House Bill No. 5281
               House Bill No. 5281

              PUBLIC ACT NO. 98-162


AN   ACT   CONCERNING   THE   CONNECTICUT  UNIFORM
SECURITIES ACT.


    Be it enacted  by  the  Senate  and  House  of
Representatives in General Assembly convened:
    Section 1. Subdivision  (10)  of section 36b-3
of the general  statutes,  as amended by section 1
of  public  act   97-220,   is  repealed  and  the
following is substituted in lieu thereof:
    (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) AN INVESTMENT ADVISER AGENT; (B) 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)]  (C)  a lawyer,
accountant, engineer, or teacher whose performance
of these services  is  solely  incidental  to  the
practice   of  his   profession;   [(C)]   (D)   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)]  (E)  a
publisher  of  any   bona   fide  newspaper,  news
magazine, or business  or financial publication of
general, regular, and  paid circulation; [(E)] (F)
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]  PUBLIC  ACT 97-220 AND
SECTION 6 OF  THIS  ACT;  [(F)]  (G) 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)]  (H)  such other persons not
within the intent of this [subsection] SUBDIVISION
as the commissioner  may  by  regulation  or order
designate.
    Sec. 2. Subdivision  (11)  of section 36b-3 of
the general statutes,  as  amended by section 1 of
public act 97-220,  is  repealed and the following
is substituted in lieu thereof:
    (11) (A) "Investment  adviser  agent" includes
(i)  any individual,  [other  than  an  investment
adviser, or a  sole  proprietor  of  an investment
adviser] INCLUDING AN OFFICER, PARTNER OR DIRECTOR
OF  AN  INVESTMENT   ADVISER,   OR  AN  INDIVIDUAL
OCCUPYING A SIMILAR  STATUS  OR PERFORMING SIMILAR
FUNCTIONS, employed, appointed or authorized by OR
ASSOCIATED WITH 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.]   OR  (ii)  ANY
PARTNER, OFFICER, OR  DIRECTOR  OF  AN  INVESTMENT
ADVISER,  OR AN  INDIVIDUAL  OCCUPYING  A  SIMILAR
STATUS OR PERFORMING  SIMILAR  FUNCTIONS, OR OTHER
INDIVIDUAL EMPLOYED, APPOINTED,  OR  AUTHORIZED BY
OR  ASSOCIATED WITH  AN  INVESTMENT  ADVISER,  WHO
MAKES  ANY  RECOMMENDATION  OR  OTHERWISE  RENDERS
ADVICE REGARDING SECURITIES  TO  CLIENTS  AND  WHO
RECEIVES  COMPENSATION  OR   OTHER   REMUNERATION,
DIRECTLY   OR  INDIRECTLY,   FOR   SUCH   ADVISORY
SERVICES.
    (B)  "INVESTMENT  ADVISER   AGENT"   DOES  NOT
INCLUDE  AN  INDIVIDUAL   EMPLOYED,  APPOINTED  OR
AUTHORIZED BY, ASSOCIATED WITH OR ACTING ON BEHALF
OF AN INVESTMENT  ADVISER EXEMPT FROM REGISTRATION
UNDER SUBDIVISION (1)  OR (2) OF SUBSECTION (e) OF
SECTION 36b-6, AS  AMENDED  BY SECTION 3 OF PUBLIC
ACT 97-220, WHO  IS  A  "SUPERVISED PERSON" UNLESS
(i) MORE THAN TEN PER CENT OF THE ADVISORY CLIENTS
ARE NATURAL PERSONS  AND THE SUPERVISED PERSON HAS
A  PLACE OF  BUSINESS  IN  THIS  STATE,  (ii)  THE
SUPERVISED PERSON ON  A  REGULAR  BASIS  SOLICITS,
MEETS WITH, OR OTHERWISE COMMUNICATES WITH CLIENTS
OF THE EXEMPT  INVESTMENT  ADVISER  IN THIS STATE,
AND  (iii)  THE   SUPERVISED   PERSON   DOES   NOT
EXCLUSIVELY RENDER IMPERSONAL INVESTMENT ADVICE.
