Substitute House Bill No. 6512
Substitute House Bill No. 6512
PUBLIC ACT NO. 97-220
AN ACT CONCERNING THE CONNECTICUT UNIFORM
SECURITIES ACT.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. Section 36b-3 of the general
statutes is repealed and the following is
substituted in lieu thereof:
As used in sections 36b-2 to 36b-33,
inclusive, unless the context otherwise requires:
[(1) "Commissioner" means the Commissioner of
Banking or any person appointed or designated by
the Commissioner of Banking to administer sections
36b-2 to 36b-33, inclusive.
(2) "Agent" means any individual, other than
a broker-dealer, who represents a broker-dealer or
"issuer", in effecting or attempting to effect
purchases or sales of securities. "Agent" shall
not include an individual who represents an issuer
in (A) effecting transactions in a security
exempted by subdivision (1), (2), (3), (4), (6),
(9), (10), (11), or (21) of subsection (a) of
section 36b-21, (B) effecting transactions
exempted by subsection (b) of section 36b-21,
except for transactions exempted by subdivision
(13) of said subsection where the transaction is
exempt under Section 4(6) of the Securities Act of
1933, by subdivision (9) of said subsection and by
subdivision (12) of said subsection, or (C)
effecting transactions with existing employees,
partners or directors of the issuer if no
commission or other remuneration is paid or given
directly or indirectly for soliciting any person
in this state. "Agent" shall not include such
other persons not within the intent of this
subsection as the commissioner may by regulation
or order determine. A general partner, officer or
director of a broker-dealer or issuer, or a person
occupying a similar status or performing similar
functions, is an agent only if he otherwise comes
within this definition and any compensation that
he receives is directly or indirectly related to
purchases or sales of securities.
(3) "Broker-dealer" means any person engaged
in the business of effecting transactions in
securities for the account of others or for his
own account. "Broker-dealer" shall not include (A)
an agent, (B) an issuer, (C) a state bank and
trust company, a national banking association, a
savings bank, a savings and loan association, a
federal savings and loan association, a credit
union, a federal credit union, or trust company,
(D) a person who has no place of business in this
state if he effects transactions in this state
exclusively with or through (i) the issuers of the
securities involved in the transactions, (ii)
other broker-dealers, or (iii) a state bank and
trust company, a national banking association, a
savings bank, a savings and loan association, a
federal savings and loan association, a credit
union, a federal credit union, a trust company, an
insurance company, an investment company as
defined in the Investment Company Act of 1940, a
pension or profit-sharing trust, or other
financial institution or institutional buyer,
whether acting for itself or as trustee, or (E)
such other persons not within the intent of this
subsection as the commissioner may by regulation
or order determine.
(4) "Fraud", "deceit", and "defraud" are not
limited to common-law deceit.
(5) "Guaranteed" means guaranteed as to
payment of principal, interest or dividends.
(6) "Investment adviser" means any person
who, for compensation, engages in the business of
advising others, either directly or through
publications or writings, as to the value of
securities or as to the advisability of investing
in, purchasing, or selling securities, or who, for
compensation and as a part of a regular business,
issues or promulgates analyses or reports
concerning securities. "Investment adviser" does
not include (A) a state bank and trust company, a
national banking association, a savings bank, a
savings and loan association, a federal savings
and loan association, a credit union, a federal
credit union or a trust company; (B) a lawyer,
accountant, engineer, or teacher whose performance
of these services is solely incidental to the
practice of his profession; (C) a broker-dealer
whose performance of these services is solely
incidental to the conduct of his business as a
broker-dealer and who receives no special
compensation for them; (D) a publisher of any bona
fide newspaper, news magazine, or business or
financial publication of general, regular, and
paid circulation; (E) a person whose advice,
analyses or reports relate only to securities
exempted by subdivision (1) of subsection (a) of
section 36b-21; (F) any insurance company under
the supervision of the Insurance Commissioner or
any affiliate thereof, as defined in subsection
(b) of section 38a-129, when providing services to
separate accounts of that insurance company or
registered investment companies all of whose
shares are owned by such insurance company or its
insurance company affiliates or by the separate
accounts of that insurance company or its
insurance company affiliates; (G) a person (i)
whose only clients in this state are other
investment advisers, broker-dealers, a state bank
and trust company, a national banking association,
a savings bank, a savings and loan association, a
federal savings and loan association, a credit
union, a federal credit union, a trust company, an
insurance company, an investment company as
defined in the Investment Company Act of 1940, a
pension or profit-sharing trust, or other
financial institution or institutional buyer,
whether acting for itself or as trustee, or (ii)
who during the course of the preceding twelve
months has had no more than five clients in this
state other than those specified in subparagraph
(i), whether or not he or any of the persons to
whom business communications are directed is then
present in this state, and who does not hold
himself out generally to the public in this state
as an investment adviser; (H) an investment
advisory publication which during the course of
the preceding twelve months has no more than five
subscribers in this state and the publisher files
a written notice to that effect with the
commissioner; and (I) such other persons not
within the intent of this subsection as the
commissioner may by regulation or order designate.
(7) "Investment adviser agent" includes any
individual, other than an investment adviser, or a
sole proprietor of an investment adviser,
employed, appointed or authorized by an investment
adviser to solicit business from any person for
such investment adviser, within or from this
state, and who receives compensation or other
remuneration, directly or indirectly, for such
solicitation. An officer, partner or director of
an investment adviser, or an individual occupying
a similar status or performing similar functions,
is an investment adviser agent only if he
otherwise comes within this definition.
(8) "Issuer" means any person who issues or
proposes to issue any security; except that (A)
with respect to certificates of deposit,
voting-trust certificates, or collateral-trust
certificates, or with respect to certificates of
interest or shares in an unincorporated investment
trust not having a board of directors or persons
performing similar functions or of the fixed,
restricted management, or unit type, the term
"issuer" means the person or persons performing
the acts and assuming the duties of depositor or
manager pursuant to the provisions of the trust or
other agreement or instrument under which the
security is issued; and (B) with respect to
certificates of interest or participation in oil,
gas or mining titles or leases, or in payments out
of production under such titles or leases,
"issuer" means the owner of any such title, lease,
right or interest, whether whole or fractional,
who creates or sells fractional interests therein.
(9) "Nonissuer" means not directly or
indirectly for the benefit of the issuer.
(10) "Person" means an individual, a
corporation, a limited liability company, a
partnership, an association, a joint-stock
company, a trust where the interests of the
beneficiaries are evidenced by a security, an
unincorporated organization, a government or a
political subdivision of a government.
(11) (A) "Sale" or "sell" includes every
contract of sale of, contract to sell, or
disposition of, a security or interest in a
security for value. (B) "Offer" or "offer to sell"
includes every attempt or offer to dispose of, or
solicitation of an offer to buy, a security or
interest in a security for value. (C) Any security
given or delivered with, or as a bonus on account
of, any purchase of securities or any other thing
shall be conclusively presumed to constitute a
part of the subject of such purchase and to have
been sold for value. (D) Nothing in this
subsection shall limit or diminish the full
meaning of the terms "sale", "sell", "offer" or
"offer to sell" as construed by the courts of this
state. (E) A purported gift of assessable stock is
considered to involve an offer and sale. (F) Every
sale or offer of a warrant or right to purchase or
subscribe to another security of the same or
another issuer, as well as every sale or offer of
a security which gives the holder a present or
future right or privilege to convert into another
security of the same or another issuer, is
considered to include an offer of the other
security. (G) The terms defined in this subsection
do not include: (i) Any bona fide pledge or loan;
(ii) any stock dividend, whether the corporation
distributing the dividend is the issuer of the
stock or not, if nothing of value is given by
stockholders for the dividend other than the
surrender of a right to a cash or property
dividend when each stockholder may elect to take
the dividend in cash or property or in stock;
(iii) any act incident to a class vote by security
holders on a merger, exchange of securities for
securities, consolidation, reclassification of
securities, or sale of assets in consideration of
the issuance of securities or securities and cash
of another person other than an individual; or
(iv) any security which is issued in exchange for
one or more bona fide outstanding securities,
claims or property interests, or partly in such
exchange and partly for cash, where the terms and
conditions of such issuance and exchange are
approved by any state or federal court.
(12) "Securities Act of 1933", "Securities
Exchange Act of 1934", "Public Utility Holding
Company Act of 1935" and "Investment Company Act
of 1940" means the federal statutes of those names
as from time to time amended.
(13) "Security" means any note, stock,
treasury stock, bond, debenture, evidence of
indebtedness, certificate of interest or
participation in any profit-sharing agreement,
interests of limited partners in a limited
partnership, collateral-trust certificate,
preorganization certificate or subscription,
transferable share, investment contract,
voting-trust certificate, certificate of deposit
for a security, certificate of interest or
participation in an oil, gas or mining title or
lease or in payments out of production under such
a title or lease, or, in general, any interest or
instrument commonly known as a "security", or any
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. "Security" does
not include any insurance or endowment policy or
annuity contract issued by an insurance company
which is subject to regulation by the Insurance
Commissioner.
(14) "State" means any state, territory, or
possession of the United States, the District of
Columbia and Puerto Rico.
(15) "Investment advisory publication" means
a publication distributed and published at
periodic intervals wherein the publisher or any of
his employees specifically recommends to
subscribers in writing, either directly or
indirectly, the advisability of investing in,
purchasing or selling specific securities or
specific categories of securities.
(16) "Branch office" means any location other
than the main office, identified by any means to
the public, customers or clients as a location at
which a broker-dealer or investment adviser
conducts a securities or investment advisory
business. Branch office shall not include (A) a
location identified solely in a telephone
directory line listing or on a business card or
letterhead if (i) the listing, card, or letterhead
also sets forth the address and telephone number
of a Connecticut office of the broker-dealer or
investment adviser from which individuals
conducting business from such identified location
are directly supervised, and (ii) no more than one
agent or investment adviser agent transacts
business on behalf of the broker-dealer or
investment adviser from such identified location,
or (B) any other location not within the intent of
this subsection as the commissioner may determine.
(17) "Blank check company" means any company
that (A) devotes substantially all of its efforts
to establishing a new business in which planned
principal operations have not commenced or, that
has commenced planned principal operations, but
has not derived significant revenue therefrom; and
(B) has no specific business plan or purpose or
has indicated that its business plan is to engage
in a merger or acquisition with an unidentified
company or companies, or other entity or person.
(18) "Shell company" or "dormant company"
means any company which does not pursue nor has
the financial capacity to pursue a business plan
or purpose.]
