DRAFT FOR DISCUSSION ONLY UNIFORM SECURITIES ACT _____________________________________________________ NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS _____________________________________________ October 2001 WITH PREFATORY NOTE AND REPORTER’S NOTES Copyright ©2001 By NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS ______________________________________________________________________________________ The ideas and conclusions set forth in this draft, including the proposed statutory language and any comments or reporter’s notes, have not been passed upon by the National Conference of Commissioners on Uniform State Laws or the Drafting Committee. They do not necessarily reflect the views of the Conference and its Commissioners and the Drafting Committee and its Members and Reporters. Proposed statutory language ma y not be used to ascertain the intent or meaning of any promulgated final statutory proposal. DRAFTING COMMITTEE TO REVISE UNIFORM SECURITIES ACT RICHARD B. SMITH, 450 Lexington Ave., New York, NY 10017, Chair JOHN FOX ARNOLD, 714 Locust St., St. Louis, MO 63101 HENRY M. KITTLESON, P.O. Box 32092, 92 Lake Wire Dr., Lakeland, FL 33802-2092 ANDREW RICHNER, Room 585, P.O. Box 30014, Lansing, MI 48909-7514 MICHAEL P. SULLIVAN, State House, Room 200, Boston, MA 02133-1053 HOWARD J. SWIBEL, Suite 1200, 120 S. Riverside Plaza, Chicago, IL 60606 ROBERT J. TENNESSEN, 3400 City Center, 33 South 6th St., Minneapolis, MN 55402-3796 JUSTIN L. VIGDOR, 2400 Chase Square, Rochester, NY 14604 JOEL SELIGMAN,Washington University School of Law, Campus Box 1120, One Brookings Dr., St. Louis, MO 63130, Reporter EX OFFICIO K. KING BURNETT, P.O. Box 910, Salisbury, MD 21803-0910, President CARL LISMAN, 84 Pine St., P.O. Box 728, Burlington, VT 05402, Division Chair AMERICAN BAR ASSOCIATION ADVISOR ALAN P. BADEN, 666 Fifth Ave., 26th Floor, New York, NY 10103 CHARLES BRAISTED, 167 Orchard Run, 45 Rockefeller Plaza, Cornwall, VT 05753 EXECUTIVE DIRECTOR WILLIAM HENNING, University of Missouri-Columbia, School of Law, 313 Hulston Hall, Columbia, MO 65211, Executive Director WILLIAM J. PIERCE, 1505 Roxbury Road, Ann Arbor, MI 48104, Executive Director Emeritus Copies of this Act may be obtained from: NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS 211 E. Ontario Street, Suite 1300 Chicago, Illinois 60611 312/915-0195 www.nccusl.org UNIFORM SECURITIES ACT TABLE OF CONTENTS PART 1 TITLE AND DEFINITIONS SECTION 101. SHORT TITLE ................................................................ 1 SECTION 102. DEFINITIONS ................................................................ 1 (1) “Administrator” ............................................................ 1 (2) “Agent” .................................................................. 1 (3) “Bank” ................................................................... 2 (4) “Broker-dealer” ............................................................ 2 [(5) “Depository institution” .....................................................3] (6) “Federal covered investment adviser” ........................................... 3 (7) “Federal covered security” .................................................... 3 (8) “Filing” .................................................................. 3 (9) “Fraud,” “deceit,” and “defraud” ............................................... 4 (10) “Guaranteed” ............................................................. 4 (11) “Institutional investor” ..................................................... 4 (12) “Insurance company” ....................................................... 6 (13) “Insured” ................................................................ 6 (14) “International bank” ........................................................ 6 (15) “Investment adviser” ....................................................... 6 (16) “Investment adviser representative” ............................................ 7 (17) “Issuer” ................................................................. 9 (18) “Nonissuer transaction” or “nonissuer distribution” .............................. 11 (19) “Offer to purchase” ....................................................... 12 (20) “Person” ................................................................ 12 (21) “Place of business” ....................................................... 12 (22) “Predecessor act” ........................................................ 12 (23) “Price amendment” ....................................................... 13 (24) “Principal place of business” ............................................... 13 (25) “Record,” except in “of record,” “official record,” and “public record” ............. 13 (26) “Sale” ................................................................. 