    (C) FOR PURPOSES  OF  SUBPARAGRAPH (B) OF THIS
SUBDIVISION:  (i) "IMPERSONAL  INVESTMENT  ADVICE"
MEANS  INVESTMENT ADVISORY  SERVICES  PROVIDED  BY
MEANS OF WRITTEN  MATERIAL OR ORAL STATEMENTS THAT
DO NOT PURPORT  TO MEET THE OBJECTIVES OR NEEDS OF
SPECIFIC INDIVIDUALS OR  ACCOUNTS;  (ii)  "NATURAL
PERSON"  DOES  NOT   INCLUDE   AN  INDIVIDUAL  WHO
IMMEDIATELY  AFTER ENTERING  INTO  THE  INVESTMENT
ADVISORY  CONTRACT  WITH   THE  EXEMPT  INVESTMENT
ADVISER HAS AT LEAST FIVE HUNDRED THOUSAND DOLLARS
UNDER MANAGEMENT WITH  SUCH INVESTMENT ADVISER, OR
WHO  THE  EXEMPT   INVESTMENT  ADVISER  REASONABLY
BELIEVES, IMMEDIATELY PRIOR  TO  ENTERING INTO THE
ADVISORY CONTRACT, HAS  A  NET WORTH TOGETHER WITH
ASSETS HELD JOINTLY WITH A SPOUSE, AT THE TIME THE
CONTRACT IS ENTERED INTO, OF MORE THAN ONE MILLION
DOLLARS; AND (iii)  "SUPERVISED  PERSON" MEANS ANY
PARTNER,  OFFICER,  DIRECTOR,   OR   OTHER  PERSON
OCCUPYING A SIMILAR  STATUS  OR PERFORMING SIMILAR
FUNCTIONS, OR EMPLOYEE  OF  AN  EXEMPT  INVESTMENT
ADVISER, OR OTHER  PERSON  WHO PROVIDES INVESTMENT
ADVICE ON BEHALF OF SUCH INVESTMENT ADVISER AND IS
SUBJECT TO THE  SUPERVISION  AND  CONTROL  OF SUCH
INVESTMENT ADVISER.
    (D)  "INVESTMENT  ADVISER   AGENT"   DOES  NOT
INCLUDE  SUCH OTHER  INDIVIDUALS  NOT  WITHIN  THE
INTENT OF THIS SUBDIVISION AS THE COMMISSIONER MAY
BY REGULATION OR ORDER DESIGNATE.
    Sec. 3. Subsection (d) of section 36b-6 of the
general  statutes, as  amended  by  section  3  of
public act 97-220,  is  repealed and the following
is substituted in lieu thereof:
    (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, PROVIDED
AN INVESTMENT ADVISER  THAT IS REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION MAY, IN LIEU OF
FILING   AN   APPLICATION    FOR   BRANCH   OFFICE
REGISTRATION, FILE A  NOTICE WITH THE COMMISSIONER
FOR EACH BRANCH  OFFICE  OF  THE  ADVISER  LOCATED
WITHIN THIS STATE  TOGETHER  WITH  A NONREFUNDABLE
NOTICE  FEE OF  ONE  HUNDRED  DOLLARS  PER  BRANCH
OFFICE.   An   application   for   branch   office
registration shall be  made on forms prescribed by
the commissioner and shall be filed with [him] THE
COMMISSIONER,   TOGETHER  with   a   nonrefundable
APPLICATION fee of  one hundred dollars per branch
office.  A broker-dealer  or  investment  adviser,
OTHER  THAN  AN   INVESTMENT   ADVISER   THAT   IS
REGISTERED  WITH  THE   SECURITIES   AND  EXCHANGE
COMMISSION, 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.]  IN  THE   CASE   OF   A  BRANCH  OFFICE
ACQUISITION OR RELOCATION,  SUCH  BROKER-DEALER OR
INVESTMENT ADVISER SHALL PAY TO THE COMMISSIONER A
NONREFUNDABLE  FEE  OF  ONE  HUNDRED  DOLLARS.  AN
INVESTMENT ADVISER THAT  IS  REGISTERED  WITH  THE
SECURITIES AND EXCHANGE  COMMISSION  SHALL  NOTIFY
THE COMMISSIONER OF  AN  ACQUISITION OR RELOCATION
OF ANY BRANCH  OFFICE OF THE INVESTMENT ADVISER IN
THIS STATE IN  THE SAME MANNER AS AND CONCURRENTLY
WITH THE NOTIFICATION  OF  SUCH INFORMATION TO THE
