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H.B. 78 Enrolled
8 Jack R. Draxler
9 Susan Duckworth
10 James A. Dunnigan
11 Kevin S. GarnNeal B. Hendrickson
Eric K. Hutchings
Steven R. Mascaro
C. Brent WallisR. Curt Webb
Ryan D. Wilcox
Bradley A. Winn 12
13 LONG TITLE
14 General Description:
15 This bill modifies the Utah Uniform Securities Act to create the Securities
16 Commission, outline its powers and duties, and make other substantive changes.
17 Highlighted Provisions:
18 This bill:
19 . creates the Securities Commission;
20 . outlines the powers and duties of the Securities Commission, including modifying
21 the powers and duties of the Division of Securities and its director;
22 . modifies definitions including the definition of a security;
23 . addresses disciplinary proceedings;
24 . addresses licensing;
25 . addresses requirements related to associations between licensed and unlicensed
27 . requires the identification of a principal or designated official;
28 . expands the scope of criminal pleas considered to determine if disciplinary action
29 or licensing restrictions should be taken;
30 . addresses disciplinary action or licensing restrictions for entities that are materially
31 the same;
32 . addresses civil actions that could result in disciplinary action;
33 . repeals registration by notification;
34 . modifies the automatic effectiveness related to registration;
35 . updates language related to means of providing notices;
36 . modifies provisions related to exemptions and registration of securities;
37 . modifies remedies available for enforcement;
38 . modifies provisions related to private causes of action;
39 . provides that prosecutors may bring criminal proceedings without referral from the
41 . deletes outdated language including references to repealed federal law; and
42 . makes technical and conforming changes.
43 Monies Appropriated in this Bill:
45 Other Special Clauses:
47 Utah Code Sections Affected:
49 31A-5-302, as last amended by Laws of Utah 1987, Chapter 91
50 61-1-3, as last amended by Laws of Utah 1997, Chapter 160
51 61-1-4, as last amended by Laws of Utah 2008, Chapter 382
52 61-1-6, as last amended by Laws of Utah 2008, Chapter 382
53 61-1-9, as last amended by Laws of Utah 1991, Chapter 161
54 61-1-11, as last amended by Laws of Utah 1994, Chapter 12
55 61-1-11.1, as last amended by Laws of Utah 2008, Chapter 382
56 61-1-12, as last amended by Laws of Utah 2008, Chapter 382
57 61-1-13, as last amended by Laws of Utah 2008, Chapter 382
58 61-1-14, as last amended by Laws of Utah 2008, Chapter 382
59 61-1-15.5, as last amended by Laws of Utah 2008, Chapter 382
60 61-1-18, as last amended by Laws of Utah 2006, Chapter 139
61 61-1-18.2, as enacted by Laws of Utah 1983, Chapter 284
62 61-1-18.3, as enacted by Laws of Utah 1983, Chapter 284
63 61-1-18.5, as last amended by Laws of Utah 2002, Chapter 176
64 61-1-18.6, as last amended by Laws of Utah 2008, Chapter 382
65 61-1-18.7, as last amended by Laws of Utah 2008, Chapter 382
66 61-1-19, as last amended by Laws of Utah 1990, Chapter 133
67 61-1-20, as last amended by Laws of Utah 1994, Chapter 12
68 61-1-21, as last amended by Laws of Utah 2001, Chapter 149
69 61-1-21.5, as last amended by Laws of Utah 1993, Chapters 38 and 158
70 61-1-22, as last amended by Laws of Utah 2007, Chapter 292
71 61-1-23, as last amended by Laws of Utah 2008, Chapter 382
72 61-1-24, as last amended by Laws of Utah 1991, Chapter 161
73 61-1-25, as last amended by Laws of Utah 1983, Chapter 284
75 61-1-8, as last amended by Laws of Utah 1991, Chapter 161
76 61-1-30, as last amended by Laws of Utah 2008, Chapter 250
78 Be it enacted by the Legislature of the state of Utah:
79 Section 1. Section 31A-5-302 is amended to read:
80 31A-5-302. Registration of securities.
81 (1) [
82 commissioner [
83 (i) by coordination under Section 61-1-9 [
84 (ii) by qualification under Section 61-1-10 . [
85 (b) A registration statement [
87 (2) The commissioner has the powers specified in Sections 61-1-12 , 61-1-15 , 61-1-19 ,
88 61-1-20 , and 61-1-24 .
89 (3) [
90 regulation of securities under this part.
91 (4) As used in this chapter, the words "commission" or "division" under Title 61,
92 Chapter 1, Utah Uniform Securities Act, mean the insurance commissioner.
93 Section 2. Section 61-1-3 is amended to read:
94 61-1-3. Licensing of broker-dealers, agents, and investment advisers.
95 (1) It is unlawful for [
96 or agent unless the person is licensed under this chapter.
97 (2) (a) It is unlawful for [
98 unless the agent is licensed. The license of an agent is not effective during any period when
100 (i) a particular broker-dealer licensed under this chapter; or
101 (ii) a particular issuer.
102 (b) When an agent begins or terminates [
103 broker-dealer or issuer, or begins or terminates [
104 agent, the agent [
105 (c) An agent who terminates an association with a broker-dealer or issuer is considered
106 to be unlicensed until the day on which the division:
107 (i) approves the agent's association with a different broker-dealer or issuer; and
108 (ii) notifies the agent of the division's approval of the association.
109 (d) (i) It is unlawful for a broker-dealer or an issuer engaged, directly or indirectly, in
110 offering, offering to purchase, purchasing, or selling a security in this state, to employ or
111 associate with an individual to engage in an activity related to a securities transaction in this
112 state if:
113 (A) (I) the license of the individual is suspended or revoked; or
114 (II) the individual is barred from employment or association with a broker-dealer, an
115 issuer, or a state or federal covered investment adviser; and
116 (B) the suspension, revocation, or bar described in Subsection (2)(d)(i)(A) is by an
118 (I) under this chapter;
119 (II) of the Securities and Exchange Commission;
120 (III) of a self-regulatory organization; or
121 (IV) of a securities administrator of a state other than Utah.
122 (ii) A broker-dealer or issuer does not violate this Subsection (2)(d) if the
123 broker-dealer or issuer did not know and in the exercise of reasonable care could not have
124 known, of the suspension, revocation, or bar.
125 (iii) An order under this chapter may modify or waive, in whole or in part, the
126 application of Subsection (2)(d)(i) to a broker-dealer or issuer.
127 (3) It is unlawful for [
128 adviser or as an investment adviser representative unless:
129 (a) the person is licensed under this chapter; [
130 (b) the person's only clients in this state are:
131 (i) one or more of the following whether acting for itself or as a trustee with
132 investment control:
133 (A) an investment [
135 (B) another investment [
136 (C) a federal covered [
138 (D) a broker-dealer;
139 (E) a depository institution;
140 (F) a trust company;
141 (G) an insurance [
142 (H) an employee benefit [
143 (I) a governmental [
145 (ii) other institutional investors as are designated by rule or order of the director; or
146 (c) the person has no place of business in this state and during the preceding 12-month
147 period has had not more than five clients, other than those specified in Subsection (3)(b), who
148 are residents of this state.
149 (4) (a) It is unlawful for [
150 (i) a person required to be licensed as an investment adviser under this chapter to
151 employ an investment adviser representative unless the investment adviser representative is
152 licensed under this chapter, [
153 representative is not effective during any period when the person is not employed by an
154 investment adviser licensed under this chapter; [
155 (ii) a federal covered adviser to employ, supervise, or associate with an investment
156 adviser representative having a place of business located in this state, unless [
157 investment adviser representative is:
158 (A) licensed under this chapter; or [
159 (B) exempt from licensing[
160 (iii) an investment adviser, directly or indirectly, to employ or associate with an
161 individual to engage in an activity related to providing investment advice in this state if:
162 (A) (I) the license of the individual is suspended or revoked; or
163 (II) the individual is barred from employment or association with a state or federal
164 covered investment adviser, broker-dealer, or issuer; and
165 (B) the suspension, revocation, or bar is by an order:
166 (I) under this chapter;
167 (II) of the Securities and Exchange Commission;
168 (III) a self-regulatory organization; or
169 (IV) a securities administrator of a state other than Utah.
170 (b) (i) An investment adviser does not violate Subsection (4)(a)(iii) if the investment
171 adviser did not know, and in the exercise of reasonable care could not have known, of the
172 suspension, revocation, or bar.
173 (ii) An order under this chapter may waive, in whole or in part, the application of
174 Subsection (4)(a)(iii) to an investment adviser.
176 chapter begins or terminates employment with an investment adviser, the investment adviser
177 shall promptly notify the division.
178 (d) An investment adviser representative who terminates association with an
179 investment adviser is considered unlicensed until the day on which the division:
180 (i) approves the investment adviser representative's association with a different
181 investment adviser; and
182 (ii) notifies the investment adviser representative of the division's approval of the
184 (5) Except with respect to an investment [
185 those described under Subsections (3)(b) or (3)(c), it is unlawful for [
186 adviser to conduct advisory business in this state unless [
188 Section 3. Section 61-1-4 is amended to read:
189 61-1-4. Licensing and notice filing procedure.
190 (1) (a) A broker-dealer, agent, investment adviser, or investment adviser representative
192 application together with a consent to service of process under Section 61-1-26 .
193 (b) (i) The application shall contain the applicant's Social Security number and
194 whatever information the division by rule requires concerning such matters as:
195 (A) the applicant's form and place of organization;
196 (B) the applicant's proposed method of doing business;
197 (C) (I) the qualifications and business history of the applicant; and
198 (II) in the case of a broker-dealer or investment adviser, the qualifications and
199 business history of any partner, officer, or director, any person occupying a similar status or
200 performing similar functions, or any person directly or indirectly controlling the broker-dealer
201 or investment adviser;
202 (D) [
203 (I) an injunction [
205 (II) a felony conviction [
206 (E) the applicant's financial condition and history.
207 (ii) An applicant's Social Security number is a private record under Subsection
208 63G-2-302 (1)(h).
209 (c) The division may, by rule or order, require an applicant for an initial license to
210 publish an announcement of the application in one or more specified newspapers published in
211 this state.
212 (d) [
214 agent, investment adviser, or investment adviser representative expires on December 31 of
215 each year.
