Chapter 409 Regulation of Securities

409.516 - Registration statement, contents — material changes, notice to commissioner, how.

Steven Groce, Attorney Advertisement

1.The registration statement required to be filed pursuant to subsection 1 of section 409.511 shall include:

(1)Copies of all prospectuses, brochures, advertisements, circulars, letters, or other matter by means of which the offeror proposes to disclose to offerees all information material to a decision to accept or reject the offer;

(2)The identity and background of all persons on whose behalf the acquisition of any equity security of the target company has been or is to be effected;

(3)The exact title and number of shares outstanding of the class of equity securities being sought, the number of such securities being sought and the consideration being offered therefor;

(4)The source and amount of funds or other consideration used or to be used in acquiring any equity security, including a statement describing any securities, other than the existing capital stock or long-term debt of the offeror, which are being offered in exchange for the equity securities of the target company and also including copies of all loan or credit agreements and letters of commitment used or to be used to secure financing for the acquisition of any equity security of the target company;

(5)A statement of any plans or proposals which the offeror, upon gaining control, may have to liquidate the target company, sell its assets, effect a merger or consolidation of it, or make any other major change in its business, corporate structure, management personnel, or policies of employment;

(6)The number of shares of any equity security of the target company of which each offeror is beneficial or record owner or has a right to acquire, directly or indirectly, together with the name and address of each person defined in this section as an offeror;

(7)Particulars as to any contracts, arrangements, or understandings to which an offeror is party with respect to any equity security of the target company, including without limitation transfers of any equity security, joint ventures, loans or option arrangements, puts and calls, guarantees of loan, guarantees against loss, guarantees of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom such contracts, arrangements, or understandings have been entered into;

(8)Complete information on the organization and operations of the offeror, including without limitation the year of organization, form of organization, jurisdiction in which it is organized, a description of each class of the offeror's capital stock and of its long-term debt, financial statements for the current period and for the three most recent annual accounting periods, a description of pending legal proceedings other than routine litigation to which the offeror or any of its subsidiaries is a party or of which any of their property is the subject, a brief description of the business done and projected by the offeror and its subsidiaries and the general development of such business over the past five years, the names of all directors and executive officers together with biographical summaries of each for the preceding three years to date;

(9)A statement as to the potential impact, if any, of the offeror's plans or proposals on the residents of this state, including any material change in the location of the target company's offices or business activities within this state; any plant or facility relocation; any plant or facility closings; any significant reduction in the workforce at an individual plant or facility; any other material change in the number, job classification, compensation, or other terms and conditions of employment of persons employed by the target company in this state; any material change in the relationships of the target company with suppliers or customers within this state, or any other material changes in the target company's business, corporate structure, management, personnel or activities which would have a substantial impact on residents of this state;

(10)Particulars as to any pension plans; profit sharing plans; savings plans; educational opportunities; relocation adjustments; labor relations records, including violations of the federal National Labor Relations Act, Occupational Safety and Health Act of 1970, Fair Labor Standards Act, or Employee Retirement and Income Security Act, as amended, finally adjudicated or settled within five years of the commencement of the takeover bid; earnings and dividend growth; community activities; and charitable, cultural, educational and civic contributions of the offeror;

(11)If the offeror is a natural person, information concerning his identity and background, including without limitation financial statements for the current and three preceding years, a description of his business activities and affiliations during that time period, and a description of any pending or administrative proceedings, other than routine and immaterial litigation, to which the offeror is a party or of which any of his property is the subject; and

(12)If debt securities or preferred stock are either offered in the takeover bid or used as a source of funds in making the takeover bid, the investment rating, if any, by a generally recognized rating service of such debt security or preferred stock.

2.If any material change occurs in the facts set forth in the registration statement required by subsection 1 of section 409.511, the offeror who filed such statement shall promptly notify the commissioner of securities and the target company of such change in writing or by telephone confirmed in writing and shall amend the registration statement, to reflect such change promptly but not later than the date such change is first published, sent or given to offerees.

3.The commissioner of securities may permit the omission of any information required by subsection 1 of this section to be included in the registration statement if he determines that such information is immaterial or otherwise unnecessary for the protection of offerees.

(L. 1986 H.B. 1667)

409.112 - Commissioner of securities may seek relief for violations, when.

If the commissioner believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of sections 409.108 to 409.114, or any order, rule or regulation issued pursuant thereto or that a person has, is, or is about to engage in an act, practice, or course of business that materially aids a violation of sections 409.108 to 409.114, the commissioner may maintain an action for relief authorized pursuant to section 409.6-603.

(L. 2004 H.B. 1617)

409.1000 - Business opportunities — definitions.

1.For the purposes of sections 409.1000 to 409.1006, "business opportunity" means the sale or lease of any product, equipment, supplies or services which are sold or leased to a purchaser to enable the purchaser to start a business for which the purchaser is required to pay an initial fee or sum of money in excess of five hundred dollars to the seller, and in which the seller represents:

(1)That the seller or a person or entity affiliated with, or referred by, the seller will provide locations, or assist the purchaser in finding locations, for the use or operation of vending machines, racks, display cases or other similar devices or currency-operated amusement machines or devices on premises neither owned nor leased by the purchaser or the sellers;

(2)That the promoter or its affiliate or designee will refund all or a substantial part of the purchaser's initial payment if the purchaser is unsuccessful or dissatisfied with the business opportunity;

(3)That the seller guarantees in writing that the purchaser will derive income from the business opportunity which exceeds the price paid or rent charged for the business opportunity or that the seller will refund all or part of the price paid or rent charged for the business opportunity or will repurchase any of the products, equipment, supplies or chattels supplied by the seller, if the purchaser is not satisfied with the business opportunity; or

(4)That the business opportunity is free from risk or certain to produce profits, which representation may arise from all of the assurances taken as a whole.

2.For purposes of subsection 1 of this section the term "assist the purchaser in finding locations" includes, but is not limited to, supplying the purchaser with names of locator companies, contracting with the purchaser to provide assistance or supply names or collecting a fee on behalf of or for a locator company.

3.For purposes of sections 409.1000 to 409.1006, "business opportunity" does not include:

(1)The sale of ongoing businesses when the owner of those businesses sells and intends to sell only those business opportunities so long as those business opportunities to be sold are no more than five in number; or

(2)The not-for-profit sale of sales demonstration equipment, materials or samples for a price that does not exceed five hundred dollars or any sales training course offered by the seller, the cost of which does not exceed five hundred dollars.

4.For purposes of sections 409.1000 to 409.1006, "purchaser" shall include a lessee and "seller" shall include a lessor.

(L. 2000 S.B. 896 § 407.2000)

409.1-104 - References to federal agencies.

A reference in this act to an agency or department of the United States is also a reference to a successor agency or department.

(L. 2003 H.B. 380)

Effective 9-01-03

409.843 - Administrative procedure, notice of intent, summary order, notice, hearing.

1.The commissioner shall commence an administrative proceeding under sections 409.800 to 409.863 by entering either a notice of intent to do a contemplated act or a summary order.The notice of intent or summary order may be entered without notice, without opportunity for hearing, and need not be supported by findings of fact or conclusions of law, but must be in writing.Upon entry of a notice of intent or summary order, the commissioner shall promptly notify all interested parties that the notice or summary order has been entered and the reasons therefor.If the proceeding is pursuant to a notice of intent, the commissioner shall inform all interested parties of the date, time, and place set for the hearing on the notice.If the proceeding is pursuant to a summary order, the commissioner shall inform all interested parties that they have thirty business days from the entry of the order to file a written request for a hearing on the matter with the commissioner and that the hearing will be scheduled to commence within thirty business days after the receipt of the written request.

2.If a proceeding is initiated under this section pursuant to a summary order, the commissioner, whether or not a written request for a hearing is received from any interested party, may set the matter down for hearing on the commissioner's own motion.

3.If no hearing is requested and none is ordered by the commissioner, a summary order issued under this section shall automatically become a final order after thirty business days.

4.If a hearing is requested or ordered under this section, the commissioner, after notice of, and opportunity for, hearing to all interested persons, may modify or vacate the order or extend it until final determination.No final order or order after hearing may be returned without:

(1)Appropriate notice to all interested persons;

(2)Opportunity for hearing by all interested persons; and

(3)Entry of written findings of fact and conclusions of law.

5.Every hearing in an administrative proceeding under sections 409.800 to 409.863 shall be public unless the commissioner grants a request joined in by all the respondents that the hearing be conducted privately.

(L. 1985 H.B. 409 & 532 § 18)

409.816 - Applicability of other laws.

Nothing in sections 409.800 to 409.863 shall impair, derogate or otherwise affect the authority or powers of the commissioner under this chapter or the application of any provision of this chapter to any person or transaction subject thereto.

(L. 1985 H.B. 409 & 532 § 7)

409.3-305 - Securities registration filings.

(a)A registration statement may be filed by the issuer, a person on whose behalf the offering is to be made, or a broker-dealer registered under this act.

(b)A person filing a registration statement shall pay a filing fee of one hundred dollars.Each person shall pay a registration fee equal to one-twentieth of one percent of the amount by which the maximum aggregate offering price at which the registered securities are to be offered in this state exceeds one hundred thousand dollars.In no case shall the registration fee be more than nine hundred dollars.If a registration statement is withdrawn before the effective date or a preeffective stop order is issued under section 409.3-306, the commissioner shall retain a filing fee of one hundred dollars.A person filing a renewal of a registration statement shall pay a filing fee of one hundred dollars.

(c)A registration statement filed under section 409.3-303 or 409.3-304 must specify:

(1)The amount of securities to be offered in this state;

(2)The states in which a registration statement or similar record in connection with the offering has been or is to be filed; and

(3)Any adverse order, judgment, or decree issued in connection with the offering by a state securities regulator, the Securities and Exchange Commission, or a court.

(d)A record filed under this act or the predecessor act within five years preceding the filing of a registration statement may be incorporated by reference in the registration statement to the extent that the record is currently accurate.

(e)In the case of a nonissuer distribution, information or a record may not be required under subsection (i) or section 409.3-304, unless it is known to the person filing the registration statement or to the person on whose behalf the distribution is to be made or unless it can be furnished by those persons without unreasonable effort or expense.

(f)A rule adopted or order issued under this act may require as a condition of registration that a security issued within the previous five years or to be issued to a promoter for a consideration substantially less than the public offering price or to a person for a consideration other than cash be deposited in escrow; and that the proceeds from the sale of the registered security in this state be impounded until the issuer receives a specified amount from the sale of the security either in this state or elsewhere.The conditions of any escrow or impoundment required under this subsection may be established by rule adopted or order issued under this act, but the commissioner may not reject a depository institution solely because of its location in another state.

(g)A rule adopted or order issued under this act may require as a condition of registration that a security registered under this act be sold only on a specified form of subscription or sale contract and that a signed or conformed copy of each contract be filed under this act or preserved for a period specified by the rule or order, which may not be longer than five years.

(h)Except while a stop order is in effect under section 409.3-306, a registration statement is effective for one year after its effective date, or for any longer period designated in an order under this act during which the security is being offered or distributed in a nonexempted transaction by or for the account of the issuer or other person on whose behalf the offering is being made or by an underwriter or broker-dealer that is still offering part of an unsold allotment or subscription taken as a participant in the distribution.A registration statement remains effective for each additional year by filing a renewal as described by rule adopted or order issued under this act.For the purposes of a nonissuer transaction, all outstanding securities of the same class identified in the registration statement as a security registered under this act are considered to be registered while the registration statement is effective.If any securities of the same class are outstanding, a registration statement may not be withdrawn until one year after its effective date.A registration statement may be withdrawn only with the approval of the commissioner.

(i)While a registration statement is effective, a rule adopted or order issued under this act may require the person that filed the registration statement to file reports, not more often than quarterly, to keep the information or other record in the registration statement reasonably current and to disclose the progress of the offering.

(j)A registration statement may be amended after its effective date. The post-effective amendment becomes effective when the commissioner so orders.If a post-effective amendment is made to increase the number of securities specified to be offered or sold, the person filing the amendment shall pay a registration fee as described in subsection (b).A post-effective amendment relates back to the date of the offering of the additional securities being registered if, within one year after the date of the sale, the amendment is filed and the additional registration fee is paid.

(L. 2003 H.B. 380)

Effective 9-01-03

409.3-301 - Securities registration requirement.

It is unlawful for a person to offer or sell a security in this state unless:

(1)The security is a federal covered security;

(2)The security, transaction, or offer is exempted from registration under sections 409.2-201 to 409.2-203; or

(3)The security is registered under this act.

(L. 2003 H.B. 380)

Effective 9-01-03

409.7-703 - Application of act to existing proceedings and existing rights and duties.

(a)The predecessor act exclusively governs all actions or proceedings that are pending on September 1, 2003, or may be instituted on the basis of conduct occurring before September 1, 2003, but a civil action may not be maintained to enforce any liability under the predecessor act unless instituted within any period of limitation that applied when the cause of action accrued or within five years after September 1, 2003, whichever is earlier.

(b)All effective registrations under the predecessor act, all administrative orders relating to the registrations, rules, statements of policy, interpretative opinions, declaratory rulings, no action determinations, and conditions imposed on the registrations under the predecessor act remain in effect while they would have remained in effect if this act had not been enacted.They are considered to have been filed, issued, or imposed under this act, but are exclusively governed by the predecessor act.

(c)The predecessor act exclusively applies to an offer or sale made within one year after September 1, 2003, pursuant to an offering made in good faith before September 1, 2003, on the basis of an exemption available under the predecessor act.

(L. 2003 H.B. 380)

Effective 9-01-03

409.806 - Exempt transaction — rules, generally, this chapter, procedure.

1.The provisions of section 409.803 shall not apply to the following:

(1)A transaction within the exclusive jurisdiction of the Commodity Futures Trading Commission as granted under the Commodity Exchange Act;

(2)A commodity contract for the purchase of one or more precious metals which requires, and under which the purchaser receives, within seven calendar days from the payment in good funds of any portion of the purchase price, physical delivery of the quantity of the precious metals purchased by such payment; provided that, for purposes of this subdivision, physical delivery shall be deemed to have occurred if, within such seven-day period, such quantity of precious metals purchased by such payment is delivered, whether in specifically segregated or fungible bulk form, into the possession of a depository other than the seller which is either a financial institution, a depository the warehouse receipts of which are recognized for delivery purposes for any commodity on a contract market designated by the Commodity Futures Trading Commission, a storage facility licensed or regulated by the United States or any agency thereof, or a depository designated by the commissioner and such depository (or other person which itself qualifies as a depository as aforesaid) issues and the purchaser receives, a certificate, document of title, confirmation or other instrument evidencing that such quantity of precious metals has been delivered to the depository and is being and will continue to be held by the depository on the purchaser's behalf, free and clear of all liens and encumbrances, other than liens of the purchaser, tax liens, liens agreed to by the purchaser, or liens of the depository for fees and expenses, which have previously been disclosed to the purchaser;

(3)A commodity contract for the sale of a cash commodity for deferred shipment or delivery entered into solely between persons engaged in producing, processing, using commercially or handling as merchants, each commodity subject thereto, or any by-product thereof; or

(4)A commodity contract under which the offeree or the purchaser is a person referred to in subdivisions (1) through (7) of subsection 2 of section 409.803, an insurance company, an investment company as defined in the Investment Company Act of 1940, or an employee pension and profit sharing or benefit plan other than a self-employed individual retirement plan, or individual retirement account.

2.The commissioner may promulgate rules and issue orders prescribing the terms and conditions of all transactions and contracts covered by the provisions of sections 409.800 to 409.863 which are not within the exclusive jurisdiction of the Commodity Futures Trading Commission as granted by the Commodity Exchange Act, exempting any person or transaction from any provision of sections 409.800 to 409.863, conditionally or unconditionally, and otherwise implementing the provisions of sections 409.800 to 409.863 for the protection of purchasers and sellers of commodities.No rule or portion of a rule promulgated under the authority of this chapter shall become effective unless it has been promulgated pursuant to the provisions of section 536.024.

(L. 1985 H.B. 409 & 532 § 3, A.L. 1993 S.B. 52, A.L. 1995 S.B. 3)

409.5-506 - Misrepresentations concerning registration or exemption.

The filing of an application for registration, a registration statement, a notice filing under this act, the registration of a person, the notice filing by a person, or the registration of a security under this act does not constitute a finding by the commissioner that a record filed under this act is true, complete, and not misleading.The filing or registration or the availability of an exemption, exception, preemption, or exclusion for a security or a transaction does not mean that the commissioner has passed upon the merits or qualifications of, or recommended or given approval to, a person, security, or transaction.It is unlawful to make, or cause to be made, to a purchaser, customer, client, or prospective customer or client a representation inconsistent with this section.

(L. 2003 H.B. 380)

Effective 9-01-03

409.506 - Definitions.

As used in sections 409.500 to 409.566, the following terms shall have the following meanings:

(1)"Takeover bid", the acquisition of or offer to acquire by an offeror from an offeree, pursuant to a tender offer or request or invitation for tenders, any equity security of a target company, if after acquisition thereof the offeror would, directly or indirectly, be a beneficial owner of more than five percent of any class of the issued and outstanding equity securities of such target company.Such term does not include:

(a)Bids made by a dealer for his own account in the ordinary course of his business of buying and selling such security;

(b)An offer to acquire such equity security solely in exchange for other securities, or the acquisition of such equity security pursuant to such offer, for the sole account of the offeror, in good faith and not for the purpose of avoiding this section, and not involving any public offering of such other securities within the meaning of section 4 of title I of the Securities Act of 1933, (48 Stat. 77, 15 U.S.C. 77 d (2)); as amended;

(c)Any other offer to acquire an equity security, or the acquisition of such equity security pursuant to such offer, for the sole account of the offeror, from not more than fifty offerees, in good faith and not for the purpose of avoiding the provisions of sections 409.500 to 409.566;

(d)Any offer or class of offer where, prior to making the offer, the offeror beneficially owns, directly or indirectly, a majority of the voting equity securities of the target company;

(2)"Offeror", a person who makes, or in any way participates or aids in making, a takeover bid, and includes persons acting jointly or in concert, or who intend to exercise jointly or in concert any voting rights attached to the securities for which such takeover bid is made.An "offeror" includes an issuer of securities whose securities are or are to be the subject of a takeover bid whether or not the issuer, upon acquisition, will become the beneficial owner of such securities.An "offeror" does not include any bank or broker-dealer in securities loaning funds to the offeror in the ordinary course of the business of the bank or broker-dealer in securities and not otherwise participating in the takeover bid, or any bank, broker-dealer in securities, attorney, accountant or consultant furnishing information or advice to an offeror and not otherwise participating in the takeover bid;

(3)"Offeree", the beneficial owner, residing in this state, of securities which an offeror acquires or offers to acquire in connection with a takeover bid;

(4)"Target company", a resident domestic corporation as defined in subdivision (13) of subsection 1 of section 351.459;

(5)"Equity security", any stock, bond, or other obligation of a target company, the holder of which has the right to vote for the election of members of the board of directors of such target company.Equity security includes any right, option or warrant to purchase an equity security.

(L. 1986 H.B. 1667)

409.853 - Examinations.

1.The commissioner may, by rule or order, impose an examination requirement upon:

(1)Any applicant applying for licensing under sections 409.850 to 409.863; or

(2)Any class of applicants.

2.Any examination required may be administered by the commissioner, or his designee.Examinations may be oral, written or both, and may differ for each class of applicants.

3.The commissioner may, by order, waive any examination requirement imposed pursuant to this section as to any applicant, if the commissioner determines that such examination is not necessary for the protection of investors.

(L. 1985 H.B. 409 & 532 § 22)

409.5-502 - Prohibited conduct in providing investment advice.

(a)It is unlawful for a person that advises others for compensation, either directly or indirectly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities or that, for compensation and as part of a regular business, issues or promulgates analyses or reports relating to securities:

(1)To employ a device, scheme, or artifice to defraud another person; or

(2)To engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.

(b)A rule adopted under this act may define an act, practice, or course of business of an investment adviser or an investment adviser representative, other than a supervised person of a federal covered investment adviser, as fraudulent, deceptive, or manipulative, and prescribe means reasonably designed to prevent investment advisers and investment adviser representatives, other than supervised persons of a federal covered investment adviser, from engaging in acts, practices, and courses of business defined as fraudulent, deceptive, or manipulative.

(c)A rule adopted under this act may specify the contents of an investment advisory contract entered into, extended, or renewed by an investment adviser.

(L. 2003 H.B. 380)

Effective 9-01-03

409.826 - Violations of domestic or foreign laws, rules — legal and equitable remedies.

1.(1)Upon a proper showing by the commissioner that a person has violated, or is about to violate, any provision of sections 409.800 to 409.863 or any rule or order of the commissioner, the circuit court may grant appropriate legal or equitable remedies.Upon showing of violation of sections 409.800 to 409.863 or a rule or order of the commissioner, the court, in addition to traditional legal and equitable remedies, including temporary restraining orders, permanent or temporary prohibitory or mandatory injunctions, and writs of prohibition or mandamus, may grant the following special remedies:

(a)Imposition of a civil penalty in amount which may not exceed ten thousand dollars for any single violation or one hundred thousand dollars for multiple violations in a single proceeding or a series of related proceedings;

(b)Declaratory judgment;

(c)Restitution to investors wishing restitution; and

(d)Appointment of a receiver or conservator for the defendant or the defendant's assets.

(2)Upon a proper showing that the defendant is only about to violate sections 409.800 to 409.863 or a rule or order of the commissioner, appropriate remedies shall be limited to:

(a)A temporary restraining order;

(b)A temporary or permanent injunction;

(c)A writ of prohibition or mandamus; or

(d)An order appointing a receiver or conservator for the defendant or the defendant's assets.

2.The court shall not require the commissioner to post a bond in any official action under sections 409.800 to 409.863.

3.(1)Upon a proper showing by the commissioner or securities or commodity agency of another state that a person other than a government or governmental agency or instrumentality has violated, or is about to violate, any provision of the commodity code of that state or any rule or order of the administrator or securities or commodity agency of that state, the circuit court may grant appropriate legal and equitable remedies.Upon a showing of a violation of the securities or commodity act of the foreign state or a rule or order of the administrator or securities or commodity agency of the foreign state, the court, in addition to traditional legal or equitable remedies including temporary restraining orders, permanent or temporary prohibitory or mandatory injunctions and writs of prohibition or mandamus, may grant the following special remedies:

(a)Appointment of a receiver, conservator, or ancillary receiver or conservator for the defendant or the defendant's assets located in this state.