SECURITIES AND EXCHANGE  COMMISSION  AND SHALL PAY
TO THE COMMISSIONER  A  NONREFUNDABLE  FEE  OF ONE
HUNDRED DOLLARS. Each  registrant or applicant for
branch office registration,  AND  EACH  INVESTMENT
ADVISER WITH A BRANCH OFFICE IN THIS STATE THAT IS
REGISTERED  WITH  THE   SECURITIES   AND  EXCHANGE
COMMISSION,  shall  pay   the   actual   cost,  as
determined by the  commissioner, of any reasonable
investigation   or  examination   made   of   such
registrant, [or] applicant  OR  INVESTMENT ADVISER
by or on behalf of the commissioner.
    Sec.  4.  Section   36b-14   of   the  general
statutes, as amended  by  section  7 of public act
97-220,  is  repealed   and   the   following   is
substituted in lieu thereof:
    (a) (1) Every  registered  [broker-dealer and]
investment  adviser shall  make,  [and]  keep  AND
PRESERVE such accounts, correspondence, memoranda,
papers,   books   and   other   records   as   the
commissioner by regulation  prescribes.  All  SUCH
records [so required]  shall be preserved for such
period   as   the   commissioner   by   regulation
prescribes.
    (2)   EVERY   INVESTMENT   ADVISER   THAT   IS
REGISTERED  WITH  THE   SECURITIES   AND  EXCHANGE
COMMISSION  OR EXCEPTED  FROM  THE  DEFINITION  OF
INVESTMENT ADVISER UNDER SECTION 202(a)(11) OF THE
INVESTMENT  ADVISERS  ACT   OF   1940,  AND  EVERY
REGISTERED  BROKER-DEALER, SHALL  MAKE,  KEEP  AND
PRESERVE SUCH ACCOUNTS, CORRESPONDENCE, MEMORANDA,
PAPERS, BOOKS AND  OTHER RECORDS AS THE SECURITIES
AND EXCHANGE COMMISSION REQUIRES. ALL SUCH RECORDS
SHALL  BE  PRESERVED   FOR   SUCH  PERIOD  AS  THE
SECURITIES AND EXCHANGE COMMISSION REQUIRES.
    (3) [Such] ALL  records  REFERRED  TO  IN THIS
SUBSECTION 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.
    (b) (1) Every  registered  [broker-dealer and]
investment  adviser  shall   file  such  financial
reports   as  the   commissioner   by   regulation
prescribes.
    (2)   EVERY   INVESTMENT   ADVISER   THAT   IS
REGISTERED  WITH  THE   SECURITIES   AND  EXCHANGE
COMMISSION  OR EXCEPTED  FROM  THE  DEFINITION  OF
INVESTMENT ADVISER UNDER SECTION 202(a)(11) OF THE
INVESTMENT  ADVISERS  ACT   OF   1940,  AND  EVERY
REGISTERED   BROKER-DEALER,   SHALL    FILE   SUCH
FINANCIAL   REPORTS   AS   THE   COMMISSIONER   BY
REGULATION    PRESCRIBES,    EXCEPT    THAT    THE
COMMISSIONER  SHALL  NOT  REQUIRE  THE  FILING  OF
FINANCIAL REPORTS THAT  ARE  NOT  REQUIRED  TO  BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
    (c)  If  the   information  contained  in  any
document filed with  the  commissioner  UNDER THIS
SECTION is or  becomes inaccurate or incomplete in
any material respect,  the [registrant] THE PERSON
MAKING THE FILING shall promptly file a correcting
amendment unless notification  of  the  correction
has been given  under  [subsection  (b) of section
36b-6] SECTIONS 36b-2  TO  36b-33,  INCLUSIVE,  AS
AMENDED BY THIS ACT.
