§ 7-11-101 - Definitions.
SECTION 7-11-101
§ 7-11-101 Definitions. – In this chapter:
(1) "Broker dealer" means a person engaged in the business ofeffecting transactions in securities for the account of others or for theperson's own account. "Broker dealer" does not include:
(i) A sales representative;
(ii) An issuer, except when effecting transactions other thanas to its own securities;
(iii) Any other person that the director, by rule or order,designates; or
(iv) A depository institution if the depository institutionis not considered to be a "broker" or "dealer" within the meaning of theSecurities Exchange Act of 1934 (15 U.S.C. §§ 78C(a)(4) and (5)) orany regulation or rule adopted by the Securities and Exchange Commission underthe Act (the "Act") because the depository institution engages in any one ormore of the activities described in the following provisions of the Act, underthe conditions set forth in:
(a) Sections 3(a)(4)(B)(i) through (vi);
(b) Section 3(a)(4)(B)(vii), so long as the depositoryinstitution is a regulated financial institution as defined in §19-1-1(11) and the offer and sale is made to a sophisticated or institutionalinvestor;
(c) Sections 3(a)(4)(B)(viii) through (x);
(d) Section 3(a)(4)(B)(xi), if limited to unsolicitedtransactions; or
(e) Section 3(a)(5)(C).
(2) "Depository institution" means:
(i) A person which is organized, chartered, or holding anauthorization certificate under the laws of a state or of the United Stateswhich authorizes the person to receive deposits, including a savings, share,certificate, or deposit account, and which is supervised and examined for theprotection of depositors by an official or agency of a state or the UnitedStates;
(ii) A trust company or other institution that is authorizedby federal or state law to exercise fiduciary powers of the type a nationalbank is permitted to exercise under the authority of the comptroller of thecurrency and is supervised and examined by an official or agency of a state orthe United States; and
(iii) "Depository institution" does not include an insurancecompany or other organization primarily engaged in the insurance business, or aMorris plan bank, industrial loan company, or a similar bank or company unlessits deposits are insured by a federal agency.
(3) "Director" means the director of the department ofbusiness regulation.
(4) "Federal covered adviser" means a person who is:
(i) Registered under § 203 of the Investment AdvisersAct of 1940, 15 U.S.C. § 80b-3; or
(ii) Is excluded from the definition of "investment adviser"under § 202(a)(11) of the Investment Advisers Act of 1940, 15 U.S.C.§ 80b-1(a)(11).
(5) "Federal covered security" means any security that is acovered security under § 18(b) of the Securities Act of 1933, 15 U.S.C.§ 77r(b), or rules or regulations promulgated under that section.
(6) "Filed" means the actual delivery of a document orapplication to the director or designee of the director or to the principaloffice of the director.
(7) "Financial or institutional investor" means any of thefollowing, whether acting for itself or another in a fiduciary capacity:
(i) A depository institution;
(ii) An insurance company;
(iii) A separate account of an insurance company;
(iv) An investment company as defined in the InvestmentCompany Act of 1940, 15 U.S.C. § 80a-1 et seq.;
(v) An employee pension, profit sharing or benefit plan ifthe plan has total assets in excess of five million dollars ($5,000,000), or ifinvestment decisions are made by a plan fiduciary, as defined in the EmployeeRetirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., which iseither a broker dealer registered under the Securities Exchange Act of 1934, 15U.S.C. § 78a et seq., an investment adviser registered or exempt fromregistration under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1et seq., a depository institution, or an insurance company; and
(vi) Any other institutional buyer.
(8) "Fraud", "deceit", and "defraud" are not limited tocommon law fraud or deceit.
(9) For purposes of § 7-11-401, "guaranteed" meansguaranteed as to payment of all or substantially all of principal and interestor dividends.
(10) For purposes of § 7-11-401, "insured" means insuredas to payment of all or substantially all of principal and interest ordividends.
