 1986 c 444; 1996 c 439 art 2 s 6 

     80A.115 Small corporate offering registration. 

    Subdivision 1.    Filing requirements.  A security 
 meeting the conditions set forth in this section may be 
 registered by filing a small corporate offering registration 
 form otherwise known as a form U-7 adopted by the North American 
 Securities Administrators Association as a uniform state 
 securities registration form. 

    Subd. 2.    Availability.  Registration under this 
 section is available only to the issuer of the securities and 
 not to an affiliate of that issuer or to any other person for 
 resale of the issuer's securities.  The issuer must be a 
 corporation organized under the laws of one of the states or 
 possessions of the United States.  Registration under this 
 section is not available to any of the following issuers: 

    (1) an issuer that engages in or proposes to engage in the 
 business of petroleum exploration or production or mining or 
 other extractive industries; 

    (2) an investment company, including a mutual fund; 

    (3) an issuer subject to the reporting requirements of 
 section 13 or 15(d) of the Securities Exchange Act of 1934; 

    (4) a direct participation program; 

    (5) 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; and 

    (6) an issuer seeking to register a debt offering unless 
 the commissioner finds that the issuer has demonstrated a 
 reasonable ability to service the debt. 

    Subd. 3.    Disqualification.  (a) An issuer is 
 disqualified from registration under this section if the issuer 
 or any of its officers, directors, ten-percent stockholders, 
 promoters, or any selling agents of the securities to be 
 offered, or any officer, director, or partner of the selling 
 agent: 

    (1) 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; 

    (2) 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; 

    (3) 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; 

    (4) 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 

    (5) 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 this offer, 
 purchase, or sale of securities. 

    Clauses (1) to (4) 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.  

    (b) No person disqualified under this subdivision may act 
 in any capacity other than that for which the person is licensed 
 or registered.  A 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. 

    Subd. 4.    Conditions.  In order to register under this 
 section, all of the following conditions must be satisfied: 

    (1) the offering price for common stock and the exercise 
 price, if the securities offered are options, warrants, or 
 rights for common stock, and the conversion price if the 
 securities are convertible into common stock must be equal to or 
 greater than $1 per share; 

    (2) the aggregate offering price of the securities offered, 
 within or outside this state, may not exceed $1,000,000 less the 
 aggregate offering price of all securities sold within the 12 
 months before the start of and during the offering of the 
 securities under Securities and Exchange Commission Rule 504 in 
 reliance on an exemption under section 3(b) of the Securities 
 Act of 1933.  The issuer may not split its common stock, or 
 declare a stock dividend for two years after effectiveness of 
 the registration, except that in connection with a subsequent 
 public offering, the issuer may upon application and consent of 
 the commissioner take this action; 

    (3) unless an issuer or its predecessors have demonstrated 
 profitable operations for two of the three fiscal years prior to 
 registration, determined in accordance with generally accepted 
 accounting principles, after taxes and excluding extraordinary 
 items, the fair value of the equity investment, as defined by 
 the commissioner by rule, of such issuer shall be at least five 
 percent of the equity investment, as defined by the commissioner 
 by rule, that would result from the sale of all the securities 
 proposed to be offered; and 

    (4) the maximum quantity of cheap stock, as defined by the 
 commissioner by rule, allowable, expressed as a percentage of 
 the total number of shares to be outstanding after the proposed 
 offering, shall be determined by calculating the fair value of 
 equity investment as a percentage of equity investment in 
 accordance with the following formulations.  If the percentage 
 is 20 percent or less, the maximum quantity of cheap stock 
 allowable shall be 50 percent.  If the percentage is greater 
 than 20 percent, the maximum quantity of cheap stock allowable 
 shall be two times the percentage plus ten percent.  The maximum 
 quantity of cheap stock allowable shall not exceed 90 percent of 
 the total number of shares to be outstanding after the proposed 
 offering. 

    Subd. 5.    Contents of registration form.  The small 
 corporate offering registration form (form U-7) must comply with 
 and contain all exhibits required by the Instructions for Use of 
 Form U-7 as adopted by the North American Securities 
 Administrators Association.  The registration must include 
 financial statements prepared in accordance with generally 
 accepted accounting principles.  An issuer that has not 
 conducted significant operations shall provide statements of 
 receipts and disbursements in lieu of statements of income. 
 Interim financial statements may be unaudited.  All other 
 financial statements shall be audited by independent certified 
 public accountants.  Financial statements may be unaudited if 
 reviewed by independent certified public accountants in 
 accordance with the accounting and review service standards 
 promulgated by the American Institute of Certified Public 
 Accountants and: 

    (1) the issuer has not previously sold securities through 
 an offering involving the general solicitation of prospective 
 investors by means of advertising, mass mailings, public 
 meetings, cold call telephone solicitation, or any other method 
 directed toward the public; 

    (2) the issuer has not been previously required under 
 federal or state securities laws to provide audited financial 
 statements in connection with any sale of its securities; and 

    (3) the aggregate amount of all previous sales of 
 securities by the issuer, exclusive of debt financing with banks 
 and similar commercial lenders does not exceed $1,000,000. 

    Subd. 6.    Stop orders.  The commissioner may in the 
 commissioner's discretion issue a stop order for any of the 
 following additional reasons: 

    (1) the issuer's principal place of business is not in this 
 state or in North Dakota, South Dakota, Iowa, or Wisconsin; 

    (2) at least 50 percent of the issuer's full-time employees 
 are not located in this state or in North Dakota, South Dakota, 
 Iowa, or Wisconsin; or 

    (3) at least 80 percent of the net proceeds of the offering 
 are not going to be used in connection with the operations of 
 the issuer in this state or in North Dakota, South Dakota, Iowa, 
 or Wisconsin.  

    Subd. 7.    Suitability.  The commissioner may, in the 
 commissioner's discretion, require investors in a particular 
 offering to meet suitability standards relating to annual gross 
 income, net worth, or other factors to determine the suitability 
 of the investment for the investor. 

    Subd. 8.    Financial reporting requirements.  The 
 issuer shall deliver to investors on an annual basis financial 
 statements prepared in accordance with generally accepted 
 accounting principles. 

    Subd. 9.    Effective date.  If no stop order is in 
 effect and no proceeding is pending under section 80A.13, a 
 registration statement under this section becomes effective 
 automatically at 5:00 p.m. on the 20th full business day after 
 the filing of the registration statement or the last amendment 
 of it, or at such earlier time as the commissioner by order 
 determines. 

    HIST: 1997 c 197 s 1; 1999 c 103 s 1,2 

     80A.12 Provisions applicable to registration generally. 

    Subdivision 1.    Filing.  A registration statement may be filed 
 by 
 the issuer, any other person on whose behalf the offering is to 
 be made, or a licensed broker-dealer.  

    Subd. 2.    Contents.  Every registration statement shall 
 specify (a) 
 the amount of securities to be offered in this state; (b) the 
 states in which a registration statement or similar document in 
 connection with the offering has been or is to be filed; and (c) 
 any adverse order, judgment or decree entered in connection with 
 the offering by the regulatory authorities in each state or by 
 any court or the Securities and Exchange Commission.  

    Subd. 3.    Incorporations by reference.  Any document filed 
 under sections 80A.01 to 
 80A.31 or a predecessor act within three years preceding the 
 filing of a registration statement may be incorporated by 
 reference in the registration statement to the extent that the 
 document is currently accurate.  

    Subd. 4.    Permitted omissions.  The commissioner may by rule 
 or otherwise permit 
 the omission of any item of information or document from any 
 registration statement.  

    Subd. 5.    Conditions; registration by qualification or 
 coordination; escrow or impounding.  The commissioner may by rule or 
 order require as 
 a condition of registration by qualification or coordination (a) 
 that any security issued within the past three years or to be 
 issued to a promoter for a consideration substantially different 
 from the public offering price, or to any person for a 
 consideration other than cash, be deposited in escrow; and (b) 
 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 commissioner may by rule or order determine the 
 conditions of any escrow or impounding required hereunder, but 
 may reject a depository solely because of location in another 
 state only if the offering is not being registered under the 
 Securities Act of 1933 and the principal place of business of 
 the registrant is in this state.  

    Subd. 6.    Conditions; registration by qualification or 
 coordination; contract requirements.  The commissioner may by rule or 
 order require as 
 a condition of registration that any security registered by 
 qualification or coordination be sold only on a specified form 
 of subscription or sale contract, and that a signed or conformed 
 copy of each contract be filed with the commissioner or 
 preserved for any period up to three years specified in the rule 
 or order.  

    Subd. 7.    Effective date.  Every registration statement shall 
 be effective, 
 for the purpose of any nonissuer distribution until withdrawn, 
 suspended or revoked.  All outstanding securities of the same 
 class as a registered security are considered to be registered 
 for the purpose of any nonissuer transaction so long as the 
 registration statement is effective.  A registration statement 
 may not be withdrawn for one year from its effective date if any 
 securities of the same class are outstanding.  

    Subd. 8.    Periodic reports.  So long as a registration 
 statement is effective, 
 the commissioner may by rule or order require the person who 
 filed the registration statement to file reports, not more often 
 than quarterly, to keep reasonably current the information 
 contained in the registration statement, to disclose the 
 progress of the offering and the use of any proceeds received 
 therefrom, and to submit reports of sales.  The commissioner may 
 by rule or order require that the issuer distribute annual 
 reports to its shareholders.  

    Subd. 9.    Certain investment companies; amendments.  A 
 registration statement relating to a security 
 issued by a face amount certificate company or a redeemable 
 security issued by an open end management company or unit 
 investment trust, as those terms are defined in the Investment 
 Company Act of 1940, may be amended after its effective date so 
 as to increase the securities specified as proposed to be 
 offered.  Such an amendment becomes effective when the 
 commissioner so orders.  Every person filing such an amendment 
 shall pay a filing fee, calculated in the manner specified in 
 section 80A.28 with respect to the additional securities 
 proposed to be offered.  

    Subd. 10.    Annual report.  So long as a registration statement 
 is effective 
 the issuer shall file an annual report in such form as the 
 commissioner by rule prescribes.  Every annual report shall be 
 due on the 90th day following the end of the issuer's fiscal 
 year, unless extended in writing for good cause by the 
 commissioner.  Failure to file the annual report within 30 days 
 after its due date shall be deemed a request for withdrawal.  