(1) "AGENT" MEANS ANY INDIVIDUAL, OTHER THAN
A BROKER-DEALER, WHO REPRESENTS A BROKER-DEALER OR
ISSUER IN EFFECTING OR ATTEMPTING TO EFFECT
PURCHASES OR SALES OF SECURITIES. "AGENT" DOES NOT
INCLUDE AN INDIVIDUAL WHO REPRESENTS AN ISSUER IN
(A) EFFECTING TRANSACTIONS IN A SECURITY EXEMPTED
BY SUBDIVISION (1), (2), (3), (4), (6), (9), (10),
(11) OR (21) OF SUBSECTION (a) OF SECTION 36b-21,
AS AMENDED BY SECTION 11 OF THIS ACT, (B)
EFFECTING TRANSACTIONS EXEMPTED BY SUBSECTION (b)
OF SECTION 36b-21, AS AMENDED BY SECTION 11 OF
THIS ACT, EXCEPT FOR TRANSACTIONS EXEMPTED BY
SUBDIVISIONS (9), (12) OR (13) OF SAID SUBSECTION,
(C) EFFECTING TRANSACTIONS WITH EXISTING
EMPLOYEES, PARTNERS OR DIRECTORS OF THE ISSUER IF
NO COMMISSION OR OTHER REMUNERATION IS PAID OR
GIVEN DIRECTLY OR INDIRECTLY FOR SOLICITING ANY
PERSON IN THIS STATE, OR (D) EFFECTING
TRANSACTIONS IN ANY COVERED SECURITY, EXCEPT FOR
COVERED SECURITIES WITHIN THE MEANING OF SECTIONS
18(b)(2) OR 18(b)(4)(D) OF THE SECURITIES ACT OF
1933. "AGENT" DOES NOT INCLUDE SUCH OTHER PERSONS
NOT WITHIN THE INTENT OF THIS SUBSECTION AS THE
COMMISSIONER MAY BY REGULATION OR ORDER DETERMINE.
A GENERAL PARTNER, OFFICER OR DIRECTOR OF A
BROKER-DEALER OR ISSUER, OR A PERSON OCCUPYING A
SIMILAR STATUS OR PERFORMING SIMILAR FUNCTIONS, IS
AN AGENT ONLY IF HE OTHERWISE COMES WITHIN THIS
DEFINITION AND ANY COMPENSATION THAT HE RECEIVES
IS DIRECTLY OR INDIRECTLY RELATED TO PURCHASES OR
SALES OF SECURITIES.
(2) "ASSOCIATED PERSON" HAS THE MEANING GIVEN
TO THAT TERM IN SECTION 3(a)(21) OF THE SECURITIES
EXCHANGE ACT OF 1934.
(3) "BLANK CHECK COMPANY" MEANS ANY COMPANY
THAT (A) DEVOTES SUBSTANTIALLY ALL OF ITS EFFORTS
TO ESTABLISHING A NEW BUSINESS IN WHICH PLANNED
PRINCIPAL OPERATIONS HAVE NOT COMMENCED OR, THAT
HAS COMMENCED PLANNED PRINCIPAL OPERATIONS, BUT
HAS NOT DERIVED SIGNIFICANT REVENUE THEREFROM; AND
(B) HAS NO SPECIFIC BUSINESS PLAN OR PURPOSE OR
HAS INDICATED THAT ITS BUSINESS PLAN IS TO ENGAGE
IN A MERGER OR ACQUISITION WITH AN UNIDENTIFIED
COMPANY OR COMPANIES, OR OTHER ENTITY OR PERSON.
(4) "BRANCH OFFICE" MEANS ANY LOCATION OTHER
THAN THE MAIN OFFICE, IDENTIFIED BY ANY MEANS TO
THE PUBLIC, CUSTOMERS OR CLIENTS AS A LOCATION AT
WHICH A BROKER-DEALER OR INVESTMENT ADVISER
CONDUCTS A SECURITIES OR INVESTMENT ADVISORY
BUSINESS. "BRANCH OFFICE" DOES NOT INCLUDE (A) A
LOCATION IDENTIFIED SOLELY IN A TELEPHONE
DIRECTORY LINE LISTING OR ON A BUSINESS CARD OR
LETTERHEAD IF (i) THE LISTING, CARD, OR LETTERHEAD
ALSO SETS FORTH THE ADDRESS AND TELEPHONE NUMBER
OF A CONNECTICUT OFFICE OF THE BROKER-DEALER OR
INVESTMENT ADVISER FROM WHICH INDIVIDUALS
CONDUCTING BUSINESS FROM SUCH IDENTIFIED LOCATION
ARE DIRECTLY SUPERVISED, AND (ii) NO MORE THAN ONE
AGENT OR INVESTMENT ADVISER AGENT TRANSACTS
BUSINESS ON BEHALF OF THE BROKER-DEALER OR
INVESTMENT ADVISER FROM SUCH IDENTIFIED LOCATION,
OR (B) ANY OTHER LOCATION NOT WITHIN THE INTENT OF
THIS SUBSECTION AS THE COMMISSIONER MAY DETERMINE.
(5) "BROKER-DEALER" MEANS ANY PERSON ENGAGED
IN THE BUSINESS OF EFFECTING TRANSACTIONS IN
SECURITIES FOR THE ACCOUNT OF OTHERS OR FOR HIS
OWN ACCOUNT. "BROKER-DEALER" DOES NOT INCLUDE (A)
AN AGENT, (B) AN ISSUER, (C) A BANK AND TRUST
COMPANY, A NATIONAL BANKING ASSOCIATION, A SAVINGS
BANK, A SAVINGS AND LOAN ASSOCIATION, A FEDERAL
SAVINGS AND LOAN ASSOCIATION, A CREDIT UNION, A
FEDERAL CREDIT UNION, OR A TRUST COMPANY, (D) A
PERSON WHO HAS NO PLACE OF BUSINESS IN THIS STATE
IF HE EFFECTS TRANSACTIONS IN THIS STATE
EXCLUSIVELY WITH OR THROUGH (i) THE ISSUERS OF THE
SECURITIES INVOLVED IN THE TRANSACTIONS, (ii)
OTHER BROKER-DEALERS, OR (iii) A BANK AND TRUST
COMPANY, A NATIONAL BANKING ASSOCIATION, A SAVINGS
BANK, A SAVINGS AND LOAN ASSOCIATION, A FEDERAL
SAVINGS AND LOAN ASSOCIATION, A CREDIT UNION, A
FEDERAL CREDIT UNION, A TRUST COMPANY, AN
INSURANCE COMPANY, AN INVESTMENT COMPANY AS
DEFINED IN THE INVESTMENT COMPANY ACT OF 1940, A
PENSION OR PROFIT-SHARING TRUST, OR OTHER
FINANCIAL INSTITUTION OR INSTITUTIONAL BUYER,
WHETHER ACTING FOR ITSELF OR AS TRUSTEE, OR (E)
SUCH OTHER PERSONS NOT WITHIN THE INTENT OF THIS
SUBSECTION AS THE COMMISSIONER MAY BY REGULATION
OR ORDER DETERMINE.
(6) "COMMISSIONER" MEANS THE COMMISSIONER OF
BANKING OR ANY PERSON APPOINTED OR DESIGNATED BY
THE COMMISSIONER OF BANKING TO ADMINISTER SECTIONS
36b-2 TO 36b-33, INCLUSIVE, AS AMENDED BY THIS
ACT.
(7) "COVERED SECURITY" HAS THE MEANING GIVEN
TO THAT TERM IN SECTION 18(b) OF THE SECURITIES
ACT OF 1933.
(8) "FRAUD", "DECEIT" AND "DEFRAUD" ARE NOT
LIMITED TO COMMON-LAW DECEIT.
(9) "GUARANTEED" MEANS GUARANTEED AS TO
PAYMENT OF PRINCIPAL, INTEREST OR DIVIDENDS.
(10) "INVESTMENT ADVISER" MEANS ANY PERSON
WHO, FOR COMPENSATION, ENGAGES IN THE BUSINESS OF
ADVISING OTHERS, EITHER DIRECTLY OR THROUGH
PUBLICATIONS OR WRITINGS, AS TO THE VALUE OF
SECURITIES OR AS TO THE ADVISABILITY OF INVESTING
IN, PURCHASING OR SELLING SECURITIES, OR WHO, FOR
COMPENSATION AND AS A PART OF A REGULAR BUSINESS,
ISSUES OR PROMULGATES ANALYSES OR REPORTS
CONCERNING SECURITIES. "INVESTMENT ADVISER" DOES
NOT INCLUDE (A) A BANK AND TRUST COMPANY, A
NATIONAL BANKING ASSOCIATION, A SAVINGS BANK, A
SAVINGS AND LOAN ASSOCIATION, A FEDERAL SAVINGS
AND LOAN ASSOCIATION, A CREDIT UNION, A FEDERAL
CREDIT UNION OR A TRUST COMPANY; (B) A LAWYER,
ACCOUNTANT, ENGINEER, OR TEACHER WHOSE PERFORMANCE
OF THESE SERVICES IS SOLELY INCIDENTAL TO THE
PRACTICE OF HIS PROFESSION; (C) A BROKER-DEALER
WHOSE PERFORMANCE OF THESE SERVICES IS SOLELY
INCIDENTAL TO THE CONDUCT OF HIS BUSINESS AS A
BROKER-DEALER AND WHO RECEIVES NO SPECIAL
COMPENSATION FOR THEM; (D) A PUBLISHER OF ANY BONA
FIDE NEWSPAPER, NEWS MAGAZINE, OR BUSINESS OR
FINANCIAL PUBLICATION OF GENERAL, REGULAR, AND
PAID CIRCULATION; (E) A PERSON WHOSE ADVICE,
ANALYSES OR REPORTS RELATE ONLY TO SECURITIES
EXEMPTED BY SUBDIVISION (1) OF SUBSECTION (a) OF
SECTION 36b-21, AS AMENDED BY SECTION 11 OF THIS
ACT; (F) ANY INSURANCE COMPANY UNDER THE
SUPERVISION OF THE INSURANCE COMMISSIONER OR ANY
AFFILIATE THEREOF, AS DEFINED IN SUBSECTION (b) OF
SECTION 38a-129, WHEN PROVIDING SERVICES TO
SEPARATE ACCOUNTS OF THAT INSURANCE COMPANY OR
REGISTERED INVESTMENT COMPANIES ALL OF WHOSE
SHARES ARE OWNED BY SUCH INSURANCE COMPANY OR ITS
INSURANCE COMPANY AFFILIATES OR BY THE SEPARATE
ACCOUNTS OF THAT INSURANCE COMPANY OR ITS
INSURANCE COMPANY AFFILIATES; AND (G) SUCH OTHER
PERSONS NOT WITHIN THE INTENT OF THIS SUBSECTION
AS THE COMMISSIONER MAY BY REGULATION OR ORDER
DESIGNATE.