(11) "Investment adviser" means a person who, forcompensation, engages in the business of advising others, either directly orthrough publications or writings, as to the value of securities or as to theadvisability of investing in, purchasing, or selling securities, or who, forcompensation and as part of a regular business, issues or promulgates analysesor reports concerning securities. "Investment adviser" does not include:
(i) An investment adviser representative;
(ii) A trust company or other institution described insubdivision (2)(ii) of this section;
(iii) A lawyer, accountant, engineer, or teacher whoseperformance of investment advisory services is solely incidental to thepractice of the person's profession;
(iv) A broker dealer or its agent whose performance ofinvestment advisory services is solely incidental to the conduct of business asa broker dealer and who receives no special compensation for the investmentadvisory services;
(v) A publisher of any bona fide newspaper, news column,newsletter, news magazine, or business or financial publication or service,whether communicated in hard copy form, or by electronic means, or otherwise,that does not consist of the rendering of advice on the basis of the specificinvestment situation of each client;
(vi) A person whose advice, analyses, or reports relate onlyto securities exempt under § 7-11-401(1);
(vii) Any person as the director, by rule or order,designates; and
(viii) A person who is a federal covered adviser.
(12) "Investment adviser representative" means any partner,officer, director of (or a person occupying a similar status or performingsimilar functions) or other individual, except clerical or ministerialpersonnel, who is employed by or associated with;
(A) An investment adviser that is registered or required tobe registered under this chapter and who does any of the following:
(I) Makes any recommendations or otherwise renders adviceregarding securities to clients;
(II) Manages accounts or portfolios of clients;
(III) Determines which recommendation or advice regardingsecurities should be given;
(IV) Solicits, offers, or negotiates for the sale of or sellsinvestment advisory services;
(V) Supervises employees who perform any of the preceding; or
(B) A federal covered adviser, subject to the limitations ofsections 203(A) of the Investment Advisors Act of 1940, 15 U.S.C. §80b-3(A), as the director may designate by rule or order.
(ii) Notwithstanding subdivisions (12)(i)(A) and (12)(i)(B),an investment adviser representative shall not include any other personsemployed by or associated with either an investment adviser or a federalcovered adviser not within the intent of subdivision (12) that the director maydesignate by rule or order or as otherwise specifically excluded by rule of theU.S. Securities and Exchange Commission.
(13) Except as provided in subdivisions (13)(ii) through(13)(iv), "issuer" means a person who issues or proposes to issue a security.
(ii) The "issuer" of a collateral trust certificate, votingtrust certificate, certificate of deposit for a security, or share in aninvestment company without a board of directors or persons performing similarfunctions, is a person performing the acts and assuming the duties of depositoror manager pursuant to the trust or other agreement or instrument under whichthe security is issued.
(iii) The "issuer" of an equipment trust certificate,including a conditional sales contract or similar security serving the samepurpose, is the person to whom the equipment or property is or is to be leasedor conditionally sold.
(iv) The "issuer" of a fractional undivided interest to anoil, gas, or other mineral lease or in payments out of production under alease, right, or royalty, is the owner of an interest in the lease or inpayments out of production under a lease, right, or royalty, whether whole orfractional, who creates fractional interest for the purpose of sale.
(14) "Nonissuer transaction" means a transaction not directlyor indirectly for the benefit of the issuer.
(15) "Person" means a natural person, corporation, businesstrust, estate, trust, partnership, association, joint venture, government inits private or public capacity, governmental subdivision or agency, or anyother legal or commercial entity.
(16) "Person associated with" a named party or parties or"associated person of" a named party or parties means any partner, officer,director, or branch manager of the named party or parties (or any personoccupying a similar status or performing similar functions), any persondirectly or indirectly controlling, controlled by, or under common control withthe named party or parties or any employee of the named party or parties,except that any associated person whose functions are solely clerical orministerial are not included in the meaning of the term for purposes of thischapter.
(17) "Price amendment" means the amendment to a registrationstatement filed under the Securities Act of 1933, 15 U.S.C. § 77a et seq.,or, if no amendment is filed, the prospectus or prospectus supplement filedunder the Securities Act of 1933, which includes a statement of the offeringprice, underwriting and selling discounts or commissions, amounts of proceeds,conversion rates, call prices, and other matters dependent on the offeringprice.
(18) "Promoter" includes:
(i) A person who, acting alone or in concert with one or moreother persons, takes the entrepreneurial initiative in founding or organizingthe business or enterprise of an issuer;
(ii) An officer or director owning securities of an issuer ora person who owns, beneficially or of record, ten percent (10%) or more of aclass of securities of the issuer if the officer, director, or person acquiresany of those securities in a transaction within three (3) years before thefiling by the issuer of a registration statement under this chapter and thetransaction does not possess the indicia of arms length bargaining; and
(iii) A member of the immediate family of a person withinsubparagraph (i) or (ii) if the family member receives securities of the issuerfrom that person in a transaction within three (3) years before the filing bythe issuer of a registration statement under this chapter and the transactiondoes not possess the indicia of arms length bargaining.