    Subd. 11.    Withdrawal, suspension, or revocation notice.  
 Within 
 two business days after receipt of an 
 order of the commissioner withdrawing, suspending, or revoking 
 effectiveness of an issuer's registration statement, the issuer 
 must notify all persons making a market in the issuer's 
 securities of the termination of the effectiveness of the 
 registration statement.  Failure to provide this notice may 
 result in the imposition of a civil penalty not to exceed $2,000 
 per violation. 

    Subd. 12.    Coordinated registration.  The commissioner 
 may enter into cooperative and reciprocal agreements with 
 members of a national securities regulatory organization 
 composed of securities administrators of this and other states 
 to participate in a coordinated review of securities offerings 
 in lieu of conducting the commissioner's own review. 

    HIST: 1973 c 451 s 12; 1981 c 140 s 4; 1986 c 444; 1987 c 336 
 s 12; 1997 c 222 s 20 

     80A.122 Federal covered securities. 

    Subdivision 1.    18(b)(2) filings.  The commissioner 
 may, by rule or otherwise, require the filing of any or all of 
 the following documents with respect to a federal covered 
 security under section 18(b)(2) of the Securities Act of 1933: 

    (1) prior to the initial offer of a federal covered 
 security in this state, all documents that are part of a current 
 federal registration statement filed with the Securities and 
 Exchange Commission under the Securities Act of 1933, together 
 with a fee and a consent to service of process; 

    (2) after the initial offer of a federal covered security 
 in this state, all documents that are part of an amendment to a 
 current federal registration statement filed with the Securities 
 and Exchange Commission under the Securities Act of 1933, which 
 must be filed concurrently with the commissioner; 

    (3) notices that increase the aggregate amount of 
 securities offered or sold in this state, together with the fee. 

    Subd. 2.    18(b)(4)(d) filings.  With respect to a 
 security that is a federal covered security under section 
 18(b)(4)(D) of the Securities Act of 1933, the commissioner, by 
 rule or otherwise, may require the issuer to file a notice on 
 form D of the Securities and Exchange Commission, together with 
 a fee and a consent to service of process no later than 15 days 
 after the first sale of the covered security in this state. 

    Subd. 3.    18(b)(3) or (4) filings.  The commissioner, 
 by rule or otherwise, may require the filing of any document 
 filed with the Securities and Exchange Commission under the 
 Securities Act of 1933 with respect to a federal covered 
 security under section 18(b)(3) or (4) of the Securities Act of 
 1933 together with the fee. 

    Subd. 4.    Registration.  Notwithstanding any other 
 provision of this section, until October 10, 1999, the 
 commissioner may require registration of a federal covered 
 security for which the fees required by section 80A.28 have not 
 been promptly paid after the issuer of such securities has been 
 notified in writing by the commissioner of the nonpayment or 
 underpayment of such fees.  An issuer shall be considered to 
 have promptly paid such fees if the fees are remitted to the 
 commissioner within 15 days following the receipt of written 
 notification from the commissioner. 

    Subd. 4a.    Expiration.  (a) A filing made in 
 connection with the securities of an open-end investment company 
 under subdivision 1 expires the next June 30 unless renewed.  To 
 renew a notice filing, an issuer shall: 

    (1) before expiration of a current notice filing, file with 
 the commissioner the documents specified by the commissioner 
 under subdivision 1, clause (2), together with any fees required 
 by section 80A.28, subdivision 1, paragraph (c); and 

    (2) no later than September 1 following expiration, file a 
 sales report for the prior fiscal year with the commissioner 
 specifying: 

    (i) the registered sales; 

    (ii) the actual sales; and 

    (iii) the balance that could be sold without an additional 
 filing under section 80A.28, subdivision 1, paragraph (c). 

    (b) No portion of the unsold balance of shares indicated on 
 the issuer's sales report may be lawfully sold in this state in 
 connection with a renewed notice filing until fees have been 
 paid to renew the shares. 

    Subd. 5.    Stop orders.  The commissioner may issue a 
 stop order suspending the offer and sale of a federal covered 
 security, except a federal covered security under section 
 18(b)(1) of the Securities Act of 1933, if the commissioner 
 finds that:  (1) the order is in the public interest; and (2) 
 there is a failure to comply with any condition established 
 under this section. 

    Subd. 6.    Commissioner's waiver.  The commissioner 
 may, by rule or otherwise, waive any or all of the provisions of 
 this section. 

    HIST: 1997 c 222 s 21; 2000 c 488 art 2 s 3 

     80A.125 Prohibition; nonrecourse loans. 

    No part of the offering proceeds resulting from the sale of 
 bonds or similar interest-bearing securities issued by the 
 United States, any state, any political subdivision of any 
 state, or any corporate or other instrumentality of one or more 
 of those entities may be loaned to a person on a nonrecourse 
 basis.  This prohibition does not apply to bonds or similar 
 interest-bearing securities: 

    (1) exempt from registration under section 80A.15; 

    (2) rated in one of the top four letter rating categories 
 by Fitch Investors Service, Inc., Standard and Poor's 
 Corporation, or Moody's Investor Services, Inc.; or 

    (3) issued to provide housing facilities with respect to 
 which low income tax credits are to be obtained. 

    HIST: 1993 c 271 s 1 

     80A.13 Denial, suspension and revocation of registration.

    Subdivision 1.    Stop order.  The commissioner may issue a stop 
 order 
 denying effectiveness to, or suspending or revoking the 
 effectiveness of, any registration statement if the commissioner 
 finds (a) that the order is in the public interest and (b) that 

    (1) the registration statement as of its effective date or 
 as of any earlier date in the case of an order denying 
 effectiveness, or any amendment under section 80A.12, 
 subdivision 9, as of its effective date, or any report under 
 section 80A.12, subdivision 8, is incomplete in any material 
 respect or contains any statement which was, in the light of the 
 circumstances under which it was made, false or misleading with 
 respect to any material fact; 

    (2) any provision of sections 80A.01 to 80A.31 or any rule, 
 order, or condition lawfully imposed under sections 80A.01 to 
 80A.31 has been willfully violated in connection with the 
 offering, by (i) the person filing the registration statement, 
 (ii) the issuer, any partner, officer, or director of the 
 issuer, any person occupying a similar status or performing 
 similar functions, or any person directly or indirectly 
 controlling or controlled by the issuer, but only if the person 
 filing the registration statement is directly or indirectly 
 controlled by or acting for the issuer, or (iii) any 
 underwriter; 

    (3) the security registered or sought to be registered is 
 the subject of an administrative stop order or similar order or 
 a permanent or temporary injunction of any court of competent 
 jurisdiction entered under any other federal or state act 
 applicable to the offering; but (i) the commissioner may not 
 institute a proceeding against an effective registration 
 statement under this clause more than one year from the date of 
 the order or injunction relied on, and (ii) may not enter an 
 order under this clause on the basis of an order or injunction 
 entered under any other state act unless that order or 
 injunction was based on facts which would currently constitute a 
 ground for a stop order under this section; 

    (4) the issuer's enterprise or method of business includes 
 or would include activities which are illegal where performed; 

    (5) the offering has worked or tended to work a fraud upon 
 purchasers or would so operate; 

    (6) except with respect to securities which are being 
 registered by notification, the terms of the securities are 
 unfair and inequitable; provided, however, that the commissioner 
 may not determine that an offering is unfair and inequitable 
 solely on the grounds that the securities are to be sold at an 
 excessive price where the offering price has been determined by 
 arm's-length negotiation between nonaffiliated parties.  The 
 selling price of any security being sold by a broker-dealer 
 licensed in this state shall be presumed to have been determined 
 by arm's-length negotiation; 

    (7) when a security is sought to be registered by 
 coordination there has been a failure to comply with the 
 undertaking required by section 80A.10, subdivision 2, clause 
 (d); 

    (8) the applicant or registrant has failed to pay the 
 proper filing fee; but the commissioner may enter only a denial 
 order under this clause and shall vacate any such order when the 
 deficiency has been corrected; or 

    (9) the offering of securities sought to be registered is 
 not firmly underwritten and (i) the minimum amount of proceeds 
 from the sale of the securities is not more than $500,000, and 
 (ii) the maximum amount of proceeds is more than 200 percent of 
 the minimum amount of proceeds required to go forward with the 
 offering. 

    The commissioner may not institute a stop order proceeding 
 against an effective registration statement solely on the basis 
 of a fact or transaction known to the commissioner when the 
 registration statement became effective unless the proceeding is 
 instituted within the next 30 days.  

    Subd. 2.    Order to show cause.  The commissioner may issue an 
 order requiring the 
 person for whom a registration was made to show cause why the 
 registration should not be revoked.  The order shall be 
 calculated to give reasonable notice of the time and place for 
 hearing thereon, and shall state the reasons for the issuance of 
 the order.  The commissioner may by order summarily suspend a 
 registration pending final determination of any order to show 
 cause.  If the registration is suspended pending final 
 determination of an order to show cause, a hearing on the merits 
 shall be held within 30 days of the issuance of the order or 
 suspension.  All hearings shall be conducted in accordance with 
 the provisions of chapter 14.  After the hearing, the 
 commissioner shall enter an order making such disposition of the 
 matter as the facts require.  If the person for whom the 
 registration was made fails to appear at a hearing of which the 
 person has been duly notified, such person shall be deemed in 
 default and the proceeding may be determined against the person 
 upon consideration of the order to show cause, the allegations 
 of which may be deemed to be true.  The commissioner may adopt 
 rules of procedure concerning all proceedings conducted pursuant 
 to this subdivision.  

    HIST: 1973 c 451 s 13; 1982 c 424 s 130; 1985 c 251 s 3; 1986 
 c 358 s 3; 1986 c 444 

     80A.14 Definitions. 

    Subdivision 1.    Terms.  When used in sections 80A.01 
 to 80A.31, the terms defined in this section have the meanings 
 given them unless the context otherwise requires.  

    Subd. 2.    Affiliate.  "Affiliate" of another person 
 means any person directly or indirectly controlling, controlled 
 by, or under common control with the other person. 