216 (e) (i) If no denial order is in effect and no proceeding is pending under Section
217 61-1-6 , a license becomes effective at noon of the 30th day after an application is filed.
218 (ii) The division may by rule or order specify an earlier effective date and may by
219 order defer the effective date until noon of the 30th day after the filing of any amendment.
220 (iii) Licensing of a broker-dealer automatically constitutes licensing of only one
221 partner, officer, director, or a person occupying a similar status or performing similar
222 functions as a licensed agent of the broker-dealer.
223 (iv) Licensing of an investment adviser automatically constitutes licensing of only one
224 partner, officer, director, or a person occupying a similar status or performing similar
226 (v) (A) For purposes of the activities of a licensee in this state, during the time period
227 that a broker-dealer or investment adviser is licensed in this state:
228 (I) the broker-dealer shall maintain a principal; and
229 (II) the investment adviser shall maintain a designated official.
230 (B) The division may by rule made in accordance with Title 63G, Chapter 3, Utah
231 Administrative Rulemaking Act, provide a process for a person to identify for the division:
232 (I) a principal or designated official at the time a license is issued; and
233 (II) a different principal or designated official if:
234 (Aa) a broker-dealer changes its principal; or
235 (Bb) an investment adviser changes its designated official.
236 (C) A principal or designated official identified in Subsection (1)(e)(v)(A) is not
237 required to be separately licensed with the division.
238 (2) Except with respect to a federal covered [
239 those described in Subsection 61-1-3 (3)(b) or (c), a federal covered adviser shall file with the
240 division, [
241 consisting of [
242 Commission as the division by rule or order may require.
243 (3) (a) [
244 shall pay a reasonable filing fee as determined under Section 61-1-18.4 .
245 (b) [
246 investment adviser representative who is subject to licensing under this chapter shall pay a
247 reasonable filing fee as determined under Section 61-1-18.4 .
248 (c) [
249 and renewal notice filing fee as determined under Section 61-1-18.4 .
250 (d) If the license or renewal is not granted or the application is withdrawn, the division
251 shall retain the fee.
252 (4) A licensed broker-dealer or investment adviser may file an application for
253 licensing of a successor for the unexpired portion of the year. There shall be no filing fee.
254 (5) The division may by rule or order:
255 (a) require a minimum capital for a licensed [
256 the limitations of Section 15 of the Securities Exchange Act of 1934[
257 (b) establish minimum financial requirements for an investment [
258 (i) subject to the limitations of Section 222 of the Investment Advisers Act of 1940[
260 (ii) which may include different requirements for [
261 adviser who [
262 funds or securities and [
263 (6) (a) The division may by rule or order require a licensed [
264 broker-dealer or investment [
265 authority over client funds or securities to post one or more bonds in amounts and under
266 conditions as the division may prescribe, subject to the limitations of Section 15 of the
267 Securities Exchange Act of 1934 for [
268 Investment Advisers Act of 1940 for an investment [
270 (b) [
271 a required bond.
272 (c) [
273 case of an investment adviser whose minimum financial requirements, which may be defined
274 by rule, exceeds the amounts required by the division.
275 (d) [
276 cause of action under Section 61-1-22 and, if the division by rule or order requires, by any
277 person who has a cause of action not arising under this chapter.
278 (e) [
280 (i) the expiration of [
281 violation; or
282 (ii) the expiration of two years after the discovery by the plaintiff of the facts
283 constituting the violation[
284 Section 4. Section 61-1-6 is amended to read:
285 61-1-6. Denial, suspension, revocation, cancellation, or withdrawal of license --
287 (1) Subject to the [
288 provisions of this section and by means of an adjudicative [
289 conducted in accordance with Title 63G, Chapter 4, Administrative Procedures Act[
290 (a) the commission may issue an order:
293 person occupying a similar status or performing similar functions for a licensee from
294 employment with a licensed broker-dealer or investment adviser;
296 business for which a license is required in this state;
299 Subsection (1)(a); or
300 (b) the director may deny a license.
301 (2) (a) The [
302 accordance with Subsection (1)(a) or the director may impose a sanction in accordance with
303 Subsection (1)(b) if the commission or director finds:
304 (i) that it is in the public interest; and [
305 (ii) with respect to the applicant or licensee or, in the case of a broker-dealer or
306 investment adviser, [
307 status or performing similar functions, or [
308 broker-dealer or investment adviser, that the person:
310 application or as of any date after filing in the case of an order denying effectiveness[
311 (I) was incomplete in [
312 (II) contained [
313 was made, false or misleading with respect to [
315 this chapter or a predecessor act or [
318 guilty, a plea of no contest, a plea in abeyance, or a similar plea of guilty to:
319 (I) a misdemeanor involving:
320 (Aa) fraud or dishonesty; or
321 (Bb) a security or any aspect of the securities business[
322 (II) a felony;
324 jurisdiction from engaging in or continuing [
325 the securities business;
327 predecessor [
328 investment adviser, or investment adviser representative; or
329 (II) is the subject of an order of the director or a predecessor denying a license as a
330 broker-dealer, agent, investment adviser, or investment adviser representative;
333 commodities agency or administrator of another state, Canadian province or territory, or a
334 court of competent jurisdiction that the person has willfully violated:
335 (Aa) the Securities Act of 1933[
336 (Bb) the Securities Exchange Act of 1934[
337 (Cc) the Investment Advisers Act of 1940[
338 (Dd) the Investment Company Act of 1940[
339 (Ee) the Commodity Exchange Act[
340 (Ff) the securities or commodities law of [
342 (Aa) entered within the past five years by the securities administrator of [
343 or Canadian province or territory or by the Securities and Exchange Commission denying or
344 revoking a license as a broker-dealer, agent, investment adviser, or investment adviser
345 representative, or the substantial equivalent of those terms; [
346 (Bb) of the Securities and Exchange Commission suspending or expelling the person
347 from a national securities exchange or national securities association registered under the
348 Securities Exchange Act of 1934[
349 (Cc) that is a United States post office fraud order; [
357 that obligations cannot be met as they mature, except that the director or commission may not
358 enter an order against a broker-dealer or investment adviser under this Subsection
361 of the securities business, except as otherwise provided in Subsection [
363 (I) agents or employees, if the person is a broker-dealer[
364 (II) investment adviser representatives or employees, if the person is an investment
365 adviser; [
367 the division of a deficiency[
375 (L) subject to Subsection (2)(c), is a licensee or applicant that is materially the same
376 entity as an entity that is defunct, insolvent, statutorily disqualified, barred, or described in
377 Subsection (2)(a)(ii)(D); or
378 (M) has had a final judgment entered against the person in a civil action on grounds
380 (I) fraud;
381 (II) embezzlement;
382 (III) misrepresentation; or
383 (IV) deceit.
384 (b) (i) The commission may not commence an agency action to revoke or suspend a
385 license under Subsection (2)(a)(ii)(F) more than one year from the day on which the order on
386 which the division relies is entered.
387 (ii) The commission or director may not enter an order under Subsection (2)(a)(ii)(F)
388 on the basis of an order under another state's law unless that order is issued on the basis of
389 facts that would constitute a ground for an agency action under this section on the day on
390 which the notice of agency action is filed.
391 (c) (i) For purposes of Subsection (2)(a)(ii)(L), the director or commission may
392 consider one or more factors in determining whether an entity is materially the same as another
393 entity including the following:
394 (A) the entity has one or more of the same executive officers as the prior entity;
395 (B) the entity conducts operations in the same location as the prior entity;
396 (C) the entity employs two or more agents from the prior entity;
397 (D) the entity solicits or serves two or more customers of the prior entity;
398 (E) the entity has a name similar to the prior entity; or
399 (F) another factor showing a relationship between the entity and the prior entity.
400 (ii) In addition to imposing a sanction in accordance with Subsection (1), for an entity
401 that is materially the same as an entity described in Subsection (2)(a)(ii)(L), the director or the
402 commission may:
403 (A) limit the license of the entity; or
404 (B) require additional disclosures to the customers or employees of the entity.
408 basis of a fact or transaction known to [
409 unless the proceeding is instituted within the [
410 license takes effect.
413 (a) The director or commission may not enter an order against a broker-dealer on the
414 basis of the lack of qualification of [
415 (i) the broker-dealer if the broker-dealer is an individual; or
416 (ii) an agent of the broker-dealer.
417 (b) The director or commission may not enter an order against an investment adviser
418 on the basis of the lack of qualification of [
419 (i) the investment adviser if the investment adviser is an individual; or
420 (ii) an investment adviser representative.
421 (c) The director or commission may not enter an order solely on the basis of lack of
422 experience if the applicant or licensee is qualified by training or knowledge.
423 (d) The director or commission shall consider that:
424 (i) an agent who will work under the supervision of a licensed broker-dealer need not
425 have the same qualifications as a broker-dealer; and [
426 (ii) an investment adviser representative who will work under the supervision of a
427 licensed investment adviser need not have the same qualifications as an investment adviser.
428 (e) (i) The director or commission shall consider that an investment adviser is not
429 necessarily qualified solely on the basis of experience as a broker-dealer or agent.
430 (ii) When the director finds that an applicant for a license as a broker-dealer is not
431 qualified as an investment adviser, the director may condition the applicant's license as a
432 broker-dealer upon the applicant's not transacting business in this state as an investment
434 (f) (i) The division may by rule provide for examinations, which may be written or oral
435 or both, to be taken by any class of or all applicants.
436 (ii) The division may by rule or order waive the examination requirement as to a
437 person or class of persons if the division determines that the examination is not necessary for
438 the protection of investors.
440 in existence, has ceased to do business as a broker-dealer, agent, investment adviser, or
441 investment adviser representative, or is subject to an adjudication of mental incompetence or
442 to the control of a committee, conservator, or guardian, or cannot be located after reasonable
443 search, the division may summarily cancel or deny the license or application according to the
444 procedures and requirements of Title 63G, Chapter 4, Administrative Procedures Act.
446 investment adviser representative becomes effective 30 days after receipt of an application to
447 withdraw or within a shorter period of time as determined by the director, unless:
448 (i) a revocation or suspension proceeding is pending when the application is filed;
449 (ii) a proceeding to revoke or suspend or to impose conditions upon the withdrawal is
450 instituted within 30 days after the application is filed; or
451 (iii) additional information is requested by the division regarding the withdrawal
453 (b) (i) If a proceeding described in Subsection [
454 director shall designate by order when and under what conditions the withdrawal becomes
456 (ii) If additional information is requested, withdrawal is effective 30 days after the
457 additional information is filed.