(19) "Sale" or "sell" includes every contract of sale,contract to sell, or other disposition, of a security or interest in a securityfor value.
(ii) "Offer to sell" includes every attempt to offer todispose of, or solicitation of an offer to purchase, a security or interest ina security for value.
(iii) "Offer to purchase" includes every attempt or offer toobtain, or solicitation of an offer to sell, a security or interest in asecurity for value, but the term does not include a transaction that is subjectto § 14(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(d).
(iv) A security given or delivered with or as a bonus onaccount of a purchase of securities or other item is considered to constitutepart of the subject of the purchase and to have been offered and sold for value.
(v) A gift of assessable stock is deemed to involve an offerand sale.
(vi) A sale or offer of a warrant or right to purchase orsubscribe to another security of the same or another issuer, or a sale or offerof a security that gives the holder a present or future right or privilege toconvert into another security of the same or another issuer, is deemed toinclude an offer of the other security.
(vii) The terms defined in this paragraph do not include:
(A) the creation of a security interest or a loan;
(B) a stock dividend, whether or not the corporationdistributing the dividend is the issuer of the stock, if nothing of value isgiven by stockholders for the dividend other than the surrender of a right to acash or property dividend and each stockholder may elect to take the dividendin cash, property, or stock; or
(C) an act incident to a judicially approved reorganizationin which a security is issued in exchange for one or more outstandingsecurities, claims, or property interests, or partly in exchange and partly forcash.
(20) "Sales representative" means a person, other than abroker dealer, associated with a broker dealer or issuer in effecting orattempting to effect purchases or sales of securities.
(21) "Securities Act of 1933", 15 U.S.C. § 77a et seq.,"Securities Exchange Act of 1934", 15 U.S.C. § 78a et seq., "PublicUtility Holding Company Act of 1935", 15 U.S.C. § 79 et seq., "InvestmentCompany Act of 1940", 15 U.S.C. § 80a-1 et seq., "Investment Advisers Actof 1940", 15 U.S.C. § 80b-1 et seq., "Employee Retirement Income SecurityAct of 1974", 29 U.S.C. § 1001 et seq., "National Housing Act", 12 U.S.C.§ 1701 et seq., and "Commodity Exchange Act", 7 U.S.C. § 2 et seq.,mean the federal statutes of those names as amended before or after July 6,1990.
(22) Unless the context requires otherwise, "security" meansa note; stock; treasury stock; bond; debenture; evidence of indebtedness;certificate of interest or participation in a profit sharing agreement; alimited partnership interest; collateral trust certificate; variable annuity;preorganization certificate or subscription; transferable share; investmentcontract; voting trust certificate; certificate of deposit for a security;fractional undivided interest in an oil, gas, or other mineral lease or inpayments out of production under a lease, right, or royalty; a put, call,straddle, or option entered into on a national securities exchange relating toforeign currency; a put, call, straddle, or option on a security, certificateof deposit, or group or index of securities, including an interest in or basedon the value of any of the preceding; or, in general, an interest or instrumentcommonly known as a "security", or a certificate of interest or participationin, temporary or interim certificate for, receipt for, whole or partialguarantee of, or warrant or right to subscribe to or purchase, any of thepreceding. The term does not include:
(i) An insurance or endowment policy or annuity contractunder which an insurance company promises to pay a fixed sum of money either ina lump sum or periodically for life or some other specified period; or
(ii) An interest in a contributory or noncontributory pensionor welfare plan subject to the Employee Retirement Income Security Act of 1974,29 U.S.C. § 1001 et seq.
(23) "Self regulatory organization" means a nationalsecurities exchange registered under § 7 of the Securities Exchange Act of1934, 15 U.S.C. § 78g, a national securities association of brokers anddealers registered under § 15A of the Securities Exchange Act of 1934, 15U.S.C. § 78o-3, a clearing agency registered under § 17A of theSecurities Exchange Act of 1934, 15 U.S.C. § 78k-1, or the municipalsecurities rule making board established under § 15B(b)(1) of theSecurities Exchange Act of 1934, 15 U.S.C. § 78o-4(b)(1).
(24) "State" means a state, commonwealth, territory, orpossession of the United States, including both the District of Columbia andthe Commonwealth of Puerto Rico.
(25) "Willfully" means intentionally committing the act whichconstitutes a violation; there being no requirement that the actor also beaware that he or she is violating any provision of this chapter or any rule ororder under this chapter.