(11) "INVESTMENT ADVISER AGENT" INCLUDES ANY
INDIVIDUAL, OTHER THAN AN INVESTMENT ADVISER, OR A
SOLE PROPRIETOR OF AN INVESTMENT ADVISER,
EMPLOYED, APPOINTED OR AUTHORIZED BY AN INVESTMENT
ADVISER TO SOLICIT BUSINESS FROM ANY PERSON FOR
SUCH INVESTMENT ADVISER, WITHIN OR FROM THIS
STATE, AND WHO RECEIVES COMPENSATION OR OTHER
REMUNERATION, DIRECTLY OR INDIRECTLY, FOR SUCH
SOLICITATION. AN OFFICER, PARTNER OR DIRECTOR OF
AN INVESTMENT ADVISER, OR AN INDIVIDUAL OCCUPYING
A SIMILAR STATUS OR PERFORMING SIMILAR FUNCTIONS,
IS AN INVESTMENT ADVISER AGENT ONLY IF HE
OTHERWISE COMES WITHIN THIS DEFINITION.
(12) "ISSUER" MEANS ANY PERSON WHO ISSUES OR
PROPOSES TO ISSUE ANY SECURITY; EXCEPT THAT (A)
WITH RESPECT TO CERTIFICATES OF DEPOSIT,
VOTING-TRUST CERTIFICATES, OR COLLATERAL-TRUST
CERTIFICATES, OR WITH RESPECT TO CERTIFICATES OF
INTEREST OR SHARES IN AN UNINCORPORATED INVESTMENT
TRUST NOT HAVING A BOARD OF DIRECTORS OR PERSONS
PERFORMING SIMILAR FUNCTIONS OR OF THE FIXED,
RESTRICTED MANAGEMENT, OR UNIT TYPE, "ISSUER"
MEANS THE PERSON OR PERSONS PERFORMING THE ACTS
AND ASSUMING THE DUTIES OF DEPOSITOR OR MANAGER
PURSUANT TO THE PROVISIONS OF THE TRUST OR OTHER
AGREEMENT OR INSTRUMENT UNDER WHICH THE SECURITY
IS ISSUED; AND (B) WITH RESPECT TO CERTIFICATES OF
INTEREST OR PARTICIPATION IN OIL, GAS OR MINING
TITLES OR LEASES, OR IN PAYMENTS OUT OF PRODUCTION
UNDER SUCH TITLES OR LEASES, "ISSUER" MEANS THE
OWNER OF ANY SUCH TITLE, LEASE, RIGHT OR INTEREST,
WHETHER WHOLE OR FRACTIONAL, WHO CREATES OR SELLS
FRACTIONAL INTERESTS THEREIN.
(13) "NONISSUER" MEANS NOT DIRECTLY OR
INDIRECTLY FOR THE BENEFIT OF THE ISSUER.
(14) "PERSON" MEANS AN INDIVIDUAL, A
CORPORATION, A LIMITED LIABILITY COMPANY, A
PARTNERSHIP, AN ASSOCIATION, A JOINT-STOCK
COMPANY, A TRUST WHERE THE INTERESTS OF THE
BENEFICIARIES ARE EVIDENCED BY A SECURITY, AN
UNINCORPORATED ORGANIZATION, A GOVERNMENT OR A
POLITICAL SUBDIVISION OF A GOVERNMENT.
(15) (A) "SALE" OR "SELL" INCLUDES EVERY
CONTRACT OF SALE OF, CONTRACT TO SELL, OR
DISPOSITION OF, A SECURITY OR INTEREST IN A
SECURITY FOR VALUE. (B) "OFFER" OR "OFFER TO SELL"
INCLUDES EVERY ATTEMPT OR OFFER TO DISPOSE OF, OR
SOLICITATION OF AN OFFER TO BUY, A SECURITY OR
INTEREST IN A SECURITY FOR VALUE. (C) ANY SECURITY
GIVEN OR DELIVERED WITH, OR AS A BONUS ON ACCOUNT
OF, ANY PURCHASE OF SECURITIES OR ANY OTHER THING
SHALL BE CONCLUSIVELY PRESUMED TO CONSTITUTE A
PART OF THE SUBJECT OF SUCH PURCHASE AND TO HAVE
BEEN SOLD FOR VALUE. (D) NOTHING IN THIS
SUBSECTION SHALL LIMIT OR DIMINISH THE FULL
MEANING OF THE TERMS "SALE", "SELL", "OFFER" OR
"OFFER TO SELL" AS CONSTRUED BY THE COURTS OF THIS
STATE. (E) A PURPORTED GIFT OF ASSESSABLE STOCK IS
CONSIDERED TO INVOLVE AN OFFER AND SALE. (F) EVERY
SALE OR OFFER OF A WARRANT OR RIGHT TO PURCHASE OR
SUBSCRIBE TO ANOTHER SECURITY OF THE SAME OR
ANOTHER ISSUER, AS WELL AS EVERY SALE OR OFFER OF
A SECURITY WHICH GIVES THE HOLDER A PRESENT OR
FUTURE RIGHT OR PRIVILEGE TO CONVERT INTO ANOTHER
SECURITY OF THE SAME OR ANOTHER ISSUER, IS
CONSIDERED TO INCLUDE AN OFFER OF THE OTHER
SECURITY. (G) THE TERMS DEFINED IN THIS SUBSECTION
DO NOT INCLUDE: (i) ANY BONA FIDE PLEDGE OR LOAN;
(ii) ANY STOCK DIVIDEND, WHETHER THE CORPORATION
DISTRIBUTING THE DIVIDEND IS THE ISSUER OF THE
STOCK OR NOT, IF NOTHING OF VALUE IS GIVEN BY
STOCKHOLDERS FOR THE DIVIDEND OTHER THAN THE
SURRENDER OF A RIGHT TO A CASH OR PROPERTY
DIVIDEND WHEN EACH STOCKHOLDER MAY ELECT TO TAKE
THE DIVIDEND IN CASH OR PROPERTY OR IN STOCK;
(iii) ANY ACT INCIDENT TO A CLASS VOTE BY SECURITY
HOLDERS ON A MERGER, EXCHANGE OF SECURITIES FOR
SECURITIES, CONSOLIDATION, RECLASSIFICATION OF
SECURITIES, OR SALE OF ASSETS IN CONSIDERATION OF
THE ISSUANCE OF SECURITIES OR SECURITIES AND CASH
OF ANOTHER PERSON OTHER THAN AN INDIVIDUAL; OR
(iv) ANY SECURITY WHICH IS ISSUED IN EXCHANGE FOR
ONE OR MORE BONA FIDE OUTSTANDING SECURITIES,
CLAIMS OR PROPERTY INTERESTS, OR PARTLY IN SUCH
EXCHANGE AND PARTLY FOR CASH, WHERE THE TERMS AND
CONDITIONS OF SUCH ISSUANCE AND EXCHANGE ARE
APPROVED BY ANY STATE OR FEDERAL COURT.
(16) "SECURITIES ACT OF 1933", "SECURITIES
EXCHANGE ACT OF 1934", "PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935", "INVESTMENT ADVISERS ACT OF
1940" AND "INVESTMENT COMPANY ACT OF 1940" MEAN
THE FEDERAL STATUTES OF THOSE NAMES, AS FROM TIME
TO TIME AMENDED.
(17) "SECURITY" MEANS ANY NOTE, STOCK,
TREASURY STOCK, BOND, DEBENTURE, EVIDENCE OF
INDEBTEDNESS, CERTIFICATE OF INTEREST OR
PARTICIPATION IN ANY PROFIT-SHARING AGREEMENT,
INTERESTS OF LIMITED PARTNERS IN A LIMITED
PARTNERSHIP, COLLATERAL-TRUST CERTIFICATE,
PREORGANIZATION CERTIFICATE OR SUBSCRIPTION,
TRANSFERABLE SHARE, INVESTMENT CONTRACT,
VOTING-TRUST CERTIFICATE, CERTIFICATE OF DEPOSIT
FOR A SECURITY, CERTIFICATE OF INTEREST OR
PARTICIPATION IN AN OIL, GAS OR MINING TITLE OR
LEASE OR IN PAYMENTS OUT OF PRODUCTION UNDER SUCH
A TITLE OR LEASE, OR, IN GENERAL, ANY INTEREST OR
INSTRUMENT COMMONLY KNOWN AS A "SECURITY", OR ANY
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. "SECURITY" DOES
NOT INCLUDE ANY INSURANCE OR ENDOWMENT POLICY OR
ANNUITY CONTRACT ISSUED BY AN INSURANCE COMPANY
WHICH IS SUBJECT TO REGULATION BY THE INSURANCE
COMMISSIONER.
(18) "SHELL COMPANY" OR "DORMANT COMPANY"
MEANS ANY COMPANY WHICH DOES NOT PURSUE NOR HAS
THE FINANCIAL CAPACITY TO PURSUE A BUSINESS PLAN
OR PURPOSE.
(19) "STATE" MEANS ANY STATE, TERRITORY OR
POSSESSION OF THE UNITED STATES, THE DISTRICT OF
COLUMBIA AND PUERTO RICO.
Sec. 2. Section 36b-5 of the general statutes
is repealed and the following is substituted in
lieu thereof:
(a) No person who directly or indirectly
receives compensation or other remuneration for
advising another person as to the value of
securities or their purchase or sale, whether
through the issuance of analyses or reports or
otherwise, shall: (1) Employ any device, scheme or
artifice to defraud the other person; (2) make any
untrue statement of a material fact or omit to
state a material fact necessary in order to make
the statements made, in light of the circumstances
under which they are made, not misleading; or (3)
engage in any act, practice or course of business
which operates or would operate as a fraud or
deceit upon such other person.