458 (c) (i) If no proceeding is pending or instituted, and withdrawal automatically becomes
459 effective, the director may initiate a revocation or suspension proceeding under this section
460 within one year after withdrawal [
461 (ii) The [
463 Section 5. Section 61-1-9 is amended to read:
464 61-1-9. Registration by coordination.
465 (1) [
466 Regulation A or [
467 of 1933 in connection with the same offering may be registered by coordination.
468 (2) A registration statement under this section shall contain the following information
469 and be accompanied by the following documents in addition to the information specified in
470 Subsection 61-1-11 (3) and the consent to service of process required by Section 61-1-26 :
471 (a) one copy of the disclosure statement together with all its amendments filed under
472 the Securities Act of 1933;
473 (b) if the division by rule or otherwise requires, a copy of the articles of incorporation
474 and bylaws or their substantial equivalents currently in effect, a copy of any agreements with
475 or among underwriters, a copy of any indenture or other instrument governing the issuance of
476 the security to be registered and a specimen or copy of the security;
477 (c) if the division requests, any other information, or copies of any other documents,
478 filed under the Securities Act of 1933; and
479 (d) an undertaking to forward all future amendments to the disclosure statement
480 promptly and in any event not later than the first working day after the day they are forwarded
481 to or filed with the Securities and Exchange Commission, whichever first occurs.
482 (3) A registration statement under this section automatically becomes effective at the
483 moment the disclosure statement becomes effective if all the following conditions are satisfied:
484 (a) no stop order is in effect and no proceeding is pending under Section 61-1-12 ;
485 (b) the disclosure statement [
486 working days; and
487 (c) a statement of the maximum and minimum proposed offering prices and the
488 maximum underwriting discounts and commissions [
489 days or such shorter period as the division permits by rule or otherwise and the offering is
490 made within those limitations.
491 (4) (a) [
492 (i) notify the division [
493 the disclosure statement became effective and the content of the price amendment, if any[
494 and [
495 (ii) file a posteffective amendment containing the information and documents in the
496 price amendment.
497 (b) "Price amendment" means the final federal amendment [
498 statement of the:
499 (i) offering price[
500 (ii) underwriting and selling discounts or commissions[
501 (iii) amount of proceeds[
502 (iv) conversion rates[
503 (v) call prices[
504 (vi) other matters dependent upon the offering price.
505 (5) (a) Upon failure to receive the required notification and posteffective amendment
506 with respect to the price amendment, the division may enter a stop order, without notice or
507 hearing, retroactively denying effectiveness to the registration statement or suspending its
508 effectiveness until compliance with Subsection (4), if [
509 registrant [
511 (b) If the registrant proves compliance with the requirements of Subsection (4) as to
512 notice and posteffective amendment, the stop order is void as of the time of its entry.
513 (6) The division may by rule or otherwise waive either or both of the conditions
514 specified in Subsections (3)(b) and (3)(c).
515 (7) If the disclosure statement becomes effective before all the conditions in
516 Subsections (3)(b) and (3)(c) are satisfied and they are not waived, the disclosure statement
517 automatically becomes effective as soon as all the conditions are satisfied.
518 (8) If the registrant advises the division of the date when the disclosure statement is
519 expected to become effective, the division shall promptly advise the registrant [
521 whether it then contemplates the institution of proceedings under Section 61-1-12 , but this
522 advice by the division does not preclude the institution of such a proceeding at any time.
523 (9) The division may by rule or order permit registration by coordination of [
524 security for which a notification or similar document [
525 Act of 1933 in connection with the same offering.
526 Section 6. Section 61-1-11 is amended to read:
527 61-1-11. Provisions applicable to registration generally.
528 (1) A registration statement may be filed by the issuer, [
529 whose behalf the offering is to be made, or a licensed broker-dealer.
530 (2) [
531 under Section 61-1-18.4 .
532 (3) [
533 (a) the amount of securities to be offered in this state;
534 (b) the states in which a registration statement or similar document in connection with
535 the offering [
536 (c) [
537 by the regulatory authorities in each state or by [
539 (4) [
540 preceding the filing of a registration statement may be incorporated by reference in the
541 registration statement to the extent that the document is currently accurate.
542 (5) The division may permit the omission of [
543 from [
544 (6) In the case of a nonissuer distribution, information may not be required under
545 Subsection (9) or Section 61-1-10 [
546 filing the registration statement or to the persons on whose behalf the distribution is to be
547 made, or can be furnished by them without unreasonable effort or expense.
548 (7) (a) The division may require as a condition of registration by qualification or
550 (i) that [
551 for a consideration substantially different from the public offering price, or to [
552 for a consideration other than cash, be deposited in escrow; and
553 (ii) that the proceeds from the sale of the registered security be impounded until the
554 issuer receives a specified amount from the sale of the security either in this state or elsewhere.
555 (b) The division may determine the conditions of [
556 required by this Subsection (7), but it may not reject a depository solely because of location in
557 another state.
558 (8) (a) [
559 (b) All outstanding securities of the same class as a registered security are considered
560 to be registered for the purpose of [
561 (i) so long as the registration statement is effective; and
562 (ii) between the 30th day after the entry of [
563 the effectiveness of the registration statement under Section 61-1-12 , if the registration
564 statement did not relate in whole or in part to a nonissuer distribution, and one year from the
565 effective date of the registration statement.
566 (c) A registration statement may not be withdrawn for one year from its effective date
567 if [
568 (d) A registration statement may be withdrawn otherwise only in the discretion of the
570 (9) So long as a registration statement is effective and the offering is not completely
571 sold, the division may require the person who filed the registration statement to file reports,
572 not more often than quarterly, to keep reasonably current the information contained in the
573 registration statement and to disclose the progress of the offering.
574 (10) (a) A registration statement may be amended after its effective date so as to
575 increase the securities specified to be offered and sold, if the public offering price and
576 underwriters' discounts and commissions are not changed from the respective amounts of
577 which the division was informed.
578 (b) The amendment becomes effective when the division so orders.
579 (c) [
580 under Section 61-1-18.4 with respect to the additional securities proposed to be offered.
581 (d) The amendment relates back to the date of the sale of the additional security being
582 registered, provided that within six months of the date of the sale the amendment is filed and
583 the additional registration fee is paid.
593 Securities Act of 1933 or that is a "mortgage related security" as defined in Section 3(a)(41) of
594 the Securities Exchange Act of 1934 [
595 61-1-14 (1)(a) to the same extent as [
596 and interest by the United States or an agency or instrumentality of the United States.
597 Accordingly, any such security shall comply with the applicable registration and qualification
598 requirements set forth in this chapter.
599 (b) This Subsection (11) specifically overrides the preemption of state law contained
600 in Section 106(c) of the Secondary Mortgage Market Enhancement Act of 1984, Public Law
601 Number 98-440.
602 Section 7. Section 61-1-11.1 is amended to read:
603 61-1-11.1. Hearings for certain exchanges of securities.
604 (1) An application may be made to the division for approval to issue securities or to
605 deliver other consideration in exchange for:
606 (a) one or more [
607 (b) partly in exchange for one or more [
608 property interests, and partly for cash.
609 (2) The director may:
610 (a) hold a hearing upon the fairness of the terms and conditions of an exchange
611 described in Subsection (1); and
612 (b) approve or disapprove the terms and conditions of an exchange described in
613 Subsection (1).
614 (3) After conducting a hearing under this section, if the director finds that the terms
615 and conditions of an exchange described in Subsection (1) are fair to those to whom the
616 securities will be issued, the director may:
617 (a) approve the fairness of the terms and conditions of the exchange described in
618 Subsection (1); and
619 (b) approve the exchange described in Subsection (1).
620 (4) In a hearing under this section, all persons to whom it is proposed to issue
621 securities or to deliver other consideration in an exchange under Subsection (1) may appear.
622 (5) An application under Subsection (1) shall contain the information and be
623 accompanied by the documents required by rule or order of the division.
624 (6) [
625 determined under Section 61-1-18.4 .
626 (7) An applicant under this section shall provide adequate notice of any hearing under
627 this section to all persons that have a right to appear, under Subsection (4), at the hearing.
628 (8) An application may be made under this section regardless of whether the security
629 or transaction being issued is:
630 (a) exempt from registration; or
631 (b) not required to be registered.
632 (9) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
633 the division may establish rules to govern the conduct of a hearing permitted by this section in
634 accordance with Sections 61-1-18.5 and 61-1-24 .
635 (10) This section is intended to provide for a fairness hearing that satisfies the
636 requirements of [
637 Section 77c(a)(10), or any comparable section that may subsequently be enacted.
638 Section 8. Section 61-1-12 is amended to read:
639 61-1-12. Denial, suspension, and revocation of registration.
640 (1) Upon approval by a majority of the [
641 director, by means of an adjudicative [
642 Title 63G, Chapter 4, Administrative Procedures Act, may issue a stop order that denies
643 effectiveness to, or suspends or revokes the effectiveness of, any securities registration
644 statement and may impose a fine if the director finds that the order is in the public interest and
646 (a) the registration statement, as of its effective date or as of any earlier date in the
647 case of an order denying effectiveness, or [
648 as of its effective date, or [
649 material respect, or contains [
650 which it was made, false or misleading with respect to [
651 (b) [
652 imposed under this chapter, [
654 (i) the person filing the registration statement;
655 (ii) the issuer, [
656 occupying a similar status or performing similar functions, or [
657 indirectly controlling or controlled by the issuer, but only if the person filing the registration
658 statement is directly or indirectly controlled by or acting for the issuer; or
659 (iii) [
660 (c) subject to Subsection (5), the security registered or sought to be registered is the
661 subject of an administrative stop order or similar order, or a permanent or temporary
662 injunction of [
663 or state act applicable to the offering; [
669 (d) the issuer's enterprise or method of business includes or would include activities
670 that are illegal where performed;
671 (e) the offering has worked or tended to work a fraud upon purchasers or would so
673 (f) the offering [
674 underwriters' and sellers' discounts, commissions, or other compensation, or promoters' profits
675 or participation, or unreasonable amounts or kinds of options;
679 a failure to comply with the undertaking required by Subsection 61-1-9 (2)(d); or
681 (2) The director may enter an order under this section but may vacate the order if the
682 director finds that the conditions that prompted its entry have changed or that it is otherwise in
683 the public interest to do so.
