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CHAPTER 1.
UNIFORM SECURITIES ACT
ARTICLE 1.
GENERAL PROVISIONS
SECTION 35110. Short title.
This chapter may be cited as the Uniform Securities Act.
SECTION 35120. Definitions.
When used in this chapter, unless the context otherwise requires:
(1) “Securities commissioner” means Attorney General, who shall be ex officio securities commissioner.
(2) “Agent” means any individual, other than a brokerdealer, who represents a brokerdealer or issuer in effecting or attempting to effect purchases or sales of securities. A partner, officer or director of a brokerdealer or issuer, or a person occupying a similar status or performing similar functions, is an “agent” only if he otherwise comes within this definition.
(3) “Brokerdealer” means any person engaged in the business of effecting transactions in securities for the account of others or for his own account.
(4) “Federal covered adviser” means a person who is registered under Section 203 of the Investment Advisers Act of 1940 or who is excluded from the definition of “investment adviser” under Section 202(a)(11) of the Investment Advisers Act of 1940.
(5) “Federal covered security” means any security that is a covered security under Section 18(b) of the Securities Act of 1933 or the rules and regulations promulgated thereunder.
(6) “Fraud”, “deceit” and “defraud” are not limited to commonlaw deceit.
(7) “Guaranteed” means guaranteed as to payment of principal, interest or dividends.
(8) “Investment adviser” means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, 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” also includes financial planners and other persons who, as an integral component of other financially related services, provide the foregoing investment advisory services to others for compensation and as part of a business or who hold themselves out as providing the foregoing investment advisory services to others for compensation. “Investment adviser” does not include (a) an employee of an investment adviser; (b) a bank, savings institution, or trust company; (c) a lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his profession; (d) a brokerdealer whose performance of these services is solely incidental to the conduct of his business as a brokerdealer and who receives no special compensation for them; (e) a publisher of any bona fide 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; (f) any person that is a federal covered adviser; or (g) such other persons not within the intent of this item as the securities commissioner may by rule or order designate. Until October 10, 1999, the exclusions provided in Section 35120(8)(f) shall not apply to a person who fails to pay the fees required under Section 351480(B) of this chapter.
(9) “Investment adviser representative”
(a) with respect to any adviser registered or required to be registered under this chapter, means any partner, officer, director of or person occupying a similar status or performing similar functions or other individual, except clerical or ministerial personnel, who is employed by or associated with an investment adviser and, who does any of the following:
(i) makes any recommendations or otherwise renders advice regarding securities,
(ii) manages accounts or portfolios of clients,
(iii) determines which recommendations or advice regarding securities should be given,
(iv) solicits, offers, or negotiates for the sale of or sells investment advisory services, or
(v) supervises employees who perform any of the foregoing; or
(b) with respect to any person that is registered or required to be registered under Section 203 of the Investment Advisers Act of 1940 or that is excluded from the definition of an “investment adviser” under Section 202(a)(11) of the Investment Advisers Act of 1940, means any person who is defined as an investment adviser representative’ under SEC Rule 203a3 (17 CFR 275.203a3) and who has a place of business located in this State.
(10) “Issuer” means any person who issues or proposes to issue any security, except that (a) with respect to certificates of deposit, votingtrust certificates or collateraltrust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or persons performing similar functions or of the fixed, restricted management or unit type, the term “issuer” means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which the security is issued and (b) with respect to certificates of interest or participation in oil, gas or mining titles or leases or in payments out of production under such titles or leases, there is not considered to be any “issuer”.
(11) “Nonissuer” means not directly or indirectly for the benefit of the issuer.
(12) “Person” means an individual, a corporation, a partnership, an association, a jointstock company, a trust where the interests of the beneficiaries are evidenced by a security, an unincorporated organization, a government or a political subdivision of a government.
(13)(a) “Sale” or “sell” includes every contract of sale of, contract to sell, or disposition of, a security or interest in a security for value.
(b) “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.
(c) 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.
(d) A purported gift of assessable stock is considered to involve an offer and sale.
(e) 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.
(f) The terms defined in this item (12) do not include (i) any bona fide pledge or loan, (ii) any stock dividend, whether the corporation distributing the dividend is the issuer of the stock or not, if nothing of value is given by stockholders for the dividend other than the surrender of a right to a cash or property dividend when each stockholder may elect to take the dividend in cash or property or in stock, (iii) any act incident to a class vote by stockholders, limited partners, or members of a limited liability company, pursuant to certificate of incorporation, partnership or limited liability company agreement, or the applicable corporation, limited liability company or partnership statute, on a merger, consolidation, reclassification of securities, or sale of corporate assets in consideration of the issuance of securities of another entity, (iv) any act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims or property interests, or partly in such exchange and partly for cash or (v) a solicitation of interest the response to which does not legally obligate the responding person to purchase or pay for the securities and which conforms to such other requirements as the securities commissioner may adopt by rule, order, or statement of policy.
(14) “Securities Act of 1933”, “Securities Exchange Act of 1934”, “Public Utility Holding Company Act of 1935”, and “Investment Company Act of 1940” mean the federal statutes of those names as amended before or after June 14, 1961.
(15) “Security” means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profitsharing agreement, collateraltrust certificate, preorganization certificate of subscription, transferable share, investment contract, votingtrust certificate, certificate of deposit for a security, certificate of interest or participation in an oil, gas or mining title or lease or in payments out of production under such a 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 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.
(16) “State” means a state, territory, or possession of the United States, the District of Columbia, and Puerto Rico.
SECTION 35130. Attorney General as securities commissioner; assistants; delegation of duties.
This chapter shall be administered by the Attorney General who shall be ex officio the securities commissioner and who may employ such additional assistants as he deems necessary. The securities commissioner may delegate any or all of his duties pursuant to this act to members of his staff, as he deems necessary or appropriate.
SECTION 35140. Use or disclosure of information by securities commissioner or employees.
It is unlawful for the securities commissioner or any of his officers or employees to use for personal benefit any information which is filed with or obtained by the securities commissioner and which is not made public. No provision of this chapter authorizes the securities commissioner or any of his officers or employees to disclose any such information except among themselves or when necessary or appropriate in a proceeding or investigation under this chapter. Investigative records and complaints filed with the securities commissioner shall not be considered public information. Orders issued by the commissioner, including complaints of the commission, are to be considered public records.
SECTION 35150. Filing of advertising and sales literature.
The securities commissioner by rule or order may 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, unless the security or transaction is exempted by Section 351310 or 351320, or the security is a federal covered security or the transaction is with respect to a federal covered security.
SECTION 35160. Promulgation of rules, forms and orders.
The securities commissioner may make, amend, and rescind those rules, forms, and orders, including cease and desist orders, as are necessary to carry out the provisions of this chapter, including rules and forms governing registration statements, applications, and reports and defining any terms, whether or not used in this chapter, insofar as the definitions are not inconsistent with the provisions of this chapter. For the purpose of rules and forms, the securities commissioner may classify securities, persons, and matters within his jurisdiction and prescribe different requirements for different classes.
No rule, form, or order may be made, amended, or rescinded unless the securities 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 this chapter. In prescribing rules and forms, the securities commissioner may cooperate with the securities administrators of the other states and the Securities and Exchange Commission with a view to effectuating the policy of this chapter to achieve maximum uniformity in the form and content of registration statements, applications, and reports wherever practicable.