    (d) All the records OF A REGISTERED INVESTMENT
ADVISER AND A REGISTERED BROKER-DEALER referred to
in subsection (a)  of  this section are subject at
any time or  from  time to time to such reasonable
periodic,  special  or   other   examinations   by
[representatives of] the  commissioner,  within or
without  this state,  as  the  commissioner  deems
necessary or appropriate in the public interest or
for the protection  of investors. EVERY REGISTERED
INVESTMENT    ADVISER   AND    EVERY    REGISTERED
BROKER-DEALER  SHALL KEEP  SUCH  RECORDS  OPEN  TO
EXAMINATION  BY THE  COMMISSIONER  AND,  UPON  THE
COMMISSIONER'S REQUEST, SHALL  PROVIDE  COPIES  OF
ANY SUCH RECORDS  TO  THE  COMMISSIONER.  For  the
purpose  of avoiding  unnecessary  duplication  of
examinations, the commissioner,  insofar  as  [he]
THE   COMMISSIONER   deems   it   practicable   in
administering this subsection,  may cooperate with
the securities administrators of other states, the
Securities  and  Exchange   Commission,   and  any
national   securities   exchange    or    national
securities   association  registered   under   the
Securities Exchange Act of 1934.
    Sec.  5.  Section   36b-20   of   the  general
statutes, as amended  by  section 10 of public act
97-220,  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  report under subsection (j)
of section 36b-19,  as  amended  by  section  9 of
[this act] PUBLIC ACT 97-220, is incomplete in any
material respect BUT  IS NOT ABANDONED PURSUANT TO
SUBSECTION (e) OF  THIS  SECTION  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 AND PUBLIC ACT
97-220,  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.
    (b) The commissioner  may  by  order summarily
postpone  or  suspend  the  effectiveness  of  the
registration statement pending final determination
of any proceeding  under  this  section.  Upon the
entry  of  the   order,   the  commissioner  shall
promptly   notify   each   person   specified   in
subsection (c) of  this  section  that it has been
entered  and of  the  reasons  therefor  and  that
within fifteen days after the receipt of a written
request the matter  will  be set down for hearing.
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,  the
commissioner may modify  or  vacate  the  order or
extend it until final determination.
    (c) No stop  order  may  be entered under this
section except as  provided  in  subsection (b) of
this section without: (1) Appropriate prior notice
to the applicant or registrant, the issuer and the
person on whose behalf the securities are to be or
have been offered;  (2)  opportunity  for hearing;
and (3) written  findings  of fact and conclusions
of law.
    (d) The commissioner  may  vacate  or modify a
stop order if  he  finds that the conditions which
prompted its entry  have  changed  or  that  it is
otherwise in the public interest to do so.
    (e) THE COMMISSIONER MAY DEEM ANY REGISTRATION
STATEMENT TO BE ABANDONED IF THE PERSON FILING THE
REGISTRATION STATEMENT FAILS  TO  RESPOND  TO  ANY
REQUEST  FOR  INFORMATION   REQUIRED   UNDER  THIS
CHAPTER, AS AMENDED BY THIS ACT, OR ANY REGULATION
OR ORDER UNDER  THIS  CHAPTER,  AS AMENDED BY THIS
ACT.  THE COMMISSIONER  SHALL  NOTIFY  THE  PERSON
FILING THE REGISTRATION  STATEMENT, THE ISSUER AND
THE PERSON ON  WHOSE  BEHALF THE SECURITIES ARE TO
BE OR HAVE  BEEN OFFERED, IN WRITING, THAT IF SUCH
INFORMATION IS NOT  SUBMITTED WITHIN SIXTY DAYS OF
SUCH   WRITTEN  NOTIFICATION,   THE   REGISTRATION
STATEMENT SHALL BE  DEEMED  ABANDONED.  ANY FILING
FEE  PAID  PRIOR  TO  THE  DATE  THE  REGISTRATION
STATEMENT IS DEEMED  ABANDONED  PURSUANT  TO  THIS
SUBSECTION SHALL NOT  BE  REFUNDED. ABANDONMENT OF
THE  REGISTRATION  STATEMENT   PURSUANT   TO  THIS
SUBSECTION SHALL NOT  PRECLUDE  THE  PERSON FILING
THE REGISTRATION STATEMENT  FROM  SUBMITTING A NEW
REGISTRATION STATEMENT UNDER  SECTIONS  36b-17  OR
36b-18, AS AMENDED.  THE  HEARING  REQUIREMENT  IN
SUBSECTION (c) OF  THIS SECTION SHALL NOT APPLY TO
ABANDONMENT PURSUANT TO THIS SUBSECTION.