(2)Upon a proper showing that the defendant is only about to violate the securities or commodity act of the foreign state or a rule or order of the administrator or securities or commodity agency of the foreign state, appropriate remedies shall be limited to:

(a)A temporary restraining order;

(b)A temporary or permanent injunction;

(c)A writ of prohibition or mandamus; or

(d)An order appointing a receiver, conservator, or ancillary receiver or conservator for the defendant or the defendant's assets located in this state.

(L. 1985 H.B. 409 & 532 § 11)

409.4-402 - Agent registration requirement and exemptions.

(a)It is unlawful for an individual to transact business in this state as an agent unless the individual is registered under this act as an agent or is exempt from registration as an agent under subsection (b).

(b)The following individuals are exempt from the registration requirement of subsection (a):

(1)An individual who represents a broker-dealer in effecting transactions in this state limited to those described in Section 15(h)(2) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78(o)(2));

(2)An individual who represents a broker-dealer that is exempt under section 409.4-401(b) or (d);

(3)An individual who represents an issuer with respect to an offer or sale of the issuer's own securities or those of the issuer's parent or any of the issuer's subsidiaries, and who is not compensated in connection with the individual's participation by the payment of commissions or other remuneration based, directly or indirectly, on transactions in those securities;

(4)An individual who represents an issuer and who effects transactions in the issuer's securities exempted by section 409.2-202, other than section 409.2-202(11) and (14);

(5)An individual who represents an issuer that effects transactions solely in federal covered securities of the issuer, but an individual who effects transactions in a federal covered security under Section 18(b)(3) or 18(b)(4)(D) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(3) or 77r(b)(4)(D)) is not exempt if the individual is compensated in connection with the agent's participation by the payment of commissions or other remuneration based, directly or indirectly, on transactions in those securities;

(6)An individual who represents a broker-dealer registered in this state under section 409.4-401(a) or exempt from registration under section 409.4-401(b) in the offer and sale of securities for an account of a nonaffiliated federal covered investment adviser with investments under management in excess of one hundred million dollars acting for the account of others pursuant to discretionary authority in a signed record;

(7)An individual who represents an issuer in connection with the purchase of the issuer's own securities;

(8)An individual who represents an issuer and who restricts participation to performing clerical or ministerial acts; or

(9)Any other individual exempted by rule adopted or order issued under this act.

(c)The registration of an agent is effective only while the agent is employed by or associated with a broker-dealer registered under this act or an issuer that is offering, selling, or purchasing its securities in this state.

(d)It is unlawful for a broker-dealer, or an issuer engaged in offering, selling, or purchasing securities in this state, to employ or associate with an agent who transacts business in this state on behalf of broker-dealers or issuers unless the agent is registered under subsection (a) or exempt from registration under subsection (b).

(e)An individual may not act as an agent for more than one broker-dealer or one issuer at a time, unless the broker-dealer or the issuer for which the agent acts are affiliated by direct or indirect common control or are authorized by rule or order under this act.

(L. 2003 H.B. 380)

Effective 9-01-03

409.4-406 - Registration by broker-dealer, agent, investment adviser, and investment adviser representative.

(a)A person shall register as a broker-dealer, agent, investment adviser, or investment adviser representative by filing an application and a consent to service of process complying with section 409.6-611, and paying the fee specified in section 409.4-410 and any reasonable fees charged by the designee of the commissioner for processing the filing.The application must contain:

(1)The information or record required for the filing of a uniform application; and

(2)Upon request by the commissioner, any other financial or other information or record that the commissioner determines is appropriate.

(b)If the information or record contained in an application filed under subsection (a) is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.

(c)If an order is not in effect and a proceeding is not pending under section 409.4-412, registration becomes effective at noon on the forty-fifth day after a completed application is filed, unless the registration is denied.A rule adopted or order issued under this act may set an earlier effective date or may defer the effective date until noon on the forty-fifth day after the filing of any amendment completing the application.

(d)A registration is effective until midnight on December thirty-first of the year for which the application for registration is filed.Unless an order is in effect under section 409.4-412, a registration may be automatically renewed each year by filing such records as are required by rule adopted or order issued under this act, by paying the fee specified in section 409.4-410, and by paying costs charged by the designee of the commissioner for processing the filings.

(e)A rule adopted or order issued under this act may impose such other conditions, not inconsistent with the National Securities Markets Improvement Act of 1996.An order issued under this act may waive, in whole or in part, specific requirements in connection with registration as are in the public interest and for the protection of investors.

(L. 2003 H.B. 380)

Effective 9-01-03

409.526 - Penalties.

1.Every person who willfully violates any provision of sections 409.500 to 409.566 shall be guilty of a class A misdemeanor.

2.Every person who violates any provision of sections 409.500 to 409.566 shall be subject to a civil penalty of one thousand dollars per violation if a natural person or ten thousand dollars per violation if a corporation.When the violation is the failure to file a registration statement as required by subsection 1 of section 409.511 the failure to file a solicitation or recommendation as required by subsection 3 of section 409.511 or the failure to amend such registration statement as required by subsection 2 of section 409.516 each business day of nonregistration or failure to file a recommendation or solicitation or failure to amend constitutes a separate violation.The penalty imposed by this section shall be cumulative and more than one penalty shall be recoverable in the same action in any court of competent jurisdiction.

(L. 1986 H.B. 1667)

409.6-607 - Public records; confidentiality.

(a)Except as otherwise provided in subsection (b), records obtained by the commissioner or filed under this act, including a record contained in or filed with a registration statement, application, notice filing, or report, are public records and are available for public examination.

(b)The following records are not public records and are not available for public examination under subsection (a):

(1)A record obtained by the commissioner in connection with an audit or inspection under section 409.4-411(d) or an investigation under section 409.6-602;

(2)A part of a record filed in connection with a registration statement under sections 409.3-301 and 409.3-303 to 409.3-305 or a record under section 409.4-411(d) that contains trade secrets or confidential information if the person filing the registration statement or report has asserted a claim of confidentiality or privilege that is authorized by law;

(3)A record that is not required to be provided to the commissioner or filed under this act and is provided to the commissioner only on the condition that the record will not be subject to public examination or disclosure;

(4)A nonpublic record received from a person specified in section 409.6-608(a);

(5)Any Social Security number, residential address unless used as a business address, and residential telephone number contained in a record that is filed; and

(6)A record obtained by the commissioner through a designee of the commissioner that a rule or order under this act determines has been:

(A)Expunged from the commissioner's records by the designee; or

(B)Determined to be nonpublic or nondisclosable by that designee if the commissioner finds the determination to be in the public interest and for the protection of investors.

(c)If disclosure is for the purpose of a civil, administrative, or criminal investigation, action, or proceeding or to a person specified in section 409.6-608(a), the commissioner may disclose a record obtained in connection with an audit or inspection under section 409.4-411(d) or a record obtained in connection with an investigation under section 409.6-602.

(L. 2003 H.B. 380)

Effective 9-01-03

409.6-603 - Civil enforcement.

(a)If the commissioner believes that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of this act or a rule adopted or order issued under this act or that a person has, is, or is about to engage in an act, practice, or course of business that materially aids a violation of this act or a rule adopted or order issued under this act, the commissioner may maintain an action in the circuit court of any county of the state or any city not within a county to enjoin the act, practice, or course of business and to enforce compliance with this act or a rule adopted or order issued under this act.

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

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

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

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

(B)Ordering the commissioner to take charge and control of a defendant's property, including investment accounts and accounts in a depository institution, rents, and profits; to collect debts; and to acquire and dispose of property;

(C)Imposing a civil penalty up to ten thousand dollars for a single violation or up to one million dollars for more than one violation; an order of rescission, restitution, or disgorgement directed to a person that has engaged in an act, practice, or course of business constituting a violation of this act or the predecessor act or a rule adopted or order issued under this act or the predecessor act;

(D)Ordering the payment of prejudgment and post-judgment interest; and

(E)Ordering the payment to the investor education and protection fund of an amount equal to ten percent of the total rescission, restitution, or disgorgement ordered, or such other amount as awarded by the court; or

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

(c)The commissioner may not be required to post a bond in an action or proceeding under this act.

(d)The commissioner is authorized to enter into a consent injunction and judgment in the settlement of any proceeding in the public interest under this act.

(e)The commissioner may create an "Investor Restitution Fund" for the purpose of preserving and distributing to aggrieved investors, disgorgement or restitution funds obtained through enforcement proceedings under this act.In addition to the equitable powers of the court authorized above, the court may order that such funds be paid into the investor restitution fund for distribution to aggrieved investors.It shall be the duty of the commissioner to distribute such funds to those persons injured by the unlawful acts, practices, or courses of business.Such funds may or may not be in interest-bearing accounts, but any interest, which accrues to any such account, shall be paid to the credit of the investor education and protection fund.Notwithstanding the provisions of section 33.080, any funds remaining in the secretary of state's investor restitution fund at the end of any biennium shall not be transferred to the general revenue fund, but if the commissioner is unable with reasonable efforts to ascertain the aggrieved investors, then the funds may be transferred to the investor education and protection fund.

(L. 2003 H.B. 380)

Effective 9-01-03

409.2-201 - Exempt securities.

The following securities are exempt from the requirements of sections 409.3-301 to 409.3-306 and 409.5-504:

(1)A security, including a revenue obligation or a separate security as defined in Rule 131 (17 C.F.R. 230.131) adopted under the Securities Act of 1933, issued, insured, or guaranteed by the United States; by a state; by a political subdivision of a state; by a public authority, agency, or instrumentality of one or more states; by a political subdivision of one or more states; or by a person controlled or supervised by and acting as an instrumentality of the United States under authority granted by the Congress; or a certificate of deposit for any of the foregoing;

(2)A security issued, insured, or guaranteed by a foreign government with which the United States maintains diplomatic relations, or any of its political subdivisions, if the security is recognized as a valid obligation by the issuer, insurer, or guarantor;

(3)A security issued by and representing or that will represent an interest in or a direct obligation of, or be guaranteed by:

(A)An international banking institution;

(B)A banking institution organized under the laws of the United States; a member bank of the Federal Reserve System; or a depository institution a substantial portion of the business of which consists or will consist of receiving deposits or share accounts that are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law or exercising fiduciary powers that are similar to those permitted for national banks under the authority of the Comptroller of Currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. Section 92a); or

(C)Any other depository institution, or any trust company organized or chartered under the laws of this state, unless by rule or order the commissioner proceeds under section 409.2-204;

(4)A security issued by and representing an interest in, or a debt of, or insured or guaranteed by, an insurance company authorized to do business in this state;

(5)A security issued or guaranteed by a railroad, other common carrier, public utility, or public utility holding company that is:

(A)Regulated in respect to its rates and charges by the United States or a state;

(B)Regulated in respect to the issuance or guarantee of the security by the United States, a state, Canada, or a Canadian province or territory; or

(C)A public utility holding company registered under the Public Utility Holding Company Act of 1935 or a subsidiary of such a registered holding company within the meaning of that act;

(6)A federal covered security specified in Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)) or by rule adopted under that provision or a security listed or approved for listing on another securities market specified by rule under this act; a put or a call option contract; a warrant; a subscription right on or with respect to such securities; or an option or similar derivative security on a security or an index of securities or foreign currencies issued by a clearing agency registered under the Securities Exchange Act of 1934 and listed or designated for trading on a national securities exchange, a facility of a national securities exchange, or a facility of a national securities association registered under the Securities Exchange Act of 1934 or an offer or sale, of the underlying security in connection with the offer, sale, or exercise of an option or other security that was exempt when the option or other security was written or issued; or an option or a derivative security designated by the Securities and Exchange Commission under Section 9(b) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78i(b));

(7)A security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, social, athletic, or reformatory purposes, or as a chamber of commerce, and not for pecuniary profit, no part of the net earnings of which inures to the benefit of a private stockholder or other person, or a security of a company that is excluded from the definition of an investment company under Section 3(c)(10)(B) of the Investment Company Act of 1940 (15 U.S.C. Section 80a-3(c)(10)(B)); except that with respect to the offer or sale of a note, bond, debenture, or other evidence of indebtedness issued by such a person, a rule may be adopted under this act limiting the availability of this exemption by classifying securities, persons, and transactions, imposing different requirements for different classes, specifying with respect to paragraph (B) the scope of the exemption and the grounds for denial or suspension, and requiring an issuer:

(A)To file a notice specifying the material terms of the proposed offer or sale and copies of any proposed sales and advertising literature to be used and provide that the exemption becomes effective if the commissioner does not disallow the exemption within the period established by the rule;

(B)To file a request for exemption authorization for which a rule under this act may specify the scope of the exemption, the requirement of an offering statement, the filing of sales and advertising literature, the filing of consent to service of process complying with section 409.6-611, and grounds for denial or suspension of the exemption; or

(C)To register under section 409.3-304;

(8)A member's or owner's interest in, or a retention certificate or like security given in lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit membership cooperative under the cooperative laws of a state, but not a member's or owner's interest, retention certificate, or like security sold to persons other than bona fide members of the cooperative; and

(9)An equipment trust certificate with respect to equipment leased or conditionally sold to a person, if any security issued by the person would be exempt under this section or would be a federal covered security under Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)).

(L. 2003 H.B. 380)

Effective 9-01-03

409.536 - Attorney general may prosecute, how.

The attorney general may prosecute every person charged with the commission of a criminal offense arising from the violation of any provision of sections 409.500 to 409.566. In all such proceedings, the attorney general may appear in person or by his deputy before any court of record or any grand jury and exercise all the powers and perform all the duties in respect of such actions or proceedings which the prosecuting attorney would otherwise be authorized or required to exercise or perform; or the attorney general may in his discretion transmit evidence, proof and information as to such offense to the prosecuting attorney of the county or counties in which the alleged violation has occurred, and every prosecuting attorney to whom such evidence, proof and information is so transmitted shall forthwith proceed to prosecute any corporation, company, association, or officer, manager or agent thereof, or any firm or person charged with such violation.In any such proceeding, wherein the attorney general has appeared either in person or by deputy, the prosecuting attorney shall only exercise such powers and perform such duties as are required of him by the attorney general or the deputy attorney general so appearing.

(L. 1986 H.B. 1667)

409.863 - Licenses — denial, suspension, revocation, limitations, cancellation — grounds.

1.The commissioner may, by order, deny, suspend, or revoke any license, limit the activities which an applicant or licensed person may perform in this state, conserve any applicant or licensed person, or bar any applicant or licensed person from association with a licensed commodity broker-dealer, if the commissioner finds that the order is in the public interest and that the applicant or licensed person or, in the case of a commodity broker-dealer any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the commodity broker-dealer:

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

(2)Has violated or failed to comply with a provision of sections 409.800 to 409.863 or a rule or order promulgated or issued under sections 409.800 to 409.863;

(3)Is the subject of an adjudication or determination within the last five years by a securities agency or administrator or court of competent jurisdiction that the person has willfully violated the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, or the Commodity Exchange Act, or the securities law of any other state, but only if the acts constituting the violation of that state's law would constitute a violation of sections 409.800 to 409.863 had the acts taken place in this state;

(4)Has, within the last ten years, pled guilty or nolo contendere to, or been convicted of, any crime indicating a lack of fitness to engage in the investment commodities business;

(5)Is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in, or continuing, any conduct or practice demonstrating* a lack of fitness to engage in the investment commodities business;

(6)Is the subject of an order of the commissioner denying, suspending, or revoking the person's license as a commodity or securities broker-dealer, sales representative, or investment adviser;

(7)Is the subject of any of the following orders which are currently effective and which were issued within the last five years:

(a)An order by the securities agency or administrator of another state, Canadian province or territory, or the Securities and Exchange Commission, entered after notice and opportunity for hearing, denying, suspending, or revoking the person's license as a commodities or securities broker-dealer, sales representative, or investment adviser, or the substantial equivalent of those terms;

(b)A suspension or expulsion from membership in or association with a self-regulatory organization registered under the Securities and Exchange Act of 1934 or the Commodity Exchange Act;

(c)A United States Postal Service fraud order;

(d)A cease and desist order entered after notice and opportunity for hearing by the commissioner or the securities agency or administrator of any other state, Canadian province or territory, the Securities and Exchange Commission, or the Commodity Futures Trading Commission;

(e)An order entered by the Commodity Futures Trading Commission denying, suspending, or revoking registration under the Commodity Exchange Act;

(8)Has engaged in any unethical or dishonest conduct or practice in the investment commodities or securities business;

(9)Is insolvent, either in the sense that liabilities exceed assets, or in the sense that obligations cannot be met as they mature;

(10)Is not qualified on the basis of such factors as training, experience, and knowledge of the securities business, which determination shall be governed and limited by the provisions of subsection 3 of this section;

(11)Has failed reasonably to supervise sales representatives or employees; or

(12)Has failed to pay the proper filing fee within thirty days after being notified by the commissioner of the deficiency.The commissioner shall vacate any order made under this subdivision when such deficiency has been corrected.

2.The commissioner may not institute a suspension or revocation proceeding on the basis of a fact or transaction disclosed in the license application unless the proceeding is instituted within the next ninety days following issuance of the license.

3.If the public interest or the protection of investors so requires, the commissioner may, by order, summarily suspend a license or postpone the effective date of a license.Upon the entry of the order the commissioner shall promptly notify the applicant or licensed person, as well as the commodity broker-dealer with whom the person is or will be associated if the applicant or licensed person is a commodity sales representative, that an order has been entered and of the reasons therefor and that within fifteen days after the receipt of a written request the matter will be set down for hearing.The provisions of this section shall apply with respect to all subsequent proceedings.

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

(L. 1985 H.B. 409 & 532 § 26)

*Word "demonstrating" does not appear in original rolls.

409.836 - General authority of commissioner.

In addition to specific authority granted elsewhere in sections 409.800 to 409.863, the commissioner may make, amend, and rescind rules, forms, and orders as are necessary to carry out the provisions of* sections 409.800 to 409.863.

(L. 1985 H.B. 409 & 532 § 15)

*Word "of" does not appear in original rolls; omitted by typographical error.

409.4-412 - Denial, revocation, suspension, withdrawal, restriction, condition, or limitation of registration.

(a)If the commissioner finds that the order is in the public interest and subsection (d) authorizes the action, an order issued under this act may deny an application, or may condition or limit registration:(1) of an applicant to be a broker-dealer, agent, investment adviser, or investment adviser representative, and (2) if the applicant is a broker-dealer or investment adviser, of any partner, officer, director, person having a similar status or performing similar functions, or person directly or indirectly controlling the broker-dealer or investment adviser.

(b)If the commissioner finds that the order is in the public interest and subsection (d) authorizes the action an order issued under this act may revoke, suspend, condition, or limit the registration of a registrant and if the registrant is a broker-dealer or investment adviser, any partner, officer, or director, any person having a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser.However, the commissioner:

(1)May not institute a revocation or suspension proceeding under this subsection based on an order issued by another state that is reported to the commissioner or designee later than one year after the date of the order on which it is based; and

(2)Under subsection (d)(5)(A) and (B), may not issue an order on the basis of an order under the state securities act of another state unless the other order was based on conduct for which subsection (d) would authorize the action had the conduct occurred in this state.

(c)If the commissioner finds that the order is in the public interest and subsection (d)(1) to (6), (8), (9), (10), or (12) and (13) authorizes the action, an order under this act may censure, impose a bar, or impose a civil penalty in an amount not to exceed a maximum of five thousand dollars for a single violation or fifty thousand dollars for several violations on a registrant and if the registrant is a broker-dealer or investment adviser, any partner, officer, or director, any person having similar functions or any person directly or indirectly controlling the broker-dealer or investment adviser.

(d)A person may be disciplined under subsections (a) to (c) if the person:

(1)Has filed an application for registration in this state under this act or the predecessor act within the previous ten years, which, as of the effective date of registration or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained a statement that, in light of the circumstances under which it was made, was false or misleading with respect to a material fact;

(2)Willfully violated or willfully failed to comply with this act or the predecessor act or a rule adopted or order issued under this act or the predecessor act within the previous ten years;

(3)Has been convicted of a felony or within the previous ten years has been convicted of a misdemeanor involving a security, a commodity future or option contract, or an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance;

(4)Is enjoined or restrained by a court of competent jurisdiction in an action instituted by the commissioner under this act or the predecessor act, a state, the Securities and Exchange Commission, or the United States from engaging in or continuing an act, practice, or course of business involving an aspect of a business involving securities, commodities, investments, franchises, insurance, banking, or finance;

(5)Is the subject of an order, issued after notice and opportunity for hearing by:

(A)The securities, depository institution, insurance, or other financial services regulator of a state or by the Securities and Exchange Commission or other federal agency denying, revoking, barring, or suspending registration as a broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative;

(B)The securities regulator of a state or by the Securities and Exchange Commission against a broker-dealer, agent, investment adviser, investment adviser representative, or federal covered investment adviser;

(C)The Securities and Exchange Commission or by a self-regulatory organization suspending or expelling the registrant from membership in the self-regulatory organization;

(D)A court adjudicating a United States Postal Service fraud order;

(E)The insurance regulator of a state denying, suspending, or revoking the registration of an insurance agent; or

(F)A depository institution regulator suspending or barring a person from the depository institution business;

(6)Is the subject of an adjudication or determination, after notice and opportunity for hearing, by the Securities and Exchange Commission, the Commodity Futures Trading Commission; the Federal Trade Commission; a federal depository institution regulator, or a depository institution, insurance, or other financial services regulator of a state that the person willfully violated the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, or the Commodity Exchange Act, the securities or commodities law of a state, or a federal or state law under which a business involving investments, franchises, insurance, banking, or finance is regulated;

(7)Is insolvent, either because the person's liabilities exceed the person's assets or because the person cannot meet the person's obligations as they mature, but the commissioner may not enter an order against an applicant or registrant under this paragraph without a finding of insolvency as to the applicant or registrant;

(8)Refuses to allow or otherwise impedes the commissioner from conducting an audit or inspection under section 409.4-411(d) or refuses access to a registrant's office to conduct an audit or inspection under section 409.4-411(d);

(9)Has failed to reasonably supervise an agent, investment adviser representative, or other individual, if the agent, investment adviser representative, or other individual was subject to the person's supervision and committed a violation of this act or the predecessor act or a rule adopted or order issued under this act or the predecessor act within the previous ten years;

(10)Has not paid the proper filing fee within thirty days after having been notified by the commissioner of a deficiency, but the commissioner shall vacate an order under this paragraph when the deficiency is corrected;

(11)After notice and opportunity for a hearing, has been found within the previous ten years:

(A)By a court of competent jurisdiction to have willfully violated the laws of a foreign jurisdiction under which the business of securities, commodities, investment, franchises, insurance, banking, or finance is regulated;

(B)To have been the subject of an order of a securities regulator of a foreign jurisdiction denying, revoking, or suspending the right to engage in the business of securities as a broker-dealer, agent, investment adviser, investment adviser representative, or similar person; or

(C)To have been suspended or expelled from membership by or participation in a securities exchange or securities association operating under the securities laws of a foreign jurisdiction;

(12)Is the subject of a cease and desist order issued by the Securities and Exchange Commission or issued under the securities, commodities, investment, franchise, banking, finance, or insurance laws of a state;

(13)Has engaged in dishonest or unethical practices in the securities, commodities, investment, franchise, banking, finance, or insurance business within the previous ten years; or

(14)Is not qualified on the basis of factors such as training, experience, and knowledge of the securities business.However, in the case of an application by an agent for a broker-dealer that is a member of a self-regulatory organization or by an individual for registration as an investment adviser representative, a denial order may not be based on this paragraph if the individual has successfully completed all examinations required by subsection (e).The commissioner may require an applicant for registration under section 409.4-402 or 409.4-404 who has not been registered in a state within the two years preceding the filing of an application in this state to successfully complete an examination.