    Subd. 3.    Agent.  "Agent" means any individual other 
 than a broker-dealer who represents a broker-dealer or issuer in 
 effecting or attempting to effect purchases or sales of 
 securities.  "Agent" does not include: 

    (a) an individual who represents an issuer in: 

    (1) effecting transactions in a security exempted by 
 section 80A.15, subdivision 1; 

    (2) effecting transactions exempted by section 80A.15, 
 subdivision 2; 

    (3) effecting transactions with existing employees, 
 partners or directors of the issuer if no commission or other 
 remuneration is paid or given directly or indirectly for 
 soliciting any person in this state; 

    (4) effecting other transactions, if the individual is an 
 officer or director of the issuer, no commission or other 
 remuneration is paid or given directly or indirectly for 
 soliciting any person in this state, and, upon application, the 
 individual is specifically authorized by name in an order issued 
 by the commissioner; 

    (5) effecting transactions in securities registered by 
 notification under section 80A.09 if no commission or other 
 remuneration is paid or given directly or indirectly for 
 soliciting any person in this state; or 

    (6) effecting transactions in a federal covered security as 
 described in sections 18(b)(3) and 18(b)(4) of the Securities 
 Act of 1933; or 

    (b) an individual who represents a broker-dealer in 
 effecting transactions in the state limited to those 
 transactions described in section 15(h)(2) of the Securities 
 Exchange Act of 1934. 

    A partner, officer or director of a broker-dealer or 
 issuer, or a person occupying a similar status or performing 
 similar functions, is an agent only if that person otherwise 
 comes within this definition. 

    Subd. 4.    Broker-dealer.  "Broker-dealer" means any 
 person engaged in the business of effecting transactions in 
 securities for the account of others or for that person's own 
 account. "Broker-dealer" does not include: 

    (1) an agent; 

    (2) an issuer; 

    (3) a trust company; or 

    (4) a bank, savings institution, savings association, 
 credit union: 

    (i) acting for the account of others, provided that such 
 activities are conducted in compliance with such rules as may be 
 adopted by the commissioner; 

    (ii) acting for its own account; or 

    (iii) acting in a fiduciary capacity pursuant to the powers 
 and privileges described by sections 48.36 to 48.49 or United 
 States Code, title 12, section 92(a); 

    (5) a person who has no place of business in this state if 
 that person effects transactions in this state exclusively with 
 or through (i) the issuers of the securities involved in the 
 transactions, (ii) other broker-dealers, or (iii) banks, savings 
 institutions, trust companies, insurance companies, investment 
 companies as defined in the Investment Company Act of 1940, or 
 other financial institutions or institutional buyers, or to 
 broker-dealers, whether the purchaser is acting for itself or in 
 some fiduciary capacity; or 

    (6) other persons not within the intent of this subsection 
 whom the commissioner by rule or order designates. 

    Subd. 5.    Commissioner.  "Commissioner" means the 
 commissioner of commerce. 

    Subd. 5a.    Federal covered adviser.  "Federal covered 
 adviser" means a person who is:  (1) registered under section 
 203 of the Investment Act of 1940; or (2) is excluded from the 
 definition of "investment adviser" under section 202(a)(11). 

    Subd. 5b.    Federal covered security.  "Federal covered 
 security" means a security that is a covered security under 
 section 18(b) of the Securities Act of 1933 or regulations 
 adopted under that act. 

    Subd. 6.    Fraud, deceit, defraud.  "Fraud," "deceit" 
 and "defraud" are not limited to common law deceit. 

    Subd. 7.    Guaranteed.  "Guaranteed" means guaranteed 
 as to payment of principal and interest or principal and 
 dividends. 

    Subd. 8. Repealed, 1996 c 439 art 2 s 18 

    Subd. 8a.    Institutional buyer.  For the purposes of 
 sections 80A.04, subdivision 3; 80A.14, subdivision 4, clause 
 (5); and 80A.15, subdivision 2, paragraph (g), "institutional 
 buyer" includes, but is not limited to, a corporation with a 
 class of equity securities registered under section 12(b) or 
 12(g) of the Securities Exchange Act of 1934, as amended, a 
 "qualified institutional buyer" within the meaning of rule 144A, 
 and an "accredited investor" within the meaning of rule 501(a) 
 of regulation D. 

    Subd. 9.    Investment adviser.  "Investment adviser" 
 means any person who, for compensation, engages in the business 
 of advising others, either directly or through publications, 
 writings or electronic means, as to the value of securities or 
 as to the advisability of investing in, purchasing, or selling 
 securities, or who, for compensation and as a part of a regular 
 business, issues or promulgates analyses or reports concerning 
 securities.  "Investment adviser" does not include: 

    (1) a bank, savings institution, credit union, or trust 
 company; 

    (2) a lawyer, accountant, engineer, or teacher whose 
 performance of these services is solely incidental to the 
 practice of that person's profession; 

    (3) a broker-dealer whose performance of these services is 
 solely incidental to the conduct of the business as a 
 broker-dealer and who receives no special compensation for them; 

    (4) a publisher of any newspaper, news column, newsletter, 
 news magazine, or business or financial publication or service, 
 whether communicated in hard copy form, or by electronic means, 
 or otherwise, that does not consist of the rendering of advice 
 on the basis of the specific investment situation of each 
 client; or 

    (5) other persons not within the intent of this subdivision 
 as the commissioner may by rule or order designate. 

    Subd. 9a.    Investment adviser representative.  
 "Investment adviser representative" means any partner, officer, 
 or director of an investment adviser, or any person performing 
 similar functions, or any person, directly or indirectly, 
 controlling or controlled by an investment adviser, including 
 any employee of an investment adviser who provides investment 
 advice to clients. 

    Subd. 10.    Investment metal.  "Investment metal" means 
 any object which contains gold, silver, platinum, indium, 
 chromium, or germanium, or any other metal which the 
 commissioner may specify by rule upon a showing that such other 
 metal is being purchased and sold by the public as an investment.

    Subd. 11.    Investment gem.  "Investment gem" means any 
 gem which the commissioner may specify by rule upon a showing 
 that the gem is being purchased and sold by the public as an 
 investment. 

    Subd. 12.    Investment metal contract.  (a) "Investment 
 metal contract" or "investment gem contract" means: 

    (i) a sale of an investment metal or investment gem in 
 which the seller or an affiliate of the seller retains 
 possession of the investment metal or investment gem; or 

    (ii) a contract of purchase or sale which provides for the 
 future delivery of an investment metal or investment gem, or any 
 option to purchase or option to sell such a contract; or 

    (iii) a sale of an investment metal or investment gem 
 pursuant to a contract known to the trade as a margin account, 
 margin contract, leverage account, or leverage contract. 

    (b) "Investment metal contract" or "investment gem contract"
 shall not include: 

    (i) the sale of an investment metal or investment gem where 
 the seller has reasonable grounds to believe that the investment 
 metal or investment gem is being acquired for manufacturing, 
 commercial or industrial purposes; or 

    (ii) the sale, or contract for the future purchase or sale, 
 of jewelry, art objects or other manufactured or crafted goods 
 other than bullion or bulk sales of coins; or 

    (iii) the sale of an investment metal or investment gem 
 where full payment is made to the seller, and delivery of the 
 investment metal or investment gem is made to the purchaser, or 
 to a bank, savings institution, trust company, broker-dealer, or 
 safe deposit company designated by the purchaser, within 20 days 
 of the date of purchase, if the bank, savings institution, trust 
 company, broker-dealer, or safe deposit company is located 
 within this state, and is, where required, licensed under the 
 laws of this state, provided that a safe deposit company 
 accepting such delivery may not be an affiliate of the seller; 
 or 

    (iv) any futures contracts traded on a commodities exchange 
 registered under the Federal Commodity Futures Trading 
 Commission Act of 1974. 

    Subd. 13.    Issuer.  "Issuer" means any person who 
 issues or proposes to issue any security and any promoter who 
 acts for an issuer to be formed, except: 

    (1) with respect to certificates of deposit or trust 
 certificates, issuer means the person performing the act and 
 assuming the duties of depositor, manager or trustee pursuant to 
 the provisions of the trust or other instrument under which the 
 security is issued; 

    (2) with respect to certificates of interest or 
 participation in oil, gas or mining rights, titles or leases, 
 issuer means the owner of any such right, title or lease, who 
 creates fractional interest therein for the purposes of sale. 

    Subd. 14.    Nonissuer.  "Nonissuer" means not directly 
 or indirectly for the benefit of the issuer or an affiliate of 
 the issuer. 

    Subd. 15.    Person.  "Person" means an individual, 
 corporation, a partnership, an association, a joint stock 
 company, a trust where the interests of the beneficiaries are 
 evidenced by a security, an unincorporated organization, a 
 government, a political subdivision of a government or any other 
 entity. 

    Subd. 16.    Purchasing for investment.  "Purchasing for 
 investment" means a purchase made for investment and not for the 
 purpose of resale.  In determining whether securities have been 
 purchased for investment, the length of the period for which the 
 securities are held will be one of the factors considered.  
 Securities held for two years after their purchase shall be 
 conclusively deemed to have been purchased for investment. 

    Subd. 17.    Sale, sell.  (1) "Sale" or "sell" includes 
 every contract of sale of, contract to sell, or disposition of, 
 a security or interest in a security for value. 

    (2) "Offer" or "offer to sell" includes every attempt or 
 offer to dispose of, or solicitation of an offer to buy, a 
 security or interest in a security for value. 

    (3) Any 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. 

    (4) A purported gift of assessable stock is considered to 
 involve an offer and sale. 

    (5) Every sale or offer of a warrant or right to purchase 
 or subscribe to another security of the same or another issuer, 
 as well as every sale or offer of a security which gives the 
 holder a present or future right or privilege to convert into 
 another security of the same or another issuer, is considered to 
 include an offer of the other security. 

    (6) The terms defined in this subdivision do not include 
 (i) any bona fide pledge or loans; (ii) any stock dividend, 
 whether the corporation or other entity distributing the 
 dividend is the issuer of the stock or not; or (iii) a dividend 
 on equity distributed by a cooperative organized under chapter 
 308B. 

    Subd. 18.    Security.  (a) "Security" means any note; 
 stock; treasury stock; bond; debenture; evidence of 
 indebtedness; certificate of interest or participation in any 
 profit sharing agreement; collateral trust certificate; 
 preorganization certificate or subscription; transferable 
 shares; investment contract; investment metal contract or 
 investment gem contract; voting trust certificate; certificate 
 of deposit for a security; certificate of interest or 
 participation in an oil, gas or mining right, title or lease or 
 in payments out of production under the right, title or lease; 
 or, in general, any interest or instrument commonly known as a 
 security, or any 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.  "Security" does not include:  

    (1) any insurance or endowment policy or annuity contract 
 under which an insurance company promises to pay money either in 
 a lump sum or periodically for life or for some other specified 
 period; or 

    (2) stock of a closely held corporation offered or sold 
 pursuant to a transaction in which 100 percent of the stock of 
 that corporation is sold as a means to effect the sale of the 
 business of the corporation if the transaction has been 
 negotiated on behalf of all purchasers, and if all purchasers 
 have access to inside information regarding the corporation 
 before consummating the transaction. 