684 (3) The director may not issue a stop order against an effective registration statement
685 on the basis of a fact or transaction known to the division when the registration statement
686 became effective unless the proceeding is instituted within the [
687 which the registration statement becomes effective.
688 (4) [
689 by reason of [
690 person proves by a preponderance of the evidence that the person did not know, and in the
691 exercise of reasonable care could not have known, of the order.
692 (5) (a) The director may not commence agency action against an effective registration
693 statement under Subsection (1)(c) more than one year from the day on which the order or
694 injunction on which the director relies is issued.
695 (b) The director may not enter an order under Subsection (1)(c) on the basis of an
696 order or injunction entered under the securities act of another state unless that order or
697 injunction is issued on the basis of facts that would constitute a ground for a stop order under
698 this section at the time the director commences the agency action.
699 Section 9. Section 61-1-13 is amended to read:
700 61-1-13. Definitions.
701 (1) As used in this chapter:
702 (a) "Affiliate" means a person that, directly or indirectly, through one or more
703 intermediaries, controls or is controlled by, or is under common control with a person
705 (b) (i) "Agent" means [
706 broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities.
707 (ii) "Agent" does not include an individual who represents:
708 (A) an issuer, who receives no commission or other remuneration, directly or
709 indirectly, for effecting or attempting to effect purchases or sales of securities in this state, and
710 who effects transactions:
711 (I) in securities exempted by Subsection 61-1-14 (1)(a), (b), (c), [
712 (II) exempted by Subsection 61-1-14 (2);
713 (III) in a covered security as described in Sections 18(b)(3) and 18(b)(4)(D) of the
714 Securities Act of 1933; or
715 (IV) with existing employees, partners, officers, or directors of the issuer; or
716 (B) a broker-dealer in effecting transactions in this state limited to those transactions
717 described in Section 15(h)(2) of the Securities Exchange Act of 1934.
718 (iii) A partner, officer, or director of a broker-dealer or issuer, or a person occupying a
719 similar status or performing similar functions, is an agent only if the partner, officer, director,
720 or person otherwise comes within the definition of "agent."
721 (iv) "Agent" does not include a person described in Subsection (3).
722 (c) (i) "Broker-dealer" means [
723 transactions in securities for the account of others or for the person's own account.
724 (ii) "Broker-dealer" does not include:
725 (A) an agent;
726 (B) an issuer;
727 (C) a [
729 (D) a person who has no place of business in this state if:
730 (I) the person effects transactions in this state exclusively with or through:
731 (Aa) the issuers of the securities involved in the transactions;
732 (Bb) other broker-dealers; [
737 (Cc) a depository institution, whether acting for itself or as a trustee;
738 (Dd) a trust company, whether acting for itself or as a trustee;
739 (Ee) an insurance company, whether acting for itself or as a trustee;
740 (Ff) an investment company, as defined in the Investment Company Act of 1940,
741 whether acting for itself or as a trustee;
742 (Gg) a pension or profit-sharing trust, whether acting for itself or as a trustee; or
743 (Hh) another financial institution or institutional buyer, whether acting for itself or as
744 a trustee; or
745 (II) during any period of 12 consecutive months the person does not direct more than
746 15 offers to sell or buy into this state in any manner to persons other than those specified in
747 Subsection (1)(c)(ii)(D)(I), whether or not the offeror or [
748 present in this state;
749 (E) a general partner who organizes and effects transactions in securities of three or
750 fewer limited partnerships, of which the person is the general partner, in any period of 12
751 consecutive months;
752 (F) a person whose participation in transactions in securities is confined to those
753 transactions made by or through a broker-dealer licensed in this state;
754 (G) a person who is a real estate broker licensed in this state and who effects
755 transactions in a bond or other evidence of indebtedness secured by a real or chattel mortgage
756 or deed of trust, or by an agreement for the sale of real estate or chattels, if the entire mortgage,
757 deed or trust, or agreement, together with all the bonds or other evidences of indebtedness
758 secured thereby, is offered and sold as a unit;
759 (H) a person effecting transactions in commodity contracts or commodity options;
760 (I) a person described in Subsection (3); or
761 (J) other persons as the division, by rule or order, may designate, consistent with the
762 public interest and protection of investors, as not within the intent of this Subsection (1)(c).
763 (d) "Buy" or "purchase" means [
764 acquisition of a security or interest in a security for value.
765 (e) "Commission" means the Securities Commission created in Section 61-1-18.5 .
767 (i) [
768 or [
769 offered or sold by the owner or lessee of the real property;
770 (ii) [
771 whose fair market value is at least 15% greater than the value of the metal it contains;
772 (iii) [
774 (iv) [
775 (v) [
776 (vi) all other goods, articles, products, or items of any kind, except [
777 offered or sold by art dealers, at public auction or offered or sold through a private sale by the
778 owner of the work.
780 the purchase or sale, primarily for speculation or investment purposes and not for use or
781 consumption by the offeree or purchaser, of one or more commodities, whether for immediate
782 or subsequent delivery or whether delivery is intended by the parties, and whether
783 characterized as a cash contract, deferred shipment or deferred delivery contract, forward
784 contract, futures contract, installment or margin contract, leverage contract, or otherwise.
785 (ii) [
786 the contrary, be presumed to be offered or sold for speculation or investment purposes.
787 (iii) (A) A commodity contract [
789 the payment in good funds any portion of the purchase price, physical delivery of the total
790 amount of each commodity to be purchased under the contract or agreement.
791 (B) [
792 amount of each commodity to be purchased under the contract or agreement when the
793 commodity or commodities are held as collateral for a loan or are subject to a lien of any
794 person when the loan or lien arises in connection with the purchase of each commodity or
797 giving a party to the option the right but not the obligation to purchase or sell one or more
798 commodities or one or more commodity contracts, or both whether characterized as an option,
799 privilege, indemnity, bid, offer, put, call, advance guaranty, decline guaranty, or otherwise.
800 (ii) "Commodity option" does not include an option traded on a national securities
801 exchange registered:
802 (A) with the [
803 (B) on a board of trade designated as a contract market by the Commodity Futures
804 Trading Commission.
805 (i) "Depository institution" is as defined in Section 7-1-103 .
808 61-1-18 .
813 (i) is registered under Section 203 of the Investment Advisers Act of 1940; or
814 (ii) is excluded from the definition of "investment adviser" under Section 202(a)(11)
815 of the Investment Advisers Act of 1940.
817 under Section 18(b) of the Securities Act of 1933 or rules or regulations promulgated under
818 Section 18(b) of the Securities Act of 1933.
822 debt securities, or dividends as to equity securities.
824 (A) for compensation, engages in the business of advising others, either directly or
825 through publications or writings, as to the value of securities or as to the advisability of
826 investing in, purchasing, or selling securities; or
827 (B) for compensation and as a part of a regular business, issues or promulgates
828 analyses or reports concerning securities.
829 (ii) "Investment adviser" includes a financial [
830 person who:
831 (A) as an integral component of other financially related services, [
832 the investment advisory services described in Subsection (1)[
833 compensation and as part of a business; or
834 (B) [
835 services described in Subsection (1)[
836 (iii) "Investment adviser" does not include:
837 (A) an investment adviser representative;
838 (B) a [
839 (C) a lawyer, accountant, engineer, or teacher whose performance of these services is
840 solely incidental to the practice of the profession;
841 (D) a broker-dealer or its agent whose performance of these services is solely
842 incidental to the conduct of its business as a broker-dealer and who receives no special
843 compensation for the services;
844 (E) a publisher of [
845 magazine, or business or financial publication or service, of general, regular, and paid
846 circulation, whether communicated in hard copy form, or by electronic means, or otherwise,
847 that does not consist of the rendering of advice on the basis of the specific investment
848 situation of each client;
849 (F) [
850 (G) a person described in Subsection (3); or
851 (H) such other persons not within the intent of this Subsection (1)[
852 division may by rule or order designate.
854 of, or a person occupying a similar status or performing similar functions, or other individual,
855 except clerical or ministerial personnel, who:
856 (A) (I) is employed by or associated with an investment adviser who is licensed or
857 required to be licensed under this chapter; or
858 (II) has a place of business located in this state and is employed by or associated with
859 a federal covered adviser; and
860 (B) does any of the following:
861 (I) makes [
862 regarding securities;
863 (II) manages accounts or portfolios of clients;
864 (III) determines which recommendation or advice regarding securities should be given;
865 (IV) solicits, offers, or negotiates for the sale of or sells investment advisory services;
867 (V) supervises employees who perform any of the acts described in this Subsection
869 (ii) "Investment [
870 in Subsection (3).
871 (s) "Investment contract" includes:
872 (i) an investment in a common enterprise with the expectation of profit to be derived
873 through the essential managerial efforts of someone other than the investor; or
874 (ii) an investment by which:
875 (A) an offeree furnishes initial value to an offerer;
876 (B) a portion of the initial value is subjected to the risks of the enterprise;
877 (C) the furnishing of the initial value is induced by the offerer's promises or
878 representations that give rise to a reasonable understanding that a valuable benefit of some
879 kind over and above the initial value will accrue to the offeree as a result of the operation of
880 the enterprise; and
881 (D) the offeree does not receive the right to exercise practical or actual control over the
882 managerial decisions of the enterprise.
883 (t) "Isolated transaction" means not more than a total of two transactions that occur
884 anywhere during six consecutive months.
886 security or has outstanding a security that it has issued.
887 (ii) With respect to a preorganization certificate or subscription, "issuer" means the
889 (iii) "Issuer" means the [
890 assuming duties of a depositor or manager under the provisions of the trust or other agreement
891 or instrument under which the security is issued with respect to:
892 (A) interests in trusts, including collateral trust certificates, voting trust certificates,
893 and certificates of deposit for securities; or
894 (B) shares in an investment company without a board of directors.
895 (iv) With respect to an equipment trust certificate, a conditional sales contract, or
896 similar securities serving the same purpose, "issuer" means the person by whom the equipment
897 or property is to be used.
898 (v) With respect to interests in partnerships, general or limited, "issuer" means the
899 partnership itself and not the general partner or partners.