(e)A rule adopted or order issued under this act may require that an examination, including an examination developed or approved by an organization of securities regulators, be successfully completed by a class of individuals or all individuals.An order issued under this act may waive, in whole or in part, an examination as to an individual and a rule adopted under this act may waive, in whole or in part, an examination as to a class of individuals if the commissioner determines that the examination is not necessary or appropriate in the public interest and for the protection of investors.

(f)The commissioner may suspend or deny an application summarily; restrict, condition, limit, or suspend a registration; or censure, bar, or impose a civil penalty on a registrant before final determination of an administrative proceeding.Upon the issuance of an order, the commissioner shall promptly notify each person subject to the order that the order has been issued, the reasons for the action, and that within fifteen days after the receipt of a request in a record from the person the matter will be scheduled for a hearing.If a hearing is not requested and none is ordered by the commissioner within thirty days after the date of service of the order, the order becomes final by operation of law.If a hearing is requested or ordered, the commissioner, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend the order until final determination.

(g)An order issued may not be issued under this section, except under subsection (f), without:

(1)Appropriate notice to the applicant or registrant;

(2)Opportunity for hearing; and

(3)Findings of fact and conclusions of law in a record.

(h)A person that controls, directly or indirectly, a person not in compliance with this section may be disciplined by order of the commissioner under subsections (a) to (c) to the same extent as the noncomplying person, unless the controlling person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct that is a ground for discipline under this section.

(i)The commissioner may not institute a proceeding under subsection (a), (b), or (c) based solely on material facts actually known by the commissioner unless an investigation or the proceeding is instituted within one year after the commissioner actually acquires knowledge of the material facts.

(j)Any applicant denied an agent, broker-dealer, investment adviser or investment adviser representative registration by order of the commissioner pursuant to subsection (a) may file a petition with the administrative hearing commission alleging that the commissioner has denied the registration.The administrative hearing commission shall conduct hearings and make findings of fact and conclusions of law.The commissioner shall have the burden of proving a ground for denial pursuant to this act.

(k)If a proceeding is instituted to revoke or suspend a registration of any agent, broker-dealer, investment adviser, or investment adviser representative pursuant to subsection (b), the commissioner shall refer the matter to the administrative hearing commission.The administrative hearing commission shall conduct hearings and make findings of fact and conclusions of law in such cases.The commissioner shall have the burden of proving a ground for suspension or revocation pursuant to this act.The administrative hearing commission shall submit its findings of fact and conclusions of law to the commissioner for final disposition.

(l)Hearing procedures before the commissioner or the administrative hearing commission and judicial review of the decisions and orders of the commissioner and of the administrative hearing commission, and all other procedural matters pursuant to this act shall be governed by the provisions of chapter 536.Hearings before the administrative hearing commission shall also be governed by the provisions of chapter 621.

(L. 2003 H.B. 380)

Effective 9-01-03

409.2-204 - Denial, suspension, revocation, condition, or limitation of exemptions.

(a)Except with respect to a federal covered security or a transaction involving a federal covered security, an order under this act may deny, suspend application of, condition, limit, or revoke an exemption created under section 409.2-201(3)(C), (7) or (8) or 409.2-202 or an exemption or waiver created under section 409.2-203 with respect to a specific security, transaction, or offer.An order under this section may be issued only pursuant to the procedures in section 409.3-306(d) or 409.6-604 and only prospectively.

(b)A person does not violate section 409.3-301, 409.3-303 to 409.3-306, 409.5-504, or 409.5-510 by an offer to sell, offer to purchase, sale, or purchase effected after the entry of an order issued under this section if the person did not know, and in the exercise of reasonable care could not have known, of the order.

(L. 2003 H.B. 380)

Effective 9-01-03

409.6-612 - Severability clause.

If any provision of this act or its application to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.

(L. 2003 H.B. 380)

Effective 9-01-03

409.833 - Cooperation with other jurisdictions, agencies.

1.To encourage uniform application and interpretation of sections 409.800 to 409.863 and securities regulation and enforcement in general, the commissioner and the employees of the commissioner may cooperate, including bearing the expense of the cooperation, with the securities agencies or administrator of another jurisdiction, Canadian province or territory, or such other agencies administering this act*, the Commodity Futures Trading Commission, the Securities and Exchange Commission, any self-regulatory organization established under the Commodity Exchange Act or the Securities Exchange Act of 1934, any national or international organization of commodities or securities officials or agencies, and any governmental law enforcement agency.

2.The cooperation authorized by subsection 1 of this section shall include, but need not be limited to, the following:

(1)Making joint examinations or investigations;

(2)Holding joint administrative hearings;

(3)Filing and prosecuting joint litigation;

(4)Sharing and exchanging personnel;

(5)Sharing and exchanging information and documents;

(6)Formulating and adopting mutual regulations, statements of policy, guidelines, proposed statutory changes and releases; and

(7)Issuing and enforcing subpoenas at the request of the agency administering sections 409.800 to 409.863 in another jurisdiction, the securities agency of another jurisdiction, the Commodity Futures Trading Commission or the Securities and Exchange Commission if the information sought would also be subject to lawful subpoena for conduct occurring in this state.

(L. 1985 H.B. 409 & 532 § 14)

*Words "this act" appear in original rolls; apparently §§ 409.800 to 409.863 intended.

409.566 - Unlawful practices, offeree may bring suit, damages, attorney fees.

Any offeree whose equity securities are the subject of a takeover bid and who has been injured by any violation of sections 409.500 to 409.566 may bring an action in his or her own name to enjoin such unlawful act or practice and to recover actual damages together with reasonable attorney fees in the event the offeree is successful.

(L. 1986 H.B. 1667)

409.823 - Violations — powers of commissioner.

1.If the commissioner believes, whether or not based upon an investigation conducted under section 409.820, that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of sections 409.800 to 409.863 or any rule or order promulgated or issued under sections 409.800 to 409.863, the commissioner may:

(1)Issue a cease and desist order;

(2)Take disciplinary action against a licensed person as specified in section 409.863;

(3)Issue an order imposing a civil penalty in amount which may not exceed ten thousand dollars for any single violation or one hundred thousand dollars for multiple violations in a single proceeding or a series of related proceedings; or

(4)Initiate any of the actions specified in subsection 2 of this section.

2.The commissioner may institute any of the following actions in the appropriate courts of this state, or in the appropriate courts of another state, in addition to any legal or equitable remedies otherwise available:

(1)An action for declaratory judgment;

(2)An action for a prohibitory or mandatory injunction to enjoin the violation and to insure compliance with sections 409.800 to 409.863 or any rule or order of the commissioner;

(3)An action for appointment of a receiver or conservator for the defendant or the defendant's assets.

(L. 1985 H.B. 409 & 532 § 10)

409.4-407 - Succession and change in registration of broker-dealer or investment adviser.

(a)A broker-dealer or investment adviser may succeed to the current registration of another broker-dealer or investment adviser or a notice filing of a federal covered investment adviser, and a federal covered investment adviser may succeed to the current registration of an investment adviser or notice filing of another federal covered investment adviser, by filing as a successor an application for registration pursuant to section 409.4-401 or 409.4-403 or a notice pursuant to section 409.4-405 for the unexpired portion of the current registration or notice filing.

(b)A broker-dealer or investment adviser that changes its form of organization or state of incorporation or organization may continue its registration by filing an amendment to its registration if the change does not involve a material change in its financial condition or management.The amendment becomes effective when filed or on a date designated by the registrant in its filing.The new organization is a successor to the original registrant for the purposes of this act.If there is a material change in financial condition or management, the broker-dealer or investment adviser shall file a new application for registration.A predecessor registered under this act shall stop conducting its securities business other than winding down transactions and shall file for withdrawal of broker-dealer or investment adviser registration within forty-five days after filing its amendment to effect succession.

(c)A broker-dealer or investment adviser that changes its name may continue its registration by filing an amendment to its registration.The amendment becomes effective when filed or on a date designated by the registrant.

(d)A change of control of a broker-dealer or investment adviser may be made in accordance with a rule adopted or order issued under this act.

(L. 2003 H.B. 380)

Effective 9-01-03

409.4-403 - Investment adviser registration requirement and exemptions.

(a)It is unlawful for a person to transact business in this state as an investment adviser unless the person is registered under this act as an investment adviser or is exempt from registration as an investment adviser under subsection (b).

(b)The following persons are exempt from the registration requirement of subsection (a):

(1)A person without a place of business in this state that is registered under the securities act of the state in which the person has its principal place of business if its only clients in this state are:

(A)Federal covered investment advisers, investment advisers registered under this act, or broker-dealers registered under this act;

(B)Institutional investors;

(C)Bona fide preexisting clients whose principal places of residence are not in this state if the investment adviser is registered under the securities act of the state in which the clients maintain principal places of residence; or

(D)Any other client exempted by rule adopted or order issued under this act;

(2)A person without a place of business in this state if the person has had, during the preceding twelve months, not more than five clients that are resident in this state in addition to those specified under paragraph (1); or

(3)Any other person exempted by rule adopted or order issued under this act.

(c)It is unlawful for an investment adviser, directly or indirectly, to employ or associate with an individual to engage in an activity related to investment advice in this state if the registration of the individual is suspended or revoked or the individual is barred from employment or association with an investment adviser, federal covered investment adviser, or broker-dealer by an order under this act, the Securities and Exchange Commission, or a self-regulatory organization, unless the investment adviser did not know, and in the exercise of reasonable care could not have known, of the suspension, revocation, or bar.Upon request from the investment adviser and for good cause, the commissioner, by order, may waive, in whole or in part, the application of the prohibitions of this subsection to the investment adviser.

(d)It is unlawful for an investment adviser to employ or associate with an individual required to be registered under this act as an investment adviser representative who transacts business in this state on behalf of the investment adviser unless the individual is registered under section 409.4-404(a) or is exempt from registration under section 409.4-404(b).

(L. 2003 H.B. 380)

Effective 9-01-03

409.6-602 - Investigations and subpoenas.

(a)The commissioner may:

(1)Conduct public or private investigations within or outside of this state which the commissioner considers necessary or appropriate to determine whether a person has violated, is violating, or is about to violate this act or a rule adopted or order issued under this act, or to aid in the enforcement of this act or in the adoption of rules and forms under this act;

(2)Require or permit a person to testify, file a statement, or produce a record, under oath or otherwise as the commissioner determines, as to all the facts and circumstances concerning a matter to be investigated or about which an action or proceeding is to be instituted;

(3)Publish a record concerning an action, proceeding, or an investigation under, or a violation of, this act or a rule adopted or order issued under this act if the commissioner determines it is necessary or appropriate in the public interest and for the protection of investors; and

(4)Appoint special investigators to aid in investigations conducted pursuant to this act.Under such appointment by the commissioner, special investigators who meet the qualifications of a law enforcement officer pursuant to chapter 590 shall have the authority as peace officers to serve subpoenas and all other process, and while investigating criminal violations of this act to participate in the making of arrests and the application for search warrants.Such special investigators shall coordinate arrests and seizure of evidence with other state or federal law enforcement officers.

(b)For the purpose of an investigation under this act, the commissioner or its designated officer may administer oaths and affirmations, subpoena witnesses, seek compulsion of attendance, take evidence, require the filing of statements, and require the production of any records that the commissioner considers relevant or material to the investigation.

(c)If a person does not appear or refuses to testify, file a statement, produce records, or otherwise does not obey a subpoena as required by the commissioner under this act, the commissioner may apply to the circuit court of any county of the state or any city not within a county, or a court of another state to enforce compliance.The court may:

(1)Hold the person in contempt;

(2)Order the person to appear before the commissioner;

(3)Order the person to testify about the matter under investigation or in question;

(4)Order the production of records;

(5)Grant injunctive relief, including restricting or prohibiting the offer or sale of securities or the providing of investment advice;

(6)Impose a civil penalty of not less than ten thousand dollars and not greater than fifty thousand dollars for each violation; and

(7)Grant any other necessary or appropriate relief.

(d)This section does not preclude a person from applying to the circuit court of any county of the state or any city not within a county for relief from a request to appear, testify, file a statement, produce records, or obey a subpoena.

(e)An individual is not excused from attending, testifying, filing a statement, producing a record or other evidence, or obeying a subpoena of the commissioner under this act or in an action or proceeding instituted by the commissioner under this act on the grounds that the required testimony, statement, record, or other evidence, directly or indirectly, may tend to incriminate the individual or subject the individual to a criminal fine, penalty, or forfeiture.If the individual refuses to testify, file a statement, or produce a record or other evidence on the basis of the individual's privilege against self-incrimination, the commissioner may apply to the circuit court of any county of the state or any city not within a county to compel the testimony, the filing of the statement, the production of the record, or the giving of other evidence.The testimony, record, or other evidence compelled under such an order may not be used, directly or indirectly, against the individual in a criminal case, except in a prosecution for perjury or contempt or otherwise failing to comply with the order.

(f)At the request of the securities regulator of another state or a foreign jurisdiction, the commissioner may provide assistance if the requesting regulator states that it is conducting an investigation to determine whether a person has violated, is violating, or is about to violate a law or rule of the other state or foreign jurisdiction relating to securities matters that the requesting regulator administers or enforces.The commissioner may provide the assistance by using the authority to investigate and the powers conferred by this section as the commissioner determines is necessary or appropriate.The assistance may be provided without regard to whether the conduct described in the request would also constitute a violation of this act or other law of this state if occurring in this state.In deciding whether to provide the assistance, the commissioner may consider whether the requesting regulator is permitted and has agreed to provide assistance reciprocally within its state or foreign jurisdiction to the commissioner on securities matters when requested; whether compliance with the request would violate or prejudice the public policy of this state; and the availability of resources and employees of the commissioner to carry out the request for assistance.

(L. 2003 H.B. 380)

Effective 9-01-03

409.6-606 - Administrative files and opinions.

(a)The commissioner shall maintain, or designate a person to maintain, a register of applications for registration of securities; registration statements; notice filings; applications for registration of broker-dealers, agents, investment advisers, and investment adviser representatives; notice filings by federal covered investment advisers that are or have been effective under this act or the predecessor act; notices of claims of exemption from registration or notice filing requirements contained in a record; orders issued under this act or the predecessor act; and interpretative opinions or no action determinations issued under this act.

(b)The commissioner shall make all rules, forms, interpretative opinions, and orders available to the public.

(c)The commissioner shall furnish a copy of a record that is a public record or a certification that the public record does not exist to a person that so requests.A rule adopted under this act may establish a reasonable charge for furnishing the record or certification.A copy of the record certified or a certificate by the commissioner of a record's nonexistence is prima facie evidence of a record or its nonexistence.

(L. 2003 H.B. 380)

Effective 9-01-03

409.803 - Prohibited contracts — exemptions.

1.Except as otherwise provided in subdivision (1) of subsection 1 of section 409.806, no person shall offer to enter into, enter into, or confirm the execution of, any transaction for the delivery of any commodity under a commodity contract commonly known as a margin account, margin contract, leverage account, or leverage contract, or under any contract, account, arrangement, scheme, or device that serves the same function or functions or is marketed or managed in substantially the same manner as such account or contract.

2.No person shall sell or purchase, or offer to sell or purchase, any commodity under any other commodity contract or under any commodity option or offer to enter into or enter into as seller or purchaser any other commodity contract or any commodity option.The provisions of this subsection shall not apply to any of the following persons, or any employee, officer or director thereof acting solely in that capacity:

(1)A person registered with the Commodity Futures Trading Commission as a futures commission merchant or as a leverage transaction merchant whose activities require such registration;

(2)A person registered with the Securities and Exchange Commission as a broker-dealer whose activities require such registration;

(3)A person affiliated with, and whose obligations and liabilities are guaranteed by, a person referred to in subdivision (1) or (2) of this subsection;

(4)A person who is a member of a contract market designated by the Commodity Futures Trading Commission, or any clearinghouse thereof;

(5)A financial institution;

(6)A person registered under the laws of this state as a securities broker-dealer whose activities require such registration; or

(7)A person registered as a commodity broker-dealer or commodity sales representative in accordance with the provisions of sections 409.850 to 409.863.

(L. 1985 H.B. 409 & 532 § 2)

409.556 - Construction of statutes.

In the event any provision or application of sections 409.500 to 409.566 is held illegal or invalid for any reason, such holding shall not affect the legality or validity of any other provision or application thereof.

(L. 1986 H.B. 1667)

409.7-702 - Repeals.

The following act is repealed:Missouri Securities Act of 1956, as amended, RSMo 2002.

(L. 2003 H.B. 380)

Effective 9-01-03

409.5-503 - Evidentiary burden.

(a)In a civil action or administrative proceeding under this act, a person claiming an exemption, exception, preemption, or exclusion has the burden to prove the applicability of the claim.

(b)In a criminal proceeding under this act, a person claiming an exception or exclusion from definition has the burden of injecting the issue pursuant to section 556.051*, and a person claiming an exemption or qualification as a federal covered security has the burden of proving the claim as an affirmative defense pursuant to section 556.056*.

(L. 2003 H.B. 380)

Effective 9-01-03

*Sections 556.051 and 556.056 were repealed by S.B. 491, 2014, effective 1-01-17.

409.107 - Investment firms, legal firms, other persons shall not be involved with issuance of bonds, when.

No investment firm, legal firm offering bond counsel services, or any persons having an interest in any such firms shall be involved in the issuance of bonds authorized by an election in which the firm or person made any direct or indirect financial contribution to any campaign in support of the bond election.For the purposes of this section, direct or indirect financial contribution shall not include services with respect to providing factual information relating to the prospective bond issuance, responding to questions and making presentations at public forums relative to prospective bond issuance, or participation in any meeting subject to the open meetings law.

(L. 1992 S.B. 705 § 8, A.L. 2007 S.B. 22)

409.856 - Licenses — effective date — expiration — classification, sales representatives — restrictions — exceptions.

1.Unless a proceeding under section 409.863 has been instituted, the license of any commodity broker-dealer or commodity sales representative becomes effective thirty days after an application for licensing and the last of any additional information requested by the commissioner, or his designee, has been filed, provided that all examination requirements imposed pursuant to section 409.853 have been satisfied.The commissioner may, by order, authorize an earlier effective date of licensing.

2.The license of a commodity broker-dealer or commodity sales representative shall expire on December thirty-first of the year for which issued, or at such other time as the commissioner may, by rule, prescribe.

3.The license of a commodity sales representative is only effective with respect to transactions effected as an employee or otherwise on behalf of the commodity broker-dealer or issuer for whom the commodity sales representative is licensed.

4.No person shall at any one time act as a commodity sales representative for more than one commodity broker-dealer or one issuer, except:

(1)Where the commodity broker-dealers for whom the commodity sales representative will act are affiliated by direct or indirect common control, a commodity sales representative may represent each of those organizations; or

(2)Where the commissioner, by rule or order, authorizes multiple licenses as consistent with the public interest and protection of investors.

5.When a commodity sales representative begins or terminates association with a commodity broker-dealer or issuer, or begins or terminates activities which make that person a commodity sales representative, the commodity sales representative and the former commodity broker-dealer on whose behalf the commodity sales representative was acting shall notify promptly the commissioner or his designee.

6.If the commissioner shall determine, by rule, that one or more classifications of licenses as a commodity broker-dealer or commodity sales representative which are subject to limitations and conditions on the nature of the activities which may be conducted by those persons are consistent with the public interest and the protection of investors, the commissioner may authorize the licensing of persons subject to specific limitations and conditions.

(L. 1985 H.B. 409 & 532 § 23)

409.5-507 - Qualified immunity.

A broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative is not liable to another broker-dealer, agent, investment adviser, federal covered investment adviser, or investment adviser representative for defamation relating to a statement that is contained in a record required by the commissioner, or designee of the commissioner, the Securities and Exchange Commission, or a self-regulatory organization, unless the person knew, or should have known at the time that the statement was made, that it was false in a material respect or the person acted in reckless disregard of the statement's truth or falsity.

(L. 2003 H.B. 380)

Effective 9-01-03

409.1-105 - Electronic records and signatures.

This act modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, but does not modify, limit, or supersede Section 101(c) of that act (15 U.S.C. Section 7001(c)) or authorize electronic delivery of any of the notices described in Section 103(b) of that act (15 U.S.C. Section 7003(b)).This act authorizes the filing of records and signatures, when specified by provisions of this act or by a rule adopted or order issued under this act, in a manner consistent with Section 104(a) of that act (15 U.S.C. Section 7004(a)).

(L. 2003 H.B. 380)

Effective 9-01-03

409.1-101 - Short title.

Sections 409.1-101 to 409.7-703 may be cited as the "Missouri Securities Act of 2003" and in this chapter as this act.

(L. 2003 H.B. 380)

Effective 9-01-03

409.113 - Commissioner of securities may issue orders, when.

If the commissioner determines that a person has engaged, is engaging, or is about to engage in an act, practice, or course of business constituting a violation of sections 409.108 to 409.114, or any order, rule or regulation issued pursuant thereto or that a person has materially aided, is materially aiding, or is about to materially aid an act, practice, or course of business constituting a violation of sections 409.108 to 409.114, or any order, rule or regulation issued pursuant thereto, the commissioner may issue such orders as authorized pursuant to section 409.6-604.

(L. 2004 H.B. 1617)

409.846 - Judicial review of commissioner's orders — procedure — standard of review.

