CHAPTER 168
H.P. 717 - L.D. 981
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 32 MRSA §10301, sub-§2, as enacted by PL 1985, c. 400, §2, is amended to read:
2. Employment of unlicensed persons. It is unlawful for any issuer or broker-dealer licensed under this Act to employ or contract with a person as a sales representative within in this State unless the sales representative is licensed or exempt from licensing under this Act.
Sec. 2. 32 MRSA §10302, sub-§1, ¶A, as enacted by PL 1985, c. 400, §2, is amended to read:
A. A broker-dealer who is registered as a broker-dealer under the United States Securities Exchange Act of 1934, if the transactions effected by the broker-dealer in this State are exclusively with the following:
(1) The issuer of the securities involved in the transactions;
(2) Other broker-dealers licensed or exempt from licensing under this Act, except when the broker-dealer is acting as a clearing broker-dealer for such other broker-dealers; and
(3) Financial and institutional investors acting for themselves or in a fiduciary capacity;
Sec. 3. 32 MRSA §10302, sub-§2, ¶A, as enacted by PL 1985, c. 400, §2, is amended to read:
A. A sales representative acting for a broker-dealer exempt from licensing under section 10302, subsection 1;
Sec. 4. 32 MRSA §10302, sub-§2, ¶A-1 is enacted to read:
A-1. A sales representative acting for a broker-dealer licensed under section 10301, subsection 1, in effecting in this State transactions described in Section 15(h)(2) of the United States Securities Exchange Act of 1934;
Sec. 5. 32 MRSA §10302, sub-§2, ¶E, as amended by PL 1989, c. 542, §10, is further amended to read:
E. Other sales representatives whom the administrator may exclude, by rule or order, as not required to be registered licensed consistent with the public interest and the protection of investors.
Sec. 6. 32 MRSA §10303, sub-§3, as enacted by PL 1991, c. 82, §2, is amended to read:
3. Employment of unqualified persons by investment advisers subject to licensing requirements in this State. It is unlawful for an investment adviser licensed or required to be licensed under this Act to employ or contract with an individual as a representative of the investment adviser in this State unless the individual has satisfied all applicable examination requirements under this Act. For purposes of this subsection, "representative" means an individual who represents an investment adviser in doing any of the acts that make that person an investment adviser.
Sec. 7. 32 MRSA §10303, sub-§4 is enacted to read:
4. Employment of unqualified persons by investment advisers exempt under section 10304, subsection 2-A. It is unlawful for an investment adviser exempt from licensing under section 10304, subsection 2-A, to employ or contract with an individual who has a place of business in this State as a representative of the investment adviser unless the individual has satisfied all applicable examination requirements under this Act, or unless the investment adviser is otherwise exempt from licensing under this Act. For purposes of this subsection, "representative" means an individual who represents an investment adviser in doing any of the acts that make that person an investment adviser.
Sec. 8. 32 MRSA §10304, sub-§1, as enacted by PL 1985, c. 400, §2, is repealed.
Sec. 9. 32 MRSA §10304, sub-§2, as enacted by PL 1985, c. 400, §2, is repealed and the following enacted in its place:
2. No place of business in this State. An investment adviser who has no place of business in this State and who, during the preceding 12-month period, has had fewer than 6 clients who are residents of this State. For purposes of this subsection only, "client" does not include other investment advisers, broker-dealers or financial and institutional investors, whether acting for themselves or acting in a fiduciary capacity;
Sec. 10. 32 MRSA §10304, sub-§2-A is enacted to read:
2-A. Registered or excluded under federal law. An investment adviser who is registered as an investment adviser under Section 203 of the United States Investment Advisers Act of 1940 or excluded from the definition of "investment adviser" under Section 202(a)(11) of the United States Investment Advisers Act of 1940; and
Sec. 11. 32 MRSA §10305-A is enacted to read:
An investment adviser who is exempt from licensing under section 10304, subsection 2-A shall file with the administrator, for notice purposes only, such documents filed with the United States Securities and Exchange Commission as the administrator may by rule or order require, together with the fee that would otherwise be applicable pursuant to section 10306 if the adviser were not exempt from licensing under section 10304, subsection 2-A, and a consent to service of process pursuant to section 10704. Until October 11, 1999, an investment adviser who fails or refuses to pay the fee required by this section is required to be licensed under section 10303. The requirements of this section do not apply to an adviser who is also exempt under another provision of this Act other than section 10304, subsection 2-A or an adviser whose only clients in this State are other investment advisers, broker-dealers or financial and institutional investors, whether acting for themselves or acting in a fiduciary capacity. Rules adopted under this section are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.
