PART IV.  BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS,



INVESTMENT
ADVISER REPRESENTATIVES, AND



FEDERAL
COVERED INVESTMENT ADVISERS



 



[§485A-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 chapter 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 as a
broker-dealer under this chapter or not required to be registered as a
broker-dealer under this chapter;



(C)  An institutional investor;



(D)  A nonaffiliated federal covered investment
adviser with investments under management in excess of $100,000,000 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 the earlier of seventy-five days after the date on which the
application is filed, or 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 (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; or



(H)  Any other person exempted by rule adopted
or order issued under this chapter; 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 chapter, 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 chapter may modify or waive, in whole or in part,
the application of the prohibitions of this subsection to the broker-dealer.



(d)  A broker-dealer that is registered in
Canada and has no office or other physical presence in this State may effect
transactions in securities with or for, or attempt to effect the purchase or
sale of any securities by an individual who is a resident of Canada, and:



(1)  Only effects or attempts to effect transactions
in securities with or through the issuers of securities involved in the
transactions, broker-dealers, banks, savings institutions, trust companies,
insurance companies, investment companies (as defined in the Investment Company
Act of 1940), pension or profit-sharing trusts, or other financial institutions
or institutional buyers, whether acting for themselves or as trustees; with or
for a person from Canada who is present temporarily in this State and with whom
a bona fide business relationship existed before the person entered this State;
or with or for a person from Canada who is present in this State, whose
transactions are in a self-directed tax advantaged retirement plan in Canada of
which the person is the holder or contributor;



(2)  Is a member of a duly authorized self-regulatory
organization or stock exchange in Canada;



(3)  Maintains the provincial or territorial
registration and membership in a self-regulatory organization or stock exchange
of the person in good standing; and



(4)  Discloses to the person's clients in this State
that the person is not subject to the full regulatory requirements of this
chapter; provided that a notice is filed with the commissioner in the form of
the individual's current securities registration together with a consent to
service of process.



(e)  A rule adopted or order issued under this
chapter may permit:



(1)  A broker-dealer that is registered in any other
foreign jurisdiction and that has no office or other physical presence 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 any 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 any 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 the other foreign
jurisdiction.



An agent who represents a broker-dealer that is
exempt under this subsection may 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 this subsection. [L 2006, c
229, pt of §1]