14 (27) “Securities Act of 1933” ................................................... 16 (28) “Securities and Exchange Commission” ....................................... 17 (29) “Security” ............................................................... 17 (30) “Self-regulatory organization” ............................................... 18 (31) “State” ................................................................. 18 [SECTION 103 ELECTRONIC RECORDS AND SIGNATURES ....................................29] PART 2 EXEMPTION FROM REGISTRATION OF SECURITIES SECTION 201. EXEMPT SECURITIES ........................................................ 30 (1) [United States government and municipal.] ..................................... 30 (2) [Foreign governm ent.] ...................................................... 30 (3) [Depository institution and international bank.] .................................. 31 (4) [Insurance company.] ....................................................... 31 (5) [Public utility.] ........................................................... 31 (6) [Certain options and rights.] ................................................. 32 (7) [Nonprofit organization.] .................................................... 32 (8) [Cooperative.] ............................................................ 35 (9) [Emp loyee benefit plan.] .................................................... 35 (10) [Equipment trust certificate.] ................................................ 36 SECTION 202. EXEMPT TRANSACTIONS. .................................................... 39 (1) [Isolated nonissuer transaction.] ............................................... 39 (2) [Nonissuer transaction in specified outstanding securities.] ......................... 39 (3) [Nonissuer transaction in specified foreign securities.] ............................. 41 (4) [Nonissuer transaction in securities sub ject to Securities Exchange Act reporting.] ....... 41 (5) [Nonissuer transaction in specified fixed income securities.] ........................ 42 (6) [Unso licited brokerage transaction.] ........................................... 42 (7) [Nonissuer transaction by pledgees.] ........................................... 42 (8) [Underwriter transaction.] ................................................... 43 (9) [Unit secured transaction.] ................................................... 43 (10) [Bankruptcy, guardian, or conservator transaction.] .............................. 43 (11) [Transaction with institutional investors.] ...................................... 43 (12) [Limited offering transaction.] .............................................. 43 (13) [Transaction with existing security holders.] .................................... 45 (14) [Offering when registered under this [Act] and the Securities Act of 1933.] ........... 45 (15) [Offering when registered under this [Act] and exempt from the Securities Act of 1933.] . 46 (16) [Co ntrol transaction.] ...................................................... 46 (17) [Rescission Offer.] ....................................................... 47 [(18) [Out-of-state offer or sale.] ................................................47] SECTION 203. ADDITIONAL EXEMPTIONS AND WAIVERS .................................... 50 SECTION 204. DENIAL, CONDITION, LIMITATION, OR REVOCATION OF EXEMPTIONS .......... 51 PART 3 REGISTRATION OF SECURITIES AND NOTICE FILINGS OF FEDERAL COVERED SECURITIES SECTION 301. SECURITIES REGISTRATION REQUIREMENT ................................... 53 SECTION 302. NOTICE FILINGS & FEES APPLICABLE TO CERTAIN FEDERAL COVERED SECURITIES54 SECTION 303. SECURITIES REGISTRATION BY COORDINATION ............................... 56 SECTION 304. SECURITIES REGISTRATION BY QUALIFICATION .............................. 59 SECTION 305. SECURITIES REGISTRATION FILINGS ......................................... 65 SECTION 306. DENIAL, SUSPENSION, AND REVOCATION OF SECURITIES REGISTRATION ....... 70 PART 4 BROKER-DEALERS, AGENTS, INVESTMENT ADVISERS, INVESTMENT ADVISER REPRESENTATIVES, FEDERAL COVERED INVESTMENT ADVISERS, AND INVESTMENT ADVISER REPRESENTATIVES OF FEDERAL COVERED INVESTMENT ADVISERS SECT ION 401. BROKER-DEA LER REGISTRATION REQU IREM ENT AND EXEMPT IONS. ........... 79 SECTION 402. AGENT REGISTRATION REQUIREMENT AND EXEMPTIONS ..................... 87 SECTION 403. INVESTMENT ADVISER REGISTRATION REQUIREMENT AND EXEMPTIONS ...... 89 SECTION 404. INVESTMENT ADVISER REPRESENTATIVE REGISTRATION REQUIREMENT AND EXEMPTIONS ..................................................................... 91 SECTION 405. FEDERAL COVERED INVESTMENT ADVISER NOTICE FILING REQUIREMENT ..... 93 SECTION 406. REGISTRATION BY BROKER-DEALERS,