1.Any person aggrieved by a final order of the commissioner may obtain judicial review of such order in the manner provided in chapter 536 for the review of contested cases.

2.Upon the filing of a petition for review, except where the taking of additional evidence is ordered by the court pursuant to subsection 3 or 4 of this section, the court shall have exclusive jurisdiction of the matter, and the commissioner may not modify or set aside the order, in whole or in part.

3.The filing of a petition for review under subsection 1 of this section, does not, unless specifically ordered by the court, operate as a stay of the commissioner's order, and the commissioner may enforce or ask the court to enforce the order pending the outcome of the review proceedings.

4.If either the aggrieved party or the commissioner applies to the court for leave to adduce additional evidence and shows to the satisfaction of the court that there were reasonable grounds for failure to adduce the evidence in the hearing before the commissioner or other good cause, the court may order the additional evidence to be taken by the commissioner under such conditions as the court considers proper.

5.If new evidence is ordered taken by the court, the commissioner may modify the findings and order by reason of the additional evidence and shall file in the court the additional evidence together with any modified or new findings or order.

6.The court shall review the petition based upon the original record before the commissioner as amended under subsections 3 and 4 of this section.The findings of the commissioner as to the facts, if supported by competent, material, and substantive evidence, are conclusive.Based upon this review, the court may affirm, modify, enforce, or set aside the order, in whole or in part.

(L. 1985 H.B. 409 & 532 § 19)

409.813 - Principals, agents, joint and several liability — when.

1.The act, omission, or failure of any official, agent, or other person acting for any individual, association, partnership, corporation, or trust within the scope of his employment or office shall be deemed the act, omission, or failure of such individual, association, partnership, corporation, or trust, as well as of such official, agent, or other person.

2.Every person who directly or indirectly controls another person liable under any provision of sections 409.800 to 409.863, every partner, officer, or director of such other person, every person occupying a similar status or performing similar functions, and every employee of such other person who materially aids in the violation is also liable jointly and severally with and to the same extent as such other person, unless the person who is also liable by virtue of this subsection sustains the burden of proof that he did not know and, in exercise of reasonable care, could not have known of the existence of the facts by reason of which the liability is alleged to exist.

(L. 1985 H.B. 409 & 532 § 6)

409.3-304 - Securities registration by qualification.

(a)A security may be registered by qualification under this section.

(b)A registration statement under this section must contain the information or records specified in section 409.3-305, a consent to service of process complying with section 409.6-611, and, if required by rule adopted under this act, the following information or records:

(1)With respect to the issuer and any significant subsidiary, its name, address, and form of organization; the state or foreign jurisdiction and date of its organization; the general character and location of its business; a description of its physical properties and equipment; and a statement of the general competitive conditions in the industry or business in which it is or will be engaged;

(2)With respect to each director and officer of the issuer, and other person having a similar status or performing similar functions, the person's name, address, and principal occupation for the previous five years; the amount of securities of the issuer held by the person as of the thirtieth day before the filing of the registration statement; the amount of the securities covered by the registration statement to which the person has indicated an intention to subscribe; and a description of any material interest of the person in any material transaction with the issuer or a significant subsidiary effected within the previous three years or proposed to be effected;

(3)With respect to persons covered by paragraph (2), the aggregate sum of the remuneration paid to those persons during the previous twelve months and estimated to be paid during the next twelve months, directly or indirectly, by the issuer, and all predecessors, parents, subsidiaries, and affiliates of the issuer;

(4)With respect to a person owning of record or owning beneficially, if known, ten percent or more of the outstanding shares of any class of equity security of the issuer, the information specified in paragraph (2) other than the person's occupation;

(5)With respect to a promoter, if the issuer was organized within the previous three years, the information or records specified in paragraph (2), any amount paid to the promoter within that period or intended to be paid to the promoter, and the consideration for the payment;

(6)With respect to a person on whose behalf any part of the offering is to be made in a nonissuer distribution, the person's name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; a description of any material interest of the person in any material transaction with the issuer or any significant subsidiary effected within the previous three years or proposed to be effected; and a statement of the reasons for making the offering;

(7)The capitalization and long term debt, on both a current and pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding or being registered or otherwise offered, and a statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill, or anything else of value, for which the issuer or any subsidiary has issued its securities within the previous two years or is obligated to issue its securities;

(8)The kind and amount of securities to be offered; the proposed offering price or the method by which it is to be computed; any variation at which a proportion of the offering is to be made to a person or class of persons other than the underwriters, with a specification of the person or class; the basis on which the offering is to be made if otherwise than for cash; the estimated aggregate underwriting and selling discounts or commissions and finders' fees, including separately cash, securities, contracts, or anything else of value to accrue to the underwriters or finders in connection with the offering or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts; the estimated amounts of other selling expenses, including legal, engineering, and accounting charges; the name and address of each underwriter and each recipient of a finder's fee; a copy of any underwriting or selling group agreement under which the distribution is to be made or the proposed form of any such agreement whose terms have not yet been determined; and a description of the plan of distribution of any securities that are to be offered otherwise than through an underwriter;

(9)The estimated monetary proceeds to be received by the issuer from the offering; the purposes for which the proceeds are to be used by the issuer; the estimated amount to be used for each purpose; the order or priority in which the proceeds will be used for the purposes stated; the amounts of any funds to be raised from other sources to achieve the purposes stated; the sources of the funds; and, if a part of the proceeds is to be used to acquire property, including goodwill, otherwise than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of any persons that have received commissions in connection with the acquisition, and the amounts of the commissions and other expenses in connection with the acquisition, including the cost of borrowing money to finance the acquisition;

(10)A description of any stock options or other security options outstanding, or to be created in connection with the offering, and the amount of those options held or to be held by each person required to be named in paragraph (2), (4), (5), (6), or (8) and by any person that holds or will hold ten percent or more in the aggregate of those options;

(11)The dates of, parties to, and general effect concisely stated of each managerial or other material contract made or to be made otherwise than in the ordinary course of business to be performed in whole or in part at or after the filing of the registration statement or that was made within the previous two years, and a copy of the contract;

(12)A description of any pending litigation, action, or proceeding to which the issuer is a party and that materially affects its business or assets, and any litigation, action, or proceeding known to be contemplated by governmental authorities;

(13)A copy of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended as of the effective date to be used in connection with the offering and any solicitation of interest used in compliance with section 409.2-202(17)(B);

(14)A specimen or copy of the security being registered, unless the security is uncertificated; a copy of the issuer's articles of incorporation and bylaws or their substantial equivalents, in effect; and a copy of any indenture or other instrument covering the security to be registered;

(15)A signed or conformed copy of an opinion of counsel concerning the legality of the security being registered, with an English translation if it is in a language other than English, which states whether the security when sold will be validly issued, fully paid, and nonassessable and, if a debt security, a binding obligation of the issuer;

(16)A signed or conformed copy of a consent of any accountant, engineer, appraiser, or other person whose profession gives authority for a statement made by the person, if the person is named as having prepared or certified a report or valuation, other than an official record, that is public, which is used in connection with the registration statement;

(17)A balance sheet of the issuer as of a date within four months before the filing of the registration statement; a statement of income and changes in financial position for each of the three fiscal years preceding the date of the balance sheet and for any period between the close of the immediately previous fiscal year and the date of the balance sheet, or for the period of the issuer's and any predecessor's existence if less than three years; and, if any part of the proceeds of the offering is to be applied to the purchase of a business, the financial statements that would be required if that business were the registrant; and

(18)Any additional information or records required by rule adopted or order issued under this act.

(c)A registration statement under this section becomes effective thirty days, or any shorter period provided by rule adopted or order issued under this act, after the date the registration statement or the last amendment other than a price amendment is filed, if:

(1)A stop order is not in effect and a proceeding is not pending under section 409.3-306;

(2)The commissioner has not issued an order under section 409.3-306 delaying effectiveness; and

(3)The applicant or registrant has not requested that effectiveness be delayed.

(d)The commissioner may delay effectiveness once for not more than ninety days if the commissioner determines the registration statement is not complete in all material respects and promptly notifies the applicant or registrant of that determination.The commissioner may also delay effectiveness for a further period of not more than thirty days if the commissioner determines that the delay is necessary or appropriate.

(e)A rule adopted or order issued under this act may require as a condition of registration under this section that a prospectus containing a specified part of the information or record specified in subsection (b) be sent or given to each person to which an offer is made, before or concurrently, with the earliest of:

(1)The first offer made in a record to the person otherwise than by means of a public advertisement, by or for the account of the issuer or another person on whose behalf the offering is being made or by an underwriter or broker-dealer that is offering part of an unsold allotment or subscription taken by the person as a participant in the distribution;

(2)The confirmation of a sale made by or for the account of the person;

(3)Payment pursuant to such a sale; or

(4)Delivery of the security pursuant to such a sale.

(L. 2003 H.B. 380)

Effective 9-01-03

409.546 - Fraudulent practices not allowed, solicitation of offerees.

1.No person shall make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any takeover bid or any solicitation of offerees in opposition to or in favor of any such takeover bid.

2.Fraudulent, deceptive or manipulative acts or practices include without limitation those acts and practices prescribed by rules and regulations which the commissioner of securities is hereby empowered to adopt, promulgate, amend and rescind as is necessary to carry out the provisions of this section.

(L. 1986 H.B. 1667)

409.5-505 - Misleading filings.

It is unlawful for a person to make or cause to be made, in a record that is used in an action or proceeding or filed under this act, a statement that, at the time and in the light of the circumstances under which it is made, is false or misleading in a material respect, or, in connection with the statement, to omit to state a material fact necessary to make the statement made, in the light of the circumstances under which it was made, not false or misleading.

(L. 2003 H.B. 380)

Effective 9-01-03

409.605 - Definitions.

As used in sections 409.600 to 409.630, the following terms shall mean:

(1)"Agencies", the department of health and senior services and the commissioner of securities;

(2)"Agent", shall have the same meaning as in section 409.1-102;

(3)"Broker-dealer", shall have the same meaning as in section 409.1-102;

(4)"Financial exploitation", the wrongful or unauthorized taking, withholding, appropriation, or use of money, real property, or personal property of a qualified adult;

(5)"Immediate family member", a spouse, child, parent, or sibling of a qualified adult;

(6)"Qualified adult":

(a)A person sixty years of age or older; or

(b)A person who:

a.Has a disability as defined in section 192.2005; and

b.Is between the ages of eighteen and fifty-nine;

(7)"Qualified individual", a person associated with a broker-dealer who serves in a supervisory, compliance, or legal capacity as part of his or her job.

(L. 2015 S.B. 244)

409.950 - Fiduciaries and employee retirement systems, investment in certain multinational development banks authorized.

Notwithstanding any other law to the contrary, securities or other obligations issued by multinational development banks in which the United States is a member nation, including the African Development Bank, shall be treated as eligible for investment by all employee retirement systems and by all fiduciaries created or regulated pursuant to the laws of this state.Nothing in this section or in section 379.080 shall be construed to require such investments.

(L. 1985 H.B. 589 § 1, A.L. 2007 S.B. 66)

409.850 - Broker-dealers, sales representatives — applications for licenses — fees.

1.An applicant for licensing as a commodity broker-dealer or commodity sales representative shall file with the commissioner an application for licensing together with a consent to service of process pursuant to section 409.838.The application for licensing shall contain the information which the commissioner determines, by rule, is necessary or appropriate to facilitate the administration of sections 409.850 to 409.863.

2.Each applicant for licensing under sections 409.850 to 409.863 shall pay a fee as follows:

(1)For a license as a commodity broker-dealer, one hundred dollars, and for each branch office, fifty dollars; and

(2)For a license as a commodity sales representative, twenty-five dollars.

3.Except in any year in which a licensing fee is paid, an applicant shall pay an annual fee as follows:

(1)Each commodity broker-dealer, seventy-five dollars, and for each branch office in this state, thirty dollars; and

(2)Each commodity sales representative, fifteen dollars.

4.For purposes of this section, a "branch office" shall mean each office of a commodity broker-dealer in this state, other than the principal office in this state of the commodity broker-dealer, from which three or more commodity sales representatives transact business.

5.If an application is denied or withdrawn or the license is terminated by revocation, cancellation, or withdrawal, the commissioner shall retain the fee paid.

(L. 1985 H.B. 409 & 532 § 21)

409.5-501 - General fraud.

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

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

(2)To make an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statement made, in the light of the circumstances under which it is made, not misleading; or

(3)To engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.

(L. 2003 H.B. 380)

Effective 9-01-03

409.5-509 - Civil liability.

(a)Enforcement of civil liability under this section is subject to the Securities Litigation Uniform Standards Act of 1998.

(b)A person is liable to the purchaser if the person sells a security in violation of section 409.3-301 or, by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading, the purchaser not knowing the untruth or omission and the seller not sustaining the burden of proof that the seller did not know and, in the exercise of reasonable care, could not have known of the untruth or omission.An action under this subsection is governed by the following:

(1)The purchaser may maintain an action to recover the consideration paid for the security, less the amount of any income received on the security, and interest at the rate of eight percent per year from the date of the purchase, costs, and reasonable attorneys' fees determined by the court, upon the tender of the security, or for actual damages as provided in paragraph (3).

(2)The tender referred to in paragraph (1) may be made any time before entry of judgment.Tender requires only notice in a record of ownership of the security and willingness to exchange the security for the amount specified.A purchaser that no longer owns the security may recover actual damages as provided in paragraph (3).

(3)Actual damages in an action arising under this subsection are the amount that would be recoverable upon a tender less the value of the security when the purchaser disposed of it, and interest at the rate of eight percent per year from the date of the purchase, costs, and reasonable attorneys' fees determined by the court.

(c)A person is liable to the seller if the person buys a security by means of an untrue statement of a material fact or omission to state a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading, the seller not knowing of the untruth or omission, and the purchaser not sustaining the burden of proof that the purchaser did not know, and in the exercise of reasonable care, could not have known of the untruth or omission.An action under this subsection is governed by the following:

(1)The seller may maintain an action to recover the security, and any income received on the security, costs, and reasonable attorneys' fees determined by the court, upon the tender of the purchase price, or for actual damages as provided in paragraph (3).

(2)The tender referred to in paragraph (1) may be made any time before entry of judgment.Tender requires only notice in a record of the present ability to pay the amount tendered and willingness to take delivery of the security for the amount specified.If the purchaser no longer owns the security, the seller may recover actual damages as provided in paragraph (3).

(3)Actual damages in an action arising under this subsection is the difference between the price at which the security was sold and the value the security would have had at the time of the sale in the absence of the purchaser's conduct causing liability, and interest at the rate of eight percent per year from the date of the sale of the security, costs, and reasonable attorneys' fees determined by the court.

(d)A person acting as a broker-dealer or agent that sells or buys a security in violation of section 409.4-401(a), 409.4-402(a), or 409.5-506 is liable to the customer.The customer, if a purchaser, may maintain an action for recovery of actual damages as specified in subsections (b)(1) to (3), or, if a seller, for a remedy as specified in subsections (c)(1) to (3).

(e)A person acting as an investment adviser or investment adviser representative that provides investment advice for compensation in violation of section 409.4-403(a), 409.4-404(a), or 409.5-506 is liable to the client.The client may maintain an action to recover the consideration paid for the advice, interest at the rate of eight percent per year from the date of payment, costs, and reasonable attorneys' fees determined by the court.

(f)A person that receives directly or indirectly any consideration for providing investment advice to another person and that employs a device, scheme, or artifice to defraud the other person or engages in an act, practice, or course of business that operates or would operate as a fraud or deceit on the other person is liable to the other person.An action under this subsection is governed by the following:

(1)The person defrauded may maintain an action to recover the consideration paid for the advice and the amount of any actual damages caused by the fraudulent conduct, interest at the rate of eight percent per year from the date of the fraudulent conduct, costs, and reasonable attorneys' fees determined by the court, less the amount of any income received as a result of the fraudulent conduct.

(2)This subsection does not apply to a broker-dealer or its agents if the investment advice provided is solely incidental to transacting business as a broker-dealer and no special compensation is received for the investment advice.

(g)The following persons are liable jointly and severally with and to the same extent as persons liable under subsections (b) to (f):

(1)A person that directly or indirectly controls a person liable under subsections (b) to (f), unless the controlling person sustains the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;

(2)An individual who is a managing partner, executive officer, or director of a person liable under subsections (b) to (f), including an individual having a similar status or performing similar functions, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;

(3)An individual who is an employee of or associated with a person liable under subsections (b) to (f) and who materially aids the conduct giving rise to the liability, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist; and

(4)A person that is a broker-dealer, agent, investment adviser, or investment adviser representative that materially aids the conduct giving rise to the liability under subsections (b) to (f), unless the person sustains the burden of proof that the person did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which liability is alleged to exist.

(h)A person liable under this section has a right of contribution as in cases of contract against any other person liable under this section for the same conduct.

(i)A cause of action under this section survives the death of an individual who might have been a plaintiff or defendant.

(j)A person may not obtain relief:

(1)Under subsection (b) for violation of section 409.3-301, or under subsection (d) or (e), unless the action is instituted within one year after the violation occurred; or

(2)Under subsection (b), other than for violation of section 409.3-301, or under subsection (c) or (f), unless the action is instituted within the earlier of two years after discovery of the facts constituting the violation or five years after the violation.

(k)A person that has made, or has engaged in the performance of, a contract in violation of this act or a rule adopted or order issued under this act, or that has acquired a purported right under the contract with knowledge of conduct by reason of which its making or performance was in violation of this act, may not base an action on the contract.

(l)A condition, stipulation, or provision binding a person purchasing or selling a security or receiving investment advice to waive compliance with this act or a rule adopted or order issued under this act is void.

(m)The rights and remedies provided by this act are in addition to any other rights or remedies that may exist, but this act does not create a cause of action not specified in this section or section 409.4-411(e).

(L. 2003 H.B. 380)

Effective 9-01-03

409.858 - Annual report, records — amendment, broker — dealers — capital requirements — fidelity bonds — financial reports.

1.For so long as a commodity broker-dealer or commodity sales representative is licensed under sections 409.850 to 409.863, he shall file an annual report, together with the fee specified by rule of the commissioner promulgated under section 409.836, at a time and including that information which the commissioner determines, by rule or order, is necessary or appropriate.

2.The commissioner may, by rule, require a licensed commodity broker-dealer to maintain:

(1)Minimum net capital; and

(2)A prescribed ratio between net capital and aggregate indebtedness. The minimum net capital and net capital-to-aggregate-indebtedness ratio may vary with type or class of commodity broker-dealer.

3.If a licensed commodity broker-dealer believes, or has reasonable cause to believe, that any requirement imposed on it under subsection 2 of this section is not being met, it shall promptly notify the commissioner of its current financial condition.

4.The commissioner may, by rule, require the furnishing of fidelity bonds from commodity broker-dealers.

5.A licensed commodity broker-dealer shall file financial and other reports which the commissioner determines, by rule, are necessary or appropriate.

6.A licensed commodity broker-dealer or commodity sales representative shall make and maintain records as the commissioner determines, by rule, are necessary or appropriate.Required records may be maintained in computer or microform format or any other form of data storage provided that the records are readily accessible to the commissioner.Required records must be preserved for five years unless the commissioner, by rule, specifies either a longer or shorter period for a particular type or class of records.

7.If the information contained in any document filed with the commissioner, or his designee pursuant to this section, except for those documents which the commissioner, by rule or order, may exclude from this requirement, is or becomes inaccurate or incomplete in any material respect, the licensed person shall promptly file a correcting amendment, unless notification of the correction has been given under subsection 5 of section 409.856.

(L. 1985 H.B. 409 & 532 § 24)

409.109 - Penalty.

A person who willfully violates section 409.108 shall upon conviction be fined not more than five hundred thousand dollars or imprisoned not more than ten years, or both.The proper prosecuting attorney with or without a criminal reference from the commissioner, or the attorney general under section 27.030, may institute criminal proceedings under this section.

(L. 2004 H.B. 1617)

409.848 - Exemptions — burden of proof.

It shall not be necessary to negative any of the exemptions of sections 409.800 to 409.863 in any complaint, information or indictment, or any writ or proceeding brought under sections 409.800 to 409.863; and the burden of proof of any such exemption shall be upon the party claiming the same.

(L. 1985 H.B. 409 & 532 § 20)

409.3-306 - Denial, suspension, and revocation of securities registration.

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

(1)The registration statement as of its effective date or before the effective date in the case of an order denying effectiveness, an amendment under section 409.3-305(j) as of its effective date, or a report under section 409.3-305(i), is incomplete in a material respect or contains a statement that, in the light of the circumstances under which it was made, was false or misleading with respect to a material fact;

(2)This act or a rule adopted or order issued under this act or a condition imposed under this act has been willfully violated, in connection with the offering, by the person filing the registration statement; by the issuer, a partner, officer, or director of the issuer or a person having a similar status or performing a similar function; a promoter of the issuer; or a person directly or indirectly controlling or controlled by the issuer; but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer; or by an underwriter;

(3)The security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order issued under any federal, foreign, or state law other than this act applicable to the offering, but the commissioner may not institute a proceeding against an effective registration statement under this paragraph more than one year after the date of the order or injunction on which it is based, and the commissioner may not issue an order under this paragraph on the basis of an order or injunction issued under the securities act of another state unless the order or injunction was based on conduct that would constitute, as of the date of the order, a ground for a stop order under this section;

(4)The issuer's enterprise or method of business includes or would include activities that are unlawful where performed;

(5)With respect to a security sought to be registered under section 409.3-303, there has been a failure to comply with the undertaking required by section 409.3-303(b)(4);

(6)The applicant or registrant has not paid the filing fee, but the commissioner shall void the order if the deficiency is corrected; or

(7)The offering:

(A)Will work or tend to work a fraud upon purchasers or would so operate;

(B)Has been or would be made with unreasonable amounts of underwriters' and sellers' discounts, commissions, or other compensation, or promoters' profits or participations, or unreasonable amounts or kinds of options; or

(C)Is being made on terms that are unfair, unjust, or inequitable.

(b)To the extent practicable, the commissioner by rule adopted or order issued under this act shall publish standards that provide notice of conduct that violates subsection (a)(7).

(c)The commissioner may not institute a stop order proceeding against an effective registration statement on the basis of conduct or a transaction known to the commissioner when the registration statement became effective unless the proceeding is instituted within thirty days after the registration statement became effective.