(b) (1) It is unlawful for any investment
adviser THAT IS REGISTERED OR REQUIRED TO BE
REGISTERED UNDER SECTIONS 36b-2 TO 36b-33,
INCLUSIVE, AS AMENDED BY THIS ACT, to have, enter
into, extend or renew any investment advisory
contract, whether written or oral, unless it is
signed by the client or clients and discloses in
writing: (A) That the investment adviser shall not
be compensated on the basis of a share of capital
gains upon or capital appreciation of the funds or
any portion of the funds of the client; (B) that
an assignment of the contract may not be made by
the investment adviser without the consent of the
other party to the contract; (C) that the
investment adviser, if a partnership, shall notify
the other party to the contract of any change in
the membership of the partnership within a
reasonable time after the change; (D) the fee
arrangement between the investment adviser and the
client or clients; and (E) the services which the
investment adviser will render. [; provided that
investment advisory contracts with clients in
effect on October 1, 1982, which would not
otherwise be in compliance with subparagraphs (D)
and (E) of this subdivision may continue in effect
until October 1, 1983.] (2) Subparagraph (A) of
subdivision (1) of this subsection does not
prohibit an investment advisory contract which
provides for compensation based upon the total or
net asset value of a fund averaged over a definite
period or as of definite dates or taken as of a
definite date. (3) "Assignment", as used in
subparagraph (B) of subdivision (1) of this
subsection, includes any direct or indirect
transfer or hypothecation of an investment
advisory contract by the assignor or of the
beneficial ownership of a controlling block of the
assignor's outstanding voting securities by a
security holder of the assignor, but, if the
investment adviser is a partnership, an assignment
of an investment advisory contract is not
considered to result from the death or withdrawal
of a minority of the members of the investment
adviser having only a minority interest in the
business of the investment adviser, or from the
admission to the investment adviser of one or more
members who, after admission, will be only a
minority of the members and will have only a
minority interest in the business.
(c) It is unlawful for any investment adviser
THAT IS REGISTERED OR REQUIRED TO BE REGISTERED
UNDER SECTIONS 36b-2 TO 36b-33, INCLUSIVE, AS
AMENDED BY THIS ACT, to take or have custody of
any securities or funds of any client if: (1) The
commissioner by [rule] REGULATION prohibits
custody; or (2) in the absence of [rule] A
REGULATION, the investment adviser fails to notify
the commissioner that he has or may have custody.
[(d) Notwithstanding any other provisions of
sections 36b-2 to 36b-33, inclusive, investment
advisory contracts with clients in effect on April
20, 1978, which would not otherwise be in
compliance with subsections (b) and (c) of this
section, may continue in effect until July 1,
1979.]
[(e)] (d) Subparagraph (A) of subdivision (1)
of subsection (b) of this section shall not be
construed to prohibit performance fees permitted
and determined in accordance with Section 205 of
the [Federal] Investment Advisers Act of 1940, [as
amended,] and any rules or regulations adopted in
accordance with said act.
[(f)] (e) No person who directly or
indirectly receives compensation or other
remuneration for soliciting advisory business on
behalf of a person subject to the prohibition
contained in subsection (a) of this section shall,
in connection with such solicitation: (1) Employ
any device, scheme or artifice to defraud; (2)
make any untrue statement of a material fact or
omit to state a material fact necessary in order
to make the statements made, in light of the
circumstances under which they are made, not
misleading; or (3) engage in any act, practice or
course of business which operates or would operate
as a fraud or deceit.
[(g)] (f) No person who directly or
indirectly receives compensation or other
remuneration for: (1) Advising another person as
to the value of securities or their purchase or
sale, whether through the issuance of analyses or
reports or otherwise; or (2) soliciting advisory
business on behalf of a person subject to the
prohibition contained in subsection (a) of this
section shall engage in any dishonest or unethical
practice in connection with the rendering of such
advice or in connection with such solicitation.
Sec. 3. Section 36b-6 of the general statutes
is repealed and the following is substituted in
lieu thereof:
(a) No person shall transact business in this
state as a broker-dealer unless he is registered
under sections 36b-2 to 36b-33, inclusive, AS
AMENDED BY THIS ACT. No individual shall transact
business as an agent in this state unless he is
(1) registered as an agent of the broker-dealer or
issuer whom he represents in transacting such
business OR (2) AN ASSOCIATED PERSON WHO
REPRESENTS A BROKER-DEALER IN EFFECTING
TRANSACTIONS DESCRIBED IN SUBDIVISIONS (2) AND (3)
OF SECTION 15(h) OF THE SECURITIES EXCHANGE ACT OF
1934.
(b) No [broker-dealer or] issuer shall employ
an agent unless such agent is registered under
sections 36b-2 to 36b-33, inclusive, AS AMENDED BY
THIS ACT. NO BROKER-DEALER SHALL EMPLOY AN AGENT
UNLESS SUCH AGENT IS (1) REGISTERED UNDER SECTIONS
36b-2 TO 36b-33, INCLUSIVE, AS AMENDED BY THIS
ACT, OR (2) AN ASSOCIATED PERSON WHO REPRESENTS A
BROKER-DEALER IN EFFECTING TRANSACTIONS DESCRIBED
IN SUBDIVISIONS (2) AND (3) OF SECTION 15(h) OF
THE SECURITIES EXCHANGE ACT OF 1934. The
registration of an agent is not effective during
any period when he is not associated with a
particular broker-dealer registered under said
sections or a particular issuer. When an agent
begins or terminates a connection with a
broker-dealer or issuer, or begins or terminates
those activities which make him an agent, both the
agent and the broker-dealer or issuer shall
promptly notify the commissioner.
(c) No person shall transact business as an
investment adviser, within or from this state,
unless registered as such by the commissioner as
provided in sections 36b-2 to 36b-33, inclusive,
AS AMENDED BY THIS ACT, OR EXEMPTED PURSUANT TO
SUBSECTION (e) OF THIS SECTION. No individual
shall transact business as an investment adviser
agent, within or from this state, unless he is
registered as an investment adviser agent of the
investment adviser for whom he acts in transacting
such business. No investment adviser shall engage
an investment adviser agent unless such investment
adviser agent is registered under said sections.
The registration of an investment adviser agent is
not effective during any period when he is not
associated with a particular investment adviser.
[registered under said sections.] When an
investment adviser agent begins or terminates a
connection with an investment adviser, both the
investment adviser agent and the investment
adviser shall promptly notify the commissioner. If
an investment adviser or investment adviser agent
provides such notice, such investment adviser or
investment adviser agent shall not be liable for
the failure of the other to give such notice.
(d) No broker-dealer or investment adviser
shall transact business from any place of business
located within this state unless that place of
business is registered as a branch office with the
commissioner pursuant to this subsection. An
application for branch office registration shall
be made on forms prescribed by the commissioner
and shall be filed with him, with a nonrefundable
fee of one hundred dollars per branch office. A
broker-dealer or investment adviser shall promptly
notify the commissioner in writing if such
broker-dealer or investment adviser (1) engages a
new manager at a branch office in this state, (2)
acquires a branch office of another broker-dealer
or investment adviser in this state, or (3)
relocates a branch office in this state. In the
case of a branch office acquisition or relocation,
the broker-dealer or investment adviser shall pay
to the commissioner an additional nonrefundable
fee of one hundred dollars. Each registrant or
applicant for branch office registration shall pay
the actual cost, as determined by the commissioner
of any reasonable investigation or examination
made of such registrant or applicant by or on
behalf of the commissioner.
(e) THE FOLLOWING INVESTMENT ADVISERS ARE
EXEMPTED FROM THE REGISTRATION REQUIREMENTS UNDER
SUBSECTION (c) OF THIS SECTION: ANY INVESTMENT
ADVISER THAT (1) IS REGISTERED OR REQUIRED TO BE
REGISTERED UNDER SECTION 203 OF THE INVESTMENT
ADVISERS ACT OF 1940; (2) IS EXCEPTED FROM THE
DEFINITION OF INVESTMENT ADVISER UNDER SECTION
202(a)(11) OF THE INVESTMENT ADVISERS ACT OF 1940;
OR (3) HAS NO PLACE OF BUSINESS IN THIS STATE AND,
DURING THE PRECEDING TWELVE MONTHS, HAS HAD NO
MORE THAN FIVE CLIENTS WHO ARE RESIDENTS OF THIS
STATE. ANY INVESTMENT ADVISER CLAIMING AN
EXEMPTION PURSUANT TO SUBDIVISION (1) OR (2) OF
THIS SUBSECTION THAT IS NOT OTHERWISE EXCLUDED
UNDER SUBSECTION (10) OF SECTION 36b-3, AS AMENDED
BY SECTION 1 OF THIS ACT, SHALL FIRST FILE WITH
THE COMMISSIONER A NOTICE OF EXEMPTION TOGETHER
WITH A CONSENT TO SERVICE OF PROCESS AS REQUIRED
BY SUBSECTION (g) OF SECTION 36b-33, AS AMENDED BY
SECTION 14 OF THIS ACT. THE NOTICE OF EXEMPTION
SHALL CONTAIN SUCH INFORMATION AS THE COMMISSIONER
MAY REQUIRE AND SHALL BE ACCOMPANIED BY A
NONREFUNDABLE FEE OF TWO HUNDRED FIFTY DOLLARS.
SUCH NOTICE OF EXEMPTION SHALL BE VALID UNTIL
DECEMBER THIRTY-FIRST OF THE CALENDAR YEAR IN
WHICH IT WAS FIRST FILED AND MAY BE RENEWED
ANNUALLY THEREAFTER UPON SUBMISSION OF SUCH
INFORMATION AS THE COMMISSIONER MAY REQUIRE
TOGETHER WITH A NONREFUNDABLE FEE OF ONE HUNDRED
FIFTY DOLLARS. IF ANY INVESTMENT ADVISER THAT IS
EXEMPTED FROM REGISTRATION PURSUANT TO SUBDIVISION
(1) OR (2) OF THIS SUBSECTION FAILS OR REFUSES TO
PAY ANY FEE REQUIRED BY THIS SUBSECTION, THE
COMMISSIONER MAY REQUIRE SUCH INVESTMENT ADVISER
TO REGISTER PURSUANT TO SUBSECTION (c) OF THIS
SECTION. FOR PURPOSES OF THIS SUBSECTION, A DELAY
IN THE PAYMENT OF A FEE OR AN UNDERPAYMENT OF A
FEE WHICH IS PROMPTLY REMEDIED SHALL NOT
CONSTITUTE A FAILURE OR REFUSAL TO PAY SUCH FEE.
[(e) A registered] (f) ANY broker-dealer or
investment adviser ceasing to transact business at
any office in this state shall, in addition to
providing written notice to the commissioner prior
to the termination of business activity at that
office, (1) provide written notice to each
customer or client serviced by such office at
least ten business days prior to the termination
of business activity at that office or (2)
demonstrate to the commissioner, in writing, the
reasons why such notice to customers or clients
cannot be provided within the time prescribed. If
the commissioner finds that the broker-dealer or
investment adviser cannot provide notice to
customers or clients at least ten business days
prior to the termination of business activity, the
commissioner may exempt the broker-dealer or
investment adviser from giving such notice. The
commissioner shall act upon a request for such
exemption within five business days following his
receipt of the written request for such exemption.