    (b) A security that is offered and sold pursuant to section 
 4(5) of the Securities Act of 1933 or that is a "mortgage 
 related security" (as defined in section 3(a)(41) of the 
 Securities Exchange Act of 1934) is not a security exempt from 
 registration under section 80A.15, subdivision 1, paragraph (a), 
 in the same manner as obligations issued or guaranteed as to 
 principal and interest by the United States or its agencies or 
 instrumentalities.  This provision specifically overrides the 
 preemption of state law contained in section 106(c) of the 
 Secondary Mortgage Market Enhancement Act of 1984, Public Law 
 98-440. 

    Subd. 19.    State.  "State" means any state, territory 
 or possession of the United States, the District of Columbia and 
 Puerto Rico.  

    Subd. 20.    Qualified charity.  "Qualified charity" 
 means an organization that is described in section 501(c)(3) of 
 the Internal Revenue Code and that is not a private foundation 
 as described in section 509 of the Internal Revenue Code.  

    Subd. 21.    Internal Revenue Code.  "Internal Revenue 
 Code" means the Internal Revenue Code of 1986, as amended, 
 United States Code, title 26, section 1 et seq.  

    Subd. 22.    Pooled income fund.  "Pooled income fund" 
 means a trust that meets the requirements of a pooled income 
 fund as defined in section 642(C)(5) of the Internal Revenue 
 Code, provided that the remainder beneficiary is a qualified 
 charity. 

    Subd. 23.    Charitable remainder trust.  "Charitable 
 remainder trust" means a trust that meets the requirements of 
 either a charitable remainder annuity trust or a charitable 
 remainder unitrust as defined in section 664 of the Internal 
 Revenue Code, provided that the remainder beneficiary is a 
 qualified charity. 

    Subd. 24.    Charitable lead trust.  "Charitable lead 
 trust" means a trust that meets the requirements of a charitable 
 lead trust as described in section 170(F)(2) of the Internal 
 Revenue Code, provided that the lead beneficiary is a qualified 
 charity. 

    Subd. 25.    Charitable gift annuity.  "Charitable gift 
 annuity" means an annuity that meets the requirements of a 
 charitable gift annuity as defined in section 501(m)(5) of the 
 Internal Revenue Code. 

    HIST: 1973 c 451 s 14; 1975 c 371 s 1; 1980 c 516 s 2; 1981 c 
 140 s 5; 1983 c 284 s 8-10; 1983 c 289 s 114 subd 1; 1984 c 552 
 s 4; 1984 c 655 art 1 s 92; 1985 c 248 s 70; 1986 c 358 s 4; 
 1986 c 444; 1987 c 336 s 13; 1989 c 209 art 1 s 8; 1993 c 257 s 
 39,40; 1995 c 11 s 2; 1995 c 202 art 1 s 25; 1996 c 439 art 2 s 
 7-12; 1997 c 222 s 22-26; 2003 c 105 art 2 s 1 

     80A.15 Exemptions. 

    Subdivision 1.    Securities exempted.  The following 
 securities are exempted from sections 80A.08 and 80A.16: 

    (a) Any security, including a revenue obligation, issued or 
 guaranteed by the United States, any state, any political 
 subdivision of a state, or any agency or corporate or other 
 instrumentality of one or more of the foregoing; but this 
 exemption does not apply to a security issued by any of the 
 foregoing that is payable solely from payments to be received in 
 respect of property or money used under a lease, sale, or loan 
 arrangement by or for a nongovernmental industrial or commercial 
 enterprise.  Pursuant to section 106(c) of the Secondary 
 Mortgage Market Enhancement Act of 1984, Public Law 98-440, this 
 exemption does not apply to a security that is offered or sold 
 pursuant to section 106(a)(1) or (2) of that act. 

    (b) Any security issued or guaranteed by Canada, any 
 Canadian province, any political subdivision of any province, 
 any agency or corporate or other instrumentality of one or more 
 of the foregoing, if the security is recognized as a valid 
 obligation by the issuer or guarantor; but this exemption shall 
 not include any revenue obligation payable solely from payments 
 to be made in respect of property or money used under a lease, 
 sale or loan arrangement by or for a nongovernmental industrial 
 or commercial enterprise. 

    (c) Any security issued by and representing an interest in 
 or a debt of, or guaranteed by, any bank organized under the 
 laws of the United States, or any bank, savings institution or 
 trust company organized under the laws of any state and subject 
 to regulation in respect of the issuance or guarantee of its 
 securities by a governmental authority of that state. 

    (d) Any security issued by and representing an interest in 
 or a debt of, or guaranteed by, any federal savings association, 
 or any savings association or similar association organized 
 under the laws of any state and authorized to do business in 
 this state. 

    (e) Any security issued or guaranteed by any federal credit 
 union or any credit union, or similar association organized and 
 supervised under the laws of this state. 

    (f) Any security listed or approved for listing upon notice 
 of issuance on the New York Stock Exchange, the American Stock 
 Exchange, the Midwest Stock Exchange, the Pacific Stock 
 Exchange, or the Chicago Board Options Exchange; any other 
 security of the same issuer which is of senior or substantially 
 equal rank; any security called for by subscription rights or 
 warrants so listed or approved; or any warrant or right to 
 purchase or subscribe to any of the foregoing.  This exemption 
 does not apply to second tier listings on any of the exchanges 
 in this paragraph. 

    (g) Any commercial paper which arises out of a current 
 transaction or the proceeds of which have been or are to be used 
 for current transactions, and which evidences an obligation to 
 pay cash within nine months of the date of issuance, exclusive 
 of days of grace, or any renewal of the paper which is likewise 
 limited, or any guarantee of the paper or of any renewal which 
 are not advertised for sale to the general public in newspapers 
 or other publications of general circulation or otherwise, or by 
 radio, television or direct mailing. 

    (h) Any interest in any employee's savings, stock purchase, 
 pension, profit sharing or similar benefit plan, or a 
 self-employed person's retirement plan. 

    (i) Any security issued or guaranteed by any railroad, 
 other common carrier or public utility which is subject to 
 regulation in respect to the issuance or guarantee of its 
 securities by a governmental authority of the United States. 

    (j) Any interest in a common trust fund or similar fund 
 maintained by a state bank or trust company organized and 
 operating under the laws of Minnesota, or a national bank 
 wherever located, for the collective investment and reinvestment 
 of funds contributed thereto by the bank or trust company in its 
 capacity as trustee, executor, administrator, or guardian; and 
 any interest in a collective investment fund or similar fund 
 maintained by the bank or trust company, or in a separate 
 account maintained by an insurance company, for the collective 
 investment and reinvestment of funds contributed thereto by the 
 bank, trust company or insurance company in its capacity as 
 trustee or agent, which interest is issued in connection with an 
 employee's savings, pension, profit sharing or similar benefit 
 plan, or a self-employed person's retirement plan. 

    (k) Any security which meets all of the following 
 conditions: 

    (1) If the issuer is not organized under the laws of the 
 United States or a state, it has appointed a duly authorized 
 agent in the United States for service of process and has set 
 forth the name and address of the agent in its prospectus; 

    (2) A class of the issuer's securities is required to be 
 and is registered under section 12 of the Securities Exchange 
 Act of 1934, and has been so registered for the three years 
 immediately preceding the offering date; 

    (3) Neither the issuer nor a significant subsidiary has had 
 a material default during the last seven years, or for the 
 period of the issuer's existence if less than seven years, in 
 the payment of (i) principal, interest, dividend, or sinking 
 fund installment on preferred stock or indebtedness for borrowed 
 money, or (ii) rentals under leases with terms of three years or 
 more; 

    (4) The issuer has had consolidated net income, before 
 extraordinary items and the cumulative effect of accounting 
 changes, of at least $1,000,000 in four of its last five fiscal 
 years including its last fiscal year; and if the offering is of 
 interest bearing securities, has had for its last fiscal year, 
 net income, before deduction for income taxes and depreciation, 
 of at least 1-1/2 times the issuer's annual interest expense, 
 giving effect to the proposed offering and the intended use of 
 the proceeds.  For the purposes of this clause "last fiscal 
 year" means the most recent year for which audited financial 
 statements are available, provided that such statements cover a 
 fiscal period ended not more than 15 months from the 
 commencement of the offering; 

    (5) If the offering is of stock or shares other than 
 preferred stock or shares, the securities have voting rights and 
 the rights include (i) the right to have at least as many votes 
 per share, and (ii) the right to vote on at least as many 
 general corporate decisions, as each of the issuer's outstanding 
 classes of stock or shares, except as otherwise required by law; 
 and 

    (6) If the offering is of stock or shares, other than 
 preferred stock or shares, the securities are owned beneficially 
 or of record, on any date within six months prior to the 
 commencement of the offering, by at least 1,200 persons, and on 
 that date there are at least 750,000 such shares outstanding 
 with an aggregate market value, based on the average bid price 
 for that day, of at least $3,750,000.  In connection with the 
 determination of the number of persons who are beneficial owners 
 of the stock or shares of an issuer, the issuer or broker-dealer 
 may rely in good faith for the purposes of this clause upon 
 written information furnished by the record owners. 

    (l) Any certificate of indebtedness sold or issued for 
 investment, other than a certificate of indebtedness pledged as 
 a security for a loan made contemporaneously therewith, and any 
 savings account or savings deposit issued, by an industrial loan 
 and thrift company. 

    (m) Any security designated or approved for designation 
 upon notice of issuance on the NASDAQ/National Market System; 
 any other security of the same issuer that is of senior or 
 substantially equal rank; any security called for by 
 subscription rights or warrants so designated or approved; or 
 any warrant or right to purchase or subscribe to any of the 
 securities referred to in this paragraph; provided that the 
 National Market System provides the commissioner with notice of 
 any material change in its designation requirements.  The 
 commissioner may revoke this exemption if the commissioner 
 determines that the designation requirements are not enforced or 
 are amended in a manner that lessens protection to investors. 