900 (vi) With respect to certificates of interest or participation in oil, gas, or mining titles
901 or leases or in payment out of production under the titles or leases, "issuer" means the owner
902 of the title or lease or right of production, whether whole or fractional, who creates fractional
903 interests therein for the purpose of sale.
906 (i) an individual;
907 (ii) a corporation;
908 (iii) a partnership;
909 (iv) a limited liability company;
910 (v) an association;
911 (vi) a joint-stock company;
912 (vii) a joint venture;
913 (viii) a trust where the interests of the beneficiaries are evidenced by a security;
914 (ix) an unincorporated organization;
915 (x) a government; or
916 (xi) a political subdivision of a government.
918 (i) silver;
919 (ii) gold;
920 (iii) platinum;
921 (iv) palladium;
922 (v) copper; and
923 (vi) such other substances as the division may specify by rule.
925 more persons, takes initiative in founding or organizing the business or enterprise of a person.
926 (z) (i) Except as provided in Subsection (1)(z)(ii), "record" means information that is:
927 (A) inscribed in a tangible medium; or
928 (B) (I) stored in an electronic or other medium; and
929 (II) retrievable in perceivable form.
930 (ii) This Subsection (1)(z) does not apply when the context requires otherwise,
931 including when "record" is used in the following phrases:
932 (A) "of record";
933 (B) "official record"; or
934 (C) "public record."
936 disposition of, a security or interest in a security for value.
937 (ii) "Offer" or "offer to sell" includes [
938 solicitation of an offer to buy, a security or interest in a security for value.
939 (iii) The following are examples of the definitions in Subsection (1)[
940 (A) [
941 purchase of a security or any other thing, is part of the subject of the purchase, and [
942 is offered and sold for value;
943 (B) a purported gift of assessable stock is an offer or sale as is each assessment levied
944 on the stock;
945 (C) an offer or sale of a security that is convertible into, or entitles its holder to acquire
946 or subscribe to another security of the same or another issuer is an offer or sale of that security,
947 and also an offer of the other security, whether the right to convert or acquire is exercisable
948 immediately or in the future;
949 (D) [
950 constitutes an offer or sale of the security received in a conversion or exchange, and the offer
951 to buy or the purchase of the security converted or exchanged;
952 (E) securities distributed as a dividend wherein the person receiving the dividend
953 surrenders the right, or the alternative right, to receive a cash or property dividend is an offer
954 or sale;
955 (F) a dividend of a security of another issuer is an offer or sale; or
956 (G) the issuance of a security under a merger, consolidation, reorganization,
957 recapitalization, reclassification, or acquisition of assets [
958 or sale of the security issued as well as the offer to buy or the purchase of [
959 surrendered in connection therewith, unless the sole purpose of the transaction is to change the
960 issuer's domicile.
961 (iv) The terms defined in Subsections (1)[
962 (A) a good faith gift;
963 (B) a transfer by death;
964 (C) a transfer by termination of a trust or of a beneficial interest in a trust;
965 (D) a security dividend not within Subsection (1)[
966 (E) a securities split or reverse split[
972 federal statutes of those names as amended before or after the effective date of this chapter.
973 (cc) "Securities Exchange Commission" means the United States Securities Exchange
974 Commission created by the Securities Exchange Act of 1934.
976 (A) note;
977 (B) stock;
978 (C) treasury stock;
979 (D) bond;
980 (E) debenture;
981 (F) evidence of indebtedness;
982 (G) certificate of interest or participation in [
983 (H) collateral-trust certificate;
984 (I) preorganization certificate or subscription;
985 (J) transferable share;
986 (K) investment contract;
987 (L) burial certificate or burial contract;
988 (M) voting-trust certificate;
989 (N) certificate of deposit for a security;
990 (O) certificate of interest or participation in an oil, gas, or mining title or lease or in
991 payments out of production under such a title or lease;
992 (P) commodity contract or commodity option;
993 (Q) interest in a limited liability company;
994 (R) viatical settlement interest; or
995 (S) in general, [
997 for, guarantee of, or warrant or right to subscribe to or purchase [
998 listed in Subsections (1)(dd)(i)(A) through (R).
999 (ii) "Security" does not include [
1000 (A) an insurance or endowment policy or annuity contract under which an insurance
1001 company promises to pay money in a lump sum or periodically for life or some other specified
1003 (B) an interest in a limited liability company in which the limited liability company is
1004 formed as part of an estate plan where all of the members are related by blood or marriage,
1006 the members are actively engaged in the management of the limited liability company; or
1007 (C) (I) a whole long-term estate in real property;
1008 (II) an undivided fractionalized long-term estate in real property that consists of ten or
1009 fewer owners; or
1010 (III) an undivided fractionalized long-term estate in real property that consists of more
1011 than ten owners if, when the real property estate is subject to a management agreement:
1012 (Aa) the management agreement permits a simple majority of owners of the real
1013 property estate to not renew or to terminate the management agreement at the earlier of the end
1014 of the management agreement's current term, or 180 days after the day on which the owners
1015 give notice of termination to the manager;
1016 (Bb) the management agreement prohibits, directly or indirectly, the lending of the
1017 proceeds earned from the real property estate or the use or pledge of its assets to [
1018 or entity affiliated with or under common control of the manager; and
1019 (Cc) the management agreement complies with any other requirement imposed by rule
1020 by the Real Estate Commission under Section 61-2-26 .
1021 (iii) For purposes of Subsection (1)[
1022 have the right to vote, or the right to information concerning the business and affairs of the
1023 limited liability company, or the right to participate in management, [
1024 without more, that all members are actively engaged in the management of the limited liability
1027 District of Columbia, and Puerto Rico.
1029 in real property by two or more persons that is a:
1030 (A) tenancy in common; or
1031 (B) any other legal form of undivided estate in real property including:
1032 (I) a fee estate;
1033 (II) a life estate; or
1034 (III) other long-term estate.
1035 (ii) "Undivided fractionalized long-term estate" does not include a joint tenancy.
1037 fractional interest in any of the following that is the subject of a viatical settlement:
1038 (A) a life insurance policy; or
1039 (B) the death benefit under a life insurance policy.
1040 (ii) "Viatical settlement interest" does not include the initial purchase from the viator
1041 by a viatical settlement provider.
1043 tenancy [
1044 (i) a fee estate;
1045 (ii) a life estate; or
1046 (iii) other long-term estate.
1048 of legal holidays listed in Section 63G-1-301 .
1049 (2) A term not defined in this section shall have the meaning as established by
1050 division rule. The meaning of a term neither defined in this section nor by rule of the division
1051 shall be the meaning commonly accepted in the business community.
1052 (3) (a) This Subsection (3) applies to:
1053 (i) the offer or sale of a real property estate exempted from the definition of security
1054 under Subsection (1)[
1055 (ii) the offer or sale of an undivided fractionalized long-term estate that is the offer of
1056 a security.
1057 (b) A person who, directly or indirectly receives compensation in connection with the
1058 offer or sale as provided in this Subsection (3) of a real property estate is not an agent,
1059 broker-dealer, investment adviser, or [
1060 chapter if that person is licensed under Chapter 2, Division of Real Estate, as:
1061 (i) a principal real estate broker;
1062 (ii) an associate real estate broker; or
1063 (iii) a real estate sales agent.
1064 (4) The list of real property estates excluded from the definition of securities under
1065 Subsection (1)[
1066 are not a security.
1067 Section 10. Section 61-1-14 is amended to read:
1068 61-1-14. Exemptions.
1069 (1) The following securities are [
1070 (a) [
1071 States, [
1072 other instrumentality of one or more of the foregoing, or [
1073 of the foregoing;
1074 (b) [
1075 a political subdivision of [
1076 instrumentality of one or more of the foregoing, or [
1077 with which the United States currently maintains diplomatic relations, if the security is
1078 recognized as a valid obligation by the issuer or guarantor;
1079 (c) [
1080 by, [
1082 of [
1092 security regulated in respect of its rates or in its issuance by a governmental authority of the
1093 United States, [
1102 (e) (i) a federal covered security specified in the Securities Act of 1933, Section
1103 18(b)(1), 15 U.S.C. Section 77r(b)(1), or by rule adopted under that provision;
1104 (ii) a security listed or approved for listing on another securities market specified by
1105 rule under this chapter;
1106 (iii) any of the following with respect to a security described in Subsection (1)(e)(i) or
1108 (A) a put or a call option contract;
1109 (B) a warrant; or
1110 (C) a subscription right on or with respect to the security;
1111 (iv) an option or similar derivative security on a security or an index of securities or
1112 foreign currencies issued by a clearing agency that is:
1113 (A) registered under the Securities Exchange Act of 1934; and
1114 (B) listed or designated for trading on a national securities exchange, or a facility of a
1115 national securities association registered under the Securities Exchange Act of 1934;
1116 (v) an offer or sale, of the underlying security in connection with the offer, sale, or
1117 exercise of an option or other security that was exempt when the option or other security was
1118 written or issued; or
1119 (vi) an option or a derivative security designated by the Securities and Exchange
1120 Commission under Securities Exchange Act of 1934, Section 9(b), 15 U.S.C. Section 78i(b);
1122 private profit but exclusively for religious, educational, benevolent, charitable, fraternal,
1123 social, athletic, or reformatory purposes, or as a chamber of commerce or trade or professional
1124 association; and
1125 (ii) [
1126 General Provisions Relating to Agricultural Cooperative Associations, and [
1127 issued by a corporation to which [
1128 compliance with [
1139 purchase, option, savings, pension, profit-sharing, or similar benefit plan;
1169 (h) a security issued by an investment company that is registered, or that has filed a
1170 registration statement, under the Investment Company Act of 1940; and
1172 is not necessary or appropriate for the protection of investors.