Sec. 12. 32 MRSA §10307, sub-§1, ¶C, as amended by PL 1991, c. 82, §4, is further amended to read:
C. Any class of employees of applicants for licensing as to whom the administrator determines that an examination requirement is necessary for the protection of investors; and
Sec. 13. 32 MRSA §10307, sub-§1, ¶D, as enacted by PL 1991, c. 82, §5, is amended to read:
D. Any individual who represents an investment adviser licensed under this Act in doing any of the acts that make that person an investment adviser.; and
Sec. 14. 32 MRSA §10307, sub-§1, ¶E is enacted to read:
E. Any individual who has a place of business in this State and who represents an investment adviser exempt from licensing under section 10304, subsection 2-A, in doing any of the acts that make that person an investment adviser.
Sec. 15. 32 MRSA §10309, as amended by PL 1989, c. 542, §21, is further amended to read:
For so as long as a broker-dealer, sales representative or investment adviser is licensed under this Act, that person shall file an annual report, together with the fee specified in section 10306, subsection 2, with the administrator or the designee of the administrator, at a time and including such information as the administrator determines, by rule, is necessary or appropriate to facilitate administration of this Act. In the case of a broker-dealer, this requirement may not exceed the limitations imposed by the United States Securities Exchange Act of 1934, Section 15.
Sec. 16. 32 MRSA §10310, sub-§1, ¶A, as enacted by PL 1985, c. 400, §2, is amended to read:
A. Minimum net capital not to exceed the limitations imposed by Section 15 of the United States Securities Exchange Act of 1934; and
Sec. 17. 32 MRSA §10310, sub-§§2, 3, 4 and 6, as amended by PL 1989, c. 542, §22, are further amended to read:
2. Investment adviser net worth requirements. The administrator may, by rule, require a licensed investment adviser, other than an investment adviser registered under the United States Investment Advisers Act of 1940, to maintain a minimum net worth, which may vary with type or class of investment adviser, but may not exceed the limitations imposed by Section 222 of the United States Investment Advisers Act of 1940.
3. Notification of financial condition. If a licensed broker-dealer or investment adviser believes, or has reasonable cause to believe, that any requirement imposed under subsection 1 or subsection 2 is not being met, it shall promptly notify the administrator of its current financial condition.
4. Fidelity bonds. The administrator may, by rule, require the furnishing of fidelity bonds from broker-dealers or classes of broker-dealers not to exceed the limitations imposed by Section 15 of the United States Securities Exchange Act of 1934.
6. Record keeping. A licensed broker-dealer, sales representative or investment adviser shall make and maintain records as the administrator determines, by rule, are necessary or appropriate, but these record-keeping requirements may not exceed the limitations imposed by Section 15 of the United States Securities Exchange Act of 1934 in the case of a broker-dealer, or Section 222 of the United States Investment Advisers Act of 1940 in the case of an investment adviser.
A. Unless the administrator adopts, by rule, a special record-keeping requirement, compliance with the record-keeping requirements of the United States Securities Exchange Act of 1934 in the case of a broker-dealer, or the United States Investment Advisers Act of 1940 in the case of an investment adviser, shall satisfy satisfies the requirement of this subsection.
B. Required records may be maintained in computer or microform format or any other form of data storage, provided that the records are readily accessible to the administrator.
C. Required records must be preserved for 6 years unless the administrator, by rule, specifies either a longer or shorter period for a particular type or class of records.
Sec. 18. 32 MRSA §10312, sub-§2, as amended by PL 1989, c. 542, §24, is further amended to read:
2. Copies of records. The administrator may copy records or require a licensee to copy records and provide the copies to the administrator in a manner reasonable under the circumstances whether in connection with an on-site inspection or otherwise.
Sec. 19. 32 MRSA §10314, sub-§1, as amended by PL 1989, c. 542, §27, is repealed.