    Subd. 2.    Transactions exempted.  The following 
 transactions are exempted from sections 80A.08 and 80A.16: 

    (a) Any sales, whether or not effected through a 
 broker-dealer, provided that: 

    (1) no person shall make more than ten sales of securities 
 in Minnesota of the same issuer pursuant to this exemption, 
 exclusive of sales according to clause (2), during any period of 
 12 consecutive months; provided further, that in the case of 
 sales by an issuer, except sales of securities registered under 
 the Securities Act of 1933 or exempted by section 3(b) of that 
 act, (i) the seller reasonably believes that all buyers are 
 purchasing for investment, and (ii) the securities are not 
 advertised for sale to the general public in newspapers or other 
 publications of general circulation or otherwise, or by radio, 
 television, electronic means or similar communications media, or 
 through a program of general solicitation by means of mail or 
 telephone; or 

    (2) no issuer shall make more than 25 sales of its 
 securities in Minnesota according to this exemption, exclusive 
 of sales pursuant to clause (1), during any period of 12 
 consecutive months; provided further, that the issuer meets the 
 conditions in clause (1) and, in addition meets the following 
 additional conditions:  (i) files with the commissioner, ten 
 days before a sale according to this clause, a statement of 
 issuer on a form prescribed by the commissioner; and (ii) no 
 commission or other remuneration is paid or given directly or 
 indirectly for soliciting any prospective buyers in this state 
 in connection with a sale according to this clause except 
 reasonable and customary commissions paid by the issuer to a 
 broker-dealer licensed under this chapter. 

    (b) Any nonissuer distribution of an outstanding security 
 if (1) either Moody's, Fitch's, or Standard &> Poor's Securities 
 Manuals, or other recognized manuals approved by the 
 commissioner contains the names of the issuer's officers and 
 directors, a balance sheet of the issuer as of a date not more 
 than 18 months prior to the date of the sale, and a profit and 
 loss statement for the fiscal year preceding the date of the 
 balance sheet, and (2) the issuer or its predecessor has been in 
 active, continuous business operation for the five-year period 
 next preceding the date of sale, and (3) if the security has a 
 fixed maturity or fixed interest or dividend provision, the 
 issuer has not, within the three preceding fiscal years, 
 defaulted in payment of principal, interest, or dividends on the 
 securities. 

    (c) The execution of any orders by a licensed broker-dealer 
 for the purchase or sale of any security, pursuant to an 
 unsolicited offer to purchase or sell; provided that the 
 broker-dealer acts as agent for the purchaser or seller, and has 
 no direct material interest in the sale or distribution of the 
 security, receives no commission, profit, or other compensation 
 from any source other than the purchaser and seller and delivers 
 to the purchaser and seller written confirmation of the 
 transaction which clearly itemizes the commission, or other 
 compensation. 

    (d) Any nonissuer sale of notes or bonds secured by a 
 mortgage lien if the entire mortgage, together with all notes or 
 bonds secured thereby, is sold to a single purchaser at a single 
 sale. 

    (e) Any judicial sale, exchange, or issuance of securities 
 made pursuant to an order of a court of competent jurisdiction. 

    (f) The sale, by a pledge holder, of a security pledged in 
 good faith as collateral for a bona fide debt. 

    (g) Any offer or sale to a bank, savings institution, trust 
 company, insurance company, investment company as defined in the 
 Investment Company Act of 1940, or other financial institution 
 or institutional buyer, or to a broker-dealer, whether the 
 purchaser is acting for itself or in some fiduciary capacity. 

    (h) An offer or sale of securities by an issuer made in 
 reliance on the exemptions provided by Rule 505 or 506 of 
 Regulation D promulgated by the Securities and Exchange 
 Commission, Code of Federal Regulations, title 17, sections 
 230.501 to 230.508, subject to the conditions and definitions 
 provided by Rules 501 to 503 of Regulation D, if the offer and 
 sale also satisfies the conditions and limitations in clauses 
 (1) to (10). 

    (1) The exemption under this paragraph is not available for 
 the securities of an issuer if any of the persons described in 
 Rule 252(c) to (f) of Regulation A promulgated by the Securities 
 and Exchange Commission, Code of Federal Regulations, title 17, 
 sections 230.251 to 230.263:  

    (i) has filed a registration statement that is the subject 
 of a currently effective order entered against the issuer, its 
 officers, directors, general partners, controlling persons, or 
 affiliates, according to any state's law within five years 
 before the filing of the notice required under clause (5), 
 denying effectiveness to, or suspending or revoking the 
 effectiveness of, the registration statement; 

    (ii) has been convicted, within five years before the 
 filing of the notice required under clause (5), of a felony or 
 misdemeanor in connection with the offer, sale, or purchase of a 
 security or franchise, or a felony involving fraud or deceit, 
 including but not limited to forgery, embezzlement, obtaining 
 money under false pretenses, larceny, or conspiracy to defraud; 

    (iii) is subject to an effective administrative order or 
 judgment entered by a state securities administrator within five 
 years before the filing of the notice required under clause (5), 
 that prohibits, denies, or revokes the use of an exemption from 
 securities registration, that prohibits the transaction of 
 business by the person as a broker-dealer or agent, that is 
 based on fraud, deceit, an untrue statement of a material fact, 
 or an omission to state a material fact; or 

    (iv) is subject to an order, judgment, or decree of a court 
 entered within five years before the filing of the notice 
 required under clause (5), temporarily, preliminarily, or 
 permanently restraining or enjoining the person from engaging in 
 or continuing any conduct or practice in connection with the 
 offer, sale, or purchase of a security, or the making of a false 
 filing with a state. 

    A disqualification under paragraph (h) involving a 
 broker-dealer or agent is waived if the broker-dealer or agent 
 is or continues to be licensed in the state in which the 
 administrative order or judgment was entered against the person 
 or if the broker-dealer or agent is or continues to be licensed 
 in this state as a broker-dealer or agent after notifying the 
 commissioner of the act or event causing disqualification. 

    The commissioner may waive a disqualification under 
 paragraph (h) upon a showing of good cause that it is not 
 necessary under the circumstances that use of the exemption be 
 denied. 

    A disqualification under paragraph (h) may be waived if the 
 state securities administrator or agency of the state that 
 created the basis for disqualification has determined, upon a 
 showing of good cause, that it is not necessary under the 
 circumstances that an exemption from registration of securities 
 under the state's laws be denied. 

    It is a defense to a violation of paragraph (h) based upon 
 a disqualification if the issuer sustains the burden of proof to 
 establish that the issuer did not know, and in the exercise of 
 reasonable care could not have known, that a disqualification 
 under paragraph (h) existed. 

    (2) This exemption must not be available to an issuer with 
 respect to a transaction that, although in technical compliance 
 with this exemption, is part of a plan or scheme to evade 
 registration or the conditions or limitations explicitly stated 
 in paragraph (h). 

    (3) No commission, finder's fee, or other remuneration 
 shall be paid or given, directly or indirectly, for soliciting a 
 prospective purchaser, unless the recipient is appropriately 
 licensed, or exempt from licensure, in this state as a 
 broker-dealer. 

    (4) Nothing in this exemption is intended to or should be 
 in any way construed as relieving issuers or persons acting on 
 behalf of issuers from providing disclosure to prospective 
 investors adequate to satisfy the antifraud provisions of the 
 securities law of Minnesota.  

    (5) The issuer shall file with the commissioner a notice on 
 form D as adopted by the Securities and Exchange Commission 
 according to Regulation D, Code of Federal Regulations, title 
 17, section 230.502.  The notice must be filed not later than 15 
 days after the first sale in this state of securities in an 
 offering under this exemption.  Every notice on form D must be 
 manually signed by a person duly authorized by the issuer and 
 must be accompanied by a consent to service of process on a form 
 prescribed by the commissioner.  

    (6) A failure to comply with a term, condition, or 
 requirement of paragraph (h) will not result in loss of the 
 exemption for an offer or sale to a particular individual or 
 entity if the person relying on the exemption shows that:  (i) 
 the failure to comply did not pertain to a term, condition, or 
 requirement directly intended to protect that particular 
 individual or entity, and the failure to comply was 
 insignificant with respect to the offering as a whole; and (ii) 
 a good faith and reasonable attempt was made to comply with all 
 applicable terms, conditions, and requirements of paragraph (h), 
 except that, where an exemption is established only through 
 reliance upon this provision, the failure to comply shall 
 nonetheless constitute a violation of section 80A.08 and be 
 actionable by the commissioner.  

    (7) The issuer, upon request by the commissioner, shall, 
 within ten days of the request, furnish to the commissioner a 
 copy of any and all information, documents, or materials 
 furnished to investors or offerees in connection with the offer 
 and sale according to paragraph (h).  

    (8) Neither compliance nor attempted compliance with the 
 exemption provided by paragraph (h), nor the absence of an 
 objection or order by the commissioner with respect to an offer 
 or sale of securities undertaken according to this exemption, 
 shall be considered to be a waiver of a condition of the 
 exemption or considered to be a confirmation by the commissioner 
 of the availability of this exemption.  

    (9) The commissioner may, by rule or order, increase the 
 number of purchasers or waive any other condition of this 
 exemption.  

    (10) The determination whether offers and sales made in 
 reliance on the exemption set forth in paragraph (h) shall be 
 integrated with offers and sales according to other paragraphs 
 of this subdivision shall be made according to the integration 
 standard set forth in Rule 502 of Regulation D promulgated by 
 the Securities and Exchange Commission, Code of Federal 
 Regulations, title 17, section 230.502.  If not subject to 
 integration according to that rule, offers and sales according 
 to paragraph (h) shall not otherwise be integrated with offers 
 and sales according to other exemptions set forth in this 
 subdivision. 

    (i) Any offer (but not a sale) of a security for which a 
 registration statement has been filed under sections 80A.01 to 
 80A.31, if no stop order or refusal order is in effect and no 
 public proceeding or examination looking toward an order is 
 pending; and any offer of a security if the sale of the security 
 is or would be exempt under this section.  The commissioner may 
 by rule exempt offers (but not sales) of securities for which a 
 registration statement has been filed as the commissioner deems 
 appropriate, consistent with the purposes of sections 80A.01 to 
 80A.31. 