    Sec. 6. Subsection  (a)  of  section 36b-21 of
the general statutes,  as amended by section 11 of
public act 97-220,  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] PUBLIC ACT  97-220, and 36b-22, as amended by
section 12 of  [this  act]  PUBLIC ACT 97-220: (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) (A)  ANY  SECURITY  APPEARING ON THE
LIST OF OVER-THE-COUNTER  AND  FOREIGN  SECURITIES
APPROVED FOR MARGIN  BY  THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE  SYSTEM WHICH IS NOT OTHERWISE
A COVERED SECURITY,  (B)  ANY  WARRANT OR RIGHT TO
PURCHASE OR SUBSCRIBE TO ANY SECURITY DESCRIBED IN
SUBPARAGRAPH (A) OF  THIS SUBDIVISION, AND (C) any
warrant or right  to  purchase or subscribe to any
security  listed  or  approved  for  listing  upon
notice of issuance on [(A)] (i) 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,  [(B)]  (ii)  the  list  of
over-the-counter securities approved for margin by
the Board of  Governors  of  the  Federal  Reserve
System WHERE SUCH  SECURITY IS A COVERED SECURITY,
or [(C)] (iii)  the  national market system of the
National   Association   of   Securities   Dealers
Automated Quotation System established pursuant to
the  Securities Exchange  Act  of  1934;  (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.
    Sec. 7. Subsection  (b)  of  section 36b-21 of
the general statutes,  as amended by section 11 of
public act 97-220,  is  repealed and the following
is substituted in lieu thereof:
    (b) The following  transactions  are  exempted
from sections 36b-16,  as  amended by section 8 of
[this  act] PUBLIC  ACT  97-220,  and  36b-22,  as
amended by section  12  of  [this  act] PUBLIC ACT
97-220: (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]
TRANSACTION BY A  REGISTERED AGENT OF A REGISTERED
BROKER-DEALER IN A  SECURITY  OF  A CLASS THAT HAS
BEEN OUTSTANDING IN THE HANDS OF THE PUBLIC FOR AT
LEAST NINETY DAYS  PROVIDED,  AT  THE  TIME OF THE
TRANSACTION: (A) THE  SECURITY  IS SOLD AT A PRICE
REASONABLY RELATED TO  THE CURRENT MARKET PRICE OF
THE SECURITY; (B) THE SECURITY DOES NOT CONSTITUTE
THE WHOLE OR  PART OF AN UNSOLD ALLOTMENT TO, OR A
SUBSCRIPTION    OR    PARTICIPATION     BY,    THE
BROKER-DEALER AS AN  UNDERWRITER  OF THE SECURITY;
(C)  A  NATIONALLY  RECOGNIZED  SECURITIES  MANUAL
CONTAINS (i) A  DESCRIPTION  OF  THE  BUSINESS AND
OPERATIONS OF THE  ISSUER;  (ii)  THE NAMES OF THE
ISSUER'S OFFICERS AND  DIRECTORS; (iii) AN AUDITED
BALANCE SHEET OF  THE  ISSUER  AS OF A DATE WITHIN
EIGHTEEN   MONTHS,   OR   IN   THE   CASE   OF   A
REORGANIZATION OR MERGER  WHERE THE PARTIES TO THE
REORGANIZATION OR MERGER  HAD SUCH AUDITED BALANCE
SHEET, A PRO  FORMA  BALANCE  SHEET;  AND  (iv) AN
AUDITED INCOME STATEMENT  FOR EACH OF THE ISSUER'S
PRECEDING TWO FISCAL  YEARS,  OR FOR THE PERIOD OF
EXISTENCE OF THE  ISSUER, IF IN EXISTENCE FOR LESS
THAN TWO YEARS, OR IN THE CASE OF A REORGANIZATION
OR MERGER WHERE  THE PARTIES TO THE REORGANIZATION
OR MERGER HAD SUCH AUDITED INCOME STATEMENT, A PRO
FORMA INCOME STATEMENT;  AND (D) THE ISSUER OF THE
SECURITY HAS A  CLASS  OF EQUITY SECURITIES LISTED
ON A NATIONAL SECURITIES EXCHANGE REGISTERED UNDER
THE SECURITIES EXCHANGE ACT OF 1934, OR DESIGNATED
FOR  TRADING  ON   THE   NATIONAL  ASSOCIATION  OF
SECURITIES  DEALERS  AUTOMATED  QUOTATION  SYSTEM,
except  that the  exemption  IN  THIS  SUBDIVISION
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)] (3)
ANY  NONISSUER  DISTRIBUTION   OF  AN  OUTSTANDING