(d)The commissioner may summarily revoke, deny, postpone, or suspend the effectiveness of a registration statement pending final determination of an administrative proceeding.Upon the issuance of the order, the commissioner shall promptly notify each person specified in subsection (e) that the order has been issued, the reasons for the revocation, denial, postponement, or suspension, and that within fifteen days after the receipt of a request in a record from the person the matter will be scheduled for a hearing.If a hearing is not requested and none is ordered by the commissioner, within thirty days after the date of service of the order, the order becomes final.If a hearing is requested or ordered, the commissioner, after notice of and opportunity for hearing for each person subject to the order, may modify or vacate the order or extend the order until final determination.

(e)A stop order may not be issued under this section without:

(1)Appropriate notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered;

(2)An opportunity for hearing before the commissioner; and

(3)Findings of fact and conclusions of law in a record in accordance with the provisions of chapter 536 and procedural rules promulgated by the commissioner.

(f)The commissioner may modify or vacate a stop order issued under this section if the commissioner finds that the conditions that caused its issuance have changed or that it is necessary or appropriate in the public interest or for the protection of investors.

(L. 2003 H.B. 380)

Effective 9-01-03

409.3-302 - Notice filing.

(a)With respect to a federal covered security, as defined in Section 18(b)(2) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(2)), that is not otherwise exempt under sections 409.2-201 to 409.2-203, a rule adopted or order issued under this act may require the filing of any or all of the following records:

(1)Before the initial offer of a federal covered security in this state, all records that are part of a federal registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933 and a consent to service of process complying with section 409.6-611 signed by the issuer and the payment of a fee of one hundred dollars;

(2)After the initial offer of the federal covered security in this state, all records that are part of an amendment to a federal registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933; and

(3)To the extent necessary or appropriate to compute fees, a report of the value of the federal covered securities sold or offered to persons present in this state, if the sales data are not included in records filed with the Securities and Exchange Commission and payment of a fee of one-twentieth of one percent of the amount of securities sold in this state during that previous fiscal year.In no case shall this fee exceed three thousand dollars.

(b)A notice filing under subsection (a) is effective for one year commencing on the later of the notice filing or the effectiveness of the offering filed with the Securities and Exchange Commission.On or before expiration, the issuer may renew a notice filing by filing a copy of those records filed by the issuer with the Securities and Exchange Commission that are required by rule or order under this act to be filed and by paying a renewal fee of one hundred dollars.A previously filed consent to service of process complying with section 409.6-611 may be incorporated by reference in a renewal.A renewed notice filing becomes effective upon the expiration of the filing being renewed.

(c)With respect to a security that is a federal covered security under Section 18(b)(4)(D) of the Securities Act of 1933(15 U.S.C. Section 77r(b)(4)(D)), a rule under this act may require a notice filing by or on behalf of an issuer to include a copy of Form D, including the Appendix, as promulgated by the Securities and Exchange Commission, and a consent to service of process complying with section 409.6-611 signed by the issuer not later than fifteen days after the first sale of the federal covered security in this state and the payment of a fee of one hundred dollars; and the payment of a fee of fifty dollars for any late filing.

(d)Except with respect to a federal security under Section 18(b)(1) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)(1)), if the commissioner finds that there is a failure to comply with a notice or fee requirement of this section, the commissioner may issue a stop order suspending the offer and sale of a federal covered security in this state.If the deficiency is corrected, the stop order is void as of the time of its issuance and no penalty may be imposed by the commissioner.

(L. 2003 H.B. 380)

Effective 9-01-03

409.615 - Refusal of request for disbursement, when — expiration.

1.A qualified individual may refuse a request for disbursement from the account of a qualified adult, or an account on which a qualified adult is a beneficiary or beneficial owner, if:

(1)The qualified individual reasonably believes that the requested disbursement will result in financial exploitation of the qualified adult; and

(2)The broker-dealer or qualified individual:

(a)Within two business days makes a reasonable effort to notify all parties authorized to transact business on the account orally or in writing, unless such parties are reasonably believed to have engaged in suspected or attempted financial exploitation of the qualified adult; and

(b)Within three business days notifies the agencies.

2.Any refusal of a disbursement as authorized by this section shall expire upon the sooner of:

(1)The time when the broker-dealer or qualified individual reasonably believes that the disbursement will not result in financial exploitation of the qualified adult; or

(2)Ten business days after the initial refusal of disbursement by the qualified individual.

3.A court of competent jurisdiction may enter an order extending the refusal of a disbursement or any other protective relief.

(L. 2015 S.B. 244)

409.1-103 - References to federal statutes.

"Securities Act of 1933" (15 U.S.C. Section 77a et seq.), "Securities Exchange Act of 1934" (15 U.S.C. Section 78a et seq.), "Public Utility Holding Company Act of 1935" (15 U.S.C. Section 79 et seq.), "Investment Company Act of 1940" (15 U.S.C. Section 80a-1 et seq.), "Investment Advisers Act of 1940" (15 U.S.C. Section 80b-1 et seq.), "Employee Retirement Income Security Act of 1974" (29 U.S.C. Section 1001 et seq.), "National Housing Act" (12 U.S.C. Section 1701 et seq.), "Commodity Exchange Act" (7 U.S.C. Section 1 et seq.), "Internal Revenue Code" (26 U.S.C. Section 1 et seq.), "Securities Investor Protection Act of 1970" (15 U.S.C. Section 78aaa et seq.), "Securities Litigation Uniform Standards Act of 1998" (112 Stat. 3227), "Small Business Investment Act of 1958" (15 U.S.C. Section 661 et seq.), and "Electronic Signatures in Global and National Commerce Act" (15 U.S.C. Section 7001 et seq.) mean those statutes and the rules and regulations adopted under those statutes, as in effect on the date of enactment of this act*.

(L. 2003 H.B. 380)

Effective 9-01-03, see § 409.7-701

*"This act" (H.B. 380, 2003) was signed by the Governor on 5-08-03.

409.111 - Commissioner of securities may investigate violations.

The commissioner of securities may conduct pursuant to the authorization of section 409.6-602 such investigations as the commissioner considers necessary to determine whether a person has violated, is violating, or is about to violate any provision of sections 409.108 to 409.114 or any order, rule or regulation issued pursuant thereto.

(L. 2004 H.B. 1617)

409.511 - Requirements, offeror must send registration statement — solicitations, recommendations, file with commissioner.

1.No offeror shall make a takeover bid unless as soon as practicable on the date of commencement of the takeover bid he files with the commissioner of securities and delivers to the target company at its principal executive offices a registration statement containing the information required by section 409.516.

2.An offeror shall make full and fair disclosure to offerees of the material information set forth in the registration statement filed pursuant to subsection 1 of this section.

3.No solicitation or recommendation to the offerees of a target company to accept or reject a takeover bid shall be made by or on behalf of an offeror or a target company unless at the time copies of such solicitation or recommendation are first published, sent or given to such offerees, the person making such solicitation or recommendation has filed copies of the solicitation or recommendation with the commissioner of securities of this state.

(L. 1986 H.B. 1667)

409.1003 - Practices prohibited — penalty.

1.A business opportunity seller shall not:

(1)Misrepresent, by failure to disclose or otherwise, the known required total investment for such business opportunity;

(2)Misrepresent or fail to disclose efforts to sell or establish more franchises or distributorships than it is reasonable to expect the market or market area for the particular business opportunity to sustain;

(3)Misrepresent the quantity or the quality of the products to be sold or distributed through the business opportunity;

(4)Misrepresent the training and management assistance available to the business opportunity purchaser;

(5)Misrepresent the amount of profits, net or gross, which the franchisee can expect from the operation of the business opportunity;

(6)Misrepresent, by failure to disclose or otherwise, the termination, transfer or renewal provision of a business opportunity agreement;

(7)Falsely claim or imply that a primary marketer or trademark of products or services sponsors or participates directly or indirectly in the business opportunity;

(8)Assign a so-called exclusive territory encompassing the same area to more than one business opportunity purchaser;

(9)Provide machines or display of a brand or kind substantially different from and inferior to those promised by the business opportunity seller;

(10)Fail to provide the purchaser a written contract;

(11)Misrepresent the seller's ability or the ability of a person or entity providing services as defined in subdivision (1) of subsection 1 of section 409.1000 to provide locations or assist the purchaser in finding locations expected to have a positive impact on the success of the business opportunity;

(12)Misrepresent a material fact or create a false or misleading impression in the sale of a business opportunity.

2.Any person who violates the provisions of this section is guilty of a class A misdemeanor.

(L. 2000 S.B. 896 § 407.2015)

409.840 - Application of sections 409.803, 409.808, 409.810, offers to sell, buy — where deemed made.

1.Sections 409.803, 409.808 and 409.810 apply to persons who:

(1)Sell or offer to sell when:

(a)An offer to sell is made in this state; or

(b)An offer to buy is made and accepted in this state;

(2)Buy or offer to buy when:

(a)An offer to buy is made in this state; or

(b)An offer to sell is made and accepted in this state.

2.For the purpose of this section:

(1)An offer to sell or to buy is made in this state, whether or not either party is then present in this state, when the offer:

(a)Originates from this state; or

(b)Is directed by the offeror to this state and received at the place to which it is directed, or at any post office in this state in the case of a mailed offer;

(2)An offer to buy or to sell is accepted in this state when acceptance:

(a)Is communicated to the offeror in this state; and

(b)Has not previously been communicated to the offeror, whether or not either party is then present in this state, when the offeree directs it to the offeror in this state reasonably believing the offeror to be in this state and it is received at the place to which it is directed, or at any post office in this state in the case of a mailed acceptance;

(3)An offer to sell or to buy is not made in this state when the publisher circulates, or there is circulated on his behalf, in this state, any bona fide newspaper or other publication of general, regular, and paid circulation:

(a)Which is not published in this state; or

(b)Which is published in this state, but has had more than two-thirds of its circulation outside this state during the past twelve months.

For the purpose of this subdivision, when a publication is published in editions, each edition shall be considered a separate publication except for material common to all editions;

(4)An offer to sell or to buy is not made in this state when a radio or television program or other electronic communication originating outside this state is received in this state.A radio or television program or other electronic communication shall be considered having originated from this state if either the broadcast studio or means of transmission is located within this state, unless:

(a)The program or communication is syndicated and distributed from outside this state for redistribution to the general public in this state;

(b)The program or communication is supplied by a radio, television, or other electronic network with the electronic signal originating from outside this state for redistribution to the general public in this state;

(c)The program or communication is an electronic signal that originates outside this state and is captured for redistribution to the general public in this state by a community antenna or cable radio, television, or other electronic system; or

(d)The program or communication consists of an electronic signal which originates from within this state, but which is not intended for redistribution to the general public in this state.This subdivision shall not apply to any changes, alterations or additions made locally to a radio or television program or other electronic communications.

(L. 1985 H.B. 409 & 532 § 17)

409.4-411 - Postregistration requirements.

(a)Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a rule adopted or order issued under this act may establish minimum financial requirements for broker-dealers registered or required to be registered under this act and investment advisers registered or required to be registered under this act.

(b)Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222(b) of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a broker-dealer registered or required to be registered under this act and an investment adviser registered or required to be registered under this act shall file such financial reports as are required by a rule adopted or order issued under this act.If the information contained in a record filed under this subsection is or becomes inaccurate or incomplete in a material respect, the registrant shall promptly file a correcting amendment.

(c)Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22):

(1)A broker-dealer registered or required to be registered under this act and an investment adviser registered or required to be registered under this act shall make and maintain the accounts, correspondence, memoranda, papers, books, and other records required by rule adopted or order issued under this act;

(2)Broker-dealer records required to be maintained under paragraph (1) may be maintained in any form of data storage acceptable under Section 17(a) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78q(a)) if they are readily accessible to the commissioner; and

(3)Investment adviser records required to be maintained under paragraph (1) may be maintained in any form of data storage required by rule adopted or order issued under this act.

(d)The records of a broker-dealer registered or required to be registered under this act and of an investment adviser registered or required to be registered under this act are subject to such reasonable periodic, special, or other audits or inspections by a representative of the commissioner, within or without this state, as the commissioner considers necessary or appropriate in the public interest and for the protection of investors.An audit or inspection may be made at any time and without prior notice.The commissioner may copy, and remove for audit or inspection copies of, all records the commissioner reasonably considers necessary or appropriate to conduct the audit or inspection.The commissioner may assess a reasonable charge for conducting an audit or inspection under this subsection.

(e)Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), a rule adopted or order issued under this act may require a broker-dealer or investment adviser that has custody of or discretionary authority over funds or securities of a customer or client to obtain insurance or post a bond or other satisfactory form of security in an amount not to exceed twenty-five thousand dollars.The commissioner may determine the requirements of the insurance, bond, or other satisfactory form of security.Insurance or a bond or other satisfactory form of security may not be required of a broker-dealer registered under this act whose net capital exceeds, or of an investment adviser registered under this act whose minimum financial requirements exceed, the amounts required by rule or order under this act.The insurance, bond, or other satisfactory form of security must permit an action by a person to enforce any liability on the insurance, bond, or other satisfactory form of security if instituted within the time limitations in section 409.5-509(j)(2).

(f)Subject to Section 15(h) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(h)) or Section 222 of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-22), an agent may not have custody of funds or securities of a customer except under the supervision of a broker-dealer and an investment adviser representative may not have custody of funds or securities of a client except under the supervision of an investment adviser or a federal covered investment adviser.A rule adopted or order issued under this act may prohibit, limit, or impose conditions on a broker-dealer regarding custody of funds or securities of a customer and on an investment adviser regarding custody of securities or funds of a client.

(g)With respect to an investment adviser registered or required to be registered under this act, a rule adopted or order issued under this act may require that information or other record be furnished or disseminated to clients or prospective clients in this state as necessary or appropriate in the public interest and for the protection of investors and advisory clients.

(h)A rule adopted or order issued under this act may require an individual registered under section 409.4-402 or 409.4-404 to participate in a continuing education program approved by the Securities and Exchange Commission and administered by a self-regulatory organization or, in the absence of such a program, a rule adopted or order issued under this act may require continuing education for an individual registered under section 409.4-404.

(L. 2003 H.B. 380)

Effective 9-01-03

409.2-202 - Exempt transactions.

The following transactions are exempt from the requirements of sections 409.3-301 to 409.3-306 and 409.5-504:

(1)An isolated nonissuer transaction, whether effected by or through a broker-dealer or not;

(2)A nonissuer transaction by or through a broker-dealer registered, or exempt from registration under this act, and a resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least ninety days, if, at the date of the transaction:

(A)The issuer of the security is engaged in business, the issuer is not in the organizational stage or in bankruptcy or receivership, and the issuer is not a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;

(B)The security is sold at a price reasonably related to its current market price;

(C)The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security or a redistribution; and

(D)A nationally recognized securities manual or its electronic equivalent designated by rule adopted or order issued under this act or a record filed with the Securities and Exchange Commission that is publicly available contains:

(i)A description of the business and operations of the issuer;

(ii)The names of the issuer's executive officers and the names of the issuer's directors, if any;

(iii)An audited balance sheet of the issuer as of a date within eighteen months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had an audited balance sheet, a pro forma balance sheet for the combined organization; and

(iv)An audited income statement for each of the issuer's two immediately previous fiscal years or for the period of existence of the issuer, whichever is shorter, or, in the case of a reorganization or merger when each party to the reorganization or merger had audited income statements, a pro forma income statement; or

(E)The issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934 or designated for trading on the National Association of Securities Dealers Automated Quotation System, unless the issuer of the security is a unit investment trust registered under the Investment Company Act of 1940; or the issuer of the security, including its predecessors, has been engaged in continuous business for at least three years; or the issuer of the security has total assets of at least two million dollars based on an audited balance sheet as of a date within eighteen months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had the audited balance sheet, a pro forma balance sheet for the combined organization;

(3)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this act in a security of a foreign issuer that is a margin security defined in regulations or rules adopted by the Board of Governors of the Federal Reserve System;

(4)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this act in an outstanding security if the guarantor of the security files reports with the Securities and Exchange Commission under the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));

(5)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this act in a security that:

(A)Is rated at the time of the transaction by a nationally recognized statistical rating organization in one of its four highest rating categories; or

(B)Has a fixed maturity or a fixed interest or dividend, if:

(i)A default has not occurred during the current fiscal year or within the three previous fiscal years or during the existence of the issuer and any predecessor if less than three fiscal years, in the payment of principal, interest, or dividends on the security; and

(ii)The issuer is engaged in business, is not in the organizational stage or in bankruptcy or receivership, and is not and has not been within the previous twelve months a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;

(6)A nonissuer transaction by or through a broker-dealer registered or exempt from registration under this act effecting an unsolicited order or offer to purchase;

(7)A nonissuer transaction executed by a bona fide pledgee without the purpose of evading this act;

(8)A nonissuer transaction by a federal covered investment adviser with investments under management in excess of one hundred million dollars acting in the exercise of discretionary authority in a signed record for the account of others;

(9)A transaction in a security, whether or not the security or transaction is otherwise exempt, in exchange for one or more bona fide outstanding securities, claims, or property interests, or partly in such exchange and partly for cash, if the terms and conditions of the issuance and exchange or the delivery and exchange and the fairness of the terms and conditions have been approved by the commissioner after a hearing;

(10)A transaction between the issuer or other person on whose behalf the offering is made and an underwriter, or among underwriters;

(11)A transaction in a note, bond, debenture, or other evidence of indebtedness secured by a mortgage or other security agreement if:

(A)The note, bond, debenture, or other evidence of indebtedness is offered and sold with the mortgage or other security agreement as a unit;

(B)A general solicitation or general advertisement of the transaction is not made; and

(C)A commission or other remuneration is not paid or given, directly or indirectly, to a person not registered under this act as a broker-dealer or as an agent;

(12)A transaction by an executor, commissioner of an estate, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;

(13)A sale or offer to sell to:

(A)An institutional investor;

(B)A federal covered investment adviser; or

(C)Any other person exempted by rule adopted or order issued under this act;

(14)A sale or an offer to sell securities of an issuer, if part of a single issue in which:

(A)Not more than twenty-five purchasers are present in this state during any twelve consecutive months, other than those designated in paragraph (13);

(B)A general solicitation or general advertising is not made in connection with the offer to sell or sale of the securities;

(C)A commission or other remuneration is not paid or given, directly or indirectly, to a person other than a broker-dealer registered under this act or an agent registered under this act for soliciting a prospective purchaser in this state; and

(D)The issuer reasonably believes that all the purchasers in this state, other than those designated in paragraph (13), are purchasing for investment;

(15)A transaction under an offer to existing security holders of the issuer, including persons that at the date of the transaction are holders of convertible securities, options, or warrants, if a commission or other remuneration, other than a standby commission, is not paid or given, directly or indirectly, for soliciting a security holder in this state;

(16)An offer to sell, but not a sale, of a security not exempt from registration under the Securities Act of 1933 if:

(A)A registration or offering statement or similar record as required under the Securities Act of 1933 has been filed, but is not effective, or the offer is made in compliance with Rule 165 adopted under the Securities Act of 1933 (17 C.F.R. 230.165); and

(B)A stop order of which the offeror is aware has not been issued against the offeror by the commissioner or the Securities and Exchange Commission, and an audit, inspection, or proceeding that is public and that may culminate in a stop order is not known by the offeror to be pending;

(17)An offer to sell, but not a sale, of a security exempt from registration under the Securities Act of 1933 if:

(A)A registration statement has been filed under this act, but is not effective;

(B)A solicitation of interest is provided in a record to offerees in compliance with a rule adopted by the commissioner under this act; and

(C)A stop order of which the offeror is aware has not been issued by the commissioner under this act and an audit, inspection, or proceeding that may culminate in a stop order is not known by the offeror to be pending;

(18)A transaction involving the distribution of the securities of an issuer to the security holders of another person in connection with a merger, consolidation, exchange of securities, sale of assets, or other reorganization to which the issuer, or its parent or subsidiary and the other person, or its parent or subsidiary, are parties;

(19)A rescission offer, sale, or purchase under section 409.5-510;

(20)An offer or sale of a security to a person not a resident of this state and not present in this state if the offer or sale does not constitute a violation of the laws of the state or foreign jurisdiction in which the offeree or purchaser is present and is not part of an unlawful plan or scheme to evade this act;

(21)Employees' stock purchase, savings, option, profit-sharing, pension, or similar employees' benefit plan, including any securities, plan interests, and guarantees issued under a compensatory benefit plan or compensation contract, contained in a record, established by the issuer, its parents, its majority-owned subsidiaries, or the majority-owned subsidiaries of the issuer's parent for the participation of their employees including offers or sales of such securities to:

(A)Directors; general partners; trustees, if the issuer is a business trust; officers; consultants; and advisors;

(B)Family members who acquire such securities from those persons through gifts or domestic relations orders;

(C)Former employees, directors, general partners, trustees, officers, consultants, and advisors if those individuals were employed by or providing services to the issuer when the securities were offered;

(D)Insurance agents who are exclusive insurance agents of the issuer, or the issuer's subsidiaries or parents, or who derive more than fifty percent of their annual income from those organizations; and

(E)Current employees;

(22)A transaction involving:

(A)A stock dividend or equivalent equity distribution, whether the corporation or other business organization distributing the dividend or equivalent equity distribution is the issuer or not, if nothing of value is given by stockholders or other equity holders for the dividend or equivalent equity distribution other than the surrender of a right to a cash or property dividend if each stockholder or other equity holder may elect to take the dividend or equivalent equity distribution in cash, property, or stock;

(B)An act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims, or property interests, or partly in such exchange and partly for cash; or

(C)The solicitation of tenders of securities by an offeror in a tender offer in compliance with Rule 162 adopted under the Securities Act of 1933 (17 C.F.R. 230.162); or

(23)A nonissuer transaction in an outstanding security by or through a broker-dealer registered or exempt from registration under this act, if the issuer is a reporting issuer in a foreign jurisdiction designated by this paragraph or by rule adopted or order issued under this act; has been subject to continuous reporting requirements in the foreign jurisdiction for not less than one hundred eighty days before the transaction; and the security is listed on the foreign jurisdiction's securities exchange that has been designated by this paragraph or by rule adopted or order issued under this act, or is a security of the same issuer that is of senior or substantially equal rank to the listed security or is a warrant or right to purchase or subscribe to any of the foregoing.For purposes of this paragraph, Canada, together with its provinces and territories, is a designated foreign jurisdiction and The Toronto Stock Exchange, Inc., is a designated securities exchange.After an administrative hearing in compliance with chapter 536, the commissioner, by rule adopted or order issued under this act, may revoke the designation of a securities exchange under this paragraph, if the commissioner finds that revocation is necessary or appropriate in the public interest and for the protection of investors.