    (j) The offer and sale by a cooperative organized under 
 chapter 308A or under the laws of another state, of its 
 securities when the securities are offered and sold only to its 
 members, or when the purchase of the securities is necessary or 
 incidental to establishing membership in the cooperative, or 
 when 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.27, subdivision 7, and has, not less than ten days prior to 
 the issuance or delivery, furnished the commissioner with a 
 written general description of the transaction and any other 
 information that the commissioner requires by rule or otherwise. 

    (l) The issuance and delivery of any securities of one 
 corporation to another corporation or its security holders in 
 connection with a merger, exchange of shares, or transfer of 
 assets whereby the approval of stockholders of the other 
 corporation is required to be obtained, provided, that the 
 commissioner has been furnished with a general description of 
 the transaction and with other information as the commissioner 
 by rule prescribes not less than ten days prior to the issuance 
 and delivery.  For purposes of this paragraph, a corporation 
 includes a cooperative organized under chapter 308B, and the 
 approval of stockholders applies to members of such a 
 cooperative. 

    (m) Any transaction between the issuer or other person on 
 whose behalf the offering is made and an underwriter or among 
 underwriters. 

    (n) The distribution by a corporation of its or other 
 securities to its own security holders as a stock dividend or as 
 a dividend from earnings or surplus or as a liquidating 
 distribution; or upon conversion of an outstanding convertible 
 security; or pursuant to a stock split or reverse stock split.  
 For purposes of this paragraph, a corporation includes a 
 cooperative organized under chapter 308B, and the term "stock" 
 applies to interests in such a cooperative. 

    (o) Any offer or sale of securities by an affiliate of the 
 issuer thereof if:  (1) a registration statement is in effect 
 with respect to securities of the same class of the issuer and 
 (2) the offer or sale has been exempted from registration by 
 rule or order of the commissioner.  

    (p) Any transaction pursuant to an offer to existing 
 security holders of the issuer, including persons who at the 
 time of the transaction are holders of convertible securities, 
 nontransferable warrants, or transferable warrants exercisable 
 within not more than 90 days of their issuance, if:  (1) no 
 commission or other remuneration (other than a standby 
 commission) is paid or given directly or indirectly for 
 soliciting any security holder in this state; and (2) the 
 commissioner has been furnished with a general description of 
 the transaction and with other information as the commissioner 
 may by rule prescribe no less than ten days prior to the 
 transaction. 

    (q) Any nonissuer sales of any security, including a 
 revenue obligation, issued by the state of Minnesota or any of 
 its political or governmental subdivisions, municipalities, 
 governmental agencies, or instrumentalities. 

    (r) Any transaction as to which the commissioner by rule or 
 order finds that registration is not necessary in the public 
 interest and for the protection of investors. 

    (s) An offer or sale of a security issued in connection 
 with an employee's stock purchase, savings, option, profit 
 sharing, pension, or similar employee benefit plan, if the 
 following conditions are met:  

    (1) the issuer, its parent corporation or any of its 
 majority-owned subsidiaries offers or sells the security 
 according to a written benefit plan or written contract relating 
 to the compensation of the purchaser; and 

    (2) the class of securities offered according to the plan 
 or contract, or if an option or right to purchase a security, 
 the class of securities to be issued upon the exercise of the 
 option or right, is registered under section 12 of the 
 Securities Exchange Act of 1934, or is a class of securities 
 with respect to which the issuer files reports according to 
 section 15(d) of the Securities Exchange Act of 1934; or 

    (3) the issuer fully complies with the provisions of Rule 
 701 as adopted by the Securities and Exchange Commission, Code 
 of Federal Regulations, title 12, section 230.701. 

    The issuer shall file not less than ten days before the 
 transaction, a general description of the transaction and any 
 other information that the commissioner requires by rule or 
 otherwise or, if applicable, a Securities and Exchange Form S-8. 
 Annually, within 90 days after the end of the issuer's fiscal 
 year, the issuer shall file a notice as provided with the 
 commissioner. 

    (t) Any sale of a security of an issuer that is a pooled 
 income fund, a charitable remainder trust, or a charitable lead 
 trust that has a qualified charity as the only charitable 
 beneficiary. 

    (u) Any sale by a qualified charity of a security that is a 
 charitable gift annuity if the issuer has a net worth, otherwise 
 defined as unrestricted fund balance, of not less than $300,000 
 and either:  (1) has been in continuous operation for not less 
 than three years; or (2) is a successor or affiliate of a 
 qualified charity that has been in continuous operation for not 
 less than three years.  

    (v) The offer and sale by a cooperative organized under 
 chapter 308B of its securities when the securities are offered 
 and sold only 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 when 
 securities are issued as patronage dividends or otherwise only 
 when: 

    (1) the issuer, prior to the completion of the sale of such 
 securities, provides each offeree or purchaser disclosure 
 materials, which 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 

    (2) 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 commissioner a consent to service 
 of process under section 80A.27, subdivision 7, and has 
 furnished the commissioner with a written general description of 
 the transaction and any other information that the commissioner 
 requires by rule or otherwise. 

 A cooperative may, at or about the same time as offers or sales 
 are being completed in reliance upon this exemption from 
 registration 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 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. 

    Subd. 3.    Revocation; order to show cause.  The 
 commissioner may issue an order requiring any person who claims 
 the benefit of an exemption with respect to a specific security 
 or transaction, to show cause why the exemption should not be 
 revoked.  The order shall be calculated to give reasonable 
 notice of the time and place for hearing thereon, and shall 
 state the reasons for the entry of the order.  The commissioner 
 may by order summarily suspend an exemption pending final 
 determination of any order to show cause.  If an exemption is 
 suspended pending final determination of an order to show cause, 
 a hearing on the merits shall be held within 30 days of the 
 issuance of the order of suspension.  All hearings shall be 
 conducted in accordance with the provisions of chapter 14.  
 After the hearing, the commissioner shall enter an order making 
 such disposition of the matter as the facts require.  If the 
 person claiming the benefit of the exemption fails to appear at 
 a hearing of which the person has been duly notified, such 
 person shall be deemed in default, and the proceeding may be 
 determined against the person upon consideration of the order to 
 show cause, the allegations of which may be deemed to be true.  
 The commissioner may adopt rules of procedure concerning all 
 proceedings conducted pursuant to this subdivision.  

    A notice filing that is incomplete is considered withdrawn 
 if no activity occurs with respect to the notice filing for a 
 period of 120 days. 

    Subd. 4.    Burden of proof.  In any judicial or 
 administrative proceeding under sections 80A.01 to 80A.31, the 
 burden of proving an exemption or an exception from a definition 
 is upon the person claiming it.  

    HIST: 1973 c 451 s 15; 1976 c 2 s 43; 1979 c 228 s 1; 1980 c 
 503 s 4; 1980 c 516 s 2; 1981 c 140 s 6,7; 1982 c 424 s 130; 
 1983 c 252 s 14; 1984 c 552 s 5; 1985 c 251 s 4; 1986 c 358 s 
 5,6; 1986 c 444; 1987 c 336 s 14,15; 1989 c 173 s 1; 1989 c 206 
 s 1; 1989 c 356 s 6; 1993 c 271 s 2; 1994 c 642 s 5; 1995 c 202 
 art 1 s 25; 1996 c 439 art 2 s 13-15; 1997 c 222 s 27,28; 1999 c 
 137 s 4; 2000 c 350 s 15; 2000 c 379 s 1; 2000 c 483 s 41; 2003 
 c 105 art 2 s 2 

     80A.16 Filing of sales and advertising literature. 

    The commissioner may by rule or order require the filing of 
 any prospectus, pamphlet, circular, form letter, advertisement, 
 or other sales literature or advertising communication addressed 
 or intended for distribution to prospective investors, including 
 clients or prospective clients of an investment adviser or 
 broker-dealer unless:  (1) the security or transaction is 
 exempted by section 80A.15; or (2) the security is a federal 
 covered security. 

    HIST: 1973 c 451 s 16; 1981 c 140 s 8; 1997 c 222 s 29 

     80A.17 Misleading filings.  

    It is unlawful for any person to make or cause to be made, 
 in any document filed with the commissioner or in any proceeding 
 under sections 80A.01 to 80A.31, other than a contested case 
 hearing any statement which is, at the time and in the light of 
 the circumstances under which it is made, false or misleading in 
 any material respect or, in connection with such statement, to 
 omit to state a material fact necessary in order to make the 
 statements made, in the light of the circumstances under which 
 they are made, not misleading.  

    HIST: 1973 c 451 s 17 

     80A.18 Unlawful representations concerning registration 
  or exemption.  

    Neither the fact that a registration statement or an 
 application for a license has been filed nor the fact that a 
 security is effectively registered or a person is licensed 
 constitutes a finding by the commissioner that any document 
 filed under this chapter is true, complete and not misleading.  
 Neither any such fact nor the fact that an exemption or 
 exception is available for a security or a transaction means 
 that the commissioner has passed in any way upon the merits or 
 qualifications of, or recommended or given approval to, any 
 person, security, or transaction.  It is unlawful to make, or 
 cause to be made, to any prospective purchaser, customer or 
 client any representation inconsistent with the foregoing.  

    HIST: 1973 c 451 s 18 

     80A.19 Administration. 

    Subdivision 1.    Commissioner of commerce.  This chapter shall 
 be administered by the 
 commissioner of commerce.  

    Subd. 2.    Information regulation.  It is unlawful for the 
 commissioner or any of the 
 commissioner's officers or employees to use for personal benefit 
 any information which is filed with or obtained by the 
 commissioner and which is not a matter of public record.  
 Nothing in this chapter authorizes the commissioner or any of 
 the commissioner's officers or employees to disclose information 
 which is not a matter of public record except among themselves 
 or when necessary or appropriate in a proceeding or 
 investigation under this chapter.  No provision of this chapter 
 either creates or derogates from any privilege which exists at 
 common law or otherwise when documentary or other evidence is 
 sought under a subpoena directed to the commissioner or any of 
 the commissioner's officers or employees.  

    Subd. 3.    Biennial report.  It shall be the duty of the 
 commissioner 
 biennially, on or before October 1, in each even numbered year, 
 to prepare and file in the office of the governor a report for 
 the preceding two fiscal years ending June 30 preceding the 
 report, which shall contain a summary of all applications 
 received, withdrawn, granted and denied; a summary of all 
 registrations and licenses suspended, revoked or canceled, a 
 schedule of receipts and disbursements of the commissioner, and 
 such other information as the commissioner considers material.  

