17-12a401.   Broker-dealer registration requirementand exemptions.(a) Registration requirement. It is unlawfulfor a person to transact business in this state as a broker-dealerunless the person is registered under this act as a broker-dealeror is exempt from registration as a broker-dealer under subsection(b) or (d).

      (b)   Exemptions from registration. The following persons areexempt from the registration requirement of subsection (a):

      (1)   A broker-dealer without a place of business in this stateif 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 ornot required to be registered as a broker-dealer under this act;

      (C)   an institutional investor;

      (D)   a nonaffiliated federal covered investment adviser withinvestments under management in excess of $100,000,000 acting forthe account of others pursuant to discretionary authority in asigned record;

      (E)   a bona fide preexisting customer whose principal place ofresidence is not in this state and the broker-dealer is registeredas a broker-dealer under the securities exchange act of 1934 or notrequired to be registered under the securities exchange act of 1934and is registered under the securities act of the state in whichthe customer maintains a principal place of residence;

      (F)   a bona fide preexisting customer whose principal place ofresidence is in this state but was not present in this state whenthe customer relationship was established, if:

      (i)   The broker-dealer is registered under the securitiesexchange act of 1934 or not required to be registered under thesecurities exchange act of 1934 and is registered under thesecurities laws of the state in which the customer relationship wasestablished and where the customer had maintained a principal placeof residence; and

      (ii)   within 45 days after the customer's first transaction inthis state, the person files an application for registration as abroker-dealer in this state and a further transaction is noteffected more than 75 days after the date on which the applicationis filed, or, if earlier, the date on which the administratornotifies the person that the administrator has denied theapplication for registration or has stayed the pendency of theapplication for good cause;

      (G)   not more than three customers in this state during theprevious 12 months, in addition to those customers specified insubparagraphs (A) through (F) and under subparagraph (H), if thebroker-dealer is registered under the securities exchange act of1934 or not required to be registered under the securities exchangeact of 1934 and is registered under the securities act of the statein which the broker-dealer has its principal place of business; and

      (H)   any other person exempted by rule adopted or order issuedunder this act; and

      (2)   a person that deals solely in United States governmentsecurities and is supervised as a dealer in government securitiesby the board of governors of the federal reserve system, thecomptroller of the currency, the federal deposit insurancecorporation, or the office of thrift supervision.

      (c)   Limits on employment or association. It is unlawful fora broker-dealer, or for an issuer engaged in offering, offering topurchase, purchasing, or selling securities in this state, directlyor indirectly, to employ or associate with an individual to engagein an activity related to securities transactions in this state if theregistration of the individual is suspended or revoked or theindividual is barred from employment or association with a broker-dealer, anissuer, an investment adviser, or a federal coveredinvestment adviser by an order of the administrator under this act,the securities and exchange commission, or a self-regulatoryorganization. A broker-dealer or issuer does not violate thissubsection if the broker-dealer or issuer did not know and in theexercise of reasonable care could not have known, of thesuspension, revocation, or bar. Upon request from a broker-dealeror issuer and for good cause, an order under this act may modify orwaive, in whole or in part, the application of the prohibitions ofthis subsection to the broker-dealer.

      (d)   Foreign transactions. A rule adopted or order issuedunder this act may permit:

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

      (A)   An individual from Canada or other foreign jurisdictionwho is temporarily present in this state and with whom the broker-dealer had abona fide customer relationship before the individualentered the United States;

      (B)   an individual from Canada or other foreign jurisdictionwho is present in this state and whose transactions are in a self-directed taxadvantaged retirement plan of which the individual is the holderor contributor in that foreign jurisdiction; or

      (C)   an individual who is present in this state, with whom thebroker-dealer customer relationship arose while the individual wastemporarily or permanently resident in Canada or the other foreignjurisdiction; and

      (2)   an agent who represents a broker-dealer that is exemptunder this subsection to effect transactions in securities orattempt to effect the purchase or sale of securities in this stateas permitted for a broker-dealer described in paragraph (1).

      History:   L. 2004, ch. 154, § 18; July 1, 2005.