The notice to customers or clients shall contain
the following information: The date and reasons
why business activity will terminate at the
office; if applicable, a description of the
procedure the customer or client may follow to
maintain the customer's account at any other
office of the broker-dealer or investment adviser;
the procedure for transferring the customer's or
client's account to another broker-dealer or
investment adviser; and the procedure for making
delivery to the customer or client of any funds or
securities held by the broker-dealer or investment
adviser.
[(f) A registered] (g) ANY broker-dealer or
investment adviser ceasing to transact business at
any office in this state as a result of executing
an agreement and plan of merger or acquisition
shall provide written notice to the commissioner
and to each customer or client serviced by such
office not later than the date such merger or
acquisition is completed. The notice provided to
each customer or client shall contain the
information specified in subsection [(e)] (f) of
this section.
[(g) A registered] (h) ANY broker-dealer or
investment adviser ceasing to transact business at
any office in this state as a result of the
commencement of a bankruptcy proceeding by such
broker-dealer or investment adviser or by a
creditor or creditors of such broker-dealer or
investment adviser shall immediately upon the
filing of a petition with the bankruptcy court,
provide written notice to the commissioner. The
commissioner shall determine the time and manner
in which notice shall be provided to each customer
or client serviced by such office.
Sec. 4. Section 36b-7 of the general statutes
is repealed and the following is substituted in
lieu thereof:
A broker-dealer, agent, [or] investment
adviser or investment adviser agent may obtain an
initial or renewal registration by filing with the
commissioner or other depository as the
commissioner may by regulation or order designate
an application together with a consent to service
of process pursuant to subsection (g) of section
36b-33, AS AMENDED BY SECTION 14 OF THIS ACT. The
application shall contain such information as the
commissioner may require.
Sec. 5. Section 36b-9 of the general statutes
is repealed and the following is substituted in
lieu thereof:
[Each] THE COMMISSIONER MAY REQUIRE THAT EACH
application for registration of a broker-dealer or
investment adviser [shall] be accompanied by a
true and correct statement of financial condition,
in such form and containing such data as the
commissioner may require. Such statement of
financial condition shall be sworn to, before a
person qualified to administer oaths, by the
applicant, and shall state that the alleged facts
therein contained are true to his own knowledge.
If such applicant is a partnership, such oath
shall be made by a general partner thereof, and,
if such applicant is a corporation or other form
of association, such oath shall be made by an
executive officer thereof. Such statement of
financial condition shall be kept in a
confidential file and shall not be open to the
public.
Sec. 6. Section 36b-13 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Each person registered as a broker-dealer
or investment adviser may renew such registration
for a one-year period not later than December
thirty-first of each calendar year by making
application [on a form] IN SUCH MANNER AS
prescribed by the commissioner. The fee for
renewal of registration for each registered
broker-dealer or investment adviser shall be one
hundred fifty dollars per renewal application,
nonrefundable, payable at the time of renewal, and
shall be submitted, together with the renewal
application, to the commissioner or any person
designated in writing by the commissioner to
collect such fee on his behalf. [Each registered
broker-dealer or registered investment adviser
whose registration expires on June 30, 1983, shall
pay the commissioner a renewal fee of seventy-five
dollars for the period ending December 31, 1983,
and any registration renewal effected after
December 31, 1983, shall be effected in accordance
with this section.]
(b) Each person registered as an agent or
investment adviser agent may renew such
registration for a one-year period by December
thirty-first of each calendar year by making
application [on a form] IN SUCH MANNER AS
prescribed by the commissioner. The fee for
renewal of registration for each person registered
as an agent or investment adviser agent shall be
[forty] FIFTY dollars, nonrefundable, payable at
the time of renewal, and shall be submitted,
together with the renewal application, to the
commissioner or any person designated in writing
by the commissioner to collect such fee on his
behalf. [Each registered agent or registered
investment adviser agent whose registration
expires on June 30, 1983, shall pay the
commissioner a renewal fee of fifteen dollars for
the period ending December 31, 1983, and any
renewal registration effected after December 31,
1983, shall be effected in accordance with this
section.]
(c) Each registrant or person requesting
renewal of a registration shall pay the actual
cost, as determined by the commissioner, of any
reasonable investigation or examination made of
such person by or on behalf of the commissioner.
Sec. 7. Subsection (a) of section 36b-14 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(a) Every registered broker-dealer and
investment adviser shall make and keep such
accounts, correspondence, memoranda, papers, books
and other records as the commissioner by
regulation prescribes. All records so required
shall be preserved for [three years unless] SUCH
PERIOD AS the commissioner by regulation
prescribes. [otherwise for particular types of
records.] Such records may be stored on microfilm,
microfiche or on an electronic data processing
system or similar system utilizing an internal
memory device provided that a printed copy of any
such record is immediately accessible.
Sec. 8. Section 36b-16 of the general
statutes is repealed and the following is
substituted in lieu thereof:
No person shall offer or sell any security in
this state unless (1) it is registered under
sections 36b-2 to 36b-33, inclusive, [or] AS
AMENDED BY THIS ACT, (2) the security or
transaction is exempted under section 36b-21, AS
AMENDED BY SECTION 11 OF THIS ACT, OR (3) THE
SECURITY IS A COVERED SECURITY PROVIDED SUCH
PERSON COMPLIES WITH ANY APPLICABLE REQUIREMENTS
IN SUBSECTIONS (c), (d) AND (e) OF SECTION 36b-21,
AS AMENDED BY SECTION 11 OF THIS ACT.
Sec. 9. Section 36b-19 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) A registration statement may be filed by
the issuer, any other person on whose behalf the
offering is to be made or a registered
broker-dealer.
(b) Every person [filing a registration
statement relating to either a security issued by
a face-amount certificate company or a redeemable
security issued by an open-end management company
or unit investment trust, as those terms are
defined in the Investment Company Act of 1940,
shall pay a nonrefundable filing fee of five
hundred dollars for registration by coordination
and qualification. All other persons] filing a
registration statement for registration by
coordination and qualification shall pay a
nonrefundable filing fee of one-tenth of one per
cent of the maximum aggregate offering price of
securities to be offered in this state, such fee
not to exceed fifteen hundred dollars nor to be
less than three hundred dollars.
(c) Every registration statement shall
specify (1) the amount of securities to be
offered; (2) the states in which a registration
statement or similar document in connection with
the offering has been or is to be filed; (3) the
name of any broker-dealer or agent of issuer
registered to do business under sections 36b-2 to
36b-33, inclusive, AS AMENDED BY THIS ACT, who may
offer the securities in this state; and (4) any
adverse order, judgment, or decree entered in
connection with the offering by the regulatory
authorities in each state or by any court or the
Securities and Exchange Commission.
(d) Any document filed under sections 36b-2
to 36b-33, inclusive, AS AMENDED BY THIS ACT, or a
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 document is
currently accurate.
(e) The commissioner may by regulation or
otherwise permit the omission of any item of
information or document from any registration
statement.
(f) In the case of a nonissuer distribution,
information may not be required under section
36b-18 or subsection (j) of this section unless it
is known to the person filing the registration
statement or to the persons on whose behalf the
distribution is to be made, or can be furnished by
them without unreasonable effort or expense.
(g) The commissioner may by regulation or
order require as a condition of registration by
qualification or coordination (1) that any
security issued within the past three years or to
be issued to a promoter for a consideration
substantially different from the public offering
price, or to any person for a consideration other
than cash, be deposited in escrow; and (2) 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 commissioner may by regulation or order
determine the conditions of any escrow or
impounding required hereunder, but he may not
reject a depository solely because of location in
another state.
(h) The commissioner may by regulation or
order require as a condition of registration that
any security registered by qualification or
coordination be sold only on a specified form of
subscription or sale contract and that a signed or
conformed copy of each contract be filed with the
commissioner or preserved for any period up to
three years specified in the regulation or order.
(i) Every registration statement is effective
for one year from its effective date, except
during the time a stop order is in effect under
section 36b-20, AS AMENDED BY SECTION 10 OF THIS
ACT. All outstanding securities of the same class
as a registered security are considered to be
registered for the purpose of any nonissuer
transaction (1) so long as the registration
statement is effective and (2) between the
thirtieth day after the entry of any stop order
suspending or revoking the effectiveness of the
registration statement under section 36b-20, AS
AMENDED BY SECTION 10 OF THIS ACT, if the
registration statement did not relate in whole or
in part to a nonissuer distribution and one year
from the effective date of the registration
statement. A registration statement may not be
withdrawn for one year from its effective date if
any securities of the same class are outstanding;
provided, if within such one-year period the
security or transaction covered by such
registration statement becomes eligible for an
exemption from registration, the registration
statement shall be terminated if the commissioner
is notified in writing within such one-year period
of the exempt status of the security or
transaction. A registration statement may be
withdrawn otherwise only in the discretion of the
commissioner.
(j) So long as a registration statement is
effective, the commissioner may by regulation or
order require the person who filed the
registration statement to file reports not more
often than quarterly, to keep reasonably current
the information contained in the registration
statement and to disclose the progress of the
offering.
[(k) A registration statement relating to a
security issued by a face-amount certificate
company or unit investment trust, as those terms
are defined in the federal Investment Company Act
of 1940, shall continue in force and effect for a
period of one year from the date of effectiveness,
without limitation as to number of shares or
aggregate amount. A registration statement
relating to a redeemable security issued by an
open-end management company, as that term is
defined in the federal Investment Company Act of
1940, shall continue in force and effect for a
period of two months following the end of the
applicant's current fiscal year, without
limitation as to the number of shares or aggregate
amount. A registration statement relating to a
security issued by a unit investment trust or
face-amount certificate company may be renewed by
the applicant by filing with the commissioner not
earlier than thirty days nor later than five days
prior to the date upon which such registration or
renewal registration would expire, a nonrefundable
renewal fee of five hundred dollars. Such a
renewal becomes effective when the commissioner so
orders. A registration statement relating to a
security issued by an open-end management company
may be renewed by the applicant by filing with the
commissioner, not later than two months following
the end of the applicant's fiscal year, a
nonrefundable renewal fee of five hundred dollars.
Such a renewal becomes effective when the
commissioner so orders.]