Sec. 20. 32 MRSA §10314, sub-§2, as amended by PL 1989, c. 542, §27, is further amended to read:
2. Investment advisers licensed under this Act. If permitted Unless prohibited by rule or order of the administrator, an investment adviser exempt from registration under the United States Investment Advisers Act of 1940, but licensed as an investment adviser under this Act, may take or have custody of securities or funds of a client.
Sec. 21. 32 MRSA §10401, as enacted by PL 1985, c. 400, §2, is amended to read:
§10401. Registration requirement
A person may not offer or sell any security in this State unless the security is registered under this Act or, the security or transaction is exempt under this Act or the security is a federal covered security.
Sec. 22. 32 MRSA §10501, sub-§2-A is enacted to read:
2-A. Federal covered security. "Federal covered security" means any security described as a covered security in the United States Securities Act of 1933.
Sec. 23. 32 MRSA §10501, sub-§§17 and 18, as enacted by PL 1985, c. 400, §2, are amended to read:
17. United States Securities Act of 1933, United States Securities Exchange Act of 1934, United States Public Utility Holding Company Act of 1935, United States Investment Company Act of 1940, United States Investment Advisers Act of 1940, United States Employee Retirement Income Security Act of 1974 and United States Small Business Investment Act of 1958. "United States Securities Act of 1933," "United States Securities Exchange Act of 1934," "United States Public Utility Holding Company Act of 1935," "United States Investment Company Act of 1940," "United States Investment Advisers Act of 1940," "United States Employee Retirement Income Security Act of 1974" and "United States Small Business Investment Act of 1958" mean the federal laws of those names, as amended before or after the effective date of this Act.
18. Security. "Security" means any note; stock,; treasury stock; bond,; debenture; evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; any limited partnership interest; collateral - trust certificate; preorganization certificate or subscription; transferable share,; investment contract; voting-trust certificate; certificate of deposit for a security; documents of title to and certificates of interest in an oil, gas or other mineral lease or in payments out of production under such lease, right or royalty; documents of title to and certificates of interest in the title to or any profits or earnings from land or other property situated outside of the State; any put, call, straddle or option entered into a national securities exchange relating to foreign currency; any put, call, straddle or option on any security, certificate of deposit or group or index of securities, including any interest therein or based on the value thereof; 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 under which an insurance company promises to pay money either in a lump sum or periodically for life or some other specified period or any interest in a contributory or noncontributory pension or welfare plan subject to the United States Employee Retirement Income Security Act of 1974.
Sec. 24. 32 MRSA §10502, sub-§2, as amended by PL 1989, c. 542, §42, is further amended by amending the first paragraph to read:
2. Exempt transactions. The following transactions are exempted from section sections 10401 and 10503 10504:
Sec. 25. 32 MRSA §10502, sub-§2, ¶¶L, N and R, as amended by PL 1989, c. 542, §42, are further amended to read:
L. 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 90 days of their issuance, if 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 and the issuer first files a notice together with a filing fee of $300 specifying the terms of the offer and the administrator does not by order disallow the exemption within the next 5 full business days; if:
(1) 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
(2) Prior to any offer in this State, a notice, specifying the terms of the offer, is filed with the administrator together with the consent to service of process required by section 10704 and a filing fee of $300 for each security being offered in this State and the administrator does not by order disallow the exemption within the next 5 full business days;
N. Any transaction involving the distribution of the securities of an issuer to the security holders of another person in connection with a merger, consolidation, exchange of securities, sale of assets or other reorganization to which the issuer, or its parent or subsidiary and the other person, or its parent or subsidiary, are parties, if:;
(1) The securities to be distributed are registered under the United States Securities Act of 1933 prior to the consummation of the transaction; or
(2) If the transaction is exempt from registration under the United State Securities Act of 1933, written notice of the transaction, together with a copy of all materials, if any, by which approval of the transaction will be solicited is given to the administrator at least 10 days prior to the consummation of the transaction and the administrator does not, by order, disallow the exemption within the next 10 days on the ground that the disallowance is necessary or appropriate for the protection of investors;
R. Any transaction by an issuer not involving any public offering within the meaning of the United States Securities Act of 1933, as amended, Section 4(2) and the rules promulgated under that Act, including, but not limited to, any transaction exempt from registration with the United States Securities and Exchange Commission under the United States Securities and Exchange Commission, Rule 506, or any successor rule adopted under the United States Securities Act of 1933, as amended, and any transaction constituting a nonpublic offering under rules adopted by the administrator, if at least 10 days prior to the no later than 15 days after the first sale in this State of a security in reliance on the exemption from registration provided in this subsection, the issuer shall file with the administrator a notification of exemption, upon such form as the administrator may prescribe notice on United States Securities and Exchange Commission Form D, as amended, and the consent to service of process required by section 10704, and pay a filing fee of $300 for each security sold in this State.
