UNIFORM SECURITIES ACT - Uniform Law Commission

1 UNIFORM SECURITIES ACT(Last Revised or Amended in 2005)drafted by theNATIONAL CONFERENCE OF COMMISSIONERSON UNIFORM STATE LAWSand by itAPPROVED AND RECOMMENDED FOR ENACTMENTIN ALL THE STATESat itsANNUAL CONFERENCEMEETING IN ITS ONE-HUNDRED-AND-ELEVENTH YEARIN TUCSON, ARIZONAJULY 26 - AUGUST 2, 2002 WITH PREFATORY NOTE AND COMMENTSA pproved by the American Bar AssociationSeattle, Washington, February 10, 2003 Copyright 2002 ByNATIONAL CONFERENCE OF COMMISSIONERSON UNIFORM STATE LAWSN ovember 14, 2008 ABOUT NCCUSLThe National Conference of Commissioners on UNIFORM State Laws (NCCUSL), now in its114 year, provides states with non-partisan, well-conceived and well-drafted legislation thatthbrings clarity and stability to critical areas of state statutory members must be lawyers, qualified to practice law.

2 They are practicing lawyers,judges, legislators and legislative staff and law professors, who have been appointed by stategovernments as well as the District of Columbia, Puerto Rico and the Virgin Islands toresearch, draft and promote enactment of UNIFORM state laws in areas of state law whereuniformity is desirable and practical. NCCUSL strengthens the federal system by providing rules and procedures that areconsistent from state to state but that also reflect the diverse experience of the states. NCCUSL statutes are representative of state experience, because the organization is madeup of representatives from each state, appointed by state government. NCCUSL keeps state law up-to-date by addressing important and timely legal issues.

3 NCCUSL s efforts reduce the need for individuals and businesses to deal with differentlaws as they move and do business in different states. NCCUSL s work facilitates economic development and provides a legal platform forforeign entities to deal with citizens and businesses. NCCUSL Commissioners donate thousands of hours of their time and legal and draftingexpertise every year as a public service, and receive no salary or compensation for theirwork. NCCUSL s deliberative and uniquely open drafting process draws on the expertise ofcommissioners, but also utilizes input from legal experts, and advisors and observersrepresenting the views of other legal organizations or interests that will be subject to theproposed laws.

4 NCCUSL is a state-supported organization that represents true value for the states,providing services that most states could not otherwise afford or COMMITTEE TO REVISEUNIFORM SECURITIES ACTRICHARD B. SMITH, 450 Lexington Ave., New York, NY 10017, ChairJUSTIN L. VIGDOR, 2400 Chase Square, Rochester, NY 14604, Vice ChairJOHN FOX ARNOLD, 714 Locust St., St. Louis, MO 63101 HENRY M. KITTLESON, Box 32092, 92 Lake Wire Dr., Lakeland, FL 33802-2092 ANDREW RICHNER, Room 585, Box 30014, Lansing, MI 48909-7514 MICHAEL P. SULLIVAN, Box 39286, 7505 Metro Blvd., Minneapolis, MN 55439 HOWARD J. SWIBEL, Suite 1200, 120 S. Riverside Plaza, Chicago, IL 60606 ROBERT J. TENNESSEN, 3400 City Center, 33 S.

5 6 St., Minneapolis, MN 55402-3796thLEE YEAKEL, Box 164196, Austin, TX 78716-4196 JOEL SELIGMAN,Washington University School of Law, Campus Box 1120, One BrookingsDr., St. Louis, MO 63130, ReporterEX OFFICIOK. KING BURNETT, Box 910, Salisbury, MD 21803-0910, PresidentCARL LISMAN, 84 Pine St., Box 728, Burlington, VT 05402, Division ChairAMERICAN BAR ASSOCIATION ADVISORALAN P. BADEN, 666 Fifth Ave., 26th Floor, New York, NY 10103, ABA AdvisorW. REECE BADER, 1020 Marsh Rd., Menlo Park, CA 94025, ABA Litigation Section AdvisorCHARLES BRAISTED, 167 Orchard Run, 45 Rockefeller Plaza, Cornwall, VT 05753, ABAB usiness Law Section AdvisorEXECUTIVE DIRECTORWILLIAM HENNING, University of Missouri-Columbia, School of Law, 313 Hulston Hall,Columbia, MO 65211, Executive DirectorFRED H.