1173 (2) The following transactions are [
1174 61-1-15 :
1175 (a) [
1177 (b) [
1178 the division:
1179 (i) information about the issuer of the security as required by the division is currently
1180 listed in a securities manual recognized by the division, and the listing is based upon such
1181 information as required by rule of the division; or
1182 (ii) the security has a fixed maturity or a fixed interest or dividend provision and there
1184 or during the existence of the issuer and any predecessors if less than three years, in the
1185 payment of principal, interest, or dividends on the security;
1186 (c) [
1187 pursuant to an unsolicited order or offer to buy;
1188 (d) [
1189 is made and an underwriter, or among underwriters;
1190 (e) [
1191 chattel mortgage or deed of trust, or by an agreement for the sale of real estate or chattels, if
1192 the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidences
1193 of indebtedness secured thereby, is offered and sold as a unit;
1194 (f) [
1195 in bankruptcy, guardian, or conservator;
1196 (g) [
1197 evading this chapter;
1198 (h) [
1199 itself or in a fiduciary capacity:
1200 (i) a [
1201 (ii) a trust company[
1202 (iii) an insurance company[
1203 (iv) an investment company as defined in the Investment Company Act of 1940[
1204 (v) a pension or profit-sharing trust[
1205 (vi) other financial institution or institutional investor[
1206 (vii) a broker-dealer[
1208 (i) [
1209 (i) no commission or other remuneration is paid or given directly or indirectly for
1210 soliciting [
1211 (ii) the number of subscribers acquiring [
1212 not exceed ten; [
1213 (iii) there is no general advertising or solicitation in connection with the offer or sale;
1215 (iv) no payment is made by a subscriber;
1216 (j) [
1217 securities to its existing securities holders, if:
1218 (i) no commission or other remuneration, other than a standby commission is paid or
1219 given directly or indirectly for soliciting [
1220 (ii) the transaction constitutes [
1221 (A) the conversion of convertible securities;
1222 (B) the exercise of nontransferable rights or warrants;
1223 (C) the exercise of transferable rights or warrants if the rights or warrants are
1224 exercisable not more than 90 days after their issuance; [
1225 (D) the purchase of securities under a preemptive right; [
1229 (E) a transaction other than one specified in Subsections (2)(j)(ii)(A) through (D) if:
1230 (I) the division is furnished with:
1231 (Aa) a general description of the transaction;
1232 (Bb) the disclosure materials to be furnished to the issuer's securities holders in the
1233 transaction; and
1234 (Cc) a non-refundable fee; and
1235 (II) the division does not, by order, deny or revoke the exemption within 20 working
1236 days after the day on which the filing required by Subsection (2)(j)(ii)(E)(I) is complete;
1237 (k) [
1239 or refusal order is in effect and no public proceeding or examination looking toward such an
1240 order is pending;
1241 (l) a distribution of securities as a dividend if the person distributing the dividend is
1242 the issuer of the securities distributed;
1243 (m) [
1244 where the broker-dealer or issuer files with the division, and the broker-dealer maintains in the
1245 broker-dealer's records, and makes reasonably available upon request to [
1246 expressing an interest in a proposed transaction in the security with the broker-dealer
1247 information prescribed by the division under its rules;
1248 (n) [
1249 (o) [
1250 are defined in [
1251 sold by installment contract, if the [
1252 (i) Title 57, Chapter 8, Condominium Ownership Act, or if the units are located in
1253 another state, the condominium act of that state[
1254 (ii) Title 57, Chapter 11, Utah Uniform Land Sales Practices Act[
1255 (iii) Title 57, Chapter 19, Timeshare and Camp Resort Act[
1256 (iv) Title 70C, Utah [
1257 (p) [
1258 reorganization, recapitalization, reclassification, or sale of assets, if the consideration for
1259 which, in whole or in part, is the issuance of securities of a person or persons, and if:
1260 (i) the transaction or series of transactions is incident to a vote of the securities holders
1261 of each person involved or by written consent or resolution of some or all of the securities
1262 holders of each person involved;
1263 (ii) the vote, consent, or resolution is given under a provision in:
1264 (A) the applicable corporate statute or other controlling statute;
1265 (B) the controlling articles of incorporation, trust indenture, deed of trust, or
1266 partnership agreement; or
1267 (C) the controlling agreement among securities holders;
1268 (iii) (A) one person involved in the transaction is required to file proxy or
1269 informational materials under Section 14(a) or (c) of the Securities Exchange Act of 1934 or
1270 Section 20 of the Investment Company Act of 1940 and has so filed;
1271 (B) one person involved in the transaction is an insurance company [
1272 exempt from filing under Section 12(g)(2)(G) of the Securities Exchange Act of 1934, and has
1273 filed proxy or informational materials with the appropriate regulatory agency or official of its
1274 domiciliary state; or
1275 (C) all persons involved in the transaction are exempt from filing under Section
1276 12(g)(1) of the Securities Exchange Act of 1934, and file with the division such proxy or
1277 informational material as the division requires by rule;
1278 (iv) the proxy or informational material is filed with the division and distributed to all
1279 securities holders entitled to vote in the transaction or series of transactions at least ten
1280 working days prior to any necessary vote by the securities holders or action on any necessary
1281 consent or resolution; and
1282 (v) the division does not, by order, deny or revoke the exemption within ten working
1283 days after filing of the proxy or informational materials;
1284 (q) [
1285 of an issuer if:
1286 (i) the transaction is part of an issue in which there are not more than 15 purchasers in
1287 this state, other than those designated in Subsection (2)(h), during any 12 consecutive months;
1288 (ii) no general solicitation or general advertising is used in connection with the offer to
1289 sell or sale of the securities;
1290 (iii) no commission or other similar compensation is given, directly or indirectly, to a
1291 person other than a broker-dealer or agent licensed under this chapter, for soliciting a
1292 prospective purchaser in this state;
1293 (iv) the seller reasonably believes that all the purchasers in this state are purchasing for
1294 investment; and
1295 (v) the transaction is part of an aggregate offering that does not exceed [
1296 $1,000,000, or a greater amount as prescribed by a division rule, during any 12 consecutive
1297 months; [
1301 (r) [
1302 (s) a transaction in a security, whether or not the security or transaction is otherwise
1303 exempt if:
1304 (i) the transaction is:
1305 (A) in exchange for one or more outstanding securities, claims, or property interests;
1307 (B) partly for cash and partly in exchange for one or more outstanding securities,
1308 claims, or property interests; and
1309 (ii) the terms and conditions are approved by the director after a hearing under Section
1310 61-1a-408 ;
1311 (t) a transaction incident to a judicially approved reorganization in which a security is
1313 (i) in exchange for one or more outstanding securities, claims, or property interests; or
1314 (ii) partly for cash and partly in exchange for one or more outstanding securities,
1315 claims, or property interests;
1316 (u) a nonissuer transaction by a federal covered investment adviser with investments
1317 under management in excess of $100,000,000 acting in the exercise of discretionary authority
1318 in a signed record for the account of others; and
1320 necessary or appropriate for the protection of investors.
1321 (3) [
1322 determined under Section 61-1-18.4 .
1323 (4) Upon approval by a majority of the [
1324 director, by means of an adjudicative proceeding conducted in accordance with Title 63G,
1325 Chapter 4, Administrative Procedures Act, may deny or revoke [
1326 in Subsection (1)[
1327 (a) a specific security, transaction, or series of transactions; or
1328 (b) [
1330 impose a fine if the [
1331 (i) the application for or notice of exemption filed with the division is incomplete in
1333 circumstances under which it was made, false or misleading with respect to [
1335 (ii) [
1336 imposed under this chapter has been willfully violated in connection with the offering or
1337 exemption by:
1338 (A) the person filing [
1339 (B) the issuer, [
1340 occupying a similar status or performing similar functions, or [
1341 indirectly controlling or controlled by the issuer, but only if the person filing the application
1342 for or notice of exemption is directly or indirectly controlled by or acting for the issuer; or
1343 (C) [
1344 (iii) subject to Subsection (8), the security for which the exemption is sought is the
1345 subject of an administrative stop order or similar order, or a permanent or temporary
1346 injunction or [
1347 or state act applicable to the offering or exemption; [
1353 (iv) the issuer's enterprise or method of business includes or would include activities
1354 that are illegal where performed;
1355 (v) the offering has worked, has tended to work, or would operate to work a fraud
1356 upon purchasers;
1357 (vi) the offering [
1358 and sellers' discounts, commissions, or other compensation, or promoters' profits or
1359 participation, or unreasonable amounts or kinds of options;
1360 (vii) an exemption is sought for a security or transaction [
1361 the exemption; or
1362 (viii) the proper filing fee, if required, has not been paid.
1363 (5) (a) [
1364 (b) [
1365 by reason of [
1366 Subsection (5) if the person sustains the burden of proof that the person did not know, and in
1367 the exercise of reasonable care could not have known, of the order.
1368 (6) The exemption created by Subsection (2)(j) is not available for an offer or sale of a
1369 security to an existing securities holder who has acquired the holder's security from the issuer
1370 in a transaction in violation of Section 61-1-7 .
1371 (7) As to a security, a transaction, or a type of security or transaction, the division
1373 (a) withdraw or further condition the exemption described in Subsection (2)(q); or
1374 (b) waive one or more of the conditions described in Subsection (2)(q).
1375 (8) (a) The director may not institute a proceeding against an effective exemption
1376 under Subsection (4)(b) more than one year from the day on which the order or injunction on
1377 which the director relies is issued.
1378 (b) The director may not enter an order under Subsection (4)(b) on the basis of an
1379 order or injunction entered under another state act unless that order or injunction is issued on
1380 the basis of facts that would constitute a ground for a stop order under this section at the time
1381 the director enters the order.
1382 Section 11. Section 61-1-15.5 is amended to read:
1383 61-1-15.5. Federal covered securities.
1384 (1) The division by rule or order may require the filing of any of the following
1385 documents with respect to a covered security under Section 18(b)(2) of the Securities Act of
1387 (a) prior to the initial offer of federal covered security in this state, a notice form as
1388 prescribed by the division or all documents that are part of a federal registration statement
1389 filed with the [
1390 together with a consent to service of process signed by the issuer and a filing fee as determined
1391 under Section 61-1-18.4 ;
1392 (b) after the initial offer of such federal covered security in this state, all documents
1393 that are part of an amendment to a federal registration statement filed with the U.S. Securities
1394 and Exchange Commission under the Securities Act of 1933, which shall be filed concurrently
1395 with the division;
1396 (c) a report of the value of federal covered securities offered or sold in this state,
1397 together with a filing fee as determined under Section 61-1-18.4 ; and
1398 (d) a notice filing under this section shall be effective for one year and shall be
1399 renewed annually in order to continue to offer or sell the federal covered securities for which
1400 the notice was filed.
1401 (2) With respect to [
1402 18(b)(4)(D) of the Securities Act of 1933, the division by rule or order may require the issuer
1403 to file a notice on SEC Form D and a consent to service of process signed by the issuer no later
1404 than 15 days after the first sale of such covered security in this state, together with a filing fee
1405 as determined under Section 61-1-18.4 .