Sec. 26. 32 MRSA §10502, sub-§6, as amended by PL 1989, c. 542, §44, is further amended to read:
6. Waiting period. For purposes of an exemption notice filed under subsection 2, paragraph L, N or R, subparagraph (2) or subsection 3, the administrator may, when the administrator determines that good cause exists, provide in writing for a shorter waiting period than that which is specified in the paragraph.
Sec. 27. 32 MRSA §10503, as amended by PL 1989, c. 542, §45, is repealed.
Sec. 28. 32 MRSA §§10504 and 10505 are enacted to read:
§10504. Filing of sales and advertising literature
1. Filing of sales and advertising literature. The administrator, by rule or order, may 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 qualifies for an exemption under section 10502 for which the filing of a notice with the administrator is not required or the security is a federal covered security.
2. Federal covered securities. Notwithstanding subsection 1, in conjunction with a notice filing for a federal covered security, the administrator, by rule or order, may require the filing of any document filed with the United States Securities and Exchange Commission.
3. Rules. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.
§10505. Federal covered securities
1. Federal covered securities under Section 18(b)(2) of the United States Securities Act of 1933. A federal covered security may not be offered or sold in this State in reliance on Section 18(b)(2) of the United States Securities Act of 1933 unless there is on file with the administrator a currently effective notice filing and the consent to service of process required by section 10704. The notice filing requirements are as follows.
A. Prior to the initial offer of a federal covered security in this State in reliance on Section 18(b)(2) of the United States Securities Act of 1933, a person authorized to register the security under the United States Securities Act of 1933 shall file with the administrator a notice, upon a form prescribed by the administrator, and the consent to service of process required by section 10704, signed by the issuer of the security, and pay a filing fee of $500. A notice filing under this subsection automatically becomes effective when the administrator receives the documents and fee required by this subsection, unless the administrator receives a request to delay effectiveness, and will expire one year from its effective date.
B. To maintain a currently effective notice filing under this subsection, a person authorized to register the security under the United States Securities Act of 1933 shall file with the administrator, no later than the expiration date of the currently effective notice filing, a notice, upon a form prescribed by the administrator, and pay a filing fee of $500.
2. Federal covered securities under Section 18(b)(4)(D) of the United States Securities Act of 1933. The notice filing requirements for federal covered securities offered or sold in this State in reliance on Section 18(b)(4)(D) of the United States Securities Act of 1933 are set forth in section 10502, subsection 2, paragraph R.
3. Other federal covered securities. Unless the administrator provides otherwise by rule, any other federal covered security may be offered and sold in this State in reliance on its being a federal covered security without the filing of a notice or the payment of a fee.
4. Nonpayment of fee. Notwithstanding any other provision of law, until October 11, 1999, a federal covered security for which the fee required under this section has not been promptly paid following a written request by the administrator, unless otherwise exempt from registration under this Act, is required to be registered and, unless registered or otherwise exempt from registration, its offer or sale in this State constitutes a violation of section 10401.
5. Stop order. The administrator may issue a stop order suspending the offer and sale of a federal covered security, except a federal covered security under Section 18(b)(1) of the United States Securities Act of 1933, if the administrator finds that the order is in the public interest and that there has been a failure to comply with any condition established by this section or by any rule adopted under this section.
6. Waiver provision. The administrator may, by rule or order, waive any or all of the provisions of this section.
7. Rules. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.
Sec. 29. 32 MRSA §10602, sub-§1, ¶B, as enacted by PL 1985, c. 400, §2, is amended to read:
B. Censure that person if that person is a licensed broker-dealer, sales representative or investment adviser, but in each case only after compliance with section 10708, subsection 6;
Sec. 30. 32 MRSA §10701, sub-§8, as amended by PL 1989, c. 542, §56, is further amended to read:
8. Waiver of fee. The administrator may, by order, waive the filing fee required to register a security, to perfect a notice filing for a federal covered security or to secure an exemption from registration, upon a written finding that the fee would be unreasonably high in light of the maximum potential proceeds from the sale of the security in the State or that the imposition of the fee would otherwise be unreasonable.