6 MILLER, University of Oklahoma, College of Law, 300 Timberdell Road, Norman,OK 73019, Executive Director EmeritusWILLIAM J. PIERCE, 1505 Roxbury Road, Ann Arbor, MI 48104, Executive Director EmeritusCopies of this Act may be obtained from:NATIONAL CONFERENCE OF COMMISSIONERSON UNIFORM STATE LAWS211 E. Ontario Street, Suite 1300 Chicago, Illinois 60611312 SECURITIES ACTTABLE OF CONTENTS[ARTICLE] 1 GENERAL PROVISIONSSECTION 101. SHORT 102. 103. REFERENCES TO FEDERAL 104. REFERENCES TO FEDERAL 105. ELECTRONIC RECORDS AND [ARTICLE] 2 EXEMPTIONS FROM REGISTRATION OF SECURITIESSECTION 201. EXEMPT SECURITIES ..38 SECTION 202. EXEMPT 203. ADDITIONAL EXEMPTIONS AND 204. DENIAL, SUSPENSION, REVOCATION, CONDITION, OR LIMITATION OF [ARTICLE] 3 REGISTRATION OF SECURITIES AND NOTICE FILING OF FEDERAL COVERED SECURITIESSECTION 301.

7 SECURITIES REGISTRATION REQUIREMENT..63 SECTION 302. NOTICE 303. SECURITIES REGISTRATION BY 304. SECURITIES REGISTRATION BY 305. SECURITIES REGISTRATION 306. DENIAL, SUSPENSION, AND REVOCATION OF SECURITIES REGISTRATION ..80 SECTION 307. WAIVER AND MODIFICATION..88[ARTICLE] 4 BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, INVESTMENT ADVISER REPRESENTATIVES,AND FEDERAL COVERED INVESTMENT ADVISERSSECTION 401. BROKER-DEALER REGISTRATION REQUIREMENT AND 402. AGENT REGISTRATION REQUIREMENT AND 403. INVESTMENT ADVISER REGISTRATION REQUIREMENT AND 404. INVESTMENT ADVISER REPRESENTATIVE REGISTRATION REQUIREMENT AND 405. FEDERAL COVERED INVESTMENT ADVISER NOTICE FILING 406.

8 REGISTRATION BY BROKER-DEALER, AGENT, INVESTMENT ADVISER, AND INVESTMENT ADVISER 407. SUCCESSION AND CHANGE IN REGISTRATION OF BROKER-DEALER OR INVESTMENT 408. TERMINATION OF EMPLOYMENT OR ASSOCIATION OF AGENT AND INVESTMENT ADVISER REPRESENTATIVE AND TRANSFER OF EMPLOYMENT OR 409. WITHDRAWAL OF REGISTRATION OF BROKER-DEALER, AGENT, INVESTMENT ADVISER, AND INVESTMENT ADVISER 410. FILING 411. POSTREGISTRATION 412. DENIAL, REVOCATION, SUSPENSION, WITHDRAWAL, RESTRICTION, CONDITION, OR LIMITATION OF [ARTICLE] 5 FRAUD AND LIABILITIESSECTION 501. GENERAL 502. PROHIBITED CONDUCT IN PROVIDING INVESTMENT 503. EVIDENTIARY 504. FILING OF SALES AND ADVERTISING 505. MISLEADING 506.

9 MISREPRESENTATIONS CONCERNING REGISTRATION OR 507. QUALIFIED 508. CRIMINAL 509. CIVIL 510. RESCISSION OFFERS..143[ARTICLE] 6 ADMINISTRATION AND JUDICIAL REVIEWSECTION 601. 602. INVESTIGATIONS AND 603. CIVIL 604. ADMINISTRATIVE 605. RULES, FORMS, ORDERS, INTERPRETATIVE OPINIONS, AND 606. ADMINISTRATIVE FILES AND 607. PUBLIC RECORDS; 608. UNIFORMITY AND COOPERATION WITH OTHER 609. JUDICIAL 610. 611. SERVICE OF 612. SEVERABILITY CLAUSE..173[ARTICLE] 7 TRANSITIONSECTION 701. EFFECTIVE 702. REPEALS..174 SECTION 703. APPLICATION OF ACT TO EXISTING PROCEEDING AND EXISTING RIGHTS AND SECURITIES ACT (2002)Prefatory NoteThere are two versions of the UNIFORM SECURITIES Act currently in UNIFORM SECURITIES Act of 1956 ( 1956 Act ) has been adopted at one time or another, inwhole or in part, by 37 Revised UNIFORM SECURITIES Act of 1985 ( RUSA )

10 Has been adopted in only a Acts have been preempted in part by the National SECURITIES Markets Improvement Actof 1996 and the SECURITIES Litigation UNIFORM Standards Act of need to modernize the UNIFORM SECURITIES Act is a consequence of a combination of thenew federal preemptive legislation, significant recent changes in the technology of securitiestrading and regulation, and the increasingly interstate and international aspects of approach of this Act is to use the substance and vocabulary of the more widely adopted1956 Act, when appropriate. The Act also takes into account RUSA, federal preemptivelegislation, and the other developments that are described in this Preface and the Act has been reorganized to follow in large part the National Conference ofCommissioners on UNIFORM State Laws ( NCCUSL ) Procedural and Drafting Manual 15-41(1997).