31A-5-303 - Insider trading of securities.
31A-5-303. Insider trading of securities.
(1) Every person who is directly or indirectly the beneficial owner of more than 10% ofany class of any equity security of a domestic stock insurance corporation, or who is a director orofficer of a domestic stock corporation, shall file with the commissioner within 10 days after hebecomes a beneficial owner, director, or officer, and within 10 days after the close of anyfollowing calendar month in which there has been a change in his ownership or office, astatement in a form prescribed by the commissioner, of his office and of all the equity securitiesof the company which he beneficially owns, and of all the changes in either. The commissionermay accept a copy of a similar statement filed with another regulatory authority in satisfaction ofthis subsection's requirement.
(2) To prevent the unfair use of information which may have been obtained by abeneficial owner, director, or officer because of his relationship to the corporation, any profitrealized by him from the purchase and sale or sale and purchase of any equity security of thecorporation within any period of less than six months, unless the security was acquired in goodfaith in connection with a debt previously contracted, is recoverable by the corporation. Thisrecovery may be made in spite of any intention by the beneficial owner, director, or officer inentering into the transaction to hold the security purchased or not to repurchase the security soldfor a period exceeding six months. A suit to recover the profit may be instituted in any court ofcompetent jurisdiction by the corporation. If the corporation fails to bring suit within 60 daysafter request by the owner of a security of the corporation or if the corporation fails to prosecuteit diligently, the owner of any security of the corporation may bring suit or prosecute the action inthe name and on behalf of the corporation. This suit may not be brought more than two yearsafter the date the profit was realized. This subsection does not apply to any transaction where thebeneficial owner was not a beneficial owner both at the time of the purchase and sale, or the saleand purchase, of the security involved, nor does it apply to any transaction which thecommissioner, by rule, exempts as not within the purpose of this subsection.
(3) (a) A dealer in the ordinary course of his business and incident to his establishment ormaintenance of a primary or secondary market for the security other than on an exchange asdefined in the federal Securities Exchange Act of 1934, is not governed by Subsection (2)regarding a purchase and sale or sale and purchase. The commissioner may by rule define termsand prescribe conditions regarding securities held in an investment account and transactionsmade in the ordinary course of business and incident to the establishment or maintenance of aprimary or secondary market.
(b) Subsections (1) and (2) do not apply to foreign or domestic arbitrage transactionsunless made in contravention of rules the commissioner adopts to carry out this section.
(c) Subsections (1) and (2) do not apply to equity securities of a corporation if:
(i) the securities are registered, or are required to be registered, under Section 12 of thefederal Securities Exchange Act of 1934, as amended; or
(ii) the corporation did not have any class of its equity securities held of record by 100 ormore persons on the last business day of the year preceding the year in which equity securities ofthe corporation would otherwise be subject to Subsections (1) and (2).
(4) No person may, in contravention of rules the commissioner adopts for the protectionof investors or the public, solicit or permit the use of his name to solicit a proxy, consent, orauthorization regarding an equity security of a domestic stock corporation having 100 or moreshareholders of record.
(5) No provision of this section imposing liability applies to an act done or omitted ingood faith in conformity with any rule of the commissioner. Liability does not apply even if therule is amended, rescinded, or determined by judicial or other authority to be invalid after the actor omission.
(6) As used in this section, "equity security" means any stock or similar security; anysecurity convertible, with or without consideration, into stock or a similar security; carrying anywarrant or right to subscribe to or purchase stock or a similar security; any such warrant or right;or any other security which the commissioner considers to be of similar nature and designates asan equity security by rules promulgated in the public interest or for the protection of investors.
Enacted by Chapter 242, 1985 General Session