(L. 2003 H.B. 380, A.L. 2005 H.B. 678)

409.6-610 - Jurisdiction.

(a)Sections 409.3-301, 409.3-302, 409.4-401(a), 409.4-402(a), 409.4-403(a), 409.4-404(a), 409.5-501, 409.5-506, 409.5-509, and 409.5-510 do not apply to a person that sells or offers to sell a security unless the offer to sell or the sale is made in this state or the offer to purchase or the purchase is made and accepted in this state.

(b)Sections 409.4-401(a), 409.4-402(a), 409.4-403(a), 409.4-404(a), 409.5-501, 409.5-506, 409.5-509, and 409.5-510 do not apply to a person that purchases or offers to purchase a security unless the offer to purchase or the purchase is made in this state or the offer to sell or the sale is made and accepted in this state.

(c)For the purpose of this section, an offer to sell or to purchase a security is made in this state, whether or not either party is then present in this state, if the offer:

(1)Originates from within this state; or

(2)Is directed by the offeror to a place in this state and received at the place to which it is directed.

(d)For the purpose of this section, an offer to purchase or to sell is accepted in this state, whether or not either party is then present in this state, if the acceptance:

(1)Is communicated to the offeror in this state and the offeree reasonably believes the offeror to be present in this state and the acceptance is received at the place in this state to which it is directed; and

(2)Has not previously been communicated to the offeror, orally or in a record, outside this state.

(e)An offer to sell or to purchase is not made in this state when a publisher circulates or there is circulated on the publisher's behalf in this state a bona fide newspaper or other publication of general, regular, and paid circulation that is not published in this state, or that is published in this state but has had more than two-thirds of its circulation outside this state during the previous twelve months or when a radio or television program or other electronic communication originating outside this state is received in this state.A radio or television program, or other electronic communication is considered as having originated in this state if either the broadcast studio or the originating source of transmission is located in this state, unless:

(1)The program or communication is syndicated and distributed from outside this state for redistribution to the general public in this state;

(2)The program or communication is supplied by a radio, television, or other electronic network with the electronic signal originating from outside this state for redistribution to the general public in this state;

(3)The program or communication is an electronic communication that originates outside this state and is captured for redistribution to the general public in this state by a community antenna or cable, radio, cable television, or other electronic system; or

(4)The program or communication consists of an electronic communication that originates in this state, but which is not intended for distribution to the general public in this state.

(f)Sections 409.4-403(a), 409.4-404(a), 409.4-405(a), 409.5-502, 409.5-505, and 409.5-506 apply to a person if the person engages in an act, practice, or course of business instrumental in effecting prohibited or actionable conduct in this state, whether or not either party is then present in this state.

(L. 2003 H.B. 380)

Effective 9-01-03

409.860 - Records — examination without notice — fees.

1.The commissioner, without prior notice, may examine the records and require copies of the records which a licensed commodity broker-dealer or commodity sales representative is required to make and maintain under section 409.858, within or without this state, in a manner which is reasonable under the circumstances.Commodity broker-dealers and commodity sales representatives shall make their records available to the commissioner in a readable form.

2.The commissioner may copy records or require a licensed person to copy records and provide the copies to the commissioner in a manner reasonable under the circumstances.

3.The commissioner may impose reasonable fees for conducting an examination pursuant to this section.

(L. 1985 H.B. 409 & 532 § 25)

409.531 - Commissioner may promulgate rules, establish fees.

1.Sections 409.500 to 409.566 shall be administered by the commissioner of securities and employees designated by him.The commissioner of securities is hereby empowered to promulgate, alter, amend or revoke rules and regulations necessary to carry out the purposes of sections 409.500 to 409.566.

2.The commissioner of securities may establish fees for the filing of any registration statement, not to exceed two thousand five hundred dollars, to recover the costs of administering sections 409.500 to 409.566.Such fees may vary according to the maximum consideration payable by the offeror for the securities which are the subject of the takeover bid.

(L. 1986 H.B. 1667)

409.6-604 - Administrative enforcement.

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

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

(2)Issue an order denying, suspending, revoking, or conditioning the exemptions for a broker-dealer under section 409.4-401(b)(1)(D) or (F) or an investment adviser under section 409.4-403(b)(1)(C); or

(3)Issue an order under section 409.2-204.

(b)An order under subsection (a) is effective on the date of issuance. Upon issuance of the order, the commissioner shall promptly serve each person subject to the order with a copy of the order and a notice that the order has been entered.The order must include a statement whether the commissioner will seek a civil penalty or costs of the investigation, a statement of the reasons for the order, and notice that, within fifteen days after receipt of a request in a record from the person, the matter will be scheduled for a hearing.If a person subject to the order does not request a hearing and none is ordered by the commissioner within thirty days after the date of service of the order, the order becomes final as to that person by operation of law.If a hearing is requested or ordered, the commissioner, after notice of and opportunity for hearing to each person subject to the order, may modify or vacate the order or extend it until final determination.

(c)If a hearing is requested or ordered pursuant to subsection (b), a hearing before the commissioner must be provided.A final order may not be issued unless the commissioner makes findings of fact and conclusions of law in a record in accordance with the provisions of chapter 536 and procedural rules promulgated by the commissioner.The final order may make final, vacate, or modify the order issued under subsection (a).

(d)In a final order under subsection (c), the commissioner may:

(1)Impose a civil penalty up to one thousand dollars for a single violation or up to ten thousand dollars for more than one violation;

(2)Order a person subject to the order to pay restitution for any loss, including the amount of any actual damages that may have been caused by the conduct and interest at the rate of eight percent per year from the date of the violation causing the loss or disgorge any profits arising from the violation;

(3)In addition to any civil penalty otherwise provided by law, impose an additional civil penalty not to exceed five thousand dollars for each such violation if the commissioner finds that a person subject to the order has violated any provision of this act and that such violation was committed against an elderly or disabled person.For purposes of this section, the following terms mean:

(A)"Disabled person", a person with a physical or mental impairment that substantially limits one or more of the major life activities of such individual, a record of such impairment, or being regarded as having such an impairment;

(B)"Elderly person", a person sixty years of age or older.

(e)In a final order, the commissioner may charge the actual cost of an investigation or proceeding for a violation of this act or a rule adopted or order issued under this act.These funds may be paid into the investor education and protection fund.

(f)If a petition for judicial review of a final order is not filed in accordance with section 409.6-609, the commissioner may file a certified copy of the final order with the clerk of a court of competent jurisdiction.The order so filed has the same effect as a judgment of the court and may be recorded, enforced, or satisfied in the same manner as a judgment of the court.

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

(h)The commissioner is authorized to issue administrative consent orders in the settlement of any proceeding in the public interest under this act.

(L. 2003 H.B. 380, A.L. 2009 H.B. 62)

409.625 - Records, provided to agencies or law enforcement, when.

A broker-dealer may provide access to or copies of records that are relevant to the suspected financial exploitation of a qualified adult to the agencies or law enforcement.The records may include historical records or records relating to the most recent disbursement as well as disbursements that comprise the suspected financial exploitation of a qualified adult.All records made available to the agencies under this section shall not be considered a public record as defined under chapter 610.

(L. 2015 S.B. 244)

409.4-409 - Withdrawal of registration of broker-dealer, agent, investment adviser, and investment adviser representative.

Withdrawal of registration by a broker-dealer, agent, investment adviser, or investment adviser representative becomes effective sixty days after the filing of the application to withdraw or within any shorter period as provided by rule adopted or order issued under this act unless a revocation or suspension proceeding is pending when the application is filed.If a proceeding is pending, withdrawal becomes effective when and upon such conditions as required by rule adopted or order issued under this act.The commissioner may institute a revocation or suspension proceeding under section 409.4-412 within one year after the withdrawal became effective automatically and issue a revocation or suspension order as of the last date on which registration was effective if a proceeding is not pending.

(L. 2003 H.B. 380)

Effective 9-01-03

409.521 - Commissioner may make investigations, seek injunctions, when.

1.The commissioner of securities may conduct such investigation as he deems necessary concerning any takeover bid for the purpose of determining compliance with the requirements of sections 409.500 to 409.566.As part of such investigation the commissioner of securities may require persons to file statements in writing and under oath with his office, subpoena witnesses, compel their attendance, examine them under oath and require the production of books, records, documents and papers.

2.In the event the commissioner of securities determines that any person is violating or about to violate any provision of sections 409.500 to 409.566, or any order, rule or regulation issued pursuant thereto, he may seek, in court, an injunction temporarily or permanently barring that person from making or taking part in or continuing a takeover bid or from taking up or paying for shares tendered by offerees pursuant to a takeover bid, and the court may grant the relief applied for or so much thereof as it may deem proper.

(L. 1986 H.B. 1667)

409.4-401 - Broker-dealer registration requirement and exemptions.

(a)It is unlawful for a person to transact business in this state as a broker-dealer unless the person is registered under this act as a broker-dealer or is exempt from registration as a broker-dealer under subsection (b) or (d).

(b)The following persons are exempt from the registration requirement of subsection (a):

(1)A broker-dealer without a place of business in this state if its only transactions effected in this state are with:

(A)The issuer of the securities involved in the transactions;

(B)A broker-dealer registered under this act or not required to be registered as a broker-dealer under this act;

(C)An institutional investor;

(D)A nonaffiliated federal covered investment adviser with investments under management in excess of one hundred million dollars acting for the account of others pursuant to discretionary authority in a signed record;

(E)A bona fide preexisting customer whose principal place of residence is not in this state and the person is registered as a broker-dealer under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities act of the state in which the customer maintains a principal place of residence;

(F)A bona fide preexisting customer whose principal place of residence is in this state but was not present in this state when the customer relationship was established, if:

(i)The broker-dealer is registered under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities laws of the state in which the customer relationship was established and where the customer had maintained a principal place of residence; and

(ii)Within forty-five days after the customer's first transaction in this state, the person files an application for registration as a broker-dealer in this state and a further transaction is not effected more than seventy-five days after the date on which the application is filed, or, if earlier, the date on which the commissioner notifies the person that the commissioner has denied the application for registration or has stayed the pendency of the application for good cause;

(G)Not more than three customers in this state during the previous twelve months, in addition to those customers specified in subparagraphs (A) to (F) and under subparagraph (H), if the broker-dealer is registered under the Securities Exchange Act of 1934 or not required to be registered under the Securities Exchange Act of 1934 and is registered under the securities act of the state in which the broker-dealer has its principal place of business; and

(H)Any other person exempted by rule adopted or order issued under this act; and

(2)A person that deals solely in United States government securities and is supervised as a dealer in government securities by the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Office of Thrift Supervision.

(c)It is unlawful for a broker-dealer, or for an issuer engaged in offering, offering to purchase, purchasing, or selling securities in this state, directly or indirectly, to employ or associate with an individual to engage in an activity related to securities transactions in this state if the registration of the individual is suspended or revoked or the individual is barred from employment or association with a broker-dealer, an issuer, an investment adviser, or a federal covered investment adviser by an order of the commissioner under this act, the Securities and Exchange Commission, or a self-regulatory organization.A broker-dealer or issuer does not violate this subsection if the broker-dealer or issuer did not know and in the exercise of reasonable care could not have known, of the suspension, revocation, or bar.Upon request from a broker-dealer or issuer and for good cause, an order under this act may modify or waive, in whole or in part, the application of the prohibitions of this subsection to the broker-dealer.

(d)A rule adopted or order issued under this act may permit:

(1)A broker-dealer that is registered in Canada or other foreign jurisdiction and that does not have a place of business in this state to effect transactions in securities with or for, or attempt to effect the purchase or sale of any securities by:

(A)An individual from Canada or other foreign jurisdiction who is temporarily present in this state and with whom the broker-dealer had a bona fide customer relationship before the individual entered the United States;

(B)An individual from Canada or other foreign jurisdiction who is present in this state and whose transactions are in a self-directed tax advantaged retirement plan of which the individual is the holder or contributor in that foreign jurisdiction; or

(C)An individual who is present in this state, with whom the broker-dealer customer relationship arose while the individual was temporarily or permanently resident in Canada or the other foreign jurisdiction; and

(2)An agent who represents a broker-dealer that is exempt under this subsection to effect transactions in securities or attempt to effect the purchase or sale of securities in this state as permitted for a broker-dealer described in paragraph (1).

(L. 2003 H.B. 380)

Effective 9-01-03

409.6-608 - Uniformity and cooperation with other agencies.

(a)The commissioner shall, in the discretion of the commissioner, cooperate, coordinate, consult, and, subject to section 409.6-607, share records and information with the securities regulator of another state, Canada, a Canadian province or territory, a foreign jurisdiction, the Securities and Exchange Commission, the United States Department of Justice, the Commodity Futures Trading Commission, the Federal Trade Commission, the Securities Investor Protection Corporation, the attorney general, a self-regulatory organization, a national or international organization of securities regulators, a federal or state banking and insurance regulator, and a governmental law enforcement agency to effectuate greater uniformity in securities matters among the federal government, self-regulatory organizations, states, and foreign governments.

(b)In cooperating, coordinating, consulting, and sharing records and information under this section and in acting by rule, order, or waiver under this act, the commissioner shall, in the discretion of the commissioner, take into consideration in carrying out the public interest the following general policies:

(1)Maximizing effectiveness of regulation for the protection of investors;

(2)Maximizing uniformity in federal and state regulatory standards; and

(3)Minimizing burdens on the business of capital formation, without adversely affecting essentials of investor protection.

(c)The cooperation, coordination, consultation, and sharing of records and information authorized by this section includes:

(1)Establishing or employing one or more designees as a central depository for registration and notice filings under this act and for records required or allowed to be maintained under this act;

(2)Developing and maintaining uniform forms;

(3)Conducting a joint examination or investigation;

(4)Holding a joint administrative hearing;

(5)Instituting and prosecuting a joint civil or administrative proceeding;

(6)Sharing and exchanging personnel;

(7)Coordinating registrations under sections 409.3-301 and 409.4-401 to 409.4-404 and exemptions under section 409.2-203;

(8)Sharing and exchanging records, subject to section 409.6-607;

(9)Formulating rules, statements of policy, guidelines, forms, and interpretative opinions and releases;

(10)Formulating common systems and procedures;

(11)Notifying the public of proposed rules, forms, statements of policy, and guidelines;

(12)Attending conferences and other meetings among securities regulators, which may include representatives of governmental and private sector organizations involved in capital formation, deemed necessary or appropriate to promote or achieve uniformity; and

(13)Developing and maintaining a uniform exemption from registration for small issuers, and taking other steps to reduce the burden of raising investment capital by small businesses.

(L. 2003 H.B. 380)

Effective 9-01-03

409.4-405 - Federal covered investment adviser notice filing requirement.

(a)Except with respect to a federal covered investment adviser described in subsection (b), it is unlawful for a federal covered investment adviser to transact business in this state as a federal covered investment adviser unless the federal covered investment adviser complies with subsection (c).

(b)The following federal covered investment advisers are not required to comply with subsection (c):

(1)A federal covered investment adviser without a place of business in this state if its only clients in this state are:

(A)Federal covered investment advisers, investment advisers registered under this act, and broker-dealers registered under this act;

(B)Institutional investors;

(C)Bona fide preexisting clients whose principal places of residence are not in this state; or

(D)Other clients specified by rule adopted or order issued under this act;

(2)A federal covered investment adviser without a place of business in this state if the person has had, during the preceding twelve months, not more than five clients that are resident in this state in addition to those specified under paragraph (1); and

(3)Any other person excluded by rule adopted or order issued under this act.

(c)A person acting as a federal covered investment adviser, not excluded under subsection (b), shall file a notice, a consent to service of process complying with section 409.6-611, and such records as have been filed with the Securities and Exchange Commission under the Investment Advisers Act of 1940 required by rule adopted or order issued under this act and pay the fees specified in section 409.4-410(e).

(d)The notice under subsection (c) becomes effective upon its filing, and shall expire on December thirty-first each year, unless renewed.

(L. 2003 H.B. 380)

Effective 9-01-03

409.6-601 - Administration.

(a)This act shall be administered by the commissioner of securities who shall be appointed by and act under the direction of the secretary of state, and shall receive compensation as provided by law.

(b)The attorney general shall appear on behalf of and represent the commissioner in all proceedings before the administrative hearing commission, and in the circuit court of any county of the state or any city not within a county, or any court of another state in all civil enforcement actions brought under this act.The attorney general may appoint attorneys employed by the secretary of state as special assistant attorneys general to appear on behalf of and represent the commissioner.

(c)It is unlawful for the secretary of state, commissioner or an officer, employee, or designee of the commissioner to use for personal benefit or the benefit of others records or other information obtained by or filed with the commissioner that are not public under section 409.6-607(b).This act does not authorize the secretary of state, commissioner or an officer, employee, or designee of the commissioner to disclose the record or information, except in accordance with section 409.6-602, 409.6-607(c), or 409.6-608.

(d)This act does not create or diminish a privilege or exemption that exists at common law, by statute or rule, or otherwise.

(e)The commissioner may develop and implement investor education initiatives to inform the public about investing in securities, with particular emphasis on the prevention and detection of securities fraud.In developing and implementing these initiatives, the commissioner may collaborate with public and nonprofit organizations with an interest in investor education.The commissioner may accept a grant or donation from a person that is not affiliated with the securities industry or from a nonprofit organization, regardless of whether the organization is affiliated with the securities industry, to develop and implement investor education initiatives.This subsection does not authorize the commissioner to require participation or monetary contributions of a registrant in an investor education program.

(f)The "Investor Education and Protection Fund" is created to provide funds for the purposes identified in subsection (e).Notwithstanding the provisions of section 33.080, any funds remaining in the secretary of state's investor education and protection fund at the end of any biennium shall not be transferred to the general revenue fund.

(L. 2003 H.B. 380)

Effective 9-01-03

409.4-408 - Termination of employment or association of agent and investment adviser representative and transfer of employment or association.

(a)If an agent registered under this act terminates employment by or association with a broker-dealer or issuer, or if an investment adviser representative registered under this act terminates employment by or association with an investment adviser or federal covered investment adviser, or if either registrant terminates activities that require registration as an agent or investment adviser representative, the broker-dealer, issuer, investment adviser, or federal covered investment adviser shall promptly file a notice of termination.If the registrant learns that the broker-dealer, issuer, investment adviser, or federal covered investment adviser has not filed the notice, the registrant may do so.

(b)If an agent registered under this act terminates employment by or association with a broker-dealer registered under this act and begins employment by or association with another broker-dealer registered under this act; or if an investment adviser representative registered under this act terminates employment by or association with an investment adviser registered under this act; or, if a federal covered investment adviser, who has filed a notice under section 409.4-405 and begins employment by or association with another investment adviser registered under this act; or if a federal covered investment adviser, who has filed a notice under section 409.4-405, upon the filing by or on behalf of the registrant, within thirty days after the termination, of an application for registration that complies with the requirement of section 409.4-406(a) and payment of the filing fee required under section 409.4-410, the registration of the agent or investment adviser representative, is:

(1)Immediately effective as of the date of the completed filing, if the agent's Central Registration Depository record or successor record or the investment adviser representative's Investment Adviser Registration Depository record or successor record does not contain a new or amended disciplinary disclosure within the previous twelve months; or

(2)Temporarily effective as of the date of the completed filing, if the agent's Central Registration Depository record or successor record or the investment adviser representative's Investment Adviser Registration Depository record or successor record contains a new or amended disciplinary disclosure within the preceding twelve months.

(c)The commissioner may by order withdraw a temporary registration if there are or were grounds for discipline as specified in section 409.4-412 and the commissioner does so within thirty days after the filing of the application.If the commissioner does not withdraw the temporary registration within the thirty-day period, registration becomes automatically effective on the thirty-first day after filing.

(d)The commissioner may by order prevent the effectiveness of a transfer of an agent or investment adviser representative under subsection (b)(1) or (2) based on the public interest and the protection of investors.

(e)If the commissioner determines that a registrant or applicant for registration is no longer in existence or has ceased to act as a broker-dealer, agent, investment adviser, or investment adviser representative, or is the subject of an adjudication of incapacity or is subject to the control of a committee, conservator, or guardian, or cannot reasonably be located, a rule adopted or order issued under this act may require the registration be cancelled or terminated or the application denied.The commissioner may reinstate a cancelled or terminated registration, with or without hearing, and may make the registration retroactive.

(L. 2003 H.B. 380)

Effective 9-01-03

409.620 - Immunity from liability, when.

Notwithstanding any other provision of law to the contrary, a broker-dealer, agent, or qualified individual who, in good faith and exercising reasonable care, complies with section 409.610 or 409.615 shall be immune from any civil liability under those sections.

(L. 2015 S.B. 244)

409.6-605 - Rules, forms, orders, interpretive opinions, and hearings.

(a)The commissioner may:

(1)Issue forms and orders and, after notice and comment, may adopt and amend rules necessary or appropriate to carry out this act and may repeal rules, including rules and forms governing registration statements, applications, notice filings, reports, and other records;

(2)By rule, define terms, whether or not used in this act, but those definitions may not be inconsistent with this act; and

(3)By rule, classify securities, persons, and transactions and adopt different requirements for different classes.

(b)Under this act, a rule or form may not be adopted or amended, or an order issued or amended, unless the commissioner finds that the rule, form, order, or amendment is necessary or appropriate in the public interest or for the protection of investors and is consistent with the purposes intended by this act.In adopting, amending, and repealing rules and forms, section 409.6-608 applies in order to achieve uniformity among the states and coordination with federal laws in the form and content of registration statements, applications, reports, and other records, including the adoption of uniform rules, forms, and procedures.

(c)Subject to Section 15(h) of the Securities Exchange Act and Section 222 of the Investment Advisers Act of 1940, the commissioner may require that a financial statement filed under this act be prepared in accordance with generally accepted accounting principles in the United States and comply with other requirements specified by rule adopted or order issued under this act.A rule adopted or order issued under this act may establish:

(1)Subject to Section 15(h) of the Securities Exchange Act and Section 222 of the Investment Advisors Act of 1940, the form and content of financial statements required under this act;

(2)Whether unconsolidated financial statements must be filed; and

(3)Whether required financial statements must be audited by an independent certified public accountant.

(d)The commissioner may provide interpretative opinions or issue determinations that the commissioner will not institute a proceeding or an action under this act against a specified person for engaging in a specified act, practice, or course of business if the determination is consistent with this act.A rule adopted or order issued under this act may establish a reasonable charge for interpretative opinions or determinations that the commissioner will not institute an action or a proceeding under this act.