[(l)] (k) When any securities have been sold
without compliance with the provisions of section
36b-16, AS AMENDED BY SECTION 8 OF THIS ACT, any
person may apply in writing on forms designated by
the commissioner for the registration by
qualification of such securities. If the
commissioner finds as the result of an
investigation that no person has been defrauded,
prejudiced or damaged by the prior failure to
effect a registration, the commissioner may permit
such securities to be registered upon the payment
of fifty dollars plus the fees prescribed in this
section. Such registration by qualification under
this subsection shall not relieve anyone who has
violated any provision of sections 36b-2 to
36b-33, inclusive, AS AMENDED BY THIS ACT, from
prosecution hereunder.
Sec. 10. Subsection (a) of section 36b-20 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(a) The commissioner may issue a stop order
denying effectiveness to, or suspending or
revoking the effectiveness of, any registration
statement if he finds (1) that the order is in the
public interest and (2) that: (A) The registration
statement as of its effective date or as of any
earlier date in the case of an order denying
effectiveness, [or any renewal registration under
subsection (k) of section 36b-19, as of its
effective date,] or any report under subsection
(j) of section 36b-19, AS AMENDED BY SECTION 9 OF
THIS ACT, is incomplete in any material respect or
contains any statement which was, in the light of
the circumstances under which it was made, false
or misleading with respect to any material fact;
(B) any provision of sections 36b-2 to 36b-33,
inclusive, AS AMENDED BY THIS ACT, or any
regulation, order or condition lawfully imposed
under said sections has been wilfully violated, in
connection with the offering, by (i) the person
filing the registration statement, (ii) the
issuer, any partner, officer or director of the
issuer, any person occupying a similar status or
performing similar functions, or any person
directly or indirectly controlling or controlled
by the issuer, provided the person filing the
registration statement is directly or indirectly
controlled by or acting for the issuer, or (iii)
any underwriter; (C) the security registered or
sought to be registered is the subject of an
administrative stop order or similar order or a
permanent or temporary injunction of any court of
competent jurisdiction entered under any other
federal or state act applicable to the offering;
except the commissioner (i) may not institute a
proceeding against an effective registration
statement under this subparagraph more than one
year from the date of the order or injunction
relied on, and (ii) may not enter an order under
this subparagraph on the basis of an order or
injunction entered under any other state act
unless that order or injunction was based on facts
which would currently constitute a ground for a
stop order under this section; (D) the issuer's
enterprise or method of business includes or would
include activities which are illegal where
performed; (E) the offering has worked or tended
to work a fraud upon purchasers or would so
operate; (F) the offering has been or would be
made with unreasonable amounts of underwriters'
and sellers' discounts, commissions or other
compensation, or promoters' profits or
participation, or unreasonable amounts or kinds of
options; (G) when a security is sought to be
registered by coordination, there has been a
failure to comply with the undertaking required by
subdivision (4) of subsection (b) of section
36b-17; (H) the applicant or registrant has failed
to pay the proper filing fee; but the commissioner
may enter only a denial order under this clause
and he shall vacate any such order when the
deficiency has been corrected; or (I) the issuer
is a blank check company. The commissioner may not
institute a stop order proceeding against an
effective registration statement on the basis of a
fact or transaction known to him when the
registration statement became effective unless the
proceeding is instituted within one hundred eighty
days of the effective date of such registration
statement.
Sec. 11. Section 36b-21 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) The following securities are exempted
from sections 36b-16, AS AMENDED BY SECTION 8 OF
THIS ACT, and 36b-22, AS AMENDED BY SECTION 12 OF
THIS ACT: (1) Any security including a revenue
obligation issued or guaranteed by the United
States, any state, any political subdivision of a
state, or any agency or corporate or other
instrumentality of one or more of the foregoing;
or any certificate of deposit for any of the
foregoing; (2) any security issued or guaranteed
by Canada, any Canadian province, any political
subdivision of any such province, any agency or
corporate or other instrumentality of one or more
of the foregoing, or any other foreign government
with which the United States currently maintains
diplomatic relations, if the security is
recognized as a valid obligation by the issuer or
guarantor; (3) any security issued by and
representing an interest in or a debt of, or
guaranteed by, any bank organized under the laws
of the United States, or any bank, savings
institution or trust company organized and
supervised under the laws of any state; (4) any
security issued by and representing an interest in
or a debt of, or guaranteed by, any federal
savings and loan association, or any savings and
loan or similar association organized under the
laws of any state; (5) any security issued by and
representing an interest in or a debt of, or
guaranteed by, any insurance company organized
under the laws of any state and authorized to do
business in this state; (6) any security issued or
guaranteed by any federal credit union or any
credit union, industrial loan association or
similar association organized and supervised under
the laws of this state; (7) any security issued or
guaranteed by any railroad, other common carrier,
public utility or holding company which is (A)
subject to the jurisdiction of the Interstate
Commerce Commission or its successor agency; (B) a
registered holding company under the Public
Utility Holding Company Act of 1935 or a
subsidiary of such a company within the meaning of
that act; (C) regulated in respect of its rates
and charges by a governmental authority of the
United States or any state; or (D) regulated in
respect of the issuance or guarantee of the
security by a governmental authority of the United
States, any state, Canada or any Canadian
province; (8) ANY WARRANT OR RIGHT TO PURCHASE OR
SUBSCRIBE TO any security listed or approved for
listing upon notice of issuance on (A) the New
York Stock Exchange, the American Stock Exchange,
the Chicago Board Options Exchange and such other
securities exchanges as may be designated by the
commissioner from time to time, [any security
appearing on] (B) the list of over-the-counter
securities approved for margin by the Board of
Governors of the Federal Reserve System, [or any
security designated or approved for designation
upon notice of issuance as a national market
system security on] OR (C) THE NATIONAL MARKET
SYSTEM OF the National Association of Securities
Dealers Automated Quotation System established
pursuant to the Securities Exchange Act of 1934;
[if, in each case, quotations have been available
and public trading has taken place for such class
of security prior to the offer or sale of that
security in reliance upon this exemption; any
other security of the same issuer which is of
senior or substantially equal rank; any security
called for by subscription rights or warrants so
listed, approved or designated; or any warrant or
right to purchase or subscribe to any of the
foregoing;] (9) any security issued by any person
organized and operated not for private profit but
exclusively for religious, educational,
benevolent, charitable, fraternal, social,
athletic or reformatory purposes, or as a Chamber
of Commerce or trade or professional association;
(10) any commercial paper which arises out of a
current transaction or the proceeds of which have
been or are to be used for current transactions,
and which evidences an obligation to pay cash
within nine months of the date of issuance,
exclusive of days of grace, or any renewal of such
paper which is likewise limited, or any guarantee
of such paper or of any such renewal; (11) any
security issued in connection with an employees'
stock purchase, stock option, savings, pension,
profit-sharing or similar benefit plan; (12) any
security issued by any cooperative apartment
corporation incorporated under the laws of this
state, located in and operating wholly within the
borders of this state, in conjunction with the
execution of proprietary leases; (13) any security
issued by any person, organized and located in
this state and operating exclusively for the
purpose of promoting the industrial or commercial
development of this state, or such development of
any political subdivision thereof or such
development of any regional planning area within
this state, if such persons are approved by the
Commissioner of Economic and Community Development
and such approval has been certified, in writing,
by said Commissioner of Economic and Community
Development to the commissioner; such approval and
certification shall be conclusive as to the nature
and purpose of such person; (14) any security
issued by the Connecticut Development Credit
Corporation; (15) any security issued by any
nonstock corporation, which is incorporated under
the laws of this state as a cooperative marketing
corporation and has its principal place of
business in this state, and which is a farmers'
cooperative organization as defined in Section 521
of the Internal Revenue Code of 1986, or any
subsequent corresponding internal revenue code of
the United States, as from time to time amended,
if such corporation has been certified in writing
by the Connecticut Department of Agriculture to
the commissioner to be a bona fide cooperative
marketing corporation; such certification shall be
conclusive as to the nature and purpose of such
corporation; (16) any security issued by all
cooperative associations organized or existing
under chapter 595; (17) any security issued by any
person organized, located and operating within or
from the borders of this state, when selling or
offering for sale an interest in real estate
limited partnerships or real estate syndications
exclusively, if such person has obtained a permit
from the Real Estate Commission; (18) any security
which, prior to or within sixty days after October
1, 1977, has been sold or disposed of by the
issuer or bona fide offered to the public, but
this exemption shall not apply to any new offer of
any such security by an issuer or underwriter
subsequent to such sixty days; (19) any interest
or participation in any common trust fund or
similar fund established and maintained by a bank,
or by one or more banks under common control as
otherwise authorized by general statute,
exclusively for the collective investment and
reinvestment of assets contributed thereto by such
bank in its fiduciary capacity; (20) any security
issued by a worker cooperative corporation formed
under the provisions of sections 33-418f to
33-418o, inclusive; (21) any other security that
the commissioner may exempt, conditionally or
unconditionally, on a finding that registration is
not necessary or appropriate in the public
interest or for the protection of investors.
(b) The following transactions are exempted
from sections 36b-16, AS AMENDED BY SECTION 8 OF
THIS ACT, and 36b-22, AS AMENDED BY SECTION 12 OF
THIS ACT: (1) Any isolated nonissuer transaction,
whether effected through a broker-dealer or not;
(2) any nonissuer distribution of an outstanding
security if (A) a recognized securities manual
contains the names of the issuer's officers and
directors, a balance sheet of the issuer as of a
date within eighteen months, and a profit and loss
statement for either the fiscal year preceding
that date or the most recent year of operations,
except that the exemption shall not be available
for any distribution of securities issued by a
blank check company, shell company, dormant
company or any issuer that has been merged or
consolidated with or has bought out a blank check
company, shell company or dormant company unless
the issuer or any predecessor has continuously
operated its business for at least the preceding
five years and has had gross operating revenue in
each of the preceding five years, including gross
operating revenue of at least five hundred
thousand dollars per year in three of the
preceding five years or (B) the security has a
fixed maturity or a fixed interest or dividend
provision and there has been no default during the
current fiscal year or within the three preceding
fiscal years, or during the existence of the
issuer and any predecessors if less than three
years, in the payment of principal, interest or
dividends on the security; (3) any nonissuer
transaction effected by or through a registered
broker-dealer pursuant to an unsolicited order or
offer to buy; but the commissioner may by
regulation require that the customer acknowledge
upon a specified form that the sale was
unsolicited, and that a signed copy of each such
form be preserved by the broker-dealer for a
specified period or that the confirmation
delivered to the purchaser or a memorandum
delivered in connection therewith shall confirm
that such purchase was unsolicited by the
broker-dealer or any agent of the broker-dealer;
(4) any transaction between the issuer or other
person on whose behalf the offering is made and an
underwriter, or among underwriters; (5) any
transaction in a bond or other evidence of
indebtedness secured by a real or chattel mortgage
or deed of trust or by an agreement for the sale
of real estate or chattels, if the entire
mortgage, deed of trust or agreement, together
with all the bonds or other evidences of
indebtedness secured thereby, is offered and sold
as a unit; (6) any transaction by an executor,
administrator, sheriff, marshal, receiver, trustee
in bankruptcy, creditors' committee in a
proceeding under the Bankruptcy Act, guardian or
conservator; (7) any transaction executed by a
bona fide pledgee without any purpose of evading
sections 36b-2 to 36b-33, inclusive, AS AMENDED BY
THIS ACT; (8) any offer or sale to a [state] bank
and trust company, a national banking association,
a savings bank, a savings and loan association, a
federal savings and loan association, a credit
union, a federal credit union, trust company,
insurance company, investment company as defined
in the Investment Company Act of 1940, [as
amended,] pension or profit-sharing trust, or
other financial institution or institutional
buyer, or to a broker-dealer, whether the
purchaser is acting for itself or in some
fiduciary capacity; (9) (A) subject to the
provisions of this subdivision, any transaction
not involving a public offering within the meaning
of Section 4(2) of the Securities Act of 1933, [as
amended, and] BUT NOT INCLUDING ANY TRANSACTION
SPECIFIED IN the rules and regulations thereunder;
(B) subject to the provisions of this subdivision,
any transaction made in accordance with the
uniform exemption from registration for small
issuers authorized in Section 19(c)(3)(C) of the
Securities Act of 1933. [, as amended.] (C) The
exemptions set forth in subdivisions (9)(A) and
(9)(B) of this subsection shall not be available
for transactions in securities issued by any blank
check company, shell company or dormant company.