1406 (3) The division by rule or order may require the filing of [
1407 the [
1408 to a covered security under [
1409 18(b)(3) or (4), together with a filing fee as determined under Section 61-1-18.4 .
1410 (4) Upon approval by a majority of the [
1411 director, by means of an adjudicative [
1412 Title 63G, Chapter 4, Administrative Procedures Act, may issue a stop order suspending the
1413 offer and sale of [
1414 18(b)(1) of the Securities Act of 1933, if the director finds that the order is in the public
1415 interest and there is a failure to comply with any condition established under this section.
1416 (5) The division by rule or order may waive any or all of the provisions of this section.
1417 Section 12. Section 61-1-18 is amended to read:
1418 61-1-18. Division of Securities established -- Director -- Investigators.
1419 (1) (a) There is established within the Department of Commerce a Division of
1421 (b) The division [
1423 (c) [
1424 Subject to Section 61-1-18.5 , the division shall administer and enforce this chapter.
1425 (d) The director shall hold office at the pleasure of the governor.
1426 (2) The director, with the approval of the executive director, may employ [
1427 staff [
1428 by the director according to standards established by the Department of Human Resource
1430 (3) An investigator employed pursuant to Subsection (2) who meets the training
1431 requirements of Subsection 53-13-105 (3) may be designated a special function officer, as
1432 defined in Section 53-13-105 , by the director, but is not eligible for retirement benefits under
1433 the Public Safety Employee's Retirement System.
1434 Section 13. Section 61-1-18.2 is amended to read:
1435 61-1-18.2. Budget -- Annual report.
1436 The director shall annually prepare and submit to the executive director:
1437 (1) a budget for the expenses of the division and commission for the administration
1438 and enforcement of this chapter for the next fiscal year; and
1439 (2) a report outlining the division's and commission's work for the preceding fiscal
1441 Section 14. Section 61-1-18.3 is amended to read:
1442 61-1-18.3. Information obtained by division or commission -- Use for personal
1443 benefit prohibited -- Disclosure.
1444 (1) It is unlawful for [
1446 non-public information [
1448 (2) This chapter [
1449 division, the commission, or [
1450 disclose [
1451 when necessary or appropriate in a proceeding or investigation under this chapter.
1452 (3) No provision of this chapter either creates or derogates from [
1454 under subpoena directed to:
1455 (a) the division;
1456 (b) the commission; [
1457 (c) a member of the commission; or
1458 (d) an employee of the division.
1459 Section 15. Section 61-1-18.5 is amended to read:
1460 61-1-18.5. Securities Commission -- Transition.
1461 (1) (a) There is [
1465 (b) The division shall provide staffing to the commission.
1467 (i) formulate and make recommendations to the director regarding policy and
1468 budgetary matters;
1469 (ii) submit recommendations regarding registration requirements [
1470 (iii) formulate and make recommendations to the director regarding the establishment
1471 of reasonable fees; [
1472 (iv) [
1473 of [
1474 (v) conduct an administrative hearing under this chapter that is not:
1475 (A) delegated by the commission to an administrative law judge or the division
1476 relating to a violation of this chapter; or
1477 (B) expressly delegated to the division under this chapter;
1478 (vi) except as provided in Subsection (2)(b), impose a sanction as provided in this
1480 (vii) review rules made by the division for purposes of concurrence in accordance with
1481 Section 61-1-24 ; and
1482 (viii) perform other duties as this chapter provides.
1483 (b) (i) The commission may delegate to the division the authority to impose a sanction
1484 under this chapter.
1485 (ii) If under Subsection (2)(b)(i) the commission delegates to the division the authority
1486 to impose a sanction, a person who is subject to the sanction may petition the commission for
1487 review of the sanction.
1488 (iii) A person who is sanctioned by the division in accordance with this Subsection
1489 (2)(b) may seek agency review by the executive director only after the commission reviews the
1490 division's action.
1492 appoint five members [
1493 commission with the consent of the Senate as follows:
1494 (i) two members from the securities brokerage community:
1495 (A) who are not from the same broker-dealer or affiliate; and
1496 (B) who have at least five years prior experience in securities matters;
1497 (ii) one member from the securities section of the Utah State Bar [
1498 (A) whose practice primarily involves:
1499 (I) corporate securities; or
1500 (II) representation of plaintiffs in securities cases;
1501 (B) who does not routinely represent clients involved in:
1502 (I) civil or administrative litigation with the division; or
1503 (II) criminal cases brought under this chapter; and
1504 (C) who has at least five years prior experience in securities matters;
1505 (iii) one member who is an officer or director of a [
1506 subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of
1507 1934 ; and
1508 (iv) one member from the public at large who has no active participation in the
1509 securities business.
1510 (b) [
1512 (4)(c), as terms of current [
1513 member or reappointed member to a four-year term.
1514 (b) Notwithstanding [
1515 at the time of appointment or reappointment, adjust the length of terms to ensure that the terms
1516 of commission members are staggered so that approximately half of the [
1517 appointed every two years.
1518 (c) For purposes of making an appointment to the commission, the governor:
1519 (i) shall as of May 12, 2009:
1520 (A) appoint all five members of the commission; and
1521 (B) stagger the terms of the five members of the commission to comply with
1522 Subsection (4)(b); and
1523 (ii) may not consider the commission an extension of the previous Securities Advisory
1526 shall appoint a replacement [
1529 (f) The commission shall annually select one member to serve as chair of the
1531 (5) (a) The [
1532 (i) at least quarterly on a regular date to be fixed by the [
1533 (ii) at such other times at the call of:
1534 (A) the director; or
1535 (B) any two members of the [
1536 (b) A majority of the [
1537 of business. [
1538 (c) An action of the commission requires a vote of a majority of [
1540 (6) [
1541 filed with the Department of Commerce and the lieutenant governor, disclose any position of
1542 employment or ownership interest that the member has with respect to [
1543 business subject to the jurisdiction of the division or commission. This statement shall be
1544 filed upon appointment and must be appropriately amended whenever significant changes
1545 occur in matters covered by the statement.
1546 (7) (a) [
1547 benefits for [
1548 the performance of the member's official duties at the rates established by the Division of
1549 Finance under Sections 63A-3-106 and 63A-3-107 .
1550 (b) [
1551 member's service.
1552 (8) (a) A rule or form made by the division under this section that is in effect on May
1553 11, 2009, is considered to have been concurred with by the commission as of May 12, 2009,
1554 until the commission acts on the rule or form.
1555 (b) For a civil or administrative action pending under this chapter as of May 12, 2009,
1556 brought under the authority of division under this chapter as in effect May 11, 2009 that may
1557 be brought only by the commission under this chapter as in effect on May 12, 2009:
1558 (i) the action shall be considered brought by the commission; and
1559 (ii) the commission may take any act authorized under this chapter regarding that
1561 Section 16. Section 61-1-18.6 is amended to read:
1562 61-1-18.6. Procedures -- Adjudicative proceedings.
1563 The [
1564 and requirements of Title 63G, Chapter 4, Administrative Procedures Act, in [
1565 adjudicative [
1566 Section 17. Section 61-1-18.7 is amended to read:
1567 61-1-18.7. Funding of securities investor education and training.
1568 (1) (a) There is created a restricted special revenue fund known as the "Securities
1569 Investor Education and Training Fund" to provide revenue for educating the public and the
1570 securities industry as provided in this section.
1571 (b) For purposes of this section, "fund" means the Securities Investor Education and
1572 Training Fund.
1573 (2) All money received by the state by reason of civil penalties ordered and
1574 administrative fines collected pursuant to this chapter shall be deposited in the [
1576 Chapter 5, Funds Consolidation Act.
1577 (3) [
1578 after July 1, 1989, pursuant to a voluntary [
1579 order shall be deposited into the fund.
1580 (4) (a) The fund shall earn interest.
1581 (b) All interest earned on fund monies shall be deposited into the fund.
1582 (5) Notwithstanding Title 63J, Chapter 1, Budgetary Procedures Act, the director may
1583 use [
1585 consistent with the duties of the division and commission under this chapter and only for any
1586 or all of the following and the expense of providing them:
1587 (a) education and training of Utah residents in matters concerning securities laws and
1588 investment decisions, by publications or presentations;
1589 (b) education of registrants and licensees under this chapter, by:
1590 (i) publication of this chapter and rules and policy statements and opinion letters [
1592 (ii) sponsorship of seminars or meetings to educate registrants and licensees as to the
1593 requirements of this chapter; and
1594 (c) investigation and litigation.
1595 (6) If the balance in the fund exceeds $100,000 at the close of any fiscal year, the
1596 excess shall be transferred to the General Fund.
1597 Section 18. Section 61-1-19 is amended to read:
1598 61-1-19. Investigations authorized.
1599 (1) (a) The division [
1600 within or without this state as [
1601 a person has violated, is violating, or is about to violate [
1602 a rule or order [
1603 (b) To aid in the enforcement of this chapter or in the prescribing of rules and forms
1605 a statement in writing, under oath or otherwise as to all the facts and circumstances concerning
1606 the matter to be investigated.
1607 (c) The division may publish information concerning [
1608 or the violation of [
1609 (2) For the purpose of [
1610 division, the commission, or [
1611 (a) administer [
1612 (b) subpoena [
1613 (c) take evidence; and
1614 (d) require the production of any books, papers, correspondence, memoranda,
1615 agreements, or other documents or records relevant or material to the investigation.
1616 Section 19. Section 61-1-20 is amended to read:
1617 61-1-20. Enforcement.
1618 Whenever it appears to the director that [
1619 about to engage in [
1620 rule or order under this chapter, in addition to [
1621 (1) (a) the director may issue an order directing the person to appear before the
1623 to cease and desist from engaging in the act or practice, or doing [
1624 the activity;
1625 (b) the order to show cause shall state the reasons for the order and the date of the
1627 (c) the director shall promptly serve a copy of the order to show cause upon [
1628 person named in the order;
1629 (d) the [
1630 sooner than ten business days after the order is issued;
1631 (e) after a hearing, the [
1632 from engaging in [
1633 or order under this chapter[
1635 (f) the [
1636 (g) the [
1637 licensed broker-dealer or investment adviser in this state[
1638 (h) the commission may impose a combination of sanctions in Subsections (1)(e)
1639 through (g).