(e)A penalty under this act may not be imposed for, and liability does not arise from conduct that is engaged in or omitted in good faith believing it conforms to a rule, form, or order of the commissioner under this act.

(f)A hearing in an administrative proceeding under this act must be conducted in public unless the commissioner for good cause consistent with this act determines that the hearing will not be so conducted.

(g)Any rule or portion of a rule, as that term is defined in section 536.010, that is created under the authority delegated in this act shall become effective only if it complies with and is subject to all of the provisions of chapter 536 and, if applicable, section 536.028.This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2003, shall be invalid and void.

(L. 2003 H.B. 380)

Effective 9-01-03

409.828 - Penalties.

1.Any person who willfully violates any provision of sections 409.800 to 409.863 shall, upon conviction, be fined not more than twenty thousand dollars or imprisoned for not more than ten years, or both, for each such violation.

2.The commissioner may refer such evidence as is available concerning violations of sections 409.800 to 409.863 to the attorney general or the proper prosecuting attorney, who may, with or without such a reference from the commissioner, institute the appropriate criminal proceedings under sections409.800 to 409.863.

(L. 1985 H.B. 409 & 532 § 12)

409.820 - Investigations by commissioner, subpoena powers — judicial enforcement.

1.The commissioner may make investigations, within or without this state, as he finds necessary or appropriate to:

(1)Determine whether any person has violated, or is about to violate, any provision of sections 409.800 to 409.863 or any rule or order of the commissioner; or

(2)Aid in enforcement of sections 409.800 to 409.863.

2.The commissioner may publish information concerning any violations of sections 409.800 to 409.863 or any rule or order issued or promulgated under sections 409.800 to 409.863.

3.For purposes of any investigation or proceeding under sections 409.800 to 409.863, the commissioner, or any officer or employee designated by rule or order of the commissioner, may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the commissioner finds to be relevant or material to the inquiry.If a person does not give testimony or produce the documents required by the commissioner, or a designated employee, pursuant to an administrative subpoena, the commissioner, or his designated employee, may apply for a court order compelling compliance with the subpoena or the giving of the required testimony.The request for order of compliance may be addressed to either:

(1)The circuit court of Cole County or the circuit court where service may be obtained on the person refusing to testify or produce, if the person is within this state; or

(2)The appropriate court of the state having jurisdiction over the person refusing to testify or produce, if the person is outside this state.

(L. 1985 H.B. 409 & 532 § 9)

409.4-404 - Investment adviser representative registration requirement and exemptions.

(a)It is unlawful for an individual to transact business in this state as an investment adviser representative unless the individual is registered under this act as an investment adviser representative or is exempt from registration as an investment adviser under subsection (b).

(b)The following individuals are exempt from the registration requirement of subsection (a):

(1)An individual who is employed by or associated with an investment adviser that is exempt from registration under section 409.4-403(b) or a federal covered investment adviser that is excluded from the notice filing requirements of section 409.4-405; and

(2)Any other individual exempted by rule adopted or order issued under this act.

(c)The registration of an investment adviser representative is not effective while the investment adviser representative is not employed by or associated with an investment adviser registered under this act or a federal covered investment adviser that has made or is required to make a notice filing under section 409.4-405.

(d)An individual may transact business as an investment adviser representative for more than one investment adviser or federal covered investment adviser unless a rule adopted or order issued under this act prohibits or limits an individual from acting as an investment adviser representative for more than one investment adviser or federal covered investment adviser.

(e)It is unlawful for an individual acting as an investment adviser representative, directly or indirectly, to conduct business in this state on behalf of an investment adviser or a federal covered investment adviser if the registration of the individual as an investment adviser representative is suspended or revoked or the individual is barred from employment or association with an investment adviser or a federal covered investment adviser by an order under this act, the Securities and Exchange Commission, or a self-regulatory organization.Upon request from a federal covered investment adviser and for good cause, the commissioner, by order issued, may waive, in whole or in part, the application of the requirements of this subsection to the federal covered investment adviser.

(f)An investment adviser registered under this act, a federal covered investment adviser that has filed a notice under section 409.4-405, or a broker-dealer registered under this act is not required to employ or associate with an individual as an investment adviser representative if the only compensation paid to the individual for a referral of investment advisory clients is paid to an investment adviser registered under this act, a federal covered investment adviser who has filed a notice under section 409.4-405, or a broker-dealer registered under this act with which the individual is employed or associated as an investment adviser representative.

(L. 2003 H.B. 380)

Effective 9-01-03

409.6-609 - Judicial review.

(a)Except as otherwise provided in this act, any interested person aggrieved by any order of the commissioner under any provision of this act, or by any refusal or failure of the commissioner to make an order pursuant to any of said provisions, shall be entitled to a hearing before the commissioner in accordance with the provisions of chapter 536.A final order issued by the commissioner under this act is subject to judicial review in accordance with the provisions of chapter 536 in the circuit court of Cole County.

(b)A rule adopted under this act is subject to judicial review in accordance with the provisions of chapter 536 in the circuit court of Cole County.

(L. 2003 H.B. 380)

Effective 9-01-03

409.830 - Insiders — restricted use of information, data to be public, exceptions.

1.Sections 409.800 to 409.863 shall be administered by the commissioner.Neither the commissioner nor any employees of the commissioner shall use any information which is filed with or obtained by the commissioner and which is not public information for personal gain or benefit, nor shall the commissioner nor any of his employees conduct any securities or commodity dealings whatsoever based upon any such information, even though public, if there has not been a sufficient period of time for the securities or commodity markets to assimilate such information.

2.All information collected, assembled or maintained by the commissioner is public information and is available for the examination of the public as provided by chapter 610, except for the following, which are deemed to be confidential:

(1)Information obtained in private investigations pursuant to section 409.820;

(2)Information made confidential by the provisions of chapter 610; and

(3)Information obtained from federal agencies which may not be disclosed under federal law.

The commissioner, in his discretion, may disclose any information made confidential under this subsection to persons listed in subsection 1 of section 409.833.

3.No provision of sections 409.800 to 409.863 either creates or derogates any privilege which exists at common law, by statute, or otherwise when any documentary or other evidence is sought under subpoena directed to the commissioner or any employee of the commissioner.

(L. 1985 H.B. 409 & 532 § 13)

409.561 - Additional requirements, when applicable.

If the takeover bid is not subject to the requirements of section 14(d) of the Securities Exchange Act of 1934, 15 U.S.C. 78n(d), the following additional requirements shall apply to the takeover bid:

(1)The takeover bid shall be made on the same terms to all offerees holding the same class or series of securities;

(2)The period of time within which equity securities may be deposited pursuant to a takeover bid shall not be less than thirty business days;

(3)Equity securities deposited pursuant to a takeover bid may be withdrawn at any time until the expiration of thirty business days after the commencement of the takeover bid and at any time after the expiration of sixty-five days from the commencement of the takeover bid, if the shares have not been purchased, and until the expiration of ten business days following the date of commencement of another offeror's takeover bid for the same equity securities if the shares have not been purchased and if the bidder has received notice or otherwise has knowledge of the commencement of such takeover bid;

(4)Where a takeover bid is made for less than all the outstanding equity securities of a class and where a greater number of such securities is deposited pursuant thereto than the offeror is bound or willing to take up and pay for, the securities taken up and paid for by the offeror shall be taken up and paid for as nearly as possible on a pro rata basis, disregarding fractions, according to the number of securities deposited by each shareholder;

(5)Where an offeror increases the consideration offered in a takeover bid, the offeror shall pay the increased consideration for all equity securities accepted, whether such securities have been accepted by the offeror before or after the increase in consideration;

(6)Within ten days of the filing of a registration statement as required by section 409.511 the commissioner of securities may schedule a public hearing or hearings or conduct such investigation as he deems necessary concerning any takeover bid for the purpose of determining compliance with the requirements of sections 409.500 to 409.566.Any such hearing or investigation shall be declared by order of the commissioner of securities.Any initial hearing shall commence within twenty days of the filing of a registration statement;

(7)In the event the commissioner of securities shall schedule a public hearing or otherwise conduct an investigation pursuant to subdivision (6) of this section, the commissioner of securities may also, in his discretion, issue an order staying the offeror from purchasing or paying for any shares tendered in response to its takeover bid at any time prior to such purchasing or paying for shares tendered.Every person shall comply with every such order;

(8)In the event the attorney shall issue a stay payment order pursuant to subdivision (7) of this section, the commissioner of securities shall, no later than thirty days from the issuance of such stay payment order, issue an order containing his findings of fact and conclusions of law;

(9)Any stay payment order issued by the commissioner of securities pursuant to subdivision (7) of this section shall automatically expire within sixty days from its issuance except where the commissioner of securities has in his order containing findings of fact and conclusions of law conditioned the purchase and payment for shares tendered upon changes or modifications in the registration statement, in which event any stay payment order shall be vacated by the commissioner of securities after he is satisfied that such changes or modifications have been publicly disseminated to offerees;

(10)The commissioner of securities may apply, on notice to the offeror and the target company, to a court of competent jurisdiction, and such court may grant an application, for good cause, to extend any of the time periods set forth in this section if an extension is necessary for the protection of offerees.

(L. 1986 H.B. 1667)

409.4-410 - Filing fees.

(a)A person shall pay a fee of two hundred dollars when initially filing an application for registration as a broker-dealer and a fee of one hundred dollars when filing a renewal of registration as a broker-dealer.If the filing results in a denial or withdrawal, the commissioner shall retain the entire fee.

(b)The fee for an individual is fifty dollars when filing an application for registration as an agent, a fee of fifty dollars when filing a renewal of registration as an agent, and a fee of fifty dollars when filing for a change of registration as an agent.If the filing results in a denial or withdrawal, the commissioner shall retain the entire fee.

(c)A person shall pay a fee of two hundred dollars when filing an application for registration as an investment adviser and a fee of one hundred dollars when filing a renewal of registration as an investment adviser.If the filing results in a denial or withdrawal, the commissioner shall retain the entire fee.

(d)The fee for an individual is fifty dollars when filing an application for registration as an investment adviser representative, a fee of fifty dollars when filing a renewal of registration as an investment adviser representative, and a fee of fifty dollars when filing a change of registration as an investment adviser representative.If the filing results in a denial or withdrawal, the commissioner shall retain the entire fee.

(e)A federal covered investment adviser required to file a notice under section 409.4-405 shall pay an initial fee of two hundred dollars and an annual notice fee of one hundred dollars.

(f)A person required to pay a filing or notice fee under this section may transmit the fee through or to a designee as a rule or order provides under this act.

(g)An investment adviser representative who is registered as an agent under section 409.4-402 and who represents a person that is both registered as a broker-dealer under section 409.4-401 and registered as an investment adviser under section 409.4-403 or required as a federal covered investment adviser to make a notice filing under section 409.4-405 is not required to pay an initial or annual registration fee for registration as an investment adviser representative.

(L. 2003 H.B. 380)

Effective 9-01-03

409.6-611 - Service of process.

(a)A consent to service of process complying with section 409.6-611 required by this act must be signed and filed in the form required by a rule or order under this act.A consent appointing the commissioner the person's agent for service of process in a noncriminal action or proceeding against the person, or the person's successor or personal representative under this act or a rule adopted or order issued under this act after the consent is filed, has the same force and validity as if the service were made personally on the person filing the consent.A person that has filed a consent complying with this subsection in connection with a previous application for registration or notice filing need not file an additional consent.

(b)If a person, including a nonresident of this state, engages in an act, practice, or course of business prohibited or made actionable by this act or a rule adopted or order issued under this act and the person has not filed a consent to service of process under subsection (a), the act, practice, or course of business constitutes the appointment of the commissioner as the person's agent for service of process in a noncriminal action or proceeding against the person or the person's successor or personal representative.

(c)Service under subsection (a) or (b) may be made by providing a copy of the process to the office of the commissioner, but it is not effective unless:

(1)The plaintiff, which may be the commissioner, promptly sends notice of the service and a copy of the process, return receipt requested, to the defendant or respondent at the address set forth in the consent to service of process or, if a consent to service of process has not been filed, at the last known address, or takes other reasonable steps to give notice; and

(2)The plaintiff files an affidavit of compliance with this subsection in the action or proceeding on or before the return day of the process, if any, or within the time that the court, or the commissioner in a proceeding before the commissioner, allows.

(d)Service pursuant to subsection (c) may be used in a proceeding before the commissioner or by the commissioner in a civil action in which the commissioner is the moving party.

(e)If process is served under subsection (c), the court, or the commissioner in a proceeding before the commissioner, shall order continuances as are necessary or appropriate to afford the defendant or respondent reasonable opportunity to defend.

(L. 2003 H.B. 380)

Effective 9-01-03

409.630 - Website for training resources to prevent and detect financial exploitation.

No later than September 1, 2016, the commissioner of securities shall develop and make available a website that includes training resources to assist broker-dealers and agents in the prevention and detection of financial exploitation of qualified adults.Such resources shall include, at a minimum, indicators of financial exploitation of qualified adults and potential steps broker-dealers and agents may take to prevent suspected financial exploitation of qualified adults as authorized by law.

(L. 2015 S.B. 244)

409.2-203 - Additional exemptions and waivers.

A rule adopted or order issued under this act may exempt a security, transaction, or offer; a rule under this act may exempt a class of securities, transactions, or offers from any or all of the requirements of sections 409.3-301 to 409.3-306 and 409.5-504; and an order under this act may waive, in whole or in part, any or all of the conditions for an exemption or offer under sections 409.2-201 and 409.2-202.

(L. 2003 H.B. 380)

Effective 9-01-03

409.838 - Service of process, appointment of commissioner as agent for service.

1.Every applicant for registration under sections 409.800 to 409.863 shall file with the commissioner, in such form as he by rule prescribes, an irrevocable consent appointing the commissioner, or his successor in office, to be his attorney to receive service of any lawful process in any noncriminal suit, action, or proceeding against him, or his successor executor or administrator, which arises under sections 409.800 to 409.863, or any rule or order promulgated or issued under sections 409.800 to 409.863, after the consent has been filed, with the same force and validity as if served personally on the person filing the consent.Service may be made by leaving a copy of the process in the office of the commissioner, but it is not effective unless:

(1)The plaintiff, who may be the commissioner in a suit, action, or proceeding instituted by him, forthwith sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his last address on file with the commissioner; and

(2)The plaintiff's affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

2.When a person, including a nonresident of this state, engages in conduct prohibited or made actionable by sections 409.800 to 409.863, or any rule or order of the commissioner, the engaging in such conduct shall constitute the appointment of the commissioner as such person's attorney to receive service of any lawful process in a noncriminal proceeding against such person, his successor, or personal representative, which grows out of that conduct and which is brought under sections 409.800 to 409.863 or any rule or order of the commissioner with the same force and validity as if served personally.

3.Service under subsection 1 of this section may be made by leaving a copy of the process in the office of the commissioner, but it is not effective unless:

(1)The plaintiff, who may be the commissioner in a suit, action or proceeding instituted by him, forthwith sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his last address known to the commissioner; and

(2)The plaintiff's affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.

(L. 1985 H.B. 409 & 532 § 16)

409.541 - Secretary of state deemed offeror's agent, when — service of process, how, effective when.

1.Every nonresident offeror, whether or not such offeror has filed a registration statement, except a foreign corporation which has appointed and keeps a resident agent in this state, shall be deemed to have appointed the secretary of state as his agent upon whom may be served any lawful process, authorized by sections 409.500 to 409.566, with the same effect as though served upon the offeror personally.

2.Service of process pursuant to this section shall be accomplished by leaving a copy of the process in the office of the secretary of state, but it shall not be effective unless notice of the service and a copy of the process is sent by certified or registered mail to the nonresident offeror served, at his last known address.

(L. 1986 H.B. 1667)

409.3-303 - Securities registration by coordination.

(a)A security for which a registration statement has been filed under the Securities Act of 1933 in connection with the same offering may be registered by coordination under this section.

(b)A registration statement and accompanying records under this section must contain or be accompanied by the following records in addition to the information specified in section 409.3-305 and a consent to service of process complying with section 409.6-611:

(1)A copy of the latest form of prospectus filed under the Securities Act of 1933;

(2)A copy of the articles of incorporation and bylaws or their substantial equivalents currently in effect; a copy of any agreement with or among underwriters; a copy of any indenture or other instrument governing the issuance of the security to be registered; and a specimen, copy, or description of the security that is required by rule adopted or order issued under this act;

(3)Copies of any other information or any other records filed by the issuer under the Securities Act of 1933 requested by the commissioner; and

(4)An undertaking to forward each amendment to the federal prospectus, other than an amendment that delays the effective date of the registration statement, promptly after it is filed with the Securities and Exchange Commission.

(c)A registration statement under this section becomes effective simultaneously with or subsequent to the federal registration statement when all the following conditions are satisfied:

(1)A stop order under subsection (d) or section 409.3-306 or issued by the Securities and Exchange Commission is not in effect and a proceeding is not pending against the issuer under section 409.3-306; and

(2)The registration statement has been on file for at least twenty days or a shorter period provided by rule adopted or order issued under this act.

(d)The registrant shall promptly notify the commissioner in a record of the date when the federal registration statement becomes effective and the content of any price amendment and shall promptly file a record containing the price amendment.If the notice is not timely received, the commissioner may issue a stop order, without prior notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until compliance with this section.The commissioner shall promptly notify the registrant of an order by telegram, telephone, or electronic means and promptly confirm this notice by a record.If the registrant subsequently complies with the notice requirements of this section, the stop order is void as of the date of its issuance.

(e)If the federal registration statement becomes effective before each of the conditions in this section is satisfied or is waived by the commissioner, the registration statement is automatically effective under this act when all the conditions are satisfied or waived.If the registrant notifies the commissioner of the date when the federal registration statement is expected to become effective, the commissioner shall promptly notify the registrant by telegram, telephone, or electronic means and promptly confirm this notice by a record, indicating whether all the conditions are satisfied or waived and whether the commissioner intends the institution of a proceeding under section 409.3-306.The notice by the commissioner does not preclude the institution of such a proceeding.

(L. 2003 H.B. 380)

Effective 9-01-03

409.810 - Prohibited acts.

No person shall, directly or indirectly:

(1)Cheat or defraud, attempt to cheat or defraud, or employ any device, scheme or artifice to cheat or defraud, any other person;

(2)Make any false report, enter any false record, or make any untrue statement of a material fact;

(3)Engage in any transaction, act, practice or course of business, including, without limitation, any form of advertising or solicitation, which operates or would operate as a fraud or deceit upon any person; or

(4)Misappropriate or convert the funds, security or property of any other person;

in or in connection with the purchase or sale of, the offer to sell, the offer to enter into, or the entry into of, any commodity contract or commodity option subject to the provisions of section 409.803 or subdivision (2), (3), or (4) of subsection 1 of section 409.806; except that, the provisions of subdivision (2) of this section shall not apply to a commodity contract covered by subdivision (3) of subsection 1 of section 409.806.

(L. 1985 H.B. 409 & 532 § 5)

409.3-307 - Waiver and modification.

The commissioner may waive or modify, in whole or in part, any or all of the requirements of sections 409.3-302, 409.3-303, and 409.3-304(b) or the requirement of any information or record in a registration statement or in a periodic report filed pursuant to section 409.3-305(i).

(L. 2003 H.B. 380)

Effective 9-01-03

409.610 - Notification of agencies and family members.

If a qualified individual reasonably believes that financial exploitation of a qualified adult has occurred, has been attempted, or is being attempted, the qualified individual may notify the agencies.Subsequent to notifying the agencies, an agent or qualified individual may notify an immediate family member, legal guardian, conservator, co-trustee, successor trustee, or agent under a power of attorney of the qualified adult of such belief.

(L. 2015 S.B. 244)

409.5-510 - Rescission offers.

A purchaser, seller, or recipient of investment advice may not maintain an action under section 409.5-509 if:

(1)The purchaser, seller, or recipient of investment advice receives in a record, before the action is instituted:

(A)An offer stating the respect in which liability under section 409.5-509 may have arisen and fairly advising the purchaser, seller, or recipient of investment advice of that person's rights in connection with the offer, and any financial or other information necessary to correct all material misrepresentations or omissions in the information that was required by this act to be furnished to that person at the time of the purchase, sale, or investment advice;

(B)If the basis for relief under this section may have been a violation of section 409.5-509(b), an offer to repurchase the security for cash, payable on delivery of the security, equal to the consideration paid, and interest at the rate of eight percent per year from the date of the purchase, less the amount of any income received on the security, or, if the purchaser no longer owns the security, an offer to pay the purchaser upon acceptance of the offer damages in an amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it, and interest at the rate of eight percent per year from the date of the purchase in cash equal to the damages computed in the manner provided in this subsection;

(C)If the basis for relief under this section may have been a violation of section 409.5-509(c), an offer to tender the security, on payment by the seller of an amount equal to the purchase price paid, less income received on the security by the purchaser and interest at the rate of eight percent per year from the date of the sale; or if the purchaser no longer owns the security, an offer to pay the seller upon acceptance of the offer, in cash, damages in the amount of the difference between the price at which the security was purchased and the value the security would have had at the time of the purchase in the absence of the purchaser's conduct that may have caused liability and interest at the rate of eight percent per year from the date of the sale;

(D)If the basis for relief under this section may have been a violation of section 409.5-509(d); and if the customer is a purchaser, an offer to pay as specified in subparagraph (B); or, if the customer is a seller, an offer to tender or to pay as specified in subparagraph (C);

(E)If the basis for relief under this section may have been a violation of section 409.5-509(e), an offer to reimburse in cash the consideration paid for the advice and interest at the rate of eight percent per year from the date of payment; or

(F)If the basis for relief under this section may have been a violation of section 409.5-509(f), an offer to reimburse in cash the consideration paid for the advice, the amount of any actual damages that may have been caused by the conduct, and interest at the rate of eight percent per year from the date of the violation causing the loss;

(2)The offer under paragraph (1) states that it must be accepted by the purchaser, seller, or recipient of investment advice within thirty days after the date of its receipt by the purchaser, seller, or recipient of investment advice or any shorter period, of not less than three days, that the commissioner, by order, specifies;

(3)The offeror has the present ability to pay the amount offered or to tender the security under paragraph (1);

(4)The offer under paragraph (1) is delivered to the purchaser, seller, or recipient of investment advice, or sent in a manner that ensures receipt by the purchaser, seller, or recipient of investment advice; and

(5)The purchaser, seller, or recipient of investment advice that accepts the offer under paragraph (1) in a record within the period specified under paragraph (2) is paid in accordance with the terms of the offer.