    HIST: 1973 c 451 s 19; 1980 c 516 s 2; 1983 c 289 s 114 subd 
 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 336 s 16 

  80A.20 Repealed, 1987 c 336 s 47 

  80A.21 Repealed, 1987 c 336 s 47 

     80A.22 Criminal penalty. 

    Subdivision 1.    False or misleading statements.  Any person 
 who willfully violates any 
 provision of sections 80A.01 to 80A.31 except section 80A.17, or 
 any rule or order under sections 80A.01 to 80A.31, of which that 
 person has notice, or who violates section 80A.17 knowing that 
 the statement was false or misleading in any material respect, 
 may be fined not more than $10,000 or imprisoned not more than 
 five years or both.  Each of the acts specified shall constitute 
 a separate offense and a prosecution or conviction for any one 
 of such offenses shall not bar prosecution or conviction for any 
 other offense. 

    Subd. 2.    Referral to attorney general.  The commissioner may 
 refer such evidence as is 
 available concerning violations of sections 80A.01 to 80A.31 or 
 of any rule or order hereunder to the attorney general or the 
 county attorney of the appropriate county, who may, with or 
 without any such reference, institute the appropriate criminal 
 proceedings under sections 80A.01 to 80A.31.  If referred to a 
 county attorney, the county attorney shall within 90 days file 
 with the commissioner a statement concerning any action taken, 
 or, if no action has been taken, the reasons therefor.  

    Subd. 3.    Other crimes.  Nothing in sections 80A.01 to 80A.31 
 limits the 
 power of the state to punish any person for any conduct which 
 constitutes a crime under any other statute.  

    HIST: 1973 c 451 s 22; 1984 c 628 art 3 s 1; 1986 c 444 

     80A.23 Civil liabilities. 

    Subdivision 1.    Registration-related actions.  Any person who 
 sells a security in 
 violation of sections 80A.08 or 80A.18, or of any condition 
 imposed under section 80A.11, subdivision 4, or 80A.12, 
 subdivisions 5 and 6, is liable to the person purchasing the 
 security, who may sue either in equity for rescission upon 
 tender of the security or at law for damages if that person no 
 longer owns the security.  In any action for rescission, the 
 purchaser shall be entitled to recover the consideration paid 
 for the security together with interest at the legal rate, 
 costs, and reasonable attorney's fees, less the amount of any 
 income received on the securities.  In an action at law, damages 
 shall be the consideration paid for the security together with 
 interest at the legal rate to the date of disposition, costs, 
 and reasonable attorney's fees, less the value of the security 
 at the date of disposition.  

    Subd. 2.    Sales and purchase actions.  Any person who violates 
 section 80A.01 in 
 connection with the purchase or sale of any security shall be 
 liable to any person damaged thereby who sold such security to 
 that person or to whom that person sold such security, and any 
 person who violates section 80A.03 in connection with the 
 purchase or sale of any security shall be liable to any person 
 damaged by the conduct prescribed by section 80A.03.  Any person 
 who violates section 80A.02 in connection with the purchase or 
 sale of any security shall be liable to any investment advisory 
 client who is damaged thereby.  Damages in an action pursuant to 
 this subdivision shall include the actual damages sustained plus 
 interest from the date of payment or sale, costs and reasonable 
 attorney's fees.  

    Subd. 3.    Joint and several liability of others.  Every person 
 who directly or indirectly controls 
 a person liable under subdivision 1 or 2, every partner, 
 principal executive officer or director of such person, every 
 person occupying a similar status or performing a similar 
 function, every employee of such person who materially aids in 
 the act or transaction constituting the violation, and every 
 broker-dealer or agent who materially aids in the act or 
 transaction constituting the violation, are also liable jointly 
 and severally with and to the same extent as such person.  There 
 is contribution as in cases of contract among the several 
 persons so liable.  

    Subd. 4.    Liability exception.  No person shall be liable 
 under subdivisions 1 to 
 3 who shall sustain 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 facts by reason of which the 
 liability is alleged to exist.  

    Subd. 5.    Tender.  Any tender specified in this section may be 
 made 
 at any time before entry of judgment.  Tender by a purchaser 
 shall require only notice of willingness to exchange the 
 security for the amount computed pursuant to subdivision 1.  
 Tender by a seller shall require only notice of willingness to 
 pay the amount specified in exchange for the security.  Any 
 notice may be given by service as in civil actions or by 
 certified mail to the last known address of the person liable.  

    Subd. 6.    Survival of action.  Every cause of action under 
 this statute survives 
 the death of any person who might have been a plaintiff or 
 defendant.  

    Subd. 7.    Limitation on actions.  No person may commence an 
 action under 
 subdivision 1 more than three years after the sale upon which 
 such action is based.  No person may commence an action under 
 subdivision 2 more than three years after the occurrence of the 
 act or transaction constituting the violation.  

    Subd. 8.    Offer to prevent suit.  No purchaser may commence an 
 action under 
 subdivision 1 if, before suit is commenced, the purchaser has 
 received a written offer to repurchase the security for cash 
 payable on delivery of the security equal to the consideration 
 paid, together with interest at the legal rate from the date of 
 payment, less the amount of any income received thereon or, if 
 the purchaser no longer owns the security, an offer to pay an 
 amount in cash equal to the damages computed in accordance with 
 subdivision 1 and the purchaser has failed to accept such offer 
 in writing within 30 days of its receipt.  No offer shall be 
 effective to prevent suit under this section unless a duplicate 
 copy thereof shall have been filed with the commissioner at 
 least 20 days prior to its delivery to the offeree and the 
 commissioner shall not have objected to the offer within that 
 time.  The offer shall be in the form and contain the 
 information the commissioner by rule or order prescribes.  If 
 the offer is not performed in accordance with its terms, suit by 
 the offeree under this section shall be permitted without regard 
 to this subdivision.  

    Subd. 9.    Conduct-related action restrictions.  No person who 
 has made or engaged in the 
 performance of any contract in violation of any provision of 
 this section or any rule or order hereunder or has acquired any 
 purported rights under any such contract with knowledge of the 
 facts by reason of which its making or performance was in 
 violation may base any suit on such violation under the contract.

    Subd. 10.    Compliance waivers void.  Any condition, 
 stipulation or provision binding 
 any person to waive compliance with any provision of sections 
 80A.01 to 80A.31 or any rule or order hereunder in the purchase 
 or sale of any security is void.  

    Subd. 11.    Other actions.  The rights and remedies promulgated 
 by sections 
 80A.01 to 80A.31 are in addition to any other right or remedy 
 that may exist at law or in equity, but sections 80A.01 to 
 80A.31 do not create any cause of action not specified in this 
 section or section 80A.05, subdivision 5.  No civil cause of 
 action may be based solely upon the failure of a broker-dealer 
 or agent to comply with the requirements of section 80A.04, 
 subdivision 1 or 3, except a cause of action arising under 
 section 45.027.  

    HIST: 1973 c 451 s 23; 1986 c 444; 1987 c 336 s 17 

     80A.24 Hearings and judicial review. 

    Subdivision 1.    Application and conduct of hearing.  Within 30 
 days after an order has been 
 issued without a hearing, any interested party may apply to the 
 commissioner for a hearing in respect to matters determined by 
 the order, and a hearing shall be held, on a date fixed by the 
 commissioner, within 30 days after the application is filed.  
 After the hearing the commissioner may modify the order as the 
 commissioner deems appropriate.  Hearings shall be public unless 
 the commissioner grants a request joined in by all parties that 
 the hearing be conducted privately.  

    Subd. 2.    Reviewability of orders.  Orders of the commissioner 
 shall be subject to 
 judicial review under chapter 14, but orders originally issued 
 without hearing may be reviewed only if the party seeking review 
 has requested a hearing within the time provided by subdivision 
 1.  

    Subd. 3.  Repealed, 1982 c 501 s 26; 1983 c 247 s 219 

    HIST: 1973 c 451 s 24; 1982 c 424 s 130; 1986 c 444 

     80A.25 Rules, forms and orders.  

    Subdivision 1.    Commissioner's general authority.  The 
 commissioner may from time to time 
 make, amend, and rescind such rules, forms, and orders as are 
 necessary to carry out the provisions of sections 80A.01 to 
 80A.31, including but not limited to rules and forms governing 
 the conduct of business by broker-dealers, agents and investment 
 advisers, registration statements, applications, and reports, 
 and defining any terms, whether or not used in sections 80A.01 
 to 80A.31, insofar as the definitions are not inconsistent with 
 the provisions of sections 80A.01 to 80A.31.  For the purpose of 
 rules and forms, the commissioner may classify securities, 
 persons, and matters within the commissioner's jurisdiction, and 
 prescribe different requirements for different classes.  

    Subd. 2.    Scope of authority.  No rule, form or order may be 
 made, amended or 
 rescinded unless the commissioner finds that the action is 
 necessary or appropriate in the public interest or for the 
 protection of investors and consistent with the purposes fairly 
 intended by the policy and provisions of sections 80A.01 to 
 80A.31.  In prescribing rules and forms the commissioner may 
 cooperate with securities administrators of the other states and 
 the Securities and Exchange Commission with a view to 
 effectuating the policy of this statute to achieve maximum 
 uniformity in the form and content of registration statements, 
 application, and reports wherever practicable.  

    Subd. 3.    Financial statements.  The commissioner may by rule 
 or order prescribe 
 (a) the form and content of financial statements required under 
 sections 80A.01 to 80A.31, (b) the circumstances under which 
 consolidated financial statements shall be filed, and (c) 
 whether any required financial statements shall be certified by 
 independent or certified public accountants.  All financial 
 statements shall be prepared in accordance with generally 
 accepted accounting principles unless otherwise permitted by 
 rule or order.  

    Subd. 4.    Publishing of rules and forms.  All rules and forms 
 of the commissioner shall be 
 published.  

    Subd. 5.    Good faith exception to liability.  No provision of 
 sections 80A.01 to 80A.31 
 imposing any liability applies to any act done or omitted in 
 good faith in conformity with any rule, form, or order of the 
 commissioner, notwithstanding that the rule, form, or order may 
 later be amended or rescinded or be determined by judicial or 
 other authority to be invalid for any reason.  

    HIST: 1973 c 451 s 25; 1986 c 444 

     80A.26 Administrative files and opinions. 