SECURITY IF 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)] (4) 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)] (5) any  transaction  between  the issuer or
other person on  whose behalf the offering is made
and an underwriter,  or  among underwriters; [(5)]
(6) 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)]  (7)  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)]  (8)  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  AND
PUBLIC ACT 97-220;  [(8)] (9) any offer or sale to
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,   trust   company,    insurance    company,
investment company as  defined  in  the Investment
Company Act of  1940,  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)] (10) (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,  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.  (C)  The  exemptions set
forth in [subdivisions  (9)] SUBPARAGRAPHS (A) and
[(9)] (B) of  this  [subsection] SUBDIVISION 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)]  SUBPARAGRAPHS (A) and [(9)]
(B) of this  [subsection]  SUBDIVISION  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)] (11) 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)] (12)  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)] (13) 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 PUBLIC ACT
97-220, and the Securities Act of 1933, 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;   [(13)]   (14)   any
transaction  exempt  under  Section  4(6)  of  the
Securities  Act  of   1933,   and  the  rules  and
regulations thereunder. 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)]  (15)  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, as amended by this act
AND PUBLIC ACT 97-220, (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;
(16) ANY TRANSACTION EXEMPT UNDER RULE 701, 17 CFR
SECTION 230.701 PROMULGATED  UNDER SECTION 3(b) OF
THE SECURITIES ACT  OF 1933; [(15)] (17) 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.
    Sec. 8. Subsection  (d)  of  section 36b-27 of
the general statutes,  as amended by section 13 of
public act 97-220,  is  repealed and the following
is substituted in lieu thereof:
    (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 AND PUBLIC ACT 97-220, or any regulation,
rule  or  order   adopted  or  issued  under  said
sections, the commissioner  may  send  a notice to
such person or  persons by 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 AND PUBLIC ACT
97-220, 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]  FINE  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] FINE 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
registered mail, return  receipt requested, to any
person or persons named in such order.
    Sec.  9.  (NEW)   (a)   Section   6   of   The
Philanthropy  Protection  Act   of  1995,  15  USC
Section 80a-3a, shall not preempt the laws of this
state that require  registration  or qualification
of securities or require any person to register as
or be subject  to  regulation  as a broker-dealer,
agent, investment adviser  or  investment  adviser
agent.
    (b) The Philanthropy  Protection  Act of 1995,
Public  Law  104-62,   shall   not  apply  in  any
administrative or judicial  action as a defense to
any claim that  any person, security, interest, or
participation of the  type  described  in said act
and the amendments  made by said act is subject to
the  provisions  of   sections  36b-2  to  36b-33,
inclusive, of the  general statutes, as amended by
this act.

Approved June 4, 1998