1640 (2) (a) The director may bring an action in the appropriate district court of this state or
1641 the appropriate court of another state to enjoin [
1642 enforce compliance with this chapter or [
1643 (b) upon a proper showing in an action brought under this section, the court may:
1644 (i) issue a permanent or temporary, prohibitory or mandatory injunction;
1645 (ii) issue a restraining order or writ of mandamus;
1646 (iii) enter a declaratory judgment;
1647 (iv) appoint a receiver or conservator for the defendant or the defendant's assets;
1648 (v) order disgorgement;
1649 (vi) order rescission;
1650 (vii) order restitution;
1654 (c) the court may not require the division to post a bond in an action brought under
1655 this [
1656 (3) An order issued under Subsection (1) shall be accompanied by written findings of
1657 fact and conclusions of law.
1658 Section 20. Section 61-1-21 is amended to read:
1659 61-1-21. Penalties for violations.
1660 (1) A person is guilty of a third degree felony who willfully violates [
1661 (a) a provision of this chapter except Sections 61-1-1 and 61-1-16 [
1663 (b) a rule or order issued under this chapter[
1664 (c) Section 61-1-16 knowing the statement made [
1665 a material respect.
1666 (2) A person who willfully violates Section 61-1-1 :
1667 (a) is guilty of a third degree felony if, at the time the crime was committed, the
1668 property, money, or thing unlawfully obtained or sought to be obtained was worth less than
1670 (b) is guilty of a second degree felony if:
1671 (i) at the time the crime was committed, the property, money, or thing unlawfully
1672 obtained or sought to be obtained was worth $10,000 or more; or
1673 (ii) (A) at the time the crime was committed, the property, money, or thing unlawfully
1674 obtained or sought to be obtained was worth less than $10,000; and
1675 (B) in connection with that violation, the violator knowingly accepted any money
1677 (I) equity in a person's [
1678 (II) a withdrawal from [
1679 (III) a withdrawal from [
1680 Revenue Code; or
1681 (c) is guilty of [
1682 an indeterminate term of not less than three years or more than 15 years if:
1683 (i) at the time the crime was committed, the property, money, or thing unlawfully
1684 obtained or sought to be obtained was worth $10,000 or more; and
1685 (ii) in connection with that violation, the violator knowingly accepted any money
1687 (A) equity in a person's [
1688 (B) a withdrawal from [
1689 (C) a withdrawal from [
1690 Revenue Code.
1691 (3) [
1692 issued under this chapter if [
1693 the rule or order.
1694 (4) In addition to any other penalty for a criminal violation of this chapter, the
1695 sentencing judge may impose [
1696 61-1-20 (2)(b).
1697 Section 21. Section 61-1-21.5 is amended to read:
1698 61-1-21.5. Legal counsel -- Prosecutions.
1699 (1) The attorney general shall advise and represent the division, the commission, and
1701 counsel or services in:
1702 (a) the exercise or defense of the division's or commission's power; or
1703 (b) the performance of [
1704 (2) With the concurrence of the attorney general, the staff of the division may
1705 represent the division in hearings conducted during the course of adjudicative proceedings of
1706 the commission or the division.
1707 (3) (a) In the prosecution of all criminal actions under this chapter, the attorney
1708 general, county attorney, or district attorney of the appropriate jurisdiction, shall provide all
1709 legal services for the division, the commission, and [
1710 (b) The division or commission may refer [
1711 concerning [
1712 (i) the attorney general; or
1713 (ii) the appropriate county attorney [
1714 United States Attorney's Office.
1715 (4) The attorney general, a county attorney, or a district attorney of the appropriate
1716 jurisdiction may institute a criminal proceeding under this chapter, with or without referral
1717 from the division.
1718 Section 22. Section 61-1-22 is amended to read:
1719 61-1-22. Sales and purchases in violation -- Remedies -- Limitation of actions.
1720 (1) (a) [
1721 (i) offers or sells a security in violation of:
1722 (A) Subsection 61-1-3 (1)[
1723 (B) Section 61-1-7 [
1724 (C) Subsection 61-1-17 (2)[
1725 (D) a rule or order under Section 61-1-15 , which requires the affirmative approval of
1726 sales literature before it is used[
1727 (E) a condition imposed under Subsection 61-1-10 (4) or 61-1-11 (7)[
1728 (ii) offers, sells, or purchases a security in violation of Subsection 61-1-1 (2).
1729 (b) A person described in Subsection (1)(a) is liable to [
1730 security to or buying the security from [
1731 The person to whom the person described in Subsection (1)(a) is liable may sue either at law
1732 or in equity to recover the consideration paid for the security, together with interest at 12% per
1733 year from the date of payment, costs, and reasonable [
1734 of [
1735 the person no longer owns the security.
1737 (i) subtract from the amount that would be recoverable upon a tender [
1738 Subsection (7)(b) the value of the security when the buyer disposed of [
1739 security; and
1740 (ii) add to the amount calculated under Subsection (1)(c)(i) interest at:
1741 (A) 12% per year [
1742 (I) beginning the day on which the security is purchased by the buyer; and
1743 (II) ending on the date of disposition[
1744 (B) after the period described in Subsection (1)(c)(ii)(A), 12% per year on the amount
1745 lost at disposition.
1746 (2) The court in a suit brought under Subsection (1) may award an amount equal to
1747 three times the consideration paid for the security, together with interest, costs, and
1749 that the violation was reckless or intentional.
1750 (3) A person who offers or sells a security in violation of Subsection 61-1-1 (2) is not
1751 liable under Subsection (1)(a) if the purchaser knew of the untruth or omission, or the seller
1752 did not know and in the exercise of reasonable care could not have known of the untrue
1753 statement or misleading omission.
1754 (4) (a) Every person who directly or indirectly controls a seller or buyer liable under
1755 Subsection (1), every partner, officer, or director of such a seller or buyer, every person
1756 occupying a similar status or performing similar functions, every employee of such a seller or
1757 buyer who materially aids in the sale or purchase, and every broker-dealer or agent who
1758 materially aids in the sale or purchase are also liable jointly and severally with and to the same
1759 extent as the seller or purchaser, unless the nonseller or nonpurchaser who is so liable sustains
1760 the burden of proof that [
1761 reasonable care could not have known, of the existence of the facts by reason of which the
1762 liability is alleged to exist.
1763 (b) There is contribution as in cases of contract among the several persons so liable.
1764 (5) [
1766 (6) A cause of action under this section survives the death of [
1767 might have been a plaintiff or defendant.
1768 (7) (a) [
1769 this section unless brought before the earlier of:
1770 (i) the expiration of [
1771 violation; or
1772 (ii) the expiration of two years after the discovery by the plaintiff of the facts
1773 constituting the violation[
1774 (b) [
1775 (i) the buyer or seller received a written offer, before suit and at a time when [
1776 buyer or seller owned the security, to refund the consideration paid together with interest at
1777 12% per year from the date of payment, less the amount of any income received on the
1778 security, and [
1779 (ii) the buyer or seller received such an offer before suit and at a time when [
1780 buyer or seller did not own the security, unless [
1781 writing within 30 days of its receipt.
1782 (8) [
1783 violation of this chapter or any rule or order [
1784 acquired [
1785 reason of which its making or performance was in violation, may not base [
1787 (9) A condition, stipulation, or provision binding a person acquiring a security to
1788 waive compliance with this chapter or a rule or order [
1790 (10) (a) The rights and remedies provided by this chapter are in addition to any other
1791 rights or remedies that may exist at law or in equity.
1792 (b) This chapter does not create [
1793 Subsection 61-1-4 (6).
1794 Section 23. Section 61-1-23 is amended to read:
1795 61-1-23. Review of orders.
1797 determining all of the issues of an adjudicative proceeding may obtain review of the order by
1798 the executive director in accordance with Title 63G, Chapter 4, Administrative Procedures
1800 Section 24. Section 61-1-24 is amended to read:
1801 61-1-24. Rules, forms, and orders.
1802 (1) (a) [
1803 rescind [
1805 (b) For the purpose of [
1806 (i) classify securities, persons, and matters within [
1807 commission or division; and
1808 (ii) prescribe different requirements for different classes.
1812 (c) The division shall make rules in accordance with Title 63G, Chapter 3, Utah
1813 Administrative Rulemaking Act, except that the division may not make, amend, or rescind a
1814 rule or form under this chapter without the concurrence of the commission.
1816 with the securities administrators of the other states and the Securities and Exchange
1817 Commission to achieve maximum uniformity in the form and content of registration
1818 statements, applications, and reports wherever practicable.
1820 (i) the form and content of a financial [
1822 (ii) the circumstances under which a consolidated financial [
1823 shall be filed; and
1824 (iii) whether or not [
1825 by an independent public [
1826 (b) [
1827 prepared in accordance with generally accepted accounting principles.
1830 does not apply to [
1831 form, or order of the division or an order of the commission, notwithstanding that the rule,
1832 form, or order may later be amended or rescinded or be determined by judicial or other
1833 authority to be invalid for any reason.
1835 meaning of Sections 61-1-1 and 61-1-2 if it finds that:
1836 (a) the [
1837 defraud [
1838 (b) the rule is not inconsistent with this chapter.
1839 Section 25. Section 61-1-25 is amended to read:
1840 61-1-25. Record of registrations.
1841 (1) A document is filed when it is received by the division.
1842 (2) (a) The division shall keep a register of:
1843 (i) all applications for registration and registration statements [
1844 ever been effective under this chapter; and
1845 (ii) all denial, suspension, or revocation orders [
1846 this chapter.
1847 (b) The register shall be open for public inspection.
1848 (3) The information contained in or filed with [
1849 application, or report may be made available to the public under [
1850 division prescribes.
1851 (4) (a) [
1852 shall furnish to [
1853 requested, of [
1855 (i) upon request; and
1856 (ii) at a reasonable charge prescribed by the division.
1857 (b) In [
1858 under this Subsection (4) is prima facie evidence of the contents of the entry or document
1860 (5) The division [
1861 issue an interpretative [
1862 concurs in the interpretative opinion.
1863 Section 26. Repealer.
1864 This bill repeals:
1865 Section 61-1-8, Registration by notification.
1866 Section 61-1-30, Prior law repealed -- Savings clause.
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