    Subdivision 1.    Filings.  A document is filed when it is 
 received by 
 the commissioner.  

    Subd. 2.    Register.  The commissioner shall keep a register of 
 all 
 applications for registration and registration statements which 
 are or have ever been effective, and all denial, suspension, or 
 revocation orders which have ever been entered under this 
 chapter and any predecessor laws.  Any information contained in 
 the register shall be a matter of public record.  

    Subd. 3.    Classification of information.  All information 
 contained in or filed with any 
 registration statement, application, or report, except such 
 information as to which the commissioner, upon request and for 
 good cause shown, grants confidential treatment, and except as 
 to reports of sales provided for in section 45.027, subdivision 
 1, clause (7), shall be a matter of public record and shall be 
 made available to the public under such rules as the 
 commissioner prescribes.  

    Subd. 4.    Copying.  Upon request and at such reasonable 
 charges as 
 the commissioner prescribes, the commissioner shall furnish to 
 any person photostatic or other copies (certified under the seal 
 of office if requested) of any entry in the register or any 
 document which is a matter of public record.  In any proceeding 
 or prosecution under this chapter, any copy so certified is 
 prima facie evidence of the contents of the entry or document 
 certified.  

    Subd. 5.    Interpretive opinions.  The commissioner may honor 
 requests from 
 interested persons for interpretive opinions.  

    HIST: 1973 c 451 s 26; 1986 c 444; 1987 c 336 s 18 

     80A.27 Scope of sections 80A.01 to 80A.31 and service of 
  process. 

    Subdivision 1.    Sales.  Sections 80A.01; 80A.04, subdivision 
 1; 
 80A.08; 80A.18; and 80A.23, apply to persons who sell or offer 
 to sell when (a) an offer to sell is made in this state or (b) 
 an offer to buy is made and accepted in this state. 

    Subd. 2.    Purchases.  Sections 80A.01; 80A.04, subdivision 1; 
 80A.18; 
 and 80A.23, apply to persons who buy or offer to buy when (a) an 
 offer to buy is made in this state, or (b) an offer to sell is 
 made and accepted in this state. 

    Subd. 3.    Offers made.  For the purpose of this section an 
 offer to sell 
 or to buy is made in this state, whether or not either party is 
 then present in this state, when the offer (a) originates from 
 this state or (b) is directed by the offeror to this state and 
 received by the offeree in this state, but for the purpose of 
 section 80A.08 an offer to sell which is not directed to or 
 received by the offeree in this state is not made in this state. 

    Subd. 4.    Offers accepted.  For the purpose of this section an 
 offer to buy 
 or to sell is accepted in this state when acceptance (a) is 
 communicated to the offeror in this state and (b) has not 
 previously been communicated to the offeror, orally or in 
 writing outside of this state; and acceptance is communicated to 
 the offeror in this state, whether or not either party is then 
 present in this state, when the offeree directs it to the 
 offeror in this state reasonably believing the offeror to be in 
 this state and it is received by the offeror in this state. 

    Subd. 5.    Offers not made in state.  An offer to sell or to 
 buy is not made in this 
 state when (a) the publisher circulates or there is circulated 
 on the publisher's behalf in this state any bona fide newspaper 
 or other publication of general, regular, and paid circulation 
 which is not published in this state, or which is published in 
 this state but has had more than two-thirds of its circulation 
 outside this state during the past 12 months, or (b) a radio or 
 television program originating outside this state is received in 
 this state. 

    Subd. 6.    Application of certain sales and licensing 
 restrictions.  Sections 80A.01 and 80A.04, subdivision 3, so far 
 as investment advisers are concerned, and section 80A.03 so far 
 as any person is concerned, apply when any act instrumental in 
 effecting prohibited conduct is done in this state, whether or 
 not either party is then present in this state. 

    Subd. 7.    Consent to service of process.  Every applicant for 
 registration under sections 
 80A.01 to 80A.31 and every issuer who proposes to offer a 
 security in this state through any person acting on an agency 
 basis in the common law sense shall file with the commissioner, 
 in such form as the commissioner by rule prescribes, an 
 irrevocable consent appointing the commissioner or a successor 
 in office to be the attorney to receive service of any lawful 
 process in any noncriminal suit, action, or proceeding against 
 that person or a successor, executor, or administrator which 
 arises under sections 80A.01 to 80A.31 or any rule or order 
 hereunder after the consent has been filed, with the same force 
 and validity as if served personally on the person filing the 
 consent.  The consent need not be filed by a person who has 
 filed a consent in connection with a previous registration or 
 license which is then in effect.  Service may be made in 
 compliance with section 45.028, subdivision 2. 

    Subd. 8.    Appointment of commissioner to receive process.  
 When any person, including any nonresident of 
 this state, engages in conduct prohibited or made actionable by 
 sections 80A.01 to 80A.31 or any rule or order hereunder, and 
 has not filed a consent to service of process under subdivision 
 7 and personal jurisdiction cannot otherwise be obtained in this 
 state, that conduct shall be considered equivalent to an 
 appointment of the commissioner or a successor in office to be 
 the attorney to receive service of any lawful process in any 
 noncriminal suit, action, or proceeding against that person or a 
 successor executor or administrator which grows out of that 
 conduct and which is brought under sections 80A.01 to 80A.31 or 
 any rule or order hereunder, with the same force and validity as 
 if served personally.  Service under this section shall be made 
 in compliance with section 45.028, subdivision 2. 

    Subd. 9.    Authority to grant continuance.  When process is 
 served under this section, the 
 court, or the commissioner in a proceeding before the 
 commissioner, shall order such continuance as may be necessary 
 to afford the defendant or respondent reasonable opportunity to 
 defend. 

    HIST: 1973 c 451 s 27; 1978 c 674 s 60; 1986 c 444; 1992 c 564 
 art 2 s 10,11 

     80A.28 Fees and expenses. 

    Subdivision 1.    Registration or notice filing fee.  (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.  

    (b) When an application for registration is withdrawn 
 before the effective date or a preeffective stop order is 
 entered under section 80A.13, subdivision 1, 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. 

    (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.122, subdivision 1, clause 
 (3), 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.122, 
 subdivision 4a.  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. 

    Subd. 2.    License application and renewal filing fee.  Every 
 applicant for an initial or renewal license 
 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 licensed 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.05, subdivision 1a, is $100. 

    Subd. 3.    Amendment fee.  Any amendment to an existing license 
 or 
 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.  

    Subd. 4.    Annual report fee.  Every annual report required by 
 section 80A.12, 
 subdivision 10, shall be accompanied by a fee of $100.  

    Subd. 5.    Exemption filing fee.  The filing of any exemption 
 for which notice is 
 required to be given the commissioner under section 80A.15, 
 subdivision 2, shall be accompanied by a fee of $50.  

    Subd. 6.    Rescission offer filing fee.  The filing of a 
 rescission offer under section 
 80A.23, subdivision 8, shall be accompanied by the fees as 
 calculated in subdivision 1.  

    Subd. 7.    Written opinion request fee.  Every request for a 
 written opinion from the 
 commissioner shall be accompanied by a fee of $50.  

    Subd. 7a.    Excess securities registration filing fee.  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).  

    Registration of the excess securities shall be effective 
 retroactively to the date of sale.  

    Subd. 8.    Expense deposits.  When the commissioner deems it 
 necessary to incur 
 any expense in connection with any application, registration or 
 license, 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.  

    Subd. 9.    Generally.  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.  

    HIST: 1973 c 451 s 28; 1973 c 492 s 14; 1981 c 140 s 10-15; 
 1982 c 475 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 
 1986 c 444; 1992 c 513 art 3 s 27; 1997 c 222 s 30,31; 1998 c 
 331 s 37; 2000 c 488 art 2 s 4 

     80A.29 Sale of liquor warehouse receipts is sale of 
  securities.  

    The sale of warehouse receipts or other evidence of 
 ownership for the storing of liquor during the aging or 
 processing period of liquor is hereby declared to be a sale of 
 securities subject to all of the provisions of sections 80A.01 
 to 80A.31 except section 80A.15.  The sale of such warehouse 
 receipts by broker-dealers and agents licensed under sections 
 80A.01 to 80A.31 is hereby authorized without such 
 broker-dealers or agents having to procure a liquor license when 
 such liquor is not to be imported nor shipped into this state, 
 except as authorized by law.  The provisions of sections 80A.01 
 to 80A.31 shall not apply to the sale of warehouse receipts to 
 distillers, manufacturers, or wholesalers of liquor duly 
 licensed as such in the state of Minnesota.  

    HIST: 1973 c 451 s 29 

     80A.30 Registration of oil or gas lands or interest 
  before sale. 

    Subdivision 1.    Generally.  No person shall sell to any person 
 in this 
 state any lands represented to contain or to be a prospect for 
 oil or gas, or any interest therein or thereunder, or in 
 royalties therefrom, unless and until those lands, interests or 
 royalties shall have been first registered under this chapter.  
 Registration shall be made or denied in substantially the same 
 manner and upon substantially the same grounds and conditions as 
 are prescribed for the registration of securities by section 
 80A.11.  The fees for registration shall be calculated in the 
 same manner as the fees for registration of securities under 
 section 80A.28, subdivision 1.  

    Subd. 2.    Exception.  This section shall not apply to any 
 isolated sale 
 not made or occurring in the course of repeated or successive 
 sale; nor to any judicial sale or any transaction lawfully 
 ordered, authorized, or approved by a court of competent 
 jurisdiction in this state; nor to any sale to a bank or 
 financial institution under the supervision of any 
 instrumentality or officer of the United States or of the 
 commissioner of commerce of this state, or a licensed 
 broker-dealer; nor to any sale made in compliance with the 
 provisions of section 80A.15, subdivision 2, clause (g) or (h).  
 In any complaint, information or indictment charging a sale in 
 violation of this section, it shall not be necessary to 
 specifically name or identify persons other than the complainant 
 to whom like sales have been made.  

    HIST: 1973 c 451 s 30; 1981 c 140 s 16; 1984 c 552 s 6 

     80A.31 Statutory policy.  

    Sections 80A.01 to 80A.31 shall be so construed as to 
 effectuate its general purpose to make uniform the law of those 
 states which enact it and to coordinate the interpretation of 
 sections 80A.01 to 80A.31 with the related federal regulation.  

    HIST: 1973 c 451 s 31