(L. 2003 H.B. 380)

Effective 9-01-03

409.114 - Duties and powers of commissioner of securities.

Sections 409.108 to 409.114 shall be administered by the commissioner of securities.The commissioner of securities is hereby empowered to promulgate, alter, amend or revoke rules and regulations pursuant to section 409.6-605 as necessary to carry out the purposes of sections 409.108 to 409.114.

(L. 2004 H.B. 1617)

409.1-102 - Definitions.

In this act, unless the context otherwise requires:

(1)"Agent" means an individual, other than a broker-dealer, who represents a broker-dealer in effecting or attempting to effect purchases or sales of securities or represents an issuer in effecting or attempting to effect purchases or sales of the issuer's securities.But a partner, officer, or director of a broker-dealer or issuer, or an individual having a similar status or performing similar functions is an agent only if the individual otherwise comes within the term.The term does not include an individual excluded by rule adopted or order issued under this act.

(2)"Commissioner" means the commissioner of securities appointed by the secretary of state.

(3)"Bank" means:

(A)A banking institution organized under the laws of the United States;

(B)A member bank of the Federal Reserve System;

(C)Any other banking institution, whether incorporated or not, doing business under the laws of a state or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to be exercised by national banks under the authority of the Comptroller of the Currency pursuant to Section 1 of Public Law 87-722 (12 U.S.C. Section 92a), and which is supervised and examined by a state or federal agency having supervision over banks, and which is not operated for the purpose of evading this act; and

(D)A receiver, conservator, or other liquidating agent of any institution or firm included in subparagraph (A), (B), or (C).

(4)"Broker-dealer" means a person engaged in the business of effecting transactions in securities for the account of others or for the person's own account.The term does not include:

(A)An agent;

(B)An issuer;

(C)A bank, a trust company organized or chartered under the laws of this state, or a savings institution, if its activities as a broker-dealer are limited to those specified in subsections 3(a)(4)(B)(i) to (vi), (viii) to (x), and (xi) if limited to unsolicited transactions; 3(a)(5)(B); and 3(a)(5)(C) of the Securities Exchange Act of 1934 (15 U.S.C. Sections 78c(a)(4) and (5)) or a bank that satisfies the conditions described in subsection 3(a)(4)(E) of the Securities Exchange Act of 1934 (15 U.S.C.Section 78c(a)(4));

(D)An international banking institution; or

(E)A person excluded by rule adopted or order issued under this act.

(5)"Depository institution" means:

(A)A bank; or

(B)A savings institution, trust company, credit union, or similar institution that is organized or chartered under the laws of a state or of the United States, authorized to receive deposits, and supervised and examined by an official or agency of a state or the United States if its deposits or share accounts are insured to the maximum amount authorized by statute by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law.The term does not include:

(i)An insurance company or other organization primarily engaged in the business of insurance;

(ii)A Morris Plan bank; or

(iii)An industrial loan company.

(6)"Federal covered investment adviser" means a person registered under the Investment Advisers Act of 1940.

(7)"Federal covered security" means a security that is, or upon completion of a transaction will be, a covered security under Section 18(b) of the Securities Act of 1933 (15 U.S.C. Section 77r(b)) or rules or regulations adopted pursuant to that provision.

(8)"Filing" means the receipt under this act of a record by the commissioner or a designee of the commissioner.

(9)"Fraud", "deceit", and "defraud" are not limited to common law deceit.

(10)"Guaranteed" means guaranteed as to payment of all principal and all interest.

(11)"Institutional investor" means any of the following, whether acting for itself or for others in a fiduciary capacity:

(A)A depository institution, a trust company organized or chartered under the laws of this state, or an international banking institution;

(B)An insurance company;

(C)A separate account of an insurance company;

(D)An investment company as defined in the Investment Company Act of 1940;

(E)A broker-dealer registered under the Securities Exchange Act of 1934;

(F)An employee pension, profit-sharing, or benefit plan if the plan has total assets in excess of ten million dollars or its investment decisions are made by a named fiduciary, as defined in the Employee Retirement Income Security Act of 1974, that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under this act, a depository institution, or an insurance company;

(G)A plan established and maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or a political subdivision of a state for the benefit of its employees, if the plan has total assets in excess of ten million dollars or its investment decisions are made by a duly designated public official or by a named fiduciary, as defined in the Employee Retirement Income Security Act of 1974, that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under this act, a depository institution, or an insurance company;

(H)A trust, if it has total assets in excess of ten million dollars, its trustee is a depository institution, and its participants are exclusively plans of the types identified in subparagraph (F) or (G), regardless of the size of their assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans;

(I)An organization described in Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Section 501(c)(3)), corporation, Massachusetts trust or similar business trust, limited liability company, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of ten million dollars;

(J)A small business investment company licensed by the Small Business Administration under Section 301(c) of the Small Business Investment Act of 1958 (15 U.S.C. Section 681(c)) with total assets in excess of ten million dollars;

(K)A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(22)) with total assets in excess of ten million dollars;

(L)A federal covered investment adviser acting for its own account;

(M)A "qualified institutional buyer" as defined in Rule 144A(a)(1), other than Rule 144A(a)(1)(H), adopted under the Securities Act of 1933 (17 C.F.R. 230.144A);

(N)A "major U.S. institutional investor" as defined in Rule 15a-6(b)(4)(i) adopted under the Securities Exchange Act of 1934 (17 C.F.R.240.15a-6);

(O)Any other person, other than an individual, of institutional character with total assets in excess of ten million dollars not organized for the specific purpose of evading this act; or

(P)Any other person specified by rule adopted or order issued under this act.

(12)"Insurance company" means a company organized as an insurance company whose primary business is writing insurance or reinsuring risks underwritten by insurance companies and which is subject to supervision by the insurance commissioner or a similar official or agency of a state.

(13)"Insured" means insured as to payment of all principal and all interest.

(14)"International banking institution" means an international financial institution of which the United States is a member and whose securities are exempt from registration under the Securities Act of 1933.

(15)"Investment adviser" means a person that, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities or that, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities.The term includes a financial planner or other person that, as an integral component of other financially related services, provides investment advice to others for compensation as part of a business or that holds itself out as providing investment advice to others for compensation.The term does not include:

(A)An investment adviser representative;

(B)A lawyer, accountant, engineer, or teacher whose performance of investment advice is solely incidental to the practice of the person's profession;

(C)A broker-dealer or its agents whose performance of investment advice is solely incidental to the conduct of business as a broker-dealer and that does not receive special compensation for the investment advice;

(D)A publisher of a bona fide newspaper, news magazine, or business or financial publication of general and regular circulation;

(E)A federal covered investment adviser;

(F)A bank, a trust company organized or chartered under the laws of this state, or a savings institution;

(G)Any other person that is excluded by the Investment Advisers Act of 1940 from the definition of investment adviser; or

(H)Any other person excluded by rule adopted or order issued under this act.

(16)"Investment adviser representative" means an individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or holds herself or himself out as providing investment advice, receives compensation to solicit, offer, or negotiate for the sale of or for selling investment advice, or supervises employees who perform any of the foregoing.The term does not include an individual who:

(A)Performs only clerical or ministerial acts;

(B)Is an agent whose performance of investment advice is solely incidental to the individual acting as an agent and who does not receive special compensation for investment advisory services;

(C)Is employed by or associated with a federal covered investment adviser, unless the individual has a "place of business" in this state as that term is defined by rule adopted under Section 203A of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-3a) and is:

(i)An "investment adviser representative" as that term is defined by rule adopted under Section 203A of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-3a); or

(ii)Not a "supervised person" as that term is defined in Section 202(a)(25) of the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-2(a)(25)); or

(D)Is excluded by rule adopted or order issued under this act.

(17)"Issuer" means a person that issues or proposes to issue a security, subject to the following:

(A)The issuer of a voting trust certificate, collateral trust certificate, certificate of deposit for a security, or share in an investment company without a board of directors or individuals performing similar functions is the person performing the acts and assuming the duties of depositor or manager pursuant to the trust or other agreement or instrument under which the security is issued.

(B)The issuer of an equipment trust certificate or similar security serving the same purpose is the person by which the property is or will be used or to which the property or equipment is or will be leased or conditionally sold or that is otherwise contractually responsible for assuring payment of the certificate.

(C)The issuer of a fractional undivided interest in an oil, gas, or other mineral lease or in payments out of production under a lease, right, or royalty is the owner of an interest in the lease or in payments out of production under a lease, right, or royalty, whether whole or fractional, that creates fractional interests for the purpose of sale.

(18)"Nonissuer transaction" or "nonissuer distribution" means a transaction or distribution not directly or indirectly for the benefit of the issuer.

(19)"Offer to purchase" includes an attempt or offer to obtain, or solicitation of an offer to sell, a security or interest in a security for value.The term does not include a tender offer that is subject to Section 14(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78n(d)).

(20)"Person" means an individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity.

(21)"Place of business" of a broker-dealer, an investment adviser, or a federal covered investment adviser means:

(A)An office at which the broker-dealer, investment adviser, or federal covered investment adviser regularly provides brokerage or investment advice or solicits, meets with, or otherwise communicates with customers or clients; or

(B)Any other location that is held out to the general public as a location at which the broker-dealer, investment adviser, or federal covered investment adviser provides brokerage or investment advice or solicits, meets with, or otherwise communicates with customers or clients.

(22)"Predecessor act" means sections 409.101, 409.102 and 409.201 to 409.421, as repealed by this act.

(23)"Price amendment" means the amendment to a registration statement filed under the Securities Act of 1933 or, if an amendment is not filed, the prospectus or prospectus supplement filed under the Securities Act of 1933 that includes a statement of the offering price, underwriting and selling discounts or commissions, amount of proceeds, conversion rates, call prices, and other matters dependent upon the offering price.

(24)"Principal place of business" of a broker-dealer or an investment adviser means the executive office of the broker-dealer or investment adviser from which the officers, partners, or managers of the broker-dealer or investment adviser direct, control, and coordinate the activities of the broker-dealer or investment adviser.

(25)"Record", except in the phrases "of record", "official record", and "public record", means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(26)"Sale" includes every contract of sale, contract to sell, or disposition of, a security or interest in a security for value, and "offer to sell" includes every attempt or offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value.Both terms include:

(A)A security given or delivered with, or as a bonus on account of, a purchase of securities or any other thing constituting part of the subject of the purchase and having been offered and sold for value;

(B)A gift of assessable stock involving an offer and sale; and

(C)A sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer and a sale or offer of a security that gives the holder a present or future right or privilege to convert the security into another security of the same or another issuer, including an offer of the other security.

(27)"Securities and Exchange Commission" means the United States Securities and Exchange Commission.

(28)"Security" means a note; stock; treasury stock; security future; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in oil, gas, or other mineral rights; put, call, straddle, option, or privilege on a security, certificate of deposit, or group or index of securities, including an interest therein or based on the value thereof; put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency; or, in general, an interest or instrument commonly known as a "security"; or a certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.The term:

(A)Includes both a certificated and an uncertificated security;

(B)Does not include an insurance or endowment policy or annuity contract under which an insurance company promises to pay money either in a lump sum or periodically for life or other specified period;

(C)Does not include an interest in a contributory or noncontributory pension or welfare plan subject to the Employee Retirement Income Security Act of 1974;

(D)Includes as an "investment contract" an investment in a common enterprise with the expectation of profits to be derived primarily from the efforts of a person other than the investor and a "common enterprise" means an enterprise in which the fortunes of the investor are interwoven with those of either the person offering the investment, a third party, or other investors; and

(E)May include as an "investment contract", among other contracts, an interest in a limited partnership and a limited liability company and an investment in a viatical settlement or similar agreement.

(29)"Self-regulatory organization" means a national securities exchange registered under the Securities Exchange Act of 1934, a national securities association of broker-dealers registered under the Securities Exchange Act of 1934, a clearing agency registered under the Securities Exchange Act of 1934, or the Municipal Securities Rulemaking Board established under the Securities Exchange Act of 1934.

(30)"Sign" means, with present intent to authenticate or adopt a record:

(A)To execute or adopt a tangible symbol; or

(B)To attach or logically associate with the record an electronic symbol, sound, or process.

(31)"State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(L. 2003 H.B. 380)

Effective 9-01-03

409.1006 - Civil remedies.

1.If a business opportunity seller uses untrue or misleading statements in the sale of a business opportunity, fails to give the proper disclosures, or fails to deliver the equipment, supplies or products necessary to begin substantial operation of the business within forty-five days of the delivery date stated in the business opportunity contract, the purchaser may, within one year of the date of the execution of the contract and upon written notice to the seller, rescind the contract and the purchaser shall be entitled to receive from the business opportunity seller all sums paid to the business seller.Upon receipt of such sums, the purchaser shall make available to the seller at the purchaser's address, or at the places at which the purchaser is located at the time notice is given, all products, equipment or supplies received by the purchaser.The purchaser shall not be entitled to unjust enrichment by exercising the remedies provided in this subsection.

2.Any purchaser injured by a violation of sections 409.1000 to 409.1006 or by the business opportunity seller's breach of a contract subject to sections 409.1000 to 409.1006 or any obligation arising therefrom, may bring an action for recovery of damages, including reasonable attorney's fees.

3.Upon complaint of any person that a business opportunity seller has violated the provisions of sections 409.1000 to 409.1006, the circuit court shall have jurisdiction to enjoin the defendant from any further violations.

4.The remedies provided in this section shall be in addition to any other remedies provided by law or in equity.

(L. 2000 S.B. 896 § 407.2021)

409.818 - Intent of law.

Sections 409.800 to 409.863 may be construed and implemented to effectuate their general purpose to protect investors, to prevent and prosecute illegal and fraudulent schemes involving commodities and to maximize coordination with federal and other states' law and the administration and enforcement thereof.

(L. 1985 H.B. 409 & 532 § 8)

409.600 - Citation of law.

Sections 409.600 to 409.630 may be cited as the "Senior Savings Protection Act".

(L. 2015 S.B. 244)

409.500 - Short title.

Sections 409.500 to 409.566 may be cited as the "Missouri Takeover Bid Disclosure Act".

(L. 1978 S.B. 820 § 1, A.L. 1986 H.B. 1667)

409.808 - Commodity merchants — license required, boards of trade — designation required.

1.No person shall engage in a trade or business or otherwise act as a commodity merchant unless such person is registered or temporarily licensed with the Commodity Futures Trading Commission for each activity constituting such person as a commodity merchant and such registration or temporary license shall not have expired, nor been suspended nor revoked; or is exempt from such registration by virtue of the Commodity Exchange Act or of a CFTC Rule.

2.No board of trade shall trade, or provide a place for the trading of, any commodity contract or commodity option required to be traded on or subject to the rules of a contract market designated by the Commodity Futures Trading Commission unless such board of trade has been so designated for such commodity contract or commodity option and such designation shall not have been vacated, nor suspended nor revoked.

(L. 1985 H.B. 409 & 532 § 4)

409.5-504 - Filing of sales and advertising literature.

(a)Except as otherwise provided in subsection (b), a rule adopted or order issued under this act may require the filing of a prospectus, pamphlet, circular, form letter, advertisement, sales literature, or other advertising record relating to a security or investment advice, addressed or intended for distribution to prospective investors, including clients or prospective clients of a person registered or required to be registered as an investment adviser under this act.

(b)This section does not apply to sales and advertising literature specified in subsection (a) which relates to a federal covered security, a federal covered investment adviser, or a security or transaction exempted by section 409.2-201, 409.2-202, or 409.2-203 except as required pursuant to section 409.2-201(7).

(L. 2003 H.B. 380)

Effective 9-01-03

409.551 - Exceptions.

Sections 409.500 to 409.566 shall not apply when:

(1)The offeror or the target company is a public utility or a public utility holding company as defined in section 2 of the Public Utility Holding Company Act of 1935, (49 Stat. 803, 15 U.S.C. 79), as amended, and the takeover bid is subject to approval by the appropriate federal agency as provided in such act;

(2)The offeror or the target company is a bank or a bank holding company as subject to the Bank Holding Company Act of 1956, (70 Stat. 133, 12 U.S.C.1841), and subsequent amendments thereto, and the takeover bid is subject to approval by the appropriate federal agency as provided in such act;

(3)The offeror or the target company is a savings and loan holding company as defined in section 2 of the Savings and Loan Holding Company Amendments of 1967, (82 Stat. 5, 12 U.S.C. 1730A), as amended, and the takeover bid is subject to approval by the appropriate federal agency as provided in such act;

(4)The offeror and the target company are banks and the offer is part of a merger transaction subject to approval by appropriate federal or state supervisory authorities.

(L. 1986 H.B. 1667)

409.800 - Definitions.

As used in sections 409.800 to 409.863, the following terms shall mean:

(1)"CFTC Rule", any rule or order of the Commodity Futures Trading Commission;

(2)"Board of trade", any person or group of persons engaged in buying or selling any commodity or receiving the same for sale on consignment, whether such person or group of persons is characterized as a board of trade, exchange or other form of marketplace;

(3)"Commissioner", the commissioner of securities provided for in this chapter;

(4)"Commodity", except as otherwise specified by the commissioner by rule or order, any agricultural, grain or livestock product or by-product, any metal or mineral (including a precious metal as defined in subdivision (13) of this section), any gem or gemstone (whether characterized as precious, semiprecious or otherwise), any fuel (whether liquid, gaseous or otherwise), any foreign currency, and all other goods, articles, products or items of any kind; except that, the term "commodity" shall not include:

(a)A numismatic coin whose fair market value is at least twenty percent higher than the value of the metal it contains;

(b)Real property or any agricultural or livestock product grown or raised on real property and offered or sold by the owner or lessee of such real property; or

(c)Any work of art offered or sold by art dealers at public auction or offered or sold through a private sale by the owner thereof;

(d)Any consignment of goods to another person or merchant by an owner if the goods are received in the ordinary course of the consignee's business;

(5)"Commodity contract", any account, agreement or contract for the purchase or sale, primarily for speculation or investment purposes and not for use or consumption by the offeree or purchaser, of one or more commodities, whether for immediate or subsequent delivery or whether delivery is intended by the parties, and whether characterized as a cash contract, deferred shipment or deferred delivery contract, forward contract, futures contract, installment or margin contract, leverage contract or otherwise.Any commodity contract offered or sold shall, in the absence of evidence to the contrary, be presumed to be offered or sold for speculation or investment purposes.A commodity contract shall not include any contract or agreement which requires, and under which the purchaser receives, within twenty-eight calendar days from the payment in good funds of any portion of the purchase price, physical delivery of the total amount of each commodity to be purchased under the contract or agreement;

(6)"Commodity Exchange Act", the act of Congress known as the Commodity Exchange Act, as amended, codified at 7 U.S.C. § 1, et seq.;

(7)"Commodity Futures Trading Commission", the independent regulatory agency established by Congress to administer the Commodity Exchange Act;

(8)"Commodity merchant", any of the following, as defined or described in the Commodity Exchange Act or by CFTC Rule:

(a)Futures commission merchants;

(b)Commodity pool operators;

(c)Commodity trading advisors;

(d)Introducing brokers;

(e)Leverage transaction merchants;

(f)Any person associated with any of the persons listed in paragraphs (a) to (e) of this subdivision;

(g)Floor brokers; and

(h)Any other person, other than a futures association, required to register with the Commodity Futures Trading Commission;

(9)"Commodity option", any account, agreement or contract giving a party thereto the right to purchase or sell one or more commodities or one or more commodity contracts, or both, whether characterized as an option, privilege, indemnity, bid, offer, put, call, advance guaranty, decline guaranty or otherwise.The term "commodity contract" shall not include a commodity option traded on a national securities exchange registered with the United States Securities and Exchange Commission;

(10)"Financial institution", any bank, savings institution or trust company organized under, or supervised pursuant to, the laws of the United States or of any state;

(11)"Offer" or "offer to sell" includes every offer, every attempt to offer to dispose of, or solicitation of an offer to buy, to purchase or to acquire, for value;

(12)"Person", any individual, corporation, partnership, association, joint-stock company, trust where the interests of the beneficiaries are evidenced by a security, unincorporated organization, government, or political subdivision of a government.The term "person" shall not include a contract market designated by the Commodity Futures Trading Commission, or any clearinghouse thereof, or a national securities exchange registered with the Securities and Exchange Commission, or any employee, officer or director of such contract market, clearinghouse or exchange acting solely in that capacity;

(13)"Precious metal", silver, gold or platinum, in either coin, bullion or other form, and such other precious metals as the commissioner may specify by rule or order;

(14)"Sale" or "sell" includes every sale, contract of sale, contract to sell, or disposition, for value.

(L. 1985 H.B. 409 & 532 § 1)

409.108 - Tampering with securities documents or impeding investigations prohibited.

It is unlawful for any person, in any investigation or other proceeding under this chapter, to alter, destroy, mutilate, conceal, make a false entry in, or by any means falsify, remove from any place or withhold any record, document, or tangible, electronic or physical evidence with the intent to impede, obstruct, avoid, evade, or influence the official investigation or administration of any other proceeding under this chapter.

(L. 2004 H.B. 1617)

409.5-508 - Criminal penalties.

(a)A person commits the crime of criminal securities fraud when such person willfully violates section 409.5-501.

(b)A person commits a criminal securities violation when such person willfully violates any other provision of this act, or a rule adopted or order issued under this act, except Section 409.5-504 or the notice filing requirements of section 409.3-302 or 409.4-405, or that willfully violates section 409.5-505 knowing the statement made to be false or misleading in a material respect.

(c)A person convicted of criminal securities fraud or any other criminal securities violation shall be fined not more than one million dollars or imprisoned not more than ten years, or both, and if the violation was committed against an elderly or disabled person, then the fine shall be not less than fifty thousand dollars.For purposes of this section, the following terms mean:

(1)"Disabled person", a person with a physical or mental impairment that substantially limits one or more of the major life activities of such individual, a record of such impairment, or being regarded as having such an impairment;

(2)"Elderly person", a person sixty years of age or older.

(d)An individual convicted of violating a rule or order under this act may be fined, but may not be imprisoned, if the individual did not have knowledge of the rule or order.

(e)The attorney general or the proper prosecuting attorney with or without a reference from the commissioner may institute criminal proceedings under this act.

(f)This act does not limit the power of this state to punish a person for conduct that constitutes a crime under other laws of this state.

(L. 2003 H.B. 380, A.L. 2009 H.B. 62)

409.7-701 - Effective date.

This act takes effect on September 1, 2003.