17-12a401. Broker-dealer registration requirement and exemptions.
17-12a401
17-12a401. Broker-dealer registration requirement
and exemptions.
(a) Registration requirement. 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) Exemptions from registration. 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 $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 broker-dealer 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 45 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 75 days after the date on which the application
is filed, or, if earlier, the date on which the administrator
notifies the person that the administrator 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 12 months, in addition to those customers specified in
subparagraphs (A) through (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) Limits on employment or association. 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 administrator 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) Foreign transactions. 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).
History: L. 2004, ch. 154, § 18; July 1, 2005.