Sec. 31. 32 MRSA §10704, sub-§1, as amended by PL 1989, c. 542, §59, is repealed.
Sec. 32. 32 MRSA §10704, sub-§1-A is enacted to read:
1-A. Filing requirement. Except as the administrator otherwise provides by rule or order, the following persons shall file with the administrator, on a form prescribed by the administrator, an irrevocable consent appointing the administrator to be that person's attorney to receive service of any lawful process in any noncriminal proceeding against that person, a successor or personal representative, that arises under this Act or any rule or order of the administrator after the consent has been filed, with the same force and validity as if served personally on the person filing the consent:
A. Every applicant for licensing under subchapter III;
B. Every investment adviser subject to the notice filing requirements of section 10305-A;
C. Every issuer that registers one or more classes of its securities under subchapter IV;
D. Every issuer that proposes to offer a security in this State through a sales representative; and
E. Every issuer subject to the notice filing requirements of section 10505.
Sec. 33. 32 MRSA §10704, sub-§2, as enacted by PL 1985, c. 400, §2, is amended to read:
2. No additional filing required. A person who has filed the consent required by subsection 1 1-A in connection with a previous registration need not file an additional consent.
Sec. 34. 32 MRSA §10704, sub-§§3 and 4, as amended by PL 1989, c. 542, §59, are further amended to read:
3. Prohibited acts deemed consent. When a person, including a nonresident of this State, engages in conduct prohibited or made actionable by the Act or any rule or order of the administrator and has not filed a consent to service of process under subsection 1 1-A, the engaging in the conduct shall constitute constitutes the appointment of the administrator as the person's attorney to receive service of any lawful process in a noncriminal proceeding against the person, a successor or personal representative which that grows out of that conduct and which is brought under the Act or any rule or order of the administrator with the same force and validity as if served personally.
4. Service. Service under subsections 1 1-A and 3 may be made by leaving a copy of the process in the office of the administrator, but it is not effective unless:
A. The plaintiff, who may be the administrator, immediately sends notice of the service and a copy of the process by registered or certified mail, return receipt requested, to the defendant or respondent at the last address known to the administrator; and
B. The plaintiff files an affidavit of compliance with this subsection in the proceeding on or before the return day of the process, if any, or within such further time as the court, or the administrator in a proceeding before the administrator, allows.
Sec. 35. 32 MRSA §10704, sub-§7 is enacted to read:
7. Rules. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter II-A.
Sec. 36. 32 MRSA §10706, sub-§1, ¶¶D and E, as enacted by PL 1985, c. 400, §2, are amended to read:
D. All disciplinary and enforcement orders issued and reports of investigation under this Act; and
E. All advisory rulings and declaratory rulings rendered.;
Sec. 37. 32 MRSA §10706, sub-§1, ¶¶F and G are enacted to read:
F. All notice filings under section 10305-A; and
G. All notice filings under section 10505.
Sec. 38. 32 MRSA §10707, sub-§6, as enacted by PL 1985, c. 400, §2, is amended to read:
6. Radio and television programs. For the purpose of subsection 1, an offer to sell or to purchase is not made in this State when a radio or television program or other electronic communication originating outside this State is received in this State.
For the purpose of this subsection, a radio or television program or other electronic communication shall be considered having originated originates from this State if either the broadcast studio or means of transmission is located within this State, unless:
A. The program or communication is syndicated and distributed from outside this State for redistribution to the general public in this State;
B. The program or communication is supplied by a radio, or television or other electronic network with the electronic signal originating from outside this State for redistribution to the general public in this State;
C. The program or communication is an electronic signal that originates outside this State and is captured for redistribution to the general public in this State by a community antenna or cable, radio, or television or other electronic system; or
D. The program or communication consists of an electronic signal which that originates from within this State, but which is not intended for redistribution to the general public in this State.
This subsection shall does not apply to any changes, alterations or additions made locally to a radio or television program or other electronic communications.
Effective September 19, 1997, unless otherwise indicated.
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