(D) The exemptions set forth in subdivisions
(9)(A) and (9)(B) of this subsection may, with
respect to any security or transaction or any type
of security or transaction, be modified,
withdrawn, further conditioned or waived as to
conditions, in whole or in part, conditionally or
unconditionally, by the commissioner, acting by
regulation, rule or order, on a finding that such
regulation, rule or order is necessary or
appropriate in the public interest or for the
protection of investors. (E) A fee of one hundred
fifty dollars shall accompany any filing made with
the commissioner pursuant to this subdivision;
(10) any offer or sale of a preorganization
certificate or subscription if (A) no commission
or other remuneration is paid or given directly or
indirectly for soliciting any prospective
subscriber, (B) the number of subscribers does not
exceed ten, and (C) no payment is made by any
subscriber; (11) any transaction pursuant to an
offer to existing security holders of the issuer,
including persons who at the time of the
transaction are holders of convertible securities,
nontransferable warrants or transferable warrants
exercisable within not more than ninety days of
their issuance, if (A) no commission or other
remuneration other than a standby commission is
paid or given directly or indirectly for
soliciting any security holder in this state, or
(B) the issuer first files a notice, in such form
and containing such information as the
commissioner may by regulation prescribe,
specifying the terms of the offer and the
commissioner does not by order disallow the
exemption within the next ten full business days;
(12) any offer, but not a sale, of a security for
which registration statements have been filed
under both sections 36b-2 to 36b-33, inclusive, AS
AMENDED BY THIS ACT, and the Securities Act of
1933, [as amended,] if no stop order or refusal
order is in effect and no public proceeding or
examination looking toward such an order is
pending under either said sections or the
Securities Act of 1933; [, as amended;] (13) any
transaction exempt under [Section 4(1), Section
4(4) or] Section 4(6) of the [federal] Securities
Act of 1933, [as amended,] and the rules and
regulations thereunder. [With respect to
transactions exempt under Section 4(6) of the
federal Securities Act of 1933, as amended, the]
THE issuer shall, prior to the first sale, file
with the commissioner a notice, in such form and
containing such information as the commissioner
may by regulation, rule or order prescribe. A fee
of one hundred fifty dollars shall accompany any
such filing made pursuant to this subdivision;
(14) any transaction if all the following
conditions are satisfied: (A) The offer and sale
is effectuated by the issuer of the security; (B)
the total number of purchasers of all securities
of the issuer does not exceed ten. A subsequent
sale of securities THAT (i) IS registered under
sections 36b-2 to 36b-33, inclusive, [or] AS
AMENDED BY THIS ACT, (ii) IS sold pursuant to an
exemption under said sections other than this
subdivision, OR (iii) INVOLVES COVERED SECURITIES,
shall not be integrated with a sale pursuant to
this exemption in computing the number of
purchasers hereunder. For the purpose of this
subdivision, each of the following is deemed to be
a single purchaser of a security: A husband and
wife, a child and his parent or guardian when the
parent or guardian holds the security for the
benefit of the child, a corporation, a
partnership, an association or other
unincorporated entity, a joint stock company or a
trust, but only if the corporation, partnership,
association, unincorporated entity, joint stock
company or trust was not formed for the purpose of
purchasing the security; (C) no advertisement,
article, notice or other communication published
in any newspaper, magazine or similar medium, or
broadcast over television or radio, or any other
general solicitation is used in connection with
the sale; and (D) no commission, discount or other
remuneration is paid or given directly or
indirectly in connection with the offer and sale,
and the total expenses, excluding legal and
accounting fees, in connection with the offer and
sale do not exceed one per cent of the total sales
price of the securities. For purposes of this
subdivision, a difference in the purchase price
among the purchasers shall not, in and of itself,
be deemed to constitute indirect remuneration;
(15) any other transaction that the commissioner
may exempt, conditionally or unconditionally, on a
finding that registration is not necessary or
appropriate in the public interest or for the
protection of investors.
(c) (1) ANY PERSON WHO OFFERS OR SELLS A
SECURITY THAT IS A COVERED SECURITY UNDER SECTION
18(b)(2) OF THE SECURITIES ACT OF 1933 SHALL FILE
WITH THE COMMISSIONER A NOTICE FOR EACH SERIES OR
PORTFOLIO PRIOR TO THE INITIAL OFFER OF SUCH
SECURITY IN THIS STATE. THE NOTICE SHALL CONTAIN
SUCH INFORMATION AS THE COMMISSIONER MAY REQUIRE
AND SHALL BE ACCOMPANIED BY A CONSENT TO SERVICE
OF PROCESS AS REQUIRED BY SUBSECTION (g) OF
SECTION 36b-33, AS AMENDED BY SECTION 14 OF THIS
ACT, AND A NONREFUNDABLE FEE OF FIVE HUNDRED
DOLLARS; (2) ANY NOTICE FILED PURSUANT TO THIS
SUBSECTION RELATING TO A SECURITY ISSUED BY A
FACE-AMOUNT CERTIFICATE COMPANY OR UNIT INVESTMENT
TRUST, AS SUCH TERMS ARE DEFINED IN THE INVESTMENT
COMPANY ACT OF 1940, SHALL BE VALID FOR A PERIOD
OF ONE YEAR FROM THE DATE THAT SUCH SECURITY IS
DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE
COMMISSION, WITHOUT LIMITATION AS TO THE NUMBER OF
SHARES OR AGGREGATE AMOUNT. SUCH NOTICE MAY BE
RENEWED ANNUALLY THEREAFTER UPON SUBMISSION OF
SUCH INFORMATION AS THE COMMISSIONER MAY REQUIRE,
NOT EARLIER THAN THIRTY DAYS NOR LATER THAN FIVE
DAYS PRIOR TO THE DATE UPON WHICH SUCH PREVIOUSLY
FILED NOTICE IS DUE TO EXPIRE, TOGETHER WITH A
NONREFUNDABLE FEE OF FIVE HUNDRED DOLLARS; (3) ANY
NOTICE FILED PURSUANT TO THIS SUBSECTION RELATING
TO A REDEEMABLE SECURITY ISSUED BY AN OPEN-END
MANAGEMENT COMPANY, AS DEFINED IN THE INVESTMENT
COMPANY ACT OF 1940, SHALL BE VALID UNTIL DECEMBER
THIRTY-FIRST OF THE CALENDAR YEAR IN WHICH IT WAS
FIRST FILED, WITHOUT LIMITATION AS TO THE NUMBER
OF SHARES OR AGGREGATE AMOUNT. SUCH NOTICE MAY BE
RENEWED ANNUALLY THEREAFTER UPON SUBMISSION OF
SUCH INFORMATION AS THE COMMISSIONER MAY REQUIRE
TOGETHER WITH A NONREFUNDABLE FEE OF FIVE HUNDRED
DOLLARS.
(d) ANY PERSON WHO OFFERS OR SELLS A SECURITY
THAT IS A COVERED SECURITY UNDER SECTION 18(b)(3)
OF THE SECURITIES ACT OF 1933 SHALL FILE A CONSENT
TO SERVICE OF PROCESS WITH THE COMMISSIONER AS
REQUIRED BY SUBSECTION (g) OF SECTION 36b-33, AS
AMENDED BY SECTION 14 OF THIS ACT, PRIOR TO THE
FIRST OFFER OR SALE OF SUCH SECURITY IN THIS
STATE.
(e) ANY PERSON WHO OFFERS OR SELLS A SECURITY
THAT IS A COVERED SECURITY UNDER SECTION
18(b)(4)(D) OF THE SECURITIES ACT OF 1933 SHALL
FILE A NOTICE WITH THE COMMISSIONER WITHIN FIFTEEN
DAYS AFTER THE FIRST SALE OF SUCH A SECURITY IN
THIS STATE. SUCH NOTICE SHALL CONTAIN SUCH
INFORMATION AS THE COMMISSIONER MAY REQUIRE AND
SHALL BE ACCOMPANIED BY A CONSENT TO SERVICE OF
PROCESS AS REQUIRED BY SUBSECTION (g) OF SECTION
36b-33, AS AMENDED BY SECTION 14 OF THIS ACT, AND
A NONREFUNDABLE FEE OF ONE HUNDRED FIFTY DOLLARS.
[(c)] (f) The commissioner may by order (1)
deny or revoke any exemption specified in
subdivision (9) or (11) of subsection (a) or in
subsection (b) of this section with respect to a
specific security or transaction, (2) SUSPEND THE
OFFER OR SALE OF A COVERED SECURITY IN THIS STATE
IF ANY PERSON WHO OFFERS A COVERED SECURITY FAILS
TO COMPLY WITH ANY OF THE REQUIREMENTS SET FORTH
IN SUBSECTIONS (c), (d) OR (e) OF THIS SECTION, OR
(3) REQUIRE ANY PERSON WHO OFFERS A COVERED
SECURITY IN THIS STATE AND REFUSES TO PAY ANY FEE
REQUIRED BY SUBSECTIONS (c) OR (e) OF THIS SECTION
TO REGISTER SUCH SECURITY PURSUANT TO SECTION
36b-16, AS AMENDED BY SECTION 8 OF THIS ACT. FOR
PURPOSES OF THIS SUBSECTION, A DELAY IN THE
PAYMENT OF A FEE OR UNDERPAYMENT OF A FEE THAT IS
PROMPTLY REMEDIED SHALL NOT CONSTITUTE A REFUSAL
TO PAY SUCH FEE. No such order may be entered
without appropriate prior notice to all interested
parties, opportunity for hearing and written
findings of fact and conclusions of law, except
that the commissioner may by order summarily deny
or revoke any of the specified exemptions OR
SUMMARILY SUSPEND THE OFFER OR SALE OF ANY COVERED
SECURITY SUBJECT TO ANY OF THE REQUIREMENTS SET
FORTH IN SUBSECTIONS (c), (d) OR (e) OF THIS
SECTION pending final determination of any
proceeding under this subsection. Upon the entry
of a summary order, the commissioner shall
promptly notify all interested parties that it has
been entered and of the reasons therefor and that
within fifteen days of the receipt of a written
request the matter will be set down for hearing.
If no hearing is requested and none is ordered by
the commissioner, the order will remain in effect
until it is modified or vacated by the
commissioner. If a hearing is requested or
ordered, 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 order under this
subsection may operate retroactively. No person
may be considered to have violated sections
36b-16, AS AMENDED BY SECTION 8 OF THIS ACT, and
36b-22, AS AMENDED BY SECTION 12 OF THIS ACT, by
reason of any offer or sale effected after the
entry of an order under this subsection if he
sustains the burden of proof that he did not know,
and in the exercise of reasonable care could not
have known, of the order.
[(d)] (g) In any proceeding under sections
36b-2 to 36b-33, inclusive, AS AMENDED BY THIS
ACT, the burden of proving an exemption or an
exception from a definition is upon the person
claiming it.
Sec. 12. Section 36b-22 of the general
statutes is repealed and the following is
substituted in lieu thereof:
The commissioner may by regulation or order
require the filing of any prospectus, pamphlet,
circular, form letter, advertisement or other
sales literature or advertising communication
addressed or intended for distribution to
prospective investors, including clients or
prospective clients of an investment adviser
unless the security or transaction is (1) exempted
by subsection (a) or (b) of section 36b-21, AS
AMENDED BY SECTION 11 OF THIS ACT, except for
transactions exempted by subdivision (12) of
subsection (b) of said section, OR (2) A COVERED
SECURITY.
Sec. 13. Section 36b-27 of the general
statutes is repealed and the following is
substituted in lieu thereof:
(a) Whenever it appears to the commissioner
after an investigation that any person or persons
HAVE VIOLATED, are violating or are about to
violate any of the provisions of sections 36b-2 to
36b-33, inclusive, AS AMENDED BY THIS ACT, or any
regulation, rule or order adopted or issued under
said sections, or that the further sale or offer
to sell securities would constitute a violation of
said sections or any such regulation, rule or
order, the commissioner may in his discretion
order the person or persons to cease and desist
from the violations of the provisions of said
sections or of the regulations, rules or orders
thereunder or from the further sale or offer to
sell securities constituting or which would
constitute a violation of the provisions of said
sections or of the regulations, rules or orders
thereunder. After such an order is issued, the
person or persons named therein may, within
fourteen days after receipt of the order, file a
written request for a hearing. Said hearing shall
be held in accordance with the provisions of
chapter 54.
(b) Whenever it appears to the commissioner,
after an investigation, that any person or persons
have violated any of the provisions of sections
36b-2 to 36b-33, inclusive, AS AMENDED BY THIS
ACT, or any regulation, rule or order adopted or
issued under said sections, or that the further
sale or offer to sell securities would constitute
a violation of said sections or any such
regulation, rule or order, the commissioner may,
in addition to any other remedy under this
section, (1) order the person or persons to make
restitution of any sums shown to have been
obtained in violation of any of the provisions of
said sections or any such regulation, rule or
order plus interest at the rate set forth in
section 37-3a or (2) order the person or persons
to provide disgorgement of any sums shown to have
been obtained in violation of any of the
provisions of said sections or any such
regulation, rule or order. After such an order is
issued, the person or persons named therein may,
within fourteen days after receipt of the order,
file a written request for a hearing. Said hearing
shall be held in accordance with the provisions of
chapter 54.
(c) The commissioner, in the commissioner's
discretion, may order any person who directly or
indirectly controls a person liable under
subsection (b) of this section to make restitution
or to provide disgorgement of any sums shown to
have been obtained in violation of any of the
provisions of sections 36b-2 to 36b-33, inclusive,
AS AMENDED BY THIS ACT, unless such controlling
person allegedly liable under this subsection
sustains the burden of proof that such person did
not know, and in the exercise of reasonable care
could not have known, of the existence of facts by
reason of which the liability is alleged to exist.
After such an order is issued, the person or
persons named therein may, within fourteen days
after receipt of the order, file a written request
for a hearing. Said hearing shall be held in
accordance with the provisions of chapter 54.
There shall be contribution as in cases of
contract among the several people so liable under
this subsection.
(d) (1) Whenever the commissioner finds as
the result of an investigation that any person or
persons have violated any of the provisions of
sections 36b-2 to 36b-33, inclusive, AS AMENDED BY
THIS ACT, or any regulation, rule or order adopted
or issued under said sections, the commissioner
may send a notice to such person or persons by
[certified] REGISTERED mail, return receipt
requested. Any such notice shall include: (A) A
reference to the title, chapter, regulation, rule
or order alleged to have been violated; (B) a
short and plain statement of the matter asserted
or charged; (C) the maximum fine that may be
imposed for such violation; and (D) the time and
place for the hearing. Such hearing shall be fixed
for a date not earlier than fourteen days after
the notice is mailed.
(2) The commissioner shall hold a hearing
upon the charges made unless such person or
persons fail to appear at the hearing. Said
hearing shall be held in accordance with the
provisions of chapter 54. After the hearing if the
commissioner finds that the person or persons have
violated any of the provisions of sections 36b-2
to 36b-33, inclusive, AS AMENDED BY THIS ACT, or
any regulation, rule or order adopted or issued
under said sections, the commissioner may, in his
discretion and in addition to any other remedy
authorized by said sections, order that a civil
penalty not exceeding ten thousand dollars per
violation be imposed upon such person or persons.
If such person or persons fail to appear at the
hearing, the commissioner may, as the facts
require, order that a civil penalty not exceeding
ten thousand dollars per violation be imposed upon
such person or persons. The commissioner shall
send a copy of any order issued pursuant to this
subsection by [certified] REGISTERED mail, return
receipt requested, to any person or persons named
in such order.
(e) Whenever it appears to the commissioner
that any person or persons have violated, are
violating or are about to violate any of the
provisions of sections 36b-2 to 36b-33, inclusive,
AS AMENDED BY THIS ACT, or any regulation, rule or
order adopted or issued under said sections, or
that the further sale or offer to sell securities
would constitute a violation of said sections or
any such regulation, rule or order, the
commissioner may, in his discretion and in
addition to any other remedy authorized by this
section: (1) Bring an action in the superior court
for the judicial district of Hartford-New Britain*
to enjoin the acts or practices and to enforce
compliance with sections 36b-2 to 36b-33,
inclusive, AS AMENDED BY THIS ACT, or any such
regulation, rule or order. Upon a proper showing a
permanent or temporary injunction, restraining
order or writ of mandamus shall be granted and a
receiver or conservator may be appointed for the
defendant or the defendant's assets. The court
shall not require the commissioner to post a bond;
(2) seek a court order imposing a fine not to
exceed ten thousand dollars per violation against
any person found to have violated any order issued
by the commissioner; or (3) apply to the superior
court for the judicial district of Hartford-New
Britain* for an order of restitution whereby the
defendants in such action shall be ordered to make
restitution of those sums shown by the
commissioner to have been obtained by them in
violation of any of the provisions of sections
36b-2 to 36b-33, inclusive, AS AMENDED BY THIS
ACT, plus interest at the rate set forth in
section 37-3a. Such restitution shall, at the
option of the court, be payable to the receiver or
conservator appointed pursuant to this subsection,
or directly to the persons whose assets were
obtained in violation of any provision of sections
36b-2 to 36b-33, inclusive, AS AMENDED BY THIS
ACT.
(f) Any time after the issuance of an order
provided for in subsection (a), (b) or (c) of this
section, the commissioner may accept an agreement
by any person charged with violating any provision
of sections 36b-2 to 36b-33, inclusive, AS AMENDED
BY THIS ACT, to enter into a written consent order
in lieu of an adjudicative hearing. The acceptance
of a consent order shall be within the complete
discretion of the commissioner. The consent order
provided for in this subsection shall contain (1)
an express waiver of the right to seek judicial
review or otherwise challenge or contest the
validity of the order; (2) a provision that the
order may be used in construing the terms of the
consent order; (3) a statement that the consent
order shall become final when issued; (4) a
specific assurance that none of the violations
alleged in the order shall occur in the future;
(5) such other terms and conditions as are
necessary to further the purposes and policies of
sections 36b-2 to 36b-33, inclusive, AS AMENDED BY
THIS ACT; (6) the signature of each of the
individual respondents evidencing his consent; and
(7) the signature of the commissioner or of his
authorized representative.
Sec. 14. Subsection (g) of section 36b-33 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(g) Every applicant for registration under
sections 36b-2 to 36b-33, inclusive, AS AMENDED BY
THIS ACT, EVERY INVESTMENT ADVISER EXEMPT UNDER
SUBSECTION (e) OF SECTION 36b-6, AS AMENDED BY
SECTION 3 OF THIS ACT, and every issuer, other
than the United States, any state, Canada, [or]
any other foreign government with which the United
States currently maintains diplomatic relations,
OR ANY ISSUER OF COVERED SECURITIES UNDER SECTION
18(b)(1) OF THE SECURITIES ACT OF 1933, which
proposes to offer a security in this state through
any person acting on an agency basis in the
common-law sense shall file with the commissioner,
in such form as he by regulation 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 36b-2 to 36b-33,
inclusive, AS AMENDED BY THIS ACT, or any
regulation or order thereunder after the consent
has been filed, with the same force and validity
as if served personally on the person filing the
consent. A person who has filed such a consent in
connection with a previous registration need not
file another. 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.
Sec. 15. This act shall take effect July 1,
1997.
Approved June 27, 1997